Holcim Ltd (OTCPK:HCMLF) Q2 2022 Earnings Conference Call July 27, 2022 4:00 AM ET
Company Participants
Swetlana Schoordijk – Head of IR
Jan Jenisch – CEO
Geraldine Picaud – CFO
Conference Call Participants
Elodie Rall – JP Morgan
Paul Roger – BNP Paribas
Matthias Pfeifenberger – Deutsche Bank
Brijesh Siya – HSBC
Martin Huesler – ZKB
Cedar Ekblom – Morgan Stanley
Gregor Kuglitsch – UBS
Yassine Touahri – On Field Investment Research.
Luis Prieto – Kepler Cheuvreux
Arnaud Lehmann – Bank of America
Remo Rosenau – Helvetische Bank
Tobias Woerner – Stifel
Jean-Christophe Lefevre-Moulenq – CIC
Yuri Serov – Redburn
Harry Goad – Berenberg
Operator
Ladies and gentlemen, welcome to the Half Year 2022 Results Analyst and Investor Conference Call. I am Sandra, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions] The conference must not be recorded for publication or broadcast.
At this time, it’s my pleasure to hand over to Swetlana Iodko, Head of Investor Relations. Please go ahead, madam.
Swetlana Schoordijk
Good morning, ladies and gentlemen, and welcome to Holcim first-half results call. As usual, we will start with the opening remarks done by our CEO, Jan Jenisch, and follow with more financial details afterwards by our CFO, Geraldine Picaud. After that, we’ll take some time for your questions as usual.
Without any further ado, I would like to hand over right now to our CEO, Jan. Go ahead, please.
Jan Jenisch
Hi. Good morning, everyone, and thank you for making time to join our half year call. I’m very excited to share more details with you on the results. You can imagine, we are very pleased that we continue this profitable growth also in the quarter two. You remember, we have already reported a profitable growth in Q1, and we even have a better momentum in the second quarter of the year. So I think that’s very satisfying to see.
Moreover, the growth you’re seeing from us is very broad-based. Basically, we have a good demand and strong pricing in all our regions. Then, we have some additional push from the launch of our green products. So ECOPact green concrete solution is already 10% of our concrete sales. Then, ECOPlanet, our CO2-reduced cement solution is on the same track, and that’s very, very fulfilling to see.
And of course, the building up of our fourth segment Solutions & Products is really shaping up now. We have — based on our four acquisitions for Roofing systems, Firestone, Malarkey and lately SES. Insulation Solutions, we have built a stronger base for Roofing system. Already with pro forma sales of CHF3.5 billion for 2022. We have done an additional platform for insulation and persuade a mortar systems with the acquisition of four companies in Europe, accounting already for CHF600 million of pro forma sales in 2022.
So in total, we are now in a situation that for this year, Solutions & Products will already be 24% of entire Holcim Group. So that’s a big step. You remember two years ago, we were at 8%. So we could accelerate here successfully. And looks like the target we set for 2025 with 30% of sales in Solutions & Products is, of course, very, very achievable. And hopefully, we have the opportunity to go beyond this original target. So very happy to see that.
We have them in the second quarter as, I think, we discussed with you previously, was the steepest challenge for us regarding cost inflation. We still had comparatively low cost base in 2021 in the second quarter. And now we have this very high cost inflation, of course, starting with energy, I think with around 40% cost inflation for H1 alone, but also all the other costs from logistics, maintenance, spare parts and so on, we have high cost inflation. And I’m more than happy to report that we could balance off here this cost inflation and even coming back with a positive price over cost for Q2 and for the first half 2022. Very, very fulfilling and it puts us, I think, in a great position now.
You have seen a little bit our scorecard in the slides, record performance in H1 from net sales to EBIT, to net income, earnings per share, we have reached new highs and all double-digit growth. I think it’s a very nice, good position for us, I think for the second half of the year and also for next year.
I think with this, we have Geraldine telling us a bit more on the regions and on the financial results, and then I will return back with the outlook for the year.
Geraldine Picaud
Thank you, Jan, and good morning, ladies and gentlemen. I’m very pleased to share with you more details on our results for this first half and second quarter of 2022. The pricing has continued to be very strong. Consequently, net sales have grown organically by 13.6% in the second quarter, leading to a like-for-like growth of 12.7% in H1. EBIT growth has reached 7% like-for-like in Q2, driven by the excellent performance of the Roofing systems.
In respect of Cement, aggregates and ready-mix, the price of the cost has been positive in Q2, demonstrating here our ability to contain cost inflation and offset it with pricing power. Earnings per share before impairment and divestment ended at CHF2.14 per share for the half year, that’s 50% above H1 2021. Free cash flow amounts to CHF275 million for H1, below the same period last year, reflecting strong activity, which implies more inventories and more CapEx.
Let’s now go to the Slide 12. Our net sales in H1 reached CHF14.7 billion, that’s up 17% compared to the same period last year. Cement, aggregates and ready-mix sales recorded a total growth of 10%. This is primarily attributable to the strong price increase, which stood at 12.1% over H1 on average. The negative scope effect mainly comes from Russia and from the divestment closed in H2 2021. These scope outs were partly offset by bolt-ons.
Solutions & Products segment recorded a huge growth of CHF1.2 billion. This was comprised of two main drivers: Firstly, the scope effect of CHF0.8 billion, includes the net sales of Malarkey and PRB, which have been consolidated from March and May, respectively. It also includes the sales of Elevate, formerly known as Firestone for Q1 2022. Secondly, the like-for-like growth of CHF0.4 billion is primarily attributable to the excellent performance of our Roofing business in Q2. And then currency translation had a negative impact of 1% only. This effect primarily stemmed from the euro.
Let’s now move on to recurring EBIT. Recurring EBIT showed a total growth of 10%. The EBIT of cement, aggregates and ready-mix segment decreased by CHF44 million, mainly due to the scope out and the decline of Russian (ph). The volume effect has been slightly positive at CHF19 million, benefiting from the favorable geographic mix. Please note that the price of our cost is positive in H1 due to strong pricing and effective energy sourcing.
Solutions & Product segments recorded a strong growth of CHF245 million attributable to the acquisition and the outstanding performance of the Roofing business. ForEx was small at only minus CHF11 million.
Now let me focus on Q2, Slide 14, which really highlights the current trends. With regards to cement, aggregates and ready-mix, the price of our cost has been strongly positive, a price increase of 13.2% in Q2 has more than offset the cost inflation and in particular, the energy, which has recorded a 39% increase for Q2.Solutions & Products, Q2 was marked by the excellent performance of our Roofing business.
Let’s now look at the results by business lines. Cement sales grew by 12.2% like-for-like, mainly driven by the price impact of 12.4%. Recurring EBIT slightly declined by 2% like-for-like due to inflationary pressure. Aggregates price increased by 7.4% in H1, allowing an increase in the recurring EBIT margin by 0.3 percentage points. The ready-mix volume grew by 4.7% and price by 9.1%. The recurring margin also grew here by 0.3 percentage points. And the Solutions & Products business segment is now the second largest contributor to the group recurring EBIT. It fully plays its role of a growth engine with like-for-like growth of above 25% in sales and above 140% in recurring EBIT.
