Results 2012 and outlook holcim ltd switzerland

Thanks to the combined effects of an organic growth and the Holcim Leadership Journey, the Group achieved like-for-like growth of both the operating EBITDA and operating profit of 6.4 pe

Ladies and Gentlemen,

We welcome you to the presentation of our Annual Results 2012 After my remarks

highlighting the most important developments throughout the Group, Thomas Aebischer,

our CFO, will explain the Group financial results Before the discussion, I will comment

on the outlook

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In 2012, better demand for building materials in the fast growing markets of Asia and Latin

America as well as North America was in contrast to the low demand in debt and

recession hit Europe

Holcim delivered more cement However, shipments of aggregates and ready-mix

concrete declined due to lower demand in several mature markets, primarily in Europe and

the Pacific Rim

Despite the limited volume growth and important restructuring costs, Holcim succeeded in

increasing net sales, operating EBITDA and net income Excluding the restructuring costs

of 736 million Swiss francs, operating profit also increased significantly Thanks to the

combined effects of an organic growth and the Holcim Leadership Journey, the Group

achieved like-for-like growth of both the operating EBITDA and operating profit of 6.4

percent and 11.4 percent respectively on an adjusted basis These results are driven by a

high degree of cost awareness and the successes achieved in passing on various higher

costs to prices The various streams of the Holcim Leadership Journey, which gained

momentum from mid-year on, contributed 158 million Swiss francs on a net basis to the

improvements at consolidated operating profit level The restructuring costs also impacted

net income Nevertheless, it substantially increased by more than 50 percent compared to

the previous year This rise was supported by the sale of stakes in Guatemala and

Thailand More details on our financial performance will follow from our CFO Thomas

Aebischer As the payout potential before write-offs remains intact, the Board of Directors

proposes an increased cash payout per registered share of 1.15 Swiss franc from capital

contribution reserves, compared to 1.00 Swiss franc in 2012

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And now to the Holcim Leadership Journey, which was launched in May last year, and will

generate an additional 1.5 billion Swiss francs in operating profit by year-end 2014

A safe and healthy working environment is part of this initiative Our goal for 2012 was to

reduce the lost time injury frequency rate, a goal that was reached Despite many

improvements, we still faced severe accidents Therefore, our efforts are ongoing and we

aspire to be among the best companies worldwide in 2013 with regard to the lost time

injury frequency rate

Core elements of the Holcim Leadership Journey are Customer Excellence and Cost

Leadership They quickly gained momentum following the Group-wide announcement, so

today I can already report on the first successes As you know, we set the goal for 2012 to

increase the operating profit by at least 150 million Swiss francs, and with a result of 158

million Swiss francs on a net basis, we reached that goal - a fact which, considering the

challenging market environment, holds promise for the future In terms of Cost Leadership,

the main contributions on a net basis came from Procurement, with 48 million Swiss

francs, and from Energy and AFR, with 40 million Swiss francs

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In connection with the Holcim Leadership Journey, Holcim has and will streamline its

production capacity in several markets according to long-term demand Primarily in Europe, further capacity adaptions became necessary For example in the cement segment, Holcimaims to reduce capacity in this Group region by around 10 percent to improve capacity

utilization

Substantial capacity adjustments took place in Spain and Hungary and Holcim Germany reorganized its ready-mix concrete business In Belgium, the intended closure of the Haccourtgrinding station, in France – after the closure of the Ebange plant – the intended

transformation of the Dannes plant and in Italy the intended transformation of the Meroneplant into grinding stations were officially announced These announcements always occurred within the framework of relevant consultations with the authorities and employee

representatives

Holcim also optimized capacities outside of Europe In the Yocsina plant in Argentina clinker production was stopped, and in Australia, Brazil and Mexico the aggregates and ready-mix concrete businesses were optimized

