Holcim: Profitable Growth Continues With Record Results

• Record H1 net sales of CHF 14,681m (+16.9%)
• Record H1 Recurring EBIT of CHF 2,173m (+9.6%) and EPS of CHF 1.90 (+39.7%)
• Accelerated portfolio transformation with expansion of Solutions & Products and divestment of India
• Rating upgrades to BBB+ (Standard & Poor’s) and Baa1 (Moody’s)
• Net sales growth guidance for FY2022 upgraded to at least 10% LFL

Ad Hoc Announcement Pursuant to Art. 53 of the SIX Exchange Regulation Listing Rules

ZUG, Switzerland--(BUSINESS WIRE)-- Regulatory News:

Holcim (Paris:HOLN):

Performance overview H1

Group (in million CHF)	H1 2022	H1 2021	±%	±%LFL
Net sales	14,681	12,556	+16.9	+12.7
Recurring EBIT	2,173	1,983	+9.6	+5.7
Recurring EBIT margin (%)	14.8	15.8
Operating profit (EBIT)	2,067	1,794	+15.2
Net income, Group share	1,157	839	+38.0
Net income before impairment and divestments, Group share	1,304	881	+48.0
EPS (CHF)	1.90	1.36	+39.7
EPS before impairment and divestments (CHF)	2.14	1.43	+49.7
Free Cash Flow1	275	814	-66.2
Net financial debt	13,365	12,438	+7.5

Jan Jenisch, CEO: “I would like to thank all members of the Holcim family for their continued resilience and outstanding performance in spite of our challenging times. Our teams are going above and beyond to keep our people and communities safe, while firmly leading our decarbonization journey. I am encouraged by how we are engineering scalable Carbon Capture Utilization and Storage technologies, which are receiving innovation grants in the EU to advance their impact.

“Our record results, from net sales to Recurring EBIT and earnings per share, are setting solid foundations to deliver our ‘Strategy 2025 – Accelerating Green Growth’. Our roofing and insulation businesses stood out as growth engines, on track to reach pro-forma net sales of CHF 3.5 billion in 2022. This remarkable achievement gives us the confidence to revise our 2022 guidance to at least 10% net sales growth on a like-for-like basis.”

Record net sales and Recurring EBIT

Net sales of CHF 14,681 million for the first half of 2022 were up +16.9% in Swiss francs and +12.7% on a like-for-like basis compared to the prior year. The increase was driven by sales growth in all segments. Net sales in the second quarter alone were CHF 8,240 million, or +13.6% higher like-for-like than the prior-year period.

Recurring EBIT reached a record CHF 2,173 million for the first half of 2022, up +9.6% in Swiss francs and +5.7% on a like-for-like basis compared to the prior-year period. Recurring EBIT growth for the standalone second quarter was +7.0% on a like-for-like basis, with strong price over cost. This record result was driven by robust improvement of profitability in the Solutions & Products segment and strong Recurring EBIT margin expansion in North America.

Net income Group share reached CHF 1,157 million, up +38.0% compared to the prior-year period. Reported earnings per share reached CHF 1.90, up +39.7%. Earnings per share before impairment and divestments increased by 49.7% to reach CHF 2.14 for the first half of 2022 versus CHF 1.43 for H1 2021. Free Cash Flow after leases was at CHF 275 million in the first half of 2022 versus CHF 814 million in H1 2021.

Holcim’s balance sheet remained strong and was recognized by credit rating upgrades. Standard & Poor’s upgraded Holcim’s credit rating to BBB+ in March 2022 and Moody’s upgraded Holcim’s credit rating to Baa1 in June 2022.

Strong progress on portfolio transformation

Holcim is making strong progress on its portfolio transformation with the continued expansion of roofing, insulation and specialty building solutions and eight bolt-ons in the first half of 2022. The Solutions & Products segment reached 18% of the Group’s total net sales in H1, up from 8% for 2020, putting the company on track to reach its strategic goal of 30% of net sales from Solutions & Products by 2025. Profitability of Solutions & Products also improved significantly, with a Recurring EBIT margin of 15.0% for Q2 2022, up from 8.8% in the prior year. Roofing and insulation businesses are on track to reach pro-forma net sales of CHF 3.5 billion in 2022, while specialty building solutions pro-forma net sales are estimated to reach CHF 600 million.

Holcim has signed divestments for its businesses in India, Brazil and Zimbabwe with expected proceeds of above USD 7 billion.