So before getting into more detail Slide 16 here provides you an overview of the regional performance. All regions grew in recurring EBIT except Asia-Pac, which has been less successful in mitigating inflation. So let’s begin with North America. The region delivered an outstanding performance in the quarter. We saw strong market demand across the region. Our traditional businesses benefited from the favorable market environment and excellent product momentum, leading to positive price over cost and recurring EBIT margin improvement in Q2.
Additionally, our Roofing systems strongly contributed to the performance of the region with double-digit net sales growth and increased profitability. The recurring EBIT margin reached 19% in H1. Going forward, we continue to see robust demand in all our markets and that we have a full order book for 2022.
If we turn now to Latin America, the region delivered another quarter of strong profitable growth. We observed a good level of demand despite very high comparison in the prior year. Argentina and Colombia, in particular, experienced even higher activity compared to 2021. Price momentum remains strong across the board. As a result, the region achieved a positive price of a cost in the quarter. We continue to accelerate the expansion of our Aggregates business with new production facilities in Colombia, Ecuador and El Salvador. Finally, the region further progressed on our sustainability journey by significantly increasing the use of alternative fuels.
Let’s now move on to Europe. The region has again delivered a good performance. Price dynamics remained strong and further accelerated in Q2. Price over cost was positive in the quarter, clearly demonstrating our ability to offset cost inflation. The region has advanced well in the execution of green CapEx, notably driving the increase of the usage of alternative fuels. A significant milestone has been achieved with two major carbon-capture projects selected for grants from the EU Innovation Fund, accelerating our green growth strategy and strengthening our leadership in sustainability. Additionally, we continue to accelerate growth by signing numerous bolt-on acquisitions and further expanding our specialty building solutions.
Let’s turn next to Middle East and Africa, where the region recorded a strong performance in the quarter. Market growth remained solid in Nigeria, while cement demand was a bit softer in Egypt. Driven by strong pricing momentum, the region managed to deliver positive price over cost, driven by price increases, especially in Egypt and in Nigeria. The region recorded a margin increase of 60 basis points in Q2, a clear achievement in the current inflationary context.
Finally, moving to APAC. The region continued to be challenged by the inflationary environment, while we saw volume recovery in India. Demand in the Philippines and China remains soft, both impacted by the pandemic. Price increases were insufficient to offset high cost inflation, resulting in significant negative price over costs. Recurring EBIT margin declined by 10 percentage points in Q2. Good order book in Australia and continued expansion of aggregates and ready-mix businesses in China should provide additional growth in H2.
Let’s move on to our P&L, and this table, Slide 22, shows the income statement for the half year. As usual, it excludes impairment and the capital gains or losses on the divestments. The increase of the recurring EBIT amounted to CHF190 million or 10% as presented earlier. Restructuring, litigation and other non-recurring costs have decreased by CHF157 million, mainly due to one-off litigation costs incurred in H1 2021. Despite the acquisitions and the macroeconomic background, our financial expenses have continued to reduce and our effective tax rate has remained stable at 26%.
Finally, our subsidiaries with minority shareholders have contributed less to earnings than in H1 2021, especially in India. So consequently, the net income attributable to non-controlling interest has decreased. All these factors allowed the earnings per share to record an outstanding increase of 50%, reaching CHF2.14 per share for the H1.
Moving now to the cash. We reported a free cash flow of CHF275 million generated in H1. In H1 2022, we have invested in development and in green CapEx consistently with a high level of activity. Some key projects in India and Europe have generated increased spending in H1 by CHF227 million. With regards to working capital, the month of June has been particularly strong and our operations have created more inventory to serve the high demand this summer. Consequently, the working capital requirement has increased by CHF681 million.
On the contrary, in H1 2021 last year, we incurred some non-recurring costs, as I mentioned before, and extend CHF170 million more than this current year. Overall, the free cash flow should reach CHF3 billion on a full year basis, excluding the impact of the Indian divestment.
Let’s now move on to the debt. Our net debt amounted to CHF13.4 billion at the end of June 2022, that’s CHF1 billion above June 2021. And you can see here on this waterfall that over the last 12 months, we have recorded a total free cash flow of CHF2.7 billion. Merger and acquisition represented a net spending of CHF2 billion. And within this envelope, cash paid for Malarkey and PRB amounted to CHF1.7 billion.
We have also spent CHF0.5 billion on bolt-on acquisitions. The divestment of Zambia, the Indian Ocean and Northern Ireland brought CHF0.2 billion. We paid dividend for CHF1.55 billion. And the back at others, mainly contains the cash spent on treasury shares, largely offset by the positive translation effect on our debt in foreign currencies.
With this, I hand over now to Jan.
Jan Jenisch
Yes. Thank you. So I think we can look with quite a bit of confidence into the second half of this year. You have seen our growth is very broad-based, basically in all our key markets, we have good demand. We have very good order books. We don’t see a slowdown. We see our strong Q2 results. There’s no slowdown for us. We have good order books. So we’re very confident with our business. We keep pushing with our green products. We expect here a further acceleration here in the second half of the year and, of course, in also the years to come.
And then we have our growth engine of Solutions & Products, which is now already starting to be a quarter of the Holcim business. You see our guidance of above CHF5 billion, I think we’ll be rather around CHF6 billion for the full year already with all the incoming acquisitions, we have — we are closing around this year. So that gave us the confidence to upgrade our guidance. We upgrade the guidance now to double-digit, both like-for-like and also in Swiss francs and I look forward to half year another record result in the second half of the year.
I think you will see further speed in our sustainability program. We just received two grants from the European Union Innovation Fund for two of our carbon-capture projects, very sizable funding of a couple of hundred million euros. So this will help us here to further accelerate here all our efforts to decarbonize the business. I think on the bottom line side, I believe Q2 was probably the steepest challenge we have for the year and we look at cost inflation. I think now we are on a very good level when you look at our price over cost I think our pricing is very sharp already for the second half of the year.
Cost inflation, I personally don’t think we will see a worsening. I think we will rather have a higher comparison base with last year. So I think we are in a very good position now for the second half of the year when it comes to the margin, when it comes to the EBIT growth, which I also expect here to further grow in the second half of the year. So very good progress, I think, on all levers of our strategy.
And now I think I’m happy to have your questions and comments.
Question-and-Answer Session
Operator
We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Elodie Rall from JPMorgan. Please go ahead.
Elodie Rall
Hi. Good morning, Jan and Geraldine. Congratulations for the very good results. So I’ll keep my questions to two then. The first one would be on natural gas. So you have previously mentioned that you’re not exposed to Russian natural gas, but you’re exposed indirectly. So have you seen any adverse impacts on your operations so far and [indiscernible] what will happen should Russian gas supply come to a halt? That’s my first question.
And the second question is, whether you could provide us an update on the Syria investigation and that perhaps Syria as it relates to the DOJ because there seems to be an additional comment in the H1 report that we haven’t seen before, where you’re talking about potential actions that could impact the business financial year and reputation as well. So if you could just comment on that? Thanks very much.
