Holcim Ltd

Good morning and welcome to the analyst and investor webcast for Holcim's third quarter 24 trading update. My name is Bernd Pommerin and I'm pleased to welcome Miljan Gutovic, our CEO, and Stefan Kindler, our CFO, who are with me in the room today. After their financial presentations, you will have the opportunity to ask your questions. In order to guarantee a smooth flow, please use either your phone or the webcast to ask your questions. We will now show a short movie where you can see how you can address your questions.

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And with this short intro, I hand directly over to Miljan. Miljan, please.

Good morning. Thank you, Bern. Good morning to all of you. And a warm welcome to Holtzim's Trading Update. Stefan and I are pleased to be with you today to present our results. And we will turn it over to you afterwards for your questions. Once again, we have achieved an industry-leading earnings profile with broad-based growth drivers and our resilient business model delivering a record recurring EBIT and record EBIT margin. To start with, let me take you through the key highlights. In the third quarter, we delivered record recurring EBIT of 1.67 billion with a record margin of 23.5%. This outstanding performance is driven by strict focus on strategic priorities combined with impeccable execution delivered by Holcim's 64,000 employees. Our value strategy with our high value solutions is playing out perfectly in this environment and continues to deliver industry leading performance. Our industry leading performance in EBIT growth and EBIT margin expansion clearly demonstrate that our business model is resilient in all market conditions and economic cycles. In Q3, Holcim disciplined M&A execution continued with another six value accretive acquisitions in the most attractive markets. And in circular construction, we accelerated our expansion of our technology eco-cycle with a 23% increase in recycling of construction and demolition materials. Finally, a few words about the market dynamics. Fundamental demand across all our key markets remains positive despite some challenging weather conditions in Q3 in US, Mexico and Europe. When it comes to North America, the outlook is robust with demand in U.S. driven by continued federal and state investment program, reindustrialization and reshoring. Just this week, there was another announcement by the U.S. Department of Transportation of more than $4 billion in additional infrastructure investments. We also see increasing demand in re-roofing, particularly as a result of adverse weather events. With our strong North American footprint of over 850 operational sites and with our leading market positions, we tend to benefit disproportionately. Similarly, in Europe as well as other regions, we expect robust demand in infrastructure activity to continue. Industrial facilities, data centres, transportation and energy transition projects. These are supported by significant investments from government funding programmes, reshoring and also nearshoring. Executing on our strategic priorities, we are committed to delivering another record year of results in 2024. Now let's look at these highlights in more details. First, let's look at our record Q3 EBIT, which was an increase of 9.1% in local currency and 4.6% in Swiss francs. Next, our EBIT margin, which we increased by 160 basis points over the first nine months to a record 19.5%. You can see the excellent progression there, and we are well on track to deliver industry-leading margins again for the full year. This reflects our focus on our differentiated value strategy from continued to advanced sustainable building solutions with growing multi-billion brands like Ecopact, Ecoplanet, Elevate and all the way to our empowered leadership with its strong performance culture. We also continued our M&A execution in Q3 with six value accretive acquisition, strengthening our geographical footprint. Holcim has now completed more than 100 transactions in the last five years, fundamentally transforming our portfolio to allow us to capture growth opportunities in the most attractive markets and offer our customers the most innovative and sustainable building solutions. We will remain disciplined and focused allocating our capital to maximise value for shareholders. As you can see, we are active in Latin America in Q3, where we bought three businesses. Latam is a very attractive region for Holcim, with the highest EBIT margin of our regions at above 35%, strong cash generation and excellent growth potential. Its performance is driven by the long-term trends of population growth, urbanisation, government spending and niche shoring. In Europe, we continue to invest in aggregates and ready mix with another two highly synergetic acquisitions. In circular construction, we have a strong pipeline of acquisition to increase capabilities in this attractive market. We also continue to expand solutions and products, and with Ox Engineering products, we are making a great acquisition, one that complements Holcim's range of building envelope solutions for our customers in North America across residential and commercial application. The company has trusted brands and technologies that are an excellent fit with our existing businesses Elevate, Malaki and Eurolast. Synergetic and EPS are creative from year one. The acquisition continues the expansion of Holcim solutions and products business into the most attractive construction segment from roofing and insulation to repair and refurbishment. Switching now to our billion brands. Overall, customer demand from Holcim's Ecopact and Ecoplanet continues to grow and we are significantly up versus last year. And it's our sustainability building solutions like Ecopact and Ecoplanet that make Holcim partner of choice for our customers. Take a look at these projects where we add value to our customers with our sustainable, circular, durable, and also energy-efficient building solutions. Toulouse Metro driving sustainable transportation, Gode-Hove international bridge connecting the US and Canada, and very impressive building, Deva building in Dubai. Another highlight is circular construction, which we are advancing as a driver of profitable growth. Here, our unique geographical footprint and strong logistics network give us access to construction and demolition materials in key metropolitan areas where we operate. We have the largest footprint in Europe, Urban's Mine, with 100 recycling centres. We have made this year four highly valued creative acquisitions, and we have increased our recycling of construction and demolition materials by more than one fifth in the first nine months. To try to give you some sense of how much that is, it's more than one and a half thousand truckloads per day. As you can see on the slide, we have already built many concentrated clusters around the UK capital London, in Paris, Toulouse and Lyon in France, and of course across Switzerland, which is a regional leader in circular construction innovation. Circular construction is indeed a highly profitable business model. We can recycle up to 100% of construction and demolition materials back into solutions ranging from highest quality aggregates to recovered cement paste using our EcoCycle technology. Finally, let's look at our sustainability highlights. As you have been seeing, Holcim is making excellent progress on scale up its sustainable building solutions from EcoPact and EcoPlanet to EcoCycle. And we are on course to deliver a 20% increase in recycling of construction and demolition materials to 10 million tonnes by the end of this year. Just a couple of days ago, we were awarded another grant from the EU Innovation Fund for a carbon capture project, this time in France, bringing the total number of Holcim's large-scale EU-supported projects to seven. And through Holcim Acre Ventures, our venture capital arm, we are investing in start-ups to scale up the most innovative technologies in the built environment. And with that, I would like to hand it over to CFO Stefan, who will take you through some of the financial highlights. Stefan.

