helvea swiss equities conference 2012 thomas aebischer cfo managing growth in a two speed economy january 12 2012 holcim ltd

© Holcim Ltd 2012
Helvea – Swiss Equities Conference 2012
Thomas Aebischer – CFO
Managing growth in a two speed economy
January 12, 2012
2
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
1
Drivers of demand growth
2
Managing the investment portfolio
3
People focus on the triple bottom line
4
Innovation, cost leadership, pricing
5
Summary & Conclusions
Agenda
3
© Holcim Ltd 2012
-4%
-2%
0%
2%
4%
6%
8%
10%
2007 2008 2009 2010 2011E 2012E 2016E

Mature Markets Emerging Markets World
January 2012
Helvea – Swiss Equities Conference
—
1
2
3
4
5
6
7
8
9
10
1950 1975 2000 2025E 2050E
Mature regions - urban Mature regions - rural
Emerging regions - urban Emerging regions - rural
Strong fundamental global growth drivers
• Emerging markets drive the global
population growth
• Strong trend towards global
popurbanization
• GDP growth heavily driven by
emerging markets
• Wealth is increasingly recorded in
emerging markets
Long term population growth (billion) Mid-term GDP development
Source: United Nations (World Urbanization Prospects & World Population Prospects - 2011)
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© Holcim Ltd 2012

January 2012
Helvea – Swiss Equities Conference
Demographics positively impact economic
structures and demand
Low demand
Low savings
Lacking investments
Increasing demand
Growing savings rate
Increasing investments
Mass consumption
High savings rate
Peaking investments
Softening demand outlook
Declining savings rate
Refurbishment
Stationary
High fertility rate
High youth base
Developing
Falling fertility rate
Declining youth base
Mature
Negative fertility rate
Youth ~ retirees
Ageing
Shrinking active population
Youth < retirees
China
USA

Russia
Niger
Nigeria
Ethiopia
Japan
Philippines
France
Italy
Argentina
Mexico
India
Spain
Switzerland
Brazil
Canada
Indonesia
Chile
Thailand
Time
Working age (15 – 64) / Total population
50%
70%
High level of people below 15 years High level of people above 64 years
Source: United Nations (World Urbanization Prospects & World Population Prospects, 2011)
Germany
5
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Solid construction growth outlook 2010 – 2020E

Up to 3% growth
Between 3% and 6% growth
Above 6% growth
n.a.
Source: Global Construction 2020 (Oxford Economics, 2011)
0%
1%
2%
3%
4%
5%
6%
7%
8%
World Mature Markets Emerging
Markets
2010 - 2020E
0%
1%
2%
3%
4%
5%
6%
Residential Non-residential Infrastructure
2010 - 2020E
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© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference

By 2020 the global construction market is
expected to grow by 67%
Largest construction markets in 2010 Largest construction markets in 2020E
• In 2010 the global construction market
was valued at around USD 7.2 trillion
• Mature markets outweigh emerging
markets
• In 2020 the global construction
market is expected to reach some
USD 12 trillion
• Emerging markets outweigh
mature markets
Source: Global Construciton 2020 (Oxford Economics, 2011)
Mature markets
Emerging markets
+ 67%
China 21%
US 15%
India 7%
Japan 6%
Canada 3%
Australia 3%
Spain 2%
Italy 2%
UK 2%
Brazil 2%
Russia 2%
Mexico 2%
Others (Mature &
Emerging

Markets) 24%
Germany 3%
Indonesia 3%
France 3%
China 15%
US 14%
Japan 9%
India 5%
France 4%
Australia 3%
Indonesia 3%
Others
(Mature &
Emerging
Markets) 23%
Italy 3%
UK 3%
Mexico 2%
Spain 4%
Brazil 2%
S. Korea 2%
Canada 4%
Germany 4%
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© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Our portfolio offers above average growth
3.7%
5.3%

2.5%
6.4%
4.8%
3.1%
GDP Growth [%] (excl. China)
World
Mature
Market
Emerging
Market
2010
Holcim
World
Mature
Market
Emerging
Market
GDP Growth weighted with Holcim op. EBITDA 2010 per country [%] (excl. China)
2.6%
1.6%
4.0%
4.2%
1.8%
5.1%
2.6%
1.9%
3.8%
4.3%
2.1%
5.2%

