2 3 rd Quarter 2006 Latin America * Approved projects of Group companies; partly under construction Dynamic growth in key Group markets enables capacity expansion in cement 2 The acquisi
Trang 1Third quarter results and outlook for 2006
Presentation of November 8, 2006
Markus Akermann, CEO
Theophil H Schlatter, CFO
The spoken word prevails
Trang 23 rd Quarter 2006
Key facts at a glance
Hig
Hig
Holc
her sales in all Group regions and segments
increases, efficiency gains and expanded scope of consolidation strengthen results
her energy costs and competitive pressure in
some markets have been largely offset
nal and external growth produce record results
im again "Leader of the Industry" in the Dow
Jones Sustainability Index 2006/07
1) In the first nine months of the year, Holcim succeeded to further increase sales in all Group regions and segments This also confirms the success of Holcim's global
business portfolio and the dual product strategy based on cement and aggregates Both, Aggregate Industries, acquired in 2005, and our entry into the Indian market had
a positive impact on the Group Higher sales volumes, price adjustments and efficiency gains were key to the encouraging result helping to counter higher energy costs and strong pressure on prices in some markets We were able to partly offset the increase
in thermal energy costs thanks to comprehensive programs to increase the use of alternative fuels and raw materials The solid earnings reported by our Group
companies, coupled with external growth, translated into record results
We are delighted to have been named Dow Jones Sustainability Index "Leader of the Industry" two years in succession
2
3 rd Quarter 2006
Latin America
* Approved projects of Group companies; partly under construction
Dynamic growth in key Group markets enables
capacity expansion in cement
2) The acquisitions made in recent years have created a platform to give the Group an excellent geographic positioning, in particular in the emerging markets Building on this basis and working from established market positions, Holcim can participate fully in the dynamic growth and selectively expand cement capacity By 2009 alone, Group
cement capacity will be increased by 19 million tonnes, which, with the exception of the major Ste Genevieve plant in the USA, will be achieved mainly in the emerging
markets This figure relates to projects authorized and announced to date, some of which are already under construction The fact that these projects can be implemented fast and cost-effectively drawing on existing structures will have a positive impact on future profitability
I will comment on the individual expansion projects when I come to report on the Group regions
2
Trang 33 rd Quarter 2006
Robust economy supports construction industry Encouraging order situation in western and southeastern Europe Europe
3) The robust economic environment impacted positively on the European building industry The level of new orders was particularly strong in France and the Benelux countries, but also in Spain and Switzerland In the UK, demand held up thanks to residential and commercial projects, and in Germany, the general improvement in the economy contributed to greater construction activity The southeastern European economies continued to expand, the building materials industry benefiting from huge demand for housing and increased investment in infrastructure
4
3 rd Quarter 2006
Positions in Europe
Cement plant Grinding plant/terminal Aggregates
Participation:
Cement plant
1Under construction
1 1
1
4) In September 2006, Aggregate Industries UK took over building materials group Foster Yeoman This company operates attractive quarries in southern England and in Scotland Foster Yeoman is also active in the asphalt business and operates a network
of sales centers for aggregates in important ports along the coast of northern and eastern Europe
Holcim will be building a grinding plant with an annual capacity of 0.6 million tonnes near Rouen, to the west of Paris The new plant will also serve the Paris market directly via the Seine We are also increasing the capacity in the Swiss plants of Siggenthal and Eclépens
Dynamic market growth in southeastern Europe results in increasing demand for building materials Holcim Bulgaria has modernized its Beli Izvor plant in an initial phase and substantially expanded the kiln line's clinker capacity In 2007, we will increase the plant's capacity by a further 0.3 million tonnes to a total of 1.4 million tonnes We are also increasing our cement capacity in Romania Reaching an annual capacity of 1.5 million tonnes, the country's largest kiln line is currently under
