Heidelberg Materials Q2 26 preview: a quarter much in line with mgmt expectations

Research evidence excerpt

Heidelberg Materials Q2 26 preview: a quarter much in line with mgmt expectations

12/27E 15.27 15.13 -1 14.72

concern about potential earnings downgrades or even a guidance adjustment at HEI.

12/28E 17.26 17.10 -1 16.29

Despite a "choppy" quarter with some moderate potential cons downside, we think

there a few crucial nuances here: (1) any potential headwinds from timing mismatches Julian Radlinger, CFA

between diesel cost inflation and surcharges in Q2 should reasonably reverse in Q3; Analyst

(2) European price growth - at the core of the decarbonization story - is fully intact; julian.radlinger@ubs.com

(3) NA - where HEI missed expectations in Q1 - appears to be back on track with volume, +44-20-7901 6558

price and most importantly earnings growth. The key lagging segment continues to be Ayo Olukotun

APAC but this is the smallest segment (~10% of group EBIT) and not new. We also think Associate Analyst

investors would like to see more bottom line impact from the cost savings program. ayo.olukotun@ubs.com

However, HEI shares are down ~25% YTD and have been amongst the worst +44-20-7567 0065

performing in the sector this year despite only ~LSD% EPS downgrades; our discussions

as well as UBS Quant data suggest positioning is neutral; we do NOT see risk to the

FY guidance; and valuation looks undemanding here, with multiples back to the lower

end of the pre-COVID trading range. Therefore, we don't think it would take much for

shares to regain momentum at these levels, and delivering a clean set of numbers could

go long way in catalysing this. Net net, we think risk reward at these levels is highly

attractive.

Valuation: Buy, €260 price target

Our price target is based on DCF.

Highlights (€m) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E