third quarter outlook for 2003 holcim

Third quarter + outlook for 2003
1
Third quarter 2003
Positions in Europe
Group:
plant
plant
Terminal
Participation:
plant
Cement capacity Group (Europe): 39.9 m t; additionally with partners: 9.9 m t.
2
Third quarter 2003
Europe
Slight recovery in the European
construction sector in general.
Activity remained buoyant in
Southern Europe, particularly
Spain and Italy.
Decline in demand in Germany
and Switzerland.
Reforming countries of Central
and Eastern Europe becoming
noticeably stronger.
Demand patterns also encourag-
ing in the construction markets of
Southeast Europe.
3
Third quarter 2003
Europe: the facts
Acquisition of Cementos Hispania boosts Holcim Spain and

underpins financial results.
Buoyant construction activity in Southern and Southeast
Europe brings higher sales volume in all three core seg-
ments.
Difficult sales situation in Germany and declining volume of
demand in Switzerland adversely affect results.
Operating profit for this Group region increases slightly due
to rising performance in Southern and Southeast Europe.
Holcim to acquire Rohrbach Zement in first quarter 2004.
Continued

exploitation of synergies

will impact positively
on our margins over the coming years.
4
Third quarter 2003
Positions in North America
Cement plant
Grinding plant
Terminal
Cement plant project
Cement capacity Group (North America): 21.3 m t.
5
Third quarter 2003
North America
Subdued picture overall for the
construction sector on this conti-
nent.
In Canada, the order situation in

the construction sector remained
healthy; the weather-related order
shortfall at the start of the year
has not yet been fully offset.
In the US, volumes and prices
declined in several market re-
gions – such as Colorado and the
Southeast of the country.
6
Third quarter 2003
North America: the facts
Efficiency-improvement program set in train by new manage-
ment is having a positive effect.
The Holly Hill plant successfully commissioned by Holcim US
at the end of June will contribute to lowering costs.
The weak state of the US market adversely affected the
result of Holcim US.
St. Lawrence Cement benefited from the healthy order
situation in Canada, though it was unable to fully offset
demand-induced setbacks in the Northeast of the US.
Together with the sharp fall in the value of the dollar, oper-
ating profit for North America was unsatisfactory in overall
terms.
Programs to

reduce costs

accorded top priority.
7
Third quarter 2003

Positions in Latin America
Group:
plant
Grinding plant
Terminal
Participation:
plant
Grinding plant
Terminal
Cement capacity Group (Latin America): 31.0 m t; additionally with partners: 9.9 m t.
8
Third quarter 2003
Latin America
Positive and negative develop-
ments in Latin America more or
less cancel each other out.
Brazil continued to prove resistant
to crisis.
Political instability hampered
developments in the Venezuelan
economy.
The market in Argentina staged
an unexpectedly strong recovery,
while construction activity also
grew in Chile and Mexico.
9
Third quarter 2003
Latin America: the facts
Pleasing sales figures for Mexico, the Caribbean and Chile.
Marked increase in sales at Minetti in Argentina.

Holcim Brazil holds up well in a market that is in need of a
fresh boost.
Group:
plant
Grinding plant
Terminal
Participation:
plant
plant
Terminal
Increase in deliveries of cement and ready-mix concrete;
fall in demand for aggregates.
Major progress on productivity in all areas.
Sharp increase in regional operating profit in US dollars
despite poorer operating situation in Venezuela.
Latin America remains the Group’s strongest region in
terms of operating profit.
Strong presence

in key markets gives us optimism.
10
Third quarter 2003
Positions in Africa Middle East
Cement capacity Group (Africa Middle East): 12.9 m t; additionally with partners: 6.3 m t.
11
Third quarter 2003
Africa Middle East
Very positive market develop-
ments in Africa.
Morocco and South Africa proved

to be the main growth drivers.
In Lebanon and West Africa the
market situation continued to be
strained.
Despite persistent pressure on
prices, the market situation in
Egypt has stabilized slightly.
12
Third quarter 2003
Africa Middle East: the facts
Significant increase in volumes in core segments of cement
and ready-mix concrete; fall in the case of aggregates.
Higher cement deliveries in Egypt, Madagascar, La Réunion
and Morocco in particular.
Regional uncertainties hit performance of group West Africa.
Good results in South Africa and Morocco leading to higher
operating profit in this Group region.
Holcim Lebanon acquiring grinding facility in northern
Cyprus.
From a Group perspective, this region has
gained further significance .
13
Third quarter 2003
Positions in Asia Pacific
Group:
plant
Grinding plant
terminal
project
Participation:

Cement plant
plant
terminal
Cement capacity Group (Asia Pacific): 36.0 m t;
additionally with partners: 14.6 m t.
14
Third quarter 2003
Asia Pacific
Further increase in construction
activity in this Group region.
In Vietnam, Malaysia and New
Zealand, cement demand remain-
ed very impressive.
Volume increases also achieved
in the Philippines, Thailand and
Indonesia.
The potential demand in housing
construction and the infrastructure
sector remains huge.
15
Third quarter 2003
Asia Pacific: the facts
Slightly higher cement sales in the Philippines almost
entirely due to consolidation changes.
Successful integration of PT Semen Cibinong in Indonesia
and correspondingly improvement in financial results.
Substantially higher operating profit also being generated by
the Group companies in Thailand, Australia and New Zealand.
The plants in Vietnam are operating at full capacity due
to high demand; expansion of cement capacity in Ho Chi

