annual report 2010 holcim ltd biodiversity is life 2010 was the international year of biodiversity

Holcim is a worldwide leading producer of cement and aggregates. Further activities include the provision of ready-mix concrete and asphalt as well as other services. The Group works in around 70 countries and employs more than 80,000 people. Biodiversity is life 2010 was the International Year of Biodiversity Annual Report 2010 Holcim Ltd Strength. Performance. Passion. Annual Report 2010 Holcim Ltd GB_10_Umschlag_d+e:Layout 1 12.4.2011 8:22 Uhr Seite 2 Annual Report 2010 Holcim Ltd Strength. Performance. Passion. Holcim is one of the world’s leading producers of cement and aggregates. Further business activities are ready-mix concrete, concrete products, asphalt and a range of related services. The Group operates in around 70 countries and employs more than 80,000 people. For many years, Holcim has been doing pioneering work in the field of sustainable development, including the cultivation of fauna and flora at production sites. Holcim today is more globally spread than any other building materials group and, with around 2,500 loca- tions worldwide, very well positioned. Its consequent geographic diversification strengthens the Group during difficult economic times. The local companies of the Group, founded 1912 in Switzerland, focus on optimum customer service, including innovative product-specific solutions. As a Group, Holcim applies global standards not only in production and distribution, but also in environmen- tal and socia l responsibility matters. The United Nations declared 2010 the International Year of Biodiversity. Holcim is also reporting on activi- ties in this area in the current Annual R eport. The Group promotes biodiversity at production sites and forged a valuable partnership with the International Union for Conservation of Nature (IUCN) several years ago. Holcim had been confirmed as a member of the Dow Jones Sustainability World Index for the eighth consecutive year. It is r ecognized as one of the most sustainable companies in the building materials industry. Holcim is also listed in the FTSE4Good sustainability index. Financial Inform ation 1 Net income plus depreciation, amortization and impairment. 2 Net fi nancial debt divided by total shareholders’ equity. 3 EPS calculation based on net income attributable to shareholders of Holcim Ltd weighted by the average number of shares. 4 Proposed by the Board of Directors for a payout from capital contribution reserves. 5 Statement of income fi gures translated at average rate; statement of financial position figures at year-end rate. Key figures Group Holcim 2010 2009 ±% ±% like-for- like Annual cement production capacity million t 211.5 202.9 +4.2 +4.2 Sales of cement million t 136.7 131.9 +3.6 +2.4 Sales of mineral components million t 4.1 3.5 +17.1 +5.7 Sales of aggregates million t 157.9 143.4 +10.1 –1.6 Sales of ready-mix concrete million m 3 45.9 41.8 +9.8 +0.2 Sales of asphalt million t 10.6 11.0 –3.6 –3.6 Net sales million CHF 21,653 21,132 +2.5 –2.1 Operating EBITDA million CHF 4,513 4,630 –2.5 –6.1 Operating EBITDA margin % 20.8 21.9 EBITDA million CHF 4,988 5,229 –4.6 Operating profit million CHF 2,619 2,781 –5.8 –10.1 Operating profit margin % 12.1 13.2 Net income million CHF 1,621 1,958 –17.2 –18.2 Net income margin % 7.5 9.3 Net income – shareholders of Holcim Ltd million CHF 1,182 1,471 –19.6 –21.1 Cash flow from operating activities million CHF 3,659 3,888 –5.9 –8.3 Cash flow margin % 16.9 18.4 Net financial debt million CHF 11,363 13,833 –17.9 –9.9 Funds from operations 1 /net financial debt % 31.3 27.6 Total shareholders’ equity million CHF 21,121 22,044 –4.2 Gearing 2 % 53.8 62.8 Personnel 31.12. 80,310 81,498 –1.5 –1.5 Earnings per share 3 CHF 3.69 4.93 –25.2 Fully diluted earnings per share 3 CHF 3.69 4.93 –25.2 Payout million CHF 480 4 480 0.0 Payout/dividend per share CHF 1.50 4 1.50 0.0 Principal key figures in USD (illustrative) 5 Net sales million USD 20,820 19,387 +7.4 Operating EBITDA million USD 4,339 4,248 +2.1 Operating profit million USD 2,518 2,551 –1.3 Net income – shareholders of Holcim Ltd million USD 1,137 1,350 –15.8 Cash flow from operating activities million USD 3,518 3,567 –1.4 Net financial debt million USD 12,088 13,430 –10.0 Total shareholders’ equity million USD 22,469 21,402 +5.0 Earnings per share 3 USD 3.55 4.52 –21.5 Principal key figures in EUR (illustrative) 5 Net sales million EUR 15,691 13,995 +12.1 Operating EBITDA million EUR 3,270 3,066 +6.7 Operating profit million EUR 1,898 1,842 +3.0 Net income – shareholders of Holcim Ltd million EUR 857 974 –12.0 Cash flow from operating activities million EUR 2,651 2,575 +3.0 Net financial debt million EUR 9,090 9,284 –2.1 Total shareholders’ equity million EUR 16,897 14,795 +14.2 Earnings per share 3 EUR 2.67 3.26 –18.1 Annual Review 2010 6 Shareholders’ Letter 10 Value-Driven Corporate Management 19 Key Success Factors 19 Organization and Management 27 Innovation 32 Capital Market Information 36 Sustainable Development 40 Environmental Commitment and Social Responsibility 40 Human Resources 45 Business Review 52 Group Region Europe 52 Group Region North America 60 Group Region Latin America 68 Group Region Africa Middle East 76 Group Region Asia Pacific 82 Corporate Governance 87 Remuneration Report 