Holcim(US:HCMLY)2024-04-26 20:22Financial Data and Key Metrics Changes - The company reported over 3% growth in local currency for Q1 2024, with an EBIT growth of more than 17% in local currency and 7.8% in Swiss Francs, indicating strong margins and a positive outlook for the year [4][5][15] - The EBIT margin increased by 0.9 percentage points in Q1, supporting the guidance for an 18% EBIT margin for the full year [8][15] Business Line Data and Key Metrics Changes - Solutions & Products saw roofing sales increase by 67% in Q1, with a significant contribution from the acquisition of Duro-Last and organic growth of 38% [6][22] - The overall performance in Solutions & Products showed a profitable growth with margin expansion of 2 percentage points [22] Market Data and Key Metrics Changes - North America experienced strong underlying demand despite adverse weather and fewer trading days, with expectations for a strong performance in 2024 [19] - Latin America achieved record Q1 net sales and recurring EBIT with a strong margin of about 36%, driven by near-shoring trends and a robust pipeline of infrastructure projects [20] - Europe reported a record Q1 recurring EBIT margin expansion of almost 1.5 percentage points, marking the sixth consecutive quarter of margin expansion [20] Company Strategy and Development Direction - The company continues to focus on M&A as a growth driver, having completed five acquisitions in Q1 2024 and a total of 28 in 2023, while also closing four divestments [7][26] - Sustainability initiatives are emphasized, with low-carbon solutions like ECOPact and ECOPlanet increasing from 16% to 26% of respective sales [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving over 4% organic net sales growth and an additional 2% from M&A for 2024, with a target of over CHF 3 billion in free cash flow [27] - The company is optimistic about the recovery in roofing and solutions, expecting continued strong demand and growth in the coming months [55] Other Important Information - The company has returned over CHF 11 billion to shareholders since 2018 and plans to increase dividends by 12% to CHF 2.8 [24] - The company is committed to maintaining a strong investment-grade rating while executing share buybacks from cash on the balance sheet [24] Q&A Session Summary Question: Can you quantify the price cost benefit in Q1 and its evolution through 2024? - Management indicated that energy costs are down mid to high single digits, contributing positively to margins, and expects continued normalization in other cost items [31] Question: What is the M&A pipeline looking like? - The company has a healthy pipeline with a focus on bolt-on acquisitions, expecting many more transactions to come [30] Question: Can you provide insights on pricing and volume developments? - Management noted that margin development is now more focused on value-added systems rather than volume, with expectations for continued pricing improvement throughout the year [33][34] Question: How did Asia and Africa perform in Q1? - Asia faced challenges, particularly in China, but overall performance in Africa and the Middle East was strong, with sustainable growth expected [51] Question: What is the outlook for the European construction cycle? - Management expects a good second half of the year driven by infrastructure projects, despite a softer first half mainly in the residential sector [61]