Holcim's Strategic Spinoff Positions It as a Tariff-Proof Play in Building Materials

In an era of escalating trade tensions and unpredictable tariff policies, companies are being forced to adapt or risk obsolescence. While tech giants like HP and Best Buy grapple with tariff-driven margin pressures, Holcim (HOLN.SW) has engineered a bold move to insulate itself: spinning off its North American business into Amrize, a standalone entity poised to dominate the U.S. construction market. This strategic maneuver not only capitalizes on domestic infrastructure growth but also shields the firm from cross-border trade headwinds. Here's why investors should consider Holcim a defensive cornerstone for their portfolios.

The Amrize Play: Localized Growth Amid Global Chaos

Holcim's decision to spin off Amrize by mid-2025 is a masterclass in corporate agility. By carving out its North American operations—a $11.7 billion revenue engine—Holcim is positioning Amrize as the largest U.S.-focused building solutions provider, with a 100% focus on regional demand. This move isn't just about geographic specialization; it's a deliberate shield against trade volatility.

Amrize's localized supply chain—spanning 1,000 facilities and 19,000 employees across the U.S. and Canada—reduces reliance on imported materials vulnerable to tariffs. Unlike global peers, Amrize's products (cement, aggregates, roofing systems) are sourced and manufactured domestically, minimizing exposure to the Trump administration's 2025 tariff hikes, including 10% blanket duties and sector-specific levies. CEO Miljan Gutovic emphasized this resilience: “We're a local business in the U.S., producing locally. Tariffs won't disrupt our plans.”

Contrast with the Tech Sector: HP's Struggles Highlight Holcim's Edge

While Holcim is doubling down on domestic operations, tech firms like HP (HPQ) are scrambling. HP's Q1 2025 earnings revealed tariffs shaving $0.12 off EPS, with margins compressed by 100 basis points. Despite shifting production to Vietnam, Mexico, and India, HP's tariff mitigation efforts remain incomplete. The company now faces a 12.5% reduction in full-year EPS guidance, underscoring the risks of global supply chains in a fragmented trade landscape.

HP's plight contrasts starkly with Holcim's strategy. Unlike HP, Amrize doesn't depend on complex, tariff-prone cross-border logistics. Its vertically integrated model—controlling everything from quarries to finished building products—ensures cost stability and operational control.

Best Buy's Retail Woes: A Cautionary Tale

Even retail giants aren't immune. Best Buy (BBY) reported that 30-35% of its COGS still originate from China, despite vendor diversification efforts. Tariffs on electronics and appliances have forced price hikes, squeezing margins. While Best Buy's mitigation strategies—like shifting sourcing to Vietnam and Mexico—are steps forward, they've yet to fully offset costs.

Holcim avoids this vulnerability entirely. Amrize's materials are sourced and produced within its core market, eliminating reliance on high-tariff regions. This “build local, sell local” model isn't just resilient—it's a moat in an era of trade uncertainty.

Why Amrize is Built for Turbulence

1. Market Leadership: As North America's largest building solutions provider, Amrize commands scale in infrastructure, residential, and commercial projects.
2. Financial Fortitude: With $3.2 billion in 2024 EBITDA and $5.1 billion in committed financing, Amrize has the capital to invest in innovation (e.g., advanced insulation, low-carbon cement) while maintaining investment-grade credit.
3. Tariff Mitigation by Design: Its U.S. supply chain inherently avoids the risks faced by global manufacturers.

Risks and Reassurances

Critics may point to regulatory hurdles or macroeconomic slowdowns in construction. Yet Amrize's investor day (March 25, 2025) emphasized $8 billion in cumulative free cash flow through 2028, signaling confidence in demand resilience. Meanwhile, Holcim's spin-off timeline remains on track, with shareholder approval secured in May 2025.

The Bottom Line: Holcim is the Building Materials Sector's Safe Harbor

In a world where tariffs and trade wars are the new normal, Holcim's Amrize spinoff exemplifies strategic corporate agility. Unlike tech and retail peers, it's insulated by localization, scale, and financial strength. With U.S. construction spending projected to hit $2 trillion annually, Amrize is positioned to thrive.

For investors seeking stability in volatile markets, Holcim isn't just a play on construction growth—it's a hedge against trade chaos. With Amrize's IPO imminent, now is the time to secure a stake in a company engineered to outlast the storm.

Action Item: Consider adding Holcim (HOLN.SW) to your portfolio as a defensive play in the building materials sector. Its spinoff of Amrize represents a rare combination of growth and risk mitigation in an unpredictable global economy.