Business
Building materials supplier Holcim beats profit forecast
Global Banking & Finance Review®
Company
By John Revill
ZURICH (Reuters) -Holcim beat third-quarter operating profit expectations, the construction materials maker said on Friday, as higher profitability helped offset lower sales.
The company, which is planning to spin off its North American business next year, posted recurring operating profit of 1.67 billion Swiss francs ($1.93 billion) for the three months to the end of September.
The figure was slightly ahead of analyst forecasts for 1.65 billion francs in a company supplied consensus.
The profit was helped by the company increasing its profit margin to 23.5% from 21.8% a year earlier, as Holcim sold more of its more profitable low carbon cement, roofing and other building products.
This compensated for lower revenues, which fell 3% to 7.12 billion francs, missing forecasts for 7.19 billion francs.
Our Q3 results confirm Holcim’s strong earnings profile, with broad-based growth drivers delivering record recurring EBIT and a record margin,” said Chief Executive Miljan Gutovic.
Profitability was also supported by acquisitions made by Holcim, with the company buying six more companies during the quarter to take its total to 17 for the year.
Holcim confirmed its full-year guidance to increase its sales in the low single-digit percentage range in local currencies, and increase its recurring operating profit at a higher rate.
The company’s shares were indicated 0.1% lower in premarket activity on the Zurich stock exchange.
Even though sales were a touch below consensus forecast on lower volumes in North America and Europe, recurring EBIT development was again very robust,” said Bank Vontobel analyst Mark Diethelm.
The confirmed guidance was also seen a positive in challenging markets, he added.
Holcim said its intended U.S. listing of its North American business was still on track to be completed in the first half of 2025.
The North American market, Holcim’s second biggest after Europe, was showing “strong market fundamentals”, the company said, adding it is currently working on 150 infrastructure projects in the region.
($1 = 0.8656 Swiss francs)
(Reporting by John Revill, Editing by Rachel More)
Recurring operating profit refers to the profit generated from a company's core business operations, excluding any one-time or irregular items, providing a clearer view of ongoing profitability.
Profit margin is a financial metric that shows the percentage of revenue that exceeds the costs of goods sold. It indicates how efficiently a company is managing its expenses.
The construction industry encompasses all activities related to the building of infrastructure, including residential, commercial, and industrial projects, and involves various trades and professions.
Business investment refers to the allocation of resources, typically capital, into projects or assets that are expected to generate returns or growth for the company.
Financial performance is an assessment of how well a company is using its assets to generate revenue and profit, often evaluated through financial statements and key ratios.
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