construction at the Campulung plant
Trang 43 rd Quarter 2006
Facts on Europe
I
Higher volumes in all segments
Cement sales rising, in particular in France, Benelux, and
southeastern Europe
Aggregate Industries UK lifts sales of aggregates and
ready-mix concrete
Group companies showed significant improvement in results
Operating EBITDA up by 16.8 percent to CHF 1.464 billion
nternal operating EBITDA growth at 9.5 percent
5) In Europe, we increased deliveries in all segments We reported higher sales
volumes in particular in France, the Benelux countries, and southeastern Europe Holcim Spain posted record sales of ready-mix concrete
Romania, Serbia and Bulgaria were the leading performers among the Group’s eastern European operations; Holcim posted its largest percentage sales increases in these three states
Aggregate Industries UK lifted sales of aggregates and ready-mix concrete, but
reported a minor decline in volumes in the heavily cyclical asphalt and concrete
products segment Holcim Germany reported higher volumes in all segments
The performance of all Group companies in Europe improved, in some cases
significantly Operating EBITDA increased by 16.8 percent to approximately 1.5 billion Swiss francs, and internal operating EBITDA growth reached 9.5 percent
6
3 rd Quarter 2006
Economic environment largely sound
Housing construction cooling visibly
North America
6) While the US real estate market has cooled noticeably in the third quarter,
commercial construction and infrastructure expansion projects witnessed gratifying growth
The situation in the Canadian provinces of Quebec and Ontario, the principal markets for St Lawrence Cement, was subdued in recent months
4
Trang 53 rd Quarter 2006
Positions in North America
1
Cement plant Grinding plant/terminal Aggregates
1Under construction
1
7) Acquired this July, Meyer Material Company was fully integrated into Aggregate Industries US The Chicago-based building materials firm strengthens Aggregate Industries’ aggregates and related businesses in the Great Lakes region, and opens up
a further area of growth potential for the group
Construction of the 4 million tonne Ste Genevieve plant on the Mississippi is
progressing to schedule and from the second half of 2009 will allow Holcim US to efficiently supply the large market of the river system
In addition, St Lawrence Cement is building a 0.5 million tonne grinding station at its Mississauga plant for the manufacture of GranCem® products based on granulated blast furnace slag
8
3 rd Quarter 2006
Facts on North America
I
Slight increase in cement sales
Cement, clinker and granulated blast furnace slag again had to
be imported to cover demand
Sales of aggregates and ready-mix concrete higher thanks to
additions to the scope of consolidation
Better prices in all market regions
Operating EBITDA up by 15.1 percent to CHF 776 million
nternal operating EBITDA growth at 14.6 percent
8) North America saw a slight increase in consolidated cement deliveries Owing to a continuing demand overhang, again large quantities of cement and clinker had to be imported
Aggregate Industries US succeeded in maintaining market share Several regions faced decreases in sales of aggregates, ready-mix concrete and asphalt owing both to bad weather conditions and to the economic situation St Lawrence also reported setbacks in these segments Thanks to the first-time nine-month consolidation of sales
of Aggregate Industries US and the inclusion of Meyer Material Company's volumes effective July, deliveries nevertheless rose noticeably
Operating EBITDA increased by 15.1 percent to 776 million Swiss francs In a positive price environment, internal operating EBITDA grew by 14.6 percent
Trang 63 rd Quarter 2006
Economic upswing continues unbroken
Housing construction robust and infrastructure expanded further Latin America
9) The economic upswing in Latin America continued unbroken Compared with the first nine months of 2005, demand for cement and other building materials increased in all countries Once again, this market growth was driven by investment in private and public housing and public-sector infrastructure projects
10
3 rd Quarter 2006
Positions in Latin America
Cement plant
Grinding plant/terminal
Aggregates
Participation:
Cement plant
Grinding plant/terminal
10) There have been no fundamental changes in cement capacity in Latin America this year However, in a number of markets we have expanded aggregates and ready-mix concrete operations and strengthened our position in the area of alternative fuels and raw materials
