Holcim values ​​ billion with North American business listing, selects new CEO

Holcim values ​​$30 billion with North American business listing, selects new CEO

The company, which is one of the world’s largest cement producers, said that Miljan Gutovic, who is currently the head of Holcim for Europe, will replace Jan Yenis as CEO from May 1.

In the biggest shakeup at Holcim since the Swiss company took over French rival Lafarge in 2015, the deal is set to close in the first half of 2025.

“Our North American business is a real rock star. We’ve doubled the company in just the last four years through strong organic growth, acquisitions. We have leading margins, EBITDA margin is now over 27%,” Jenisch told CNBC on Monday. .

“Now I am happy that we can start the next level of performance to bring the business to $20 billion in sales. We want to separate it to focus more on North American customers and get all the synergies from our supply chain.”

Jenisch told reporters that the split could value the new company at about $30 billion, with Holcim retaining no stake.

“We will fully demerge our North American business from the capital market, so we will list 100% of the business on the New York Stock Exchange,” said Jenisch, who is confident of shareholder support for the flotation.

Holcim’s operating model is already focused on North America, with five R&D centers in the region, Jenisch told CNBC. He added that the company sees “minimal implementation costs” of the spin-off.

The company said the U.S. business aims to grow annual sales to $20 billion from about $11 billion now and generate operating profit of more than $5 billion by 2030.

Holcim’s remaining global business – in Europe, Latin America, Africa and Asia – will remain listed on Switzerland’s blue-chip SMI index and focus on building solutions such as roofing products.

Jenisch, who has led Holcim since 2017, will remain chairman and lead a planned listing in the U.S., where the building materials company trades at a much higher yield than in Europe, potentially boosting its valuation.

Analysts were bullish on the listing, which would be one of the largest in the construction industry for many years.

“As transatlantic synergies are limited, this makes sense to me,” said Martin Huesler, an analyst at Zuercher Kantonalbank.

“US building material prices are higher than Holcim, so I see that as a positive.”

The transaction had been planned for a long time and came about because Holcim felt its North American business was undervalued compared to peers such as Carlisle, RPM and James Hardy, a person familiar with the matter said.

Holcim North America was trading at just 7 times operating earnings, well below its peers’ 10-15 times.

Describing the US as one of the world’s most attractive construction markets, Jenisch said the move would help the new company take advantage of the region’s infrastructure and construction boom.

Holcim is the largest cement producer in North America, employing 16,000 people at 850 sites. The business competes in the region with companies such as Carlisle and RPM in building products and solutions, and Eagle Materials and Summit Materials in the cement industry.

The North American business accounted for a quarter of Holcim’s sales in the first nine months of 2023 and has also been the company’s most profitable region, with sales growing by more than 20% on average in recent years. The remaining Holcim business will have sales of approximately 17 billion Swiss francs ($19.69 billion) and employ 48,000 people.

Jenisch said the US operations were “too successful to be run as a subsidiary”.

CNBC’s Jenny Reid contributed to this report.

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