106 Financial Information 118 MD & A 118 Consolidated Financial Statements 129 Key Management Compensation 189 Company Data 201 Holding Company Results 208 5-Year-Review 217 Contents Holcim Ltd Corporate Communications Roland Walker Phone +41 58 858 87 10 Fax +41 58 858 87 19 communications@holcim.com Holcim Ltd Investor Relations Bernhard A. Fuchs Phone +41 58 858 87 87 Fax +41 58 858 80 09 investor.relations@holcim.com The German version is binding. Puesto Viejo, Argentina: The rehabilitated quarry provides shelter for rare flora (see pages 64 to 67). Milton, Canada: The rehabilitated quarry is now a showcase complex of wetlands, lakes, meadows and forests (see pages 56 to 59). Consolidated key figures for North America Net sales in million CHF 3,240 Net sales in % of Group turnover 14.6 Operating EBITDA in million CHF 460 Cement and grinding plants 19 Aggregates plants 97 Ready-mix concrete and asphalt plants 234 Personnel 6,668 Consolidated key figures for Latin America Net sales in million CHF 3,442 Net sales in % of Group turnover 15.5 Operating EBITDA in million CHF 999 Cement and grinding plants 27 Aggregates plants 25 Ready-mix concrete plants 233 Personnel 12,710 Holcim sold more cement, aggregates and ready-mix concrete. 2 3 2 3 El Puente, Spain: The gravel pit, inhabited by thousands of birds, was designated a zone of special protection for birds by the administration of Castile-La Mancha (see pages 48 to 51). El Gara, Morocco: This reforestation of 200 hectares will contribute to combat desertification and to protect biodiversity (see pages 72 to 75). Lugait, Philippines: Children enjoy nature at the butterfly garden (see pages 78 to 81). 76 Consolidated key figures for Asia Pacific Net sales in million CHF 7,958 Net sales in % of Group turnover 35.7 Operating EBITDA in million CHF 1,820 Cement and grinding plants 58 Aggregates plants 86 Ready-mix concrete plants 403 Personnel 38,172 Consolidated key figures for Africa Middle East Net sales in million CHF 1,098 Net sales in % of Group turnover 4.9 Operating EBITDA in million CHF 359 Cement and grinding plants 13 Aggregates plants 5 Ready-mix concrete plants 25 Personnel 2,213 Consolidated key figures for Europe Net sales in million CHF 6,535 Net sales in % of Group turnover 29.3 Operating EBITDA in million CHF 1,045 Cement and grinding plants 40 Aggregates plants 259 Ready-mix concrete and asphalt plants 636 Personnel 19,690 Annual Review 2010 1 4 5 1 4 5 Profile Cement is manufactured through a large-scale, complex and capital-intensive process. At the core of the pro- duction process is a rotary kiln, in which limestone and clay are heated to approximately 1,450 degrees Celsius. The semifinished product, called clinker, is created by sintering. In the cement mill, gypsum is added to the clinker and the mixture is ground to a fine powder – traditional Portland cement. Other high-grade materi- als such as granulated blast furnac e slag, fly ash, pozzolan and limestone are added in order to modify the properties of the cement. Holcim offers customers a very wide range of cements and also develops cus- tomized solutions for special applications. Developments In 2010, the volume of cement sold grew by 3.6 percent to 136.7 million tonnes. In addition, 4.1 million tonnes of other mineral components were sold, representing a rise of 17.1 percent. The increase in volume stems from additional sales in Group regions Asia Pacific, North America and Africa Middle East. In terms of quantity, Latin America just maintained last year’s level, and in Europe, deliveries declined as a result of the economic situation. The positive overall tre nd also reflects capac- ity expansions in important markets and the full con- solidation of Cement Australia. Profile Aggregates include crushed stone, gravel and sand. The production process centers around quarrying, preparing and sorting the raw material as well as quality testing. Aggregates are mainly used in the manufacturing of ready-mix concrete, concrete products and asphalt as well as for road building and railway track beds. The recycling of aggregates from concrete material is gaining importance at Holcim. Developments The aggregates segment experienced a sharp rise in sales, with an increase of 10.1 percent to 157.9 million tonnes. Holcim posted gains in Latin America, but primarily in Asia Pacific, where it benefited from the full consolidation of Holcim Australia.The Group companies in New Zealand,Thailand and the Philippines also lifted sales volumes. Europe and Africa Middle East witnessed an overall decline in the aggregates business. However, some Group companies delivered more crushed stone, gravel and sand, including Aggregate Industries UK and the companies in Belgium, Germany, Switzerland, Hungary and the Czech Republic. In North America, the aggregates business declined. Profile Globally, concrete is the second most consumed com- modity by volume after water. One cubic meter consists of approximately 300 kilograms of cement, 150 liters of water and 2 tonnes of aggregates. Concrete is a very envi- ronmentally friendly, energy-efficient building material. Asphalt is a bituminous construction material used pri- marily for road paving. It consists mainly of aggregates of differing grain size. Holcim’s service offering also includes constructi on services and international trading. Following the acquisition in Australia, this segment has gained in significance. Developments Sales of ready-mix concrete rose by 9.8 percent to 45.9 million cubic meters. The strongest growth was seen in Asia Pacific driven by the full consolidation of Holcim Australia. Delivery volumes also increased in North and Latin America, with Canada, Mexico and Chile leading the way. Group region Africa Middle East just maintained sales volumes, while Europe saw a 5.9 percent decline. The volume of asphalt sold was down by 3.6 percent to 10.6 million tonnes. Cement Aggregates Other construction materials and services [...]