Holcim AG: A High-Yield, Sustainable Growth Story Post-North America Spin-Off

Holcim AG (SIX: HOLN) has emerged as a compelling case study in strategic repositioning and margin expansion within the construction materials sector. Following the successful spin-off of its North American business into the independent entity Amrize (AMRZ) on June 23, 2025, the Swiss multinational has refocused its energy on Europe, Latin America, and Asia/Middle East/Africa—markets where its high-value, sustainability-driven strategy is generating robust returns. For long-term investors seeking ESG-aligned exposure to a sector poised for structural growth, Holcim's post-spin-off trajectory offers a rare combination of profitability, resilience, and environmental stewardship.

Margin Expansion and EBIT Growth: A Testament to Strategic Discipline

Holcim's first-half 2025 results underscore the power of its post-spin-off repositioning. Recurring EBIT surged by 10.8% in local currency, with a margin expansion of 90 basis points to 18.3%. This outperformance was driven by a dual focus on decarbonization and circular construction, which have not only reduced costs but also created premium pricing power. For instance, the share of low-carbon ECOPact concrete in ready-mix sales climbed to 31% in H1 2025, up from 25% in the prior year, while ECOPlanet cement sales reached 35% of total cement sales.

Regionally, the margin expansion was even more pronounced. In Europe, recurring EBIT rose 6.1% in local currency, supported by 130 basis points of margin improvement to 15.4%, as eight value-accretive acquisitions in Building Materials and Building Solutions strengthened its position in high-growth markets like Serbia and France. Meanwhile, Asia/Middle East/Africa delivered a double-digit EBIT increase and a 200-basis-point margin expansion, fueled by strong demand for sustainable products in North Africa and infrastructure tailwinds in Australia.

Strategic Acquisitions and Market-Specific Growth Drivers

Holcim's NextGen Growth 2030 strategy has been instrumental in unlocking value post-spin-off. The company executed 11 value-accretive transactions in 2025 alone, including:
- Europe: Acquisitions of Tribex (Serbia), Klokotnitsa IM EOOD (Bulgaria), and SA.RE.MER (France) to bolster aggregates and insulation solutions.
- Latin America: Expansion of Disensa, its retail franchise, with 170 new stores in Peru and Argentina, alongside infrastructure-driven demand in Mexico.
- Asia/Middle East/Africa: Strategic entry into circular construction markets, with a 35% increase in recycled construction demolition materials compared to 2024.

These moves are not just geographic diversification—they are tailored to capitalize on regional trends. In Latin America, for example, Holcim's retail expansion aligns with urbanization and housing demand, while in Asia, its focus on near-zero carbon cement (via projects like the EU-backed OLYMPUS in Greece) positions it to meet regulatory and consumer demands for sustainability.

Sustainability as a Profit Center

Holcim's ESG strategy is no longer just a compliance exercise—it is a core driver of financial performance. By 2030, the company aims to produce 8 million tons of near-zero carbon cement annually, a goal accelerated by projects like OLYMPUS, which alone will produce 2 million tons per year. This aligns with global decarbonization mandates and creates a competitive moat: customers are willing to pay a premium for sustainable materials, and Holcim's margin expansion in H1 2025 reflects this.

Moreover, Holcim's ESG ratings reinforce its appeal to institutional investors. It holds an “AA” rating from MSCI, an “A” score for climate action from CDP, and a “Prime” status from ISS ESG. These accolades are critical in a sector where ESG performance increasingly dictates capital allocation.

Investment Thesis: A Resilient, ESG-Aligned Play

Holcim's post-spin-off strategy is creating a virtuous cycle: sustainability drives premium pricing, disciplined M&A fuels margin expansion, and diversified geographies insulate against macroeconomic volatility. With full-year 2025 guidance calling for 6–10% recurring EBIT growth in local currency and free cash flow of CHF 2 billion, the company is well-positioned to deliver shareholder returns while advancing its decarbonization agenda.

For investors, the case is clear. Holcim's repositioning has transformed it from a commodity play into a high-margin, ESG-focused leader. Its NextGen 2030 targets—including 3%–5% net sales growth and 50% of sales from sustainable offerings by 2030—offer a roadmap for sustained outperformance.

Conclusion: A Long-Term Bet on Sustainable Construction

Holcim AG's post-spin-off evolution is a masterclass in strategic repositioning. By aligning its growth with sustainability, it has unlocked margin expansion, geographic diversification, and ESG leadership. For investors seeking a resilient, high-yield exposure to a sector undergoing a green revolution, Holcim presents a compelling long-term opportunity. The construction materials industry is no longer a low-margin commodity business—it's a battleground for sustainability innovation, and Holcim is leading the charge.