Thank you, Miljan. And a warm welcome to you all also from my side. It's a pleasure to be here with you today. Turning first to the net sales bridge for the first nine months, you can see that net acquisitions have provided the bulk of our local currency net sales increase with our organic growth broadly flat. The FX effect, foreign exchange effect, is minus 3.5% or 715 million Swiss francs. Over the same period, we reached an absolute record in recurring EBIT for the first nine months of a year, with a double-digit percentage increase in local currency. This is a very strong performance driven by organic growth. Recurring EBIT is also up 6.6% in Swiss francs. It's worth noting that this result comes in spite of the continued appreciation of the Swiss franc through the period, impacting EBIT by minus 4.5%. Looking at the next slide, I'm also pleased to say that our broad-based growth drivers delivered over-proportional EBIT growth in all of our business areas and regions for the first nine months. As you can see here, there are some very strong growth numbers here from our five segments. We will now review each of the five performance segments in turn, and I'm going to start with North America. North America is reaching a new level of profitability with a significant expansion of recurring EBIT margin. There are strong market fundamentals, and this is just... Just this week, as Milian was saying earlier, there was a U.S. Department of Transportation announcement of a more than $4.2 billion investment from a bipartisan infrastructure law into national infrastructure projects. That's in addition to projects coming from the PIKE, from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act and so on. As we said at the time of our spin-off announcement, with our leading positions and expansive footprint, we are best positioned to capitalize on the strong construction spend and once-in-a-generation infrastructure investment across the region. And we have now secured more than 150 infrastructure projects. Looking ahead, North America will continue to drive margin expansion for the full year. Next, let's go to Latin America. There was another excellent performance in this high-growth region, where we delivered the 17th consecutive quarter of profitable growth. At some point, we may have to stop counting these consecutive quarters, I think, but as they're going, we're going. There were three more highly synergetic acquisitions in Q3, meaning we've now made four in the first nine months, and nearshoring is continuing to drive commercial and infrastructure investment. In Europe, sustainability continues to be a key driver of profitable growth. We reached a milestone in the first nine months of the year, crossing one billion Swiss francs in recurring EBIT. To put that in a bit of context, six years ago, we were just half that. So this really speaks to how we delivered growing profitability in the region, reflected, of course, by the substantial increase in our nine-month EBIT margin. We've also made eight bolt-on acquisitions so far this year, including four in the attractive market for recycling construction demolition materials, or as we all call it, CDM. We expect a strong earnings momentum here to continue. Strong margin expansion has been the story in Asia, Middle East and Africa, led by good market dynamics in Australia and North Africa. We continue to manage our portfolio proactively and we expect the strong earnings momentum to continue in this region as well. Our final business segment, solutions and products, has produced the largest percentage increase in both net sales and recurring EBIT, driven by our roofing systems. The double-digit EBIT growth and strong margin expansions are notable. Emilian has mentioned the signing of the Ox engineering products acquisition, which will drive more growth in the future. And the outlook for the year is positive. Now, as you know, we've continually looking to deploy our capital to great value for our shareholders, including through share buybacks. Our latest share buyback program, which launched on the 18th of March this year, is well on track. As of the end of September, we had purchased three quarters of the total one billion Swiss francs in shares we were targeting by year end. By the close of yesterday, we had increased that to 833 million, representing roughly 1.8% of total shares outstanding. And with that, I'm pleased to hand it back to Miljan now to talk you through our outlook and guidance as we commit to delivering another year of record results.

