sg infrastructure construction building materials conference positioned for future growth marco knuchel investor relations binit sanghvi investor relations may 19 2010 hlcim ltd

SG – Infrastructure, Construction & Building
Materials Conference
Holcim – Positioned for future growth
Marco Knuchel – Investor Relations
Binit Sanghvi – Investor Relations

May 19, 2010
Phu My Bridge, Vietnam

© Holcim Ltd 2010


Agenda
1

Strategy and positioning

2

Value driven investment criteria

3

First quarter 2010 results

4

Conclusions

5

Appendix – Maps
2

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Holcim strategy…
Geographic
Diversification

Product Focus

• Two basic resources
• Cement
• Aggregates
• Value-adding products
and services
• Ready-mix concrete
• Asphalt
• Concrete products

Local Management
Global Standards

• Business – strongly
anchored in local

markets

• Truly global
• Balanced between
• regions
• mature / emerging markets
Net sales1

Op. EBITDA1
25%

29%

34%

37%

8%

6%
15 %

16 %

Europe
North America

8%

22%

Latin America
Africa Middle East
Asia Pacific

• Supported by
global standards
• Policies &
directives
• Exchange of
know how &
best practices /
benchmarking

…effective execution is the base for success
1

3

Reported as per 12M 2009 YTD

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Holcim Value Chain
Supply

Basic Materials
Processing

Cementitious
Materials
(cement,
mineral
components)

Channels
Transactional
Transformational

End - users

Direct Sales
Ready -mix
Concrete
Traders

General
Contractors

Concrete
Products
Self - builders
Masons

Wholesalers
Mortars

Aggregates
Retailers
(sand, gravel,
stone, recycled
aggregates)

Demand
Applications and
Construction Fields

Asphalt
Direct Sales

Civil
Engineering

A
p
p
l
i
c
a
t
i
o
n
s

Housing

Commercial /
Industrial
Building

Infrastructure

4
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Holcim generates its EBITDA in countries with
GDP growth above average
GDP Growth [%] (excl. China)
2009

World

Mature
Market

2010

3.9%

-1.1%

2012

4.7%

2.7%

-2.3%

Emerging
Market

2011

3.5%

5.4%

0.6%

5.2%

3.9%

6.3%

6.8%

6.4%

6.7%

GDP Growth weighted with Holcim op. EBITDA 2009 per country [%] (excl. China)

2009 Holcim
op. EBITDA split:

Holcim World

Mature: 30%

Mature
Market

Emerging: 70%

Emerging
Market

5.7%

1.3%

3.1%

-1.7%

4.4%

3.8%

8.2%

4.1%

8.8%

9.0%

Source: Nominal GDP per Capita (at PPP) in USD: International Monetary Fund - World Economic Outlook Database (April 2010), Holcim estimates

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

5

May 19, 2010


Demand drivers – population growth and
urbanization
World population

Population in rural and urban areas

10
10

10
urban

rural

6.4

5
5

5

Emerging
markets

5.0

3.2
2.4

Mature
markets

0
0
1970

2000

0

2030

2050

3.3
2.8

2.9

1.3

1970

2000

2030

2050

• Likely little or even no population growth in most developed countries
while population growth in emerging countries will continue
• In emerging and mature countries migration from rural areas into
urban agglomerations will continue
Source: United Nations, World Population Prospects, March 2009 – in billion
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

6

May 19, 2010


Global construction outlook still rock-solid and
dynamic!
Largest construction markets 2009E

Largest construction markets 2020E
Global ranking

USA
China
Japan
Germany
Spain
France
Italy
South Korea
India
UK
Canada
Brazil
Australia
Russia
Indonesia

1
2
3
4

5
6
7
8
9
10
11
12
13
14
15

Global ranking

China
USA
India
Japan
South Korea
Germany
Spain
Russia
UK
Canada
France
Italy
Indonesia
Brazil
Australia

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

With a presence in 13 out of 15 top construction markets
Holcim is very well positioned to capture growth opportunities
Source: Global Construction 2020, Global Construction Perspectives, Oxford Economics, November 2009
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

