kepler cheuvreux 15th swiss seminar bernard fontana ceo zurich april 2 2014 holcim strength performance passion

Strength. Performance. Passion.
Kepler Cheuvreux 15
th
Swiss Seminar
Bernard Fontana, CEO
Zurich, April 2, 2014
© 2014 Holcim Ltd
Agenda
Holcim at a Glance – 2013 Milestones

Holcim strategy and positioning based on long term growth


Outlook 2014 – Conclusions

Holcim Leadership Journey

Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
Holcim at a glance
130 cement plants
around 200 limestone quarries /
450 aggregates operations
1’150 RMX plants in the world
> 70’000 employees
over 5’000 own RMX trucks / more
than 3’000 subcontracted
over 1’600’000’000 cement bags sold
Presence on all five continents and in around 70 countries
2013 Net sales of CHF 19.7 bn and operating EBITDA of CHF 3.9 bn
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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
• Solid financial results
• Holcim Leadership Journey – strong cost reductions
• Strategic portfolio management continued
• Simplification of group structure in India initiated
• Expansions on track
• Group management streamlined with continued focus on new talents
• Strong cash flow generation
• Payout proposal of CHF 1.30 per share

2013 Milestones
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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
Agenda
Holcim at a Glance – 2013 Milestones

Holcim strategy and positioning based on long term growth


Outlook 2014 – Conclusions

Holcim Leadership Journey

Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
Rapid urbanization: In 2010, for the first time in history
urban population exceeded rural population
São Paulo

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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
Growing demand for housing and infrastructure
Shanghai
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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
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Europe
37%
45%
55%
22%
78%
16%
84%
North
America 10%
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%
1990 2013E 2030E
1990: ~0.8 Bn t 2013E: ~1.7 Bn t 2030E: ~2.7 Bn t
Cement demand Split Mature vs. Emerging markets
Cement demand evolution by region, excl. China
Mature Emerging
*Source: BMI, National cement associations, Holcim estimates
Long-term cement consumption growth is driven by
emerging markets and recovery in Europe and US
Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
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5
60
17
26

26
11
19
3
5
68
4
12
7
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Holcim cement capacity as of December 31, 2013: 206 Mt * China not consolidated
Over the past 10 years Holcim invested about USD 30 billion to establish a global
footprint unmatched in the industry
Kepler Cheuvreux 15th Swiss Seminar
Well positioned to address growth in cement demand
© 2014 Holcim Ltd
• Global footprint - the result of
organic and inorganic growth
initiatives
• Operating cash flow more than
sufficient to cover CAPEX and
financial investments
• Current cement capacities incl.
ongoing projects sufficient for
growth without major new
investments
• Increasing capacity utilization of
existing plants coupled with
ongoing cost reductions to vastly
improve ROIC

• Substantial free cash flow
generation expected for coming
years
Value creation from our existing asset base
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• Add nice picture here
-500
500
1'500
2'500
3'500
4'500
5'500
6'500
Cash flow from operating activities CAPEX Financial (de)/investments
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
In CHF million
Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
Agenda
Holcim at a Glance – 2013 Milestones

Holcim strategy and positioning based on long term growth


Outlook 2014 – Conclusions

Holcim Leadership Journey

Kepler Cheuvreux 15th Swiss Seminar

© 2014 Holcim Ltd
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* by 2014
Customer Excellence Cost Leadership
CHF 500 m
> CHF 1 bn
Capture demand through advice & service Optimization of cost base
Customer focus
Value management
Pricing policies
Marketing and sales
Energy and AFR
Logistics
Procurement
Fixed cost
* in similar markets conditions
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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
Holcim Leadership Journey is on track
All figures in million CHF
2012 2013 2014



Target
achieved

Target


12M






Customer
Excellence (operating profit impact) 50-100

31
150-200

135


500


-
Customer focus

-
Value management







-
Pricing policies







-
Marketing and sales forces skills and motivation

Cost Leadership
(operating profit impact) 100-200

127

400-500

808


> 1,000


-
Energy and AFR

40


187


> 300


-
Logistics

0



162

> 250


-
Procurement

48


203


> 250


-
Fixed cost

39


255


> 200

Total
increase in operating profit
1)
150-300


158



550-700

943


> 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

171


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). Adjusted for sale of 25% of Cement Australia and Siam City Cement, the new base line is CHF 2,193 million.
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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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
• OH&S: Laying the foundation for the success

• Customer Excellence: Focusing on the customer for the
Roche Tower and at Holcim Philippines
• Energy: Reducing energy costs in Eastern and Central
Europe
• AFR: Expanding the waste business in Asia

• Logistics: Improving logistics efficiency at Aggregate
Industries UK
• Procurement: Making Holcim a better buyer with the LEAP!
initiative
• Fixed Costs: Reducing fixed costs in Latin America with a
new shared business process center
• Investment Costs: Optimizing capital expenditure for new kiln
project at Holcim Ecuador




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Holcim Leadership Journey in action – example projects

