holcim in south asia asean paul hugentobler member of the executive committee 2012 holcim ltd

Holcim footprint in South Asia / ASEAN* Source: Corporate Controlling * Association of Southeast Asian Nations Integrated Plant Grinding Station Under construction Terminal... Holci

Strength Performance Passion

Holcim in South Asia / ASEAN

Paul Hugentobler, Member of the Executive Committee

Agenda

Holcim footprint in South Asia / ASEAN*

Source: Corporate Controlling

* Association of Southeast Asian Nations

Integrated Plant

Grinding Station

Under construction

Terminal

A relatively young history within Holcim Group

Ireland Serbia Croatia China New Caledonia Tanzania Sri Lanka Bulgaria Romania Honduras Poland Kosovo Madagascar Mauritius Guinea Angola Iran Malaysia Thailand

El Salvador Dom Republic Indonesia Nicaragua Guatemala French Guyana Azerbaijan Austria Ivory Coast Nigeria Namibia

La Réunion Fiji

Haiti Carib Islands Panama Bangladesh Yemen Singapore Vietnam Switzerland

France Belgium

Netherlands Egypt Lebanon

Germany South Africa

Canada Brazil USA

Mexico Costa Rica Italy Colombia

New Zealand Philippines Ecuador Chile Australia Cyprus

Venezuela Spain Hungary Czech Republic Greece

Slovak Republic Morocco Peru Argentina Russia

Solid platform: 53% Holcim CEM volume, 27% of Net Sales, 33% of EBITDA in 2011

OpCo

Sales 2011 (t cem /m3 RMX) EBITDA 2011 (CHF) at actual

2011 constant FX rates

Holcim Lanka

1.5 mt CHF 21 m

Holcim Bangladesh

0.9 mt CHF 8 m

Siam City Cement:

11.8 mt / 2.7 mm3 CHF 168 m

Holcim Malaysia

0.7 mt / 0.3 mm3 CHF 14 m

Holcim Philippines

5.3 mt / 0.1 mm3 CHF 99 m

Holcim Singapore

1.3 mm3 CHF 13 m

Holcim Indonesia

8.0 mt / 1.5 mm3 CHF 235 m

Regional network of manufacturing sites and markets

Australia

Australia

Integrated Plant Grinding Station

Under construction Terminal

Our regional management approach…

• Robust business growth strategy for every country;

coordinated across region to optimize capacity utilization and flows of clinker and cement

• Lean Regional Management structure and strong local

management teams

• De-centralized but standardized philosophy deploys making

and accountability to the local management teams

multiplication of best practices across the region

…is based on a blend of skills and emotional engagement

Principles

• Ensure leadership development at both the front-line and management level

• Deploy large efforts to internationalize talent across the region and the Group

• Rely on formal levers to achieve alignment (within OpCo’s and across the region),

while focusing on informal levers to mobilize the human capital

• Identify the “pride builders” within the organization and leverage their ability to

Purpose

Pride

Commit- ment

Top Leaders

Team Members

Rational

Compliance

Emotional Commitment

Pride Bell Curve

Energize

Pride Score Indicator (PSI)

Pride builders

Achieving Alignment and Motivation

Best practice multiplication to accelerate delivery of bottom line impact

RMX, LIP (Large and Infrastructure Projects)

In the past ten years Holcim Group rapidly increased its

exposure to South Asia and ASEAN…

Indexed development of Holcim Group vs Holcim South Asia / ASEAN (excl the

Philippines), (2002=100)

…paying back in increasing Operating EBITDA contribution

359

311 301

285 243

249

350

311 297

291

225

264 234

Q2 Q1

Development of operating EBITDA in South Asia / ASEAN (excl the Philippines), (CHF m,

at constant exchange rates per 30.6.2012)

* CAGR of H1 results Source: Corporate Controlling

Agenda

India’s short-term macro environment is challenging…

• Millions of young people aspire to be integrated into the workforce

• Rupee depreciation erodes current factor market benefits

Inflation

• Inflation remains at a high level of around 7%

• Government’s 5% inflation target un-realistic unless major reforms ease supply pressure and infrastructure development gets pushed

…but long-term growth fundamentals are robust

Trade volume quadruples

(USD m)

HH Consumption doubles (USD bn)

Infra spending doubles (USD bn; 5 year plan)

Cement demand to grow at 8-9% p.a over the next years

• Overall cement demand expected to reach around 341 mt in 2016

• More conservative growth assumptions in 2012/13 due to overall macro situation; upcoming election cycle push expected in 2014

Cement demand of India 2006-2016E (mt)

341 312

286 263

242 224

212 193

174 160

146

2016E 2015E

2014E 2013E

Source: ACC / ACL D/S workshops, CRISIL 2012, McK 2011

Supply surplus situation remains, however, demand / supply ratio is improving

• Slow down in available supply growth as most capacities from the 2007 up-cycle are commissioned by now

• New projects get delayed due to lack of financing availability, difficult land acquisition and lengthy processes to obtain permits