Minh City proceeding in line with schedule.
Operating profit for Group region Asia Pacific grew markedly
despite negative exchange rate fluctuations.
This Group region continues to offer enormous
future potential

for the construction industry.
16
Third quarter 2003
Strategic transactions strengthen core business
Cement Australia was included in the consolidated accounts
for the first time in the third quarter. It is the market leader on
that continent and benefits from optimal distribution channels.
The bleak order situation in Germany and Switzerland is
resulting in capacity adjustments. The Geisingen plant in
southern Germany and Morbio grinding facility in Ticino/
Switzerland are to close.
Eternit AG, based in Niederurnen, has been sold and is no
longer consolidated. BA Holding AG of Baar is to continue
using the Eternit brand name.
These transactions will mean a total charge of CHF 40 million
to the consolidated accounts for fourth quarter 2003.
The Group is strengthening market integration and building
a new, cross-border cluster .
17
Third quarter 2003
Key financial figures
Million

CHF

Group net income
Cash flow from
2.63
2.65
0.8%
8.4%
3.76 3.81 1.3% 7.7%
9

Months
+/-
2002
2003
in

CHF in

loc.

curr.
9'928
9'395
-5.4%
1.1%
1'559
1'550
-0.6%
8.1%
2'616
2'537

-3.0%
5.2%
2'719
2'597
-4.5%
3.0%
514
518
0.8%
8.2%
1'732 1'527 -11.8% -4.9%
Effective

as

at
Cement
capacity
+
Novi Popovac, Serbia
April 15, 2002 1.4 million t
+
Union Cement, Philippines, from
proportionate to full consolidation
October 1, 2002 + 2.4 million t
+
Cementos Hispania, Spain
January 1, 2003 0.8 million t
+
Proportionate consolidation of Cement

Australia (integration of Queensland Cement)
June 1, 2003 –
–
Baubedarf, Switzerland
October 1, 2002 –
+/–
Various smaller companies
after minority interests 506
EBITDA 3'399
Operating EBITDA 3'341
Operating profit 1'903
Net sales 13'010
2002
Full

Year
18
Third quarter 2003
19
Third quarter 2003
2) weighted by net sales full year 2002
20
Third quarter 2003
operating activities 2'388
EPS in CHF 2.59
Cash EPS in CHF 4.14
Major changes in the scope of consolidation
Statement

of

income
average

exchange
9M

01
9M

02
9M

03
+/-
1 EUR 1.52 1.47 1.51 2.7%
1 USD 1.70 1.59 1.36 -14.5%
1

African

Basket

(EGP,

ZAR,

MAD)

1)

1.29 1.00 1.02 2.0%
1

Asian

Basket

(AUD,

NZD,

THB,

PHP)

1)
1.03 1.00 0.93 -7.0%
Balance

sheet
exchange

rates

in

CHF
30.9.02
31.12.02
30.9.03

+/-
1 EUR 1.46 1.45 1.54 6.2%
1 USD 1.49 1.39 1.32 -5.0%
1

African

Basket

(EGP,

ZAR,

MAD)

2)
0.96 1.00 1.04 4.0%
1

Asian

Basket

(AUD,

NZD,

THB,

PHP)

2)
1.04 1.00 1.05 5.0%
Exchange rates
1) weighted by net sales 9 months 2002
Sales volumes
Cement sales in million t
Aggregates sales in million t
Ready-mix concrete sales in million m
3
63.6
64.8
68.0
+

6.9%

+ 4.8%
70.5
+

3.7%

+ 1.5%
18.8 18.9
19.7
+ 0.5%
+ 4.2%
9M 2001 9M 2002 9M 2003
21

Third quarter 2003
Net sales
Million CHF
10'301
9'928
9'395
Volume / price -12 -0.1% 39 0.4%
Change in structure 319 3.1% 71 0.7%
Forex movements -680 -6.6% -643 -6.5%
Total

change -373 -3.6% -533 -5.4%
9M 2001 9M 2002 9M 2003
22
Third quarter 2003
Net sales by region
67.9
68.9
Million

CHF
3308 3343
9 months 2002
9 months 2003
2103
2500
1844
2136
1286

1308
853

921
∆



9M 02/9M 03




Volume/



Change



in



Currency

Total
price

structure
Europe

-1.0%









-0.2%







2.3%

1.1%
Nor th



America















-1.6%

0.0 %





-10.7%





-12.3%
Latin



Ameri c a

-1.2%











1.0%





-14.4%

-14.6%
Africa



Middle



East









8.8%

0.8%







-1.6%







8.0%
Asia



Pacific

9.3%











3.7%

-11.3%



1.7%
Total

0.4%









0.7%





-6.5%

-5.4%
23
Third quarter 2003
Net sales by region
North

America
19%
Latin

America
22%
Africa
Middle

East
10%
Europe
35%
Asia

Pacific
14%
9 months 2003
24
Third quarter 2003
Operating EBITDA
Million CHF
4.9%
2'565

