holcim strength performance passion third quarter interim report 2010 holcim ltd

Sales development and financial resultsConsolidated cement deliveries increased by 3.7 percent to 102.8 million tonnes in the period to end-September.The biggest increases were posted by

Third Quarter Interim Report 2010 Holcim Ltd

Strength Performance Passion

Key figures Group Holcim

like-for-like

Principal key figures in USD (illustrative) 4

Net income – shareholders of Holcim Ltd million USD 825 1,081 –23.7

Principal key figures in EUR (illustrative) 4

1

As of December 31, 2009.

2 Net financial debt divided by total shareholders’ equity.

3 EPS calculation based on net income attribut- able to share- holders of Holcim Ltd weighted

by the average number of shares 4

Statement of income figures translated at average rate; statement of financial position figures at closing rate.

In many emerging markets demand for construction materials grew

Economic and seasonal influences negatively impacted operating EBITDA in the third quarter

Overall stable volume development, but increased price pressure in cement

Trend toward higher production and distribution costs, but substantially lower fixed costs

Operating EBITDA similar to the previous year’s nine months

Net income continued to be impacted by the non-recurring cash-neutral tax charge in connection with the restructuring

of the Group’s interests in North America in the first quarter

Dear Shareholder

As anticipated in our half-year report, the building materials markets suffered a setback in global terms in the

third quarter of 2010, but many of the emerging markets – in which Holcim has a very good footing – continued

to experience further strong growth However, there were temporary challenges due to economic and seasonal

influences, particularly in the US, Mexico, Eastern Europe and India

However, operating EBITDA – our key operational performance indicator – declined only slightly in the first

nine months of the year The reasons for this decline are increased pressure on prices in important markets and

a trend toward higher variable production and distribution costs Holcim was severely affected by this in India

The onset of the monsoon – which was particularly harsh this year – prompted a slide in cement prices right

across the country In addition, ACC in India had to contend with delivery bottlenecks due to operational

fac-tors In the third quarter especially, the price situation also worsened in Europe and the US Encouragingly,

price levels in Latin America and Group region Africa Middle East were generally stable or even slightly better

Mexico, however, suffered a further decline in volumes owing to market and weather conditions

Holcim successfully managed factors it could influence directly Despite the commissioning of around 5 million

tonnes of new cement capacity in emerging markets, the Group succeeded not only in maintaining its fixed

costs on a year-on-year basis, but reduced them further from quarter to quarter Overall, total fixed cost

reduc-tion for the first nine months was CHF 188 million This is the outcome of the major savings exercise conducted

in all business areas and across the whole Group

Like-for-like, the aggregates segment virtually matched the previous year’s level Thanks to the successfully

integrated Australian company, activities could be expanded further

Worthy of particular mention is the fact that a number of Group companies have achieved substantially better

results in the current financial year They include Holcim Canada, Holcim US and Holcim Brazil, as well as

Ambuja Cements in India and our companies in Indonesia and the Philippines A substantial contribution to

the successful operating performance was made by the two Australian firms, which have been fully

consoli-dated since October 2009 Our broad-based strategy of geographic diversification therefore continues to prove

itself to be an important cornerstone of the Group’s success

3

Shareholders’ Letter

Net income – shareholders of Holcim Ltd –

* Factoring out changes in the scope of consolidation and currency translation effects.

