berenberg european conference thomas aebischer cfo holcim group london december 4 2013

Berenberg European Conference Thomas Aebischer, CFO Holcim Group London, December 4, 2013 © 2013 Holcim Ltd Agenda Holcim Strategy and Positioning - base for value creation Holcim Leadership Journey Proactive Asset Management - recently announced transactions Regional overview Conclusions European Conference 2013 - Berenberg © 2013 Holcim Ltd Global construction growth is driven by emerging markets and recovery in Europe and US Construction Industry Value Outlook until 2017E (USD bn) Share of market 2008 2017E - Emerging markets - Developed markets 6'000 29% 71% 48% 52% CAGR ‘13-’17: 7% 5'000 CAGR ‘08-’12: 3% Asia Pacific (emerging) 4'000 10% Asia Pacific (mature) 3'000 16% Latin America 6% 8% Africa / Middle East 8% 7% 2'000 1% 11% North America 3% -1% 0% 2008 2009 2010 Europe (emerging) 12% -6% 1'000 4% 2011 2012 2013E 2014E 2015E Europe (mature) 2016E 2017E Source: BMI Market Outlook, 2013 European Conference 2013 - Berenberg © 2013 Holcim Ltd Holcim’s Strategy House – base for value creation Goal Creation of Value Geographic Diversification Strategy Product Focus Mindsets Sustainable Better Permanent Environmental Cost Marketing Performance Management Innovation Local Management Global Standards Human Resources Excellence Corporate Social Responsibility People Base European Conference 2013 - Berenberg © 2013 Holcim Ltd Positioning – Holcim’s cement market portfolio Cumulated population Growth 2012 - 2017E 12% Mature markets Emerging markets Asia Pacific excl Size of circles represents influenced capacity 2012 India, Oceania, China 43.5 Mt Africa Oceania India Middle East 4.8 Mt 60.5 Mt 10% 8% Demand growth 23.2 Mt 6% North America 22.0 Mt 4% Latin America 35.5 Mt Western Europe 25.9 Mt 2% 0% China 60.0 Mt Eastern Europe 23.3 Mt -2% -4% 2% 3% 4% 5% 6% 7% 8% 9% GDP per capita (at PPP) CAGR 2012 - 2017E 10% 11% 12% Sources: Holcim, US Census Bureau, Datastream – IMF: World Economic Outlook, January 2013 European Conference 2013 - Berenberg © 2013 Holcim Ltd Positioning – Holcim’s aggregates market portfolio Cumulated population Growth 2012 - 2017E 12% Mature markets Emerging markets Size of circles represents consolidated sales volumes 2012 10% Asia excl Oceania 3.8 Mt Oceania 23.9 Mt 8% 6% North America 41.3 Mt 4% 2% Demand growth Africa Middle East 2.3 Mt Latin America 14.0 Mt Western Europe 64.8 Mt Eastern Europe 9.5 Mt 0% -2% -4% 2% 3% 4% 5% 6% 7% 8% 9% GDP per capita (at PPP) CAGR 2012 - 2017E 10% 11% 12% Sources: Holcim, US Census Bureau, Datastream – IMF: World Economic Outlook, January 2013 European Conference 2013 - Berenberg © 2013 Holcim Ltd Agenda Holcim Strategy and Positioning - base for value creation Holcim Leadership Journey Proactive Asset Management - recently announced transactions Regional overview Conclusions European Conference 2013 - Berenberg © 2013 Holcim Ltd The Holcim Leadership Journey and a focused capital allocation to increase short and long term returns Holcim Leadership Journey Customer Excellence Cost Leadership Customer focus Energy and AFR Value management Logistics Pricing policies Procurement Marketing and sales Fixed cost Capture demand through advice & service Optimization of cost base CHF 500 m > CHF bn Operating profit increase of at least CHF 1.5 bn and ROICAT > 8%* by 2014 * In similar markets conditions Corresponds to a ROICBT of > 11.8% European Conference 2013 - Berenberg © 2013 Holcim Ltd Holcim Leadership Journey is on track All figures in million CHF 2012 Target Customer Excellence (operating profit impact) 2013 achieved Target 2014 9M 50-100 31 150-200 95 500 100-200 127 400-500 531 > 1,000 146 104 131 151 > 300 > 250 > 250 > 200 626 > 1,500 -Customer focus -Value management -Pricing policies -Marketing and sales forces skills and motivation Cost Leadership (operating profit impact) -Energy and AFR -Logistics -Procurement -Fixed cost 40 48 39 Total increase in operating profit 1) 150-300 158 Cash cost to achieve the savings (one-off) < 80 239 Additional CAPEX net 2) 0-40 48 1) 2) 3) 550-700 3) 100-180 3) 105 100-180 The base line is the financial year 2011 amounting to CHF 2,308 million (excluding one-off charges 2011 of CHF 375 m and without fluctuations in currency, changes in scope of consolidation and similar market conditions) Additional CAPEX net will come from prioritization of CAPEX based on the speed of the returns (ROIC) Current energy fund of CHF 100 million will be maintained through the period 2012 – 2014 Original amount was projected < CHF 120 million for 2013; having spent already CHF 239 million, no additional restructuring cash costs are foreseen at this stage European