By John Revill
ZURICH, January 29 (Reuters) – Holcim HOLN.S Chief Executive Jan Jenisch on Monday outlined his company’s planned North American operation of the Swiss building materials firm. rotates as “rock star business” next year.
He may be right, analysts and investors say, though he may be right about the business he wants to list in New York next year at a $30 billion valuation.
On Sunday, Holcim announced it was divesting 100% of its North American business in the biggest shakeup at the cement maker since it bought French rival Lafarge in 2015.
Its shares rose 4.7%, making Holcim the second best performer among European stocks on Monday .STOXX.
Its largest shareholder, a member of the company’s founding family and former chairman, Thomas Schmidheiny, announced the transaction. followed “industrial logic”.
The division, which currently has sales of $11 billion, has been a star performer for Holcim in recent years, growing sales by an average of 20% per year.
A number of big-ticket items helped purchases operating profit, especially in roofing, has also increased sharply.
The company, which also supplies cement and aggregates, now wants to increase annual sales to $20 billion by 2030, mostly through organic growth and smaller acquisitions.
Doing deals in dollars would be an advantage, Jenisch said.
With 850 sites and 16,000 employees, Holcim has the scale to succeed in the vast U.S. building materials market, where an ever-growing population will provide market opportunities, unlike China’s shrinking population, analysts say.
The company has already identified a potential market of $175 billion for its products in North America.
Growth spurred by President Joe Biden’s Infrastructure Investment and Jobs Act and the Inflation Reduction Act will free up spending to help rebuild America’s battered airports, bridges and roads, as well as support U.S. manufacturing as the refinancing trend continues.
More than 100 infrastructure projects have already been secured, and Jenisch allayed concerns that those programs could be derailed if Biden loses this year’s presidential election.
Regardless of who occupies the White House, Jenisch said Biden and his likely opponent, Donald Trump, both have similar economic policies.
“This re-industrialization of the United States started with the previous president, and while the current president and the previous president may seem like different people, their economic policies are very consistent,” he said.
U.S. single-family homebuilding rose to a 1-1/2-year high in November and could gain further momentum as lower mortgage rates and builder incentives are likely to lure potential buyers back into the housing market.
Analysts say the long-term outlook for the business looks good.
Bank Vontobel analyst Mark Diethelm said, “Holcim’s North American operations have been successful in recent years and as a stand-alone business, it has the chance to be more agile and more successful, especially with American management and an American Board of Directors.”
Jenisch, who is due to step down as CEO at the end of April but remains Holcim’s chairman, has been tasked by the board to lead the planned US listing in the coming months.
Martin Huesler of Zuercher Kantonalbank said Jenisch’s track record and the company’s strong performance in North America bode well for the independent business.
“Undoubtedly, Holcim’s expectations are ambitious, but to date CEO Jan Jenisch has never disappointed,” he said.
(Reporting by John Revill Editing by Tomasz Janowski)
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