Heidelberg Materials (HEIG.DE): Clinker closure announced, supports cost out catalyst; Buy

Heidelberg Materials has announced the closure of their Ranville Clinker factory in France, the 3rd European clinker closure this year as the company looks to shift production to lower emitting substitute materials from traditional clinker. We believe this group of factory closures by Heidelberg, alongside broader technology efficiency incentives are likely to form a new cost program, potentially similar in size to the Transformation Accelerator (TA) program announced 2Y ago, with 3Q'26 results in Nov-26 in focus. The 3 European clinker closures to-date are meaningful and together represent 75% of the size of 2024-25 closures which formed the foundation of Heidelberg's €500mn TA cost out program. We believe any new cost out program could be a meaningful catalyst. After 3Q'24 results (where the TA program was announced), Heidelberg outperformed the peer average by +20% in the month post. We believe any upside risk to margins from potential cost reductions is likely to come in the back h