Q3 23: conservative guidance

Holcim Q3 revenue met expectations, while its EBIT exceeded them slightly. All geographic regions experienced positive organic growth, although this was somewhat offset by adverse foreign exchange effects. In light of this robust performance, the company has increased its margin forecast for the full year 2023, which, in our opinion, is a cautious estimate.

H1 23: America to drive future growth

Holcim’s first-half performance was positive, showing a 7.4% lfl increase in sales and a 13.4% lfl rise in EBIT. The growth was primarily driven by North and Latin America. Nevertheless, the Solutions & Products business encountered destocking challenges, which affected both sales and EBIT. Looking ahead to the full year, Holcim reaffirmed its guidance, expecting sales to grow by at least 6% lfl and EBIT to exceed 10%.

Q1 23: LatAm drives organic growth

Holcim reported good first quarter results, with sales up 8% lfl and EBIT up 12% lfl (1% and 4% above consensus respectively). All markets grew organically, but Latin America was the main contributor with organic growth of 25% in sales and 11% in EBIT. For the full year, Holcim expects the growth trends to continue in all regions and has also revised its forecast upwards to 6% lfl sales growth (previously low single digits).

FY22: A successful green transformation

Holcim published a good set of results, with EBIT roughly in line, but revenues slightly below market estimates. Growth was driven by the lightweight materials segment where Holcim sees further growth potential. FCF was below CHF3bn due to a litigation cost, however the company still managed to reduce its net debt/EBITDA ratio to 0.9x thanks to divestments. The group proposes a dividend payment of CHF2.5/share, an increment of 14%.

Q3 22: yet another guidance upgrade

Holcim published results above market expectations. All regions delivered positive EBIT growth, except for APAC where the EBIT was down by 45% as the region was challenged by high inflation, with negative price over cost. Following this strong performance, particularly in North America and Solutions & Products, Holcim has again upgraded its guidance. Additionally it announced a share buyback of CHF2bn, thanks to >$7.3bn in proceeds from the recent divestments.

H1 22: positive surprise from portfolio transformation

Holcim published its results above market expectations. This good performance was driven primarily by its roofing and insulation businesses, in addition to a positive price cost mix in the Americas and Europe in particular. The management upgraded the guidance and, due to the company’s strong order book, is also confident about the company’s performance in FY23.

Q1 22: scope effect drives growth

Holcim has published good Q1 results with sales up by 20% and EBIT up by 16% (5% and 38% above consensus respectively). However, the newly-acquired roofing businesses were the main contributors to growth and the lfl sales and EBIT growth stood at 11% and just 2% respectively. For the full year, Holcim expects positive demand trends to continue in all regions and has also upgraded its guidance to top-line growth of 8% lfl (previously: 6%).

FY21: best in class price/cost spread

Holcim reported FY21 results in line with our expectations. It saw strong demand trends across all markets and management is confident of seeing the momentum continue in 2022. The recurring EBIT margin improved by 130bp, and the group has guided for an over-proportional EBIT increase in 2022. FCF was above CHF3bn for the third consecutive year, with a net debt/EBITDA ratio of 1.4x. The group proposes a dividend payment of CHF2.2/share, an increment of 10% for the first time in five years.

Q3 21: confident of maintaining a positive price-cost mix

Holcim announced a good set of Q3 results, beating average consensus expectations by 3%. Despite a 28% increase in energy costs, it was able to maintain its margins, thanks to higher selling prices. Management is confident that it will be able to maintain a positive price-cost mix in Q4 as well as FY22 and sees growth via multiple bolt-ons (Firestone-like acquisition possible too). We have updated our estimates following this result, with no significant impact on the target price.

H1 21: well managed margins

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.

Q1 21: LatAm and India drive growth

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.

FY 20: confidently walking into 2021

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.

LafargeHolcim embracing the light-side

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

Q3 20: disproportionate growth in EBIT

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.

H1 20: excellent FCF but at the cost of H2?

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.

Renold - Strong end to FY24: EPS up 11%. Robust FY25: EPS up 27.6%

The FY24 year-end update is very upbeat signalling trading being materially ahead of expectations, with a better-than-expected profit out turn and stronger cash generation. It continues to strengthen margins through efficiencies and investment in modern equipment. The order book remains close to record levels providing a robust view of future forecasts. In FY24E we upgrade EPS by 11% and in FY25E a significant upgrade of 27.6%. It looks capable of declaring a dividend in FY25 as well as manageme

Morning Note – 16 April 2024

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FY23 results show very strong growth over FY22, driven by strong Structural Steel activity, with results slightly ahead of upgraded profit expectations, while stronger than expected cash flow resulted in an unexpectedly generous dividend of 33p (offering a FY23 yield of 7.0%). The group now has net cash of £22.1m and is debt free and is therefore in a strong position for potential M&A activity. Following the recent £90m of new orders to increase the order book to record levels we conservatively

Q1 Operating Results

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Plant Health Care - China distribution with AMVAC

Plant Health Care announced it has signed a distribution agreement with AMVAC, an American Vanguard Company, to support commercialisation of novel fertiliser products incorporating Plant Health Care's Harpinαβ in China starting in 2024. The novel product combines Harpinαβ technology with an AMVAC fertiliser and is expected to help growers improve crop quality and yield as part of an integrated and environmentally responsible crop production programme. AMVAC continues to evaluate Plant Health Car

Morning Note – 15 April 2024

Severfield - Multiple positives should excite investors

Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and the company ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, Severfield has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appear

discoverIE - Back to organic growth

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Acquisitions have been an important element of Severfield management’s growth strategy, with the aim of adding new products, sectors and regions to what we have identified as exciting long-term organic opportunities. In this Spotlight report, we focus on the group’s targeted M&A approach, highlighting three significant deals.

LIBERUM: Severfield: Erratum: Better EPS and cashflow, and buyback

Invinity Energy Systems - Update on Strategic Investment

Invinity’s update on discussions with strategic investors reveals interest from multiple parties. While this has slightly delayed finalising an agreement it increases the potential for a better outcome. Although details are unknown at this stage, we think there is enough in the statement to be comfortable that any agreements will be consistent with the company’s strategy of growing market share in core markets and using a licencing and royalty model in other markets.

PROGRESSIVE: Severfield: Step change in European and Indian outlook

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