7
May 19, 2010


All BRICs in one basket? Positions and challenges
are very different!
Holcim influenced capacity 2009 (M tonnes)

Europe
North America
Latin America
Africa Middle East
Asia Pacific

51.1
20.6
34.2
27.2
153.1

18%
7%
12%
10%
54%

Total influenced capacity
- of which BRIC

Holcim BRIC pro-forma op. EBITDA 20091

286.2 100%
111.4 39%

Brazil – platform for growth

16%

8%

4%

72%

Brazil
Russia/CIS
India
China

Russia – Shurovo renewal

Southeast – in % of Brazil
Population
GDP
Cement demand

53%
73%
66%

Brasilia
Belo Horizonte
Sao Paulo

1

~130km

~85km
Rio de Janeiro

Pro-forma incl. China (Holcim participation in Huaxin Cement is 39.9 percent – therefore it’s not fully consolidated)

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

8
May 19, 2010


All BRICs in one basket? Positions and challenges
are very different!
Holcim influenced capacity 2009 (M tonnes)

Europe
North America
Latin America
Africa Middle East
Asia Pacific

51.1
20.6
34.2
27.2
153.1

Total influenced capacity

- of which BRIC

286.2 100%
111.4 39%

Pan-Indian footprint

18%
7%
12%
10%
54%

Holcim BRIC pro-forma op. EBITDA 20091

16%

8%

4%
Brazil
Russia/CIS
India
China

72%

China – focus on provinces
Attractive positions
Rauri in the Himalayas

>3,000 km

Delhi

Calcutta
Mumbai

• Eight provinces along the

Madras

1

Yangtze River
• Market size of 450M t
• Huaxin – capacity 51M tonnes

Pro-forma incl. China (Holcim participation in Huaxin Cement is 39.9 percent – therefore it’s not fully consolidated)

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

9
May 19, 2010


Not only BRICs – a lot of other emerging markets
show above average growth rates…
CAGR 2010 – 2020 construction output

10%

Markets with
Holcim presence
No Holcim
presence

World
average

5%

0%
a
a
ia co d y ia E ce ia ia a lic es ca d t m ry co e ia ia
ld
zi l s i i a i n
es exi lanurke rab UAree mb an ntin ub pin fri ilan gyp tna ga roc rainlgar iger
or Bra us IndCh
W
on M Po T i A
R
G olo omrge ep ilip th A ha E VieHunMo Uk Bu N
d
nd
C R A h R Ph ou T
I
u
S

Sa
ec
Cz

…and Holcim holds top-three market positions in most of them
Order of other emerging markets according to construction market size.
Source: Global Construction 2020, Global Construction Perspectives, Oxford Economics, November 2009
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

10
May 19, 2010


Agenda
1

Strategy and positioning

2

Value driven investment criteria

3

First quarter 2010 results

4

Conclusions

5

Appendix – Maps
11

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Holcim investment criteria –
set to secure long-term above average returns
Geographic
Diversification

Product Focus
• Strategic fit
• Position taking in line
with maturity profile of
the respective market
• Networking possibilities
and partnerships

Local Management
Global Standards

• GDP growth
• Management and
• Favourable demographics manpower resources
• Resource management
• Deficit markets
• Substantial market share • Local culture
embedment
• Networking

Financials
• Value creation

• Financing in line with
Holcim policy

• Investment scorecard
• Accountability

Success factor – rigorous investment analysis and discipline
12
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Organic expansion – most efficient way to grow
USA: Ste Genevieve

Indonesia: Tuban Java

Mexico: Hermosillo

Know how from past projects applied to new expansions
13
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Holcim’s cement capacity expansion projects
Cement capacity in million tonnes

2013

2010

2011

Europe
North America
Latin America
Africa Middle East
Asia Pacific

2.1

1.7

3.8

2.3

1.8

4.1

Total Group

8.0

3.6

Total

1.6
3.5

5.2

1.6

13.1

14
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Agenda
1

Strategy and positioning

2

Value driven investment criteria

3

First quarter 2010 results

4

Conclusions

5

Appendix – Maps
15

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Key financial figures
Million CHF
(if not otherwise stated)