1 Including a non-recurring cash-neutral tax charge of CHF 182 million in connection with the restructuring of the Group’s interests in

Sales development and financial results

Consolidated cement deliveries increased by 3.7 percent to 102.8 million tonnes in the period to end-September.The biggest increases were posted by Ambuja Cements in India and the Group companies in Brazil and Thai-land Cement Australia was fully consolidated in this reporting period for the first time Sales of aggregateswere up 15.1 percent at 118.8 million tonnes, while for ready-mix concrete there was a rise of 13.2 percent to34.4 million cubic meters The increase in these segments was primarily attributable to the newly consolidatedHolcim Australia Sales of aggregates were down slightly on a comparable basis, and volumes of ready-mixconcrete remained at the year-back level

Operating EBITDA declined by 1 percent to CHF 3.6 billion On a like-for-like basis, however, it fell by 6.7 percent.Negative factors included not only the trend in volumes, prices and costs, but also the weak euro and low

US dollar exchange rate In the aggregates business, margins slightly increased while decreasing in the othersegments Cash flow from operating activities reached CHF 2.1 billion, a fall of 6.3 percent

Net income was down 22.4 percent at CHF 1.2 billion and the share of net income attributable to shareholders

of Holcim Ltd declined by 27.1 percent to CHF 875 million The reduction in net income is explained not only

by the poorer level of business but also by the previously reported one-off, cash-neutral tax charge in connectionwith the restructuring of the Group’s interests in North America in the first quarter of 2010

Subdued demand for construction materials in Europe

The contrasting economic development in Western and Eastern Europe continued into the third quarter of

2010 While economic activity picked up in the UK, France and especially Germany – despite the euro crisis andausterity measures in the public sector – most countries in Southern and Southeastern Europe struggled withtheir high levels of government debt

The European construction sector made hardly any progress Reluctance to invest on the part of governments,together with declining commercial and industrial construction activity, muted the demand for building mate-rials This effect outweighed the slight recovery in residential construction in some western markets

Net income – shareholders of Holcim Ltd –

Cash flow from operating activities in million CHF 1,147 1,387 –17.3 –21.7

* Factoring out changes in the scope of consolidation and currency translation effects.

Shareholders’ Letter

Aggregate Industries UK sold more aggregates, primarily for infrastructure projects, as highway construction

in Scotland led to higher asphalt deliveries Volumes of ready-mix concrete declined, however

Holcim France Benelux could increase cement and ready-mix concrete volumes Sales of aggregates declined

Thanks to deliveries to the Nord Stream gas pipeline consortium, Holcim Germany managed to nearly maintain

cement sales Deliveries of aggregates and ready-mix concrete increased

Holcim Southern Germany and Holcim Switzerland sold higher volumes in all segments The construction

industry benefited from an excellent order situation in residential construction and infrastructure projects For

Holcim Switzerland, the start of work on the NEAT rail tunnel through the Monte Ceneri also had a positive

impact

The crisis in the Southern European construction sector continued Holcim Italy experienced lower sales of

cement and aggregates, however posted a rise in deliveries of ready-mix concrete Holcim Spain increased its

sales of cement, but only due to higher exports The demand situation for aggregates and ready-mix concrete

remained difficult, and sales volumes decreased

In the markets of Eastern and Southeastern Europe, sales were impacted by the limited awarding of

construc-tion contracts by the public as well as the private sector Thanks to EU-funded infrastructure projects, the

decline in deliveries slowed over the course of the year The Czech Group company recorded a rise in cement

shipments In all other markets in the region, there was a fall in sales volumes The economic situation as well

as weather conditions also negatively impacted sales of aggregates and ready-mix concrete Holcim sold more

aggregates in Hungary, the Czech Republic and Slovakia, as well as more ready-mix concrete in Slovakia and

Serbia

* Factoring out changes in the scope of consolidation and currency translation effects.

* Factoring out changes in the scope of consolidation and currency translation effects.

