annual results 2002 and outlook for 2003 holcim

Annual results 2002 and outlook for 20031 Holcim Group 2002 ƒ Strong operating results in a difficult market environment.. 5 Positions in Europe Group: Cement plant Grinding plant Termin

Annual results 2002 and outlook for 2003

1

Holcim Group 2002

ƒ Strong operating results in a difficult market environment

ƒ Gratifying internal growth, excluding the negative impact

of foreign currency translations

ƒ Increase in operating EBITDA margin confirms efficiency

gains in production and distribution

ƒ Debt reduction and solid cash flow

ƒ Provisions for cartel investigation in Germany

and write-offs in Argentina impact Group net profit

Well positioned for solid growth when global economy

recovers

Annual results 2002

Corporate Governance

ƒ Corporate Governance at Holcim is aimed at meeting

the requirements of a progressive,

internationally-oriented public company

ƒ Chairman of the Board of Directors and CEO functions

have been separated Audit Committee and Nomination

& Compensation Committee have been established

ƒ Executive Committee strengthened by nomination of

Thomas Knöpfel, responsible for Group region Latin

America

Holcim takes up the challenges posed by markets and

society

3

Roadmap to increase efficiency

ƒ Consistent increase of operating EBITDA margin as

guiding principle for the entire Group

ƒ Group standards support local management in important

areas with a worldwide relevance

ƒ Swift integration of newly acquired companies

ƒ Increasing use of alternative fuels and raw materials in

the production process

ƒ New products particularly in the field of composite

cements Optimization of customer service

ƒ Sustainability in terms of the environment and social

responsibility

The Group is gaining strength

Overall, stagnating cement consumption in Group region Europe

5

Positions in Europe

Group:

Cement plant Grinding plant Terminal

Participation:

Cement plant

Cement capacity (Europe): 40.8 m t; additionally with partners: 9.8 m t.

Annual results 2002Cost reduction measures strengthen industrial basis

Facts Europe

ƒ Proximity to markets supports sales

ƒ Holcim increases cement deliveries in a generally flat

market

ƒ Central Eastern European country cluster lead by one

management team and further concentration on core

business in Switzerland

ƒ Most Group companies post better operating results

ƒ Decreasing demand and a deterioration in prices in

Germany result in lower operating profit

7

No provisions required for asbestos-related risks

Status Eternit AG, Niederurnen (Switzerland)

ƒ Holcim acquired Eternit AG in 1995 By then, the company ' s

production was entirely asbestos-free

ƒ Any cases of illnesses attributable to the Swiss factories of

Eternit AG will be covered under the Swiss accident

insurance fund SUVA

ƒ Eternit AG never managed or owned asbestos-processing

companies abroad It has no connection with any foreign

company with a similar or identical brand name

ƒ Holcim never produced, imported or traded products

containing asbestos in the USA There is no basis for legal

action against Holcim in the USA.

Annual results 2002

The Group strengthens measures to ensure

compliance in competition behavior

Status of cartel investigation (Germany)

ƒ In 2002, the German Federal Cartel Office initiated a

nationwide investigation into the cement industry

ƒ The legal proceedings are related to market violations in

the 1990s Both Holcim Group companies in Germany

have been under new management since 2000 and

2001 respectively

ƒ Alsen AG, Hamburg, expects a fine of EUR 80 million

and has made corresponding provisions The decision

is likely to be appealed

ƒ There are clear indications that the Group company in

Southern Germany will not be fined

9

Ideal market addition on the Iberian Peninsula

Strengthening of market presence (Spain)

ƒ Holcim is expanding its position in Madrid, Spain's most

important and dynamic market

ƒ With the acquisition of Cementos de Hispania, Holcim

is extending its existing range of aggregates and

ready-mix concrete in the central market and tying it in with

the strategically important cement business

ƒ The Yeles plant serves the Madrid area with an annual

capacity of 0.9 million tonnes of cement A well

positioned mortar business was also acquired

ƒ Corresponding with the acquisition, Holcim sold its

10-percent stake in Dyckerhoff AG

Positions in North America

Cement plant Grinding plant Terminal Cement plant (project or under construction)

Cement capacity Group (North America): 21.1 m t

Annual results 2002Increasing efficiency is still a priority

Facts North America

ƒ St Lawrence Cement exceeded last year's good results

ƒ It benefited from the new slag cement plant in Camden

(USA) and lively demand in Canada

ƒ Holcim (US) overcame its production bottleneck in the

Mid-West by commissioning the new Portland plant in

the second half of the year

ƒ The weak US dollar and the final write-offs on the

de-commissioned Fort Collins plant weighed on the

operating results of Holcim (US)

ƒ Both Group companies joined the US Environmental

Protection Agency's "Climate Leader Program"

13

Modern production facilities reduce cost

Status of expansion projects (USA)

ƒ During the last 5 years, cement capacity has been

modernized in Utah, Texas, Colorado and Pennsylvania

ƒ The new plant in South Carolina (capacity: 2.2 million t)

will be commissioned during the 3rd quarter 2003

ƒ The regulatory approval for the projects in Greenport

(New York) and St Geneviève (Missouri) should

progress significantly during the next few months

ƒ As usual, Holcim will install state-of-the-art and

environment-friendly technologies in these projects

Markets and currencies strained

by the crisis in Argentina, the difficult political situation in Venezuela and Colombia and the reluctance to invest in Brasil

The construction sector was a strong pillar of economic development in Mexico and Central America Overall, Latin America remained firm

15

Positions in Latin America

Group:

Cement plant Grinding plant Terminal

Participation:

Cement plant Grinding plant Terminal Cement capacity Group (Latin America): 31.2 m t; additionally with partners: 9.6 m t.

