Analyst Note| Matthew Donen, CFA |
Narrow-moat Holcim successfully offset significant cost inflation, which exceeded CHF 1 billion, to deliver 13% organic revenue growth and 6% EBIT growth during the first half of the year. Growth was driven by price increases and strong demand for Holcim’s downstream solutions & products segment, which is becoming an increasing part of the business and now contributes 18% of group sales. The shift in business mix and ability to raise prices to help offset inflation confirms our investment thesis, which, combined with the group’s shareholder-friendly capital return, we believe will lead to attractive shareholder returns. We reiterate our CHF 56 fair value estimate and view shares as undervalued.