Thank you, Stefan. So as you can see from our results, Holcim is a growth company with a resilient business model across all market conditions and economic cycles. And we are confirming our full year guidance. Net sales, low single-digit in local currency. EBIT margin greater than 18.5%. Strong crash generation, more than 3 billion. And, of course, we are on track to reach 10 million tonnes of recycled construction and emulsion materials, which is up 20% versus previous year. Regarding the intended listing of Holcim's North America business in the US, I confirm we are on track to complete it in the first half of 2025 with the aim of unlocking a new era of value creation for stakeholders. In the last month, we have made significant progress on all aspects of the planned listing. Now we will open the Q&A.

Thank you, Emilian. Thank you, Stefan. With this, we can open up the line for questions. The first question comes from Sida Ekblom from Morgan Stanley. Good morning, Sida.

Thanks very much. Good morning, gentlemen. I have got two questions. One is on the solutions and products business. We had flat organic performance year on year in the third quarter at the top line. And I wonder if you could give us a little bit of color on what the components were of that growth, what the roofing business in the U.S. delivered, and what the rest of the business, the concrete products business, delivered. You've spoken about double-digit EBIT growth for that business in the second half, and it hasn't been delivered in the third quarter. How do we think about that? And then the second question, can you give us the margin of your cement and aggregates business in North America? I see that you give it at a group level, but it would be interesting to understand how the margins of those businesses look, considering that that's a business that you'll be carving out. Thank you.

Good morning, Cedar, and thanks for joining us this morning. In the past, we have not been disclosing cement margins per region, so you will have to wait for our capital market dates for full disclosure. Regarding your first questions on solutions and products, and I'll ask Stefan to give more details, roofing is still significant, most significant part of this business. greater than 50%. We still see strong demand. As you know, our roofing business is mainly focused on re-roofing. And unfortunately, due to these bad weather conditions in the US, the demand for re-roofing is increasing. And also, pricing seems to stay resilient. On the rest of the solutions and products, it's a mixed bag. But maybe, Stefan, would you like to expand on this?

Yeah, thanks for that. Of course. Hi, Sita. And we elaborated on that before. The majority of our solutions and products is roofing and roofing North America. But there are some other product categories, for example, mortars. And some of these categories, especially in the UK, were affected by weather. And this is how you're seeing a bit of a mix in here with roofing in North America doing quite well and some of the other businesses being affected by the same effects that we're also seeing some of our cement and ready mix businesses, the weather and basically the storms that we had that were at a negative impact. I would say this sums it up. Also, Q3 last year for some of these businesses was very strong.

Okay, I'm going to push a little bit because it would be helpful to actually get a number for how that roofing business is performing. Obviously, we want to understand your performance relative to peers, and I understand that it's a mix of things, but I don't know if you could give us a little bit more visibility on what's actually happening on the roofing side of things. And then my question on double-digit growth at EBIT, I didn't hear an answer to that. I don't know how you guys are thinking about that guidance that you gave at H1. Thanks.

So, Cedar, please be patient with us. We will disclose all of this in due course, of course. I would like to confirm that our roofing business this year will achieve double-digit growth in EBIT. So, if you stay with us for a few more months, you will see more fragmentation.

OK. Thanks very much. Thank you.

Thank you, Miljan. The next question comes from the line of Elodie Rawls from JP Morgan. Good morning, Elodie.

Hi, thanks for taking my questions. So the first one is with regard to the preliminary expectations on 2025, how we could think about volume trends given the easy comps from the weather impact this year and whether you have already started discussion on price increases next year. by vision. And my second question is also looking ahead on margin with the guidance of being, you know, for above 18.5%. Where do you think this could go in a volume recovery environment?

Thank you. Good morning, Elodie, and thank you for your question. Thanks for joining us. Regarding 2025, so to give you a little bit of split, this year we have seen a softer residential market. It's been soft now for more than a year. We might see, we are expecting slight recovery in 2025 as a result of the interest cuts. I'm confident that North America will continue to be robust, driven by all these federal and state investments. Stefan mentioned in one of the slides we have already secured 150 mid- to large-scale projects in U.S. that are related to Inflation Reduction Act, IIJ, CHIPS Act, and so on. On Europe, I would expect resilience with possible residential recovery in H2 next year. LATAM and EMEA will remain strong, LATAM driven by Mexico and Central America, and I expect good demand in North Africa, Australia and some other markets. Regarding pricing, it's a bit too early to comment on this. There won't be any price deviations till the end of the year. And then we start in January and it will be gradual price increases till April next year. So probably next time when we get together, I'll be able to give you more flavor on the pricing for 2025. Thank you, Mirjam. Okay, great. Thank you. Thank you.

And the next question comes from Yacine Touari from Onfield. Yacine, good morning.

