holcim CS building sector seminar michel r gerber senior investor relations officer swetlana iodko investor relations officer

Holcim at a Glance Macro Economic Development and the impact for the cement industry Merger between Holcim and Lafarge First quarter 2014 results Outlook 2014 – Conclusions... China *Sou

CS Building Sector Seminar

Michel R Gerber, Senior Investor Relations Officer

Swetlana Iodko, Investor Relations Officer

Holcim at a glance

130 cement plants around 200 limestone quarries / 450 aggregates operations

1’150 RMX plants in the world

> 70’000 employees

over 5’000 own RMX trucks / more than 3’000 subcontracted over 1’600’000’000 cement bags sold Presence on all five continents and in around 70 countries

2013 Net sales of CHF 19.7 bn and operating EBITDA of CHF 3.9 bn

Holcim at a Glance

Macro Economic Development and the impact for the cement industry

Merger between Holcim and Lafarge

First quarter 2014 results

Outlook 2014 – Conclusions

GDP at constant prices [annual % change]

2014 and 3.9% in 2015 (IMF April 2014)

• Major developed countries to expand simultaneously for the first time in several years

• Emerging markets, on balance, should perform better in 2014

Source: IMF World Economic Outlook April 2014

Change in GDP Forecast [January '14 to April'14]

fundamental trends support our business …

The right place to be

Population

growth

Continued urbanization Economic growth

Europe 37%

Asia

Pacific 30%

Latin America 8%

Africa Middle

East 14%

Europe 18%

North America 6%

Latin America 11%

Asia Pacific 38%

Africa Middle East 27%

Europe 13%

North America 5%

Latin America 10%

Asia Pacific 42%

Africa Middle East 29%

Cement demand Split Mature vs Emerging markets

Cement demand evolution by region, excl China

*Source: BMI, National cement associations, Holcim estimates

… resulting in long-term cement consumption growth driven

by emerging markets and recovery in Europe and US

Regional Construction Market Growth Forecast [CAGR]

positive for the majority of the regional construction sectors, driven by sound fundamentals and mega-trends

GDP growth, growth projections for the sector are still strong

(CAGR) in construction spend is expected to be 6% for the period from

2013 to 2025

Oxford Economics remains positive on the long term

prospects of the global construction sector

Source: Oxford Economics - Global Construction Perspectives 2020 (March 2011) and 2025 (July 2013)

China and North America will attract most of the additional construction spend, followed by Emerging Asia and India

• In nominal dollar terms, China, North America,

Emerging Asia and India are expected to attract

more than two thirds of global construction

spend

• China is a growth driver with more than a third of

2013-2025 value growth potential [36% TOT]

• North America is expected to regain momentum driven

by economic recovery and population growth [15% TOT]

• New Asian Tigers (Indonesia, South Korea, Vietnam and Philippines) is expected see significant growth over

the period - Indonesia is expected to become the

worlds third largest housing market [12% TOT]

• India considerable growth potential [9% of TOT]

• Latin America (excl Mexico) will grow at a relatively low rate [6% of TOT]

• Weak economic fundamentals in Western Europe and

stagnant population will result in low but stable growth [5% TOT]

• Eastern Europe (driven by Russia and Turkey) is expected to grow almost as much as India [8% TOT]

• Africa with significant growth rates, however small overall

Source: Oxford Economics - Global Construction Perspectives 2025 (July 2013)

Global Construction Market [2013-2025]

60

17 26

26 11

19 3

5

68

4 12

7 11

Over the past 10 years Holcim invested about CHF 35 billion to establish a global

footprint unmatched in the industry

Well positioned to address growth in cement demand

• Global footprint - the result of

organic and inorganic growth

initiatives

sufficient to cover CAPEX and

financial investments

ongoing projects sufficient for

growth without major new

investments

existing plants coupled with

ongoing cost reductions to vastly

improve ROIC

generation expected for coming

years

Value creation from our existing asset base

-5005001'5002'5003'5004'5005'5006'500

Cash flow from operating activities CAPEX Financial (de)/investments

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

In CHF million

Holcim at a Glance

Macro Economic Development and the impact for the cement industry

Merger between Holcim and Lafarge

First quarter 2014 results

Outlook 2014 – Conclusions

Geographical Complimentarity of Portfolios

Developed markets Total

# of countries 73 17 90

Note: pre-disposals, pre-group elimination, post regional elimination

Combined sales by region

(in billion)