Jan Jenisch
Hey. Good morning, Elodie. Thank you for the questions. I think on the natural gas side, we are not using natural gas ourselves. We are basically exposed to the inflation coming from the utility companies where, of course, some of them are using gas or other sources of high energy inflation. I think we managed this very well. We had in the first half of the year a record of 40% energy cost rise, can you imagine? And that was, I think, well planned for us. I think even if you look at the spot prices, they are, of course, even higher, which is normal because we have a lot longer-term contracts and so on. But I think we did this very well.
I don’t — we don’t know how this war in the Ukraine curves, how this conflict will further influence the energy prices. I think we at Holcim, we have a secure supply chain when it comes to energy. You also see that we have a new record, of course, in alternative fuels, especially in Europe, we are close to two-third of alternative fuel usage now in Europe with a super big increase. So on energy cost, we feel rather secure here and I think we have proven that we can fully mitigate those costs also by efficiencies and of course, by price adaptations to the customers.
Regarding the Syria investigation, I think we have — with the DOJ, I think we have updated a bit under the country risks, what’s going on at the moment. And we are in — continue to have discussions with DOJ about potential resolution of the matter. Discussions are ongoing at this point in time. And I cannot comment any further. We put some risk claimer here on the — risk disclaimer here in the half year report that there are potential actions or — sorry, potential outcomes here, which can be considered as a legal claimer — disclaimer or something.
So I look forward to resolve the issues. As we have stated in the past, we are fully responsive and transparent with resolving the Syrian matter, both in the cost investigation in Paris, but also with the DOJ discussions which we are having.
Operator
The next question comes from Paul Roger from BNP Paribas. Please go ahead.
Paul Roger
Hi, Jan and Geraldine team. Congratulations on the results. Yes, so two questions there. I think firstly, I mean, obviously, there’s a lot of talk about macro headwinds and recession than anything else, you’ve obviously not seen it yet. But I just wonder, if there are any warning signs like project cancellations or anything like that in any of your markets?
And then the second one, maybe a bit of a cheeky one on M&A. Obviously, you mentioned before some of the verticals like roofing and insulation you’d be interested in. Just wondering how radical you could prepare to be? Is there a maximum deal size you’d consider to expand in those verticals? Thank you.
Jan Jenisch
Hi. Good morning, Paul. Yes, thank you for the question. I think, on the outlook of the economy, I cannot make a general comment, but just what we see at Holcim, we are — we have full order books. And especially in North America, also in Latin America, also in Europe, we see in principle, no cancellation of projects. In some cases, you have some delays, but which is normal, especially in those times, not only cost inflation, you also have a disruptions in resources, right? We have shortages on some materials. We have shortages on construction labor, on drivers and so on. But I think it’s all still in a very healthy shape.
And on top of the good order books we have right now, we should also remember that all the infrastructure measures, which were announced by many, many countries like in the U.S., Build Back Better, all this whole new investors in infrastructure. This has not been reflected in our order books yet, right. So on a normal circumstances, we expect this to start influencing our business very positively next year. So at this point in time, we can only give a confident outlook because that’s what we see happening with our customers and in all our key markets.
You’re asking about the further expansion of Solutions & Products. And maybe, first of all, I’m super happy we entered the roofing and insulation system business. You have to imagine, we now say, we have about CHF3.5 billion pro forma sales already through the acquisitions and a super high organic growth rate at the moment, which puts us already in the number three, number four position globally in roofing systems. At the same time, these are large markets. In the U.S. alone, we are operating in a $25 billion plus market with those products. Then you have similar volumes, of course, in Europe, and you have some volumes in Latin America. So we entered an extremely large market segment.
And I’m just talking about roofing. We also entered into insulation. So we can talk about a whole building envelope where we can offer systems in the future. So we have a lot to do, Paul. And our number one priority is to further build, grow and further acquire in this space of roofing and insulation systems. Having said that, we at the same time, we put together a nice new platform, which is also for insulating for sales, mortars, tile adhesives in Europe, where we did four acquisitions, giving us already a base of CHF600 million in sales. And you see here that gives us quite some market share in Europe. The market segment itself is smaller than roofing. Nevertheless, we have just started, so plenty to grow.
So to be transparent with you, we entered two segment Solutions & Products which gives us plenty of room to grow, already now making up 24% of the group sales and making it now very achievable to 30%. And hopefully, we can beyond — go beyond the 30%. If something exciting comes up in a related market segment, we will look at it, and we will not say no if it’s attractive. But we have plenty of space to go with the two platforms we just established.
Paul Roger
That’s great. Thank you very much.
Operator
The next question comes from Matthias Pfeifenberger from Deutsche Bank. Please go ahead.
Matthias Pfeifenberger
Yes. Good morning, ladies and Jan. Two questions from my side. Firstly, on the S&P segment, the strong like-for-like growth, more than 25%. Could you segment a bit in pricing and volume terms? And what’s really driving the increase, especially in North America? And then 140% like-for-like on the EBIT, why is this such a big operating leverage? And then also taking a couple of steps back, you seem happy with the pricing or are you launching more price increases, especially on the cement side? And is there in the end scope to maintain margins on a year-on-year basis for the group? Thanks.
Jan Jenisch
Yes. And good morning. And yeah, I’m very excited, of course, that when you acquire a business, it’s fantastic to have such a rocket start, as you mentioned, both in growth and then even in margins. And I can share with you when we say we now reached already CHF3.5 billion in Roofing Systems alone, we have basically doubled the profitability of those CHF3.5 billion in just the last 1.5 years where we started to acquire those businesses. I think we have very dedicated management. You have to imagine the Firestone business, for example, was carved out of the biggest tire manufacturer, Bridgestone.
And I think it’s natural to be in a building materials home now that we are there with full passion. We’re also investing in the business. We had a couple of debottlenecks or bottlenecks, we could debottleneck. So very excited to do that. And the market is good. You have to see these Roofing Systems. We are selling more than two-third of the sales comes from repair and refurbishment. So we don’t depend largely on new build and that’s a very, very stable and profitable market. And the market has been very good.
To the growth, we do about half the growth in volume, half the growth in pricing and that’s not a bad mix. And of course, the pricing here was above the cost inflation, so helping us to increase the profitability, as mentioned by you. So a very exciting start and gives us, I think, now a lot of confidence that strategy has started to not only Europe, but already delivering such strong results, and it gives us a bit of confidence now to go ahead here.
I think on the price increase, your second question, I’m super happy. When you see this 40% energy cost increase in the first half of the year, we are talking a couple of hundred millions alone. And then we have CHF250 million increase in logistics. And I could just go on. So we’re talking like CHF1 billion-plus in cost inflation in the first half of the year and that was a challenge for us to target the right price and the patience to make the price over cost work, and I’m really proud our people could make it.
I think we have seen the steepest cost challenge in Q2. That doesn’t mean the costs go down now. But I think for Holcim, we are in a sweet spot on the margin side. We don’t need further price increases, I believe, at the moment. It doesn’t mean we don’t have some. But I think we have done our homework now in the first half of the year to a very good level.
