Negative Points

• Foreign exchange translation effects negatively impacted net sales by 3.4% and recurring EBIT by 2.8% in H1.

• Free cash flow in H1 was impacted by CapEx phasing, seasonally strong June working capital, and the divestment of Nigeria, though full-year guidance remains around CHF2 billion.

• Latin America volumes were slightly negative in Q2, with softer performance in Argentina and election-related impacts in Colombia.

• UK market remained soft in H1, with residential still weak, though infrastructure projects are expected to improve momentum in H2.

• Margin expansion was partly offset by divestments, particularly Nigeria, which had a high margin, keeping group margin flat in Q2.

• Integration costs and lower margins from new acquisitions like Pacas Mayo and Xella are expected to have a slight negative impact on margins in the near term.

Q & A Highlights

Q: Can you provide an update on your European cement pricing ambitions for the second half of 2026 and into 2027, especially given the backdrop of energy inflation? A: Miljan Gutovic (CEO) stated that pricing performance has been very strong, with the company achieving its mid-single-digit target for the year. He noted "pleasant upsides" in markets like Mexico. For the second half, he sees "pockets of opportunities" but not at the same level as H1. He declined to give specific guidance for 2027, stating it is too early and that they will discuss it in Q3 or towards the end of the year. He reaffirmed the goal of achieving an 18th consecutive quarter of positive price over cost.

Q: Could you break down the organic growth building blocks of your Q2 2026 recurring EBIT bridge between price over cost and volume? A: Steffen Kindler (CFO) detailed that the positive price over cost in Q2 was approximately CHF90 million. He broke this down further, stating that CHF15-20 million of that was from volume, there was a positive contribution of CHF10-15 million from JVs, and the rest was driven by pricing.

Q: Your guidance implies a deceleration in H2 given the strong H1 performance. What is keeping you from being more optimistic, and can you confirm the price over cost was positive in Q2 across all regions? A: Miljan Gutovic (CEO) explained that the decision to move guidance to the upper end was based on H1 confidence and does not signal a slowdown. He confirmed that July is looking as good as June across all markets. Steffen Kindler (CFO) confirmed that the 17th consecutive quarter of positive price over cost was achieved in all regions, with the CHF90 million benefit roughly split equally between Europe, EMEA, and LATAM.

Q: Can you explain what has been better than expectations in terms of pricing, and how should we think about margin expansion going into H2? A: Miljan Gutovic (CEO) explained that margin expansion is driven by more than just pricing. He highlighted the scaling of sustainable offerings (EcoPlanet, EcoCycle), which now represent a third of sales and offer both price premiums and cost upsides. He also cited decarbonization, circular construction initiatives, and value-accretive M&A as key drivers. Steffen Kindler (CFO) added that the margin was flat in Q2 due to the divestment of high-margin Nigeria, but expects the full-year margin to be positive, with a sequential improvement in H2.

Q: Can you provide more color on the European market, specifically which countries are growing and whether the recovery is infrastructure or residential driven? A: Miljan Gutovic (CEO) stated that the infrastructure backlog is "extremely healthy" across Europe. He noted that Eastern Europe is doing well in residential, with a "soft recovery" in Germany and France, while Spain and Greece are performing strongly. The UK was the only soft market in H1, but he expects momentum to improve in H2 due to large projects like the River Crossing in London and Sizewell C, although UK residential remains soft.

Q: Given your net debt position and expected free cash flow, do you have significant balance sheet firepower for sizable acquisitions in the next 12 months? A: Steffen Kindler (CFO) confirmed that after closing all announced acquisitions, leverage is expected to be around 1.6x by year-end. He stated that to return to the 1.5x target, the company has more than CHF1.2 billion available for spending next year, in addition to the usual CHF400-500 million for bolt-on acquisitions. Miljan Gutovic (CEO) added that the M&A pipeline is "very healthy" and they are working on "very good deals."

Q: Can you help us understand the volume setback in Latin America in Q2 and will that change in the second half? A: Miljan Gutovic (CEO) attributed the mixed performance to specific country conditions. Argentina was softer than expected, and Colombia was impacted by elections. However, Mexico, Ecuador, Central America, and especially Peru (with Pacasmayo) performed strongly. He expects "significantly better momentum" in H2, highlighting Mexico's pricing as a key positive and noting that investments in integration are already paying off.

Q: Can you confirm that Xella's sales have been broadly stable this year, and can the business start growing without a meaningful recovery in German housing? A: Miljan Gutovic (CEO) acknowledged that Xella's Q1 was impacted by weather, but stated that Q2 was "very promising." He believes Xella can grow due to positive signs in residential and the synergies from combining forces with Holcim, including cross-selling, specification selling, and system selling. He expressed confidence that the business "can and will grow."

Q: Can you provide an update on the AI savings, specifically whether any were booked in H1 and the phasing of the CHF200 million target? A: Miljan Gutovic (CEO) reiterated the target of CHF200 million net benefit by 2028, with approximately CHF20 million in annual investments. He did not give a specific 2026 target but expects it to be in the range of CHF30-50 million, with significant increases and doubling in subsequent years. He highlighted the progress in production with the "Predict" family of initiatives, noting that over 1,500 machines are now on the AI platform.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .