Société Générale Premium Review Conference Bernard Fontana, CEO Holcim Group Paris, December 4, Holcim Ltd

Transcription

1 Société Générale Premium Review Conference Bernard Fontana, CEO Holcim Group Paris, December 4, 2013

2 Agenda Holcim Strategy and Positioning - base for value creation Holcim Leadership Journey Proactive Asset Management - recently announced transactions Regional overview Conclusions 2

3 Global construction growth is driven by emerging markets and recovery in Europe and US Construction Industry Value Outlook until 2017E (USD bn) 6'000 Share of market E - Emerging markets 29% 48% - Developed markets 71% 52% 5'000 CAGR 13-17: 7% 4'000 CAGR 08-12: 3% Asia Pacific (emerging) 10% Asia Pacific (mature) 3'000 16% 1% Latin America 6% 8% Africa / Middle East 2'000 1'000 8% 7% -1% 0% 11% 3% 12% North America Europe (emerging) -6% 4% Europe (mature) E 2014E 2015E 2016E 2017E Source: BMI Market Outlook,

4 Holcim s Strategy House base for value creation Goal Creation of Value Strategy Product Focus Geographic Diversification Local Management Global Standards Mindsets Sustainable Environmental Performance Better Cost Management Permanent Marketing Innovation Human Resources Excellence Corporate Social Responsibility Base People 4

5 Positioning Holcim s cement market portfolio Cumulated population Growth E 12% 10% 8% 6% 4% 2% 0% -2% Oceania 4.8 Mt North America 22.0 Mt Asia Pacific excl. India, Oceania, China 43.5 Mt Western Europe 25.9 Mt Africa Middle East 23.2 Mt Eastern Europe 23.3 Mt Mature markets Emerging markets Size of circles represents influenced capacity 2012 Latin America 35.5 Mt India 60.5 Mt China 60.0 Mt Demand growth -4% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% GDP per capita (at PPP) CAGR E Sources: Holcim, US Census Bureau, Datastream IMF: World Economic Outlook, January

6 Positioning Holcim s aggregates market portfolio Cumulated population Growth E 12% 10% 8% 6% 4% 2% 0% -2% North America 41.3 Mt Oceania 23.9 Mt Western Europe 64.8 Mt Asia excl. Oceania 3.8 Mt Latin America 14.0 Mt Mature markets Africa Middle East 2.3 Mt Emerging markets Size of circles represents consolidated sales volumes 2012 Eastern Europe 9.5 Mt Demand growth -4% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% GDP per capita (at PPP) CAGR E Sources: Holcim, US Census Bureau, Datastream IMF: World Economic Outlook, January

8 The Holcim Leadership Journey and a focused capital allocation to increase short and long term returns Customer Excellence Holcim Leadership Journey Cost Leadership Customer focus Energy and AFR Value management Logistics Pricing policies Procurement Marketing and sales Fixed cost Capture demand through advice & service CHF 500 m Optimization of cost base > CHF 1 bn Operating profit increase of at least CHF 1.5 bn and ROIC AT > 8%* by 2014 * In similar markets conditions. Corresponds to a ROIC BT of > 11.8% 8

9 Holcim Leadership Journey is on track All figures in million CHF Target achieved Target 9M Customer Excellence (operating profit impact) Customer focus -Value management -Pricing policies -Marketing and sales forces skills and motivation Cost Leadership (operating profit impact) > 1,000 -Energy and AFR > 300 -Logistics > 250 -Procurement > 250 -Fixed cost > 200 Total increase in operating profit 1) > 1,500 Cash cost to achieve the savings (one-off) < ) 0 3) 0 Additional CAPEX net 2) ) 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) 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 ) 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 9

11 Value creative portfolio adjustments in Europe Acquisition of Cemex s operations in North-Western Germany Sale of Holcim Česko to Cemex Business combination of Holcim and Cemex in Spain where Holcim will hold a 25% shareholding One time cash payment of EUR 70 million by Holcim to Cemex Closing expected in H1 2014, subject to due diligence, regulatory and other approvals + Laegerdorf Beckum-Kollenbach Hoever Dotternhausen Ruedersdorf Prachovice Morata de Jalón Castillejo Buñol Alcanar Lloseta + Integrated Cement Plant Grinding Station Slag Granulator Jerez Gador Alican te Carboneras 11

12 Transaction with synergies and strategic relevance driven by strong geographical focus Holcim to optimize its portfolio in Europe through a series of interlinked transactions with Cemex in Germany, Spain and the Czech Republic Strengthen European footprint for the future and adjust to new economic reality Create value through stronger geographic footprint in North-Western Germany and connect current Northern Germany and France Benelux operations Additional operating EBITDA and synergies expected to be at least EUR 20 million p.a. Combine operations in Spain to add value and benefit from expected synergies 12

13 Recent developments / Next steps Recent developments European Union antitrust regulators to further investigate series of transactions with Cemex EU Commission opened a Phase II investigation of the German transaction on October 22nd, Phase II could take until end of April 2014 (90 to max. 125 working days). EU Commission issued a formal decision on November 14th, 2013 to submit extensive economic data. Due to this formal decision, Phase II is on hold until November 29th, Next steps Decision of the European Commission by March / April, 2014 Transaction expected to be closed in Q