Matthias Pfeifenberger
Thank you. Very helpful.
Operator
The next question comes from Siya Brijesh (ph) from HSBC. Please go ahead.
Brijesh Siya
Hi. Good morning. I have two as well. So the first one is on the gas situation. I agree that you’re not using gas directly, but looking at EU’s target of kind of volume to reduction of 15% in the next 10 months, do you think the overall construction industry will also kind of befall in that level because your other ancillary products like chemicals and other stocks or steel are not available because of the reduction in gas consumption? That’s the first one. And the second one is on the hedging. If you could just give us an update of where your power hedging in Europe is for the second half and into 2023, please?
Jan Jenisch
Sure. Thank you. I mean I think you are all are experts in the influence of gas. I think it’s used not only as an energy source, it’s used for production, it’s used as a feedstock for chemical industry and so on. And again, I’m not — I cannot forecast here something and no one can forecast how this will turn out, but I can just tell you that we have a good situation for Holcim. We have secured our energy. We are not depending directly on gas. We have also alternatives. We had a huge increase of alternative fuels.
We are close to two-third of the energy we need in our plants coming from alternative fuels, there’s a huge increase. So that also has actually a positive effect. A lot of people complain when the cost increases. But if you handle this well, it helps you to make — your company more robust and more efficiency, right? So for example, increase in CO2 pricing, but also increase in energy cost has helped us to accelerate our transformation. And when you look at our numbers, we have done this, I think, it’s quite an impressive manner. So there’s nothing I can be worried now at this point in time. I think we are on a very safe grounds here.
On the hedging, I’ll let Geraldine speak in a moment. Just as a general rule, and I said this before, we have to be careful in hedging because hedging doesn’t come free of charge, and then hedging sometimes makes the operational people slower in the reaction time. I honestly prefer to have cost reality as soon as it’s there, so our people can react accordingly and cannot rely on, no problem with the energy cost, I’m hedged for the next three months or six months. And then I’m just too slow to react. So we try — we hedge a bit on the corporate side, but we keep this away from the countries because the country needs to be very proactive and adjust immediately and not be slow because they believe something is hedged.
Geraldine Picaud
Yes. And thank you, Jan. Then to complement, we are very agile, and we are really trying to have an optimized sourcing strategy. Yes, it includes a hedging. But it’s all about contracting and agile buying behavior that we want to maintain. And we are also reinforcing all green power contracts mitigating here the increase. We have also an owned wind farm in Germany. So all of this is part of the plan for us to mitigate the power cost that are effectively linked potentially to what’s happening in the gas.
Brijesh Siya
Okay. Would you be able to put a number around it?
Jan Jenisch
Number is not that easy because you’re hedging, we believe, in longer-term contracts. So we love to have multi-year contracts with the power or the utility companies. We love to have green energy contracts. I most loved to have alternative fuel increasing by 10% a year. So we do this as number one for us. And a pure financial hedge on some indices, we do this sometimes, but that’s not a focus for us.
Brijesh Siya
Okay. All right. Thank you very much.
Jan Jenisch
But you can make another calculation, if you like. So we shared with you that our energy costs globally went up 40% in the first half year. And when you look at the different energy indicators, I don’t know if the costs are up 60% or 70% or 80%. But you see already this gap there that — and this is not a miracle, we are not saying we are genius with this, but we have long-term contracts, and this is what we like to do, and that gives you quite a buffer when it comes to this price hikes.
Brijesh Siya
Okay. Got you. Thanks.
Operator
The next question comes from Martin Huesler from ZKB. Please go ahead.
Martin Huesler
Yes. Good morning and thank you for taking my question. First one, so you had a very strong recurring EBIT growth in the first half and you say something like that in H2 probably comparable base will be more or kind of easier for you. I just wonder why don’t you give a guidance on EBIT growth for this year? And if you don’t give, is it fair to assume that in the second quarter, the recurring EBIT dynamic should be higher than in the first half. So in the second half higher than the first half. That’s the first question. And then after, I will ask my second.
Jan Jenisch
Hey, Martin. Good morning. Yes, what a question you’re having. Let me say, we took quite a confident outlook beginning of the year. If you call back, we had this that we’re going to have an EBIT growth. We came out, I think, with the full year results. And that was quite a statement at that point in time. And I’m very happy we could deliver this in the first half year because we had a lot of — there’s a lot of negative sentiments around different sectors and people and so on. So we delivered in the first half of the year.
Now if you make your math, my guidance is still the right guidance. We’re going to have a positive growth in EBIT, both in Swiss francs and like-for-like. So I think we are in a right now, if you want to have an exact number, we will not be able to give that to you today. I shared already with you that I believe we are quite in a sweet spot regarding margins, regarding pricing, regarding cost mitigation, but we have very volatile times, and that’s why I think it’s not the right time for us to be more precise than that. But obviously, you can see that we are confident that we will continue with the profitable growth also in the second half of the year. And hopefully, we can give you a more precise target maybe in the upcoming months.
Martin Huesler
Okay. Thanks a lot. Fair enough. And the second question is turning around this rebranding of Firestone into Elevate. Can you give the a bit more of background. Why did you do that? Did you have to do that because of some branding topics? And why is Malarkey not part of the Elevate kind of brand?
Jan Jenisch
Okay. Yes. No, great, Martin, look, I think we made extremely great progress with the branding. You see the new Holcim brand, it’s a big success throughout the world. It gives the company, I think, the right also a base for reputation, quality, service and so on. This is also what we did with Firestone. So we’re using now the Holcim Group brand also for the acquired companies. And then for the particular Firestone, which is kind of our industrial roofing brand, we have only a limited time spend, we can use the brand because Bridgestone is actually using that brand also for certain tire brands.
And we made the change now much earlier than we needed to because we have a good market situation, and we have the Holcim brand is strong also in the U.S. We are doing now in U.S., Canada, about one-third of Holcim is North America. So we are very happy now to put Holcim right in front of the roofing customers, and then we’re using Elevate for the industrial roofing solutions. We’re using Malarkey, a brand which we own, for the residential roofing and that’s how we plan to go forward.
Martin Huesler
Okay. Thank you. Very helpful. All the best for the second half.
Jan Jenisch
Thank you, Martin.
Operator
The next question comes from Cedar Ekblom from Morgan Stanley. Please go ahead.
Cedar Ekblom
Thanks, very much. Hello, guys. I’ve got my question on your premium pricing for your green cement and concrete products. We’ve seen a lot of peers over the last couple of quarters starting to launch products onto the market. Can you give us a little bit of color in terms of how you’re seeing the premium of your products deliver? And then just on the excess of assets, we know that you had guided to the Indian exits in the second half, so that still seems on track. But on the Brazil business, it seems like that one is dragging a little bit, and it is a sizable potential cash inflow. So could you give us a little bit more understanding of what is delaying the closing of that transaction?
And then sorry, just a follow-up, Jan. Just on your comments there on the roofing brand in the U.S. Does that mean that some of your products in roofing are now Holcim branded? So you sort of split the Firestone product offering into the Elevate products, the sort of most technology advanced and then the more or less innovative products, I just didn’t really understand that part on the branding. Thank you.