Kepler Cheuvreux 15th Swiss Seminar

© 2014 Holcim Ltd
15
Customer Excellence
Holcim Philippines – Enhanced Cement Withdrawal System
Initial situation:
• Peak season demand for bagged cement exceeds
supply
• Dealers and retailers struggle to maintain sufficient stock
levels to adequately service their customers
• Long waiting times at Holcim plants lead to increased
transport costs
Holcim solution:
• New ordering and pick up system, similar to an airline
booking system
• Customers receive a text message confirming the pick
up time and place
Value created:
• Waiting times have been reduced on average by 25%
• Better capacity planning for Holcim, stronger reputation
as a reliable supplier and increased customer loyalty
Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
Customer Excellence
Holcim Switzerland – Roche Tower
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New Roche headquarters:
• Highest building in Switzerland with 41 floors and a
height of 175 meters; construction period between 2010

to 2015
Project challenges and customer needs:
• Massive base plate foundation and core walls requiring
concrete with high strength and hydration heat of less
than 60°C
• Delivery schedule with 1,000 t of aggregates per day
Value created:
• Taylor-made solution found in close collaboration with the
customer
• Time and cost savings for the customer
• Higher integrated margin achieved by Holcim
Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
• The Alternative Fuels and Raw materials business is a showcase for sustainable
development, leading to a competitive advantage
• Holcim operates a waste co-processing network with 38 waste management and
alternative fuels business units and total 1’500 employees
• From already significant volumes today, the global solid waste production will
grow by 50% in the next ten years, especially in emerging countries
• Sustainable waste management solutions are needed
• Kiln flame temperature of up to 2’000°C destroys
organic material
• Win-win-win situation
 Waste issues securely solved
 Environmental protection
 Holcim’s fuel needs partly solved through co-
processing
• Projected to add some USD 100 million in gross
value added in Asia alone over the next few years
Pictures on the right: Geocycle Philippines, Lugait bio mass feedsystem commissioned February 2014 with 16 tph biomass

capacity (rice husk, saw dust) storage and dosing facility in Lugait

Alternative Fuels and Raw materials (AFR)
Innovative waste management
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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
Geocycle
Other AFR
business unit
20 Geocycle business units (~800 FTE)
18 other AFR business units (~700 FTE)
18
FTE: Full Time Equivalent
Kepler Cheuvreux 15th Swiss Seminar
Alternative Fuels and Raw materials (AFR)
Holcim operates a global waste co-processing network
© 2014 Holcim Ltd
• In over 1’500 initiatives, Project LEAP! has defined clear targets and processes
to achieve substantial savings
• Today, procurement manages about 50% of 3
rd
party spend; the introduction of
“Category Management” increases this to 100% by Q3 2015
• Category Management is an approach that supports the entire process – starting
from procurement strategy to local execution
• “Big picture” approach drives lower total cost of ownership for each category at
the Holcim Group level
• Each category is managed by a global team including:
 Corporate Procurement

 Local Procurement (80% of spend, or 15 operating companies)
 Operations
 Users & Specifiers
 Key business sponsors
• Category teams have full responsibility and accountability for
delivering results


Procurement
Project LEAP! – Category Management Approach
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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
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Procurement
Category Management Cascades from Global to Local
Global Category Team
• Category Management structure covers 70-80% of
the global spend per category through involved
operating companies at all levels
• Global Category team will have members from the 3
largest operating companies (by spend)
Global
Category
Manager

Regional
Category
Managers (3)
Regional OpCo Operations

Leads (3)
OpCo Category Managers from 3 largest
OpCos by spend in category
Cross Functional Team Members
EMEA
Category
Manager
Regional OpCo
Operations Lead
OpCo Category Managers from
largest OpCos by spend for
category: to cover +/- 70% spend
Cross Functional Team Members
APAC
Category
Manager
Regional OpCo
Operations Lead
OpCo Category Managers from
largest OpCos by spend for
category: to cover +/- 70% spend
Cross Functional Team Members
Americas
Category
Manager
Regional OpCo
Operations Lead
OpCo Category Managers from
largest OpCos by spend for
category: to cover +/- 70% spend

Cross Functional Team Members
Regional Category Teams
Global
Business
Sponsor

Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
Agenda
Holcim at a Glance – 2013 Milestones

Holcim strategy and positioning based on long term growth


Outlook 2014 – Conclusions

Holcim Leadership Journey

Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
• Holcim expects cement volumes to increase in all Group regions
• Aggregates volumes expected to remain flat overall as increases in
Asia Pacific, Europe, North America, and Africa Middle East are
offset by negative volumes in Latin America
• Ready-mix concrete volumes also expected to increase in most
regions with the exception of Europe and Latin America
• Holcim expects that organic growth in operating profit can be
achieved in 2014
• The ongoing focus on the cost base coupled with all the benefits
expected from the Holcim Leadership Journey will lead to a further

expansion in operating margins
Outlook for 2014
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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
• Energy costs per tonne of cement produced slightly above 2013 level
of CHF 14.6
• Average interest rate unchanged at 4.8 percent
• Long term expected tax rate of 27 percent
• Maintenance CAPEX of CHF 0.8 billion net
• Expansion CAPEX of CHF 1.1 billion
Cost and CAPEX guidance for 2014
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Kepler Cheuvreux 15th Swiss Seminar
© 2014 Holcim Ltd
• Cement consumption growth driven by emerging markets and
recovery in Europe and US
• Holcim with current footprint well positioned to address growth in
cement demand without adding any significant new capacities
• Self help measures remain an important part of earnings
improvement; Holcim Leadership Journey well on track
• Initiatives from the Holcim Leadership Journey will go far beyond
2014
Conclusions
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Kepler Cheuvreux 15th Swiss Seminar