Russia’s economy recovered even though the lengthy drought – followed by wide-spread forest fires – ened activities Following an easing of mortgage lending, private residential construction in Moscow increased.Nevertheless, Alpha Cement could not offset the fall in deliveries from the first half of the year GaradaghCement in Azerbaijan benefited from solid demand for construction work Cement deliveries increased despiteproject delays and ongoing pressure from imports In Russia and Azerbaijan, expansion of cement and clinkercapacity proceeded according to plan.

damp-Cement sales in Group region Europe declined by 3.8 percent to 20.1 million tonnes Deliveries of aggregates fellmarginally by 0.2 percent to 59.5 million tonnes Ready-mix concrete sales contracted by 4.6 percent to

12.4 million cubic meters

Operating EBITDA for Group region Europe decreased by 17.4 percent to CHF 855 million This figure includessales of CO2 emission certificates totaling CHF 75 million (2009: 61) Many Group companies could only partlyoffset the decline in volumes and prices through cost-cutting measures Additionally, the result was impacted

by an unfavorable currency translation effect Internal operating EBITDA development was –14 percent

Differing market developments in North America

Economic growth continued in the US The recovery, however, was less vigorous than expected and demand forbuilding materials remained subdued In Canada, better economic activity positively impacted the constructionindustry

The insufficient demand for residential and commercial real estate in the US prevented a sustained recovery

in volumes The number of homes for sale increased again when the tax break for prospective homebuyersexpired Unfavorable weather conditions put further pressure on the construction sector Industrial buildingprojects and the economic stimulus program initiated by the Obama administration last year took up some ofthe slack in terms of volumes Infrastructure projects at the state level were hit by the precarious budget situa-tion At local level too, public-sector construction projects were either postponed or canceled Nevertheless,cement sales at Holcim US remained more or less stable

Aggregate Industries US recorded a fall in the volume of shipments of aggregates and ready-mix concrete.

Difficult market conditions prevailed in the northeast and west of the country, while demand was sustained

by transportation projects on the Atlantic coast, as well as airport and roadbuilding projects in the Midwest

In Canada, stronger residential and industrial construction activity coupled with stimulus programs in the

in-frastructure sector ensured rising demand for building materials Holcim Canada sold more cement and

ready-mix concrete In Holcim’s key province of Ontario, the improved order situation in the automotive components

industry exerted a positive effect Also Quebec and the country’s central provinces saw some increase of

con-struction activity Sales of aggregates reached previous year’s level

Consolidated cement deliveries in North America increased by 1.2 percent to 8.4 million tonnes due to the

growth in sales at Holcim Canada In the aggregates segment, there was a decline of 3 percent to 28.8 million

tonnes owing to the difficult US market Consolidated sales of ready-mix concrete increased by 2.4 percent to

4.2 million cubic meters, however

The drastic cost reduction achieved over the last few months in the US and the very good efficiency of the new

Ste Genevieve cement plant, as well as the better results of Holcim US and Holcim Canada, led to a consolidated

operating EBITDA increase of 11.6 percent to CHF 366 million Group region North America posted internal

operating EBITDA growth of 9.8 percent

Stable delivery volumes in Latin America

In general, the construction sector in Latin America proved relatively resistant to the crisis In most countries

of South America, construction sector activity remained solid, with a particularly large volume of work in Brazil

and Argentina However, construction markets in Mexico and Central America remained under pressure

7

Shareholders’ Letter

* Factoring out changes in the scope of consolidation and currency translation effects.

Latin America July–Sept July–Sept ±% ±%

In Mexico, the demand for cement was impacted by weak domestic economic activity Furthermore, tion activity in some parts of the country was to a large extent adversely affected by hurricanes and recordrainfalls New construction projects were scarce, and there were no export opportunities Holcim Apasco conse-quently sold less cement However, thanks to major infrastructure projects, the Group company was able to sellmore aggregates and ready-mix concrete The government of El Salvador had to cancel previously announcedhousebuilding programs and postponed planned highway construction projects Private construction activityalso declined, with the result that Holcim El Salvador sold less building materials Market conditions in CostaRica and Nicaragua were comparable Both local Group companies shipped less cement

construc-Holcim Colombia benefited from higher grinding capacity at the Nobsa plant, and sold more cement Sales

of aggregates fell due to the temporary closure of a gravel operation near Bogotá The situation in ready-mixconcrete was slightly better Activity in the Ecuadorian construction sector cooled after a lengthy period ofexpansion New projects were few and far between, and a number of road expansion projects on the coastwere put on hold Holcim Ecuador’s delivery volumes declined in all segments

