holcim CS building sector seminar michel r gerber senior investor relations officer swetlana iodko investor relations officer

© 2014 CS Building Sector Seminar Michel R. Gerber, Senior Investor Relations Officer Swetlana Iodko, Investor Relations Officer © 2014 Agenda Holcim at a Glance Macro Economic Development and the impact for the cement industry Merger between Holcim and Lafarge First quarter 2014 results Outlook 2014 – Conclusions CS Building Sector Seminar – June 12, 2014 2 © 2014 Holcim at a glance 130 cement plants around 200 limestone quarries / 450 aggregates operations 1’150 RMX plants in the world > 70’000 employees over 5’000 own RMX trucks / more than 3’000 subcontracted over 1’600’000’000 cement bags sold Presence on all five continents and in around 70 countries 2013 Net sales of CHF 19.7 bn and operating EBITDA of CHF 3.9 bn CS Building Sector Seminar – June 12, 2014 3 © 2014 Agenda Holcim at a Glance Macro Economic Development and the impact for the cement industry Merger between Holcim and Lafarge First quarter 2014 results Outlook 2014 – Conclusions CS Building Sector Seminar – June 12, 2014 4 © 2014 -6 -4 -2 0 2 4 6 8 10 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 World Advanced economies Emerging economies GDP at constant prices [annual % change] Forecast Slightly better economic recovery expected, although uncertainty remains, … • Global economic growth is expected to accelerate slowly from 3.0% in 2013 to 3.6% in 2014 and 3.9% in 2015 (IMF April 2014) • Major developed countries to expand simultaneously for the first time in several years • Emerging markets, on balance, should perform better in 2014 Source: IMF World Economic Outlook April 2014 Change in GDP Forecast [January '14 to April'14] ‐0.6 ‐0.5 ‐‐ 0.1 ‐0.1 ‐‐ 0.4 ‐0.2 ‐0.2 ‐‐ 0.1 ‐0.1 ‐ ‐ 0.3 2014 2015 [annual %chan ge] CS Building Sector Seminar – June 12, 2014 5 © 2014 fundamental trends support our business … The right place to be Population growth Continued urbanization Economic growth CS Building Sector Seminar – June 12, 2014 6 © 2014 Europe 37% 45% 55% 22% 78% 16% 84% North America 10% Asia Pacific 30% Latin America 8% Africa Middle East 14% Europe 18% North America 6% Latin America 11% Asia Pacific 38% Africa Middle East 27% Europe 13% North America 5% Latin America 10% Asia Pacific 42% Africa Middle East 29% 1990 2013E 2030E 1990: ~0.8 Bn t 2013E: ~1.7 Bn t 2030E: ~2.7 Bn t Cement demand Split Mature vs. Emerging markets Cement demand evolution by region, excl. China Mature Emerging *Source: BMI, National cement associations, Holcim estimates … resulting in long-term cement consumption growth driven by emerging markets and recovery in Europe and US CS Building Sector Seminar – June 12, 2014 7 © 2014 Regional Construction Market Growth Forecast [CAGR] 7.1% 1.7% 6.5% 5.6% 4.9% 2.1% 6.6% 8.3% 8.7% 6.0% 5.9% 6.0% 1.4% 4.9% 4.2% 3.7% 0.9% 5.3% 7.2% 7.5% 4.9% 5.0% Total Wester nEu rop e EasternEu rope North America South&Central America As iaPacif ic('developed') As iaPacif ic('emerging' w/o India&Chi na)) China India Middl eEast&NorthAfrica Sub‐SaharanAfrica PreviousFC[CAGR2010‐2020] CurrentFC[CAGR2013‐2025] ‐1.1% ‐0.3% ‐1.5% ‐1.4% ‐1.2% ‐1.1% ‐1.3% ‐1.1% ‐0.9% No te:Pre vi ousFCbasedonUSD 2010prices&Curre ntFCbasedonUSD2012pri ces Change ‐1.1% ‐1.2% • Long term growth prospects remain positive for the majority of the regional construction sectors, driven by sound fundamentals and mega-trends • Following the pattern of expected slower GDP growth, growth projections for the sector are still strong • The compounded annual growth rate (CAGR) in construction spend is expected to be 6% for the period from 2013 to 2025 Oxford Economics remains positive on the long term prospects of the global construction sector Source: Oxford Economics - Global Construction Perspectives 2020 (March 2011) and 2025 (July 2013) CS Building Sector Seminar – June 12, 2014 8 © 2014 China and North America will attract most of the additional construction spend, followed by Emerging Asia and India • In nominal dollar terms, China, North America, Emerging Asia and India are expected to attract more than two thirds of global construction spend • China is a growth driver with more than a third of 2013- 2025 value growth potential [36% TOT] • North America is expected to regain momentum driven by economic recovery and population growth [15% TOT] • New Asian Tigers (Indonesia, South Korea, Vietnam and Philippines) is expected see significant growth over the period - Indonesia is expected to become the worlds third largest housing market [12% TOT] • India considerable growth potential [9% of TOT] • Latin America (excl. Mexico) will grow at a relatively low rate [6% of TOT] • Weak economic fundamentals in Western Europe and stagnant population will result in low but stable growth [5% TOT] • Eastern Europe (driven by Russia and Turkey) is expected to grow almost as much as India [8% TOT] • Africa with significant growth rates, however small overall Source: Oxford Economics - Global Construction Perspectives 2025 (July 2013) Global Construction Market [2013-2025] 2'182 914 746 566 489 353 340 314 125 95 China North America AsiaPacifi c ('em erging' w/oInd ia&China)) India Eastern Euro pe South& CentralAmerica Mid dleEast &NorthAfrica We stern Euro pe AsiaPacific (' de ve lope d' ) Sub‐Sa haran Africa 2013‐2025 Changein US D bn No te: FCba sedonUSD2012pri ces 36% 15% 12% 9% 8% 6% 6% 5% 2% 2% %‐share in Globalgrowth USD bn in2013 1'677 1'442 783 409 628 650 6% 1'711 1'050 118 CS Building Sector Seminar – June 12, 2014 9 © 2014 5 60 17 26 26 11 19 3 5 68 4 12 7 11 Holcim cement capacity as of December 31, 2013: 206 Mt * China not consolidated Over the past 10 years Holcim invested about CHF 35 billion to establish a global footprint unmatched in the industry Well positioned to address growth in cement demand CS Building Sector Seminar – June 12, 2014 10 [...]