third quarter outlook for 2003 holcim

Third quarter + outlook for 2003 1 Third quarter 2003 Positions in Europe Group: plant plant Terminal Participation: plant Cement capacity Group (Europe): 39.9 m t; additionally with partners: 9.9 m t. 2 Third quarter 2003 Europe Slight recovery in the European construction sector in general. Activity remained buoyant in Southern Europe, particularly Spain and Italy. Decline in demand in Germany and Switzerland. Reforming countries of Central and Eastern Europe becoming noticeably stronger. Demand patterns also encourag- ing in the construction markets of Southeast Europe. 3 Third quarter 2003 Europe: the facts Acquisition of Cementos Hispania boosts Holcim Spain and underpins financial results. Buoyant construction activity in Southern and Southeast Europe brings higher sales volume in all three core seg- ments. Difficult sales situation in Germany and declining volume of demand in Switzerland adversely affect results. Operating profit for this Group region increases slightly due to rising performance in Southern and Southeast Europe. Holcim to acquire Rohrbach Zement in first quarter 2004. Continued exploitation of synergies will impact positively on our margins over the coming years. 4 Third quarter 2003 Positions in North America Cement plant Grinding plant Terminal Cement plant project Cement capacity Group (North America): 21.3 m t. 5 Third quarter 2003 North America Subdued picture overall for the construction sector on this conti- nent. In Canada, the order situation in the construction sector remained healthy; the weather-related order shortfall at the start of the year has not yet been fully offset. In the US, volumes and prices declined in several market re- gions – such as Colorado and the Southeast of the country. 6 Third quarter 2003 North America: the facts Efficiency-improvement program set in train by new manage- ment is having a positive effect. The Holly Hill plant successfully commissioned by Holcim US at the end of June will contribute to lowering costs. The weak state of the US market adversely affected the result of Holcim US. St. Lawrence Cement benefited from the healthy order situation in Canada, though it was unable to fully offset demand-induced setbacks in the Northeast of the US. Together with the sharp fall in the value of the dollar, oper- ating profit for North America was unsatisfactory in overall terms. Programs to reduce costs accorded top priority. 7 Third quarter 2003 Positions in Latin America Group: plant Grinding plant Terminal Participation: plant Grinding plant Terminal Cement capacity Group (Latin America): 31.0 m t; additionally with partners: 9.9 m t. 8 Third quarter 2003 Latin America Positive and negative develop- ments in Latin America more or less cancel each other out. Brazil continued to prove resistant to crisis. Political instability hampered developments in the Venezuelan economy. The market in Argentina staged an unexpectedly strong recovery, while construction activity also grew in Chile and Mexico. 9 Third quarter 2003 Latin America: the facts Pleasing sales figures for Mexico, the Caribbean and Chile. Marked increase in sales at Minetti in Argentina. Holcim Brazil holds up well in a market that is in need of a fresh boost. Group: plant Grinding plant Terminal Participation: plant plant Terminal Increase in deliveries of cement and ready-mix concrete; fall in demand for aggregates. Major progress on productivity in all areas. Sharp increase in regional operating profit in US dollars despite poorer operating situation in Venezuela. Latin America remains the Group’s strongest region in terms of operating profit. Strong presence in key markets gives us optimism. 10 Third quarter 2003 Positions in Africa Middle East Cement capacity Group (Africa Middle East): 12.9 m t; additionally with partners: 6.3 m t. 11 Third quarter 2003 Africa Middle East Very positive market develop- ments in Africa. Morocco and South Africa proved to be the main growth drivers. In Lebanon and West Africa the market situation continued to be strained. Despite persistent pressure on prices, the market situation in Egypt has stabilized slightly. 