Holcim (HOLN.S) was the biggest gainer among European construction stocks on Wednesday after the world’s biggest cement maker beat earnings forecasts and raised its full year sales outlook.
The Swiss group successfully offset higher energy costs which have been a worry for other companies, adding it expected demand from the construction industry to be unaffected by rising interest rates.
Chief Executive Jan Jenisch said the company had seen “super growth momentum” which he expected would continue in the second half of the year.
“We had even better growth in the second quarter than in the first, and if you look where the growth comes from, it’s our Holcim business with cement, aggregates and concrete,” Chief Executive Jan Jenisch told reporters.
“The other half of the growth comes from our newly acquired companies, especially in roofing systems. We don’t see a slowdown in our markets, especially the U.S. where we have record numbers and double-digit sales growth organically.”
Holcim now expects its full-year sales to grow 10% this year on a like-for-like basis which excludes the impact of currencies and portfolio changes. Its previous forecast was 8%.
The brighter outlook and strong performance in the second quarter sent the company’s shares 5.25% higher in early trading, making Holcim the top gainer in the Stoxx Europe 600 Construction and Materials Index. (.SXOP)
Jenisch, who has led Holcim since 2017, said rising global interest rates posed little threat for now.
“It is a modest interest rate, it is stepping up, but it’s been at historically low levels. So it’s not concerning for us at the moment,” he said.
Energy costs rose more then 40% in the first six months compared with a year earlier.
Overall costs were 14% higher as the company also spent more on logistics and maintenance, but this was offset by efficiency measures, extra volumes and price rises of 12%, the CEO said.
“Demand is still strong because of still strong commercial, residential and infrastructure construction and weather conditions were rather favourable,” Vontobel analyst Bernd Pomrehn said.
“And when everyone is talking about inflation, customers obviously accept price increases.”
Holcim’s second-quarter net sales rose 14% to 8.24 billion Swiss francs ($250 million), beating forecasts for 7.94 billion francs in a company-provided consensus of analyst estimates.
Recurring operating profit rose 7.2% to 1.56 billion francs, beating forecasts of 1.42 billion.
($1 = 0.9617 Swiss francs)