Good morning. Quick question. First, on your capital market day in Europe and the US, I think there might have been delayed a little bit. Have you a timing in mind, even if it's not very precise? And on the capital allocation strategy, what do you think would be the priority? And how do you see the group in Europe and the US in the next 10 years? Could you see, if we look at the European business, could you see a split which is the same as in North America with a much bigger solution and product business? And if so, what kind of asset would you be looking at?

Good morning, Yasin. Thank you for your question. Regarding, I'll start with Capital Market Day, then maybe hand it over to Stefan. Yes, at the beginning of the year, on 28th of January, we did say, communicated, we expect Capital Markets Day later in the year. We decided to postpone that and the main reason is we would like to finalize SEC filing and then we will go out with the capital market day. Stefan, would you like to elaborate on the SEC filings?

Yeah, yeah. Thanks, Miljan. Of course. Hi, Yasin. So, look, since we announced the spin end of January, we made really, really good progress on all kinds of aspects, technical aspects like accounting, but also governance and everything in between. So, really pleased with the progress. It's been well received, also, the announcement by the investors. I think the strategy and the reason behind it is well understood. Now, having made great progress, we understand that investors want to have reliable numbers to take investment decisions, which we will share at our CMDs. We will share everything that we've worked on at our CMDs. But we also want to do that with the adequate proximity to the actual listing date. So, you know, we're working between having numbers that are really final, that have been also vetted with the authorities, but close enough to the capital market states. I think that is our intention here. But again, the project is progressing extremely well.

Thank you, Stefan. Just to add, maybe we have, obviously we are in constant communications with all our shareholders and we are all equally excited about this project, which will open, unleash the new era of growth for both businesses on both sides of Atlantic. Regarding capital allocation, yes, bear with us. Obviously, during the Capital Market Day, we will present a new strategy for both businesses. But just to give you the flavour, we will continue to grow on both sides of Atlantic, and at the same time, we will continue to reward loyalty of our shareholders.

Thank you. Thank you, Emilian. Just as a reminder, if you join by phone and want to ask a question, please press star one four. The next question comes from the line of Arno Lehmann, Bank of America. Good morning, Arno.

Good morning. Good morning, gentlemen. Thank you for taking my question. I have two, if I may. Firstly, if I could push you a little bit on the 2025 outlook you mentioned earlier. I guess, optimism on volumes and a gradual progressive increase in prices. Could you comment on the cost outlook as well and whether you are overall confident that you can improve margins further into 2025? And I'm considering excluding the spin-off, right, at group level as it's done today. My second question is on bolt-on acquisitions. You've done quite a lot of deals linked with recycling of materials. How does it impact the business model? I'm assuming these targets have lower margins and lower capital intensity, maybe also good returns. If you continue with this, could you explain us how this will impact the financial profile of Holcim? Thank you.

Arnold, thank you for the question. Regarding 2025, as I said, I am optimistic infrastructure will remain strong and we should expect logically as a result of the interest rate cuts, we should expect recovery in residential segment. On the question on the Boltons, yes, impressive record. Last year, 28, we continue with another 17 year to date in 2024. And we will continue to do this. Just to correct you on the construction and demolition materials. Actually, the companies we bought this year, these four companies, UK, Germany, Belgium, and Switzerland, EBITDA margins are ranging between 25% to 35%. And these businesses are highly, highly synergetic to our existing business. So on the margin for next year, pricing is one aspect, and we will continue to push on the pricing. But our margin expansion, margin improvement, and you've seen in Q3, just in North America, it was 320 basis points. This is driven by our scaling up sustainable building solutions, EcoPact, EcoPlanet, where we are getting premium. We also have proven over and over that decarbonisation and circularity are drivers of profitable growth. We can make money on decarbonisation and we can make money on circular construction. And we will continue to expand our solutions and products. When it comes to M&A, as I said, we had a great momentum this year, and also in the last five years, we have completed more than 100 acquisitions. And we are focusing on the most attractive markets and most attractive business segments.

Thank you, Mirjam. That's helpful. Thank you very much.

So the next one in the line is Gregor Kuglic from UBS. Good morning, Gregor.

Oh, hi. Good morning. I've got a few questions. Can I start maybe because you mentioned it on the carbon capture side? I think you won your seventh project and I appreciate you had a CMD on this not too long ago. But I guess I just wanted to get your thoughts sort of on the bigger picture of carbon capture in particular in the light of, I guess, the carbon price being sort of around the 70 mark. And I But the big picture question is, at what point does it really become sort of attractive to you financially on those projects? And particularly, I guess, the last one that you announced yesterday, I think. Second question is, just to be clear, you said you're going to complete the buyback, the billion this year. And I guess what you're saying is you'll let us know what you're going to do with the CMDs, or can you just give us an update what you're thinking is in terms of communication regarding that? I'm guessing you're going to have your full year results before the CMDs, but I'm not entirely sure. And then finally, on margins, so you had a very strong performance across the business and particularly North America, and you sort of mentioned it there in your last answer, but can I probe you a little bit more? It does look very strong, particularly I think your volume three were down, I don't know, double digit or something like that in North America in Q3. How that was achieved and whether you think that's a sustainable performance. Thank you.

