Holcim published a good set of results, supported by good growth momentum. Recurring EBIT more than doubled on the back of restructuring efforts and good cost control (excluding energy costs). For the full year, the company has raised its guidance and now expects an 18% lfl growth in the recurring EBIT.
Companies: Holcim Ltd
LafargeHolcim has achieved a good set of Q1 results with LatAm and APAC delivering high growth. The group observed a significant margin increase in all regions, thanks to the tailwinds from price-over-cost and improved efficiency in key markets. Management has an optimistic outlook for FY21 and expects the Strategy 2022 targets to be achieved a year in advance.
LafargeHolcim reported FY20 results in line with our expectations. It saw demand recovery in all its markets and the trend is continuing in 2021 as well. Its COVID-19 action plan delivered CHF385m in fixed cost savings and will deliver further savings in 2021, which should offset the inflation in raw material prices. It generated a record-high FCF of CHF3.2bn resulting in a net debt leverage of only 1.4x.
LafargeHolcim proposed a dividend payment of CHF2/share.
As anticipated by the market, LafargeHolcim has signed an agreement to acquire Firestone Building Products, a light-side materials player in commercial roofing and building envelope solutions based in the US, with FY20 estimated net sales of $1.8bn and EBITDA of $270m. This transaction is valued at $3.4bn (~12.5x EV/EBITDA), which, in our opinion, is not very expensive. The company sees high growth opportunities in this business through bolt-ons in the US and footprint expansion in LatAm and Eur
LafargeHolcim saw resilient demand in Q3 (down by only 2.6% lfl) and the company delivered well on its Covid-19 action plan, resulting in a disproportionate increase in EBIT with a margin improvement of 250 bps. Management upgraded its guidance, with FCF now expected to be >CHF2.75bn and debt leverage <1.8x.
LafargeHolcim reported a better-than-consensus set of H1 20 results although the operational performance was weaker than that of HEI (which also published its results today). We attribute this to LHN’s larger exposure to the markets having experienced strict lock-downs and due to a weaker contingency plan versus HEI. LHN did however manage to generate excellent FCF via active NWC management. The management is optimistic about H2. We maintain our BUY recommendation.
Despite strict lockdowns in major markets like France, Italy, Spain and India, LafargeHolcim managed to perform well, thanks to the tailwinds from raw material costs and its performance improvement in some markets. Management has an optimistic outlook for FY20 because the building sector is comparatively resilient to the pandemic and is expected to benefit from recovery plans, but we will stick to our current conservative assumptions until we see further visibility.
2019 was a good year for LafargeHolcim with 3.1% lfl growth. It was able to achieve all its set targets for 2019 and has overachieved its SG&A cost targets. The cash conversion rate was ~50%. For 2020, the company has an optimistic outlook for its markets and will continue to work on profitability and sustainability.
The Asia Pacific region showed a strong margin improvement in Q3 19. The good progress in India was driven by price and the easing cost inflation despite softer demand.
Following this earnings release, we expect to keep our recommendation unchanged with a somewhat higher target price.
EBITDA was up by 10.8% lfl despite a negative volume effect due to an unfavourable regional mix more than offset by a positive price over cost spread.
Management still sees FY recurring EBITDA pre IFRS 16 of at least +5%, which seems somewhat low as H1 19 was clearly higher. In our view, the 5% will become the lower end of the consensus range.
Overall, we expect to maintain our Buy recommendation.
LafargeHolcim posted a strong start to the year with an over-proportional increase in lfl recurring EBITDA.
As expected in our model update of 2 April 2019, India and Europe posted strong performances.
We continue to believe that North America has reached a high point in the cycle and, with the inversion of the yield curve, which is a good indicator of the possibility of a recession over the next 18 months, we will keep our negative view on the US.