Margin
26.3%
2'616
27.0%
2'537
Volume / price / cost 183 7.1% 82 3.2%
Change in structure 53 2.1% 53 2.0%
Forex movements -185 -7.2% -214 -8.2%
Total

change 51 2.0% -79 -3.0%
9M 2001 9M 2002 9M 2003
25
Third quarter 2003
EBITDA
Million CHF
Margin
26.7%
2'747
27.4%
2'719
- 1.0%
27.6%
2'597
- 4.5%
9M

2001 9M

2002 9M

2003
26
Third quarter 2003
Operating profit
Million CHF
M
argin
15.1%

15.7%
16.5%
1'553
1'559
1'550
Volume / price / cost 132 8.5% 97 6.2%
Change in structure -8 -0.5% 29 1.9%
Forex movements -118 -7.6% -135 -8.7%
Total

change 6 0.4% -9 -0.6%
9M 2001 9M 2002 9M 2003
27
Third quarter 2003
Operating profit by region
Million CHF
475

478
9 months 2002

9 months 2003
225
179
201
208 118 151
603
593
∆



9M 02/9M 03 Volume/



Change



in



Currency

Total
price/cost structure
Europe -6.1% 4.4% 2.3% 0.6%
Nor th



America















-10.6%

0.0 %







-9.8 %



-20.4%
Latin



Ameri c a

14.9%











0.5%





-17.1 %

-1.7%
Africa



Midd le



East











7.0 %

1.0 %







-4.5 %







3.5 %
Asia



Pacific

35.6%

2.2%







-9.8%





28.0%
Total 6.2% 1.9% -8.7% -0.6%
28
Third quarter 2003
Other income and financial expenses
Other

Income
9

Months
Million

CHF


2002


2003
Dividends earned 41 68
Financial income 14 2
Other ordinary income (expenses) 48 -9
Depreciation and amortization of non-operating assets -84 -62

Total




19


-1

Financial

Expenses

Net
Financial expenses -517 -431
Interest earned on cash and cash equivalents 47 43
Foreign exchange gain (loss) net 15 -8

Financial expenses capitalized 19 10

Total




-436


-386
29
Third quarter 2003
Group net income
Before minority interests in million CHF
After minority interests in million CHF
773
727

723
613
514
518
9M 2001 9M 2002 9M 2003
30
Third quarter 2003
Cash flow from operating activities
Million CHF Margin
17.4%
16.3%

14.0%
1'732
1'447
1'527
9M

2001 9M

2002 9M

2003
31
Third quarter 2003
Cash flow st atement
Investments to maintain productive
32
Third quarter 2003
Financing
Equity capital paid-in
9

Months +/-
2002 2003
1'732 1'527
-11.8%
-543 -510 -6.1%
1'189 1'017
-14.5%
-300 -323 7.7%
-140 -483 245.0%

-330 -335 1.5%
419 -124
-129.6%
9

Months +/-
2002 2003
419 -124
-129.6%
– –
-5 4
699 661
60 –
-79 -22
1'094 519
-52.6%
Million

CHF

Full

Year
2002
Cash

flow

from

operating

activities

2'388
capacity and to secure competitiveness -843
Free

cash

flow

1'545
Expansion investments -409
Financial investments net -245
Dividends paid -358
Financing

surplus

(requirement)

533
Financing

surplus

(requirement)

533

2002
Million

CHF

Full

Year
Increase

in

cash

and
33
Third quarter 2003
Financial position
94.2%
93.9%
94.3%
9'825
9'260
9'435
8'857
9'695
9'144
30.09.2002 31.12.2002 30.09.2003
Equity in million CHF Net financial debt in million CHF Gearing
34

Third quarter 2003
De(In)crease in marketable securities 16
Equity component of convertible bonds 58
Increase in financing liabilities 334
Movements of treasury shares net -1
cash

equivalents

930
by minority interests -10
Outlook for 2003 I
Europe: further improvement at operating level against
persistently difficult situation in German and Swiss markets.
North America: it will be 2004 until the expected economic
recovery and greater level of efficiency at Holcim US impact
positively on this Group region’s operating result.
Latin America: despite a mixed picture across the market, a
very solid contribution to consolidated results is expected.
Africa Middle East: income flow can be expected to remain
stable.
Asia Pacific: though the US economic situation has a major
influence on these markets, our margins will increase.
Balanced flow of income

between industrialized and
emerging markets.
35
Third quarter 2003

Outlook for 2003 II
Assuming there are no fundamental changes in the
general framework in the final quarter of 2003, we can
make the following financial forecasts with regard to the
full financial year:
Margins will improve further on the back of
efficiency improvements.
After adjusting for exchange rates, operating profit
and consolidated net income after minorities will
exceed the prior-year figures.
An economic recovery in key markets would lead to clear
improvements in results

for Holcim in 2004.
36
Third quarter 2003