annual results 2003 and outlook 2004 holcim strength performance passion

1 Annual Results 2003 and Outlook 2004 Strength. Performance. Passion. 1 Annual Results 2003 Holcim Group in 2003  Difficult economic environment – no improvement until second half of the year.  Weak dollar pressures financial results. Holcim nevertheless reports a strong annual result:  Higher sales volumes in all three core segments.  Operating profit rises 1.2 percent to CHF 1,925 million and Group net income jumps 35.6 percent to CHF 686 million.  Focus on growth markets has again proved effective.  Measures to improve performance are kicking in.  Standard share increases transparency and stock liquidity.  Proposed increase in dividend. 2 2 Annual Results 2003 Operating strengths  Creation of cross-border management structures and regional IT service centers improving efficiency.  Lower administration and selling expenses.  Energy price hikes off-set by greater use of alternative fuels and raw materials.  Innovative products enable us to produce more cement with less clinker, minimizing environmental impacts.  Selective pricing adjustments in individual markets. 3 Annual Results 2003 Progress in the US  New management at Holcim US delivering on expectations.  At 20 percent, the 18 percent target operating EBITDA margin announced mid-2003 was exceeded.  Improved performance at the Portland plant.  Holly Hill plant commissioning very successful.  In seven years, more than 8 million tonnes of state-of-the- art cement capacity has been installed.  Rising freight rates will increase price of imported cement.  Holcim US will benefit well from growing cement demand. 3 4 Annual Results 2003 Balance-sheet clean-up Holcim has successfully continued to concentrate on its core business and further streamlined its portfolio of interests:  Eternit AG in Switzerland was divested.  Further reduction in shareholding in Cimpor of Portugal.  Disposal of interest in Dyckerhoff (Germany).  Successful financial restructuring at Minetti in Argentina.  Additional disposal of non-strategic assets. 5 Annual Results 2003 Value-adding transactions  Acquisition of Cementos Hispania strengthens Holcim presence in key Madrid market.  Successful conclusion of contract leads to acquisition of Rohrbach Zement.  Acquisition of majority holding in Alpha Cement in Russia with plants near Moscow and on the Volga.  Purchase of two quarries in Ontario secures strategic raw materials supply and strengthens market positioning.  Merger of the two Group companies in the Philippines.  Cement Australia becomes market leader in Australia.  Expansion of ready-mix business, especially in Eastern and Southeast Europe, as well as Brazil and Chile. 4 6 Annual Results 2003 Europe  Main drivers in the sector are infrastructure projects and residential construction.  Markets in Spain and Italy continue to demonstrate solidity.  In several West European markets, order volumes were stable or slightly lower.  Crisis in the German building industry is not yet over.  Cement demand rising in Eastern and Southeast Europe. 7 Annual Results 2003 Operations in Europe Cement capacity Group (Europe): 44.0 million t; further 2.3 million t with partners. Group: Cement plant Grinding plant Terminal Grinding plant under construction Participation: Cement plant 5 8 Annual Results 2003 Facts on Europe  New production capacity and new products strengthen cost leadership.  Higher sales volumes due to extended presence and solid market positions.  Stiffer competitive situation and price war in Germany pressure operating results.  Declining operating profit in Europe.  Focus on core business through disposal of Eternit AG, Niederurnen (Switzerland).  Divestiture of interest in Dyckerhoff AG and substantial scaling back of shareholding in Cimpor. 9 Annual Results 2003 North America  Sluggish recovery in US construc- tion sector and weather-related sales setback in first-half 2003.  Gradual rise in US and Canadian demand in second-half 2003.  Biggest drivers were residential and major infrastructure projects.  Cement consumption recovering; slight decline in share of imports. 