Good morning, Gregor, and thank you for being here this morning. I'll start with CCUS, then Stefan, you can talk about buyback and CMD, and then I'll discuss on the margins. First of all, we are very proud that we have been awarded funding for our seventh project in Europe. So now we have projects in Poland, Germany, Belgium, Croatia, Greece, and two in France. So yes, Gregory, we discussed this in the past. At the moment, CO2 price is 70. But these projects will kick off in 2028, 29, 30. And we believe that as a result of the changes in UETS in 2026, this will logically drive carbon price up. And as I told you in the past, I think by the time these projects will be commissioned, I guess carbon price will be above 100 Swiss francs.

uh stefan buybacks yeah hi gregor good morning um the share buyback uh is to i think last night we stood at 83 percent uh of the total amount we want to spend on the share buyback which was one billion as you remember um we expect to close the share buyback in december uh so we will we will finalize the one billion this year and this was also what we announced uh in february when we announced the share buyback so this is well on track And for the CMDs, as I explained before, we're making such good progress with our filing process and with all the other processes with our North American listing, also the cooperation with the authorities there, that we want to conclude that. Then we give all the data to the investors, but we're going to put also the CMDs in a good proximity to the final listing date, which will be in the first half of next year. So I would like to ask your patience for a little longer to get the final dates. but you can probably guess where that is going to be.

Back to me? Yes, please. On the margins, Gregor, once again, I'm very pleased with our Q3 performance, especially in North America. US and Canada, we expect this trend to continue. I would expect that this will be driven by these mega projects. The best is yet to come. I mean, we are monitoring these mid- to large-scale projects for the past year and a half, and we are seeing that each quarter Holcim is getting involved or starting to supply on these projects. Stefan mentioned in one of his slides that we currently are working on 150 projects that are direct result of Inflation Reduction Act, IIJ, CHIPS Act, and so on. So, I am confident that U.S. will remain strong. It's a sold-out market. Pricing dynamic was always strong. So, as I said, very confident about U.S. in the long term.

Thank you. Thank you, Miljan. So, the next question comes from Luis Prieto from Kepler Chevrolet. Good morning, Luis.

Morning, Luis Prieto here. Thanks a lot for your time this morning. I had a couple of questions. The first one, I agree that the US markets fundamentals seem sound, but obviously weather has taken a very heavy toll on heavy building materials, volume performance in the first nine months and Q3 was no different. Should we expect a rapid volume catch up in Q4 if weather allows in line with what you just said about the best is yet to come and into next year? Or will it take longer to normalize next year and waiting for the residential recovery. And then my second question is, if I recall correctly, in the Have Your Results conference call, you commented that, yes, active cost management had come back on the agenda. Any updates on what sort of action you're taking and in what order of magnitude, just to complement the pricing and the cost inflation picture in terms of margin evolution? Thank you.

Good morning, Lewis, and thank you for joining us. Just a small comment on the cost. This is DNA of this company. Cost is always our focus. We have a strict cost discipline in place when it comes to the purchases, when it comes to M&A. So for us, this is day-to-day business, and all our people are trained and fully focused on the cost initiative, so nothing special. We maintain this to be our key focus for the past few years and also in the future. Regarding US recovery, Louis, what I can share with you is simply we are monitoring all these big projects, and we are... closely watching the future tenders that are coming. As I said, best is yet to come. Last, at the beginning of the year, we had around 100 of these projects already secured or we started supplying. Now we're up to 150. This time next year, I would expect 200, 300. So I honestly believe that... fundamentals are so strong and the best is yet to come us has entered into the golden age of construction for the next decade that's the fact and all these billions and trillions will fuel that not only in 2025 but for the next five ten years thank you thank you louis

Okay, so the next question comes from Martin Hüseler from ZKB. Good morning, Martin.

Yes, good morning, gentlemen, and thank you for letting me have some questions. So the first of all is, you didn't increase your margin guidance for this year. Obviously, you're very cautious here. But to be honest, you know, what are the biggest risks that you foresee that you didn't like kind of mention a 19% EBIT margin for ZKB? at the full year? That's the first question. And the second question is, you showed on this slide about the circular construction, this very nice map, and it looks like that in Germany, even though it's a very important market for you, it's rather a bit under-penetrated. Why is this the case? And what would you say we can expect over the next couple of years in Germany?

