Analyst Note| Matthew Donen, CFA |
Narrow-moat Holcim reported a strong set of first-half results that saw management raise recurring EBIT growth guidance for the second time this year. First-half EBIT growth of 72% year over year to CHF 2 billion is a record high for the group and is impressively 19% above 2019 levels despite revenue being below prepandemic levels. Margin expansion was mostly driven by volume growth across geographies and product categories coupled with healthy pricing, which was able to mitigate higher energy prices. Our forecasts were already bullish prior to the guidance upgrade, and thus we maintain our CHF 56 fair value estimate. We believe shares are trading in fair value territory.