Holcim raises earnings forecast after Q3 profit beats expectations (updated)

Holcim AG

Today 05:51

Recasts, adds share price in paragraph 2, further details and analyst comment in paragraphs 3, 8, 9 and 11-12
By John Revill
ZURICH, Oct 23 (Reuters) - Swiss cement maker Holcim HOLN.S raised its full-year earnings forecast on Friday after reporting better-than-expected quarterly sales and profit as it sold more higher-margin low-carbon products.
Shares were set to open 4.8% higher premarket in Zurich.
The results of Holcim, one of the world's biggest construction materials companies, give an insight into the health of the broader building industry.
The company posted a 27% increase in its sales of building solutions products - roofs, walling and flooring - which are highly profitable when sold as a package of products to builders and are less capital-intensive to produce.
     As a result, Holcim increased its profit margin in the three months to September 30, pushing recurring operating profit 17% higher to 976 million Swiss francs ($1.19 billion). That beat analyst expectations of 949 million francs in a company-compiled consensus. 
Sales rose to 4.66 billion francs, Holcim said, above estimates of 4.59 billion francs.
As a result, Holcim increased its full-year earnings forecast, saying it now expects its recurring operating profit to increase 10%-12%, up from its previous expectation of a 10% increase.
This is the second time this year that Holcim has increased its profit forecast, following an upgrade in July. 
     The company has improved its performance by selling more low-carbon cement and concrete, which boast higher profit margins, while increasing its usage of recycled building materials.
"In the first nine months of the year, we achieved strong profitable growth with an industry-leading recurring EBIT margin thanks to increased customer demand for our high-value offering, strict cost discipline and operational excellence," said CEO Miljan Gutovic.
   Holcim reported higher quarterly sales and profit in all three of its regions, with the company saying it was seeing a strong pipeline of infrastructure projects in Europe and Latin America, while it expects further growth from investments in Morocco related to the 2030 football World Cup.
 "The raised EBIT growth guidance was expected and consensus already sits there, but fears of a potential downward revision had flared up recently and proved unfounded, so today's solid Q3 and guidance hike should be taken positively," said Bank Vontobel analyst Mark Diethelm.
     
($1 = 0.8209 Swiss francs)

 (Reporting by John Revill
Editing by Ludwig Burger and Sonia Cheema)
 ((John.Revill@thomsonreuters.com; +41 41 528 36 37; Reuters Messaging: john.revill.thomsonreuters.com@reuters.net/))