11
3 rd Quarter 2006
Facts on Latin America
I
Higher sales in all segments
Strong volume increases at Holcim Apasco in Mexico
and Holcim Brazil
Strong results increase in Mexico, El Salvador, Ecuador and
Colombia/Venezuela
Operating EBITDA up by 13 percent to CHF 955 million
nternal operating EBITDA growth at 10.5 percent
6
11) Holcim reported higher sales volumes in all segments Holcim Apasco in Mexico and Holcim Brazil both posted substantial sales increases Cemento de El Salvador
Trang 7and Panamá Cement turned in very strong sales performances In Ecuador, we again achieved record sales Deliveries also held up well in Colombia, although the still low cement prices are recovering only very slowly To meet the steady growth in domestic demand, Holcim Venezuela has slightly reduced exports of cement Deliveries by Cemento Polpaico in Chile and, above all, Minetti in Argentina were significantly higher year-on-year With the exception of Brazil, all Group companies in this region
contributed to the pleasing result With prices still too low, Holcim Brazil reported an operating loss A sharp increase in energy costs and government-regulated prices pressured the results of Minetti in Argentina In Group region Latin America, operating EBITDA increased by 13 percent to 955 million Swiss francs Internal operating
EBITDA growth came to 10.5 percent
12
3 rd Quarter 2006
Africa Middle East
Construction activity robust in Morocco and South Africa Building activity recovered fast in Lebanon after end of hostilities
12) Economic development in Group region Africa Middle East was generally
satisfactory, despite regional differences in growth In Lebanon, on the other hand, the economy was hit by the events of war Construction activity remained robust in
Morocco and South Africa
13
3 rd Quarter 2006
Positions in Africa Middle East
1
1
1
Cement plant
Grinding plant/terminal
Aggregates
Participation:
Grinding plant/terminal
Under construction
1
13) In Morocco, work on the new cement plant near Casablanca is progressing very well The fully equipped cement plant with an annual capacity of 1.7 million tonnes will commence operations on schedule at the middle of next year
In the 1st quarter of 2007, a grinding plant with a capacity of 2 million tonnes of cement will be commissioned in Abu Dhabi Holcim holds a minority stake in this company The capacity of the grinding plant in Roodepoort, South Africa, will be increased by 0.6 million tonnes of cement by 2008
At the end of August, we signed a conditional agreement to dispose of a substantial share of our majority interest in Holcim South Africa By doing so, Holcim seeks to act
in accordance with the statutory obligations under Black Economic Empowerment and
Trang 8ensure Holcim South Africa an optimal market positioning If all preconditions are satisfied, we expect the transaction to close sometime next year Until that point,
Holcim South Africa will remain part of the Group
14
3 rd Quarter 2006
Facts on Africa Middle East
W
Mo
W
Sig
Int
ith the exception of Holcim Lebanon, all Group
companies lifted domestic sales
rocco and South Africa reported very good sales
trend
ith the exception of Holcim Lebanon, all Group
companies contributed to the improved financial result
nificant 8 percent increase in operating EBITDA to
CHF 512 million
ernal operating EBITDA growth at 10.5 percent
14) With the exception of Lebanon, all Group companies succeeded in further lifting domestic deliveries Although Holcim Lebanon maintained clinker and cement
production at its plant in Chekka almost until the end of hostilities, cement deliveries practically dried up for a while, but have in the meantime recovered Holcim Morocco reported an impressive increase in sales in all segments The unbroken sales growth achieved by Holcim South Africa was driven by an upturn in construction activity Domestic sales remained quite stable at Egyptian Cement, and cement deliveries in the Indian Ocean region matched the previous year's level
All Group companies contributed to this solid result, with the exception of Holcim
Lebanon Results in Egypt, Morocco and South Africa were sharply higher Operating EBITDA of Group region Africa Middle East rose by 8 percent to CHF 512 million Internal operating EBITDA growth came to 10.5 percent
15
3 rd Quarter 2006
Strong growth of Indian construction industry
Restrained building activity in Thailand, the Philippines and Indonesia
Asia Pacific