Further strengthening leadership in sustainability

Holcim continued to progress in its sustainability ambitions with ECOPact green concrete reaching 10% of Ready-Mix Concrete net sales in H1 2022, on its way to delivering the strategic target of 25% of ready-mix sales by 2025. ECOPlanet green cement also achieved significant net sales growth and is now available in 16 markets. Driving circular construction, Holcim recycled 2.9 million tons of construction & demolition waste in its products in H1 2022, on track to reach 10 million tons by 2025.

In July, Holcim was selected for two investments from the European Union Innovation Fund for its breakthrough Carbon Capture Utilization and Storage projects in Germany and Poland. In Germany, the EU will support Carbon2Business, which is part of the Westküste 100 project, where carbon captured from Holcim’s Lägerdorf plant will be turned into synthetic fuel for the mobility sector and as feedstock for the chemical industry. The EU is also supporting Holcim's Go4ECOPlanet project in Poland, which aims to create an end-to-end carbon capture and storage chain starting from CO₂ capture from its site in Kujawy to offshore storage in the North Sea, with the vision to be a net-zero plant by 2027.

Outlook

Despite volatile market conditions and geopolitical uncertainty, Holcim expects growth momentum to continue with:

• Growth in net sales of at least 10% LFL, upgraded from 8%, and at least 10% in Swiss francs
• Double-digit net sales growth in Solutions & Products to achieve net sales of above CHF 5 billion
• Accelerated progress towards 2025 sustainability targets
• Positive growth in Recurring EBIT like-for-like and in Swiss francs
• Free Cash Flow² above CHF 3 billion

Key Group figures

Group Q2	2022	2021	±%	±%LfL
Net sales (CHFm)	8,240	7,194	+14.6	+13.6
Recurring EBIT (CHFm)	1,559	1,455	+7.2	+7.0
Recurring EBIT margin (%)	18.9	20.2

Group H1 (in million CHF)	2022	2021	±%	±%LfL
Net sales	14,681	12,556	+16.9	+12.7
Recurring EBIT	2,173	1,983	+9.6	+5.7
Recurring EBIT margin (%)	14.8	15.8
Operating profit (EBIT)	2,067	1,794	+15.2
Net income, Group share	1,157	839	+38.0
Net income before impairment and divestments, Group share	1,304	881	+48.0
EPS before impairment and divestments (CHF)	2.14	1.43	+49.7
Free Cash Flow after leases	275	814	-66.2
Net financial debt	13,365	12,438	+7.5

Group results by segment	H1 2022	H1 2021	±%	±%LfL
Sales of cement (mt)	95.3	99.0	-3.7	-1.1
Net sales of Cement (CHFm)	8,596	7,932	+8.4	+12.2
Recurring EBIT of Cement (CHFm)	1,563	1,654	-5.5	-2.0
Recurring EBIT margin of Cement (%)	18.2	20.9
Sales of aggregates (mt)	122.7	123.0	-0.3	-1.2
Net sales of Aggregates (CHFm)	1,974	1,864	+5.9	+6.2
Recurring EBIT of Aggregates (CHFm)	236	217	+8.8	+8.4
Recurring EBIT margin of Aggregates (%)	11.9	11.6
Sales of ready-mix concrete (m m3)	23.7	22.1	+7.2	+4.7
Net sales of Ready-Mix Concrete (CHFm)	2,764	2,462	+12.3	+12.2
Recurring EBIT of Ready-Mix Concrete (CHFm)	52	40	+31.2	+44.2
Recurring EBIT margin of Ready-Mix Concrete (%)	1.9	1.6
Net sales of Solutions & Products (CHFm)	2,613	1,423	+83.6	+25.4
Recurring EBIT of Solutions & Products (CHFm)	323	72	+346.4	+140.8
Recurring EBIT margin of Solutions & Products (%)	12.4	5.1

Regional H1 performance

Asia Pacific
Demand recovery in India and a good order book in Australia helped to partially offset strong cost inflation and negative price over cost. Cement demand was softer in China and the Philippines compared to the first half of 2021, partially offset by expansion of the aggregates and ready-mix businesses in China.

