Bellevue meets Management 2012 Thomas Aebischer – CFO Managing growth in a two speed economy January 13, 2012 © Holcim Ltd 2012 Agenda Drivers of demand growth Managing the investment portfolio People focus on the triple bottom line Innovation, cost leadership, pricing Summary & Conclusions © Holcim Ltd 2012 Bellevue meets Management January 2012 Strong fundamental global growth drivers Long term population growth (billion) 10 Mid-term GDP development 10% 8% 6% 4% 2% 0% -2% — -4% 1950 1975 2000 Mature regions - urban Emerging regions - urban 2025E 2007 2050E Mature regions - rural Emerging regions - rural 2008 2009 Mature Markets 2010 2011E Emerging Markets 2012E 2016E World • Emerging markets drive the global population growth • GDP growth heavily driven by emerging markets • Strong trend towards global popurbanization • Wealth is increasingly recorded in emerging markets Source: United Nations (World Urbanization Prospects & World Population Prospects - 2011) © Holcim Ltd 2012 Bellevue meets Management January 2012 Demographics positively impact economic structures and demand Stationary Developing Mature Ageing High fertility rate Falling fertility rate Negative fertility rate Shrinking active population High youth base Declining youth base Youth ~ retirees Youth < retirees Working age (15 – 64) / Total population China Brazil Russia Thailand Mexico Chile Argentina Indonesia Philippines 70% Switzerland Spain France Germany Canada Italy Japan USA India Ethiopia Nigeria Niger 50% Low demand Increasing demand Mass consumption Softening demand outlook Low savings Growing savings rate High savings rate Declining savings rate Lacking investments Increasing investments Peaking investments High level of people below 15 years Time High level of people above 64 years Source: United Nations (World Urbanization Prospects & World Population Prospects, 2011) © Holcim Ltd 2012 Refurbishment Bellevue meets Management January 2012 Solid construction growth outlook 2010 – 2020E 8% 7% 6% 5% 4% 3% 2% 1% 0% World Mature Markets Emerging Markets 6% 5% 2010 - 2020E 4% 3% 2% Up to 3% growth Between 3% and 6% growth Above 6% growth 1% 0% Residential n.a Infrastructure 2010 - 2020E Source: Global Construction 2020 (Oxford Economics, 2011) © Holcim Ltd 2012 Non-residential Bellevue meets Management January 2012 By 2020 the global construction market is expected to grow by 67% Largest construction markets in 2010 Others (Mature & Emerging Markets) 23% Largest construction markets in 2020E Others (Mature & Emerging Markets) 24% China 15% China 21% US 14% Mexico 2% + 67% S Korea 2% Brazil 2% Indonesia 3% Australia 3% Mexico 2% Russia 2% US 15% Brazil 2% Japan 9% UK 2% UK 3% India 5% Italy 3% Spain 4% France 4% Canada 4% Germany 4% Italy 2% Spain 2% India 7% Australia 3% Germany 3% Mature markets France 3% Canada 3% Japan 6% Indonesia 3% Emerging markets • In 2010 the global construction market was valued at around USD 7.2 trillion • Mature markets outweigh emerging markets • In 2020 the global construction market is expected to reach some USD 12 trillion • Emerging markets outweigh mature markets Source: Global Construciton 2020 (Oxford Economics, 2011) © Holcim Ltd 2012 Bellevue meets Management January 2012 Our portfolio offers above average growth GDP Growth [%] (excl China) 2010 World Mature Market 2011E 2.6% 3.7% 3.2% 1.9% 4.0% 4.8% 2016E 2.6% 1.6% 3.1% Emerging Market 2012E 2.7% 3.8% 3.8% GDP Growth weighted with Holcim op EBITDA 2010 per country [%] (excl China) Holcim World Mature Market Emerging Market 4.2% 5.3% 1.8% 2.5% 6.4% 4.3% 2.1% 5.1% 4.7% 2.6% 5.2% 5.5% Source: Nominal GDP per Capita (at PPP) in USD: International Monetary Fund, World Economic Outlook Database, September 2011; Population: IMF © Holcim Ltd 2012 Bellevue meets Management January 2012 Agenda Drivers of demand growth Managing the investment portfolio People focus on the triple bottom line Innovation, cost leadership, pricing Summary & Conclusions © Holcim Ltd 2012 Bellevue meets Management January 2012 Capex allocation aligned to demand Capital investments (CHF m) Production capacity cement (mt) 220 5'000 200 180 4'000 160 140 3'000 120 100 2'000 80 60 1'000 40 20 0 2001 2002 2003 2004 2005 Maintenance (CHF 10.7 bn) 2006 2007 2008 2009 2010 Expansion (CHF 13.5 bn) 2001 Europe 2002 2003 2004 North America 2005 2006 Latin America 2007 2008 2009 