Bellevue Seminar 2013 ROIC: Past - Present - Future

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1 Strength. Performance. Passion. Bellevue Seminar 2013 ROIC: Past - Present - Future Thomas Aebischer, CFO Holcim Ltd Bellevue meets Management Seminar January Holcim

2 Agenda Focus on safety and sustainability 3 Assessing our strategy and asset portfolio 7 The first eight months of the Holcim Leadership Journey 15 Identifying and capturing growth globally 20 ROIC: Past, Present, Future 24 Bellevue meets Management Seminar January Holcim 2

3 Safety is our first priority Lost-Time Injury Frequency Rate (LTIFR) for own employees has dropped to 1.6 in 2011 Puts us amongst the top performers in the industry for LTIFR LTIFR YTD June 2012 was 1.4 which is within our current target of 1.5 Aim to improve even further Target: <1 by 2013 LTIFR Sep 12 Actual Target 2010 Target 2012 Target 2013 Bellevue meets Management Seminar January Holcim 3

4 Broader stakeholder perspective: Sustainable Development (SD) is our license to operate Vision Our vision is to provide foundations for society's future Mission Our mission is to be the world's most respected and attractive company in our industry creating value for all our stakeholders Member of World Business Council for Sustainable Development (WBCSD) Selected as an index component for the Dow Jones Sustainability World Index and the European Dow Jones STOXX Sustainability Index for seven years Goal Strategy Mindsets Base Product Focus Holcim Strategy House Sustainable Better Environmental Cost Performance Management Environmental performance Economic growth Creation of Value Geographic Diversification Triple Permanent bottom Marketing Innovation line People Human Resources Excellence Local Management Global Standards Corporate Social Responsibility Social progress Bellevue meets Management Seminar January Holcim 4

5 Holcim met its CO 2 reduction target ahead of schedule new ambitious target set for : 2010 target reached ahead of schedule: net 1 CO2 emissions per tonne of cement down by 22% in 2011 Cement prod. increased 100% absolute net CO2 by 55% New target 25% lower emissions per tonne of cement than 1990 baseline by 2015 Specific CO 2 emissions (kg CO 2 / tonne cement Thermal substitution rate by alternative fuels (% of thermal energy from alternative fuels) Bellevue meets Management Seminar January Holcim 5

6 Agenda Focus on safety and sustainability 3 Assessing our strategy and asset portfolio 7 The first eight months of the Holcim Leadership Journey 15 Identifying and capturing growth globally 20 ROIC: Past, Present, Future 24 Bellevue meets Management Seminar January Holcim 6

7 Building on a proven strategy 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 Bellevue meets Management Seminar January Holcim 7

8 and increasing the focus on ROIC Value Creation Outside view Internal view ROIC & EV (Enterprise Value) - Credit Rating TSR (Total Shareholder Return) Op. EBITDA / Op. EBITDA - Margin ROIC & HVA (Holcim Value Added) Market capitalization (incl. minority interests) + financial debt (Dividend paid + share price appreciation) / Share Price Key operational indicator focused on cash-generation/ efficiency Company result after consideration of all costs of capital, incl. cost of equity Bellevue meets Management Seminar January Holcim 8

9 Sustainable growth through the execution of a 14.5 million tonne pipeline provides for cost leadership and returns Capital expansion investments (CHF m) Production capacity cement (mt) Bellevue meets Management Seminar January Holcim 9

10 Reported figures recorded significant currency fluctuations - total operating EBITDA impact of CHF 1.5 bn (2007-9M 2012) Index at 100 ( ) Source: Datastream -23% -25% -37% -1% -38% -36% Bellevue meets Management Seminar January Holcim 10

11 Emerging markets continue to record sound growth rates 30'000 12% 25'000 10% 20'000 8% CHF m 15'000 10'000 6% 4% GDP growth 5'000 2% 0 0% -5'000-2% -10' % Sales Operating EBITDA World (rhs) 1 Advanced economies (rhs) 1 Emerging / developing economies (rhs) 1 1 IMF World Economic Outlook Databases as of October 2012 Bellevue meets Management Seminar January Holcim 11

12 Main financing projects concluded within the last 12 months CAD 250 m RCF CHF 450 m bond USD 1 bn CP program EUR 500 m bond EUR 2 bn RCF USD 100 m & EUR 38 m ECA financings EUR 422 m bilateral loans MXN 4 bn bonds BRL 700 m development banks AUD 500 m bonds AUD 320 m bilateral loans Average interest rate of main financings concluded last 12 months: ~ 3.4% Bellevue meets Management Seminar January Holcim 12

13 Holcim s ROIC has reached good levels on a pre-crisis level, while witnessing a softening thereafter ROIC before tax 1 : 16% 14% 12.9% 14.2% 14.3% 14.6% 12% 10% 8% 6% 10.2% 10.2% 9.1% 8.3% 6.5% 4% 2% 0% 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 Bellevue meets Management Seminar January Holcim 13

14 Agenda Focus on safety and sustainability 3 Assessing our strategy and asset portfolio 7 The first eight months of the Holcim Leadership Journey 15 Identifying and capturing growth globally 20 ROIC: Past, Present, Future 24 Bellevue meets Management Seminar January Holcim 14

15 The Holcim Leadership Journey and its two pillars Customer Excellence Holcim Leadership Journey Cost Leadership Customer focus Energy and AFR Value management Logistics Pricing policies Procurement Marketing and sales Capture demand through advice & service CHF 500 m Fixed cost Optimization of cost base > CHF 1 bn Operating profit increase of at least CHF 1.5 bn and ROIC AT > 8%* by 2014 * Corresponds to a ROIC BT of > 11.8% Bellevue meets Management Seminar January Holcim 15