Conference 2013 - Berenberg © 2013 Holcim Ltd Agenda Holcim Strategy and Positioning - base for value creation Holcim Leadership Journey Proactive Asset Management - recently announced transactions Regional overview Conclusions European Conference 2013 - Berenberg © 2013 Holcim Ltd 10 Transaction with synergies and strategic relevance driven by strong geographical focus • Holcim to optimize its portfolio in Europe through a series of interlinked transactions with Cemex in Germany, Spain and the Czech Republic • Strengthen European footprint for the future and adjust to new economic reality • Create value through stronger geographic footprint in North-Western Germany and connect current Northern Germany and France Benelux operations • Additional operating EBITDA and synergies expected to be at least EUR 20 million p.a • Combine operations in Spain to add value and benefit from expected synergies European Conference 2013 - Berenberg © 2013 Holcim Ltd 12 Recent developments / Next steps Recent developments • European Union antitrust regulators to further investigate series of transactions with Cemex   EU Commission opened a Phase II investigation of the German transaction on October 22nd, 2013 Phase II could take until end of April 2014 (90 to max 125 working days) EU Commission issued a formal decision on November 14th, 2013 to submit extensive economic data Due to this formal decision, Phase II is on hold until November 29th, 2013 Next steps • Decision of the European Commission by March / April, 2014 • Transaction expected to be closed in Q2 2014 European Conference 2013 - Berenberg © 2013 Holcim Ltd 13 ACL acquires Holcim’s 50.01% equity stake in ACC Evolution of current to target shareholder structure Interlinked transaction steps Step I: Acquire 24% in Holcim India 40.79% 0.29% Holcim Step II: Merge Holcim India into ACL 40.79% 76% 24% 76% 24% Holcim India 9.76% ACL 0.29% Holcim ACC ACL Holcim 0.29% 61.39% Holcim India 9.76% 50.01% Target Structure ACL 50.01% ACC 50.01% ACC • Holcim India value of INR 14,584 crore (USD ~2.4 bn) consists of 50.01% stake in ACC for INR 11,727 crore (USD ~2.0 bn) and 9.76% stake in ACL for INR 2,857 crore (USD ~0.4 bn) • Two step transaction for a total deal value of INR 11,727 crore (USD ~2 bn)  Step I: ACL acquires 24% of Holcim India for INR 3,500 core (USD ~0.6 bn)  Step II: ACL issues net 434 mio equity shares for a total value of INR 8,226 crore (USD ~1.4 bn) to Holcim post cancellation of Holcim India’s 9.76% stake in ACL upon merger • The transaction steps are inter-linked and subject to requisite approvals European Conference 2013 - Berenberg © 2013 Holcim Ltd 14 Value creation opportunity Improve Structure • More efficient capital structure & EPS accretive • Re-investment of cash into business • Collaboration under ‘India Management’ structure Unlock Synergies • Synergy potential of approximately INR 900 crore (USD 150 mio) through supply chain and fixed cost optimisation Get Scale • Consolidated pan-India footprint with 58 mio tpa capacity • Confirmed >10 mio tpa capacity expansion underway in both companies; additional projects in planning (e.g ACC Ametha) • Strong and debt free balance sheet; cash flow diversification Maintain Front-end • Complementary premium brands will continue to exist • Independent go-to-market strategy with strong dealer networks / distribution in respective markets Commit to India Group • Investment in Marwar Mundwa • Intent to increase economic ownership in ACC over time • ACC is a perfect fit, being a Holcim Group company already European Conference 2013 - Berenberg © 2013 Holcim Ltd 15 Recent developments / Next steps Recent developments • November 19th - closure of postal ballot for ACL minority shareholders • November 21st – voting results announcement: 68.5% of ACL’s minority shareholders voted in favor of the deal • November 23rd – Court Convened Extraordinary General Meeting – ACL received approval from 90.4% of shareholders for the proposed restructuring Next steps • High Court approval (Delhi and Gujarat) on the scheme of amalgamation under Sec 391-394 of the Companies Act, 1956 (regulatory process) • Clearance from Foreign Investment Promotion Board (FIPB) • Transaction expected to be closed in Q2 / Q3 2014 European Conference 2013 - Berenberg © 2013 Holcim Ltd 16 Agenda Holcim Strategy and Positioning - base for value creation Holcim Leadership Journey Proactive Asset Management - recently announced transactions Regional overview Conclusions European Conference 2013 - Berenberg © 2013 Holcim Ltd 17 Asia Pacific affected by fall in demand in India • Growth in the construction industry remained solid • Drop in sales in all segments: in cement primarily