Concentrate on what we can influence:
The financial dimension and what's in the cards
Theophil H. Schlatter – CFO Holcim Group
St. Louis, September 15, 2010

© Holcim Ltd 2010

Investor / Analyst Capital Markets Event 2010


Executive Summary
• Thanks to swift operational measures Holcim’s profitability
preserved at 9.1% ROIC despite Global Financial Crisis
• Financial profile strengthened:
Liquidity increased, maturities extended, bank financing
reduced, rating maintained
• Capacity expansion program pursued, acquisition
opportunities seized
• We are stronger than before the crisis, thanks to our
Highly passionate people committed to perform
Modern asset base
Sound financing and
High liquidity
• Holcim will benefit from the upswing and has the strength for
value creating acquisitions
2
© Holcim Ltd 2010

Investor / Analyst Capital Markets Event 2010

What happened since 2007?
• Mumbai, 26 – 28 September 2007

22 Sept. 2007

26 Jan. 2008

20 Sept. 2008

04 Oct. 2008

The world experienced an unprecedented crisis.
3
© Holcim Ltd 2010

Investor / Analyst Capital Markets Event 2010


Since 2009, the world economy is in the trough…
1)

World GDP growth

Emerging markets

12%
9%

Mature markets


6%
3%
0%
-3%
2000

2001

2002

2003

2004

• However not without hope …

15 Aug. 2009
1)

11 Nov. 2009

2005

2006

2007

2009

• but …


22 Nov. 2008

at PPP, current international dollar, based on IMF data per April 2010 (including China)

© Holcim Ltd 2010

2008

4
Investor / Analyst Capital Markets Event 2010


Agenda
1. How did we manage in the crisis?
2. Look forward

"We give a high priority to a solid balance sheet and a high
level of liquidity. We are convinced that we can emerge from
the current economic cycle stronger than before, and that the
'post-crisis Holcim' will be a better company than the 'precrisis Holcim'."
Excerpt of the Shareholder's letter of the annual report 2008,
Rolf Soiron, Chairman of the Board of Holcim Ltd,
Markus Akermann, Chief Executive Officer of Holcim Ltd,
March 4, 2009
5
© Holcim Ltd 2010

Investor / Analyst Capital Markets Event 2010



Holcim could not escape the crisis but profitability
maintained on high level – targets confirmed
Group
Net Sales, operating EBITDA (million CHF)
27'000

GDP growth1)
Net Sales

12%

24'000
21'000

9%

18'000
15'000
12'000

6%

op. EBITDA
GDP growth:
Emerging
Mature

9'000
6'000


3%

3'000
-

0%

-3'000
-6'000

-3%
2005

2006

2007

2008

2009

2010

• Operating EBITDA margin target
Cementitious materials
Aggregates
Other construction materials and services
• Holcim Value Added target > 0


33%
27%
8%

defined as (EBIT – WACCbefore tax x invested capital)
WACCbefore tax = 11.76%
Equivalent to ROICbefore tax > WACCbefore tax
1)

GDP at PPP in dollar (IMF April 2010), weighted by Sales Volumes of Holcim

© Holcim Ltd 2010

6
Investor / Analyst Capital Markets Event 2010


Holcim improved its efficiency in a difficult environment.
Robust cost management makes up for falling volumes
Op. EBITDA
in million CHF

Op. EBITDA
Operating EBITDA target
margin
cementitious materials: 33%

Op. EBITDA
in million CHF


Operating EBITDA target
Aggregates: 27%

Op. EBITDA
margin

36%

6'000

36%

30%

5'000

30%

4'000

24%

4'000

3'000

18%

3'000


18%

2'000

12%

2'000

12%

1'000

6%

1'000

6%

0

0%

0

0%

6'000

31.4%


32.6%

32.6%
27.3%

5'000

2005

2006

2007

28.4%

2008

2009

Op. EBITDA
Operating EBITDA target
in million CHF Other Construction Materials

2005

Op. EBITDA
margin

and Services: 8%


6'000

36%

5'000

30%

4'000

24%

3'000

18%

2'000

7.5%

6.0%

12%

7.0%
4.3%

1'000

3.7%


6%
0%

0
2005
© Holcim Ltd 2010

2006

2007

2008

2009

21.1%

HVABT

20.7%

2006

20.3%

2007

19.5%


2008

19.7%

2009

Return targets Holcim Value Added
(HVA)>0 and ROICBT>11.76%

in million CHF
1'200
1'000
800
600
400
200
-200
-400
-600
-800
-1'000
-1'200

14.2%

14.3%

14.6%
10.2% 9.1%


2005

2006

2007

2008

24%

2009

ROICBT
23.5%
21.6%
19.6%
17.6%
15.7%
13.7%
11.8%
9.8%
7.8%
5.9%
3.9%
2.0%
0.0%

7

Investor / Analyst Capital Markets Event 2010



Holcim stabilized the overall entrepreneurial risk by
actively lowering the financial risk
Entrepreneurial Risk
definition1):