... Contact information and event calendar Contact information Event calendar Bernhard A Fuchs Michel R Gerber Swetlana Iodko July 30, 2014 Half-year results for 2014 November 3, 2014 Press and analyst conference for the third quarter 2014 November 18, 2014 Investor Day in Zurich Investor Relations Phone +41 58 858 87 87 Fax +41 58 858 80 09 investor. relations @holcim. com www .holcim. com/investors Mailing... proposition CS Building Sector Seminar – June 12, 2014 © 2014 15 Best-in-Class Portfolio for Growth • • Emerging Markets • 60% of pro forma sales 13 countries out of our Top 20 with strong infrastructure needs2 6% CAGR for construction outputs expected until 20253 Portfolio breakdown (2013 sales)1 c. 60% Emerging  markets LatAm Africa/Middle East Eastern  Europe Developed Markets • • 40% of pro forma... strong operating EBITDA and further reduction in NWC • Portfolio management in Europe received approval in the Czech Republic • Simplification of group structure in India close to completion • Merger of equals with Lafarge announced – Creating the most advanced Group in the building materials industry CS Building Sector Seminar – June 12, 2014 © 2014 22 Holcim Leadership Journey is on track All figures... Regulatory Approvals • Regulatory proceedings initiated in all relevant jurisdictions shortly Shareholder Approval and Acceptances • After regulatory approvals:  Holcim EGM approvals  Launch public exchange offer Transaction Closing expected in H1 2015 CS Building Sector Seminar – June 12, 2014 © 2014 20 Agenda Holcim at a Glance Macro Economic Development and the impact for the cement industry Merger... 348 RMC volume sold (mm3) 31 39 70 © 2014 13 Unique Value Proposition for Shareholders • • • • • New best-in-class global portfolio Superior growth and operating profitability Significant synergies Strict capital allocation discipline and strong capital structure Attractive returns for shareholders CS Building Sector Seminar – June 12, 2014 © 2014 14 Key Transaction Highlights Company name • LafargeHolcim... index for quality of overall infrastructure 2012-2013 3 Global Construction 2025 - A global forecast for the construction industry to 2025 CS Building Sector Seminar – June 12, 2014 © 2014 16 Operational Synergies Source » • » Estimated run-rate synergies Operational optimisation / best practices E.g logistics, distribution, IT, energy consumption CHF 240 m / EUR 200 m Procurement • Savings in overlapping... between Holcim and Lafarge First quarter 2014 results Outlook 2014 – Conclusions CS Building Sector Seminar – June 12, 2014 © 2014 21 Q1 2014 Milestones • Like-for-like sales increase in all segments • Strong momentum of Holcim Leadership Journey continues • Significant increase in operating profit and further margin improvement • Substantial adverse exchange rate impact • Improved cash flow from operating... further expansion in operating margins CS Building Sector Seminar – June 12, 2014 © 2014 29 Conclusions • Cement consumption growth driven by emerging markets and recovery in Europe and US • Holcim with current footprint well positioned to address growth in cement demand without adding any significant new capacities • The proposed merger with Lafarge will add significant value for all stakeholders... structure • • Merger of equals Company domiciled in Switzerland Exchange ratio • Exchange ratio of 1 Holcim share for 1 Lafarge share Rebalanced portfolio • • • • Capitalise on developed markets recovery Divestments of assets representing CHF 6bn / EUR 5bn of sales 60% exposure to emerging markets post divestments No country above c 10% of sales • • • • Best growth platform in the industry and superior... Agenda Holcim at a Glance Macro Economic Development and the impact for the cement industry Merger between Holcim and Lafarge First quarter 2014 results Outlook 2014 – Conclusions CS Building Sector Seminar – June 12, 2014 © 2014 28 Outlook for 2014 • Holcim expects cement volumes to increase in all Group regions • Aggregates volumes expected to remain flat overall as increases in Asia Pacific, Europe, . © 2014 CS Building Sector Seminar Michel R. Gerber, Senior Investor Relations Officer Swetlana Iodko, Investor Relations Officer © 2014 Agenda Holcim at a Glance Macro Economic Development. strong capital structure • Attractive returns for shareholders CS Building Sector Seminar – June 12, 2014 14 © 2014 Deal structure Company name Key Transaction Highlights • LafargeHolcim • Merger. consumption growth driven by emerging markets and recovery in Europe and US CS Building Sector Seminar – June 12, 2014 7 © 2014 Regional Construction Market Growth Forecast [CAGR] 7.1% 1.7% 6.5% 5.6% 4.9% 2.1% 6.6% 8.3% 8.7% 6.0% 5.9% 6.0% 1.4% 4.9% 4.2% 3.7% 0.9% 5.3% 7.2% 7.5% 4.9% 5.0% Total Wester