Asia Pacific	H1 2022	H1 2021	±%	±%LFL
Sales of cement (mt)	35.3	35.8	-1.3	-1.3
Sales of aggregates (mt)	16.1	16.9	-4.7	-4.7
Sales of ready-mix concrete (m m3)	4.0	3.9	+2.8	+2.8
Net sales to external customers (CHFm)	3,098	2,998	+3.3	+4.0
Recurring EBIT (CHFm)	525	713	-26.4	-26.7
Recurring EBIT margin (%)	16.9	23.8

Europe
A good performance was delivered with strong price momentum and positive price over cost, offsetting inflation. Accelerated execution of green capex drove an increase in the use of alternative fuels. Growth was boosted by bolt-on acquisitions as well as the expansion of Solutions & Products.

Europe	H1 2022	H1 2021	±%	±%LFL
Sales of cement (mt)	20.1	22.2	-9.5	-0.4
Sales of aggregates (mt)	56.5	56.1	+0.7	-0.7
Sales of ready-mix concrete (m m3)	10.1	9.9	+2.2	+0.6
Net sales to external customers (CHFm)	4,223	3,886	+8.7	+13.4
Recurring EBIT (CHFm)	470	469	+0.3	+8.0
Recurring EBIT margin (%)	11.0	11.9

Latin America
Another quarter of strong profitable growth was delivered. Pricing was robust with good market demand, especially in Argentina and Colombia. The aggregates business expanded in Colombia, Ecuador and El Salvador and the use of alternative fuels showed a strong increase.

Latin America	H1 2022	H1 2021	±%	±%LFL
Sales of cement (mt)	13.3	13.3	-0.2	-0.2
Sales of aggregates (mt)	3.8	2.9	+32.2	+32.2
Sales of ready-mix concrete (m m3)	2.7	2.3	+20.3	+19.0
Net sales to external customers (CHFm)	1,464	1,269	+15.3	+14.9
Recurring EBIT (CHFm)	454	425	+6.7	+6.9
Recurring EBIT margin (%)	30.6	33.2

Middle East Africa
Strong ability to offset cost inflation resulted in positive price over cost. Solid market demand in Nigeria and Iraq was partially offset by softer demand in Egypt. The use of alternative fuels showed a strong increase. Strong growth in aggregates and ready-mix.

Middle East Africa	H1 2022	H1 2021	±%	±%LFL
Sales of cement (mt)	17.3	17.8	-3.1	-2.2
Sales of aggregates (mt)	2.2	2.0	+9.8	+10.7
Sales of ready-mix concrete (m m3)	1.8	1.4	+22.1	+8.1
Net sales to external customers (CHFm)	1,190	1,162	+2.4	+14.6
Recurring EBIT (CHFm)	199	198	+0.8	+17.9
Recurring EBIT margin (%)	15.4	16.2

North America
An outstanding performance was delivered led by double-digit growth. Market demand was excellent, supported by a significant contribution from the roofing business. Price momentum was also strong with a full order book and robust demand in all end-markets.

North America	H1 2022	H1 2021	±%	±%LFL
Sales of cement (mt)	10.0	9.1	+9.6	+9.6
Sales of aggregates (mt)	44.1	45.2	-2.3	-3.2
Sales of ready-mix concrete (m m3)	5.1	4.7	+10.3	+6.9
Net sales to external customers (CHFm)	4,414	2,984	+47.9	+19.0
Recurring EBIT (CHFm)	709	380	+86.4	+48.7
Recurring EBIT margin (%)	15.9	12.6

Reconciliation to Group accounts

Reconciling measures of profit and loss to the Holcim Group’s consolidated statement of income:

In million CHF	H1 2022 (unaudited)	H1 2021 (unaudited)
Net sales	14,681	12,556
Recurring operating costs	(11,728)	(9,834)
Share of profit of joint ventures	155	207
Recurring EBITDA after leases	3,107	2,928
Depreciation and amortization of property, plant and equipment, intangible and long-term assets	(934)	(945)
Recurring EBIT	2,173	1,983
Restructuring, litigation and other non-recurring assets	(18)	(175)
Impairment of operating assets	(88)	(13)
Operating profit	2,067	1,794

In million CHF	H1 2022 (unaudited)	H1 2021 (unaudited)
Recurring EBITDA	3,289	3,105
Depreciation of right-of-use assets	(182)	(176)
Recurring EBITDA after leases	3,107	2,928

In million CHF	H1 2022 (unaudited)	H1 2021 (unaudited)
Net income before impairment and divestments, Group share	1,304	881
Net income before impairment and divestments, non-controlling interests	145	233
Net income before impairment and divestments	1,449	1,114
Impairment of goodwill and long term assets*	(58)	(10)
Loss on disposals of Group companies*	(89)	(32)
Net income	1,302	1,072
EPS before impairment and divestments in CHF	2.14	1.43
*Adjustments disclosed net of taxation.

