bellevue meets management seminar thomas aebischer cfo flims january 10 2014 holcim strength performance passion

Agenda Holcim strategy and positioning based on long term growth Society's future: Sustainable development and innovation Holcim sustainability: Safety and development of leaders Co

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Strength Performance Passion

Bellevue Meets Management Seminar

Thomas Aebischer, CFO

Flims, January 10, 2014

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Agenda

Holcim strategy and positioning based on long term growth

Society's future: Sustainable development and innovation

Holcim sustainability: Safety and development of leaders

Conclusions

Bellevue meets Management Seminar 2014

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Presence on all five continents and in around 70 countries

2012 Net sales of CHF 21.5 bn and operating EBITDA of CHF 4.0 bn

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23%

Africa Middle East Europe

Asia Pacific North America Latin America

Other Construction Materials and Services

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Agenda

Holcim sustainability: Safety, compliance, development of leaders

Conclusions

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

urban population exceeded rural population

São Paulo

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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, Holcim estimates

Long-term cement consumption growth is driven by

emerging markets and recovery in Europe and US

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Holcim cement capacity as of September 30, 2013: 207 Mt

Holcim is well positioned to address growth in cement

demand

* China not consolidated

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Agenda

Conclusions

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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 and ROIC AT > 8%* by 2014

Marketing and sales

Energy and AFR

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Holcim Leadership Journey is on track

All figures in million CHF 2012 2013 2014

Target achieved

Cumulative Target 9M Cumulative Target

Customer Excellence (operating profit impact) 50-100 31 150-200 95 500

-Customer focus

-Value management

-Pricing policies

-Marketing and sales forces skills and motivation

Cost Leadership (operating profit impact) 100-200 127 400-500 531 > 1,000

-Energy and AFR 40 146 > 300

-Logistics 0 104 > 250

-Procurement 48 131 > 250

-Fixed cost 39 151 > 200

Total increase in operating profit 1) 150-300 158 550-700 626 > 1,500

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

Additional CAPEX net 2) 0-40 48 100-180 105 100-180

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)

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

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Agenda

Conclusions

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regulations

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Existing regulations Regulations under development On-going discussion No change

New Zealand: Intensity based ETS

Australia: ETS in launched

China: Pilot ETS in Hubei, national ETS as of 2015

EU-EFTA: Cap and Trade ETS

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Holcim has taken substantial measures to improve energy

Sector average emissions (WBCSD-GNR database)

% improvement Specific net CO2 emissions

Source: Holcim

Total energy consumption per Mt of cement

produced down by 34% since 1990

Traditional (coal, petcoke etc.)

Energy from waste Biomass

Power (electricity)

-30 -25 -20 -15 -10 -5 0

500 550 600 650 700 750 800

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Source: Annual sustainability reports, average industry assumed from PwC-GNR report

mineral components

with alternative fuels

consumption in clinker production

cement are a key indicator for process and resource

efficiency

Holcim has lowest CO 2 emissions per ton of cement in the industry

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Holcim successfully develops new products that can be

manufactured more efficiently…

Actions on energy and climate change go beyond efficiency in operations

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…and valorizes waste as alternative fuel and material

Efficient for economic, social and environmental reasons

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Sources of Green House Gas emissions

Partnerships and innovation along the value chain are fundamental

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Blocks

Regular concrete

Energy needs

31% 18% 4% 12%

Industry Cement industry

5% 30%

Waste Transportation

Direct and indirect sources; excluding emissions from forestry and agriculture

Source: IPCC

Sources of Green House Gas emissions

Concrete is one of the most eco-friendly building material over the life cycle

of the product

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The business case for sustainable development

• Sustainable development is our license to operate

• Sustainability is not philanthropy but a sound business case

• Holcim’s sustainability initiatives lead to a reduction in the use or emission

of energy, resource, capital and CO 2 emissions

• Beyond the environmental and business positives, being a sustainable

company

 Attracts and retains talent

 Stimulates innovation and cost effectiveness

 Inspires people to reduce energy, resources, capital and CO 2 intensity

CO 2 is the an efficiency KPI for cement; achieved by low clinker factor,

kWh/t, MJ/t and high Thermal Substitution Rate (TSR)

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Agenda

Conclusions

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OH&S reflects our values of caring for people and society and is a key feature of a

performing business and at the heart of any leading organization

The OH&S key attributes of being a leader in Holcim

Safe work environment as the foundation (“A safe work place”)

 Safe work environment seen as the foundation for strong OH&S culture

 Different characteristics of design and process safety to occupational safety well understood and addressed respectively

Strong OH&S Culture (“Passion for Safety”)

 Everybody knows the risks of the workplace environment

 OH&S mindset is license to lead

 OH&S competences are part of the individual development plans

Strategy of “Zero Harm to People”

 Implement well-defined strategy and respective improvement plans

 OH&S considerations at the heart of decision making

 No compromise on safety policy

Proven safety improvement processes (“Value adding processes”)

 Solid management systems for continuous improvement

 Strong capabilities to identify and address deficiencies

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Entries Shortlist Winners

North America & UK

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6

1

Africa Middle East

East Asia Oceania

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• Address legacy of non work related health issues

• Empower employees to improve own health

• Results over 12 months

• 60% Reduction in duration rate of injuries

• 60% Reduction in claims costs

• 50% Reduction in absenteeism

• 97% of employees have undergone a physical examination and standardized lab tests

• Clear understanding of major health issues

• Specific measures implemented to reduce risks

• Encouragement of individual stretching exercise

• Prevents 90% of skeletal lesions

muscle-• Driver audits with random roadside inspections

• Defensive driving training

• 80% of drivers recognized as Class one at Defensive Driving

• Fatalities caused by Holcim logistics down to ZERO

• Dedicated warning signs on high traffic routes

• Dedicated hotline in case of complaints

• Initiated safety culture program with leading external experts

• Interactive perception survey provided immediate results

• Dedicated local workgroups at major jobsites and projects

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Core HR Processes are enablers for business success

• Developing and engaging talent through high potential identification, talent assessment and development, engagement and retention

and leadership deployment

• Attracting critical talent with employment value proposition and talent

sourcing and recruiting

• Establishing functional success with HR as strategic advisors, strategic

people planning process and functional structure and technology

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Agenda

Conclusions

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Conclusions

recovery in Europe and US – Holcim with current footprint well positioned to address growth in cement demand

• Self help measures remain an important part of earnings improvement;

Holcim Leadership Journey well on track and with increasing momentum

to remain the leader of the industry in carbon efficiency

• OH&S as a key priority for a performing business

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