Strength. Performance. Passion. © 2012 Holcim Ltd Driving towards higher Financial Performance Thomas Aebischer, CFO Holcim Group Investor and Analyst Day 2012 © 2012 Holcim Ltd © 2012 Holcim Ltd Agenda 2 Investor and Analyst Day 2012 Financial Picture 3 Holcim Leadership Journey – Target Tracking 9 Changes in the Finance Organization 14 Driving toward better Processes 18 Growth and Performance Management 27 Finance Structure of Holcim 31 Conclusion 38 © 2012 Holcim Ltd 3 Investor and Analyst Day 2012 • St. Louis, September 15, 2010 What happened since our last investor day in 2010? 6 Aug. 2011 19 May 2012 14 Jul. 2012 9 Oct. 2010 Source: Economist.com © 2012 Holcim Ltd / Mature Emerging markets continue to grow, but a global recovery remains elusive… today 9% Net Sales, operating EBITDA (million CHF) GDP growth -3% 0% 3% 6% 12% - 3'000 6'000 9'000 12'000 15'000 18'000 21'000 24'000 27'000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Investor Day 2010 Net Sales op. EBITDA / Emerging GDP growth (IMF WEO 2010/2012) 1 : 4 Investor and Analyst Day 2012 1 IMF World Economic Outlook Databases as of April 2010 (thin line) resp. as of April 2012 (bold line) 4 © 2012 Holcim Ltd 0 20 40 60 80 100 120 01.01.2007 01.01.2008 01.01.2009 01.01.2010 01.01.2011 01.01.2012 …and reported figures have been significantly impacted by translation into the Swiss Franc Currencies per CHF, indexed to 1 per 1 January 2007 104 AUD 79 USD 64 GBP 75 EUR 63 INR 2007 2008 2009 2010 2011 2012 Source: Datastream, latest value as of 24 August, 2012 5 Investor and Analyst Day 2012 © 2012 Holcim Ltd But a clearer picture shows that Holcim’s Net Sales have grown above their 2007 level (in USD),… 22'543 23'294 19'387 20'820 23'306 5'775 4'938 4'248 4'339 4'447 25.6% 21.2% 21.9% 20.8% 19.1% 2007 2008 2009 2010 2011 Net Sales Operating EBITDA margin Operating EBITDA Net Sales, Operating EBITDA and Operating EBITDA margin: (in million USD/%) … which however could not compensate for higher costs, resulting in USD 1.3 bn lower operating EBITDA 6 Investor and Analyst Day 2012 Source: Holcim Annual Report © 2012 Holcim Ltd The trough seems over: Since Q3 2011, there is a positive trend on like-for-like operating EBITDA variance 7 Investor and Analyst Day 2012 -250 -200 -150 -100 -50 0 50 100 150 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Like-for-like quarterly operating EBITDA variance 1 : (in million CHF) 1 Adjusted for CO 2 © 2012 Holcim Ltd Agenda 8 Investor and Analyst Day 2012 Financial Picture 3 Holcim Leadership Journey – Target Tracking 9 Changes in the Finance Organization 14 Driving toward better Processes 18 Growth and Performance Management 27 Finance Structure of Holcim 31 Conclusion 38 © 2012 Holcim Ltd All figures in million CHF 2012 2013 2014 Customer Excellence (operating profit impact) 50-100 150-200 500 -Customer focus -Value management -Pricing policies -Marketing and sales forces skills and motivation Cost Leadership (operating profit impact) 100-200 400-500 > 1,000 -Energy and AFR > 300 -Logistics > 250 -Procurement > 250 -Fixed cost > 200 Total increase in operating profit 150-300 550-700 > 1,500 Cash cost to achieve the savings (one-off) < 80 < 120 Additional CAPEX net 1) 0-40 100-180 100-180 1) 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 Holcim Leadership Journey: Increase operating profit by CHF 1.5 billion until 2014 9 Investor and Analyst Day 2012 © 2012 Holcim Ltd • Base line: Operating Profit of 2011 adjusted 1 (CHF 2’308 million) • Each work stream has its own set of performance measurement definition, considering volume, price and cost according to the specific drivers of that work stream: Holcim Leadership Journey – Target Tracking Investor and Analyst Day 2012 10 1 Excluding one-off charges of CHF 375 million Energy Fixed Cost Logistics Procurement Alternative Fuels & Raw Materials Customer Excellence = Work stream specific definition of performance measurement, reflecting only that portion of volume, price and cost effect that is attributable to the work stream itself => overall performance of Holcim Leadership Journey translating into CHF 1.5 billion of additional operating profit in 2014 [...]... 