Bellevue meets Management 2011 Markus Akermann – CEO Holcim – Ready to shift gears January 13 - 14, 2011 © Holcim Ltd 2011 Agenda Strategy – consistent execution over the cycle Drivers of demand offer huge potential Looking ahead – sustainability and differentiation Ready to shift gears – cash generation capacity Conclusions © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Founded 1912, Holcim expanded over time and is present today in the most attractive construction markets worldwide 1920 1930 1950 1960 1970 1980 1990 2000 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 The emerging markets continue to show positive macro indicators while the mature economies seek traction Annual GDP growth in percent 12 2009 10 2011 Emerging Total Mature Total -2 -4 -6 -8 • Stimulus measures quickly changed to austerity measures in mature markets • Strong growth continuing in Asia Pacific and parts of Latin America Holcim’s strategy remains consistent through the cycle Source: IMF World Economic Outlook Update October 2010 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Holcim’s cement market portfolio captures the demand in faster growing markets Cumulated population growth 2010 - 2014E 12% Mature markets Asia Pacific excl India, Australia, China 46.9 Mt 10% 8% Australia 4.5 Mt 6% 2% Size of circles represents influenced capacity 2009 Africa Middle East 27.2 Mt India 50.7 Mt China 51.0 Mt Western Europe 26.8 Mt 0% Demand growth Latin America 34.2 Mt North America 20.6 Mt 4% Emerging markets Eastern Europe 24.3 Mt -2% -4% 2% 3% 4% 5% 6% 7% 8% 9% GDP per capita (at PPP) CAGR 2010 - 2014E Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, October 2010 © Holcim Ltd 2011 Bellevue meets Management 2011 10% 11% January 2011 Holcim’s aggregates market portfolio captures the market opportunities along the value chain Cumulated population growth 2010 - 2014E 12% Mature markets Size of circles represents consolidated sales volumes 2009 10% Latin Asia 10.4 Mt1 America 11.8 Mt 8% 6% North America 40.2 Mt 4% 2% 0% Emerging markets Western Europe 70.0 Mt Demand growth Africa Middle East 2.6 Mt Eastern Europe 8.4 Mt -2% -4% 2% 3% 4% 5% 6% 7% 8% 9% GDP per capita (at PPP) CAGR 2010 - 2014E including months Australia Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, October 2010 © Holcim Ltd 2011 Bellevue meets Management 2011 10% 11% January 2011 Holcim strategy… Product Focus • Two basic resources Cement Aggregates • Value-adding products and services Ready-mix concrete Asphalt Concrete products Geographic Diversification Local Management Global Standards • Business – strongly anchored in local markets • Truly global • Balanced between • ~ 2500 locations regions mature / emerging markets Net sales1 Op EBITDA1 23% 30% 36% 38% 10% 14% 5% 15% Europe North America 8% 21% Latin America Africa Middle East Asia Pacific • Supported by global standards Policies & directives Exchange of know how & best practices / benchmarking …the effective execution is the base for success Reported as per 9M 2010 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Agenda Strategy – successful execution Drivers of demand offer huge long term potential Looking ahead – environmental sustainability Ready to shift gears – cash generation capacity Conclusions © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 “Popurbanization” = population growth + urbanization shifts the urban population from ~ 50% to ~ 70% in 2050 2010: ~ 50% urban 2050: ~ 70% urban Population bn Urban mature markets 2050 Rural emerging markets Source: United Nations (World Urbanization Prospects - 2010) © Holcim Ltd 2011 2045 Urban emerging markets Rural mature markets 2040 2035 2030 2025 2020 2015 2010 2005 2000 1995 1990 1985 1980 1975 1970 1965 1960 1955 1950 Bellevue meets Management 2011 January 2011 Our geographic portfolio captures the long term demand drivers Holcim sales split development 100% Population growth (2010 – 2050) • Additional billion people (+40%) in emerging markets 75% 25% 0% 1999 2000 2001 2002 2003 2004 Emerging Markets 2005 2006 2007 2008 2009 9M 2010 Mature Markets Holcim operating EBITDA split development 100% 75% 50% 25% 0% 1999 2000 2001 2002 2003 2004 Emerging Markets 2005 2006 2007 2008 2009 9M 2010 Key drivers for continued growth 50% • No growth between 2010 and 2050 on average in mature markets Urbanization (2010 – 2050) • Emerging markets: Urban population + 103% / Rural population -14% • Mature markets: Urban population + 18% / Rural population -43% Refurbishment (2010 – 2050) • Emerging markets: Infrastructure void and generally inadequate in many markets / modernization projects • Mature markets: Huge need for major modernization / replacement projects Mature Markets Source: United Nations (World Urbanization Prospects & World Population Prospects - 2010), Oxford Economics (2009) © Holcim Ltd 2011 Bellevue meets Management 2011 10 January 2011 Agenda Strategy – successful execution Drivers of demand offer huge long term potential Looking ahead – sustainability and differentiation Ready to shift gears – cash generation capacity Conclusions 12 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 St Genevieve cement plant Leadership on both sustainability and cost management • State of the art plant, optimized raw materials and energy efficient transportation CO2 emissions: -20% Thermal energy: 43% less NOX emissions: -66% Electrical energy: 30% less SOX emissions: -92% • Stellar ramp up with production costs achieving estimates at commissioning with excellent production cost US Cement plant– St Genevieve (4 mtpa) operational since August 2009 © Holcim Ltd 2011 Bellevue meets Management 2011 13 January 2011 London Olympics 2012 – “The Sustainable Games” Sustainable solution provider • AI UK won tender for up to 1.5 million tonnes AGG and 0.9 million m3 RMX • Tailored solutions provided to meet strict environmental customer requirements: 20-25% recycled content for AGG & RMX 