12 Third quarter 2003 Africa Middle East: the facts Significant increase in volumes in core segments of cement and ready-mix concrete; fall in the case of aggregates. Higher cement deliveries in Egypt, Madagascar, La Réunion and Morocco in particular. Regional uncertainties hit performance of group West Africa. Good results in South Africa and Morocco leading to higher operating profit in this Group region. Holcim Lebanon acquiring grinding facility in northern Cyprus. From a Group perspective, this region has gained further significance . 13 Third quarter 2003 Positions in Asia Pacific Group: plant Grinding plant terminal project Participation: Cement plant plant terminal Cement capacity Group (Asia Pacific): 36.0 m t; additionally with partners: 14.6 m t. 14 Third quarter 2003 Asia Pacific Further increase in construction activity in this Group region. In Vietnam, Malaysia and New Zealand, cement demand remain- ed very impressive. Volume increases also achieved in the Philippines, Thailand and Indonesia. The potential demand in housing construction and the infrastructure sector remains huge. 15 Third quarter 2003 Asia Pacific: the facts Slightly higher cement sales in the Philippines almost entirely due to consolidation changes. Successful integration of PT Semen Cibinong in Indonesia and correspondingly improvement in financial results. Substantially higher operating profit also being generated by the Group companies in Thailand, Australia and New Zealand. The plants in Vietnam are operating at full capacity due to high demand; expansion of cement capacity in Ho Chi Minh City proceeding in line with schedule. Operating profit for Group region Asia Pacific grew markedly despite negative exchange rate fluctuations. This Group region continues to offer enormous future potential for the construction industry. 16 Third quarter 2003 Strategic transactions strengthen core business Cement Australia was included in the consolidated accounts for the first time in the third quarter. It is the market leader on that continent and benefits from optimal distribution channels. The bleak order situation in Germany and Switzerland is resulting in capacity adjustments. The Geisingen plant in southern Germany and Morbio grinding facility in Ticino/ Switzerland are to close. Eternit AG, based in Niederurnen, has been sold and is no longer consolidated. BA Holding AG of Baar is to continue using the Eternit brand name. These transactions will mean a total charge of CHF 40 million to the consolidated accounts for fourth quarter 2003. The Group is strengthening market integration and building a new, cross-border cluster . 17 Third quarter 2003 Key financial figures Million CHF Group net income Cash flow from 2.63 2.65 0.8% 8.4% 3.76 3.81 1.3% 7.7% 9 Months +/- 2002 2003 in CHF in loc. curr. 9'928 9'395 -5.4% 1.1% 1'559 1'550 -0.6% 8.1% 2'616 2'537 -3.0% 5.2% 2'719 2'597 -4.5% 3.0% 514 518 0.8% 8.2% 1'732 1'527 -11.8% -4.9% Effective as at Cement capacity + Novi Popovac, Serbia April 15, 2002 1.4 million t + Union Cement, Philippines, from proportionate to full consolidation October 1, 2002 + 2.4 million t + Cementos Hispania, Spain January 1, 2003 0.8 million t + Proportionate consolidation of Cement Australia (integration of Queensland Cement) June 1, 2003 – – Baubedarf, Switzerland October 1, 2002 – +/– Various smaller companies after minority interests 506 EBITDA 3'399 Operating EBITDA 3'341 Operating profit 1'903 Net sales 13'010 2002 Full Year 18 Third quarter 2003 19 Third quarter 2003 2) weighted by net sales full year 2002 20 Third quarter 2003 operating activities 2'388 EPS in CHF 2.59 Cash EPS in CHF 4.14 Major changes in the scope of consolidation Statement of income average exchange 9M 01 9M 02 9M 03 +/- 1 EUR 1.52 1.47 1.51 2.7% 1 USD 1.70 1.59 1.36 -14.5% 1 African Basket (EGP, ZAR, MAD) 1) 1.29 1.00 1.02 2.0% 1 Asian Basket (AUD, NZD, THB, PHP) 1) 1.03 1.00 0.93 -7.0% Balance sheet exchange rates in CHF 30.9.02 31.12.02 30.9.03 +/- 1 EUR 1.46 1.45 1.54 6.2% 1 USD 1.49 1.39 1.32 -5.0% 1 African Basket (EGP, ZAR, MAD) 2) 0.96 1.00 1.04 4.0% 1 Asian Basket (AUD, NZD, THB, PHP) 2) 1.04 1.00 1.05 5.0% Exchange rates 1) weighted by net sales 9 months 2002 [...]... 