Jan Jenisch, CEO: “2021 was a record year for Holcim, reaching new levels of performance, across our financial and ESG targets. What makes me most proud is how we navigated the COVID pandemic with such extraordinary resilience and agility, working tirelessly to keep our people and communities safe.”
“We delivered record financial performance across all our key metrics with net sales of CHF 26.8 billion and over-proportional Recurring EBIT growth of +25.7% LFL, reaching CHF 4.6 billion, and a debt leverage ratio of 1.4x. We achieved these unprecedented results, while accelerating the expansion of Solutions & Products, advancing our vision to become the global leader in innovative and sustainable building solutions. We successfully welcomed Firestone Building Products into the Group in April and closed the year with double-digit growth. We also made good progress in the acquisitions of Malarkey and PRB Group, as further double-digit growth engines for the company.”
“We delivered our Strategy 2022 one year in advance, setting solid foundations for our next era of growth. Putting sustainability at the core of our strategy, we accelerated the deployment of our green building solutions, from ECOPact green concrete and ECOPlanet green cement to smart roofing and energy efficiency systems. My sincere thanks go to our 70 000 people who made all of this possible while keeping safety top of mind at all times.”
Record Financial Performance
Net Sales of CHF 26 834 million for 2021 were up +11.3% on a like-for-like basis and +16.0% higher in Swiss francs, compared to the prior year. The record growth in net sales was driven by volume growth in all regions and business segments and strong pricing.
Recurring EBIT reached a record CHF 4612 million for 2021, up +25.7% on a like-for-like basis and +25.5% higher in Swiss francs, compared to 2020. Recurring EBIT has grown over-proportionally in all regions and business segments.
Earnings per share increased by +30% to reach CHF 3.98 for 2021 versus CHF 3.07 for 2020.
Free Cash Flow after leases amounted to CHF 3264 million for 2021 versus CHF 3249 million in 2020, for a cash conversion of 50%. This is the third consecutive year in which Free Cash Flow after leases has exceeded CHF 3 billion, generating CHF 9.5 billion in total over the last three years.
Net debt amounted to CHF 9977 million. The company maintained its strong balance sheet with the ratio of net debt to Recurring EBITDA at 1.4 times despite the USD 3.4 billion acquisition of Firestone Building Products.
Return on Invested Capital was 8.9% in 2021, over-achieving Holcim’s Strategy 2022 target of above 8.0%.
Accelerating Expansion of Solutions & Products
With the acquisition of Firestone Building Products (Firestone) closed as of 31 March 2021, net sales in the Solutions & Products segment increased by +90.8% in 2021 compared to the prior year to CHF 3612 million. The Solutions & Products segment accounted for 13% of Group net sales to external customers in 2021, up from 8% in 2020. The Solutions & Products share of Group net sales to external customers is targeted to reach 30% by 2025 under ‘Strategy 2025 – Accelerating Green Growth.’
The milestone acquisition of Firestone was followed by the acquisitions of Malarkey Roofing Products and PRB Group. Malarkey Roofing Products is a leading provider of residential roofing solutions in the US and is fully complementary to Firestone Building Products’ leadership in the commercial segment, positioning Holcim as a full roofing provider. This acquisition is expected to close in Q1 2022. PRB Group is the biggest independent specialty building solutions business in France. Its products and solutions are highly complementary to Holcim’s and will expand the company’s reach in the high growth repair & refurbishment market. The acquisition of PRB Group is expected to close in Q2 2022. Both businesses will be part of the Solutions & Products segment.
Holcim continued to expand its aggregates and ready-mix concrete portfolio in mature European and North American markets with twelve bolt-on acquisitions in 2021. Further pursuing its ongoing portfolio optimisation, Holcim has divested cement operations in Malawi, Zambia, the Indian Ocean and Northern Ireland and has signed an agreement to divest its business in Brazil.
Strengthening leadership in sustainability
In 2021, Holcim became the first company in its industry to have its 2050 net-zero targets validated by the Science Based Targets initiative, covering scope 1, 2 and 3 CO2 emissions and cutting across its entire operations and value chain. Holcim also launched the industry’s first sustainability-linked bonds in the Swiss franc market, raising a total of CHF 425 million. This represents a significant step toward the goal announced under ‘Strategy 2025 – Accelerating Green Growth’ to link over 40% of financing agreements to the company’s sustainability goals.