14 ACL acquires Holcim s 50.01% equity stake in ACC Evolution of current to target shareholder structure Interlinked transaction steps Step I: Acquire 24% in Holcim India Step II: Merge Holcim India into ACL Target Structure 40.79% 0.29% Holcim 40.79% 0.29% Holcim Holcim 0.29% 24% 76% Holcim India 9.76% 50.01% 24% 76% Holcim India 9.76% 50.01% ACL 61.39% 50.01% ACL ACC ACL ACC ACC Holcim India value of INR 14,584 crore (USD ~2.4 bn) consists of 50.01% stake in ACC for INR 11,727 crore (USD ~2.0 bn) and 9.76% stake in ACL for INR 2,857 crore (USD ~0.4 bn) Two step transaction for a total deal value of INR 11,727 crore (USD ~2 bn) Step I: ACL acquires 24% of Holcim India for INR 3,500 core (USD ~0.6 bn) Step II: ACL issues net 434 mio equity shares for a total value of INR 8,226 crore (USD ~1.4 bn) to Holcim post cancellation of Holcim India s 9.76% stake in ACL upon merger The transaction steps are inter-linked and subject to requisite approvals 14

15 Value creation opportunity Improve Structure Unlock Synergies Get Scale Maintain Front-end Commit to India Group More efficient capital structure & EPS accretive Re-investment of cash into business Collaboration under India Management structure Synergy potential of approximately INR 900 crore (USD 150 mio) through supply chain and fixed cost optimisation Consolidated pan-india footprint with 58 mio tpa capacity Confirmed >10 mio tpa capacity expansion underway in both companies; additional projects in planning (e.g. ACC Ametha) Strong and debt free balance sheet; cash flow diversification Complementary premium brands will continue to exist Independent go-to-market strategy with strong dealer networks / distribution in respective markets Investment in Marwar Mundwa Intent to increase economic ownership in ACC over time ACC is a perfect fit, being a Holcim Group company already 15

16 Recent developments / Next steps Recent developments November 19 th - closure of postal ballot for ACL minority shareholders November 21 st voting results announcement: 68.5% of ACL s minority shareholders voted in favor of the deal November 23 rd Court Convened Extraordinary General Meeting ACL received approval from 90.4% of shareholders for the proposed restructuring Next steps High Court approval (Delhi and Gujarat) on the scheme of amalgamation under Sec of the Companies Act, 1956 (regulatory process) Clearance from Foreign Investment Promotion Board (FIPB) Transaction expected to be closed in Q2 / Q

18 Asia Pacific affected by fall in demand in India Growth in the construction industry remained solid Drop in sales in all segments: in cement primarily due to harsher economic situation in India and in aggregates due to Holcim Australia Holcim Philippines benefitted from strong demand and better prices Despite progress on the cost front, weaker results in India and negative currency translation effects led to a decrease in operating EBITDA 1 Restated due to changes in accounting policies. 18

19 Latin America still on growth track Construction industry built on last year s solid performance Higher cement deliveries in Ecuador, Argentina and Costa Rica Divestments and temporary market exits lowered aggregates sales volumes significantly; ready-mix concrete shipments also decreased Major efforts to keep costs in check led to higher operating EBITDA Chile, Colombia and Ecuador posted significantly better results 1 Restated due to changes in accounting policies. 2 The percentage change like-for-like adjusted for internal trading volumes eliminated in Corporate/Eliminations amounts to -0.6%. 19

20 Europe making further headway European construction markets still lacked economic stimuli Shipments of cement increased primarily due to the CIS/Caspian region Sales volumes of aggregates as well as ready-mix concrete decreased Capacity adjustments and cost-cutting measures led to significantly better operating EBITDA and strong organic growth 1 Restated due to changes in accounting policies 20

21 North America continues its recovery The US construction industry became slightly more dynamic, but in Canada economic growth slowed down Holcim US recorded slight decrease in cement sales and Aggregate Industries US sold more aggregates and readymix concrete Holcim Canada was unable to compensate weather-related setbacks Improved performances in the US led to solid organic growth 1 Restated due to changes in accounting policies 21

22 Subdued economic situation in Africa Middle East Demand remained strong in Lebanon despite the turmoil in Syria Reduction in sales volumes in all segments, primarily due to Morocco Grinding stations in West Africa and Gulf region delivered less cement Declining sales volumes in Indian Ocean region Operating EBITDA was down mainly due to the weaker performance in Morocco 1 Restated due to changes in accounting policies 22

24 Conclusions Medium term construction industry growth of 7% is driven by emerging markets and the recovery in Europe and the US Holcim is well positioned to participate Self help measures remain an important part of earnings improvement; Holcim Leadership Journey well on track and with increasing momentum Proactive portfolio management in selected markets offer opportunities to create more value from the existing asset base Balanced use of cash for both organic and inorganic growth to deliver appropriate returns to shareholders resulting in a ROIC AT of at least of 8% Short-term, for 2013 Holcim expects on a like-for-like basis growth in operating EBITDA and operating profit coupled with a further improvement in margins 24

25 Contact information and event calendar Contact information Event calendar Bernhard A. Fuchs Michel R. Gerber Swetlana Iodko Investor Relations Phone Fax February 26, 2014 Press and analyst conference on annual results for 2013 April, 28, 2014 Results for the first quarter 2014 April 29, 2014 General meeting of shareholders July 30, 2014 Half-year results for 2014 Mailing list: 25

26 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. 26