holcim strength performance passion driving towards higher financial performance thomas aebischer cfo holcim group

Strength. Performance. Passion.
© 2012 Holcim Ltd
Driving towards higher Financial Performance
Thomas Aebischer, CFO Holcim Group
Investor and Analyst Day 2012
© 2012 Holcim Ltd
© 2012 Holcim Ltd
Agenda
2
Investor and Analyst Day 2012
Financial Picture 3
Holcim Leadership Journey – Target Tracking 9
Changes in the Finance Organization 14
Driving toward better Processes 18
Growth and Performance Management 27
Finance Structure of Holcim 31
Conclusion 38
© 2012 Holcim Ltd
3
Investor and Analyst Day 2012
• St. Louis, September 15, 2010
What happened since our last investor day in 2010?
6 Aug. 2011 19 May 2012 14 Jul. 2012 9 Oct. 2010
Source: Economist.com
© 2012 Holcim Ltd
/ Mature
Emerging markets continue to grow, but a global recovery
remains elusive…
today
9%
Net Sales, operating EBITDA (million CHF)

GDP growth
-3%
0%
3%
6%
12%
-
3'000
6'000
9'000
12'000
15'000
18'000
21'000
24'000
27'000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Investor
Day 2010
Net Sales
op. EBITDA
/ Emerging
GDP growth (IMF WEO 2010/2012)
1
:
4
Investor and Analyst Day 2012
1
IMF World Economic Outlook Databases as of April 2010 (thin line) resp. as of April 2012 (bold line)
4

© 2012 Holcim Ltd
0
20
40
60
80
100
120
01.01.2007 01.01.2008 01.01.2009 01.01.2010 01.01.2011 01.01.2012
…and reported figures have been significantly impacted by
translation into the Swiss Franc
Currencies per CHF, indexed to 1 per 1 January 2007
104 AUD
79 USD
64 GBP
75 EUR
63 INR
2007 2008 2009 2010 2011 2012
Source: Datastream, latest value as of 24 August, 2012
5
Investor and Analyst Day 2012
© 2012 Holcim Ltd
But a clearer picture shows that Holcim’s Net Sales have
grown above their 2007 level (in USD),…
22'543
23'294
19'387
20'820
23'306
5'775

4'938
4'248
4'339
4'447
25.6%
21.2%
21.9%
20.8%
19.1%
2007 2008 2009 2010 2011
Net Sales
Operating EBITDA margin
Operating EBITDA
Net Sales, Operating EBITDA and Operating EBITDA margin:
(in million USD/%)
… which however could not compensate for higher costs,
resulting in USD 1.3 bn lower operating EBITDA
6
Investor and Analyst Day 2012
Source: Holcim Annual Report
© 2012 Holcim Ltd
The trough seems over: Since Q3 2011, there is a positive
trend on like-for-like operating EBITDA variance
7
Investor and Analyst Day 2012
-250
-200
-150
-100
-50

0
50
100
150
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Like-for-like quarterly operating EBITDA variance
1
:
(in million CHF)
1
Adjusted for CO
2
© 2012 Holcim Ltd
Agenda
8
Investor and Analyst Day 2012
Financial Picture 3
Holcim Leadership Journey – Target Tracking 9
Changes in the Finance Organization 14
Driving toward better Processes 18
Growth and Performance Management 27
Finance Structure of Holcim 31
Conclusion 38
© 2012 Holcim Ltd
All figures in million CHF 2012 2013 2014
Customer Excellence (operating profit impact) 50-100 150-200 500
-Customer focus
-Value management
-Pricing policies
-Marketing and sales forces skills and motivation

Cost Leadership (operating profit impact) 100-200 400-500 > 1,000
-Energy and AFR
> 300
-Logistics
> 250
-Procurement
> 250
-Fixed cost
> 200
Total increase in operating profit 150-300 550-700 > 1,500
Cash cost to achieve the savings (one-off) < 80 < 120
Additional CAPEX net
1)
0-40 100-180 100-180
1) 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
Holcim Leadership Journey:
Increase operating profit by CHF 1.5 billion until 2014
9
Investor and Analyst Day 2012
© 2012 Holcim Ltd
• Base line: Operating Profit of 2011 adjusted
1
(CHF 2’308 million)
• Each work stream has its own set of performance measurement definition,
considering volume, price and cost according to the specific drivers of that
work stream:

Holcim Leadership Journey – Target Tracking
Investor and Analyst Day 2012
10
1
Excluding one-off charges of CHF 375 million
Energy Fixed Cost Logistics Procurement
Alternative
Fuels & Raw
Materials
Customer
Excellence
= Work stream specific definition of performance measurement, reflecting only that portion of volume,
price and cost effect that is attributable to the work stream itself
=> overall performance of Holcim Leadership Journey translating into
CHF 1.5 billion of additional operating profit in 2014
© 2012 Holcim Ltd
11
Investor and Analyst Day 2012
In each work stream of Holcim Leadership Journey,
results are tracked per initiative
Holcim Leadership Journey
contribution
Price
Volume
Cost
2