In Brazil, the robust state of the economy strengthened demand for building materials Growth drivers wereprivate construction as well as infrastructure projects in the run-up to major sporting events Holcim Brazilhas experienced a continuous rise in sales of cement and aggregates since the start of the year In ready-mixconcrete, the company concentrated on high-margin projects with shipments similar to the previous year’slevel In Argentina, Minetti increased cement sales in the domestic market and raised cement and clinkerexports to Bolivia and Paraguay The volume of aggregates declined, while sales of ready-mix concrete benefitedfrom highway construction projects In Chile, Cemento Polpaico recorded lower cement sales in a difficultcompetitive environment Following the earthquake, the Group company felt the effects of a temporary fall inhousebuilding approvals Initial measures to rectify major damage, but also new mining projects, resulted atleast in an increase in deliveries of aggregates and ready-mix concrete

Cement deliveries in Group region Latin America fell by 1.8 percent to 16.8 million tonnes Shipments of gates showed a positive trend, and were up by 1.1 percent to 9 million tonnes Sales of ready-mix concreteincreased by 1.3 percent to 7.7 million cubic meters

aggre-Operating EBITDA reached CHF 762 million, representing a decline of 6.8 percent The substantially betterresults achieved by the Group companies in Brazil and Argentina could not offset the reductions in othermarkets, particularly Mexico Internal operating EBITDA development was –8.3 percent

* Factoring out changes in the scope of consolidation and currency translation effects.

Shareholders’ Letter

Mostly solid markets in Africa and the Middle East

Group region Africa Middle East developed positively overall In Lebanon, the favorable investment climatewas conducive to residential construction activity as well as infrastructure expansion projects In Moroccoand Holcim’s markets in the Arabian Gulf, demand for construction work remained high The constructionindustry in West Africa and the Indian Ocean region was stable

Holcim Lebanon sold significantly more cement and ready-mix concrete Rising demand in Northern Cyprussupported exports of clinker from the Chekka plant The situation for construction orders in Morocco was

robust but growth in cement demand has tapered off Capacity expansion within the industry added to petitive pressure Thanks to the excellent market position, Holcim Morocco sold higher volumes of cement

com-as well com-as aggregates However, sales of ready-mix concrete declined

The companies managed by Holcim Trading registered stable sales volumes in West Africa; in the Gulf regionthey declined In Qatar, construction projects in the liquid gas industry sustained demand In the Indian Oceanregion, cement deliveries were maintained despite the political crisis in Madagascar In La Réunion, deliveries

of aggregates and ready-mix concrete suffered from project delays caused by administrative factors

Cement sales in Group region Africa Middle East rose by 3 percent to 6.8 million tonnes Shipments of gates and ready-mix concrete remained stable at 1.9 million tonnes and 0.8 million cubic meters respectively

aggre-Group region Africa Middle East’s operating EBITDA increased by 2.5 percent to CHF 286 million and postedinternal operating EBITDA growth of 11.5 percent

* Factoring out changes in the scope of consolidation and currency translation effects.

* Factoring out changes in the scope of consolidation and currency translation effects.

Growing demand for building materials in Asia Pacific

In Group region Asia Pacific, demand remained on a high level Particularly, the markets in Indonesia and thePhilippines showed a dynamic performance In India, economic conditions remained predominantly favorabledespite heavy monsoon rains A large volume of construction work is in progress in Sri Lanka, Bangladesh,Thailand, and Vietnam

Overall, the two Indian Group companies sold more cement than in the previous year While Ambuja Cementsgenerated significantly higher sales of cement and clinker, ACC saw a fall in deliveries due to market and opera-tional factors Thanks to strong demand in key urban centers across the country, there was a marked rise inthe volumes of ready-mix concrete sold by ACC Holcim Bangladesh and Holcim Lanka benefited from variousinfrastructure projects In cement, these Group companies generated double-digit growth rates

