kepler cheuvreux 15th swiss seminar bernard fontana ceo zurich april 2 2014 holcim strength performance passion

kepler cheuvreux 15th swiss seminar bernard fontana ceo zurich april 2 2014 holcim strength performance passion

Strength Performance Passion

Bernard Fontana, CEO

Zurich, April 2, 2014

Outlook 2014 – Conclusions

Holcim Leadership Journey

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

• Solid financial results

2013 Milestones

Agenda

Holcim strategy and positioning based on long term growth

Outlook 2014 – Conclusions

Holcim Leadership Journey

Rapid urbanization: In 2010, for the first time in history

urban population exceeded rural population

São Paulo

Growing demand for housing and infrastructure

Shanghai

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%

1990: ~0.8 Bn t 2013E: ~1.7 Bn t 2030E: ~2.7 Bn t

Cement demand Split Mature vs Emerging markets

Cement demand evolution by region, excl China

Mature Emerging

*Source: BMI, National cement associations, Holcim estimates

Long-term cement consumption growth is driven by

emerging markets and recovery in Europe and US

Holcim cement capacity as of December 31, 2013: 206 Mt * China not consolidated

Over the past 10 years Holcim invested about USD 30 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

• Operating cash flow more than

sufficient to cover CAPEX and

financial investments

• Current cement capacities incl

ongoing projects sufficient for

growth without major new

investments

• Increasing capacity utilization of

existing plants coupled with

ongoing cost reductions to vastly

improve ROIC

• Substantial free cash flow

generation expected for coming

years

Value creation from our existing asset base

• Add nice picture here

-500 500 1'500 2'500 3'500 4'500 5'500 6'500

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

In CHF million

Outlook 2014 – Conclusions

Holcim Leadership Journey

The Holcim Leadership Journey and a focused capital

allocation to increase short and long term returns

Holcim Leadership Journey

Operating profit increase of at least CHF 1.5 bn* by 2014

Customer Excellence Cost Leadership

Marketing and sales

Energy and AFR

Holcim Leadership Journey is on track

All figures in million CHF 2012 2013 2014

Target achieved Target 12M

Customer Excellence (operating profit impact) 50-100 31 150-200 135 500

-Customer focus

-Value management

-Pricing policies

-Marketing and sales forces skills and motivation

Cost Leadership (operating profit impact) 100-200 127 400-500 808 > 1,000

-Energy and AFR 40 187 > 300

-Logistics 0 162 > 250

-Procurement 48 203 > 250

-Fixed cost 39 255 > 200

Total increase in operating profit 1) 150-300 158 550-700 943 > 1,500

Cash cost to achieve the savings (one-off) < 80 239 3) 0 3) 0

Additional CAPEX net 2) 0-40 48 100-180 171 100-180

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 without fluctuations in currency, changes in scope of consolidation and similar market conditions) Adjusted for sale of 25% of Cement Australia and Siam City Cement, the new base line is CHF 2,193 million 2) Additional CAPEX net will come from prioritization of CAPEX based on the speed of the returns (ROIC) Current energy fund of CHF 100 million will be maintained through the period 2012 – 2014 3) Original amount was projected < CHF 120 million for 2013; having spent already CHF 239 million, no additional restructuring cash costs are foreseen at this stage

© 2014 Holcim Ltd

Roche Tower and at Holcim Philippines

Europe

Industries UK

initiative

new shared business process center

project at Holcim Ecuador

14

Holcim Leadership Journey in action – example projects

Kepler Cheuvreux 15th Swiss Seminar

• Customers receive a text message confirming the pick

up time and place Value created:

• Waiting times have been reduced on average by 25%

• Better capacity planning for Holcim, stronger reputation

as a reliable supplier and increased customer loyalty

Customer Excellence

Holcim Switzerland – Roche Tower

New Roche headquarters:

• Highest building in Switzerland with 41 floors and a height of 175 meters; construction period between 2010

to 2015

Project challenges and customer needs:

• Massive base plate foundation and core walls requiring concrete with high strength and hydration heat of less than 60°C

• Delivery schedule with 1,000 t of aggregates per day Value created:

• Taylor-made solution found in close collaboration with the customer

• Time and cost savings for the customer

• Higher integrated margin achieved by Holcim

• The Alternative Fuels and Raw materials business is a showcase for sustainable development, leading to a competitive advantage

• Holcim operates a waste co-processing network with 38 waste management and alternative fuels business units and total 1’500 employees

• From already significant volumes today, the global solid waste production will

grow by 50% in the next ten years, especially in emerging countries

• Sustainable waste management solutions are needed

• Kiln flame temperature of up to 2’000°C destroys

• Projected to add some USD 100 million in gross

value added in Asia alone over the next few years

Pictures on the right: Geocycle Philippines, Lugait bio mass feedsystem commissioned February 2014 with 16 tph biomass

capacity (rice husk, saw dust) storage and dosing facility in Lugait

Alternative Fuels and Raw materials (AFR)

Innovative waste management

Geocycle

Other AFR

business unit

20 Geocycle business units (~800 FTE)

18 other AFR business units (~700 FTE)

FTE: Full Time Equivalent

Alternative Fuels and Raw materials (AFR)

Holcim operates a global waste co-processing network

• In over 1’500 initiatives, Project LEAP! has defined clear targets and processes

to achieve substantial savings

• Today, procurement manages about 50% of 3rd party spend; the introduction of

“Category Management” increases this to 100% by Q3 2015

• Category Management is an approach that supports the entire process – starting from procurement strategy to local execution

• “Big picture” approach drives lower total cost of ownership for each category at

the Holcim Group level

• Each category is managed by a global team including:

 Corporate Procurement

 Local Procurement (80% of spend, or 15 operating companies)

 Operations

 Users & Specifiers

 Key business sponsors

• Category teams have full responsibility and accountability for

delivering results

Procurement

Project LEAP! – Category Management Approach

Procurement

Category Management Cascades from Global to Local

Global Category Team

• Category Management structure covers 70-80% of the global spend per category through involved operating companies at all levels

• Global Category team will have members from the 3 largest operating companies (by spend)

Global Category Manager

Regional Category Managers (3) Regional OpCo Operations

Leads (3)

OpCo Category Managers from 3 largest

OpCos by spend in category

Cross Functional Team Members

EMEA Category Manager

Regional OpCo Operations Lead

OpCo Category Managers from largest OpCos by spend for category: to cover +/- 70% spend Cross Functional Team Members

APAC Category Manager

Regional OpCo Operations Lead

OpCo Category Managers from largest OpCos by spend for category: to cover +/- 70% spend Cross Functional Team Members

Americas Category Manager

Regional OpCo Operations Lead

OpCo Category Managers from largest OpCos by spend for category: to cover +/- 70% spend Cross Functional Team Members

Regional Category Teams

Global

Business

Sponsor

Holcim Leadership Journey

• Holcim expects cement volumes to increase in all Group regions

Asia Pacific, Europe, North America, and Africa Middle East are

offset by negative volumes in Latin America

regions with the exception of Europe and Latin America

achieved in 2014

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

Outlook for 2014

• Energy costs per tonne of cement produced slightly above 2013 level

of CHF 14.6

Cost and CAPEX guidance for 2014

• Cement consumption growth driven by emerging markets and

recovery in Europe and US

cement demand without adding any significant new capacities

improvement; Holcim Leadership Journey well on track

2014

Conclusions