Reconciliation of Free Cash Flow after leases to the Holcim Group’s Consolidated Statement of Cash Flows:

In million CHF	H1 2022 (unaudited)	H1 2021 (unaudited)
Cash flow from operating activities	1,151	1,457
Purchase of property, plant and equipment	(743)	(519)
Disposal of property, plant and equipment	48	51
Repayment of long-term lease liabilities	(181)	(176)
Free Cash Flow after leases	275	814

Reconciliation of Net financial debt to the Holcim Group’s consolidated statement of financial position:

In million CHF	H1 2022 (unaudited)	H1 2021 (unaudited)
Current financial liabilities	3,174	2,536
Long-term financial liabilities	15,199	13,465
Cash and cash equivalents	(4,399)	(3,465)
Short-term derivative assets	(322)	(63)
Long-term derivative assets	(287)	(36)
Net financial debt	13,365	12,438

Non-GAAP definitions

Some non-GAAP measures are used in this release to help describe the performance of Holcim. A full set of these non-GAAP definitions can be found on our website.

Measures	Definition
Like-for-like	Factors out changes in the scope of consolidation (such as divestments and acquisitions occurring in the current and the prior year) and currency translation effects (current year figures are converted with prior-year exchange rates in order to calculate the currency effects).
Recurring operating costs	It is defined as: +/- Recurring EBITDA after leases - Net sales and - Share of profit of joint ventures.
Recurring EBITDA	It is defined as: +/– Operating profit/loss (EBIT) - Depreciation, amortization and impairment of operating assets and - Restructuring, litigation and other non-recurring costs.
Recurring EBITDA after leases	The Recurring EBITDA after leases is defined as Recurring EBITDA less the depreciation of right-of-use assets.
Recurring EBIT	The Recurring EBIT is defined as Operating profit/loss (EBIT) adjusted for restructuring, litigation and other non-recurring costs and for impairment of operating assets.
Recurring EBIT Margin	Recurring EBIT divided by net sales.
Restructuring, litigation and other non-recurring costs	Significant items that, because of their exceptional nature, cannot be viewed as inherent to the Group's ongoing performance, such as strategic restructuring, major items relating to antitrust fines and other business-related litigation cases.
Profit/loss on disposals and other non-operating items	Comprises capital gains or losses on the sale of Group companies and of material property, plant and equipment and other non-operating items that are not directly related to the Group's operating activities such as revaluation gains or losses on previously held equity interests, indemnification provisions, disputes with non-controlling interest and major lawsuits.
Operating profit/loss (EBIT) before impairment	It is defined as: +/- Operating profit/loss - Impairment of goodwill and long-term assets.
Net income before impairment and divestments	It is defined as: +/- Net income/loss - Gains and losses on disposals of Group companies and - Impairment of goodwill and long-term assets.
EPS (Earnings Per Share) before impairment and divestments	It is defined as: Net income/loss before impairment and divestments attributable to the shareholders of Holcim Ltd divided by the weighted average number of shares outstanding.
“Capex” or “Capex Net” (Net Maintenance and Expansion Capex)	It is defined as: + Expenditure to increase existing or create additional capacity to produce, distribute or provide services for existing products (expansion) or to diversify into new products or markets (diversification) + Expenditure to sustain the functional capacity of a particular component, assembly, equipment, production line or the whole plant, which may or may not generate a change of the resulting cash flow – Proceeds from sale of property, plant and equipment.
Free Cash Flow after leases	It is defined as: +/– Cash flow from operating activities – Net Maintenance and expansion Capex and – Repayment of long-term lease liabilities.
Cash conversion	Cash conversion is defined as: Free Cash Flow after leases divided by Recurring EBITDA after leases.
Green Capex	The Sustainability Capital Expenditures with significant positive impact on Process Decarbonization, Clean Energy, Carbon Efficient Construction, Circular Economy, Biodiversity, Air & Water and Communities such as but not limited to carbon capture, waste heat recovery, 3D printing, electrical fleet, calcined clay technology, alternative fuels & raw materials installations.
Construction and Demolition Waste (CDW) Recycled	CDW Recycled volume is generated from construction, renovation, repair and demolition of houses, large building structures, roads, bridges, piers and dams. This includes alternative raw materials, recycled aggregates, asphalt and return concrete reused in Cement, Aggregates, Ready-mix concrete, Asphalt and Concrete Products.
Net financial debt (“Net debt”)	It is defined as: + Financial liabilities (short-term and long-term) including derivative liabilities – Cash and cash equivalents – Derivative assets (short-term and long-term).
Debt leverage	The Net financial debt to Recurring EBITDA ratio is used as an indicator of financial risk and shows how many years it would take the Group to pay back its debt.
Invested Capital	It is defined as: + Total shareholders’ equity + Net financial debt – Assets classified as held for sale + Liabilities classified as held for sale – Current financial receivables and – Long-term financial investments and other long-term assets
Net Operating Profit/loss After Tax (“NOPAT”)	It is defined as: +/– Net Operating Profit/loss (being the Recurring EBIT and share of profits of associates) – Standard Taxes (being the taxes applying the Group's tax rate to the Net Operating Profit/loss as defined above)
ROIC (Return On Invested Capital)	It is defined as: Net Operating Profit/loss After Tax (NOPAT) divided by the average Invested Capital. The average is calculated by adding the Invested Capital at the beginning of the period to that at the end of the period and dividing the sum by 2 (based on a rolling 12-month calculation). In case of material change in scope during the year, the opening invested capital is adjusted pro rata temporis.
Working Capital days on sales (countback method)	The Working Capital days on sales is an efficiency ratio which measures the level of trade accounts receivable, trade accounts payable and inventories in comparison to sales of the current month and the previous months until the respective balance is covered. It is defined as: + Days sales outstanding; + Days inventories outstanding; – Days payables outstanding.
Ton	Ton refers to a Metric ton, or 1,000 kg.