Siam City Cement in Thailand increased its sales in all segments despite competitive pressure The Groupcompany also took advantage of additional export opportunities Holcim Vietnam sold more cement and

in particular – bolstered by the company’s increased presence in the south of Ho Chi Minh City – moreready-mix concrete In Malaysia, dynamic activity in the domestic economy as well as in exports resulted inincreasing shipments of cement and ready-mix concrete Holcim Singapore focused its marketing efforts ontechnologically sophisticated projects

In the Philippines and Indonesia, demand remained strong Sales of cement and ready-mix concrete wereboosted by infrastructure projects as well as numerous private and public construction projects Both Groupcompanies therefore exported less cement

* Factoring out changes in the scope of consolidation and currency translation effects.

* Factoring out changes in the scope of consolidation and currency translation effects.

Shareholders’ Letter 11

Infrastructure expansion projects and a recovery in the residential construction market enabled volumes of

shipments of Cement Australia to be similar to the previous year’s high level At Holcim Australia, project

delays and unfavorable weather conditions impacted negatively on sales of aggregates Sales of ready-mix

concrete also suffered from bad weather and a tightened competitive environment In New Zealand, the still

weak construction sector weighed on sales of cement and ready-mix concrete Earthquake-related damage to

the road and rail network at the start of September also impaired deliveries Our Group company’s plants

sur-vived the event without significant damage, with the result that Holcim is able to devote its entire capacity to

reconstruction efforts

Consolidated cement sales in Asia Pacific increased by 6.6 percent to 53.2 million tonnes Deliveries of

aggre-gates rose by 532.3 percent to 19.6 million tonnes, and ready-mix concrete sales were up by 89.8 percent to

9.3 million cubic meters

Operating EBITDA in Group region Asia Pacific increased by 10.2 percent to CHF 1.4 billion The good result was

due in particular to Ambuja Cements in India, as well as the Group companies in Indonesia, the Philippines, and

Australia Temporary price pressure in India during the monsoon season and the significant increase in variable

production and distribution costs reduced internal operating EBITDA development to –8.6 percent

Outlook

Apart from a few exceptions, prospects for the European construction markets remain subdued for 2010 Also

in North America, little is set to change on the demand side In both continents however, developments hinge

to some extent on weather conditions for building work into year-end The construction industry in Latin

America is expected to remain robust in most cases – the exceptions being Mexico and Central America The

Group regions of Africa Middle East and Asia Pacific will continue to grow In India, a rapid rise in demand for

building materials is expected following the monsoon

It will be challenging for the Group to reach previous year’s operating EBITDA

Holcim continues to place a strong emphasis on strengthening its cost and environmental efficiency and

competitiveness

Chairman of the Board of Directors Chief Executive Officer

November 10, 2010

Consolidated Financial Statements

1 EPS calculation based on net income attributable to shareholders of Holcim Ltd weighted by the average number of shares.

2 Operating profit CHF 2,178 million (2009: 2,337) before depreciation, amortization and impairment of operating assets CHF 1,399 million (2009: 1,277).

3 Net income CHF 1,223 million (2009: 1,577) before interest earned on cash and marketable securities CHF 65 million (2009: 71), financial expenses

Consolidated statement of income of Group Holcim

Earnings per share in CHF

Million CHF

Consolidated statement of comprehensive earnings of Group Holcim

Jan–Sept Jan–Sept July–Sept July–Sept

Other comprehensive earnings

Available-for-sale financial assets

– Tax expense

Cash flow hedges

– Realized through statement of income

– Tax expense

Net investment hedges

– Tax expense

Attributable to:

Refer to note 12 “Assets classified as held for sale” for an

explanation of the movements relating to available-for-sale

financial assets