Variation in operating profit compared to 2011 (illustrative example):
The overall result of the Holcim Leadership Journey will be a
bottom-up aggregation of the identified initiatives
Change not related to
Holcim Leadership Journey
1
CHF 2’308 million (base line of operating profit)
1
Including CIS and FX effect
2
Including depreciation
© 2012 Holcim Ltd
12
Investor and Analyst Day 2012
Holcim Leadership Journey will bring Holcim back to
at least ROIC
BT
of 11.8%
1
by 2014
14.6%
10.2%
9.1%
8.3%
6.5%
11.8%
0.0%
2.0%
4.0%
6.0%

8.0%
10.0%
12.0%
14.0%
16.0%
2007 2008 2009 2010 2011 2012 2013 2014
1
Corresponding to Holcim’s WACC
BT
2
Based on Invested Capital excluding cash, marketable securities, deferred tax assets/liabilities, prepaid interest, accrued interest
receivable and dividends receivable, advance interest received, accrued interest payable and dividends payable
ROIC before tax
2
:
CHF 1.5 billion higher Operating Profit translates into ROIC
before tax of 11.8% respectively a ROIC after tax of 8%
© 2012 Holcim Ltd
Agenda
13
Investor and Analyst Day 2012
Financial Picture 3
Holcim Leadership Journey – Target Tracking 9
Changes in the Finance Organization 14
Driving toward better Processes 18
Growth and Performance Management 27
Finance Structure of Holcim 31
Conclusion 38
© 2012 Holcim Ltd
New organization in Finance

Jan Hofmann
Aggregates & Construction
Materials Services
Jacques Bourgon
Cement Manufacturing Services
Ramit Budhraja / Christian Birck
Commercial & Marketing
Martin Ceccon
Innovation
Ruksana Mirza
Sustainable Development
Andreas Leutenegger
Corporate Controlling
Christof Hässig
Corporate Financing & Treasury
Kushnud Irani
Corporate IT
Andreas Kranz
Group Structure & Tax
Thomas L. Küderli
HGRS Accounting & Administration
NN
Merger & Acquisitions
Charl Bester
Procurement


Roland Walker
Corporate Communications
Frank Rossini

Corporate Legal
Jens Diebold
Corporate Strategy & Risk
Management
NN
Human Resources Corporate
Team
Bernhard A. Fuchs
Investor Relations
Nick Traber
Occupational Health & Safety

Urs Bleisch
PMO Holcim Leadership Journey
Thomas Aebischer
CFO Holcim
Bernard Fontana
CEO Holcim
Status: September 1, 2012
14
© 2012 Holcim Ltd
Information Technology
Synergies
Exploit business intelligence synergies between financial reporting
and functional reporting areas
• Integrated dashboards for quicker decision making and actions
• Operational efficiencies
Global platform
& services
Sourcing

Leverage established global platforms and services model further
Strengthen IT strategic sourcing in selected areas
15
Replication
Support
Act as a platform for replication of best practices within the Group,
especially for new technologies
Provide IT solutions and processes to facilitate Holcim Leadership
Journey
Investor and Analyst Day 2012
© 2012 Holcim Ltd
Procurement
Global
procurement
Increase spend at global level to benefit from higher purchasing
power of Holcim - categories to be sourced at Group level to be
increased from 6 with a total spend of CHF 600 million to 36 with a
total spend of CHF 4 billion
Processes
Diversification
Improve procurement processes by
• integrated decision-making platforms & structures and
• bundling the relationship between Group companies and
suppliers
Diversify the supplier base and ensure competitive bid processes
16
Key drivers
for change
• Ability to leverage larger spend across more Group companies
• A governance model and structure to support the goal

• An integrated cross functional approach with joint objectives
• Leveraging existing ERP functionalities to increase efficiency
Investor and Analyst Day 2012
© 2012 Holcim Ltd
Agenda
17
Investor and Analyst Day 2012
Financial Picture 3
Holcim Leadership Journey – Target Tracking 9
Changes in the Finance Organization 14
Driving toward better Processes 18
Growth and Performance Management 27
Finance Structure of Holcim 31
Conclusion 38
© 2012 Holcim Ltd
2005 2006 2007 2008 2009 2010 2011 2012
Implemented
for
Holcim US and
Holcim Canada:

•
Client Support
Service
•
Book to Report
•
Order to Cash
• Purchase to Pay
• Customer

Account
Reconcil
-
iations
• Insourced
Customer
Invoice
Printing
•
Payroll
•
Buying
• Treasury
Support

• Logistics
Support

•
Hire to
Retire
• Logistics
•
Tax
Support

•
Credit
Services
•

HR
master
data
•
IT
Service
Desk
Companies

added to the
Scope of
NABS:

• Aggregate
Industries
US
•
Lattimore

Industries

North American Business Services is continuously centralizing and
standardizing the administrative and transactional services rendered to our
customers, suppliers and employees
Our Shared Service Center in North America is a model of
cost reduction and efficiency improvement
18
Investor and Analyst Day 2012
© 2012 Holcim Ltd
The recent addition of Aggregate Industries (US) and Lattimore is expected to generate

a similar magnitude of savings.

