Holcim Earnings: Raising EBIT Margin Guidance and Fair Value Despite Drop in Revenue Guidance

Narrow-moat Holcim reported a 1% decline in organic revenue during the second quarter, marginally missing company-compiled consensus. Full-year revenue guidance was lowered to low-single-digit growth from 6%, which included a 2% contribution from acquisitions, while its full-year EBIT margin guidance was lifted above 18.5% from 18%, previously. Shares are trading 2% lower. Operating profit grew 8% during the second quarter at a record EBIT margin of 23.2%, benefiting from cost management, margin-accretive acquisitions, and a recovery in its roofing business. We’re raising our fair value estimate marginally to CHF 75 from CHF 72, underpinned by a 50-basis-point increase in our short-term EBIT margin to 18.5% and 30-basis-point average increase throughout our 5-year forecast period. Shares screen as fairly valued.