Kerrisdale Capital Long Thesis on Buzzi SpA

Buzzi Spa it's a €9 billion Italian cement producer

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In its October 2025 report, Kerrisdale Capital makes a rare long call on an industrial company — Buzzi SpA, a €9 billion Italian cement producer that, according to the fund, represents “the best managed cement company in the world.”

Despite its pristine balance sheet, disciplined management, and a 30-year track record of compounding earnings, Buzzi trades at a steep discount to every one of its global peers. Kerrisdale argues this isn’t a reflection of fundamentals, but of market bias — a lingering skepticism toward Italian industrials that no longer matches reality.

Founded in 1907, Buzzi has transformed from a regional Italian operator into one of the world’s most profitable cement producers. Over the last three decades, the company has compounded EPS at 15% annually, built a global footprint across the U.S., Europe, Mexico, Brazil, and North Africa, and maintained a fortress balance sheet — with over €750M in net cash and zero stock-based compensation.

Management, still controlled by the founding family (which owns 56% of shares), has a long history of disciplined capital allocation. Buzzi expanded only when economics justified it — most notably through its acquisition of Dyckerhoff and a series of accretive deals in the U.S. and Brazil. It avoided the debt-fueled empire-building that crippled many European peers.

Kerrisdale calls this “one of the best-run public companies in Europe — period.”

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The U.S. Engine

The backbone of Buzzi’s profitability is its U.S. business, which contributes more than half of EBITDA with margins approaching 40%, among the highest in the industry. Cement pricing in the U.S. remains strong, supported by robust infrastructure spending, reshoring of manufacturing, and the unexpected surge in AI data center construction, which has become a new demand driver for concrete and aggregates.

Kerrisdale estimates the value of Buzzi’s U.S. operations alone at €8B, nearly the entire EV of the company. That means investors effectively get its European, Mexican, Brazilian, and Middle Eastern businesses — all profitable and cash generative — for free.

Decarbonization: The Hidden Catalyst

Beyond regional growth, the report focuses heavily on the structural transformation of the cement industry through decarbonization. Europe’s Emissions Trading System (ETS) and Carbon Border Adjustment Mechanism (CBAM) are reshaping the playing field, penalizing inefficient producers and raising barriers to entry.

Kerrisdale believes Buzzi is ideally positioned to benefit. The company has already reduced CO₂ emissions by 25% since 1990, with more than 100 projects underway to further lower its footprint. But rather than overspending to chase ESG headlines, Buzzi has chosen a measured, cash-flow-first approach — letting peers burn capital on unproven technologies before scaling its own initiatives.

As high-cost producers exit and imports become uneconomical, the result will be industry-wide pricing power. In Kerrisdale’s view, decarbonization will act as a “supply-side revolution,” pushing profitability higher for the few efficient survivors — Buzzi foremost among them.

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Valuation

At the time of writing, Buzzi trades at 6.8× 2025 EBITDA, compared with 9–12× for peers like Holcim, CRH, Heidelberg, Vulcan Materials, and Martin Marietta.

Yet Buzzi’s margins, ROIC, and balance sheet are stronger than all of them. The company’s clean structure — no options, minimal pension liabilities, and a long history of shareholder-friendly governance — should justify a premium, not a discount.

Kerrisdale values Buzzi at €85/share, implying roughly 73% upside from current levels. The U.S. segment alone accounts for nearly all of today’s valuation; applying conservative peer multiples to the rest of its business yields an EV near €15B*, with €1.3B in cash on top.

Why the Market Is Missing It

Kerrisdale suggests the discount is less about numbers and more about narrative. European investors tend to view Italian industrials as bureaucratic or family-entrenched, while U.S. investors have limited coverage and liquidity constraints. Buzzi’s communication style is understated — no English-language investor days, no bold capital market campaigns.

Yet, in an era where even capital-light tech companies are struggling to sustain margins, Buzzi offers the one thing few can: durable, tangible, global compounding with a clean balance sheet. It’s a business where growth doesn’t require storytelling — it just requires time.

Kerrisdale’s Takeaway

In the firm’s words, “Buzzi’s U.S. operations alone justify its entire market value; everything else comes for free.”

For Kerrisdale, this is not merely a value stock but a high-quality compounder trading at a deep discount, run by one of the most disciplined management teams in Europe.

They expect the valuation gap to close as:

1. The market recognizes the earnings power of its U.S. operations;

2. Decarbonization drives higher pricing and margins across Europe; and

3. A potential U.S. spin-off or relisting (as peers CRH and Holcim have done) unlocks a higher multiple.

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