25 Third quarter 2003 EBITDA Million CHF 26.7% 2'747 Margin 27.6% 27.4% 2'719 2'597 - 1.0% 9M 2001 - 4.5% 9M 2002 9M 2003 26 Third quarter 2003 Operating profit Million CHF M argin 15.1% 15.7% 16.5% 1'559 1'553 Volume / price / cost Change in structure Forex movements Total change 132 -8 -118 6 9M 2001 1'550 8.5% -0.5% -7.6% 0.4% 97 29 -135 -9 9M 2002 6.2% 1.9% -8.7% -0.6% 9M 2003 27 Third quarter 2003. .. Financing surplus (requirement) 9M 2002 9M 2003 31 Third quarter 2003 atement 533 9 Months +/- 2002 2003 419 -124 – – -5 4 699 661 60 – -79 -22 1'094 519 -129.6% Investments to maintain productive Million CHF Full Year 2002 Financing surplus (requirement) Financing Equity capital paid-in -52.6% 533 32 Third quarter 2003 Increase in cash and 33 Third quarter 2003 Financial position 94.2% 9'825 9'260... 4.2% 18.9 + 0.5% 9M 2001 9M 2002 9M 2003 21 Third quarter 2003 Net sales Million CHF 10'301 Volume / price Change in structure Forex movements Total change 9'928 67.9 9M 2001 -12 319 -680 -373 -0.1% 3.1% -6.6% -3.6% 9M 2002 9'395 39 71 -643 -533 68.9 0.4% 0.7% -6.5% -5.4% 9M 2003 22 Third quarter 2003 Net sales by region Million CHF 3308 3343 9 months 2002 9 months 2003 2103 1844 1286 853 2500 1308 921... between industrialized and emerging markets 35 Third quarter 2003 Outlook for 2003 II Assuming there are no fundamental changes in the general framework in the final quarter of 2003, we can make the following financial forecasts with regard to the full financial year: Margins will improve further on the back of efficiency improvements After adjusting for exchange rates, operating profit and consolidated... 23 Third quarter 2003 Net sales by region Latin America 22% North America 19% Africa Middle East 10% Europe 35% Asia Pacific 14% 9 months 2003 24 Third quarter 2003 Operating EBITDA Million CHF 4.9% 2'565 Margin 26.3% 2'616 Volume / price / cost Change in structure Forex movements Total change 183 53 -185 51 9M 2001 7.1% 2.1% -7.2% 2.0% 9M 2002 27.0% 2'537 82 53 -214 -79 3.2% 2.0% -8.2% -3.0% 9M 2003. .. 93.9% 8'857 9'695 31.12.2002 Net financial debt in million CHF 9'144 30.09 .2003 Gearing 34 Third quarter 2003 by minority interests Movements of treasury shares net Increase in financing liabilities -10 -1 334 Equity component of convertible bonds 58 De(In)crease in marketable securities 16 cash equivalents 930 Outlook for 2003 I Europe: further improvement at operating level against persistently difficult... 2002 2003 Dividends earned 41 68 Financial income 14 2 Other ordinary income (expenses) 48 -9 -84 -62 19 -1 -517 -431 Interest earned on cash and cash equivalents 47 43 Foreign exchange gain (loss) net 15 -8 Financial expenses capitalized 19 10 -436 -386 Depreciation and amortization of non-operating assets Total Financial Expenses Net Financial expenses Total 29 Third quarter 2003 Group net income Before... income Before minority interests in million CHF After minority interests in million CHF 773 727 723 613 514 9M 2001 9M 2002 518 9M 2003 30 Third quarter 2003 Cash flow from operating activities Million CHF 14.0% Margin 17.4% 16.3% 1'732 1'527 1'447 9 Months Million CHF +/- 2002 2003 1'732 1'527 Year Full -11.8% 2002 -543 Cash flow from operating activities -510 2'388 -6.1% -14.5% 1'189 1'017 9M to secure... rates, operating profit and consolidated net income after minorities will exceed the prior-year figures An economic recovery in key markets would lead to clear improvements in results for Holcim in 2004 36 Third quarter 2003 ... 179 201 603 9 months 2002 9 months 2003 478 208 118 151 593 ∆ 9M 02/9M 03 Volume/ Change in Currency Total price/cost structure Europe -6.1% 4.4% 2.3% 0.6% North America -10.6% 0.0% -9.8% -20.4% Lati n A meri ca 14.9% 0.5% - 17.1 % - 1.7% Af rica Mi ddle East 7.0% 1.0% -4.5% 3.5% A si a Pa ci f i c 35 6 % 2 2% - 9 8 % 28 0 % Total 6.2% 1.9% -8.7% -0.6% 28 Third quarter 2003 Other income and financial . 1'903 Net sales 13'010 2002 Full Year 18 Third quarter 2003 19 Third quarter 2003 2) weighted by net sales full year 2002 20 Third quarter 2003 operating activities 2'388 EPS in CHF. Third quarter + outlook for 2003 1 Third quarter 2003 Positions in Europe Group: plant plant Terminal Participation: plant Cement. 2002 9M 2003 30 Third quarter 2003 Cash flow from operating activities Million CHF Margin 17.4% 16.3% 14.0% 1'732 1'447 1'527 9M 2001 9M 2002 9M 2003 31 Third quarter 2003 Cash