holcim in latin america andreas leu member of the executive committee 2012 holicim ltd

which results in sustainable cement demand growth, Source: Global Cement Review & internal estimates Latin America generates roughly 8% of the global GDP while consuming some 5% of glob

Strength Performance Passion

Holcim in Latin America

Andreas Leu, Member of the Executive Committee

Agenda

Mexico

Guatemala Honduras Costa Rica

El Salvador Nicaragua

Panama

Ecuador Colombia

Chile Peru

Cuba

Haiti/ Dom.Rep

Puerto Rico Jamaica

Latin America, a large region…

Latin America covers an area of around 21 Mio km2

Argentina accounts for roughly 13% of Latin America

in terms of size and is roughly 16% smaller than India

Brazil accounts for roughly 40% of Latin America in terms of size and is nearly 12% larger than Australia

…with a young and growing population…

40.8 Mio people

196.7 Mio people 114.8 Mio people

17.3 Mio people

29.4 Mio people 46.9 Mio people

Buenos Aires (13.4 Mio)

Bogota (8.5 Mio)

Lima (9.0 Mio) Mexico D.F (20.1 Mio)

Rio de Janeiro (11.9 Mio) Sao Paulo (19.7 Mio)

2011 2020E

< 25 years old > 25 years old

327 384

268 267

• An increasing number of people

is entering the middle class

• The continued strong youth base offers future growth

Mio people

0 3000 6000 9000 12000 15000 18000

0 2000 4000 6000 8000 10000 12000

2011 2020E GDP nominal GDP per capita (rhs)

…and income power development potential…

…with many similarities…

• 3 regional commercial blocks

CAN (Comunidad Andina)

APEC (Asia-Pacific Economic Cooperation

NAFTA (North America Free Trade Agreement)

SICA (Sistema de la Integración Centro Americana

Source: WDI (2010/11 data)

Main Free Trade Agreements

Rich ethnic (> 500 indigenous languages) & cultural diversity

… but more diverse than often perceived abroad

Weather, biodiversity & natural resources

…but more diverse than often perceived abroad

Source: Wikipedia, Google images

Political orientation, social & economic stability/development, security, trade partners, etc

…but more diverse than often perceived abroad

However, a common need for infrastructure and housing,

Source: CEPAL & internal estimates

Country Project

Panama Canal expansion Peru/Brazil HW Peru-Brazil Peru Port Tacna Brazil Port Açu Brazil Dam Monte Belo Paraguay Aluminium plant Chile Casela

Chile Dam Castilla

x Projects < USD 3.5 bn x Projects > USD 3.5 bn

Roughly USD 300 bn housing deficit (~ 18.5 million

infrastructure projects to be executed until 2020

which results in sustainable cement demand growth,

Source: Global Cement Review & internal estimates

Latin America generates roughly 8% of the global GDP while consuming some 5% of global cement production

Brasil Mexico Argentina Colombia Peru Central America Others

3.7% CAGR 3.9% CAGR 4.0% CAGR

today led by Brazil and Mexico, …

Bubbles size according to 2011 national cement demand estimates Source: Global Cement Review & internal estimates

which together with the rest of Latin America will drive

future cement demand

Bubbles size according to 2020 national cement demand estimates Source: Global Cement Review & internal estimates

Agenda

Agenda

Holcim has build its current leading strategic footprint over the last 60 years

Investing in its people

LatAm Maintenance course

40 th Global CEM manufacturing

conference

LatAm CAPEX project management

course

• Training at all levels of the company

• Implementation of insurance and pension schemes

• Short and long term transfers

knowledge sharing and spread of best practice

Sustainably maintaining Holcim’s image as a preferred

employer who rarely loses talent to the competition or other

industries

• “I am grateful to Holcim because they trusted me and gave me the opportunities, which

allowed me to grow personally and professionally thereby supporting me all the way ”

Plant Manager of Holcim Argentina

• “During the 19 years of my professional journey , The Group has offered me many development opportunities … with special emphasis in sustainable management and

delivering on our promises to all our stakeholders”

Commercial Director of Holcim Argentina

• “Besides the enriching personal and professional experience within the Group, the opportunities offered by Holcim rewarded me with a number of external acknowledgments”

General Director of Holcim Nicaragua, “Entrepreneur Woman of the Year for the Construction Industry” and “Extraordinary Services Provider to the Central America Construction Industry”, awarded in 2011

