Free Issue No. 06 of 12.03.2020
What else should one say or write here? Many investors seem to run after every short-term and sometimes speculative trend, but investing in a rock-solid stock with an excellent track record doesn't seem to matter!
Corona virus or not, building materials group LAFARGEHOLCIM has done its homework and it is evident throughout that it will continue to do so. Targets were met for 2019:Operating profit before depreciation and amortisation increased by +6 on an adjusted basis.5%, the target was +5%. Margins also improved noticeably. Costs were reduced significantly and it was even possible to implement slight price increases.Thanks to lower costs and reduced financial and tax expenses, profit grew disproportionately. We are also pleased with the record cash flow of more than CHF 3 billion. Another very positive development is the massive reduction in net debt from CHF 13.5 billion to the new figure of CHF 8.8 billion. Expectations were thus met in every respect, and in some cases even exceeded. The proposed dividend remains stable at CHF 2, but it should be noted that this is tax-free (capital contribution reserves) and corresponds to a yield of a good 5.0%. Together with the low valuation, this still makes it a clear buy with healthy profit potential! Our price target definitely remains at CHF 65.
The new recommendation is based not least on the outlook, which is not insignificant in any case.LAFARGEHOLCIM expects continued growth in North America and most European countries in 2020. In the rest of the world, market conditions are expected to improve. But what about the coronavirus? The China market is described as challenging, but LAFARGEHOLCIM is generally not dependent on global supply chains. For the time being, the company is sticking to its 2020 targets . Optimisation will also be accelerated with regard to sustainability.