Good morning, Martin, and thank you for joining us. Regarding EBIT margin, we did upgrade it above 18.5. So you can say we are cautious or we are conservative, but we are seeing a strong margin expansion. I already mentioned U.S., but this is across all our geographical footprint. And what's driving this margin expansion is our strict focus on our strategic priorities combined with impeccable execution by 64,000 of committed Holcim employees. So I'm expecting really to... to finish this year with industry-leading EBIT margins improved from last year. On the circular construction, good pickup. What we highlighted in this quarter is Switzerland, which is probably the most innovative market when it comes to circular construction. Remember, already five years ago, Switzerland was the first country that introduced sustainer, 20 cement that contains 20% of the construction and demolition fines. We have a strong focus on this quarter, which is also focused on UK and France. And good observation, Germany More will come. So probably in Q4, you will see something from us when it comes to construction, demolition, materials, recycling, specifically related to Germany. Germany is one of our key focus markets for CDM.

Thanks a lot. Thank you, Martin. And the next one is Ross. Ross Harvey from Davie. Good morning, Ross.

Thank you very much. I have one question area, if that's okay. So I'm just looking at the EcoPact and EcoPlanet progress. I mean, EcoPact is up to 29% of ready mix and EcoPlanet is 25% of cement. What is the optimal figure for each of those or could they continue to increase very much in the next couple of years? And I'm wondering separately, what is the proportion of sales by region? Is there a large differential between Europe and other regions at the moment?

Good morning, Ross, and thank you for the question. Yes, in November last year, we did have what we called Europe's Decarbonisation Day. It was in November, 11th of November. We do have a presentation available on the website, so you can have a look at that. that day we have committed that Europe has to be above 55% of the total sales in Ecopact and Ecoplanet by 2030. We are seeing a great momentum across all our geographies. Probably some markets like UK, Germany, they are well above the average, but in U.S., We are making great inroads, and we are on the average on the group level in U.S.

Excellent. Thank you. And just as a quick follow-up, has the pricing dynamics been similar in the EcoPact and EcoPlanet product as they have been in the traditional product? Have you seen similar pricing over the course of this year in both of those?

Yes, pretty much very similar pricing dynamic. As I told you last time when we met, we do have a small pricing premium on all our eco products, but also we do benefit from some cost reduction thanks to our expertise in formulation of these products where we are substituting traditional raw materials with more advanced solutions.

Thank you. Thank you, Ross. And the next question comes from Efrem Arabi from Citi. Good morning, Efrem.

Thank you. Just two questions. Firstly, on the cash flow, I know this is an interim result and you don't go into the depths on it, but your recurring EBIT is up six percent but your free cash flow target about three billion is still sort of well below 3.7 billion that you did last year so the question is why haven't you upgraded your target there was an expectation that would be close to four billion this year you know is it because the cash conversion ratio has kind of fallen or are there any other factors or is it just pure conservatism And secondly, can you also remind us on the CCUS projects, you know, what's the total amount of funding that has been received from the EU? I think at the five CCUS project stage was around 800 million, including the two recent ones, would it be above a billion? Thank you.

Good morning. I will tackle the second question on CCUS and then I'll hand it over to Stefan to discuss cash flow. Actually, it was six projects that made more than 800. So with the additional one, we are talking about a billion, more or less. Stefan?

Yeah, look, thanks, everyone, for the question. As you know, our free cash flow of the last five years has been consistently above $3 billion. So Wholesome has become very, very reliable in our free cash flow generation. In 2022, it was 3.5. Last year, it was 3.7. But as you also see when you look at our half-year report, our cash flow is very much back-end time. So we grade most of our free cash flow towards the end of the year, and therefore we leave ourselves some flexibility to the exact number. We guarantee above $3 billion. And I'm sure we're going to reach that absolute confidence there. But the exact number, we also have to see. And, you know, cash flow also has some components with cut-off dates and so on and so on. So this is why we don't want to commit too narrowly on this number. I hope this is okay.

Thank you. Thank you, Refrem. And the next one in the line is Tobias Werner from Stiefel. Good morning, Tobias.

Yeah, good morning, Holstein team. Good morning, Mian. Three questions, if I may, mainly around decarbonization. And number one, when we look at the CCS project you've got now and the grants you received, how do you perceive your CapEx trajectory? And should we assume, and if so, that this is going to increase in future? That's number one. Number two, when, you know, your recycling business is doing really well, but what I'd like to understand is what sort of fine production you can get out of it if you hit the 10 million target or the 20 million target by 2030. And then thirdly, you've acquired Cementos, sorry, Comaxa in Peru. If I'm not mistaken, it's got a wide cement business, which tend to be extremely high in terms of carbon footprint. Can you give us a rationale for this, unless I'm mistaken?