Developing strong professional and local teams

• “After 17 years of journey, interacting with colleagues, customers, communities and institutions, I got a broad view of our business and developed skills that today allow me to

handle different challenges I am still convinced that Holcim is the company I want to

continue to be part of ”

Plant Manager of Holcim Costa Rica

• “Over the last 9 years I lived many enriching experiences, developing personal and

professionally but also accompanying Holcim Colombia on its way to a business leader

and recognized role model in our industry”

RMX Plant Manager of Holcim Colombia

Developing strong professionals and local teams

Adapting its organization according to evolving needs

IT Shared Service Center (SCC)

( 3 countries)

IT (+ 2 countries)

IT (+ 3 countries)

IT (+ 1 country)

• Becoming a long term business partner,

Retail entrepreneurs Self-builders & masons Affordable housing developers Suppliers development

(business model seminar)

Sustainably developing through fit for purpose solutions

Holcim has proven its ability to adapt to local conditions,

Sustainably developing through fit for purpose solutions

Holcim has proven its ability to adapt to local conditions,

• …

• with service excellence & innovation,

Los Bronces - Chile Estadio Maracanã - Brazil Bogota Airport - Colombia

Sustainably developing through fit for purpose solutions

Holcim has proven its ability to adapt to local conditions,

• …

• while allocating funds to capture growth opportunities,

Nobsa Hermosillo

Sustainably developing through fit for purpose solutions

Holcim has proven its ability to adapt to local conditions,

• …

• continuously working on efficiency improvements,

Bogiflex – Argentina / Ecuador

Cement drive (mill) – Ecuador /

Sustainably developing through fit for purpose solutions

Holcim has proven its ability to adapt to local conditions,

• …

• and establishing itself as a good neighbor in the community

‘’Construyendo Juntos’ – Costa Rica ‘Aférrate a tu línea de vida’ - Colombia ‘Educación para todos’

- Ecuador

Sustainably developing through fit for purpose solutions

Holcim has proven its ability to adapt to local conditions,

• Becoming a long term business partner,

• with service excellence & innovation,

• while allocating funds to capture growth opportunities,

• continuously working on efficiency improvements,

• and establishing itself as a good neighbor in the community

Over the last 60 years Holcim has laid the foundations for a

sustainable business in Latin America

Consolidating a sustainable, profitable business

America continues generating cash for the Group

based on a sound strategy

Bubbles size according to 2020 national cement demand estimates

Holcim capacity > 5 years foreseen sales

Upcoming Holcim capacity limits

Footprint expansion potential

x mtpa Million tons Holcim cement installed capacity

Grow with the market where already present

Exploring entry into new markets (countries or regions), focusing on acquisitions, JVs and/or mergers

Very selective expansion

of Aggregates footprint

driven by 12’867 skilled and engaged employees

and 17 to/from the Group

management positions covered from internal succession pool

CEOs who started their professional career in the region

employees First female Country Head of the Group

12’867 Holcim employees

2011 data

1) Results of the Hewitt engagement and satisfaction survey performed in all Holcim companies in Latin America (90% response rate)

Aon Hewitt's research indicates that organizations with Engagement scores above 65% consistently deliver better business results, estimated as Total Shareholder Return 22% above average (TSR = sum of total shareholder’s gain (share price growth + dividends paid) divided by previous year’s share price)

Above average regional employee engagement score of 83%1

Agenda

• RMX right size & AGG strategy review (Mexico & Brazil in particular)

• Shared Transactional Shared Service Center

• Local Cost Reduction Champions (cross functional initiatives)

• Alternative mineral components, mainly in Brazil

• Regional key strategic sourcing / expanded regional pooling categories (TCO mindset)

• Process simplification, automation & regional standardization for P2P

• Finalize & leverage integrated retail market solution strategy roll-out

• Foster high performance innovation (e.g microinjet in Brazil)

• Strengthen skills of energy champions and Alternative Fuels (AF) teams

• Energy review per country (fuel mix optimization, contracts renegotiation, Waste Heat

recovery & AF installations, strengthen renewable energy partnerships)

Holcim Leadership journey in Latin America continues -

some specific on-going examples

• Process/model regional standardization, incl e-logistics where possible

• Roll-out RMX distribution optimization model

• Streamline product flows (e.g cement brownfield in Brazil, clinker supply in Costa Rica)

Customer Excellence - RMX margin improvement based on business intelligence, e.g Chile

• Reach better margins at all RMX sites

• Increased transparency on current margins:

