annual results 2003 and outlook 2004 holcim strength performance passion

Annual Results 2003 Operations in North America Cement plant Grinding plant Terminal Cement plant project Cement capacity Group North America: 21.3 million t.. ƒAbove-average increase in

Annual Results 2003 and Outlook 2004

Strength Performance Passion.

1

Holcim Group in 2003

ƒDifficult economic environment – no improvement until

second half of the year

ƒWeak dollar pressures financial results

Holcim nevertheless reports a strong annual result:

ƒHigher sales volumes in all three core segments

ƒOperating profit rises 1.2 percent to CHF 1,925 million and

Group net income jumps 35.6 percent to CHF 686 million

ƒFocus on growth markets has again proved effective

ƒMeasures to improve performance are kicking in

ƒStandard share increases transparency and stock liquidity

ƒProposed increase in dividend

Annual Results 2003

Operating strengths

ƒCreation of cross-border management structures and

regional IT service centers improving efficiency

ƒLower administration and selling expenses

ƒEnergy price hikes off-set by greater use of alternative

fuels and raw materials

ƒInnovative products enable us to produce more cement

with less clinker, minimizing environmental impacts

ƒSelective pricing adjustments in individual markets

3

Progress in the US

ƒNew management at Holcim US delivering on expectations

ƒAt 20 percent, the 18 percent target operating EBITDA

margin announced mid-2003 was exceeded

ƒImproved performance at the Portland plant

ƒHolly Hill plant commissioning very successful

ƒIn seven years, more than 8 million tonnes of

state-of-the-art cement capacity has been installed

ƒRising freight rates will increase price of imported cement

ƒHolcim US will benefit well from growing cement demand

Annual Results 2003

Balance-sheet clean-up

Holcim has successfully continued to concentrate on its core

business and further streamlined its portfolio of interests:

ƒEternit AG in Switzerland was divested

ƒFurther reduction in shareholding in Cimpor of Portugal

ƒDisposal of interest in Dyckerhoff (Germany)

ƒSuccessful financial restructuring at Minetti in Argentina

ƒAdditional disposal of non-strategic assets

5

Value-adding transactions

ƒAcquisition of Cementos Hispania strengthens Holcim

presence in key Madrid market

ƒSuccessful conclusion of contract leads to acquisition of

Rohrbach Zement

ƒAcquisition of majority holding in Alpha Cement in Russia

with plants near Moscow and on the Volga

ƒPurchase of two quarries in Ontario secures strategic raw

materials supply and strengthens market positioning

ƒMerger of the two Group companies in the Philippines

ƒCement Australia becomes market leader in Australia

ƒExpansion of ready-mix business, especially in Eastern

and Southeast Europe, as well as Brazil and Chile

ƒ Markets in Spain and Italy continue to demonstrate solidity.

ƒ In several West European markets, order volumes were stable or slightly lower.

ƒ Crisis in the German building industry is not yet over.

ƒ Cement demand rising in Eastern and Southeast Europe.

Participation:

Cement plant

ƒHigher sales volumes due to extended presence and

solid market positions

ƒStiffer competitive situation and price war in Germany

pressure operating results

ƒDeclining operating profit in Europe

ƒFocus on core business through disposal of Eternit AG,

Niederurnen (Switzerland)

ƒDivestiture of interest in Dyckerhoff AG and substantial

scaling back of shareholding in Cimpor

9

North America

ƒ Sluggish recovery in US tion sector and weather-related sales setback in first-half 2003.

construc-ƒ Gradual rise in US and Canadian demand in second-half 2003.

ƒ Biggest drivers were residential and major infrastructure projects.

ƒ Cement consumption recovering;

slight decline in share of imports.

Annual Results 2003

Operations in North America

Cement plant Grinding plant Terminal Cement plant project

Cement capacity Group (North America): 21.3 million t

11

Facts on North America

ƒApproval process for building of two new cement

plants still underway

ƒAbove-average increase in cement deliveries at

Holcim US due to new Holly Hill plant and rise in

output at Portland

ƒHealthy order situation in Canada assists sales at

St Lawrence Cement; slight decline in US Northeast

ƒRising production efficiency and easing of price

pressures lead to higher operating profit in local

currency for Holcim US

ƒMassive dollar depreciation lowers results of North

America in Swiss franc terms

ƒ Largest market, Brazil, suffered lack of public building projects.

13

Operations in Latin America

Cement capacity Group (Latin America): 31.2 million t; further 9.5 million t with partners.

Annual Results 2003

Facts on Latin America

ƒ Rise in consolidated cement deliveries

ƒ Higher sales volume and productivity improve results of

Holcim Apasco in Mexico

ƒ Impressive business performance by our Group

com-panies in the Caribbean and Chile

ƒ Performance in Costa Rica, Colombia and Ecuador hit

by changes in external conditions

ƒ Brazil able to increase results despite drop in volumes

ƒ Turnaround for Minetti in Argentina due to rising demand

for building materials and strong market presence

ƒ In local currency, Latin America improves on previous

year

15

Africa Middle East

ƒ South Africa and Morocco exhibit further robust growth.