In the documents provided, you will find a detailed summary of all restructuring measures, including their impact on the annual results 2012 The restructuring initiatives have been accelerated in the fourth quarter, and in 2012 we posted cash expenses of 239 million Swiss francs – largely in the fourth quarter of 2012 As of 2013, most of these restructurings will support earnings

While the non-cash charges during the first nine months of 2012 amounted to 40 million

Swiss francs, the fourth quarter also noted a considerable acceleration with an increase

of these charges amounting to 457 million Swiss francs Therefore full year 2012 noted

total non-cash costs of 497 million Swiss francs of which the majority, as already

elaborated on, was recorded in Group region Europe The total impact on operating profit

amounted to 736 million Swiss francs for 2012, of which cement accounted for some 64

percent, aggregates 19 percent and ready-mix concrete for the remaining 17 percent

Now let me comment on the development in the Group regions I will start with Asia Pacific, our largest Group region Here, the favorable economic trend continued Mainly in South East Asia, the construction industry benefited from increasing government expenditure for the improvement and expansion of infrastructure and additional housing space The development on the Pacific Rim, on the other hand, was less dynamic Nevertheless, there were certain impulses: In Australia in

regions with strong mining activities, and in New Zealand in connection with reconstruction after the earthquake in Christchurch

Overall, Holcim increased cement deliveries Mainly due to Australia, aggregates and – less

pronounced – ready-mix concrete deliveries decreased The Indian Group companies recorded below expectations volume growth as the market faced a temporary slow restart after the

monsoon Holcim Philippines and Holcim Indonesia were working at full capacity level In Vietnam, deliveries decreased due to the fight against inflation and shortages in liquidity Also, both

Australian Group companies sold slightly less products

The operating EBITDA of the Group region improved considerably Primarily, the Group companies

in the Philippines, Indonesia, and India contributed substantially to the success of this Group

region Excluding the one-off restructuring costs in Australia, the like-for-like operating EBITDA

rose by 14 percent

To cope with the rising demand in Indonesia, we are currently building a new plant in Java, and we decided, following the dynamic development of demand, to build a second, identical kiln line at the same location Substantial capacity expansions are also in progress in India

Shortly before year-end we sold 9 percent of Siam City Cement Company in Thailand However,

we remain a strategic partner

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And now to Latin America: This Group region remained on a solid growth path, and benefited

from large infrastructure projects Residential, commercial and industrial construction also

contributed to this development

The overall solid demand for construction materials led to higher cement sales The

decrease in sales of aggregates can be explained by the closure of two quarries in

Colombia, the weak demand in Argentina, and delays in the start of construction of a big

mining project in Chile With regard to ready-mix concrete, the reduction can directly be

attributed to the strategic repositioning of our ready-mix concrete business in Brazil

The operating EBITDA increased Excluding the one-off restructuring costs, the

like-for-like operating EBITDA rose by 10.7 percent Primarily, the Group companies in

Ecuador, Colombia and El Salvador contributed to this positive result However, the weak

construction activity in Argentina impacted the financial results of our local Group company

Shortly before year-end, Holcim sold its participation of 20 percent in Cementos Progreso in

Guatemala to the local majority shareholder

In two important markets we are expanding our presence in the cement segment: In the

Brazilian plant of Barroso a substantial expansion will be realized by 2014, and a new kiln

line to increase clinker capacity will be built at the Guayaquil plant in Ecuador by end of

2015

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The recession has continued in the EU After the difficult start to the year caused by bad

weather conditions, the European construction industry never gained momentum The austerity policies of governments and a cautious private sector led to a decline in demand for construction materials Only in Russia and Azerbaijan, as well as in Switzerland, construction activity

remained high

Overall, Holcim sold less volumes in all segments The aggregates segment was hit hardest

The recession primarily impacted our Group companies in Italy, Spain and UK However,