... retired at the end of 2010 Beat Hess was newly elected to the Board of Directors An attorney and doctor of law, until the end of 2010, he With effect on January 1, 2011, Urs Fankhauser, Regional was Group Legal Director and member of the Executive Technical Director Eastern Europe, was appointed Committee of Royal Dutch Shell Group, The Hague Area Manager and member of the senior management of Holcim Ltd. .. significant proportion of the In addition to the Group companies, the Executive Com- variable compensation is paid in the form of Holcim mittee and the Board of Directors are also involved shares, which are locked in for a period of three to five in the assessment process The Group’s risk profile is years This system strengthens the shared focus on a assessed both top-down and bottom-up This not only sustainable... inextricably linked to the diversity of suppliers of building materials, Holcim is aware of this ecosystems, as well as genetic diversity within a species and acts accordingly Because the protection of bio- In its entirety, this natural wealth is part of the basis diversity around the globe is an important part of sus- for life But its rich variety is under threat Over 52,000 tainable development, Holcim seeks... For the 2010 financial year, the Board is proposing tainability theme These are conducted every three to the annual general meeting a payout from the years and economic fronts in the construction sector and capital contribution reserves corresponding to last year s amount of CHF 1.50 per registered share The third international Holcim Forum, entitled “Reinventing Construction”, was held in April 2010. .. Board of Directors will be proposing to the annual general meeting on May 5, 2011 a payout from the capital contribution reserves corresponding to last year s amount of CHF 1.50 per registered share This means that the payout ratio is above the target ratio of one-third of Group net income and reflects the confidence of the Board of Directors and the Executive Committee in the future development of business... all that the variety of species and habitats around the world is diminishing fast – and that this has implications for the whole of humanity Holcim has for many years demonstrated its global commitment to biodiversity and a responsible approach to the use of natural resources Biodiversity is about more than just the variety of cement and aggregates As one of the world’s leading species: It is also inextricably... the end of the last financial year the a newly appointed Executive Committee member Group had 81,498 employees, by the end of the year Holcim Group Support Ltd s objective is to optimally under review the headcount was 80,310 As expected, process the available global pool of knowledge and staff numbers declined significantly in the crisis-hit Group-wide practices and make it accessible to the Group... form part of this service Biodiversity as part of sustainable development The Group’s strategy includes promoting sustainable development Environmental responsibility also includes preserving biodiversity To mark the UN’s International Year of Biodiversity, this Annual Report pays special attention to this topic Protecting biodiversity is of special significance at around 600 locations where the Group... technologies of this type which cement distributors The company is therefore more can be used worldwide than just a supplier of cement: as a solution provider, it is constantly winning the confidence of new Knowledge management thanks to iShare customers and in doing so is helping improve the Improving dissemination and leveraging maximum quality of life in rural areas use of in-house knowledge is of strategic... light of the uncertain economic outlook, Holcim continued to adhere to its tight cost management in 2010 with the aim of safeguarding the substantial reductions in fixed costs achieved the previous year despite the commissioning of new production capacity The Group companies indeed succeeded to reduce their fixed costs by a further CHF 312 million This had a positive impact on the statement of income . than 80,000 people. Biodiversity is life 2010 was the International Year of Biodiversity Annual Report 2010 Holcim Ltd Strength. Performance. Passion. Annual Report 2010 Holcim Ltd GB_10_Umschlag_d+e:Layout. mark the UN’s International Year of Biodiversity, this Annual Report pays special atten- ti on to this topic. Protecting biodiversity is of special significance at around 600 locations where the. safeguard biodiversity. Holcim is now in the process of implementing these recommendations. Beautiful Peacock Butterfly. The UN General Assembly declared 2010 as the International Year of Biodiversity .