3.2%
2.7%
3.8%
4.7%
2.6%
5.5%
2011E 2012E 2016E
Source: Nominal GDP per Capita (at PPP) in USD: International Monetary Fund, World Economic Outlook Database, September 2011; Population: IMF
8
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
1
Drivers of demand growth
2
Managing the investment portfolio
3
People focus on the triple bottom line
4
Innovation, cost leadership, pricing
5
Summary & Conclusions
Agenda
9
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Capex allocation aligned to demand
0
1'000

2'000
3'000
4'000
5'000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Maintenance (CHF 10.7 bn) Expansion (CHF 13.5 bn)
Capital investments (CHF m) Production capacity cement (mt)
• Between 2001 - 2010 maintenance
capex reached CHF 10.7 bn
• Between 2001 - 2010 expansion
capex reached CHF 13.5 bn
• Between 2001 - 2010 cement
capacity increased by ~ 75%
• Capacity expansion was strongly
driven in emerging markets
0
20
40
60
80
100
120
140
160
180
200
220
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Europe North America Latin America Africa Middle East Asia Pacific
10

© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Well positioned cement market portfolio
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12%
Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, November 2011
GDP per capita (at PPP) CAGR 2010 - 2015E
Cumulated population
Growth 2010 - 2015E
Western
Europe
27.0 Mt
Eastern
Europe
23.9 Mt
Africa
Middle East
27.2 Mt
Mature markets Emerging markets
Size of circles represents influenced capacity 2010
North

America
23.2 Mt
India
54.0 Mt
China
54.7 Mt
Asia Pacific excl.
India, Oceania, China
46.3 Mt
Latin
America
36.6 Mt
Demand
growth
Oceania
4.9 Mt
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© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Positioning the aggregates market portfolio to
capture opportunities along the value chain
-4%
-2%
0%
2%
4%
6%
8%
10%

12%
2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12%
Western Europe
69.3 Mt
Africa Middle East
2.5 Mt
Latin
America
12.2 Mt
North
America
39.2 Mt
Asia excl.
Oceania
3.2 Mt
Mature markets Emerging markets
Size of circles represents consolidated sales volumes 2010
Eastern
Europe
8.2 Mt
Demand
growth
GDP per capita (at PPP) CAGR 2010 - 2015E
Cumulated population
Growth 2010 - 2015E
Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, November 2011
Oceania
23.2 Mt
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© Holcim Ltd 2012

January 2012
Helvea – Swiss Equities Conference
1
Drivers of demand growth
2
Managing the investment portfolio
3
People focus on the triple bottom line
4
Innovation, cost leadership, pricing
5
Summary & Conclusions
Agenda
13
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Energy management starts with our sustainability
culture and ends with the values of our people
Specific Gross and net direct CO2 emissions Clinker factor
Each employee is an ambassador of our
sustainability culture
kg CO2 / tonne cement Improvement % / Average % of clinker cement
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© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Handling energy cost inflation
World Primary Energy Demand
Fossil Fuel Price Development

Source: International Energy Agency (IEA) Scenario, World Energy Outlook 2011; Datastream
Fossil fuel prices based on New Policies Scenario
(not including CO2 costs)
60
70
80
90
100
110
120
130
140
2009 2015 2020 2025 2030 2035
Crude oil - USD / barrel
Steam coal - USD / tonne
6
7
8
9
10
11
12
13
14
Gas - USD / Mbtu
Holcim Energy Breakdown (2010)
Electriciy
37%
Thermal Fuel
63%

Holcim Thermal Fuel Mix (2010)
Coal
57%
Natural gas
5%
Biomass
2%
Alt fossil
fuels 10%
Shale/ lignite
5%
Heavy fuel
1%
Petcoke
20%
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© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Proactive energy management to mitigate cost
inflation
• Using the most efficient technology for new kiln capacity
• Efficiency improvement projects (e.g., waste heat
recovery, multi-stage combustion chamber)
• Focus on delivered cost per unit and fuel diversification
• Invest in physical infrastructure and delivery systems
Excellence
in buying
energy
Reduction

of Energy
Intensity
Optimization
of Fuel Mix
Proactive
energy
management
Vertical
integration
into sources
• Increase replacement of traditional by alternative fuels
• Invest in fuel flexibility and switching
• Vertical integration with coal and captive power
• Focus on renewable primary energies (e.g., wind)
• Take best practices and replicate / transfer knowledge
• Leverage global trading group scale and cost certainty
OPERATIONS
SOURCING
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© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Cost reduction through innovation
New
• Better cost management will continue to
focus on networking our assets and
renewable energy initiatives
• The Waste Heat Recovery (WHR) system at
Untervaz represents 15% of the plant’s
electricity consumption – 10.5 GWh/a