France, Belgium and the Netherlands also experienced a decrease in sales volumes

In Switzerland, where the construction activity remains high, the weak Euro led to increased

imports and thus to a reduced performance of Holcim Switzerland

In Eastern Europe several infrastructure projects were cancelled, resulting in difficult market

conditions for the Group companies present in these markets

The reduction in sales volumes, the associated price pressure and the significant restructuring

costs had a negative impact on the operating EBITDA, which declined by approximately one

third The cement restructuring initiative will reduce the cement capacity by 10 percent and will

allow a significant and sustainable improvement of fixed costs as well as a much better capacity utilization rate When excluding the one-off restructuring costs, the like-for-like operating

EBITDA declined by 13.4 percent Finally, clearly better operating results were achieved in

Russia and Azerbaijan

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The US economy gained momentum in the second half of the year, which favorably

influenced the construction industry Canada mastered the economic challenges

remarkably well and the economic upturn continued

Holcim US sold considerably more cement and was able to benefit from the increased

construction of buildings, which, however, developed differently per region Aggregate

Industries US also profited from the growth trend and increased its deliveries of ready-mix

concrete A reason for this success was the full integration of Ennstone, Inc., and Lattimore

Materials with activities in Texas, which was consolidated for the first time for the full year

With regard to aggregate sales, the previous year’s level was not reached due to the

completion of a large infrastructure project

The operating EBITDA of the Group region North America improved substantially, and

strong organic growth was achieved Both Group companies in the US improved their

performance, the reasons for which were the larger sales volumes and the stable cost

development In the US, price increases also supported the result

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Political uncertainty in North Africa, and primarily the civil war in Syria, weighed on the

economic development in the Group region Largely stable was the economic trend in

the Indian Ocean and the Arabian Gulf In most countries in West Africa, the economy

improved

We experienced a reduction in sales volumes of cement and ready-mix concrete, but

sold more aggregates

The operating EBITDA of this Group region decreased considerably by 11 percent

Primarily, the financial results of Holcim Lebanon reduced the overall performance of this

Group region

(Hand-over to Thomas Aebischer)

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Let us begin with the review of the key financial figures of the fourth quarter before turning

to the full year 2012 results Cement volumes increased by 1.1 percent, driven by the

Group regions Asia Pacific, Latin America and North America Aggregate volumes

decreased by 7.6 percent across all Group regions Sales volumes for ready-mix concrete

recorded a decrease of 7.2 percent, or 4.6 percent on a like-for-like basis, despite Group

regions Asia Pacific and North America posting higher volumes Group sales increased by

1.2 percent, or 1.7 percent on a like-for-like basis, to 5.3 billion Swiss francs The operating

EBITDA grew by 1.6 percent to above 1 billion Swiss francs, adjusting for one-off

restructuring costs of 181 million Swiss francs As a result the operating EBITDA margin in

the quarter increased to 19.1 percent from the 19 percent recorded a year ago CO2sales

were 12 million Swiss francs lower in the quarter compared to last year The operating profit

increased by 3.6 percent to 575 million Swiss francs, adjusting for one-off restructuring

costs As a result, the adjusted operating profit margin reached 10.8 percent, up from 10.5

percent in the fourth quarter 2011

Let us now cover the key financial figures for the full year 2012 Net sales amounted to 21.5

billion Swiss francs, up 3.9 percent compared to full year 2011 Cement sales volumes

increased by around 2.5 percent, supported by positive developments in all Group regions

except Europe and Africa Middle East Aggregates sales volumes declined by 7.7 percent

across all Group regions except Africa Middle East Ready-mix concrete decreased by 3.1

percent, mainly reflecting the restructuring measures impacting 159 ready-mix concrete

plants All product segments recorded favourable price developments throughout the year

Continued efforts on the cost side resulted in fixed costs increasing under proportionally,

while variable costs related to an increase mainly in raw material and energy remained

challenging The aforementioned price increases, however, strongly contributed to the

development of the operating EBITDA that increased by 6.2 percent to 4.2 billion, adjusting

for one-off restructuring costs of 239 million Swiss francs As a result, the adjusted

operating EBITDA margin expanded by 0.4 percent to 19.6 percent year-on-year CO2

sales were lower by 1 million Swiss francs The operating profit grew by 10.6 percent to

above 2.5 billion Swiss francs, adjusting for one-off costs amounting to 736 million Swiss

francs As a result, the adjusted margin recorded an increase from 11.1 percent in 2011 to