Jan Jenisch
Hi, Cedar. Good morning. Yes, the Holcim is the group brand. So we also operate now Firestone, Malarkey, SES insulation foams. We operate them within the Holcim family, but then they’re using specific brands for these different areas of roofing for industrial customers, for residential customers and also for the insulation systems. So I think that’s all really very well done and very look forward here to also freshen up this whole branding, if you see now that Elevate, that looks fresh, modern, that is connected to solar roofs, to cool roofs, to green roofs compared to a rather old-fashioned Firestone logo. So I’m very happy we made that move.
And it’s always important to make these moves at the right time. So we selected to make it early because obviously, we have a great growth. We have a great feedback from the customers. So we make it in a times of strength. We still have time to do it later, but we decided to make this early to use now our strength here to start a new era of growth in the roofing and the Solutions & Products.
On the premium for the green products, it’s — we have a premium on the green products. And you can see that, obviously, it has an effect. If you look at our concrete or other areas where, obviously, our margins are going in the positive direction, even so we have this unprecedented inflation trends we have to cover them. So this is very good. It’s just that from my personal view, I don’t want to have necessarily the highest possible premiums on those products because we want to make those products our mainstream, our volume products.
So we want to transform the Holcim products range into sustainability fully. So our target is not to have an ECOPact and leave it at 10% of sales in concrete and get like 30% extra margin. We want to instead have a margin extra and then convert the whole concrete range to ECOPact and the same for our cement range where we go into ECOPlanet.
On the margin side, it varies a little bit from country to country. We have some countries where due to the use of, for example, construction demolition waste, which is kind of a free raw material for us. If you do it right, we have even highly increased margins to other markets where a green solution has extra costs for us. So it varies a bit from country to country. But for now, I just want to share with you, so we have an increased margin, but it’s in the, I would say, low-single digit range, and it’s good this way because we want to transform our whole product range to sustainability.
On the divestments, we shared with you — I think we had one slide in the deck where we are waiting now for the closing of Brazil, Zimbabwe and India. And you are right, that Brazil has been signed already last September. We got the green light from the regulator already. There was one competitor interfering, also a second time. We expect now to get the final green light maybe in September or October, and then we can close this transaction, which, if you recall, was for an enterprise value of a little bit over $1 billion. So I very much look forward to have this cash finally in the bank.
On the India transaction, that goes, at the moment, very smooth. We have — the only condition now is also the regulator. So the Indian Competition Commission has to approve it. We expect this to come in the next four weeks. And then the deal will be closed in the following four weeks. So you can expect that we closed India already end of August or end of September.
Cedar Ekblom
Thanks very much. That’s helpful.
Operator
The next question comes from Gregor Kuglitsch from UBS. Please go ahead.
Gregor Kuglitsch
Hi. Good morning. I’ve got two questions, please. So firstly, if I could just come back on the sort of price cost spread. So you’ve done a good job in Q2 where it turned positive on the sort of legacy heavy side business. I just want to understand if your comments around the comp easing the pricing, whether you think that continues to be positive in the second half? I think that’s what I kind of infer from that.
And the second question is on the free cash flow generation. So I think looking at your slides, your trailing 12 months free cash generation has dropped a little bit. I think it’s CHF2.7 billion, if I’m not mistaken, obviously, working capital being the sort of culprit there. I want to understand whether there’s something sort of going on around timing or anything else you should consider as to why that’s sort of dropped a little bit compared to the over CHF3 billion mark that you’ve achieved over the last few years? Thank you.
Jan Jenisch
Hey. Good morning, Gregor. Yeah. No, look, I think if the conditions continue as they are at the moment, I think we’re going to have a positive price over cost for the second half of the year. I mentioned we’re in a good situation. We have done, I think, sufficient price adaptations. We have done very sufficient cost mitigations. So we are in a very good spot. I think Q2 is probably the steepest challenge for us in this year when it comes to cost inflation because we still have significant lower energy costs and other costs in Q2 last year. So I think in the second half of the year, the comparison will be much closer to the current cost situation. And then we should see, I think, very positive results. So our target for sure is to be positive price over cost.
And again, the first half year gives me quite a strong confidence because that was really challenging, to be honest with you, it was very challenging. So we expect this also to happen in the second half of the year. And then, of course, we have our turbo booster with the roofing, but also the mortar business, where we have more sales coming online with the newly acquired SES business, but also we have significant growth from the Firestone, but also Malarkey, we just closed in May, is also on a very high growth trend at the moment and for the rest of the year is sold out. So we have, I think, quite some excitement left for the second half of the year.
On the free cash flow, as we all know, the first half of the year is always a bit difficult with the cash flow, it’s on a much lower level than the second half of the year. Nevertheless, we were cash flow positive. Here, we didn’t compromise for the customer. You can imagine with all the disruption in the markets, our first priority was to serve the customer. So we have to sometimes — we have to take a bit more inventory in on certain minerals. We have to even take on spare parts and other things. We took inventory in because we have the disruption in the supply chain. The global supply chain is one thing, but to also get it delivered is another one.
You have the lead times which are 2 times or 3 times higher now than before, and we didn’t want to take any risk to disrupt our customers. That’s why we didn’t, how to say, we didn’t optimize inventory or cash flow in the first half because we wanted to fully benefit from the growth, which is possible for us and also, I think, to serve our customers well here. We have, of course, then the increased activity and also the increased pricing leads to higher valuation of inventories and all of that. So you know all that. So for me, the cash flow is a bit delayed this year because of the circumstances, and we still stick to our guidance of CHF3 billion free cash flow for the full year, and I think we’re going to have a strong cash flow in the second half of the year.
Gregor Kuglitsch
Thanks, Jan. Thank you.
Operator
The next question comes from Yassine Touahri from On Field Investment Research. Please go ahead.
Yassine Touahri
My first question would be on your Roofing & Insulation business. You’re expecting to generate CHF3.5 billion of sales in 2022 pro forma. What kind of margin would you hope to achieve on those CHF3.5 billion of sales? And my second question would be, if there is a recession in 2023 or 2024, how confident are you in your ability to keep margin and to keep the pricing at its current very high level?
Jan Jenisch
Hi, Yassine. Thank you for the questions. And I think we indicated in the presentation that our Roofing business is at a 19% EBIT margin which I think is already a very healthy level because we discussed this already earlier that we basically doubled the profitability. I think the 19% is a super level. I think it can go to 20% or beyond. But nevertheless, we are quite happy with the 19%. We still have a lot of efficiencies and economies of scale coming. We have a very exciting debottlenecking projects in our plants. You can imagine we have now in roofing and insulation, we have now a backbone of 18 manufacturing facilities, that is really fantastic. And now we have a lot of effort to debottleneck, make them faster, a bit more efficient.