ƒ In Lebanon and Egypt, the construction sector fared well.

ƒ Political instability influenced business activity on the West African coast.

ƒ Pleasing increase in cement consumption overall.

Cement plant Grinding plant Terminal Cement capacity Group (Africa Middle East): 13.3 million t; further 5.1 million t with partners.

17

Facts on Africa Middle East

ƒHigher volumes for all Group companies except West

Africa group

ƒSignificantly enhanced financial results for Group

companies in Morocco and South Africa

ƒHolcim Lebanon and Egyptian Cement suffered intense

price competition; profit contributions nevertheless

remained substantial

ƒInvestment aimed at boosting efficiency in production and

distribution is paying off

ƒSharp rise in operating profit for this Group region

ƒ Overall backdrop remains healthy

in the Pacific region.

ƒ Major infrastructure projects and residential construction providing boost for building sector activity.

ƒ Cement consumption grew in nearly all markets.

ƒ Shortage of public-sector orders

in the Philippines.

19

Operations in Asia Pacific

Cement capacity Group (Asia Pacific): 35.5 million t; further 18.4 million t with partners.

Annual Results 2003

Facts on Asia Pacific

ƒDomestic demand for cement is growing in Asia; export

business losing some of its attractiveness

ƒStrengthening of market position in the Philippines after

the merger of our two local Group companies

ƒJoint venture in Australia proving itself and fully exploiting

available production capacity

ƒImpressive increase in sales in Malaysia, Vietnam,

Thailand, Indonesia, Australia and New Zealand

ƒTurnaround at PT Semen Cibinong in Indonesia

ƒGroup region Asia Pacific displayed the biggest increase

in operating profit

21

Sustainable development

ƒWe are committed to dealing sensitively with natural

resources and the environment, and are addressing our

wider social responsibilities

ƒWe engage in numerous relationships with various

stakeholder groups

ƒWe are an active participant in the World Business

Council for Sustainable Development

ƒWe have signed the UN Global Compact

ƒPositive ranking in the Dow Jones Sustainability Index

(DJSI)

ƒSecond Corporate Sustainable Development Report

(CSDR) to be published in June

Group net income

Cash flow from

+ Union Cement, Philippines, from

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

+ Cementos Hispania, Spain January 1, 2003 0.8 million t

+ Proportionate consolidation of Cement

Australia (integration of Queensland Cement) June 1, 2003 –

+ Alpha Cement, Russia December 31, 2003 4.3 million t

+/– Various smaller companies

1 African Basket (EGP, ZAR, MAD) 1) 1.24 1.00 1.04 4.0%

1 Asian Basket (AUD, NZD, THB, PHP) 1) 1.04 1.00 0.95 -5.0%

Balance sheet

year-end exchange rates in CHF 2001 2002 2003

1 African Basket (EGP, ZAR, MAD) 1) 1.00 1.00 1.02 2.0%

1 Asian Basket (AUD, NZD, THB, PHP) 1) 1.13 1.00 1.03 3.0%

CHF 5%

Sales Operating Profit

Group net income after minority interests 686 684 -2

Cash flow from operating activities 2'619 2'609 -10

Other 26%

EUR 22%

USD 48%

CHF 4%

Sales volumes aggregates and ready-mix concrete

Aggregates sales in million t

Ready-mix concrete sales in million m 3

Annual Results 2003

12'600 13'010

Asia Pacific 14%

Africa Middle East 10%

Latin America 22%

Net sales by region

Sales 2003

31

3'311 3'341

Annual Results 2003

3'383 3'399

Other income and financial expenses

Provision related to antitrust investigation Germany -120 0

Depreciation and amortization of non-operating assets -107 -60

Interest earned on cash and marketable securities 69 64

686

Before minority interests in million CHF

After minority interests in million CHF

Annual Results 2003

Cash flow statement

+/-Cash flow from operating activities 2'402 2'388 2'619 9.7%

Net investments to maintain productive

capacity and to secure competitiveness -855 -843 -802 -4.9%

+/-Financing (requirement) surplus -1'600 533 517 -3.0%

In(De)crease in financing liabilities 490 334 -676

In(De)crease in cash and

Annual Results 2003

Financial position

9'499 9'435

10'383

8'299 8'857

Funds from operations/

Net financial debt (%) 25.1 26.4 28.6 > 25

EBITDA net interest coverage 5.5 5.9 6.8 > 5

EBIT net interest coverage 3.3 3.2 3.9 > 3

Standard & Poor's Rating BBB+

Financial indicators

Annual Results 2003

Outlook 2004

ƒ Only a modestly brighter picture for construction activity

in many Group markets

ƒ In key markets, Holcim will achieve increased sales of

cement, aggregates and concrete

ƒ Greater value added due to improved efficiency

ƒ Solid balance sheet allows selective investment in new

markets or Group companies

ƒ Further increase in operating results anticipated