11.8 percent in the year under review Cash flow from operating activities reached 2.7

billion Swiss francs, representing a slight decrease of 2.6 percent or 1.8 percent on a

like-for-like basis

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Net sales amounted to 21.5 billion Swiss francs, representing an overall increase of 3.9 percent Excluding changes in the scope of consolidation contributing a negative 0.1 percent and foreign exchange movements contributing a negative 0.2 percent, the like-for-like change amounted to an increase of 4.1 percent On a like-for-like basis Group sales benefited from solid cement volume growth in Group region Asia Pacific, Latin America and North America While most Group regions recorded either flat or lower volume growth in aggregates, Group region Africa Middle East was the only region to report a positive sales contribution from higher aggregate volumes Cement prices increased in all Group regions albeit to varying degrees, while aggregates pricing was mainly driven by Group regions Asia Pacific, North America and Europe With the exception of Group region Africa Middle East, all Group regions recorded positive sales impacts from ready-mix concrete pricing.

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Operating EBITDA increased by 6.2 percent to 4.2 billion Swiss francs adjusting for the aforementioned one-off restructuring costs This was mainly driven by better pricing and the positive impact of the Holcim Leadership Journey that helped to mitigate the impact from the overall slight volume decline in aggregates and ready-mix concrete and the continued high variable costs related to distribution and energy Compared to 2011, foreign exchange movements hardly had an impact on the operating EBITDA

The Group region Asia Pacific improved its operating EBITDA by 10.3 percent to roughly 1.9 billion Swiss francs On

a like-for-like basis the growth even reached 12.6 percent The result was driven by a combination of better pricing in all segments and higher volumes in cement that more than offset increased fixed and variable costs Key contributors were Ambuja Cements and ACC, Holcim Indonesia and Holcim Philippines Lower volumes impacted the

performance of Holcim Australia, Cement Australia and Holcim Vietnam

The operating EBITDA in Group region Latin America increased by a good 7.9 percent to 958 million Swiss francs despite inflationary cost pressures in Argentina and Brazil in addition to higher energy costs in some countries On a like-for-like basis, the increase amounted to a solid 7.2 percent This result was achieved from a combination of

volume growth in cement, partially improved market prices and last but not least the continued cost focus that more than offset the increase in fixed and variable costs in addition to restructuring charges amounting to 31 million Swiss francs While the Group companies in Ecuador, Colombia and El Salvador posted substantially better operating

results compared to last year, the sluggish demand hampered the results of the Group company in Argentina

The Group region Europe witnessed a 32.6 percent decline of its operating EBITDA to 627 million Swiss francs On a like-for-like basis, this decline amounted to minus 32.8 percent The main drivers of this decline were a combination of lower volumes and higher costs that could not be offset by an overall price increase Restructuring costs of 180

million Swiss francs in Spain, Italy, France, Belgium, Hungary and UK negatively impacted the operating EBITDA development While the Group companies in Russia and Azerbaijan posted significantly better operating results,

Holcim Switzerland, Aggregate Industries UK, Holcim Belgium and Holcim France recorded lower results compared

to last year due to weaker demand.

Group region North America posted the highest operating EBITDA growth at 38.8 percent and 32.4 percent on a for-like basis to 480 million Swiss francs The performance was mainly driven by better pricing in all segments, higher volumes in cement and ready-mix concrete and strict cost controls that more than compensated the slight increase in fixed costs.

like-Operating EBITDA in Group region Africa Middle East declined by 11 percent to 278 million Swiss francs The decline was largely driven by lower volumes and higher costs in Group companies in Morocco, in the Indian Ocean and in the Lebanon.

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