Holcim Earnings: Record EBIT Margin Achieved As Price Increases Stick; Guidance Unchanged

Narrow-moat Holcim reported organic revenue growth of 7% during the second quarter, outperforming peers Heidelberg Materials and Saint-Gobain, who also reported results in the past 24 hours. We attribute Holcim’s superior performance to its greater weighting toward the U.S., where the construction environment appeared to be more robust than other regions. Price increases implemented in prior periods are continuing to stick, which combined with easing commodity prices, supported EBIT margin expansion across each geographic segment, resulting in EBIT margin expansion of 220 basis points to a record 21.1%. Management confirmed its full-year guidance, which was upgraded during the previous quarter. We expect Holcim's EBIT margin target of 16% to be comfortably achieved this year and reiterate our CHF 60 fair value estimate. Shares are trading in line with our fair value estimate.