Exane BNP Paribas – 11th European Seminar Markus Akermann – CEO June 11, 2009 © Herzog & de Meuron © Holcim Ltd 2009 Agenda Attractiveness of the industry Challenges and management priorities Conclusions © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Attractiveness of the heavy-side building materials Housing and infrastructure are basic needs Diverse customer base include private and public sector Sustainable Development is our “license to operate” Concrete is an attractive, eco-friendly product The demand drivers and characteristics of our products provide for continued growth and profitability © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 The industry invests in physical assets No process obsolescence risk Products are not affected by short-term life-cycles Limited substitution potential Own raw material reserves Inflation hedge (real value) Plant and distribution network Investments in real assets offer long term value © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Applications vary between mature and emerging markets Application by end markets Approx % share by market Mature Emerging Infrastructure and public works ~ 33% ~ 20% Commercial and industrial ~ 33% ~ 20% Housing and residential ~ 33% ~ 60% © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Announced stimulus programs of > USD 2.5 trillion will generate demand Europe (in USD bn) Total stimulus Thereof infrastructure 750 145 North America (in USD bn) Total stimulus 820 Thereof infrastructure 130 Countries with announced stimulus programs Holcim position Latin America (in USD bn) Total stimulus 210 Thereof infrastructure 200 Asia Pacific (in USD bn) Total stimulus 1.010 Thereof infrastructure 670 Large portion dedicated to infrastructure > USD trillion © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Housing markets are less dependent on financial markets and policies Rural market demand is impacted by agricultural productivity gains, crop yields and weather Decreasing size of the average household Rising income levels Strong local brands Rural and housing markets offer sound growth prospects © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Cement – market positioning to capture growth Cumulated population growth 08-13E 12% Mature markets Emerging markets Size of circles represents influenced capacity 2008 10% Asia Pacific excl India and China 51.6 Mt 8% 6% North America 21.3 Mt 4% 2% Latin America 39.0 Mt Africa Middle East 23.6 Mt Demand growth India 44.6 Mt China 38.5 Mt Western Europe 25.9 Mt 0% Eastern Europe 23.1 Mt -2% -4% 1% 2% 3% 4% 5% 6% 7% 8% GDP per capita (at PPP) CAGR 08-13E Sources: Holcim, US Census Bureau, Economist Intelligence Unit © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar 9% 10% 11% May 13, 2009 Aggregates – counterweight in mature markets Cumulated population growth 08-13E 12% Mature markets Size of circles represents consolidated sales volumes 2008 10% 6% North America 49.3 Mt 4% 0% Demand growth Latin America 13.4 Mt 8% 2% Emerging markets Asia 4.7 Mt Africa Middle East 2.7 Mt Western Europe 86.1 Mt Eastern Europe 11.5 Mt -2% -4% 1% 2% 3% 4% 5% 6% 7% 8% GDP per capita (at PPP) CAGR 08-13E Sources: Holcim, US Census Bureau, Economist Intelligence Unit © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar 9% 10% 11% May 13, 2009 Holcim has the most global and focused portfolio Full year consolidation 2008 Cement 151 plants with a total capacity of 194 million tonnes Product sales volume of 143 million tonnes Segment revenue of CHF 16.2 billion Aggregates 415 operations Product sales volume of 168 million tonnes Segment revenue of CHF 2.5 billion OCMS1 1,217 ready-mix concrete plants Product sales volume of 48 million m3 of ready-mix and 13 million tonnes of asphalt Segment revenue of CHF 9.4 billion Estimated replacement cost / tonne of approximately CHF 300 OCMS – Other Construction Materials and Services © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar 10 May 13, 2009 Agenda Attractiveness of the industry Challenges and management priorities Conclusions 11 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Challenge – the current global recession and economic cycle Current global business environment The first global economic contraction since WWII Short term impact Declining volumes in mature markets Slowing growth rates in emerging markets Mitigants & Opportunities for Holcim Cost cutting initiatives in all segments and regions Impact from stimulus programs within the next two years Geographic diversification strategy proving its strength Holcim will benefit from both resilience in the emerging market as well as infrastructure spending from the stimulus packages 12 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Not all countries are equally affected by the downturn Annual GDP growth in percentage points 10.0 2008 2009 2010 8.0 6.0 4.0 2.0 0.0 -2.0 UK Germany Spain US Russia Mexico Brazil India China -4.0 -6.0 -8.0 Relative to previous crises and slowdowns, the economies of Asia, Latin America, Africa and the Middle East are better positioned to return to growth Source: IMF World Economic Outlook Update April 2009 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar 13 May 13, 2009 Holcim generates its EBITDA in countries with GDP growth above average GDP Growth [%] (excl China) 2009 World Mature Market 2010 1.3% -1.7% 2012 3.7% 0.1% -2.9% Emerging Market 2011 2.9% 2.7% -0.1% 5.2% 4.2% 4.9% 6.3% GDP Growth weighted with Holcim EBITDA 2008 per country [%] (excl China) Holcim EBITDA 2008 split: Holcim World Mature Market 2.0% -0.4% 4.6% 0.1% -2.3% 6.1% 3.3% 4.5% Mature: 32% Emerging: 68% Emerging Market 2.3% 4.4% 6.4% 8.1% Source: Nominal GDP per Capita (at PPP) in USD: International Monetary Fund - World Economic Outlook Database (April 2009), US Census Bureau © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar 14 May 13, 2009 Challenge – regional overcapacity and global trade Current global business environment Industry expansion combined with lower volume growth Local overcapacities combined with low freight rates Short term impact Temporary oversupply in some regional markets Mitigants & Opportunities for Holcim Capacity adjustments and expansion delays occurring across the industry and the world New capacity is in markets with sound growth rates Introducing environmentally friendly state-of-the-art plants Holcim is streamlining its asset base and building new plants in high growth markets in order to capture future growth 15 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Management has reacted quickly to the changed environment Minimize maintenance investments (net) to CHF 400 million in 2009 compared to CHF 1.1bn in 2008 Capacity expansion program 2009 – 2011 largely continued as planned No new expansion projects Take out capacity and idle production in relation to demand CHF 375 million in total cost cutting initiated of which CHF 100 million was realized in 1st quarter 2009 Workforce reduced by 5,380 compared to Q1 08 Taken actions which are leading to a more cost-efficient and environmentally-friendly operation 16 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Holcim closed or mothballed > 10 million tonnes of its capacities since the beginning of the crisis Sample of initiatives in execution Europe: Closing cement plant Mothballed kiln lines Closing 43 ready-mix, asphalt and aggregates plants USA: Closing cement plants Mothballed kiln lines Closing 67 ready-mix, aggregates, asphalt & concrete product plants Latin America: Mothballed kiln lines Closing 23 ready-mix plants Asia Pacific: Mothballed kiln lines Note: Select cost and capacity initiatives in progress – highlighted using estimated numbers © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar 17 May 13, 2009 Challenge – financial market volatility and crisis Current global business environment Borrowing and capital markets are impaired by the financial crisis Short term impact Lack of available funds for the industry Increases the cost to refinance in certain currencies Mitigants & Opportunities for Holcim Holcim continues to successfully participate in the capital and credit markets across currencies and regions No financial covenants at the corporate level Conservative balance sheet and low leverage More than CHF 2.5 bn in financing raised in Q1 2009 18 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Strong balance sheet and liquidity position as of March 31, 2009 Maturity profile (CHF million) 7,000 6,000 Liquidity summary Liquidity II 2: CHF 4.2 billion Loans Capital markets 5,000 4,000 Liquidity III 3: CHF 5.8 billion Debt summary 3,000 Fixed to floating ratio: 32% fixed 2,000 Capital markets 44%; Loans 56% 1,000 Corporate vs subsidiary debt: 79% corporate Ø total maturity: 3.6 years ,0 7,000 CP borrowings: EUR 147 million 10y No financial covenants at corporate level 6,000 Loans Capital markets 5,000 ST/LT ratings summary as of May 4, 2009 S&P Credit Rating: A-2 / BBB, outlook stable 4,000 Fitch Credit Rating: F2 / BBB, outlook negative 3,000 Moody’s Credit Rating: P-2 / Baa2, outlook stable 2,000 Current financial liabilities adjusted for short-term drawings under long-term committed credit lines Liquidity II =Cash + marketable securities Liquidity III =Liquidity II + unused committed credit lines 1,000 ,0 A M J J A S O ND J F MA M J J A S O ND J F M 2011 2009 2010 No major debt maturities in the next 12 months 19 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Agenda Attractiveness of the industry Challenges and management priorities Conclusions 20 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Conclusions The heavyside building materials industry is attractive for investments Large-scale, real value investments Basic needs with limited substitution Not all of Holcim’s markets are affected equally by the economic crisis – infrastructure programs support demand Holcim is well positioned to weather the current challenging business environment, which also offers opportunities Crisis-proven management at corporate and regional level took strong and decisive measures – anticipating the crisis development is a continuous management task Balance sheet strength continues to be an enabling factor Holcim will emerge from the crisis as a stronger company 21 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 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 22 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 Contact information and event calendar Contact information Event calendar Bernhard A Fuchs Marco Knuchel Binit Sanghvi August 20, 2009 Half-year results 2009 November 11, 2009 Results for the third quarter 2009 Press and analyst conference March 3, 2010 Annual results 2009 Press and analyst conference May 5, 2010 Results for the first quarter 2010 May 6, 2010 General meeting of the shareholders Investor Relations Phone +41 58 858 87 87 Fax +41 58 858 80 09 investor.relations@holcim.com www.holcim.com/investors Mailing list: www.holcim.com/subscribe 23 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009 ... © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar 10 May 13, 2009 Agenda Attractiveness of the industry Challenges and management priorities Conclusions 11 © Holcim Ltd 2009 Exane BNP. .. April 2009 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar 13 May 13, 2009 Holcim generates its EBITDA in countries with GDP growth above average GDP Growth [%] (excl China) 2009 World... 09 investor.relations @holcim. com www .holcim. com/investors Mailing list: www .holcim. com/subscribe 23 © Holcim Ltd 2009 Exane BNP Paribas – 11th European Seminar May 13, 2009