50% sustainable transportation CO2 savings of ~40% compared to traditional supply • Key success factors for winning the tender: Commitment to the client’s goals Customized RMX batching plant on site Maximized use of rail and water logistics Dedicated an on-site member of staff 14 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Holcim Optimo – impressive ecological performance with less clinker, energy and CO2 than existing product • State of the art energy efficiency – power generation through burning of oil shale (our own raw material) • Innovative use of raw materials – fired oil shale replaces a proportion of clinker in the cement • CO2 savings of 10% to 19% compared to existing cement ã CO2 savings approx 42% 15 â Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Holcim Optimo – not only an innovation in its environmental footprint but also uniquely superior product properties • High durability and reduced permeability • Improved strength and a low risk of cracks • Resistance to efflorescence and short demould times • Good workability 16 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Sustainable Development is our license to operate and it also makes good business sense Holcim kg CO2/tonne cement)1 800 • Three main levers to reduce CO2 Exceeded our target of >20% reduction (21% in 2009) New target is a 25% reduction by 2015 750 700 > 25% 650 756 600 689 620 550 608 597 567 500 1990 2000 2007 2008 2009 2015 Modern plants Usage of alternative fuels Reduction of clinker content • Reducing CO2 emissions goes hand in hand with improving: Energy consumption Natural resources Emissions of NOX, SO2, dust… • Sustainable quarry management and responsible biodiversity management including a partnership with the IUCN • Leadership in Sustainable Development is externally recognized 17 International Union for the Conservation of Nature © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Agenda Strategy – successful execution Drivers of demand offer huge long term potential Looking ahead – environmental sustainability Ready to shift gears – cash generation capacity Conclusions 18 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Mature market recovery combined with emerging market growth offer substantial operating EBITDA potential Mature markets Emerging markets US Europe Emerging markets Infrastructure replacement Infrastructure replacement Growth capacity expansion ~ CHF 500 m ~ CHF bn ~ CHF 500 m Additional operating EBITDA potential of around CHF bn 19 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Operating EBITDA sensitivities to price, volume and cost Costbase -5% +8% Operating EBITDA +13% +23% +5% +5% Volume Pricing 20 Sensitivity based on FY 2009 results © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Working capital management, pruning of assets and expansion capex paved the way for profitable growth Asset divestments and Net working capital / sales 12% 7'500 8% 5'000 9'000 10% Capex development 6'000 4'000 4'500 4% 3'000 2% 1'500 CHF m 6% CHF m 3'000 2'000 0% 2001 2002 2003 2004 NWC / Sales (%) 2005 2006 2007 2008 2009 1'000 2001 Disposed assets (CHF 7.4 bn) 2002 2003 2004 2005 Maintenance (CHF 10.0 bn) 2006 2007 2008 2009 Expansion (CHF 12.3 bn) A stringent focus on efficiency improvements and asset divestments contributed to the financing of expansion capex and thus a considerable increase of capacities of 29 mt (2008 – 2013) 21 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Holcim maintains ample financial flexibility across the cycle 8x Net debt / Operating EBITDA 7x 6x 5x 4x 3x 2x 1x 0x 2005 2006 2007 High Low Average 2008 Holcim Focus: Drivers of operating EBITDA and cash flow Focus: Financial flexibility Note: Net debt / Operating EBITDA compares to main rated peers © Holcim Ltd 2011 2009 Bellevue meets Management 2011 Capital structure and liquidity 22 January 2011 Agenda Strategy – successful execution Drivers of demand offer huge long term potential Looking ahead – environmental sustainability Ready to shift gears – cash generation capacity Conclusions 23 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Conclusions • Consistent and effective execution is the base for our success • Growth areas are located in emerging markets where Holcim is very well positioned to benefit from demographic trends such as “Popurbanization” (population growth + urbanization shifts) boosting demand – in mature markets, infrastructure renewal will support demand • Sustainable development and product differentiation enhance our relationship with our communities and our customer • Efficiency, cost focus, the strong capital structure, together with the potential for additional operating EBITDA lend ample financial flexibility to grasp growth opportunities Holcim – ready to shift gears 24 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 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 2011 Bellevue meets Management 2011 January 2011 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 March 2, 2011 Press and analyst conference on annual results for 2010 May 4, 2011 Results for the first quarter 2011 May 5, 2011 General meeting of shareholders August 18, 2011 Half-year results for 2011 November 9, 2011 Press and analyst conference for the third quarter 2011 Mailing list: www.holcim.com/subscribe 26 © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 ... differentiation Ready to shift gears – cash generation capacity Conclusions © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 Founded 1912, Holcim expanded over time and is present today in... sustainability Ready to shift gears – cash generation capacity Conclusions © Holcim Ltd 2011 Bellevue meets Management 2011 January 2011 “Popurbanization” = population growth + urbanization shifts the... CAGR 2010 - 2014E Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, October 2010 © Holcim Ltd 2011 Bellevue meets Management 2011 10% 11% January 2011 Holcim? ??s aggregates