Holcim
assessment

ER = MR + PR + FR

Global financial
crisis increased
entrepreneurial risks

ER

= Entrepreneurial
risk

MR = Market risk
PR

= Production risk

FR

= Financial risk


1)

Holcim
risk mitigation

Volkart, Rudolf, Finanzmanagement, Zürich 1998

© Holcim Ltd 2010

Operational
measures
Financial measures
8
Investor / Analyst Capital Markets Event 2010


Operational measures: Cement, aggregates and ready-mix
concrete are price inelastic, right sizing has top priority
+13%

+23%
+10%

4‘630

+8%

Variable
costs
-5%


Fixed costs
- 5%

24.1%

23.7%

• Operating EBITDA
sensitivity (million CHF)

AY 2009

op. EBITDA
margin

21.9%

Sales
Sales price
volume +5%
+5%
23.6%

25.6%

• Holcim people highly committed to performance management
Focus on price stability
Fixed cost reduction and efficiency improvements
Capacity optimization

Capex projects review and execution
9
© Holcim Ltd 2010

Investor / Analyst Capital Markets Event 2010


Financial measures: Liquidity secured, maturities extended,
dependency on bank financing reduced, rating maintained
Focus on Cash flows
•
•
•

September 2008: CHF 1bn credit lines drawn to test the banks abilities
(mio CHF) 2008
2009
2010
Net working capital (as of 30.6.)
2'341
2'089
1'968
Capex to maintain minimized (full year)
1'104
376
500est.
CHF m

8'000


Financing activities 2009

mio CHF

Bank financings
Capital markets (CM)
Equity (incl. stock dividend)
Total financing

2'294
5'108
2'707
10'109

Maturity profile as of 30.06.2010

7'000
6'000

•
•
•
•

Committed credit lines
Liquidity II

5'000
4'000


Loans
Capital markets

3'000
2'000
1'000
0
<1

Achievements (mio CHF) 30.6.08 30.6.10
•
•
•
•

Cash liquidity
Liquidity III (incl. CC)
Average maturity
Bank / CM ratio (%)

3'170
6'309
3.9y
53/47

3'661
8'689
4.4y
38/62


40'000
30'000
20'000
10'000
0

1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 >10y

CHF m

Banks
Capital
markets
Equity
incl.
minorities
30.6.08

© Holcim Ltd 2010

Banks
Capital
markets

47%
of total
Equity
fin.
incl.
liabilities minorities

30.6.10

62%
of total
fin.
liabilities

10

Investor / Analyst Capital Markets Event 2010


Reducing financial leverage while
seizing investment opportunities
• Developments since January 1, 2009

Capex to maintain

3'888

Business portfolio in Australia completed
14.3 million tons of cement capacities
commissioned until June 30, 2010
Strengthened balance sheet
Dividend policy maintained
Reduced debt by CHF 1 billion
Goodwill 40% of equity
BBB rating maintained
Funds from operations / Net financial debt


1)

Capital
increase

1'929

Financial
investments

Cash flow
from operating
activities

2'707

Capex to expand

2'285

Dividends paid

858
2009

Gearing

50%

100%


40%

80%

30%

60%

20%

40%

10%

20%

0%

Group target range

0%
2005

1)

376

2006


2007

2008

2009

2005

2006

Funds from operations/ Net financial debt per 2007 adjusted for gain of sale of Holcim South Africa

© Holcim Ltd 2010

2007

2008

2009

H1
2010
11

Investor / Analyst Capital Markets Event 2010


Holcim tops Euromoney best borrowers poll 2010
• Investors were asked to


General Industries
2010 2009 Entity
1
9
Holcim
2
3
General Electric
3
7
ArcelorMittal
4
10 Linde
5
5
BASF
6
19 Lafarge
7
13 ThyssenKrupp AG
8
Alstom
9
2
Roche
Strengthened financial
10
16 Glencore

to capital markets


Source: Euromoney, June 4, 2010
© Holcim Ltd 2010

nominate their top three
borrowers in each category
based on issuance strategy,
credit quality and investor

Score
76 • In total 1’739 investors took
71
part in the poll, which included
57
individual nominations for 775
52
separate borrowers
49
44
34
26
25
profile recognized – great access
22