Africa Middle East 2010 Asia Pacific • Between 2001 - 2010 maintenance capex reached CHF 10.7 bn • Between 2001 - 2010 cement capacity increased by ~ 75% • Between 2001 - 2010 expansion capex reached CHF 13.5 bn • Capacity expansion was strongly driven in emerging markets © Holcim Ltd 2012 Bellevue meets Management January 2012 Well positioned cement market portfolio Cumulated population Growth 2010 - 2015E 12% Mature markets Emerging markets Size of circles represents influenced capacity 2010 Asia Pacific excl India, Oceania, China Africa Oceania 46.3 Mt India Middle East 4.9 Mt 54.0 Mt 10% 8% Demand growth 27.2 Mt 6% North America 23.2 Mt 4% Latin America 36.6 Mt Western Europe 27.0 Mt 2% 0% China 54.7 Mt Eastern Europe 23.9 Mt -2% -4% 2% 3% 4% 5% 6% 7% 8% 9% GDP per capita (at PPP) CAGR 2010 - 2015E Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, November 2011 © Holcim Ltd 2012 Bellevue meets Management 10% 11% 12% 10 January 2012 Positioning the aggregates market portfolio to capture opportunities along the value chain Cumulated population Growth 2010 - 2015E 12% Mature markets Emerging markets Size of circles represents consolidated sales volumes 2010 10% Asia excl Oceania Oceania 3.2 Mt 23.2 Mt 8% Demand growth Africa Middle East 2.5 Mt 6% North America 39.2 Mt 4% 2% Latin America 12.2 Mt Western Europe 69.3 Mt Eastern Europe 8.2 Mt 0% -2% -4% 2% 3% 4% 5% 6% 7% 8% 9% GDP per capita (at PPP) CAGR 2010 - 2015E Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, November 2011 © Holcim Ltd 2012 Bellevue meets Management 10% 11% 12% 11 January 2012 Agenda Drivers of demand growth Managing the investment portfolio People focus on the triple bottom line Innovation, cost leadership, pricing Summary & Conclusions 12 © Holcim Ltd 2012 Bellevue meets Management January 2012 Energy management starts with our sustainability culture and ends with the values of our people Each employee is an ambassador of our sustainability culture Specific Gross and net direct CO2 emissions kg CO2 / tonne cement Improvement % / Clinker factor Average % of clinker cement 13 © Holcim Ltd 2012 Bellevue meets Management January 2012 Handling energy cost inflation World Primary Energy Demand Holcim Energy Breakdown (2010) Electriciy 37% Thermal Fuel 63% Fossil Fuel Price Development Holcim Thermal Fuel Mix (2010) Fossil fuel prices based on New Policies Scenario (not including CO2 costs) 13 120 12 110 11 100 10 90 80 70 Crude oil - USD / barrel Steam coal - USD / tonne 130 Alt fossil fuels 10% 14 60 Gas - USD / Mbtu 140 Biomass 2% Natural gas 5% Shale/ lignite 5% Heavy fuel 1% Petcoke 20% Coal 57% 2009 2015 2020 2025 2030 2035 Source: International Energy Agency (IEA) Scenario, World Energy Outlook 2011; Datastream © Holcim Ltd 2012 Bellevue meets Management 14 January 2012 OPERATIONS Proactive energy management to mitigate cost inflation Reduction of Energy Intensity • Using the most efficient technology for new kiln capacity • Efficiency improvement projects (e.g., waste heat recovery, multi-stage combustion chamber) Increase replacement of traditional by alternative fuels Proactive • energy management • SOURCING Optimization • of Fuel Mix • Focus on delivered cost per unit and fuel diversification Excellence in buying energy • Take best practices and replicate / transfer knowledge • Leverage global trading group scale and cost certainty Vertical • integration into sources • Invest in fuel flexibility and switching Invest in physical infrastructure and delivery systems Vertical integration with coal and captive power Focus on renewable primary energies (e.g., wind) 15 © Holcim Ltd 2012 Bellevue meets Management January 2012 Cost reduction through innovation • Better cost management will continue to focus on networking our assets and renewable energy initiatives • The Waste Heat Recovery (WHR) system at Untervaz represents 15% of the plant’s electricity consumption – 10.5 GWh/a • The WHR installation produces electrical power without additional CO2 emissions – a renewable power generation system New 16 © Holcim Ltd 2012 Bellevue meets Management January 2012 Agenda Drivers of demand growth Managing the investment portfolio People focus on the triple bottom line Innovation, cost leadership, pricing Summary & Conclusions 17 © Holcim Ltd 2012 Bellevue meets Management January 2012 Paving the way into the future with