Additional information

As announced in March 2022, Holcim has initiated the process to exit the Russian market. Effective from 1 March 2022, Russia is excluded from Holcim's main business performance indicators.

Non-GAAP definitions
Some non-GAAP measures are used in this release to help describe the performance of Holcim. A full set of these non-GAAP definitions can be found on our website.

Analyst presentation
The analyst presentation of the Half-Year 2022 Results is available on www.holcim.com.

Media conference: 09:00 CEST | Analyst conference: 10:00 CEST

Switzerland: +41 (0) 58 310 50 00
France: +33 (0) 1 7091 8706
Germany: +49 (0) 69 505 0 0082
UK: +44 (0) 207 107 06 13
US: +1 (1) 631 570 56 13

The media conference at 09:00 am CEST and analyst’s conference at 10:00 am CEST will be held by phone.

In order to participate in the analyst’s conference, please go to https://www.holcim.com/investors.

About Holcim
Holcim builds progress for people and the planet. As a global leader in innovative and sustainable building solutions, Holcim is enabling greener cities, smarter infrastructure and improving living standards around the world. With sustainability at the core of its strategy Holcim is becoming a net zero company, with its people and communities at the heart of its success. The company is driving circular construction as a world leader in recycling to build more with less. Holcim is the company behind some of the world’s most trusted brands in the building sector including ACC, Aggregate Industries, Ambuja Cement, Disensa, Geocycle, Holcim, Lafarge and Malarkey Roofing Products. Holcim is 70,000 people around the world who are passionate about building progress for people and the planet through four business segments: Cement, Ready-Mix Concrete, Aggregates and Solutions & Products.

Learn more about Holcim on www.holcim.com, and by following us on LinkedIn and Twitter.

Important disclaimer – forward-looking statements:
This document contains forward-looking statements. Such forward-looking statements do not constitute forecasts regarding results or any other performance indicator, but rather trends or targets, as the case may be, including with respect to plans, initiatives, events, products, solutions and services, their development and potential. Although Holcim believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions as at the time of publishing this document, investors are cautioned that these statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are difficult to predict and generally beyond the control of Holcim, including but not limited to the risks described in the Holcim's annual report available on its website (www.holcim.com) and uncertainties related to the market conditions and the implementation of our plans. Accordingly, we caution you against relying on forward-looking statements. Holcim does not undertake to provide updates of these forward-looking statements.

This document contains inside information within the meaning of the Market Abuse Regulation (EU) (No 596/2014).

______________________
¹ After leases
² after leases (does not include the impact from the divestment of India)

View source version on businesswire.com: https://www.businesswire.com/news/home/20220726006132/en/

Media Relations:

media@holcim.com

+41 (0) 58 858 87 10

Investor Relations:

investor.relations@holcim.com

+41 (0) 58 858 87 87

Source: Holcim