With the divestment of its activities in Indonesia, Malaysia, Singapore and the Philippines, LafargeHolcim exits South East Asia with a total enterprise value (EV) of $4.9bn, representing a 2018 EV/recurring EBITDA multiple of…above 21x, which is outstanding for the cement sector.
Following this divestment, we expect to revise our target price upward by a low to mid single-digit figure.
Q4 sales missed the lowest estimate, but the company registered an over-proportional increase in profitability in the last quarter. Indeed, Q4 recurring EBITDA was in line with expectations.
Overall, we believe that the key financial indicators are in line with the market expectations. Hence, we expect to keep our recommendation unchanged.
The nature of the news is a business call update we had with management.
The main message of management is that there were no big changes in Q4, the trends are similar to those in Q3, with further difficulties in LatAm and Africa Middle East offset by higher contributions from North America, Europe and Asia Pacific.
Overall, we don’t expect to change our forecasts significantly following this call with management.
Cost inflation doesn’t worry LafargeHolcim for Q4 as it affirms it is under control thanks to price increases implemented over the 9m period and the ongoing cost reduction programme that will gradually reach the bottom line.
Concerning the guidance, management revised upward its sales and downward the recurring EBITDA. It seems that the higher range of the recurring EBITDA guidance will be rather difficult to reach in our opinion.
Following this earnings release, we will keep our Buy recommend
Research Tree provides access to ongoing research coverage, media content and regulatory news on Holcim Ltd.
We currently have 34 research reports from 2
Companies: SigmaRoc Plc
ITM Power is leading the world in PEM electrolyser manufacturing, and we believe it can use this to build sustainable advantage and grow market share in a rapidly growing hydrogen economy. The company is funded to add capacity and over time this should enable ITM to keep up with market growth to maintain a strong market share. The product is itself world leading which again creates competitive advantage. Demand itself appears secure with the IEA suggesting a major supply deficit by 2030. We init
Companies: ITM Power PLC
Longspur Research and Radnor Capital Partners have launched the Active Net Zero Clean Energy Index to allow investors to measure the performance of companies actively enabling climate solutions.The key emphasis is on the word “active”. This pan-European index eliminates greenwashing by penalising fossil fuel activities and focuses on actual achievement and positive contribution, rather than promises for the future. Our proprietary selection methodology is systematic, rules based and quantifiable
Companies: DRX ITM PHE SAE SIT STRLNG VLS
Strix has announced the commercial launch of two products Aurora, an appliance that dispenses instant hot and chilled water, and Dual Flo, a product with the usual characteristics of kettle but is able to deliver a single cup of boiling water. Both products fit with Strix’s sustainability strategy by saving water, energy, reducing the overall impact on the environment and bringing tangible benefits to consumers. The announcement is evidence of the organic growth strategy outlined at the Capital
Companies: Strix Group PLC
We see the UK Government’s Net Zero Strategy as being overall helpful but not especially definitive. Amongst our coverage group, Drax Group (DRX LN) and Velocys (VLS LN) benefit from the Humberside CCS cluster prioritisation and Velocys from SAF support. The amount of renewables is likely to boost the need for flexibility solutions where Drax, Gore Street (GSF LN) and SIMEC Atlantis (SAE LN) can benefit. Hydrogen companies ITM (ITM LN) and Powerhouse Energy (PHE LN) are likely to find support. T
Companies: ADN DRX GSF ITM NESF PHE SAE SIT STRLNG TLG VLS
Oil posted the longest stretch of weekly advances since 2015 as OPEC+ producers only modestly supply the market and as US crude supplies shrink.
Crude futures rose 1.5% Friday in New York, up for a ninth straight week. President Joe Biden said Thursday night that Americans should expect high gasoline prices to continue into next year because of supply being withheld by OPEC and other foreign oil producers. Stockpiles at the biggest US storage hub are draining to levels last seen when crude pr
Companies: FO 88E DEC EME GTC TRIN UOG WEN
The forthcoming UN Climate Change Conference (known as COP26) should result in an acceleration of governments’ actions to reduce CO2 emissions. This will result in an acceleration of customer end-user adoption rates which would be positive for AFC Energy which is developing zero-emission solutions for the EV-charging, construction, data centre and marine markets.