12
Investor / Analyst Capital Markets Event 2010


Agenda

1. How did we manage in the crisis?
2. Look forward

“Emerging market dynamics and recovery of construction
activity in mature markets drive demand."
Markus Akermann, Chief Executive Officer of Holcim Ltd,
September 14, 2010

13
© Holcim Ltd 2010

Investor / Analyst Capital Markets Event 2010


Mature Europe set to recover from recession. Well established brand and products assure benefits in upswing
Mature Europe
Net Sales, operating EBITDA (million CHF)
9'000

GDP growth

today

8'000
7'000

12%

Net S ales
op. E BIT DA


6'000
5'000

9%

4'000
3'000

6%

2'000
1'000

3%

-1'000

GDP growth

0%

-2'000

-3%
2005

2006

2007


2008

2009

2010

2011

2012

2013

2014

Mature Europe
•
•
•
•
•
1)
2)

Investment in Aggregate Industries UK in 2005
2 old plants with 0.8 million tons of clinker capacity closed/mothballed
Fixed cost savings of CHF 242 million
2009 clinker capacity utilization 71%2)
Sustainable solution provider: Olympics 2010 (UK), Nord Stream (Baltic
Sea), Alptransit (CH), Liefkenshoektunnel (NL)

GDP at PPP in dollar (IMF April 2010), weighted by Sales Volumes of Holcim
Excluding mothballed plant

© Holcim Ltd 2010

14
Investor / Analyst Capital Markets Event 2010


Emerging Europe strong recovery forecasted;
efficient capacity in place
Emerging Europe
Net Sales, operating EBITDA (million CHF)
9'000

GDP growth

today

8'000

12%

Net Sales
op. EBITDA

7'000
6'000

9%


GDP growth

5'000
4'000
3'000

6%

2'000

3%

1'000
-

0%

-1'000
-2'000

-3%
2005

2006

2007

2008


2009

2010

2011

2012

2013

2014

Emerging Europe
• 0.9 million tons new clinker capacity commissioned (Romania in 2008,
Bulgaria in 2009). Further capacity of 3.8 million tons coming on stream in
Russia (2010) and Azerbaijan (2011)
• 3 old plants with 1.4 million tons of clinker capacity closed/mothballed
• Fixed cost savings of CHF 84 million
• 2009 clinker capacity utilization 73%2)
1)
2)

GDP at PPP in dollar (IMF April 2010), weighted by Sales Volumes of Holcim
Excluding mothballed plants

© Holcim Ltd 2010

15
Investor / Analyst Capital Markets Event 2010



North America GDP growth expected to recover faster than
mature Europe; new asset base with lower production costs
North America
Net Sales, operating EBITDA (million CHF)
9'000

GDP growth

today

8'000

12%

Net Sales
op. EBITDA

7'000
6'000

9%

GDP growth

5'000
4'000
3'000

6%


2'000

3%

1'000
-

0%

-1'000
-2'000

-3%
2005

2006

2007

2008

2009

2010

2011

2012


2013

2014

North America
• Investment in Aggregate Industries in 2005 and St. Geneviève plant with a
clinker capacity of 4 million tons commissioned in 2009
• 4 old plants with overall 3.4 million tons of clinker capacity mothballed/closed
• Fixed cost savings of CHF 256 million
• 2009 clinker capacity utilization 53%2)
1)
2)

GDP at PPP in dollar (IMF April 2010), weighted by Sales Volumes of Holcim
Excluding mothballed plants

© Holcim Ltd 2010

16
Investor / Analyst Capital Markets Event 2010


Latin America maintained its op. EBITDA contribution;
GDP growth expected to recover to 6%
Latin America
Net Sales, operating EBITDA (million CHF)
9'000

GDP growth


today

8'000

12%

Net Sales
op. EBITDA

7'000
6'000

9%

GDP growth

5'000
4'000

6%

3'000
2'000

3%

1'000
-

0%


-1'000
-2'000

-3%
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Latin America
• Deconsolidation of Venezuela reduced capacity by 2.4 million tons in 2009
• New capacities of 4.1 million tons will be realized in 2010/2012 (Mexico,
Colombia in 2010 and Ecuador in 2012)
• Fixed cost savings of CHF 148 million

• 2009 clinker capacity utilization 73%2)
1)
2)

GDP at PPP in dollar (IMF April 2010), weighted by Sales Volumes of Holcim
Excluding mothballed plants

© Holcim Ltd 2010

17
Investor / Analyst Capital Markets Event 2010


Africa Middle East crisis resistant & remaining at high level;
Reduction in Net Sales due to deconsolidations
Africa Middle East
Net Sales, operating EBITDA (million CHF)
9'000

