Holcim(HCMLY) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q3 2024, Holcim achieved record recurring EBIT of CHF 1.67 billion, with a record margin of 23.5% [3] - The EBIT margin increased by 160 basis points over the first nine months to a record 19.5% [6] - Recurring EBIT for the first nine months increased by 6.6% in Swiss francs, despite a 4.5% negative impact from the appreciation of the Swiss franc [12][13] Business Line Data and Key Metrics Changes - North America saw significant expansion in recurring EBIT margin, driven by strong market fundamentals and federal infrastructure investments [14] - Latin America delivered the 17th consecutive quarter of profitable growth, with three synergetic acquisitions in Q3 [15] - The Solutions & Products segment produced the largest percentage increase in both net sales and recurring EBIT, driven by roofing systems [16] Market Data and Key Metrics Changes - Demand across key markets remains positive, with robust infrastructure activity expected in North America and Europe [4][5] - In North America, the outlook is strong due to federal and state investment programs, with over CHF 4 billion in additional infrastructure investments announced [5] - Europe is expected to see resilience in demand, particularly in infrastructure and energy transition projects [5] Company Strategy and Development Direction - Holcim's strategy focuses on high-value solutions and sustainable building practices, with continued investment in circular construction and technology [3][11] - The company is committed to delivering another record year in 2024, with a focus on capital allocation to maximize shareholder value [7][18] - Holcim plans to complete the listing of its North America business in the U.S. in the first half of 2025, aiming to unlock new value creation [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model across market conditions, with expectations for continued margin expansion [18] - The company anticipates a slight recovery in the residential market in 2025, driven by interest rate cuts and strong infrastructure investments [26] - Management highlighted the importance of cost discipline and ongoing focus on operational efficiency [45] Other Important Information - Holcim completed over 100 acquisitions in the last five years, transforming its portfolio to capture growth opportunities [7] - The company is on track to reach a target of 10 million tonnes of recycled construction and demolition materials by the end of the year, representing a 20% increase from the previous year [18][11] - Holcim received additional grants from the EU innovation fund for carbon capture projects, bringing the total funding to approximately CHF 1 billion [61] Q&A Session Summary Question: Insights on Solutions & Products business performance - Management noted that roofing remains a significant part of the Solutions & Products business, with strong demand despite weather-related challenges [20][21] Question: Preliminary expectations for 2025 volume trends - Management expects a slight recovery in 2025, particularly in North America, driven by federal investments and potential residential market recovery [26] Question: Capital Market Day timing and capital allocation strategy - Management confirmed that the Capital Market Day will be scheduled after finalizing the spin-off details, with a focus on growth and shareholder value [28][31] Question: 2025 outlook on costs and margin improvements - Management expressed optimism about infrastructure demand and gradual price increases, while also focusing on cost management to improve margins [34] Question: Carbon capture project funding and CapEx trajectory - Management confirmed that the total funding from the EU for carbon capture projects is around CHF 1 billion, with CapEx spread over the next six years [60] Question: Performance of ECOPact and ECOPlanet products - Management stated that ECOPact and ECOPlanet are expected to grow significantly, with a target of over 55% of total sales in these products by 2030 [49]