Good morning, Tobias, and thank you for your question. Yep. I'll start with the CCUS project. So now, of course, once again in November last year, when we had our decarbonisation day, we have given a projectory on CAPEX requirement for these projects. It is all in line. All of these projects have a high return on investment and they are not happening all at once. They will be spread over the next six years. So I guess what we need to do, given the recent developments two days ago, we need to update this and we have received funding for another project. So in all this will not affect our cash generation in the long term. Regarding recycling, as I said, highly profitable business. It's actually a new business for us and we are making great progress. You have seen that we are pushing more for M&A because this is a quick win. We can absorb these companies easily and we can achieve synergies actually from day one. I mean recycling of construction demolition materials. We are using these materials at the end of recycling into our own operations. And we are increasing our profitability as a result of that. So we will continue to do so. What I would like to see more in the future is more organic investments. We want new recycling plants. We want to build them across all the metropolitan areas where Holcim operates. And yes, today these businesses, you see, it's mainly concentrated in Europe, but there are opportunities outside Europe. There are opportunities in US, Mexico, Australia. I believe this could be a very lucrative business. And on the recent acquisitions in Central America, in Peru, yes, you are right. It does have a wide production line, but there are some other businesses. We need wide cement for vertical integration in the whole Latam. We are increasing our portion in solutions and products where we are specifically targeting dry mortar. This is a very profitable business in Latam. We did some acquisitions in Mexico, Argentina, in Central America, and this will be our focus for the years to come. And we also, just to mention, since we are talking about LATAM, we did another acquisition in Guatemala. It's a very attractive market for us. As I said before, LATAM has the highest EBIT margin in the group, around 35%. And we see that this market will continue to grow in the years to come.

Okay, if I may just follow up on the second question. What are the fines that you're producing out of recycling at the moment, which can be used as SCMs for your clinical business, so your cement business? And then also, what sort of grants on a cumulative basis have you received so far from the EU and its innovation fund?

I already answered a question on EU. It's slightly less than a billion if I calculate quickly. So we did receive funding for, partial funding for seven projects in Europe. Regarding recycling, so we can recycle and upcycle up to 100% of construction demolition materials. We can use this as a result of our advanced technology platforms. And this is where we are really showing innovation in this field. We are recycling more premium products and we can get 20 to 30% of the fines out of the ton of construction and demolition materials.

That's very helpful. Thank you.

Thank you. Thank you, Tobias. And the next one is John Bell from Deutsche Bank. Good morning, John.

Good morning, gents. I think I've got three. So the first one, are there any distinctions to be made between the commercial and residential segments when we think about roofing? in the U.S., maybe in terms of pricing and stock levels. Second related question there is in terms of your kind of medium-term aspirations in that area. Might we expect greater M&A focus on roofing in Europe going forward? And the third question is actually in relation to your proposed U.S. listing. How do you feel about a secondary listing in Europe? Thank you.

Good morning, John, and thank you for your questions. Regarding commercial and residential roofing in the US, residential has been subdued in the last 12 months. So, as I said, I hope that the latest news on interest rate cuts, we will see a strong recovery in 2025 in roofing business. Most of our business, John, is actually in re-roofing, and this is where you really can gain premium pricing. And the re-roofing market has been growing strongly as a result of these unfortunate weather patterns in the US we have seen this year and last year. On M&A front, yes, we are open in Europe for all the opportunities. If you can, in the last three years, in Europe alone, we have done 45 acquisitions, and we are looking into solutions and products. If you recall, John, a few years, we started investing heavily in dry mortar. We bought PRB business in France, Compactuna, Contigliana. We bought businesses in UK and Poland. This is a highly synergetic market for us, and we will continue to focus on this in the years to come. On roofing side, we did have a nice acquisition at the beginning of the year in roofing in Europe, Zinco, which focuses on green roof. I see a great opportunity to build up on this business in Europe, but also probably outside Europe. And the last on listing...

Yeah. Hi, John. Good morning. Look, I mean, this spin-off will create value for shareholders and it will be a fantastic, fantastic opportunity to invest in. But as we said before, we want to give you all the information in due time in a combined fashion. So I would prefer to ask you for a bit more patience. Also, the deal structure is part of that information that will be given. And so your question will also be answered in due time.

That's very kind. Thank you very much, James.

Thank you, John. Thank you, John. And the next one is Ibrahim Humani from CMCIC. Ibrahim, good morning.

Hello, thank you for taking my question. I have three. The first one is about Latin America and Mexico, especially, is this level of margin repeatable in Q4? And could you maybe give us more detail on where in Ecuador is demand to be soft in these countries?

Good morning, Ibrahim. Sorry, I didn't get the second question, but regarding margins, as you have seen, we are very proud of our margin expansion in Q3 in North America. I mean, more than 300 basis points. I think fundamentals are there. We will continue with the strong margin expansion in Q4, but more importantly, in 2025. Second question, Ibrahim, if you can repeat, please.

Yeah, sure. It's about the Brazil demand. Is the demand still soft in Brazil? And will you see maybe an inflection point?

Pricing demand regarding US, we have seen throughout the year pricing is robust in US. We have not seen and we are not probably expecting any significant deviation till the end of this year.