• Roughly 70% excess supply is located in the South

All India demand / supply 2011-2016E (mt)

341 312

286 263

242 224

400 380

352 331

310 290

2016E 2015E

2014E 2013E

Holcim is competitively positioned in core growth markets

Integrated Plant Grinding Station Terminal

Existing ACL Existing ACC Under construction

• Holcim presence through ACC Ltd and

Ambuja Cements Ltd

► 11 plants and 13 grinding units with a total capacity of ~58 mio t cement

► 50+ Ready-mix concrete plants

► Terminals along the West cost to serve core markets

► Projects in implementation stage include Jamul, Sindri, Kharagphur, Mangalore, Sankrail; others in

planning

• Total sales 2011 of ~45 mt

• CHF ~3.5 bn net sales, CHF ~773 m EBITDA (2011)

• ~23‘400 FTE (2011)

• “Zero Harm to People” to become a license to lead

• Capacity expansion of approx 15 mtpa over the next 5 years

• Attractive acquisition target where available for sale

• Identification of new raw material sources to ensure tomorrow’s growth (e.g

limestone, clay, slag, fly-ash)

• Most agile and efficient supply chain of the industry to reduce

costs-to-serve

• Energy, e.g fuels, AFR, clinker factor, operational efficiencies

• Logistics (in- and outbound)

• Customer-centricity and front end-innovation across all market segments

• Attracting and retaining talent remains an ongoing challenge

• Training and development of people and leaders to ensure skills at all levels

Strategic priorities for India

Agenda

122.7 345.6

…however, united through economic corridor approach

Subregion Program by ADB (Asian Development Bank) in 1992 to

enhance economic cooperation / development

1998 to leverage potential of specific geographic areas

physical transport linkages opening up various development opportunities

• Physical links well progressed as of today, economic integration has yet to

be achieved

Cement demand expected at more than 120 mtpa by 2020

9 8

8 7

2 2

2 2

1 1

1 1

1 1

1 1

Cambodia Myanmar

Laos

Cement demand of Lower Mekong Subregion 2005-2020E (in mtpa)

• Infrastructure demand as main driver for cement demand growth in next decade

(hydropower dams, bridges and tunnels for railway projects, deep sea ports etc.)

• Urbanization and development of 2 nd and 3 rd tier cities will be main drivers

Source: Holcim estimates

Competitive positions in South Vietnam and Thailand

SCCC / Holcim Vietnam’s positions in the Lower Mekong Subregion

SCCC / HVL Integrated Plant SCCC / HVL Grinding Station SCCC / HVL Terminal

Cost Competitive Position (Core) Border Sales

Holcim Vietnam

We still need to network these regions with an expanded asset

footprint

Agenda

Indonesia is growing faster and gaining confidence

Middle class population is growing fast

GDP growth is promising Infrastructure investment priorities are set

Indonesia’s investment ratings upgraded

• Moody’s Baa3 (investment grade)

• Fitch’s BBB- (investment grade)

• Standard & Poor’s BB+ (one notch

(USD bn at 2005 prices)

Source: Central Statistics Bureau, MP3EI, HIL analysis

Investment priorities backed by economic corridor

Fishery, energy, mining

5 Bali – Nusa Tenggara

Tourism, national food support

6 Papua – Kepulauan Maluku

Fishery, energy, mining

Indonesia’s cement demand growth shows a strong track

record and is expected to continue its growth path

Cement demand of Indonesia 2005-2020E (in mtpa)

Holcim Indonesia’s existing footprint is concentrated in

Naragong Plant

2 kiln lines of 4’600 tpd and 8’000 tpd

3.9 mtpa clinker 4.7 mtpa cement

Tuban Plant (as of 2014)

1 kiln line of 4’000 tpd 1.2 mtpa clinker

1.7 mtpa cement

Cilacap Plant

1 kiln line of 7’800 tpd 2.4 mtpa clinker

2.9 mtpa cement

Grinding plant Cement plant Under construction Cement flow Clinker flow

Holcim (Malaysia)

Tuban – Construction work is proceeding according to plan

• Enhance cost leadership position in Java through

commissioning of first line in Tuban (East Java) end of 2013

second line in Tuban

• Expand asset footprint in Southern Sumatra to further optimize cost-to-serve position in this key market

Footprint strategy to improve competitiveness across

Indonesia

Agenda

Holcim Leadership Journey

Regional contribution

Capturing more than CHF

500 m

Organizational capability building and skills development critical to sustain performance

improvements

All workstreams to be supported by extensive capability / skills building programs across region

Commercial and Logistics (outbound)

• Refinement of Price and Margin

Management

• Sales Force training

• New products and services

• Improve logistics infrastructures,

processes and fleet management

capabilities (cycle time reduction)

Energy Activation (Project EARN)

• Coal/Petcoke sourcing and pooling

• Alternative/renewable energy

• Expand Geocycle business

• Increase efficiencies across manufacturing (e.g automation)

