Holcim raises earnings forecast after Q3 profit beats expectations

By John Revill

ZURICH, Oct 23 (Reuters) - Swiss cement maker Holcim raised its full-year earnings forecast on Friday after reporting better-than-expected quarterly sales and profit as it sold more higher-margin low-carbon products.

The upgrade, the company's second this year, sent its shares 5.5% higher, on course for their biggest daily gain since early April.

The results for one of the world's biggest construction materials companies give an insight into the broader building industry.

Holcim posted a 27% increase in sales of building solutions products — roofs, walling and flooring — which are highly profitable when sold as a package of products to builders and are less capital-intensive to produce.

The company increased its profit margin in the three months to September 30, pushing recurring operating profit 17% higher to 976 million Swiss francs ($1.2 billion). 

That beat analysts' forecast of 949 million francs in a company-compiled consensus, while sales of 4.66 billion francs also beat estimates.

Holcim said it now expects full-year recurring operating profit to increase 10%-12%, up from a previous forecast of 10% growth.

The company has improved its performance by selling more low-carbon cement and concrete, and increasing its usage of recycled building materials.

"We are scaling up our sustainable offering," CEO Miljan Gutovic told reporters. "On these products we do have a modest pricing premium, but we also do have a cost upside."

Takeovers were also helping, he added.

"In the last five, five and a half years, we have done more than 100 value-accretive deals where we are investing in the most attractive markets and we are exiting or scaling down from the markets that are not so attractive for us in the long term," Gutovic said.

Looking to 2027, infrastructure spending would remain strong, he added, although a recovery in the European housing market depended on how interest rates developed.

"The raised EBIT growth guidance was expected and consensus already sits there, but fears of a potential downward revision had flared up recently and proved unfounded, so today's solid Q3 and guidance hike should be taken positively," said Bank Vontobel analyst Mark Diethelm.

($1 = 0.8209 Swiss francs)

(Reporting by John Revill. Editing by Sonia Cheema and Mark Potter)