15) The majority of construction markets in Group region Asia Pacific have continued to make good progress India showed a very dynamic development of the construction industry In Thailand, political uncertainty dampened economic activity, and in the Philippines, budget constraints negatively affected the investment climate In
Indonesia, business activity in the construction sector has not yet picked-up
8
Trang 93 rd Quarter 2006
Positions in Asia Pacific
1 1 1
Cement plant Grinding plant/terminal Aggregates
Participation:
Grinding plant/terminal Under construction
1
16) ACC has been consolidated since the end of January 2006, and Gujarat Ambuja Cements since this May
Group companies in the fast growing market of India are continually adapting
production capacity to rising cement demand By the end of 2007, we will have
commissioned an additional 5.6 million tonnes of capacity Capacity will be expanded partly at existing plants, and partly by the construction of new grinding plants In order
to catch market growth, our Group companies in India will commission additional 3.7 million tonnes in 2008, and thus increase total capacity to 44 million tonnes The merger of Gujarat Ambuja Cements with Ambuja Cement Eastern will be concluded this year
We have intensified vertical integration in this Group region by investing in ready-mix concrete operations in major urban centers
In China, where we want to increase our holding in Huaxin Cement to a majority
interest, the authorization process has not yet been entirely completed, with the
approval of the Chinese Securities Exchange Commission still pending We assume that we will obtain a capital majority in this company by the beginning of 2007 Huaxin Cement will also be further growing in its markets in the coming years and expand production capacity
17
3 rd Quarter 2006
Facts on Asia Pacific
Group region strengthened by acquisitions in India
Cement sales volumes increasing in India, Sri Lanka,
Bangladesh, Malaysia and Singapore
Sales down in Vietnam and Indonesia
The inclusion of India and a stronger presence in
major urban centers bolsters ready-mix concrete
sales
Operating EBITDA up by 121.6 percent to CHF 933
million on generally stable prices
Internal operating EBITDA growth at 0.2 percent
17) Despite a very heavy monsoon season, the Indian Group companies significantly increased deliveries of cement We also sold more cement in Sri Lanka, Bangladesh, Malaysia and Singapore Our Group company in Thailand virtually compensated for weaker domestic demand with exports In Vietnam and Indonesia volumes decreased Domestic sales were stable at Holcim Philippines However, a production bottleneck at the Davao plant led to a reduction in exports Holcim New Zealand succeeded in largely offsetting the weather-related decline in deliveries in the first half The region also saw an increase in sales of ready-mix concrete The marked improvement in the
Trang 10financial result reflects the expanded scope of consolidation, rigorous cost controls and generally stable sales prices In this Group region, operating EBITDA rose sharply by 121.6 percent to 933 million Swiss francs Since economic and political developments have dampened construction activity in some markets and cement prices are still unsatisfactory, internal operating EBITDA growth came to only 0.2 percent
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3 rd Quarter 2006
2005 2005 1 2006 LFL CIS FX in CHF
Cash flow from
Million CHF Full Year 9 Months
+/-1 adjusted in line with IAS 21 amended
2 excludes the amortization of other intangible assets
Key financial figures
18) As Markus Akermann already mentioned, we are once again able to present record results: In the first nine months of the year, sales continued to increase in all Group regions and segments Overall, net sales increased by 31 percent and operating EBITDA by 28 percent Operating profit improved by 27 percent and cash flow from operating activities advanced 26 percent
19
3 rd Quarter 2006
Major changes in the scope of consolidation
Effective as at
+ A
+ A
+ A
+ G
+ M
+
+/– V
arious smaller companies
19) The major changes in the scope of consolidation in the first nine months of 2006 were the first-time consolidation of ACC, Gujarat Ambuja Cements, Meyer Material Company and Foster Yeoman The annual cement capacity of newly consolidated companies in India accounts for 33.4 million tonnes, whereas Meyer Materials’ and Foster Yeoman’s businesses are aggregates, ready-mix concrete, asphalt and other building materials and services with a total turnover of approximately 770 million Swiss francs
10