Full Year

1st Quarter

+/-

2009

2009

2010

LFL

CIS

Sales volumes
- Cement (mt)

131.9

29.7

31.0

3.4%

1.0%

4.4%

- Aggregates (mt)

143.4

25.1

29.5

-2.8%

20.3%

17.5%

- Ready-mix (mm3)

41.8

8.7

9.5

-4.6%

13.8%

9.2%

21,132

4,523

4'741

-3.3%

6.3%

1.8%

4.8%

Operating EBITDA

4,630

763

909

12.7%

4.7%

1.7%

19.1%

Operating profit
Net income before
minorities
Net income (loss)
Holcim shareholders
Cash flow

2,781

343

460

27.7%

3.2%

3.2%

34.1%

1,958

195

66

-51.3%

0.5% -15.4%

-66.2%

1,471

74

3,888

-161

-257

4.93

0.26

-0.21

Net sales

EPS in CHF 1
1

-68 -154.1%
-72.7%

Calculated on the weighted average number of shares outstanding
Based on IAS 33 the average number of shares was retrospectively increased by 8.8%

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

FX

Total

1.4% -39.2% -191.9%
1.9%

11.2%

-59.6%
-180.8%

16
May 19, 2010


Operating EBITDA by region
Million CHF
424

1

119
-14

-54

Q1 2008
Q1 2009
Q1 2010

137
507

-29
403
78

419

91

105

284

253

248

Δ Q1 09/Q1 10
Europe
North America
Latin America
Africa Middle East
Asia Pacific
Total

LFL Change in Currency
structure
14.3%
2.5%
-1.7%
40.7%
0.0%
5.6%
-2.4%
0.0%
0.4%
28.2%
-3.8%
-7.7%
8.4%
8.8%
3.8%
12.7%
4.7%
1.7%

Total
15.1%
46.3%
-2.0%
16.7%
21.0%
19.1%
17

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Outlook 2010 – confirmed
• Europe – markets will recover but only slowly
• North America – no rapid recovery in the construction market
• Latin America and Africa Middle East – expect business to develop
on a stable footing
• Asia Pacific – markets will remain on track for growth
• Australia – the acquisition will make a solid contribution
• Cost savings – the savings implemented in 2009 will be retained

Holcim will start the next upturn from a stronger position
18
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Agenda
1

Strategy and positioning

2

Value driven investment criteria

3

First quarter 2010 results

4

Conclusions

5

Appendix – Maps
19

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Conclusions
• Early internationalization – today, Holcim is truly global with strong
positions in the most attractive construction markets worldwide
• Holcim built up a balanced portfolio – approximately 70 percent of
operating EBITDA is generated in fast growing countries
• BRICs account for approximately 30 percent of Holcim’s pro-forma
operating EBITDA
• Challenges in the BRICs are very different and need customized
approaches
• Value driven investment criteria – leverage know how from former
projects to new expansions globally
• Good performance in the first quarter 2010 – organic growth
achieved

Holcim’s strategy has successfully executed on the
opportunities offered by the emerging markets
20
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Agenda
1

Strategy and positioning

2

Value driven investment criteria

3

First quarter 2010 results

4

Conclusions

5

Appendix – Maps
21

© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Positions in Europe

1

Cement plant
Grinding plant/
terminal
Aggregates
Participation:

1

Cement plant
1

Under construction

Cement capacity: 49.4 million t; further 1.7 million t with partners
22
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Positions in North America

Cement plant
Grinding plant/
terminal
Aggregates

Cement capacity: 20.6 million t

23
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Positions in Latin America
1

1

Cement plant

1

Grinding plant/terminal
Aggregates
Participation:
Cement plant
Grinding plant/terminal
Aggregates
1

Under construction

Cement capacity: 31.0 million t; further 3.2 million t with partners
24
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010


Positions in Africa Middle East

Cement plant
Grinding plant/terminal
Aggregates
Participation:
Cement plant
Grinding plant/terminal
Aggregates
Cement capacity: 11.2 million t; further 16.0 million t with partners
25
© Holcim Ltd 2010

SG – Infrastructure, Construction & Building Materials Conference

May 19, 2010