So I think we have a lot of positive news coming from the roofing and insulation segment going forward. If you go in a bit recession environment, which what you mentioned for next year. Just maybe two comments from my side. Of course, if this will come, we’ll have a volume effect on our business. I think on the margin side, I’m rather positive because we have proven in the last crisis that we can rather improve the percentage margin in such a scenario because the sales prices will be more stable compared to the lowering of the input costs. And Holcim has — about 75% of the cost is with third-parties.
So we — and this is something we did in the pandemic, the first part of the pandemic in 2020 when volumes dropped drastically in April, in May and June, we were able to even increase the margin because we have a decrease in costs. And compared to that, we could hold up the prices. So we had a very positive pricing over cost. So I think for these scenarios, we are very positive that we will have a positive price over cost. The volume effect, of course, we will have, like others, but we will be quite, I think, resilient. You also know that with our new product launches, with the roofing and these businesses, we are much more geared now towards refurbishment and repair market segments, and those segments are very resilient in the crisis.
Yassine Touahri
Thank you very much.
Operator
The next question comes from Luis Prieto from Kepler Cheuvreux. Please go ahead.
Luis Prieto
Good morning. Just one question from my side. If I recall correctly, in the first quarter, you pointed to 40% to 45% energy cost inflation for the full year, around 9% to 10% cost inflation for the other costs bucket. Would this still be the case at present or do these figures in the context of what you were describing earlier, the 40% for the first half, do these figures look a bit high now? Thank you.
Jan Jenisch
Okay. So basically, we are at the lower range of the energy cost inflation. We are at 40% for the first half. You mentioned we were guiding 40% to 45% that’s quite accurate. And I think for the full year, I would say our own internal planning is still in that range. So you can be assured that we are not planning for any lower energy costs, I think that would be very irresponsible at this point in time. So we plan for a high level of energy costs around the first half or it can go a bit higher. We are well prepared for that and we have all the necessary mitigations and the pricing is in place.
Luis Prieto
Excellent. Thank you.
Operator
The next question comes from Nabil Ahmed from Barclays. Please go ahead.
Nabil Ahmed
Yes. Good morning. One of your competitors have set new standards in terms of carbon-emission reduction for 2030 by significantly accelerating on carbon capture and storage. Do you see an opportunity for Holcim to follow a similar path and maybe come back with more aggressive 2030 objectives? And my second question was actually about Russia. Could you please update on the disposal process? What’s the environment for transaction looking like? Did you receive interest from potential buyers? And when do you expect to be able to effectively sell your operations? Thank you.
Jan Jenisch
Hi Nabil. Good morning. Yes, I think on the carbon capture, this is one important element of our decarbonization strategy. And you can see also from our latest press release, we have received a very significant commitments from the European Union Innovation Fund, a couple of hundred million for two projects, one in Germany, one in Poland. So I think we are fully on track also for carbon capture and carbon capture and utilization. So we are fully on track there.
It’s very important in my view that you have a whole string of decarbonization initiatives from alternative raw materials to alternative fuel, to new minerals being used to replace cement and then make the whole circular construction a reality and further increase the use of construction demolition rates, and of course, as you mentioned, to finally capture the carbon. So we are — we’re fully on track. We have over 20 projects here, and you will see also an acceleration here from our side.
Your second question was on Russia. Well, I think I’m very happy we’ve made such an early announcement to exit or divest our Russian business. We have now very active discussions with the various interested parties. And we do this very diligently. It’s handled by our actually legal departments here because you have to make sure that you’re talking to the right people and that is what we are doing. And I think we’re going to have a solution in the coming months.
Nabil Ahmed
Brilliant. Thank you.
Operator
The next question comes from Arnaud Lehmann from Bank of America. Please go ahead.
Arnaud Lehmann
Thank you very much. Good morning, Geraldine and Jan. My first question is just a follow-up on India, please. Could you remind us the strategic reasons for selling India? And related to that, could we please have the book value of the assets in your balance sheet at the moment? And can you confirm that the deal is going to be tax free? That’s my first question. My second question is on Asia-Pacific. Once you sell India, there’s not going to be that much left in this particular region. Would you consider, I guess, selling eventually the Philippines, the JV in China or the operations in Bangladesh? Thank you very much.
Jan Jenisch
Hey. Good morning, Arnaud. Yes. Look, India is about the same reason why we divested Indonesia or Malaysia or why we divest Zimbabwe now or why we divest Indian Oceans. They’re not bad markets, they are growing very early emerging markets. And you see from the Holcim strategy now, we want to focus on markets where we can sell from cement, aggregates to the new lines of concrete and then to Solutions & Products. And the sophisticated systems we are now having in Solutions & Products, they are focused on the developed construction markets in North America, in Europe and also partly in Latin America.
And this is the key focus for the Holcim Group. We are not departing cement or something. We are decarbonizing cement, but we will continue to sell cement in our key markets. But we have to shape the portfolio a bit, and that means we are divesting a handful of emerging markets. Now India is a great market for someone who wants to build one or two new cement plants every year. It’s for us as a Swiss company, not so satisfying from a cash repatriation viewpoint and many of you have asked this question many, many times, what are you going to do with this low cash repatriation?
That was always a fair comment you made because the cash repatriation has been very, very low from India due to taxes, due to minority shareholders and so on and also due to the fact that we had to reinvest a lot of money to make the operations increasing their capacity, but also increasing their efficiency. So we believe they are better owners than us, and this is what we did. And it all comes, of course, with a valuation. If you want to divest India, there’s a certain valuation you want to have, so we didn’t divest India for CHF3 billion or CHF4 billion, we divested for CHF6.4 billion. If I put that in relation to my cash repatriation, my previous year was below 1%.
So I think we did the right thing and maybe also the timing now is quite good. And I’m very happy we could make the step. And we do this very responsibly to divest something that’s not the say — that’s not a joy like when you acquire something. So we always have a bit of sad moment because it’s our long-term employees and our people, our customers. So we take very good care to select the new owner. And I think in the India case, we have with Mr. Ambani or the Adani Group, we have a perfect buyer who has synergies from his logistics and energy operations and at the same time, it’s new to cement. So he will be a very good home for our employees and customers.
To the next question, so we have quite some money coming in. So if we have Brazil, India and Zimbabwe closing, we are talking more than $7 billion cash in the bank. In Switzerland, we don’t expect taxes to come, maybe some small risk or some small amounts, but basically, we believe these proceeds will come net here to the headquarters to Holcim Group. And this is, of course, then very exciting. And then we have up to see how we use the money. We have, of course, also spent CHF5 billion to build up Solutions & Products just in the last 18 months. So we have proven that we can use the money worthwhile, and we have a couple of targets we are working on at the moment. So you can expect also here maybe some attractive deals coming along, and that’s what we plan to do.
Further divestments, you were asking. So we are not in any pressure or something. I think we made a very good portfolio transformation. I think I see it in some of your reports always very smartly pointing out that we actually are divesting for higher multiples than we are paying for this Solutions & Products segment, where we are buying or also the bolt-on acquisition. So we make, I think, a very good changeover in the portfolio. And this also you can see finally in all our numbers from balance sheet to P&L that we make this very result accretive from the first moment. So very happy with that.
