© Holcim Ltd 2012 Helvea – Swiss Equities Conference 2012 Thomas Aebischer – CFO Managing growth in a two speed economy January 12, 2012 2 © Holcim Ltd 2012 January 2012 Helvea – Swiss Equities Conference 1 Drivers of demand growth 2 Managing the investment portfolio 3 People focus on the triple bottom line 4 Innovation, cost leadership, pricing 5 Summary & Conclusions Agenda 3 © Holcim Ltd 2012 -4% -2% 0% 2% 4% 6% 8% 10% 2007 2008 2009 2010 2011E 2012E 2016E Mature Markets Emerging Markets World January 2012 Helvea – Swiss Equities Conference — 1 2 3 4 5 6 7 8 9 10 1950 1975 2000 2025E 2050E Mature regions - urban Mature regions - rural Emerging regions - urban Emerging regions - rural Strong fundamental global growth drivers • Emerging markets drive the global population growth • Strong trend towards global popurbanization • GDP growth heavily driven by emerging markets • Wealth is increasingly recorded in emerging markets Long term population growth (billion) Mid-term GDP development Source: United Nations (World Urbanization Prospects & World Population Prospects - 2011) 4 © Holcim Ltd 2012 January 2012 Helvea – Swiss Equities Conference Demographics positively impact economic structures and demand Low demand Low savings Lacking investments Increasing demand Growing savings rate Increasing investments Mass consumption High savings rate Peaking investments Softening demand outlook Declining savings rate Refurbishment Stationary High fertility rate High youth base Developing Falling fertility rate Declining youth base Mature Negative fertility rate Youth ~ retirees Ageing Shrinking active population Youth < retirees China USA Russia Niger Nigeria Ethiopia Japan Philippines France Italy Argentina Mexico India Spain Switzerland Brazil Canada Indonesia Chile Thailand Time Working age (15 – 64) / Total population 50% 70% High level of people below 15 years High level of people above 64 years Source: United Nations (World Urbanization Prospects & World Population Prospects, 2011) Germany 5 © Holcim Ltd 2012 January 2012 Helvea – Swiss Equities Conference Solid construction growth outlook 2010 – 2020E Up to 3% growth Between 3% and 6% growth Above 6% growth n.a. Source: Global Construction 2020 (Oxford Economics, 2011) 0% 1% 2% 3% 4% 5% 6% 7% 8% World Mature Markets Emerging Markets 2010 - 2020E 0% 1% 2% 3% 4% 5% 6% Residential Non-residential Infrastructure 2010 - 2020E 6 © Holcim Ltd 2012 January 2012 Helvea – Swiss Equities Conference By 2020 the global construction market is expected to grow by 67% Largest construction markets in 2010 Largest construction markets in 2020E • 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) Mature markets Emerging markets + 67% China 21% US 15% India 7% Japan 6% Canada 3% Australia 3% Spain 2% Italy 2% UK 2% Brazil 2% Russia 2% Mexico 2% Others (Mature & Emerging Markets) 24% Germany 3% Indonesia 3% France 3% China 15% US 14% Japan 9% India 5% France 4% Australia 3% Indonesia 3% Others (Mature & Emerging Markets) 23% Italy 3% UK 3% Mexico 2% Spain 4% Brazil 2% S. Korea 2% Canada 4% Germany 4% 7 © Holcim Ltd 2012 January 2012 Helvea – Swiss Equities Conference Our portfolio offers above average growth 3.7% 5.3% 2.5% 6.4% 4.8% 3.1% GDP Growth [%] (excl. China) World Mature Market Emerging Market 2010 Holcim World Mature Market Emerging Market GDP Growth weighted with Holcim op. EBITDA 2010 per country [%] (excl. China) 2.6% 1.6% 4.0% 4.2% 1.8% 5.1% 2.6% 1.9% 3.8% 4.3% 2.1% 5.2% 3.2% 2.7% 3.8% 4.7% 2.6% 5.5% 2011E 2012E 2016E Source: Nominal GDP per Capita (at PPP) in USD: International Monetary Fund, World Economic Outlook Database, September 2011; Population: IMF 8 © Holcim Ltd 2012 January 2012 Helvea – Swiss Equities Conference 1 Drivers of demand growth 2 Managing the investment portfolio 3 People focus on the triple bottom line 4 Innovation, cost leadership, pricing 5 Summary & Conclusions Agenda 9 © Holcim Ltd 2012 January 2012 Helvea – Swiss Equities Conference Capex allocation aligned to demand 0 1'000 2'000 3'000 4'000 5'000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Maintenance (CHF 10.7 bn) Expansion (CHF 13.5 bn) Capital investments (CHF m) Production capacity cement (mt) • Between 2001 - 2010 maintenance capex reached CHF 10.7 bn • Between 2001 - 2010 expansion capex reached CHF 13.5 bn • Between 2001 - 2010 cement capacity increased by ~ 75% • Capacity expansion was strongly driven in emerging markets 0 20 40 60 80 100 120 140 160 180 200 220 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Europe North America Latin America Africa Middle East Asia Pacific 10 © Holcim Ltd 2012 January 2012 Helvea – Swiss Equities Conference Well positioned cement market portfolio -4% -2% 0% 2% 4% 6% 8% 10% 12% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, November 2011 GDP per capita (at PPP) CAGR 2010 - 2015E Cumulated population Growth 2010 - 2015E Western Europe 27.0 Mt Eastern Europe 23.9 Mt Africa Middle East 27.2 Mt Mature markets Emerging markets Size of circles represents influenced capacity 2010 North America 23.2 Mt India 54.0 Mt China 54.7 Mt Asia Pacific excl. India, Oceania, China 46.3 Mt Latin America 36.6 Mt Demand growth Oceania 4.9 Mt [...]... 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 2 012 Helvea – Swiss Equities Conference 20 January 2 012 Agenda 1 Drivers of demand growth 2 Managing. .. results for 2 012 August 15, 2 012 Half year results for 2 012 November 7, 2 012 Press and analyst conference for the third quarter results for 2 012 Mailing list: www .holcim. com/subscribe 24 © Holcim Ltd 2 012 Helvea – Swiss Equities Conference January 2 012 Disclaimer Cautionary statement regarding forward-looking statements This presentation may contain certain forward-looking statements relating to the... complexity and need for sustainable solutions offers new opportunities to leverage service and tailor-made solutions - London 2 012 Olympic Village Affordable housing in Indonesia NEAT Alpentransit project Low cost housing system Standardized affordable building solution – Holcim Indonesia 18 © Holcim Ltd 2 012 Helvea – Swiss Equities Conference January 2 012 Managing fixed costs is in the DNA of our people... Conference January 2 012 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, 2 012 Press and analyst conference for the annual results for 2011 April 17, 2 012 General meeting of shareholders May 9, 2 012 First quarter... Helvea – Swiss Equities Conference January 2 012 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 2 012 Helvea – Swiss Equities Conference January 2 012 Handling... capita (at PPP) CAGR 2010 - 2015E Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, November 2011 © Holcim Ltd 2 012 Helvea – Swiss Equities Conference 10% 11% 12% 11 January 2 012 Agenda 1 Drivers of demand growth 2 Managing the investment portfolio 3 People focus on the triple bottom line 4 Innovation, cost leadership, pricing 5 Summary & Conclusions 12 © Holcim Ltd 2 012 Helvea. .. 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 2 012 Helvea – Swiss Equities Conference January 2 012 Focusing on pricing while keeping costs low Positive margin inflection point Margin expansion 10 year period from... 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 2 012 Helvea – Swiss Equities Conference January 2 012 Cost reduction through innovation • Better cost management will continue to focus on networking our assets and renewable... 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 2 012 Helvea – Swiss Equities Conference. .. 2009 and 2010 of nearly CHF 1.2 billion 22 © Holcim Ltd 2 012 Helvea – Swiss Equities Conference January 2 012 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 . © Holcim Ltd 2 012 Helvea – Swiss Equities Conference 2 012 Thomas Aebischer – CFO Managing growth in a two speed economy January 12, 2 012 2 © Holcim Ltd 2 012 January 2 012 Helvea – Swiss Equities. excl. India, Oceania, China 46.3 Mt Latin America 36.6 Mt Demand growth Oceania 4.9 Mt 11 © Holcim Ltd 2 012 January 2 012 Helvea – Swiss Equities Conference Positioning the aggregates market. retirees Ageing Shrinking active population Youth < retirees China USA Russia Niger Nigeria Ethiopia Japan Philippines France Italy Argentina Mexico India Spain Switzerland Brazil Canada Indonesia Chile Thailand Time Working