Holcim Ltd.

Overview Key strengths Key risks Strong competitive positions in North America and Europe. The heavy building materials industry being cyclical, seasonal, and highly capital- and energy-intensive. Growing share of innovative and less carbon intensive product offerings in the cement and concrete business support the company's competitive position and pricing power. High climate-transition risk in the cement business, with tightening regulation in some of the regions where the group operates, which translates into raising carbon costs. Management's disciplined approach to value creation and maintaining ratios consistent with a 'BBB+' issuer credit rating. Potential monetary and political risks, as well as heightened economic volatility, arising from operations in emerging markets, though this risk has been reduced following asset disposals in the past

...Holcim delivered solid results in 2022. The company sales increased like-for-like by 12.9% compared to 2021. Recurring EBIT, as defined by management, increased by 7.2% on a like-for-like basis, reflecting a successful price-over-cost strategy and the increasing contribution from the solutions and products segment, notably the roofing business, which reached 19% of group sales. This is notwithstanding high cost inflation in 2022, including a 40% rise in energy costs alone, but also in the areas of logistics, and maintenance, among others. We note Holcim's limited direct exposure to natural gas and its about 65% use of alternative fuels in its European operations, both of which should partly shield the company from persistently high energy price volatility. We anticipate a broadly resilient performance in 2023 notwithstanding the weaker macroeconomic environment. Holcim is well positioned to benefit from generally good demand in its markets and investments in infrastructure, although we...

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