Holcim: Strong Performance and Successful Transformation in 2022
Topic of the day
Swiss building materials firm Holcim Group (HCMLY.PK, HCMLF.PK) reported Friday that its fiscal 2022 net income Group share reached 3.31 billion Swiss francs, up 44 percent from last year's 2.30 billion francs. Earnings per share were 5.48 francs, a growth of 47 percent from 3.73 francs a year ago. Adjusted earnings per share were 3.66 francs, compared to 3.98 francs last year. Adjusted earnings per share before the resolution with the US Department of Justice increased 24.6 percent at 4.96 francs. Net sales of 29.19 billion francs for 2022 grew 8.8 percent from last year's 26.83 billion francs. Sales were up 12.9 percent on a like-for-like basis. In the fourth quarter, recurring EBIT dropped 6.2 percent from last year to 1.03 billion francs, and net sales fell 7.6 percent from last year to 6.46 billion francs. Further, the Board of Directors proposed a 14 percent increase in dividend to 2.50 francs per registered share. The company also confirmed its strong 2023 outlook. Separately, Holcim announced that Beat Hess, Chairman of the company since 2016, has decided not to seek re-election to the Board of Directors at the AGM in May 2023. The Board intends to propose Jan Jenisch as the new Chairman at the AGM. Subject to the vote, he will succeed as the Chairman and continue as CEO of Holcim for a limited duration.
The Swiss stock market was unable to hold early gains on Thursday, quickly turning lower and writing a finish to the four-day winning streak in which it had advanced more than 100 points or 1 percent. The SMI lost 0.5 per cent to 11,248 points. Among the 20 SMI stocks, there were twelve price gainers and seven price losers; Swiss Life shares closed unchanged. 38.51 (previously: 38.41) million shares were traded. Traders explained the losses of the Swiss benchmark index by the fact that the SMI is comparatively expensive with a P/E ratio of about 18. A market participant also referred to the three heavyweights in the index and their business figures: "Of those, only Nestle reported well, Roche negatively and Novartis neutrally," he said, pointing to the reporting season. Nestle lost 1.5 per cent, Novartis 0.8 per cent and Roche 0.8 per cent. Technology stocks got a boost from US chipmaker Nvidia, which released surprisingly strong numbers and an optimistic outlook. Logitech added 1.7 per cent and AMS-Osram 3.8 per cent. Credit Suisse (+2.1 per cent) continued to rally and UBS shares gained 0.9 per cent. On the day before cement producer Holcim presented its figures, its shares closed 0.3 per cent higher.
The major European stock markets were a study in contrasts on Thursday as France and Germany opened higher and stayed that way throughout, while the UK started in the red and finished the same way. Even though the minutes from the recent meeting of the U.S. Federal Reserve minutes contained few surprises, investors were hesitant to take long positions as the markets continued their weeklong trend of mixed and little changed. The Stoxx Europe 600 index gained 0.1% to 462.5 points. In Paris, the CAC 40 and SBF 120 indices gained 0.3% each, supported by good publications, notably from the insurer Axa. The DAX 40 index in Frankfurt ended up 0.5%, while the FTSE 100 in London gave up 0.3%. The eurozone consumer price index rose 8.6% year-on-year in January, compared with an initial projection of 8.5%. The index had risen by 9.2% in December. The insurer Axa (+3.2%) announced the launch of a €1.1 billion share buyback programme as well as an increased dividend, and raised its earnings outlook. IT services company Sopra Steria (+7.7%) is targeting a slight increase in its operating margin rate for 2023, after meeting or exceeding its targets for 2022. The group has also improved its dividend by 34.5% to €4.3 per share. Fnac Darty jumped 7.7%. Czech billionaire Daniel Kretinski is considering a takeover of the cultural products and household appliances retailer, of which he already owns 20%, BFM TV reported on Thursday. Nexity shares fell 9.1% as investors worried about the property developer's bleak outlook. Orpea (-5.5%) announced that the amicable conciliation procedure which was opened in October 2022 by the president of the specialised commercial court in Nanterre and was due to end on 25 February had been extended for a further month, until 25 March. The British engine manufacturer Rolls-Royce (+23% in London) announced a strategic review of its activities and a transformation plan to improve its results.
U.S. stocks rebounded from early losses Thursday, snapping a days-long selloff in the S&P 500 that was driven by concerns about the trajectory of interest rates. The S&P 500 climbed 21.27 points, or 0.5%, to 4012.32, breaking its longest losing streak this year. The Dow Jones Industrial Average rose 108.82 points, or 0.3%, to 33153.91 after initial declines. The Nasdaq Composite gained 83.33 points, or 0.7%, to 11590.40. Nvidia, one of the index’s biggest constituents, surged $29.10, or 14%, to $236.64. The semiconductor company said late Wednesday that it is expecting an AI-driven boom and a recovery in its videogame business. Data released Thursday showed the labor market remains historically tight. Initial jobless claims, a proxy for layoffs, decreased by 3,000 to a seasonally adjusted 192,000 last week, well below the 2019 prepandemic average, according to the Labor Department data. In corporate news, Wayfair shares dropped $11.48, or 23%, to $38.33. The online furniture retailer said it lost 5 million customers in 2022 and posted an annual net loss of $1.3 billion. Domino’s Pizza cut its sales-growth outlook and posted fourth-quarter revenue that missed expectations. Shares of the pizza-delivery company dropped $40.60, or 12%, to $307.86. Moderna’s stock slid $10.60, or 6.7%, to $147.57 after the drugmaker reported lower quarterly revenue and earnings, as demand for its Covid-19 vaccine fell. Shares of other semiconductor companies followed Nvidia higher, with Advanced Micro Devices gaining $3.14, or 4.1%, to $79.75.
Asian stocks were mixed. China’s benchmark Shanghai Composite edged up 0.6%, while Hong Kong’s Hang Seng declined 1.3% and Japan’s Nikkei 225 index added 1.2%. In Hong Kong, reference is made to the disappointing business figures of the online retail giant Alibaba Group (-4.3%). In Japan, although the core inflation rate shot up to its highest level in 41 years in January, the incoming governor of the Bank of Japan anticipates a decline and does not believe an interest rate hike will be necessary. Meanwhile, South Korea's Kospi sheds 0.6%.
Long-dated U.S. government debt yields finished the New York session lower on Thursday as traders and analysts continued to assess whether “higher for longer” interest-rate expectations have gone a bit too far. The 10-year Treasury note eased by 4 basis points to 3.887%. The 2-year Treasury note ended virtually unchanged at 4.699%.
Rating Dormakaba: Jefferies lifts to Buy (Hold) - Target 500 (530) SFR
Rating Cosmo: Credit Suisse downgrades to Neutral (Outperform) - Target 68 (70) SFR
Rating Straumann: UBS upgrades to Neutral (Sell) - Target 126 (96) SFR
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