Further divestments, I think we have a few countries we may be thinking about divesting. At this point in time, I have no formal announcement to make. But there are a few markets maybe we could divest in the future. But again, there is no rush for us because we are, I think, in a very good situation of the balance sheet and also closing out these rather big divestments we have signed.
Arnaud Lehmann
Thank you very much.
Operator
The next question comes from Remo Rosenau from Helvetische Bank. Please go ahead.
Remo Rosenau
Yes. Thank you. About India, again. I went back into the Annual Reports in 2006-’07 when Holcim bought Ambuja and ACC. And I saw that the purchase prices were pretty low. I mean talk about CHF3 billion or something. Of course, there were some additional shares bought later, but also the goodwill was pretty low. So there must — there will be a pretty significant booking, I presume in the tune of some billions. Is that correct or something?
Jan Jenisch
Remo, this is also the information I have. We can ask the CFO, if she wants to share some secrets or more information here?
Geraldine Picaud
Okay. Yes. Hi, Remo. Look, it obviously depends on the timing because you have also a currency impact, a ForEx impact to take into consideration, but we can count on the capital gain that’s going to be between CHF1 billion to CHF2 billion at least, yeah.
Remo Rosenau
Yeah, rather CHF2 billion, I think. Okay. Great. Then the other question, I mean, Jan, you said that you think that you’re in a very sweets pot in terms of margins looking into the second half because you did your homework in terms of pricing. Would this comment also be bad for the Asia-Pacific region, a region where pricing could not be increased as needed and the margins have increased by a very steep 10 percentage points in the second quarter. So — could we also be looking forward to an improving margin in Asia-Pacific, assuming that India would still be there as a performer? And adjacent to that, has there also been kind of a special impact in the first half due to the lockdowns in China or did that not play or have a big impact?
Jan Jenisch
Great. Yes, Remo, I think, first of all, that is key that in all key markets except for Asia Pacific, we were able to be price over cost positive. So we may from Europe, North America, Latin America, also Middle East, Africa, really outstanding results and very proud of our people, how they really hit the situation here or how they face the situation so successfully. There are three key markets. We were not able to fully offset the inflation and pointed out by you, that was India, Philippines and China, and situation for all three a little bit different.
So in India, to start with, it’s always a bit quite — a volatile market depending on the current situation, even with monthly weather and so on. And we were able to get some price adaptations, but not to the full extent which was needed. And also considering that you have the biggest cost inflation in India simply by the fact that the alternative fuel rate is very low in India. So you are very depending on traditional fuels and at the same time, the labor costs are relatively low. So you have a very big impact on this cost inflation in India, the biggest of all our key markets, and we were not able to fully offset, and that was the Indian situation.
China was different. China, actually, we have very good margins. And here, we were influenced by these lockdowns. So even on the volume side, we had, especially in April, we almost had a volume drop in China, like the beginning of the pandemic, I think in China was around more than 20% volume decrease in April. Volumes are back now on last year, but nevertheless, China was influenced by this lockdowns. That’s actually the only key market for us, which is in the lockdown situation. And that influenced also here the volumes and the pricing, but this will come back. So the Indian market is intact, that will come back.
In the Philippines, we had difficulties to adjust the prices. It happened in the meantime, but we have some, how to say, some struggles in the quarter two and only towards the end of the quarter, actually, June was the first month where we had the margins on the right level, but not before. But overall, it’s an amazing result that we had all the key markets in a success. And these are the three markets as pointed out by you, where we had a little bit of a headwind. And — but this will not stop us in the second half. As I mentioned, China will come back, Philippines is back already, and India will be with a new owner. So this will not affect us in the second half of the year.
Remo Rosenau
Okay. Great. Thank you very much.
Operator
The next question comes from Tobias Woerner from Stifel. Please go ahead.
Tobias Woerner
Hi. Good morning, Jan and Geraldine, and ladies from the IR team. Two questions from my side. Number one, Jan, you mentioned in previous calls, post-COVID or during the post-COVID that bag cement sales in emerging markets did particularly well. There’s — the question now is, are you seeing this slowdown in terms of the impacts falling away? And also given the cost of living prices in emerging markets, it’s probably a question of putting food on the table as opposed to making some capital investments, i.e., buying a bag of cement, does that have any impact?
And then the second question relates to us, analysts, we’re starting to cut our numbers for ’23, some more, some less. What do you think of that? Are we premature in doing so despite some of the lead indicators coming off, like the NHAB in the U.S., et cetera? Thank you.
Jan Jenisch
Hi, Tobias. No. Yes, you recall that rightly that in the first year of the pandemic, we had an increase of bag cement sales in many of the emerging markets. So that was a good counterbalance for maybe less volumes for bigger projects. And this is rebalancing now off. So this is nothing negative or so. But — so at the moment, we see now bigger projects and bulk sales more dominantly and the bag is rebalanced to normal levels. So just, I think, normal course of business. I think for the future, you all, of course, have to make your own models and assumptions, but I think what you can take away from our results today that I think we are above expectations and at our success both in sales and in margins are very broadly based in basically all regions, all key markets, successful mitigation, growth is based on a number of end markets, is based on Solutions & Products, increased refurbishment and repair sales. So our order books are full. We have more excitement to come with the infrastructure program. So there’s no reason for me to be pessimistic about the outlook for 2023.
Tobias Woerner
That’s good to hear, Jan. Thank you very much.
Operator
The next question comes from Jean-Christophe Lefevre-Moulenq from CIC. Please go ahead.
Jean-Christophe Lefevre-Moulenq
Yes. Good morning, Jan. I have two questions from my side. I know that you like to share some secrets. First one, to come back to the power deal. Can you give us some flavor on the share of hedged and long-term contracts and maybe the duration? Secondly, regarding the two CCUS investment projects co-financed by the European Union, could we have maybe the order of magnitude of the necessary CapEx for implementing this? Many thanks.
Jan Jenisch
Hi, Jean-Christophe. Good morning. Look, we talked already a little bit about the hedging and everything. And just for our side, our policy is important that we have rather long-term contracts. So basically, we like to have multiyear contracts with utility companies for power. We like to have more and more contracts for renewable energies. So this is our best way to hedge and have a proper base. So pure hedging, we hardly do. We do a bit at the headquarter. Geraldine likes to do that sometimes. But we try to keep that away from the countries because they need to feel a reality immediately and make the necessary adaptations in sourcing decisions, but also in decisions to price adaptations. So that is, I think, very, very important. I don’t know, Geraldine, if you want to make any extra comment?
Geraldine Picaud
No, I think that you, Jean-Christophe, you can feel assured and that we have really secured power prices for H2 as well. So as Jan I mentioned, we are in a good position and a sweet spot for 2022.
Jan Jenisch
So — and we feel we have the question also with where we land, let’s say, energy cost. We have the super-steep 40% increase in energy costs in the first half of the year. We believe the second half of the year will be in a similar magnitude. We are also prepared if it goes a bit beyond that. And that doesn’t scare us. We have I think the right measures, the right pricing is in place. So we believe that we have very — we’re going to have very good margins in the second half of the year.