GDP growth

today

8'000

12%

Net Sales
op. EBITDA


7'000
6'000

9%

GDP growth

5'000
4'000

6%

3'000
2'000

3%

1'000
-

0%

-1'000
-2'000

-3%
2005

2006


2007

2008

2009

2010

2011

2012

2013

2014

Africa Middle East
• Deconsolidation of Holcim South Africa (2007) and Egyptian Cement
Company (2008) reduced clinker capacity by overall 7.2 million tons
• New plant in Morocco commissioned 2007 (1.5 million tons)
• 2009 clinker capacity utilization 92%

1)

GDP at PPP in dollar (IMF April 2010), weighted by Sales Volumes of Holcim

© Holcim Ltd 2010

18
Investor / Analyst Capital Markets Event 2010



Foresight investment in Asia Pacific paid off: Strong op.
EBITDA contribution; further dynamic growth expected
Emerging Asia Pacific
Net Sales, operating EBITDA (million CHF)
9'000

GDP growth

today

8'000

12%

Net Sales
op. EBITDA

7'000
9%

6'000

GDP growth

5'000
6%

4'000

3'000

3%

2'000
1'000

0%

-1'000

-3%

-2'000
2005

2006

2007

2008

2009

2010

2011

2012


2013

2014

Emerging Asia Pacific
• In 2005/2006, Holcim acquired ACC Ltd. and Ambuja Cement Ltd. in India
• Cement capacity in India increased since 2005/06 by 20 million tons.
Further capacity increases in India and Indonesia of overall 5.2 million tons
coming on stream in 2010/2013
• 2009 clinker capacity utilization 91%2)
• Huaxin platform in China not yet consolidated, offers additional potential
1)
2)

GDP at PPP in dollar (IMF April 2010), weighted by Sales Volumes of Holcim
Excluding mothballed plants

© Holcim Ltd 2010

19
Investor / Analyst Capital Markets Event 2010


Well integrated business in Australia and New Zealand
achieved; GDP growth expected >5%
Mature Asia Pacific
Net Sales, operating EBITDA (million CHF)
9'000
8'000
7'000

6'000
5'000
4'000

GDP growth

today

12%
9%
6%

3'000
2'000
1'000
-1'000
-2'000

3%

Net Sales
op. EBITDA
GDP growth

Proforma
full year
figures for
Australia
businesses


0%
-3%
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Mature Asia Pacific
• Acquisition of Holcim Australia and additional 25% stake in Cement
Australia in Q3 2009 will boost sales and operating EBITDA in this region
from 2010 onwards
• 2009 clinker capacity utilization 59%2)

1)
2)


GDP at PPP in dollar (IMF April 2010), weighted by Sales Volumes of Holcim
Excluding mothballed plant

© Holcim Ltd 2010

20
Investor / Analyst Capital Markets Event 2010


Geographical diversification mitigated mature market slump
Great potential due to strong global market position
Group
Net Sales, operating EBITDA (million CHF)
27'000

GDP growth
Net Sales

today

24'000

12%

21'000
18'000

9%


15'000
12'000

6%

op. EBITDA
GDP growth:
Emerging
Mature

9'000
6'000

3%

3'000
-

0%

-3'000
-6'000

-3%
2005

2006

2007


2008

2009

2010

2011

2012

2013

2014

Holcim Group
• 2005/2006 expansion of Aggregates and Other Construction Materials and Services
business through acquisition of Aggregate Industries Ltd. UK and US, Foster Yeoman
Limited UK
• 2005/2006 acquisition of ACC Ltd. and Ambuja Cement Ltd. in India
• 2009 acquisition of Holcim Australia
• Deconsolidation of South Africa (2007), Egypt (2008) and Venezuela (2008)
• Modern high efficient cement production facilities due to ongoing investment 2008 – 2013
(overall 26 million tons of capacity)
21
© Holcim Ltd 2010

Investor / Analyst Capital Markets Event 2010


Strength. Performance. Passion.

22
© Holcim Ltd 2010

Investor / Analyst Capital Markets Event 2010


Entrepreneurial Risk formula
Revenue − total cost ⎛
debt ⎞ debt
Return on equity =
interest
⎜1 +
⎟−
invested capital ⎝ equity ⎠ equity

ER

MR

PR

FR

Leading to the simplified formula1):
ER

MR + PR + FR

ER
MR

PR
FR
1)

=
=
=
=
=

Entrepreneurial risk
Market risk
Production risk
Financial risk

Assuming no correlation between MR, PR and FR

© Holcim Ltd 2010

23
Investor / Analyst Capital Markets Event 2010