due to harsher economic situation in India and in aggregates due to Holcim Australia • Holcim Philippines benefitted from strong demand and better prices • Despite progress on the cost front, weaker results in India and negative currency translation effects led to a decrease in operating EBITDA European Conference 2013 - Berenberg Restated due to changes in accounting policies © 2013 Holcim Ltd 18 Latin America still on growth track • Construction industry built on last year’s solid performance • Higher cement deliveries in Ecuador, Argentina and Costa Rica • Divestments and temporary market exits lowered aggregates sales volumes significantly; ready-mix concrete shipments also decreased • Major efforts to keep costs in check led to higher operating EBITDA • Chile, Colombia and Ecuador posted significantly better results Restated due to changes in accounting policies The percentage change like-for-like adjusted for internal trading volumes eliminated in “Corporate/Eliminations” amounts to -0.6% European Conference 2013 - Berenberg © 2013 Holcim Ltd 19 Europe making further headway • European construction markets still lacked economic stimuli • Shipments of cement increased primarily due to the CIS/Caspian region • Sales volumes of aggregates as well as ready-mix concrete decreased • Capacity adjustments and cost-cutting measures led to significantly better operating EBITDA and strong organic growth European Conference 2013 - Berenberg Restated due to changes in accounting policies © 2013 Holcim Ltd 20 North America continues its recovery • The US construction industry became slightly more dynamic, but in Canada economic growth slowed down • Holcim US recorded slight decrease in cement sales and Aggregate Industries US sold more aggregates and readymix concrete • Holcim Canada was unable to compensate weather-related setbacks • Improved performances in the US led to solid organic growth European Conference 2013 - Berenberg Restated due to changes in accounting policies © 2013 Holcim Ltd 21 Subdued economic situation in Africa Middle East • Demand remained strong in Lebanon despite the turmoil in Syria • Reduction in sales volumes in all segments, primarily due to Morocco • Grinding stations in West Africa and Gulf region delivered less cement • Declining sales volumes in Indian Ocean region • Operating EBITDA was down mainly due to the weaker performance in Morocco European Conference 2013 - Berenberg Restated due to changes in accounting policies © 2013 Holcim Ltd 22 Agenda Holcim Strategy and Positioning - base for value creation Holcim Leadership Journey Proactive Asset Management - recently announced transactions Regional overview Conclusions European Conference 2013 - Berenberg â 2013 Holcim Ltd 23 Conclusions ã Medium term construction industry growth of 7% is driven by emerging markets and the recovery in Europe and the US – Holcim is well positioned to participate • Self help measures remain an important part of earnings improvement; Holcim Leadership Journey well on track and with increasing momentum • Proactive portfolio management in selected markets offer opportunities to create more value from the existing asset base • Balanced use of cash for both organic and inorganic growth to deliver appropriate returns to shareholders resulting in a ROICAT of at least of 8% • Short-term, for 2013 Holcim expects on a like-for-like basis growth in operating EBITDA and operating profit coupled with a further improvement in margins European Conference 2013 - Berenberg © 2013 Holcim Ltd 24 Contact information and event calendar Contact information Event calendar Bernhard A Fuchs Michel R Gerber Swetlana Iodko February 26, 2014 Press and analyst conference on annual results for 2013 April, 28, 2014 Results for the first quarter 2014 April 29, 2014 General meeting of shareholders July 30, 2014 Half-year results for 2014 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 European Conference 2013 - Berenberg © 2013 Holcim Ltd 25 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 European Conference 2013 - Berenberg © 2013 Holcim Ltd 26 ... (emerging) 12% -6% 1''000 4% 2011 2012 2013E 2014E 2015E Europe (mature) 2016E 2017E Source: BMI Market Outlook, 2013 European Conference 2013 - Berenberg © 2013 Holcim Ltd Holcim? ??s Strategy House... November 29th, 2013 Next steps • Decision of the European Commission by March / April, 20 14 • Transaction expected to be closed in Q2 20 14 European Conference 2013 - Berenberg © 2013 Holcim Ltd 13... ACL 40 .79% 76% 24% 76% 24% Holcim India 9.76% ACL 0.29% Holcim ACC ACL Holcim 0.29% 61.39% Holcim India 9.76% 50.01% Target Structure ACL 50.01% ACC 50.01% ACC • Holcim India value of INR 14, 584