• The WHR installation produces electrical
power without additional CO2 emissions – a
renewable power generation system
17
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
1
Drivers of demand growth
2
Managing the investment portfolio
3
People focus on the triple bottom line
4
Innovation, cost leadership, pricing
5
Summary & Conclusions
Agenda
18
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Paving the way into the future with innovation
• Development of eco-efficient cement products: Composite cement
• Increasing project complexity and need for sustainable solutions
offers new opportunities to leverage service and tailor-made
solutions
- London 2012 Olympic Village
- Affordable housing in Indonesia
- NEAT Alpentransit project

- Low cost housing system
70%
Ordinary Portland
cement
77%
Composite
cement
1990 2010
23%
Ordinary Portland
cement
30%
Composite cement
Standardized
affordable building
solution – Holcim
Indonesia
Eco-efficiency
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© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Managing fixed costs is in the DNA of our people
• Ongoing projects will continue to reduce fixed costs and increase operating
leverage
• Projects to leverage shared services and optimize networks are central to
continuous cost management
Cement capacity (mt)
20
© Holcim Ltd 2012

January 2012
Helvea – Swiss Equities Conference
• Pricing momentum will continue while the cost curve will bend – a positive
inflection point
• Continued cost management and operating leverage will lead to margin
expansion and cash flow generation
Focusing on pricing while keeping costs low
Positive
margin
inflection
point
Margin
expansion
10 year period from 2001 to 2010
Percentages calculated as year over year change in average selling price and cost based in CHF
21
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
1
Drivers of demand growth
2
Managing the investment portfolio
3
People focus on the triple bottom line
4
Innovation, cost leadership, pricing
5
Summary & Conclusions
Agenda

22
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Generating cash flow at different speeds while
continuously seeking efficiency gains
(CAGR: 0.5%)
(CAGR: 5.3%)
• The operating EBITDA increased by 3.4% (CAGR) between 2001 and 2010
on a group level with the emerging markets strongly driving this growth
• Efficiency gains were continuously focused on - a reduction of net working
capital / sales reaching roughly 4% in 2010 (2001: just below 12%) and a
fixed cost reduction in 2009 and 2010 of nearly CHF 1.2 billion
0
1'000
2'000
3'000
4'000
5'000
6'000
7'000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CHF m
0%
2%
4%
6%
8%
10%
12%

Mature markets Emerging markets NWC/Sales (rhs)
op. EBITDA
23
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
+ + -/ + -/ +
Mature markets
Increasing cash flow generation by the use of key
levers across the market portfolio
+ / ++ + / ++ + / ++ + / ++
Emerging markets
+
++
Volume Pricing
Variable
costs
Fixed
costs
Capex
+
+ / ++
Working
capital
• Mature markets: Cash flow generation coming from a mix of volume growth,
improving pricing, cost savings, ongoing focus on efficiency improvements
and an increase in capacity utilization rates
• Emerging markets: Strong volume growth from new capacities combined
with good pricing will offset cost challenges and together with a clear focus
on efficiency increases result in a strong level of cash flow generation

24
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
Contact information and event calendar
Event calendar
February 29, 2012 Press and analyst conference for
the annual results for 2011
April 17, 2012 General meeting of shareholders
May 9, 2012 First quarter results for 2012
August 15, 2012 Half year results for 2012
November 7, 2012 Press and analyst conference for
the third quarter results for 2012
Contact information
Bernhard A. Fuchs
Binit B. Sanghvi
John M. Feigl
Investor Relations
Phone +41 58 858 87 87
Fax +41 58 858 80 09

www.holcim.com/investors
Mailing list:
www.holcim.com/subscribe
25
© Holcim Ltd 2012
January 2012
Helvea – Swiss Equities Conference
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.