Holcim promises a bright future after the split announced the day before: the separated North American company will become a rock star, Holcim President Jan Jenisch said. The rest of Holcim is a champion. However, there were no great storms of enthusiasm on the stock market on Monday.
The traditional Swiss company announced (yesterday) Sunday the biggest change since the takeover of French competitor Lafarge in 2015. At that time, Holcim had become by far the largest cement and building materials manufacturer in the world.
The North American company will be spun off from Holcim next year and listed on the US stock exchange as a fully independent company. The split is necessary to fully utilize its potential and get off to a flying start, Jenisch said in several telephone conferences on Monday.
“The company has become too big to run as a subsidiary,” the German said in an interview with the AWP news agency on Sunday. “We have practically doubled our turnover in the past four years.” It is the largest cement manufacturer in North America and number 3 in roofing. The group ranks fifth for granulates and ready-mixed concrete.
Rockstar in North America
The North American company, with revenues of more than $11 billion and operating profit (EBIT) of $2 billion, will be a rockstar company, Jenisch said. This benefits from the US government’s various economic and infrastructure programs.
Reindustrialization is taking place in the US: manufacturers of cars, home appliances and electronics are moving production back to the US. Holcim receives many orders from companies that build factories. In addition, contracts for the construction of infrastructure would also start this year.
The election of Donald Trump as US president is also no cause for concern. Current President Joe Biden is pursuing the same economic policies as his predecessor: Biden has turned Trump’s gigantic support programs into law. As different as Biden and Trump are in style, they are on the same page when it comes to economic policy, Jenisch said.
The new company is expected to grow to more than $20 billion in U.S. sales by 2030. EBIT is expected to rise to over $5 billion.
Holcim alone is also a champion
Holcim alone is also a champion with an annual turnover of 17 billion francs and an EBIT of more than 2.7 billion francs. Europe will benefit from decarbonization and the trend towards sustainability through the EU’s “Green Deal”.
The growth engine for the rest of Holcim should be Latin America, Jenisch said. By 2030, Holcim’s turnover alone is expected to rise to 22 billion francs and EBIT to more than 4 billion francs.
Rather muted stock reaction
Despite these prospects, there was only cautious applause from investors. The stock started trading on the Swiss stock exchange on Monday with a rise of 6.7 percent. However, the price subsequently collapsed, rising 4.2 percent to 66.90 francs in the early afternoon. Holcim therefore has a market capitalization of 38.7 billion francs.
This makes the group appear undervalued: a market capitalization of $30 billion is realistic for the North American company alone, according to CEO Jenisch.
ZKB analyst Martin Hüsler calculates a value of 51 to 59 billion francs for the entire group. After deducting the net debt, this results in a valuation range for the share of around 75 to 88 francs, Hüsler estimates. The rest of Holcim without the North American activities has an enterprise value of 21 to 25 billion euros.
Even after the spin-off, Holcim will remain in the leading index of the Swiss stock exchange SMI, Jenisch said. And the distribution to shareholders will not be reduced. (saw/sda/awp)
Soource :Watson
I am Amelia James, a passionate journalist with a deep-rooted interest in current affairs. I have more than five years of experience in the media industry, working both as an author and editor for 24 Instant News. My main focus lies in international news, particularly regional conflicts and political issues around the world.