Companies: AFC Energy plc
The group continues to experience strong underlying market conditions, with some supply chain shortages and transport constraints causing price rises. These issues are not expected to improve in the short term, but the group is confident of progress and results are anticipated to be in line with expectations. No change to forecasts. We retain our price target of 315p, which still offers good upside despite the strong outperformance by the shares over the year. The shares remain attractive on a s
Companies: Alumasc Group plc
Tungsten West (TUN.L) has joined AIM. Tungsten West is the 100% owner and operator of the historical Hemerdon tungsten and tin mine located near Plymouth in southern Devon. Hemerdon represents the world's third largest tungsten mineral resource, with a JORC (2012) compliant Mineral Resource Estimate of approximately 325Mt at 0.12 WO3. Capital raised on Admission: £39m. Anticipated Mkt Cap: £106.2m.
Future Metals NL (ASX:FME, FME.L) (formerly named Red Emperor Resources NL) had joined AIM
Companies: SOLI RBD ALU ATQT BBI CWR DRV ORCP WATR
No joiners today.
No leavers today.
What’s cooking in the IPO kitchen?
ATOM headquartered in Leeds, focussed on the large-scale production of green hydrogen and ammonia intends to join AIM towards the end of the year. ATOME intends to be spun-out from AIM-listed President Energy Plc, an oil and gas company which has incubated and financially supported ATOME to date, by way of a dividend in specie and flotation.
Devolver Digital to join AIM, an award-winning digital video games pu
Companies: SAE HMI MNO MSMN NSCI OMG PCA
No Joiners Today
No Leavers Today
What’s cooking in the IPO kitchen?
Arrow Exploration Corp. (AIM: AXL ; TSXV: AXL) , the oil and gas exploration and production company, has conditionally raised approximately £8.8m and is due to complete its dual listing on AIM on 25 Oct. Market cap c£13.1m.
Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz.
Companies: ZYT CIC DMTR GILD LMS MMAG PYC SMRT SBI
LTHM announced the acquisition of the entire share capital of Sarcon (No 155) Ltd (“Sarcon”) and its subsidiary companies for ~£4.0m +/- a net asset adjustment.
Companies: James Latham Plc
Arrow Exploration Corp. (AIM:AXL; TSXV:AXL), the high-growth operator with a portfolio of assets across key Colombian hydrocarbon basins, has joined AIM, alongside a fundraise of approximately £8.8m.
No Leavers Today
What’s cooking in the IPO kitchen?
ATOM headquartered in Leeds, focussed on the large-scale production of green hydrogen and ammonia intends to join AIM towards the end of the year. ATOME intends to be spun-out from AIM-listed President Energy Plc, an oil and gas com
Companies: SPA ECR KP2 SAR SYM
eEnergy has increased its ownership of eEnergy Insights Ltd (EIL) from 37.5% to 51%. EIL is the entity holding the Group’s MY ZeERO smart metering and analytics platform, which we consider an important differentiator for the Group. EIL has completed the development of its next generation of intelligent smart meters, which are now ready for commercial launch. eEnergy has placed an order for a number of these meters, which are expected to be rolled out in the coming months. Management is said to b
Companies: eEnergy Group PLC
Empresaria has experienced continued strong trading momentum, increasing into H2 as the Group continues to realise the benefits from operational initiatives and the improved economic environment. As a result, full year NFI is expected to be in the range of £57m-£59m with adj. PBT in the range of £7.4m-£7.9m. We take the mid-point and increase our PBT forecast by 14% to £7.7m. Given recent progress, the outlook looks increasingly positive for the Group, with an improving end market backdrop and c
Companies: Empresaria Group plc