innovation • Development of eco-efficient cement products: Composite cement 1990 30% Composite cement 23% Ordinary Portland cement 2010 Eco-efficiency 77% Composite cement 70% Ordinary Portland cement • Increasing project complexity and need for sustainable solutions offers new opportunities to leverage service and tailor-made solutions - London 2012 Olympic Village Affordable housing in Indonesia NEAT Alpentransit project Low cost housing system Standardized affordable building solution – Holcim Indonesia 18 © Holcim Ltd 2012 Bellevue meets Management January 2012 Managing fixed costs is in the DNA of our people Cement capacity (mt) • Ongoing projects will continue to reduce fixed costs and increase operating leverage • Projects to leverage shared services and optimize networks are central to continuous cost management 19 © Holcim Ltd 2012 Bellevue meets Management January 2012 Focusing on pricing while keeping costs low Positive margin inflection point Margin expansion 10 year period from 2001 to 2010 • Pricing momentum will continue while the cost curve will bend – a positive inflection point • Continued cost management and operating leverage will lead to margin expansion and cash flow generation Percentages calculated as year over year change in average selling price and cost based in CHF © Holcim Ltd 2012 Bellevue meets Management 20 January 2012 Agenda Drivers of demand growth Managing the investment portfolio People focus on the triple bottom line Innovation, cost leadership, pricing Summary & Conclusions 21 © Holcim Ltd 2012 Bellevue meets Management January 2012 Generating cash flow at different speeds while continuously seeking efficiency gains (CAGR: 5.3%) 7'000 12% (CAGR: 0.5%) 6'000 10% 5'000 CHF m op EBITDA 8% 4'000 6% 3'000 4% 2'000 2% 1'000 0% 2001 2002 2003 Mature markets 2004 2005 2006 2007 Emerging markets 2008 2009 2010 NWC/Sales (rhs) • The operating EBITDA increased by 3.4% (CAGR) between 2001 and 2010 on a group level with the emerging markets strongly driving this growth • Efficiency gains were continuously focused on - a reduction of net working capital / sales reaching roughly 4% in 2010 (2001: just below 12%) and a fixed cost reduction in 2009 and 2010 of nearly CHF 1.2 billion 22 © Holcim Ltd 2012 Bellevue meets Management January 2012 Increasing cash flow generation by the use of key levers across the market portfolio Volume Mature markets Emerging markets Pricing Variable costs Fixed costs Capex Working capital + + + -/+ -/+ + ++ + / ++ + / ++ + / ++ + / ++ + / ++ • Mature markets: Cash flow generation coming from a mix of volume growth, improving pricing, cost savings, ongoing focus on efficiency improvements and an increase in capacity utilization rates • Emerging markets: Strong volume growth from new capacities combined with good pricing will offset cost challenges and together with a clear focus on efficiency increases result in a strong level of cash flow generation 23 © Holcim Ltd 2012 Bellevue meets Management January 2012 Contact information and event calendar Contact information Bernhard A Fuchs Binit B Sanghvi John M Feigl Investor Relations Phone +41 58 858 87 87 Fax +41 58 858 80 09 investor.relations@holcim.com www.holcim.com/investors Event calendar February 29, 2012 Press and analyst conference for the annual results for 2011 April 17, 2012 General meeting of shareholders May 9, 2012 First quarter results for 2012 August 15, 2012 Half year results for 2012 November 7, 2012 Press and analyst conference for the third quarter results for 2012 Mailing list: www.holcim.com/subscribe 24 © Holcim Ltd 2012 Bellevue meets Management January 2012 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 25 © Holcim Ltd 2012 Bellevue meets Management January 2012 ... demand Increasing demand Mass consumption Softening demand outlook Low savings Growing savings rate High savings rate Declining savings rate Lacking investments Increasing investments Peaking investments... Working age (15 – 64) / Total population China Brazil Russia Thailand Mexico Chile Argentina Indonesia Philippines 70% Switzerland Spain France Germany Canada Italy Japan USA India Ethiopia Nigeria... 3% Spain 4% France 4% Canada 4% Germany 4% Italy 2% Spain 2% India 7% Australia 3% Germany 3% Mature markets France 3% Canada 3% Japan 6% Indonesia 3% Emerging markets • In 2010 the global construction