Swiss building materials company Holcim (GB:0QKY) is planning the spin-off and U.S. listing of its North American unit. The rapidly growing North American business’ valuation is expected to be over $30 billion. Separately, Holcim named Miljan Gutovic as its new CEO, effective May 1, 2024. Gutovic will succeed Jan Jenisch, who will continue as the chairman of the board.
Jenisch will be responsible for the planned listing of the company’s North American business, which is expected to be completed in the first half of 2025.
More on Holcim’s Spin-Off Plans
Holcim has a solid presence in the U.S., with around 350 sites in 43 states and 7,000 employees. The company is one of the leading suppliers of cement and other building materials in North America. Holcim’s North American business contributed 35% of its overall sales of CHF29 billion in 2022, with the company expressing optimism that this proportion could increase to 40% in 2023.
Holcim highlighted that its North American business has grown at an average annual rate of more than 20% in the past four years, with an “over-proportional” average EBIT (earnings before interest and tax) growth of over 26%. The North American unit expects to pursue an accelerated growth strategy and aims to generate net sales of over $20 billion and EBIT of more than $5 billion by 2030.
Overall, Holcim believes that its North American business is well-positioned to leverage the increased infrastructure spending by the U.S. government. The spin-off decision is expected to unlock the value of the lucrative North American business as an individual entity. The company’s business in Europe, Latin America, Africa, and Asia will continue to be listed on the Swiss SMI index.
Is Holcim a Good Stock to Buy?
Analysts are sidelined on Holcim stock, with a Hold consensus rating based on two Buys and nine Holds. The Holcim share price target of CHF66.13 implies a modest upside potential of 3.1%. Shares have risen more than 22% in the past year.