The main benefit from North American Business Services:
Better services to our Customers, Suppliers and Employees
19
Investor and Analyst Day 2012
Back-office
services
Processing
costs
Efficiencies
and standards
North American Business Services…
…increased the reliability, robustness and
responsiveness of back-office services…
…reduced transactional processing costs (mostly in
finance) by over USD 5 million per year…
…improved internal efficiencies and standards between 2005
and 2011 that added an additional USD2 to USD 3 million per
year in savings
© 2012 Holcim Ltd
Implementing an IT Shared Service Center in Latin America
(LASER)
Standardizing
LASER started in 2000 standardizing transactional systems, based
on SAP ERP and common models for each core business segment
Roll-out
Applications
Several applications were added to improve electronic
communication with customers, suppliers and employees

LASER has been gradually rolled-out to all countries in Latin
America where Holcim has presence
Latest participant: Mexico joining 2012
20
Multiplication
154 LASER employees support 7’700 IT users, of which 5’800 are
SAP users
Coverage
Due to the common business model, identified improvements in
one country are easily rolled-out to other countries
Investor and Analyst Day 2012
© 2012 Holcim Ltd
European Business Model: A common process landscape
supported by a standard ERP solution
Definition
Common definition of European process established covering core
processes in all core business segments
Best practices
ERP solution
Process definition based on best practices from inside and outside
of the Group
Processes supported by a standardized ERP solution (SAP as core
plus standard satellite tools, e.g. CRM, Quality, Logistics
management etc.)
21
Benefits
First go live achieved in Holcim France and Holcim Belgium as per
July 1, 2012
Go live
Expected yearly benefits (before any shared service center)

EUR 22 million p.a.
Further
roll-out
Roll-out to the rest of the region until mid 2014
Investor and Analyst Day 2012
© 2012 Holcim Ltd
In our industry, companies that procure more efficiently will
have a cost and therefore a competitive advantage
Global
Categories
Regional
Categories
Local
Categories
Drivers of Leverage
•Pool demand requirements at
local level
•Drive service category
consolidation
•Process improvement at user
interface
•Drive transaction automation
•Drive regional agreements and
bundling
•Leverage central skills for
equipment sourcing
•Drive service category
methodology
•Set global/regional strategies
•Global negotiation and volume

commitments
•Drive specific master data and
standardization
Spend categories
Slag, Gypsum, IT,
Services, Electricity
(deregulated), critical
spares & others, …
Fuels, Additives, Capex
Equipment, Grinding
Media, IT, Travel, Large
Capex, …
Regulated Electricity &
local Solid Fuels,
Aggregates, Blast &
Drilling services, Leasing
& Rental, Electrical
Installation, Maintenance
Services, …
30%
70%
Estimates based on addressable portion of spend as % of 2011 reported total spend
Total Spend
9%
91%
2011
Target
2014
–
22

Investor and Analyst Day 2012
© 2012 Holcim Ltd
Americas
Asia Pacific Europe, Middle East
and Africa
Americas
Sourcing Hub
Process excellence will pave the way for additional cost
savings through SSC and regional sourcing hubs
APAC-Beijing Supplier
Development Hub
NABS
APAC
Sourcing Hub
Sourcing Hubs
Shared
Service
Centres
Global/EMEA
Sourcing Hub
23
Investor and Analyst Day 2012
Services
EMEA
Services Asia
Services
South Asia
LASER
Oceania IT Service
Center

© 2012 Holcim Ltd
Holcim has an excellent track record in Net Working Capital
management and will continue to optimize it
Investor and Analyst Day 2012
24
Quarterly average Net Working Capital in percent of Net Sales:
• Initiatives launched to further improve inventory management, e.g. through
implementation of reference values per plant on a global scale
• Implementation of supply chain finance solutions for selected countries
8.1%
8.4%
8.4%
7.8%
7.7%
0%
2%
4%
6%
8%
10%
2007 2008 2009 2010 2011
© 2012 Holcim Ltd
• Stock Coverage and Reorder Points
• Enhance preventive maintenance flexibility
• Controlled Replenishment
Several levers will further optimize inventory management
• Standardization
• Multi-Plant stock strategy
• Improved Planning
• Optimal Contract Management

• Plant awareness and execution
• Active consumption management
NWC
development
program
4
Virtual
Warehouse
1
Surplus
Inventory
Optimization
2
Obsolescence
Management
3
Inventory
Management
Dashboard
5
• Sustainability of achievements
• Consistent Monitoring
• Increased transparency and awareness
• Goal setting tool
• Improved Plant Reliability
• Optimal Master Data
• Payment Terms extension
• Fuels & Raw Materials Strategy
OPERATIONS
RELIABILITY

Investor and Analyst Day 2012
25