Investing.com -- Holcim ’s (SIX: HOLN ) decision to spin off its North American business into the newly listed Amrize AG (SIX: AMRZ ) marks a clear pivot toward sustainability and ESG-led growth, according to RBC Capital Markets.
The move strips away roughly 40% of Holcim’s revenues and EBITDA, but enhances its focus on cash returns and innovation in more environmentally focused markets.
RBC analysts backed the rationale behind the split.“It is very clear to us that the sustainability agenda is much more developed and much more important in Europe than it is currently in North America,” a team led by Anthony Codling said in a Tuesday note.
With a more streamlined structure, Holcim can now concentrate on low-carbon construction solutions and capitalize on growing regulatory and customer demand for green building materials.
“It is often said that you cannot serve two masters, and Holcim wanted to resolve this perceived conflict and battle for capital, to free up the North American business to focus on growth, whilst it remained focused on sustainability, innovation and cash returns,” the analysts said.
Post-spin, Holcim aims to double the share of its Building Solutions segment to 50% of total sales by 2030, up from 14% today. This will be partly achieved by reclassifying ready-mix operations and through organic growth in sustainable products like ECOPact and ECOPlanet, as well as bolt-on M&A.
RBC sees a 9% compound annual growth rate (CAGR) for Building Solutions sales, compared to a projected 1% decline in Building Materials.
Holcim also retains exposure to high-growth regions, including Latin America, North Africa, and Australia, where infrastructure demand and tightening carbon standards offer further upside.
On the valuation front, RBC is applying a blended approach using a 7.5x fiscal 2025 (FY25) EV/EBITDA and an 8% FY26 free cash flow yield, resulting in a CHF50 price target.
“Our multiples are in line with where we believe Holcim should trade relative to the European and U.S. Heavy Materials sector,” the analysts noted.
Between 2025 and 2030, the company expects to return at least CHF7 billion to shareholders in dividends and spend CHF4-5 billion on growth capex, supported by a strong balance sheet and potential divestments in AMEA markets.
Holcim completed the spin-off of Amrize on Monday, with the new company debuting at 46 Swiss francs per share and an initial valuation of around $30 billion.
Shareholders received one Amrize share for each Holcim share held. While Amrize shares slipped after the open, Holcim stock plummeted 42% to reflect the separation.