You had an interesting question on the carbon capture project. So I think for the moment, it’s fair to assume that such grants we are getting from the Innovation Fund of the European Union maybe cover up to 80% of the CapEx, yeah, which is a good number. And you see now how our CapEx is moving towards green CapEx more and more, and we also provide that number, and this is what we like to do more in the future to decarbonize our business. And always to remember that the investments in sustainability actually have the highest return for Holcim.
So all the investments we did on alternative fuel, I wish we were — they were bigger and faster. We had a program 3.5 years ago in Europe to further reduce the CO2 by 15% in our plants. And that — those investments were calculated at EUR20 per tonne of CO2, and now we are at 4 times that level. You can imagine how profitable these investments are, and this is how we see it. We’re going to see that we have very high yields in these sustainability investments, and we will be — we’re very, very excited to further accelerate here.
Jean-Christophe Lefevre-Moulenq
Excellent. Many thanks.
Operator
The next question comes from Yuri Serov from Redburn. Please go ahead.
Yuri Serov
Yes. Hi. Good morning. Yes. Can I just press you on the demand outlook or volume outlook, again? You made quite a lot of comments already, but I just want to get a bit more clarity, if possible. So you’re saying that you don’t see any slowdown in volumes and the order books are full. On the other hand, your volume growth in cement and aggregates in the first half were negative. So I wonder how you correlate those two parts and what you see for the second half and what sort of volume growth you are assuming in your numbers when you give us your guidance? Thank you.
Jan Jenisch
Yes. Hi, Yuri. Good morning. No, again, I think we feel in a good spot the demand or the capacity utilization depends a little bit on the markets. But again, we have many of the European markets. The North American markets, we are sold out at the moment. And so we cannot say anything else. We go into the second half of the year with very strong sales. You see we had a volume increase in North America, I think, it was double-digit in the first half of the year. So really nothing more to say. We have full order books. We have all the right demand trends going forward. You see we have the double-digit sales growth, plus EBIT growth. So that’s what we have at Holcim at this point in time. And I have no indication that this will slow down.
Yuri Serov
But I’m sorry, the numbers have already slowed down. You had negative numbers overall for the company in the first half. And you sound as if volumes will be positive in the second half. Is that the right read? Are you telling us that the volumes actually will come better in the second half?
Jan Jenisch
You have to look at this region by region. We have a bit lower volumes, maybe in Central Europe, if you want to scrutinize the numbers. That is correct. Now in Central Europe, we had, I don’t even want to go there, less working days, some weather impacts. Let’s not talk about this. So we have a comparison — so we have the Central Europe, we had lower volumes than maybe we wish for, but this is not a strange indication. I was just traveling around Europe, I was in France, in the U.K, in Germany, Austria and other markets, and we are slightly down in the second quarter, you’re totally right. But it’s nothing frightening.
There’s no breakdown of demand. We have in Eastern Europe with strong demand. We are sold out basically in our operations from Poland, Romania, over to ex-Czechoslovakia (ph). We have high growth in North America. The real volume drops we have seen was in the Philippines and China. We talked about Latin America, a very stable situation. And actually, this is a bit where we want to be because that’s — we also want to say we had higher-value products, like our green product range for concrete, for cement and then on top we have Solutions & Products, which is our turbocharger for now and also for the future. So there is nothing really negative to report. And you can see already when we discussed with the different markets, I think you see the ability that we can handle different demands at once successfully.
Yuri Serov
Okay. And actually related this clarification to this, I mean the volumes, again, you’re talking very positively, although the overall numbers are suggesting a drop in volumes in the first half, but your inventory went up significantly. Why was that? I mean you’re talking about strong demand, but the numbers are not showing that. And also inventory, is that finished goods or is this raw materials?
Jan Jenisch
But you have to look on the sales side. It’s — we are not — I know in the past, we talked a lot about volumes, but we go now into value selling. We have our Solutions & Product sales are not in the volume numbers. ECOPact, ECOPlanet, much higher value products, they don’t reflect in the volumes. So in the future, I’m not so concerned with the volumes at all. We want to go into higher value systems and not evaluate Holcim by the tonnes. And but nevertheless, even you look at tonnes, the system, it’s very different country to country. And I just start to explain a little bit where we are below, where we are above. And as a summit, it adds up positively. So I’m not really concerned here.
Yuri Serov
Okay. Just the second question, and this should be short. Energy, so at Q1, and we were talking back in April, I think, you said that for the full year, you see energy going up by 45%, we’ve discussed this on this call already. And you’re confirming that the estimate remains at the same range. But since April, energy cost, energy prices across the world have not further up. What is the reason why your estimate remains the same? Is that because you have changed the way to do the buying of the energy or you have some super new contracts or what is helping you preserve the estimate on all the sort of the world or…
Jan Jenisch
The different is, remember, we had the big energy hike coming in the quarter three last year. So that’s — the comparison base for Q2 was still at much lower energy prices, and then it really hiked in the second half of the year. So if we are saying we’re going to have another 40% price increase in energy costs for H2, that means significant higher prices in energy. So we’re actually reflecting the market situation fully. And again, we are not scared with the energy cost go hike up a further level or something. We have a lot of long-term contracts in place. But nevertheless, even we gave the guidance 40% to 45%. This would give me a margin of even 50% energy cost inflation for the second half, and we still would be in the sweet spot of our yearly performance.
Yuri Serov
Okay. Thank you.
Operator
The last question for today’s call is from Harry Goad from Berenberg. Please go ahead.
Harry Goad
Good morning. Thanks for taking my question. You’ve referenced an infrastructure spending a couple of times in this school. And I guess in the U.S., we have some pretty good visibility on that with the highway spending program. But can you provide us a little bit more detail in Europe, maybe by country, maybe by some specific types of projects? And I guess the thoughts on the materiality of impact that makes to volumes in 2023? Thanks.
Jan Jenisch
Yes. Hi, Harry. Yes, I think, look, we have this announcement of infrastructure, I think, across the key markets in the billions, in the trillions. And as I mentioned before, they are in the planning stage in preparation phase. So they have not hit our order books yet. So — and that’s for now, maybe all I can say, I think if this announcement come in place as planned, we’re going to see in 2023, a quite a good demand coming from those infrastructure projects, which were announced, most prominently in the U.S.
I think you’re all following closely from Build Back Better to already the past highway bills. So I think the highway bills, they will be fully in effect. They will be very rewarding for us. The Build Back Better Plan, I’m not sure how they will pass. You know the situation. There’s a lot of debate. But nevertheless, I think this is a positive element for next year to look forward to. I think even if you have a more pessimistic scenario for the markets next year, I think this will be a situation which will rather accelerate those government programs.
Harry Goad
Okay. Thank you.
Jan Jenisch
Wow. Good. That was an intense session. And again, thank you so much you spending the time, that means a lot to us. You know how much we appreciate the conversations and discussions with you. So very much hope we can all connect in the near future in person again. And for now, I wish you a happy reporting, and I wish you a good summer season and hope I see you soon after the summer. Thank you very much for joining.
Operator
Ladies and gentlemen, the conference is now over. Thank you for choosing chorus call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
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