2012 Holcim Ltd 12 Agenda Financial Picture Holcim Leadership Journey – Target Tracking Changes in the Finance Organization Driving toward better Processes Growth and Performance Management Finance Structure of Holcim Conclusion Investor and Analyst Day 2012 3 9 14 18 27 31 38 © 2012 Holcim Ltd 13 New organization in Finance Bernard Fontana CEO Holcim Thomas Aebischer CFO Holcim Urs Bleisch PMO Holcim. .. Improved Planning Optimal Contract Management © 2012 Holcim Ltd 25 Agenda Financial Picture Holcim Leadership Journey – Target Tracking Changes in the Finance Organization Driving toward better Processes Growth and Performance Management Finance Structure of Holcim Conclusion Investor and Analyst Day 2012 3 9 14 18 27 31 38 © 2012 Holcim Ltd 26 Holcim investment criteria ensures growth is value generating... Leveraging existing ERP functionalities to increase efficiency © 2012 Holcim Ltd 16 Agenda Financial Picture Holcim Leadership Journey – Target Tracking Changes in the Finance Organization Driving toward better Processes Growth and Performance Management Finance Structure of Holcim Conclusion Investor and Analyst Day 2012 3 9 14 18 27 31 38 © 2012 Holcim Ltd 17 Our Shared Service Center in North America is a... Compensation Performance Compensation Investor and Analyst Day 2012 Target Setting Holcim Performance Management Value Reporting Holcim Value Added (HVA) Operating EBITDA Performance Measurement Standard Accounting & Reporting Principles © 2012 Holcim Ltd 28 Management compensation is under review, to further strengthen the Holcim Leadership Journey Scope Compensation scheme includes 679 employees (Executive... culture embedment Financials • Value creation • Financing in line with Holcim policy • Investment scorecard • Accountability Success factor – rigorous investment analysis and discipline Investor and Analyst Day 2012 © 2012 Holcim Ltd 27 Holcim' s Performance Management cycle is designed to reward value creation Strategy review Planning process Hurdle Rate Concept Management Compensation Performance Compensation... depreciation © 2012 Holcim Ltd 11 Holcim Leadership Journey will bring Holcim back to at least ROICBT of 11.8%1 by 2014 ROIC before tax2: 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 14.6% 11.8% 10.2% 9.1% 8.3% 6.5% 2007 2008 2009 2010 2011 2012 2013 2014 CHF 1.5 billion higher Operating Profit translates into ROIC before tax of 11.8% respectively a ROIC after tax of 8% 1 2 Corresponding to Holcim s WACCBT... Group, especially for new technologies Support Provide IT solutions and processes to facilitate Holcim Leadership Journey Investor and Analyst Day 2012 © 2012 Holcim Ltd 15 Procurement Global procurement Increase spend at global level to benefit from higher purchasing power of Holcim - categories to be sourced at Group level to be increased from 6 with a total spend of CHF 600 million to 36 with a total... the performance- related compensation paid to the entitled employees in 2011 was just below 30% of their total salary Local schemes Further local bonus schemes are in place, depending on local employment markets Shareholder value Performance- related compensation is one element to support management focus on shareholder value Investor and Analyst Day 2012 © 2012 Holcim Ltd 29 Agenda Financial Picture Holcim. .. Holcim Ltd 29 Agenda Financial Picture Holcim Leadership Journey – Target Tracking Changes in the Finance Organization Driving toward better Processes Growth and Performance Management Finance Structure of Holcim Conclusion Investor and Analyst Day 2012 3 9 14 18 27 31 38 © 2012 Holcim Ltd 30 Holcim financing policy sets the framework Objective • Sustainable value creation for all stakeholders • ROIC > WACC...In each work stream of Holcim Leadership Journey, results are tracked per initiative Variation in operating profit compared to 2011 (illustrative example): Change not related to Holcim Leadership Journey Holcim Leadership Journey1 contribution Price Volume Cost2 CHF 2’308 million (base line of operating profit) The overall result of the Holcim Leadership Journey will be a bottom-up . Strength. Performance. Passion. © 2012 Holcim Ltd Driving towards higher Financial Performance Thomas Aebischer, CFO Holcim Group Investor and Analyst Day 2012 © 2012 Holcim Ltd. & Safety Urs Bleisch PMO Holcim Leadership Journey Thomas Aebischer CFO Holcim Bernard Fontana CEO Holcim Status: September 1, 2012 14 © 2012 Holcim Ltd Information Technology. Growth and Performance Management 27 Finance Structure of Holcim 31 Conclusion 38 © 2012 Holcim Ltd 2005 2006 2007 2008 2009 2010 2011 2012 Implemented for Holcim US and Holcim Canada: