© Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Holcim US – an overview Bernard Terver – Area Manager St. Louis, September 14, 2010 2 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Executive Summary Holcim US (HUS) • Ste. Genevieve start-up was successful • HUS has the most modern assets in the industry as well as one of the broadest geographical coverage due to its large distribution network. Ste. Genevieve provides cost leadership in ~80% of the river markets • Our culture is ‘performance driven’, doing our ‘homework’ well with passion • Our response to the crisis was quick and decisive Reorganization was carried out in the spirit of “Speed and Simplicity” Cost reductions of ~$150M were achieved in 2009 Operational performance improved • We have world class safety results and a standard setting plant for energy efficiency and environmental performance • HUS strategy is to “grow the pie” through promotion and being closer to customers by providing solutions • HUS is well set up for recovery and will achieve its 33% EBITDA margin target 3 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Agenda 1 Our US portfolio – broad geographic reach 2 Our response to the crisis – quick and decisive 3 Our performance – empowered employees delivering 4 Our value creation – targets achieved with recovery 4 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 North Region South Region Cement Plant z Grinding Plant S Cement Terminal S S S S S S S S S S S z S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S Holcim US (HUS) has the broadest geographical coverage – our plants and terminals cover ~80% of the US markets 3.2 million tons 5.6 million tons 5 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 North South Ontario Quebec / Atlantique z z z È È È È È È È È È È È È È È È È È È È È È È È È È È ÈÈ È È È È È È È È È È È È È È È È È È È È È È È È È È È È È È È ÈÈ È È È È È È È È È È È È È È È È È È È È È È È È È È È È È È È È West Mid West Mid Atlantic Northeast Hagerstow n Catskill Theodore Por tland Trident A da Holly Hill Midlothian Devil's Slide St. Genevieve Joliette Mississauga Our integrated positions strengthen cement sales in select integrated markets and provide opportunities for cross selling 6 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Our asset renewal program ($4.1B since 1993) has created the most modern assets in the industry 1993 1996 2000 2001 2002 2003 2009 Ste. Genevieve on-line Birmingham Camden Expansion of Portland plant Expansion of Devil's Slide plant. Chicago Skyway Expansion of Midlothian plant Expansion of Holly Hill plant Box Crow Cement (Midlothian plant) under Holnam Texas LP Acquisitions and Expansions • HUS has invested the most of all the cement players resulting in average kiln age of ~15 years • As more stringent environmental regulations are passed, HUS’ newer asset base is anticipated to have a competitive advantage HUS and main competitors average kiln age HUS investments Investment timeline 0 5 10 15 20 25 30 35 HUS Competitor Avg Source: PCA The average kiln age presented above is capacity weighted 0 100 200 300 400 500 600 700 800 900 1000 1993 1995 1997 1999 2001 2003 2005 2007 2009 $ M 7 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Barge is cheaper, cleaner and safer Ste. Genevieve provides cost leadership in ~80% of river areas which account for 32% of US cement consumption 15522.71Equivalent Fatalities (indexed to barge) 71.626.919.3 CO 2 (tons of CO 2 per million ton- miles) 26.612.240.72Cost per ton-mile (cents) 70161Equivalent Units (Indexed to barge) TrucksRailBarge HUS market volumes and Ste. Gen delivery pattern [Mt] 8 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Agenda 1 Our US portfolio – broad geographic reach 2 Our response to the crisis – quick and decisive 3 Our performance – empowered employees delivering 4 Our value creation – targets achieved with recovery 9 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Actual Consumption and PCA Forecast (M tons) Supply Demand Balance (M tons) 60 70 80 90 100 110 120 130 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Act ual Consumptio n Spring 2008 Summer 2008 Fall 2008 Wint er 2008 Spring 2009 Summer 2009 Fall 2009 Wint er 2009 Spring 2010 Summer 2010 0 20 40 60 80 100 120 140 72 75 7 8 8 1 84 87 90 93 96 99 '02 ' 05 ' 08 Residential Commercial Infrastructure Other Total Cement Consumption by Segment (M tons) 0 20 40 60 80 100 120 140 1980 1982 1984 1986 1988 1990 1 992 1994 1996 1998 2000 2002 2004 2006 2008 Clinker Capacity Cement Consumption Figures above include M asonry Figures above exclude M asonry Figures above include M asonry Holcim (US) realized early that the crisis was deep – the market trough was elusive (-57M tons since 2005) • Since the 2005 peak, the residential sector declined by 30M tons (~52% of total decline) • Infrastructure declined by 19M tons since 2006 as fiscally challenged states struggled to match Federal funding 10 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Holcim US quickly mobilized in response to the demand drop and reorganized in the spirit of “Speed and Simplicity” Four business units with complex corporate One central organization • Sales and manufacturing plants reported to business units • Sales organization had 5 levels • Large centralized distribution group • Plants report to manufacturing • 2 sales organizations with three levels • Field shipping stations in sales Why did we do this? • We want a low break-even point and achieve margin targets • The US is a large country but our business is local • Lean organization providing transparency and clear accountability • Proximity to the workforce, markets and customers • Support process to facilitate operations in the most efficient manner Speed and Simplify [...]... Distribution Cost Support Process Cost 14 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Agenda 1 Our US portfolio – broad geographic reach 2 Our response to the crisis – quick and decisive 3 Our performance – empowered employees delivering 4 Our value creation – targets achieved with recovery 15 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Cost reductions allowed HUS to stabilize... savings) Portland 100KW Solar Pilot ($10k savings) Provides leverage with Power Companies Midlothian Lighting ($48k savings) Portland Idle Time Power Consumption ($135k savings) 36,000 34,000 kwhr/day 32,000 30,000 28,000 26,000 24,000 5/9 /2010 4/25 /2010 4/11 /2010 3/28 /2010 3 /14/ 2010 2/28 /2010 2 /14/ 2010 1/31 /2010 1/17 /2010 1/3 /2010 20,000 12/20/2009 22,000 18 © Holcim Ltd 2010 Investor / Analyst Capital... believes that the industry must strive to improve emissions performance HUS continues to do so For example, HUS voluntarily installed continuous emissions monitors, the only major cement player to do so • EPA will ensure a level playing field and we remain hopeful that reasonable regulations can be achieved 22 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 HUS strategy is to ‘Grow... • Ste Gen has the lowest clinker heat consumption of all HUS plants and also very low specific emission/ton clinker • The dramatically improved environmental performance comes from state of the art design of the plant 1200 1000 800 600 400 200 0 Gross CO2 Net CO2 4 Closed/mothball plant (2008) CKD – cement kiln dust © Holcim Ltd 2010 Landfill CKD Ste Gen May 2010 YTD clk – clinker 20 Investor / Analyst... promotion and being closer to customers through providing solutions • Positioning of concrete as economical, durable and sustainable Influence policies affecting material selection and procurement by Regional Promotion Groups Life Cycle Analysis (MIT study) • Customer Alignments Four annual CEO level meetings with key customers Tech service engineers help customers with mix design Holcim branded tool... performance Ste Gen vs 4 closed/mothballed plants (kg/t clk) % Reduction from Ste Gen on HUS emissions 7.00 90% 6.00 80% 70% 5.00 60% 50% 4.00 3.00 40% 30% 2.00 1.00 20% 10% 0.00 SO2 NOx THC CO 0% Dust SO2 4 Closed/mothball plant (2008) Ste Gen May 2010 YTD NOx THC CO Dust Gross CO2 Net CO2 Landfill CKD Assumes Ste Gen replaces 4 closed/mothballed plants in 2008 Ste Gen vs 4 closed/mothballed plants... significant reduction in fixed cost of ~$150M has resulted in lower break-even point for HUS, stabilized the margins and set up HUS very well for the eventual recovery 50% 40% 30% 20% 10% 0% Cash Flow % Ebitda % 2009 2008 2005 2004 2003 2002 2001 2000 -10% Ebit % 16 © Holcim Ltd 2010 Note: Historical data has not been restated through changes of organization structure and HARP Investor / Analyst Capital... company is performing better than would be expected © Holcim Ltd 2010 Lost time frequency rate = No of LTI cases*1,000,000/actual hours worked 21 Investor / Analyst Capital Markets Event 2010 Holcim is anticipated to have a competitive advantage on NESHAP due to its modern asset base • EPA has issued final National Emissions Standards on August 9th for Hazardous Air Pollutants (NESHAP) for Mercury (Hg),... enrollment with 50k man-hours of training annually (~25 full time personnel) Changed our delivery mix to have more e-learning, Webinars and onsite courses Over 90% of courses cost less than $100 (direct cost) with no travel and no lost productivity 17 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Our employees have continued to bring ideas forward resulting improved costs and efficiency... © Holcim Ltd 2010 PD CK HH ML2 TH GV • Explained key performance indicators to the whole organization – we can’t improve what we can’t measure 13 Investor / Analyst Capital Markets Event 2010 A target total fixed cost of $400M was set and achieved in 2009 by reducing costs by ~$150M 600 549 -154 500 $$ M mio 400 142 395 74 97 300 200 61 333 236 100 0 2008A Fixed Manufacturing Cost 2009A Fixed Distribution . © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Holcim US – an overview Bernard Terver – Area Manager St. Louis, September 14, 2010 2 © Holcim Ltd 2010 Investor / Analyst Capital. 20,000 22,000 24,000 26,000 28,000 30,000 32,000 34,000 36,000 12/20/2009 1/3 /2010 1/17 /2010 1/31 /2010 2 /14/ 2010 2/28 /2010 3 /14/ 2010 3/28 /2010 4/11 /2010 4/25 /2010 5/9 /2010 kwhr/day 19 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 Our modern. markets and customers • Support process to facilitate operations in the most efficient manner Speed and Simplify 11 © Holcim Ltd 2010 Investor / Analyst Capital Markets Event 2010 The reorganization