• critical RMX KPIs1 for each job site identified

• new margin calculation and monitoring tools & processes enforced

• sales force incentive systems reviewed

• monthly monitoring of job deviation vs quotation

• Re-negotiation or termination of jobs contracted with negative integrated margins

• Santiago region: additional CHF 5.5 Mio Operating Profit in 10 months

• Rest of the region (yet to be quantified):

• better margins per product and customer

• optimized/strategically repositioned RMX networks

1) KPI: Key performance Indicator

Customer Excellence – Concrete focused, Value Added

Solutions organizations, e.g Mexico

• Partner with urban & large construction developers,competing with differentiated solutionsat aTLC1 level (vs just construction costs / mere price)

• Balance span of control within commercial organization

• New Specific Value Added concrete Solutions (VAS) department:

• close collaboration with customers on defining best TLC1

solution Example of VAS project: flooring solution for a large scale retailer improving margin while creating value for customer

• Lean commercial organization providing integrated solutions and creating more value for all stakeholders

• Increase share of projects with integrated commercial margin

• One-stop-shopping for all building needs

• Guaranteed quality products

• Credit (USD 10 Mio loans in 2011)

• Technical support (80% of customers

in 2011)

• Transparent commercial conditions

• Neat & friendly environment

• Multiregional coverage

Customer Excellence - Integrated retail market solution, e.g Argentina

retailers are promoters, NPV ~ USD 20 Mio

development stages)

• Premium brands

• Branding (store design) & advertising

• Training & improved professionalism (2’620 people trained in 2011; NPS customer loyalty system)

• Higher sales (shop sales typically increase by 15-25%)

• Sales & purchase clubs (20%

discount on trading goods and assured supply)

Customer Excellence – integrated retail market solutions

Holcim leads in Integrated Retail Market Solutions and

Brand Equity, working with a network of over 75’000

branded retail partners

Customer Excellence – High performance cement

innovation, e.g Microinjet in Brazil

• Consolidate position as preferred supplier of high performance innovative solutions

• Dedicated team on R&D of new solutions, replying to specific customer needs &/or identified market trends, e.g microinjet:

control) which no other cement producer provides in Brazil

recovering of concrete structures

• Maintain construction recovery share and capture new opportunities of upcoming large projects (FIFA World Cup 2014, Olympic Games 2016)

• USD 32 Mio NPV and additional ~ USD 5 Mio annual Op Profit

Cost Leadership - Regional key strategic sourcing and P2P process standardization

• Leverage & commit spend and sourcing at the most appropriate layer

• Simplify and standardize Procurement to Pay processes

• Strengthen a Total Cost of Ownership spend mindset

• Expand list of key procure categories to be pooled and procured at

• reduction of business risks, maintenance & operational cost

• better cash conversion cycle

• Further automatize and regionally standardize logistics processes and business models, leveraging on exiting Group best practices

• Self-assessment and gap analysis per country

• Standardization and upgrade of processes and tools planned

• New key performance indicators and reports under discussion

• Transport strategy and fee negotiation under review

• Join developments with commercial (e.g e-commerce upgrade), procurement (e.g include transport companies in SRM 1 tool) and cement / RMX operations (e.g pallet management) on-going

• Improved working context with internal and external stakeholders

• Higher customer service (specially, delivery reliability) at lower costs

• Regional logistic annual savings of ~ CHF 22 Mio

1) SRM: Supply Relationship Management

Cost Leadership - Regional logistic process / model

Agenda

Concluding Remarks

vast mineral and agricultural resources, a growing middle class, democratic governments and sounder macro-economic fundamentals

will continue on a sustainable growth path, especially for the building material industry

the Group, offering opportunities for expansion and diversification

grow and has skilled and passionate employees, determined to continue to significantly contribute to the Group

People, Footprint & Growth:

Latin America’s foundations for further contribution to the

Holcim Leadership Journey

Disclaimer

Cautionary statement regarding forward-looking statements

This presentation may contain certain forward-looking statements relating to the Group’s future business, development and economic performance

Such statements may be subject to a number of risks, uncertainties and other important factors, such as but not limited to (1) competitive pressures; (2)

legislative and regulatory developments; (3) global, macroeconomic and

political trends; (4) fluctuations in currency exchange rates and general

financial market conditions; (5) delay or inability in obtaining approvals from authorities; (6) technical developments; (7) litigation; (8) adverse publicity and news coverage, which could cause actual development and results to differ materially from the statements made in this presentation Holcim assumes no obligation to update or alter forward-looking statements whether as a result of new information, future events or otherwise