6 10 Annual Results 2003 Operations in North America Cement plant Grinding plant Terminal Cement plant project Cement capacity Group (North America): 21.3 million t. 11 Annual Results 2003 Facts on North America  Approval process for building of two new cement plants still underway.  Above-average increase in cement deliveries at Holcim US due to new Holly Hill plant and rise in output at Portland.  Healthy order situation in Canada assists sales at St. Lawrence Cement; slight decline in US Northeast.  Rising production efficiency and easing of price pressures lead to higher operating profit in local currency for Holcim US.  Massive dollar depreciation lowers results of North America in Swiss franc terms. 7 12 Annual Results 2003 Latin America  Construction industry held up well across most countries.  Cement consumption showed solid increase in Mexico, Central Ameri- ca and the Caribbean, as well as in Colombia, Argentina and Chile.  Main impetus came from private- sector housing construction.  Venezuelan building industry badly affected by politically unstable situation.  Largest market, Brazil, suffered lack of public building projects. 13 Annual Results 2003 Operations in Latin America Cement capacity Group (Latin America): 31.2 million t; further 9.5 million t with partners. Group: Cement plant Grinding plant Terminal Participation: Cement plant Grinding plant Terminal 8 14 Annual Results 2003 Facts on Latin America  Rise in consolidated cement deliveries.  Higher sales volume and productivity improve results of Holcim Apasco in Mexico.  Impressive business performance by our Group com- panies in the Caribbean and Chile.  Performance in Costa Rica, Colombia and Ecuador hit by changes in external conditions.  Brazil able to increase results despite drop in volumes.  Turnaround for Minetti in Argentina due to rising demand for building materials and strong market presence.  In local currency, Latin America improves on previous year. 15 Annual Results 2003 Africa Middle East  South Africa and Morocco exhibit further robust growth.  In Lebanon and Egypt, the construction sector fared well.  Political instability influenced business activity on the West African coast.  Pleasing increase in cement consumption overall. 9 16 Annual Results 2003 Operations in Africa Middle East Group: Cement plant Grinding plant Terminal Participation: Cement plant Grinding plant Terminal Cement capacity Group (Africa Middle East): 13.3 million t; further 5.1 million t with partners. 17 Annual Results 2003 Facts on Africa Middle East  Higher volumes for all Group companies except West Africa group.  Significantly enhanced financial results for Group companies in Morocco and South Africa.  Holcim Lebanon and Egyptian Cement suffered intense price competition; profit contributions nevertheless remained substantial.  Investment aimed at boosting efficiency in production and distribution is paying off.  Sharp rise in operating profit for this Group region. 10 18 Annual Results 2003 Asia Pacific  Impressive growth rates in ASEAN countries.  Overall backdrop remains healthy in the Pacific region.  Major infrastructure projects and residential construction providing boost for building sector activity.  Cement consumption grew in nearly all markets.  Shortage of public-sector orders in the Philippines. 19 Annual Results 2003 Operations in Asia Pacific Cement capacity Group (Asia Pacific): 35.5 million t; further 18.4 million t with partners. Group: Cement plant Grinding plant Terminal Grinding plant under construction Participation: Cement plant Grinding plant Terminal [...]