• Application of grinding aids

• Mineral components applications/enhancers

Finance

• Fixed cost reduction

• NWC reduction/optimization

• Disposal of non-operating assets

Holcim Leadership Journey

Example: Customer Excellence

Project SMX (Sales & Marketing Excellence) in ACC, India

2007-2009

SMX

2010 SMX EDGE

2010-2011 30:30

2011-2012 Institutionalizing Excellence

preparation for over-supply situation

• Strengthen

organization capacity and capabilities to

enhance sustainability

5 critical workstreams

Leadership Journey

Develop and deploy through coaches

Tools and modules

Governance

Performance cells

2009/2010 2011 2012 2013

Conduct sanity checks regarding tools & processes

Track implementation on country & regional level

Conduct region-wide expert training for Pricing Managers

Implement region-wide Community of Practice

Conduct country specific training for Sales Force

Train Pricing Managers on country level

Define SOPs 1) for most critical pricing processes

Develop approach for B2B customers

Launch tools & processes for retail customers

Improve price & margin transparency

Review & assess existing pricing policies

Holcim Leadership Journey

Example: Pricing and Margin Management, 2009-2013

• Growing populations, larger savings and rapid urbanization drive higher construction growth in Asia (Ø 2010-2020E)

Our opportunity

The continuing shift of construction growth towards Asia

Upper picture: Central Embassy development, Bangkok, includes a 30 storey five star hotel

Lower picture: Menara Palma, Golden Triangle, Central Business District, Jakarta

Source: Global Construction 2020, 2011

Our opportunity

Construction growth in Emerging Asia

Construction Market Outlook until 2016 (USD bn)

Asia Pacific (developed markets)

Forecast

Holcim Leadership Journey

Example: Value Added Solutions (SpeedCrete)

• SpeedCrete is a fast-track repair service for

infrastructure ensuring

uninterrupted business

Holcim Leadership Journey

Example: Innovation Hub in Singapore

• The Centre of Excellence (CoE) was built with the support from the

Singapore Economic Development Board (EDB)

• Aligned with Government of Singapore economic development priorities

• The CoE is dedicated to the development of sustainable and value-adding services

encompassing green solutions, productivity enhancing solutions, customized solutions and innovative materials technology solutions

• Fast urbanization and infrastructure need in Asia require a focus on Large and Infrastructure Projects (LIP)

• Regional Team has been evoked to

• build-up capabilities

expertise

• The vision of “Building Asia Together” led to the successful LIP Forum in Singapore with more than 240

participants from more than 140 companies

Holcim Leadership Journey

Approach to Large and Infrastructure Projects

Holcim Leadership Journey

Approach to Large and Infrastructure Projects

Commercial Excellence example: Regional LIP approach

Holcim Leadership Journey

Organization to serve Large and Infrastructure Projects

Head of Regional AGG & RMX Team

Regional Support

LIP Coordinator

Regional Commercial

HGRS Global LCP* Team

Regional functional team with OpCo representatives

Representative from regional Innovation Hub

in Singapore

Functional Team within Holcim Group Support

* LCP = Large Construction Projects

Holcim Leadership Journey

Cost Leadership in Energy

Measure for transparency

Best practice sharing through regional com- munities of excellence Capabilities Develop

(People) and Capacities (Infrastructure)

Create academy and equip them to drive energy projects Drive on-ground

cultural change

Create competitive advantage

EARN (Energy Activation across our Regional Network)

How will we get there?

Where do we want

to be?

Achieve 10%

reduction in annual energy costs by 2015:

“USD 200 m annual savings”

Where we are

today?

• Energy is 43% of

our overall costs

• Cost of energy will

Holcim Leadership Journey

Cost Leadership in Energy

• Reduction of energy cost by USD 150 million annually by 2014

• Introduces a new standard for Energy Management Excellence building on elements covering operations as well as sourcing

Capabilities (People) and Capacities (Supply Chain-Infrastructures)

Development Lean Energy Culture

Coal Sourcing and Pooling

Alternative and Renewable Energy plus CO2 Reduction

Thermal Energy Process

Admixtures and Clinker Factor Reduction

Energy Management Excellence

Holcim Leadership Journey

Cost Leadership in Logistics

New ACC set-up in East India region

Plant set-up in a Hub-and-Spoke System delivers significantly lower cost-to-serve due to:

• Clinker production close to raw materials (limestone, coal)

• Lower cargo volumes due to clinker transportation to grinding units vs direct cement dispatches

• Grinding units are located close to the market and in vicinity to mineral

components for blending (fly ash)

• Savings of approx 6 USD/t

Hub-and-Spoke system to improve cost competitiveness through

supply chain optimization

Agenda

Plenty of opportunities to catch!

Grinding Capacity Expansion Bangladesh

Footprint in Myanmar

Footprint in Cambodia

Footprint in Sumatra Capacity Expansion in

East Java

Footprint in Kalimantan

Capacity Growth in South Vietnam

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