Holcim also made solid progress towards three other 2025 sustainability targets announced as part of its new strategy: 25% of ready-mix sales from ECOPact green concrete; 10 million tons of construction & demolition waste (CDW) per year recycled in its products and 75 million tons per year of recycled materials overall; and Green CAPEX of CHF 500 million per year by 2025. Since its global launch, the company has already sold more than 1 million m3 of ECOPact green concrete with a global presence across 24 markets to date, on its way to 25% of ready-mix net sales by 2025. The company is scaling up circular construction, with a +17% increase in recycled materials, reaching 54 million tons in 2021 and 6.6 million tons of CDW recycled into new products.
Change in Executive Committee
The Board of Directors appointed Toufic Tabbara, currently CEO US Cement, as Region Head North America and member of the Group Executive Committee, effective 1 March 2022.
Toufic joined the Group in 1998 as Director Strategy & Development in the US. He has a strong track record of leading Holcim’s ready-mix concrete, aggregates and cement businesses in the United States, Canada, Egypt, Jordan, Lebanon, and Algeria. With his extensive experience, Toufic is well positioned to ensure profitable and sustainable growth across the North America region. He succeeds René Thibault, who decided to pursue new opportunities outside of Holcim. The Board and Executive Committee sincerely thank René for his many contributions to the company's success.
Outlook and Guidance 2022
Holcim expects growth momentum to continue in all regions with:
- Double-digit net sales growth in Solutions & Products
- Accelerated progress towards 2025 sustainability targets
- Growth in net sales of above 6% like-for-like
- Positive growth in Recurring EBIT like-for-like
- Free cash flow above CHF 3 billion
In light of the company’s record 2021 financial performance and confidence in the future, the Board of Directors proposes a 10% increase in dividend, equivalent to CHF 2.20 per registered share to be paid out from the foreign capital reserves from tax capital contributions, subject to approval by the shareholders at the Annual General Meeting on 4 May 2022. The distribution from the foreign capital reserves from tax capital contributions is not subject to Swiss withholding tax.
Regional performance
Asia Pacific
The Asia Pacific region delivered an excellent performance in 2021, with strong results in India and the successful expansion of the aggregates business in China. The positive price over cost in the region for the full year was partially offset by energy cost inflation in Q4. In India, new production lines opened in Marwar Mundwa and Ametha.
Europe
The Europe region delivered higher profitability, with good demand overall in Western Europe and strong growth in Eastern Europe. Strong pricing helped to achieve positive price over cost for the full year and to contain power inflation in Q4. Growth in the region was further fuelled by bolt-on acquisitions.
Latin America
The Latin America region achieved strong profitable growth on the back of good market demand driven by residential and infrastructure in all key markets. Pricing was strong, with positive price over cost for the year and in Q4. New production lines started in Mexico and Argentina, while the rollout of roofing products continued through the Disensa retail network.
Middle East Africa
A strong performance in the Middle East Africa region was driven by strong market growth in Nigeria and Kenya. Positive price over cost for the year and in Q4 was driven by good price momentum in the region. Cost management drove improvement in Recurring EBIT margin.
North America
North America achieved an outstanding performance in Q4. Good market growth in the region supported volume growth across all business segments. Price over cost remained positive in Q4, with strong margin expansion across all business segments and a full order book for 2022.
Other Profit & Loss Items
Restructuring, litigation and other non-recurring costs stood at CHF 194 million, compared to CHF 89 million in 2020.
Net financial expenses for 2021 showed double-digit improvement this year, at CHF 556 million versus CHF 623 million in the prior year.
The income tax rate excluding impairment and divestments was 25%, stable compared to 2020.
Net income (Group share) increased by +35.4% to CHF 2,298 million and EPS, excluding impairment and divestments, was up +30% to CHF 3.98 for 2021.
Net capital expenditure for 2021 was CHF 1.4 billion. Free Cash Flow after leases stood at CHF 3,264 million, up +0.4% compared to 2020. This led to a ratio of cash conversion, defined as Free Cash Flow after leases relative to Recurring EBITDA after leases, of 50% in 2021.