Annual results 2002Latin America delivers main contribution to Group results

Facts Latin America

ƒ Only minor decline in cement sales while price

development was solid

ƒ Higher sales of Apasco in Mexico balanced market

declines in other countries in this region

ƒ Holcim Brazil remained firm in a challenging economic

environment Group companies in Central America,

Ecuador and Chile achieved gains

ƒ Despite a negative development in sales, operating

profit reached again an encouragingly high level

17

Cement demand bolstered again by robust economy

Africa Middle East

Robust economic trends in markets important for Holcim

Housing programs and large infrastructure projects under-pinned the demand for building materials In particular, South Africa and Morocco profited from

a favorable economic climate

The situation was difficult in Madagascar and Ivory Coast

Annual results 2002

Positions in Africa Middle East

Cement capacity Group (Africa Middle East): 13.3 m t; additionally with partners: 5.1 m t.

Group:

Cement plant Grinding plant Terminal

Participation:

Cement plant Grinding plant Terminal

19

Major improvements resulted in

strongest increase of operating profit in this Group region

Facts Africa Middle East

ƒ Significant increase in sales in important markets such

as Morocco, Egypt, Lebanon and South Africa

ƒ Considerable improvement in operational efficiency;

20 percent rise in the region's operating profit

ƒ Substantial contributions from Group companies in

South Africa, Morocco, Egypt and Lebanon

ƒ Use of alternative fuels and residues from other

industries on the rise

ƒ Alpha in South Africa wins awards for environmental

leadership

Cement capacity Group (Asia Pacific): 35.5 m t;

additionally with partners: 14.9 m t.

Annual results 2002Leading position further consolidated in ASEAN

Facts Asia Pacific

ƒ Group region strengthened by first-time full consolidation

of PT Semen Cibinong in Indonesia

ƒ Strong increase in sales in most markets and all

segments

ƒ Better capacity utilization boosts operating results

Improved performance especially in Vietnam, Thailand

and Australia

ƒ Higher operating profit for Asia Pacific, despite price

pressure and integration costs at PT Semen Cibinong

ƒ Holcim Vietnam will build a new grinding plant with a

capacity of 1.3 million t to participate in market growth

23

Status Queensland Cement (Australia)

ƒ Regulatory approval for the merger of Queensland Cement

and Australian Cement Holdings.

ƒ The conclusion of contract negotiations is expected within a

month.

ƒ Solid positions in densely populated provinces with great

potential for the future

ƒ With a capacity of over 3 million t and higher utilization

rates, the largest and most attractive cement group is being

Group net income

after minority interests 886 812 506 -37.7% -31.8%

Cash flow from

+ PT Semen Cibinong, Indonesia January 1, 2002 9.6 million t

+ Union Cement, Philippines, from

proportionate to full consolidation October 1, 2002 + 2.4 million t

+/– Various smaller companies

25.3 25.5

24.9

Capacity and sales volumes

Cement capacity in million t

Cement sales in million t

Aggregates sales in million t

Ready-mix concrete sales in million m 3

1 African Basket (EGP, ZAR, MAD) 1) 1.17 1.00 0.81 -19.0%

1 Asian Basket (AUD, NZD, THB, PHP) 1) 1.12 1.00 0.96 -4.0%

Balance sheet

year-end exchange rates in CHF 2000 2001 2002

1 Asian Basket (AUD, NZD, THB, PHP) 1) 1.02 1.00 0.89 -11.0%

1) weighted by net sales 2001

24%

EUR 19%

USD 51%

CHF 6%

Africa Middle East 9%

Asia Pacific 13%

Annual results 2002

3'399 3'574

Before minority interests in million CHF

After minority interests in million CHF

• Lower interest rate level

• Losses incurred on the sale of Cimpor shares

• Impairment loss on Swiss International

Airlines investment

• Argentina, others

Annual results 2002

Cash flow statement

+/-Cash flow from operating activities 2'557 2'402 2'388 -0.6%

Investments to maintain productive

capacity and to secure competitiveness -816 -855 -843 -1.4%

Free cash flow 1'741 1'547 1'545 -0.1%

+/-Financing (requirement) surplus -1'306 -1'600 533 -133.3%

Equity capital paid-in

Increase in cash and

Annual results 2002

Gearing

9'435 10'383

Employee benefit obligations

completely outsourced and independent.

million.

available and provisions in the balance sheet of CHF 416 million.

contributions for the majority of the plans, the Group charges the

calculated underfunded amount to the balance sheet in accordance

with IAS 19.

income amounted to CHF 141 million as per December 31, 2002 (CHF

61 million in 2001) and will be amortized in 2003 with CHF 8 million.

Funds from operations /

Financial indicators

Operating EBITDA Earnings before interest, taxes, depreciation,

amortization and other (expenses) income 74/90 EBITDA Earnings before interest, taxes, depreciation and

amortization of goodwill and other intangible assets divided by total weighted number of shares after deduction of treasury shares 74/93/97

47

ƒ Higher efficiency leads to better operating results in

Europe Price pressure remains

ƒ InNorth Americaa slight improvement in operating

results in local currency is expected

ƒ Continuing solid operating results in Latin America

Positive developments balance out negative impacts

ƒ Excluding political risks, positive earnings forecast for

Africa Middle East

ƒ Asia Pacific is budgeting largely better financial results

An excellent global presence strengthens the Group

Annual results 2002

Outlook 2003 II

ƒ Holcim focuses on further efficiency increases in

production and distribution

ƒ We continue to invest selectively

ƒ Holcim aims to generate a solid free cash flow

ƒ Holcim is dedicated to maintain its comparatively strong