3.8 3.2

100%

CHF 2.0 / EUR 1.7

3.3 5.2

Asia

61%

39%

CHF 8.6 / EUR 7.0

Unique Value Proposition for Shareholders

• Company domiciled in Switzerland

• Capitalise on developed markets recovery

• Divestments of assets representing CHF 6bn / EUR 5bn of sales

• 60% exposure to emerging markets post divestments

• No country above c 10% of sales

• Boards of both companies have unanimously approved the transaction

• Thomas Schmidheiny, GBL and NNS fully support the transaction

• Best growth platform in the industry and superior operating profitability

• CHF 1.7bn / EUR 1.4bn of run-rate synergies

• Strict capital allocation discipline and strong financial structure:

targeted solid Investment Grade credit ratings

• Attractive dividend payout policy

• Exchange ratio of 1 Holcim share for 1 Lafarge share

• Transaction closing expected in H1 2015

Best-in-Class Portfolio for Growth

Emerging Markets

• 60% of pro forma sales

• 13 countries out of our Top 20 with strong infrastructure needs 2

• 6% CAGR for construction outputs expected until 2025 3

Developed Markets • 40% of pro forma sales

• Significant recovery potential

Eastern  Europe

c. 40% Developed  markets

Western  Europe 

Capturing the recovery in developed markets while ensuring long-term sustainable growth in emerging markets

1 Pro forma of divestments

2 Ranked below 50 in the World Economic Forum Global Competitiveness index for quality of overall infrastructure 2012-2013

3 Global Construction 2025 - A global forecast for the construction industry to 2025

Portfolio breakdown (2013 sales) 1

Operational Synergies

» Operational optimisation / best practices

• E.g logistics, distribution, IT, energy consumption CHF 240 m / EUR 200 m

» Procurement

• Savings in overlapping countries

• Economies of scale in centralized procurement for

selected categories

» Selling, General and Administrative

» Innovation deployed on a larger scale

• Cross-fertilization of value-added product portfolios

CHF 410 m / EUR 340 m

CHF 300 m / EUR 250 m

CHF 240 m / EUR 200 m

CHF 1.2 bn / EUR 1.0 bn Total synergies at EBITDA level

Financing & Cash Flow Synergies

» Financing savings CHF 120 m / EUR 100 m (from end of year 1)

Up to CHF 240 m / EUR 200 m (over time)

» Capital expenditures

• Best practice on maintenance capex

• Higher efficiency on expansion capex

» Working capital savings

• Sharing of best practices

CHF 250 m / EUR 200 m

CHF 500 m / EUR 410 m (over 3 years)

CHF 1.7 bn / EUR 1.4 bn Total synergies

CHF 1.7 bn / EUR 1.4 bn run-rate synergies

Operational Synergies Financing Synergies Capex Synergies Implementation Costs Working Capital Savings

Key Steps to Closing

Works Council

Consultations • Lafarge and Holcim Works Council consultations initiated immediately

Divestments • Process to start immediately

• After regulatory approvals:

 Holcim EGM approvals

 Launch public exchange offer

Transaction Closing expected in H1 2015

• Like-for-like sales increase in all segments

improvement

operating EBITDA and further reduction in NWC

Czech Republic

advanced Group in the building materials industry

Q1 2014 Milestones

Holcim Leadership Journey is on track

All figures in million CHF

3) Original amount w as projected < CHF 120 million for 2013; having spent already CHF 239 million, no additional restructuring cash costs are foreseen at this stage

achieved achieved Q1

2014

cum Target

achieved cumulative since 2012

1) The base line is the financial year 2011 amounting to CHF 2,308 million (excluding one-off charges 2011 of CHF 375 m and w ithout fluctuations in currency, changes

in scope of consolidation and similar market conditions) Adjusted for the sale of 25% of Cement Australia and Siam City Cement, the new base is CHF 2'193 million

2) Additional CAPEX net w ill come from prioritization of CAPEX based on the speed of the returns (ROIC)

Current energy fund of CHF 100 million w ill be maintained through the period 2012 - 2014

Key financial figures

Net sales by region

Operating profit bridge

Q1 2014

Operating profit by region

• Holcim expects cement volumes to increase in all Group regions

• Aggregates volumes expected to remain flat overall as increases in Asia Pacific, Europe, North America, and Africa Middle East are

offset by negative volumes in Latin America

• Ready-mix concrete volumes also expected to increase in most

regions with the exception of Europe and Latin America

• Holcim expects that organic growth in operating profit can be

achieved in 2014

• The ongoing focus on the cost base coupled with all the benefits

expected from the Holcim Leadership Journey will lead to a further expansion in operating margins

Outlook for 2014

• Cement consumption growth driven by emerging markets and

recovery in Europe and US

• Holcim with current footprint well positioned to address growth in

cement demand without adding any significant new capacities

• The proposed merger with Lafarge will add significant value for all stakeholders

• The unmatched global footprint of the combination between Holcim and Lafarge will lead to less additional capital for expansion and

therefore even more attractive returns to shareholders

• The ongoing focus on the cost base coupled with all the benefits

expected from the Holcim Leadership Journey will lead to a further expansion in operating margins in 2014 and beyond

Conclusions

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