... -564 -495 Total 35 Annual Results 2003 18 Group net income Before minority interests in million CHF After minority interests in million CHF 1'031 -0.4% 932 +16.9% 812 797 -8.4% -22.7% 686 +35.6% 506 -37.7% 2001 2002 2003 36 Annual Results 2003 Cash flow from operating activities Million CHF Margin 20.8% 17.6% 18.4% 2'619 2'402 2'388 -6.1% -0.6% 2001 2002 +9.7% 2003 37 Annual Results 2003 19 Cash flow... 2'609 -10 25 Annual Results 2003 13 Cement and clinker sales volumes Million t 25.3 16.5 2002 2003 26.5 17.2 22.9 11.7 18.8 19.3 23.2 12.8 ∆ 02/03 Volume Europe North America Latin America Africa Middle East Asia Pacific Total 1.6% 4.2% 1.5% 8.3% -4.5% 1.5% Change in structure 3.1% 0.0% 1.2% 1.1% 5.8% 2.7% Total 4.7% 4.2% 2.7% 9.4% 1.3% 4.2% 26 Annual Results 2003 Sales volumes aggregates and ready-mix... 25.3 - 0.8% 2002 + 6.7% 2003 27 Annual Results 2003 14 Net sales Million CHF 13'644 Volume/price Change in structure Forex movements Total change 166 359 -412 113 13'010 1.2% 2.6% -3.0% 0.8% -108 398 -924 -634 2001 12'600 -0.8% 2.9% -6.7% -4.6% 270 47 -727 -410 2002 2.1% 0.3% -5.6% -3.2% 2003 28 Annual Results 2003 Net sales by region Million CHF 4320 2755 2507 1136 3248 2002 2003 4441 2842 ∆ 02/03... Queensland Cement) June 1, 2003 – – Eternit AG, Switzerland November 10, 2003 – + Alpha Cement, Russia December 31, 2003 4.3 million t +/– Various smaller companies 23 Annual Results 2003 12 Exchange rates Statement of income average exchange rates in CHF 2001 1 USD 1 African Basket (EGP, ZAR, MAD) 1) 1 Asian Basket (AUD, NZD, THB, PHP) 1) 1.34 -13.5% 1.00 1.04 4.0% 1.04 1.00 0.95 -5.0% 2002 2003 +/-... >3 Standard & Poor's Rating BBB+ 41 Annual Results 2003 21 Outlook 2004 Only a modestly brighter picture for construction activity in many Group markets In key markets, Holcim will achieve increased sales of cement, aggregates and concrete Greater value added due to improved efficiency Solid balance sheet allows selective investment in new markets or Group companies Further increase in operating results. .. 108 -97 -30 -1.2% 3.2% -2.9% -0.9% 2001 3'341 184 73 -251 6 5.5% 2.2% -7.5% 0.2% 2002 3'311 177 50 -257 -30 5.3% 1.5% -7.7% -0.9% 2003 31 Annual Results 2003 16 EBITDA Margin Million CHF 26.2% 26.8% 26.1% 3'574 - 0.6% 3'399 3'383 - 4.9% - 0.5% 2001 2002 2003 32 Annual Results 2003 Operating profit Million CHF 14.3% 1'945 Volume/price/cost Change in structure Forex movements Total change -64 65 -57 -56... Middle East 11.5% 2.1% -0.9% Asia Pacific 9.9% 2.9% -10.1% Total 2.1% 0.3% -5.6% Total 2.8% -9.0% -12.5% 12.7% 2.7% -3.2% 29 Annual Results 2003 15 Net sales by region Sales 2003 Europe 35% North America 19% Latin America 22% Asia Pacific 14% Africa Middle East 10% 30 Annual Results 2003 Operating EBITDA Million CHF Margin 26.3% 25.7% 24.4% 3'335 Volume/price/cost Change in structure Forex movements Total... Annual Results 2003 Other income and financial expenses Other Income, million CHF 2002 2003 Dividends earned 78 80 Financial income 6 -8 Other ordinary income 94 0 Provision related to antitrust investigation Germany -120 0 Depreciation and amortization of non-operating assets -107 -60 -49 12 Financial Expenses Net, million CHF 2002 2003 Financial expenses -677 -574 69 64 Total Interest earned on cash and. .. 1.2% 2003 33 Annual Results 2003 17 Operating profit by region Million CHF 504 298 2002 2003 482 273 242 785 287 163 198 766 ∆ 02/03 Volume/ Change in Currency price/cost structure Europe -10.9% 3.8% 2.7% North America 0.3% 1.0% -9.7% Latin America 12.7% 0.7% -15.8% Africa Middle East 20.7% 2.0% -4.1% Asia Pacific 28.8% 1.3% -8.6% Total 8.0% 1.7% -8.5% Total -4.4% -8.4% -2.4% 18.6% 21.5% 1.2% 34 Annual. .. 2003 Financing Million CHF 2001 2002 2003 +/- -1'600 533 517 -3.0% 1'426 -10 26 Movements of treasury shares net -372 -1 4 In(De)crease in financing liabilities 490 334 -676 – 58 – Decrease in marketable securities 660 16 30 In(De)crease in cash and cash equivalents 604 930 -99 Financing (requirement) surplus Capital paid-in (repaid) Equity component of convertible bonds -110.6% 39 Annual Results 2003 . 1 Annual Results 2003 and Outlook 2004 Strength. Performance. Passion. 1 Annual Results 2003 Holcim Group in 2003  Difficult economic environment – no. Measures to improve performance are kicking in.  Standard share increases transparency and stock liquidity.  Proposed increase in dividend. 2 2 Annual Results 2003 Operating strengths  Creation. cement.  Holcim US will benefit well from growing cement demand. 3 4 Annual Results 2003 Balance-sheet clean-up Holcim has successfully continued to concentrate on its core business and further