On Tuesday, Citi reaffirmed its Buy rating on Holcim Ltd (SIX:HOLN:SW) stock with a steady price target of CHF95.00. The cement giant adjusted its full-year sales growth forecast from a previous expectation of over 6% growth in local currency to a low-single-digit percentage. The revision reflects a slight decline in like-for-like sales of 0.3% in the first half of the year, influenced by weather-related challenges.
Management at Holcim anticipates positive organic growth for 2024, but they project a greater contribution from mergers and acquisitions (M&A) than from organic growth within the updated guidance.
The original guidance included a 2% growth from M&A, suggesting organic growth could be between 0 to 1% for the year. Despite the tempered sales outlook, the company has uplifted its margin guidance from 18.0% to above 18.5%.
The company's pricing power remains strong across all markets, with potential price increases in selected areas. However, significant price hikes are not expected until the first quarter of the next year.
The analyst suggests that the rate of price increases is likely to return to the patterns seen before 2022, which typically involved once-a-year adjustments aligned with low-single-digit inflation, a shift attributed to easing energy costs and subdued volumes.
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