16 Driving ROIC based on strategy, people, execution ROIC* 2011 ROIC* 2014 Proven strategy > 8% < 8% Leadership Journey Dedicated people Building on competencies, focusing on execution * After tax Bellevue meets Management Seminar January Holcim 16

17 Differentiation and de-commoditization Evolution of VALUE ADDED SOLUTION Competitive Price Reliable Supplier Early Supplier Involvement Technical Consulting & Sales Sustainability Consistent Quality Innovative Solutions Range of Products & Services Customer Care Solid Quote-to- Cash Processes Differentiation of product & service offer in all segments Tailor-made solutions for customer segments and single projects => increase value content An opportunity to create value for our customers and us Bellevue meets Management Seminar January Holcim 17

18 Driving innovation on a global scale through our network Niagara Tunnel Ceneri tunnel Innovative flooring Road mobility Supertrees Working closely with the customer, Holcim Apasco tailormade a number of mix designs with specialized application methodologies to deliver highly durable and attractive industrial concrete floors Holcim Canada offered the solutions for the Niagara Tunnel project in terms of innovative concrete types, the transportation and several additional process innovations built to last for 100 years without maintenace Holcim Canada developed a special concrete for road repairs. A high-early-strength concrete mix and the dedication of Holcim s crews guaranteed continuous mobility Holcim Switzerland is supplying the concrete solution for the 15 km long Ceneri base tunnel. Part of this solution is a unique concrete batching plant in a cavern deep inside the mountain Holcim Singapore delivers the green lablled and high-density concretes for the construction of manmade supertrees in a new tropical garden Bellevue meets Management Seminar January Holcim 18

19 Agenda Focus on safety and sustainability 3 Assessing our strategy and asset portfolio 7 The first eight months of the Holcim Leadership Journey 15 Identifying and capturing growth globally 20 ROIC: Past, Present, Future 24 Bellevue meets Management Seminar January Holcim 19

20 Construction demand is linked to size and growth of GDP 40% Average Investment ratio (Investments / GDP) 35% 30% 25% 20% 15% 10% 5% Developed Economies Developed Economies GDP: E Developed Economies GDP: Emerging Economies GDP: Emerging Economies Emerging Economies GDP: E 0% 0% 1% 2% 3% 4% 5% 6% 7% Average GDP growth Source: IMF (World Economic Outlook, October 2012), World Bank (Population Statistics, November 2012) Bellevue meets Management Seminar January Holcim 20

21 in addition to Popurbanization representing a considerable source of steady demand globally Asia 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Latin America 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Rural Urban Rural Urban Europe 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% North America 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Rural Urban Rural Urban Source: United Nations (Population Division - November 2012) Bellevue meets Management Seminar January Holcim 21

22 Global construction growth is strongly driven by emerging markets Construction Market Outlook until 2016E (USD bn) CAGR 2012E -2016E (Share of Market) E Emerging markets: 28% 49% Developed markets: 72% 51% Asia Pacific (emerging markets): 12.0%: Europe (mature markets): North America: Asia Pacific (developed markets): Latin America: Africa Middle East: 2.5%: 2.7%: 1.0%: 11.8%: Europe (emerging markets): 11.9%: 12.3%: E 2013E 2014E 2015E 2016E Source: BMI Market Outlook, 2012 Bellevue meets Management Seminar January Holcim 22

23 Agenda Focus on safety and sustainability 3 Assessing our strategy and asset portfolio 7 The first eight months of the Holcim Leadership Journey 15 Identifying and capturing growth globally 20 ROIC: Past, Present, Future 24 Bellevue meets Management Seminar January Holcim 23

24 Holcim Leadership Journey will allow Holcim to post a ROIC BT of at least 11.8% 1 by 2014 ROIC before tax 2 : 16% 14% 12.9% 14.2% 14.3% 14.6% 12% > 11.8% 10% 8% 6% 10.2% 10.2% 9.1% 8.3% 6.5% 4% 2% 0% Corresponding to Holcim s WACC BT and a ROIC AT of at least 8% 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 Bellevue meets Management Seminar January Holcim 24

25 Growing ROIC through different levers Holcim Leadership Journey Internal Customer Excellence Cost Leadership NWC improvement Selective divestments Investment efficiency + ROIC External Market growth Combining these three levers of growth Holcim is able to capture the market growth, the growth coming from customer excellence and in addition the growth coming from cost leadership and efficiency improvements that together result in a considerable increase of ROIC Bellevue meets Management Seminar January Holcim 25

26 Conclusion Holcim s strategy has proven successful in the past and will continue to do so going forward The Holcim Leadership Journey will leverage the benefits of the strategy Organizational changes at Holcim enable initiatives in the Holcim Leadership Journey Discipline, incentive and performance management will ensure growth and improved returns Holcim has high upside potential on cash flow generation and is well financed, with a balanced maturity profile, a strong cash position and access to a wide range of capital markets By 2014 Holcim will earn at least its ROIC AT of 8%* based on its strategy, people and execution * Corresponds to a ROIC BT of > 11.8% Bellevue meets Management Seminar January Holcim 26

27 Contact information and event calendar Contact information Event calendar Bernhard A. Fuchs Binit B. Sanghvi John M. Feigl Investor Relations Phone Fax February 27, 2013 April 17, 2013 Press and analyst conference on annual results for 2012 General meeting of shareholders May 8, 2013 Results for the first quarter 2013 August 15, 2013 Half-year results for 2013 November 5, 2013 Press and analyst conference for the third quarter 2013 Mailing list: Bellevue meets Management Seminar January Holcim 27

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