Okay, thank you very much. Maybe a last question on the selling prices in Europe. Is the price effect positive also in Western Europe or it's only in Eastern Europe?

I guess the question is about Europe and the market dynamics in the East and West. We are seeing good market dynamics in all our key markets in Europe. Probably still the only soft market is Germany, and especially on residential sector. Residential sector was softer across the whole Europe in the last year and a half, especially more in Germany. So with the latest interest cuts, I am optimistic that in 2025 we will see recovery.

Okay, thank you very much.

Thank you, Ibrahim. And the next one is Harry Dow from Redburn Atlantic. Good morning, Harry.

Morning. Thank you. Just two questions. I think firstly on just European like for like profit growth, I think we're still relatively robust in the third quarter. Just a bit more colour on the bridge, I suppose. Is that still sort of favourable sort of volume mix or maybe some higher sort of cost hedges that are still rolling off or maybe even the kind of sustainable products mix coming through? a bit more color on kind of the profit bridge and maybe what we should expect for the fourth quarter in terms of profit growth there and then secondly just on some of these sustainable cements and concrete how much is regulation now the main barrier in terms of sort of strengths to pushing the penetration higher and is this changing thanks

Good morning, Harry. To start with the sustainability question, yes, there are regulations that can prevent scaling up of these products. And I can give you a concrete example. Five years ago, we have introduced in Switzerland a product called Sustaino, which is the first ever product that contains up to 20% of construction demolition materials. Switzerland was the first and only country with such a product for four years. Now, EU has adopted the forms, and we can scale it up across the whole EU. Similar product, of course. Regarding Europe, our margin expansion... I would not say it's driven by some hedging or by some cost benefit. We still see a significant inflation in Europe in our business, especially in logistics, in raw materials, third party services. What is driving margin expansion in Europe is our strategy, value over volume. Europe is best in class when it comes to sustainability, and we have proven over and over that decarbonisation and circular construction are drivers of profitable growth. We continue to invest in highly synergetic M&A. As I said previously, in the last three years, we had 45 acquisitions in Europe alone. And the example is construction and demolition materials recycling. This year, we have bought four businesses with EBITDA margin varying between 25% and 35%. So the focus will remain for Europe. Value over volume. We will continue to invest in decarbonisation and circularity as drivers of profitable growth. We will continue to scale up our eco-solutions and of course we will invest in the highly synergetic M&As in the years to come.

Thank you, Harry. And our last question comes from Bridges Zia from HSBC. Good morning, Bridges.

Hi, Jens. Good morning. I have two questions. The first one is on the CCUS. You talked about $1 billion of funding you received to date. Could you tell us what's kind of the total capex, i.e., I'm trying to understand kind of the level of funding you get from states? The second one is on the construction demolition material. It's quite exciting that you kind of continue to expand and broaden your horizon. Can you just give us an understanding why you are going for acquisitions given you have a technology to recycle so you can pretty well put organic plants wherever you want? Is that to gain a rapid scale or anything behind that and within that if you could just give us if you were to put organic plant what kind of capex you are looking for maybe one million ton or 110 recycling plant uh good morning bridges and thank you for your question i will start with cdm so

So we have a very well-advanced geographical footprint, let's say, in Europe, where we have a strong presence in all metropolitan areas. The catch when it comes to recycling of CDM, you want to be in the city, you want to be close to the market. I'll give you an example. Two and a half years ago, we have bought a company in London, Civiart, which is located in London CBD. Imagine, today London is the biggest urban mine in Europe with tens of millions of tons of construction and demolition materials generated per year. And instead of taking this outside the city, we are able to absorb it in the city and to recycle it into the new building materials. So it's about location, and we are lucky that thanks to our strong geographical footprint, as I said, we are well located in the key metropolitan areas. So we have existing operation capex to build 100,000 tons of processing plant, which is using the most advanced technologies would be measured in few million. So it's not significant. Regarding your CCUS questions, so yes, we did once again this DCARP day in November last year, we did give full disclosure on the CAPEX for these six projects. We got additional one two days ago, so obviously we will update that. So the total for six projects we talk about, 2,800,000,000 plus is coming from EU and the rest we will fund.

Okay, that's great. Thank you very much.

Thank you. Thank you, Birgit. So this was our last question for today. Thank you so much for the very active discussion. If there are any further open questions, please contact the Holcim Investor Relations team. We are more than happy to help. And with this, I hand back to Miljan for some closing remarks.

Thank you, Bern. First of all, thank you all for joining us this morning. As you can see, we are very proud of our achievements. and I would like to thank my team, 64,000 of Holcim employees, for making it happen. Our commitment stays the same. We will commit on our strategic priorities. We will execute this fast, and this will deliver industry-leading margins in 2024. Once again, thank you very much for joining us this morning.