Region North America. Benoît-H. Koch Executive Committee North America St. Louis, September 14, 2010

Transcription

1 Region North America Benoît-H. Koch Executive Committee North America St. Louis, September 14, 2010

2 Executive Summary Region North America North America and the US in particular continues to be important in economic terms and for Holcim due to its sheer size and growth prospects Holcim has over many years invested in a flexible and efficient asset base that will allow it to capitalize on the recovery We have consistently executed our strategy in North America before, during and after the recession We are organized to best meet the market demands in vastly different markets across Canada and the US allowing for integrated solution offerings where needed Synergies have and continue to be achieved in North America by optimizing organizational structures, shared service centers and tax efficient structures 2

3 Agenda 1 The importance of North America 2 Our North American portfolio and major recent acquisitions 3 How we are reaping the benefits of these acquisitions 3

4 The US remains the country with the largest economy its GDP is higher than Japan, China and Germany combined 2009 GDP Comparison [bn USD] GDPs of US States vs. Nations Worldwide [base year 2007] Source: MatadorNetwork US GDP is expected to grow by 4.3% (CAGR ) Source: World Bank and IMF 4

5 North America will maintain its high population growth, increasing the need for housing & infrastructure ultimately driving cement demand Forecasted Population Growth [CAGR] 2 % 1 % 0 % 1,1 0,9 0,0 1,0 0,8 0,0 0,9 0,7-0,1 0,7 0,6-0,2 0,6 0,5-0,2 0,5 0,5-0,2 0,4 0,4-0,2 0,4 0,3-0,3 North America World Europe -1 % Increase of North American Population by +10% from 2010 to 2020 Source: UNData - United Nations Data Retrieval System (Medium Variant) 5

6 Despite a notably lower Summer Forecast, PCA is still predicting a steady recovery of cement demand over the next 5 years US Cement Demand Forecasts [M t cem] % % +19% +14% % PCA 2007 Fall FC PCA 2008 Summer FC PCA 2009 Summer FC PCA 2009 Fall FC PCA 2010 Spring FC PCA 2010 Summer FC % Source: Portland Cement Association (PCA) 6

7 North America is crucial to Holcim s geographic diversification strategy this is true for the cement segment Cumulated population growth E 12% 10% 8% 6% 4% 2% 0% -2% -4% Asia Pacific excl. India, Australia, China 46.9 Mt Australia 4.5 Mt North America 20.6 Mt Western Europe 26.8 Mt Latin America 34.2 Mt Mature markets Emerging markets Size of circles represents influenced capacity 2009 Africa Middle East 27.2 Mt Eastern Europe 24.3 Mt India 50.7 Mt China 51.0 Mt Demand growth 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% GDP per capita (at PPP) CAGR E Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, February

8 as well as for the Aggregates segment, where the developed countries have a higher weight Cumulated population growth E 12% 10% 8% 6% 4% North America 40.2 Mt Asia 10.4 Mt 1 Mature markets Emerging markets Size of circles represents consolidated sales volume 2009 Latin America 11.8 Mt Africa Middle East 2.6 Mt Demand growth 2% 0% -2% Western Europe 70.0 Mt Eastern Europe 8.4 Mt -4% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% GDP per capita (at PPP) CAGR E 1 including 3 months Australia Sources: Holcim, US Census Bureau, Datastream - Economist Intelligence Unit, February

9 Agenda 1 The importance of North America 2 Our North American portfolio and major recent acquisitions 3 How we are reaping the benefits of these acquisitions 9

10 The extensive network of plants, terminals, quarries and pits will allow Holcim to participate in the recovery of demand PCA Forecasted Cement Demand Growth [CAGR ] lgdxarco 0.0% to 2.5% lgdxarco 2.5% to 5.0% lgdxarco 5.0% to 7.5% lgdxarco 7.5% to 10.0% lgdxarco 10.0% to 12.5% lgdxarco 12.5% to 15.0% lgdxarco 15.0% to 17.5% Cement Plant Mothballed Cement Plant Cement Terminal Joliette Trident Mississauga Catskill Devil's Slide Hagerstown Portland Ste. Genevieve Aggregates Quarry/Pit Ada Midlothian Theodore Holly Hill Recently inaugurated Ste. Genevieve plant can serve most of the markets along the Mississippi in a cost effective way Source: PCA US State Forecast Summer 2010 (Aug 2010), PCA Canadian Summer 2010 Forecast (Aug 2010) 10

11 Holcim has continuously developed its positions in North America since its first cement investments in the 1950s 2007 Long Term Supply Contract with & Minority stake in Lattimore Materials 1990 Acquisition of Northwestern States Portland Cement Corp. and United Cement Comp buyout of St. Lawrence Cement minority shareholders 1953 First foothold in NA: St. Lawrence Cement in Canada 1978 Acquisition of Santee Portland Cement Comp 2007 Acquisition of Hardaway Concrete First US venture: Dundee Cement Company 1986 Acquisition of Ideal Basic Industries 2010: Inauguration of Ste. Genevieve plant Mid 90ies Various larger upgrade & improvements of existing facilities 2006 Acquisition of Meyer Materials 2005 Acquisition of Aggregate Industries 11

12 Major acquisitions over the last 5 years in the US, provided Holcim the required base for the implementation of its twin-leg strategy Holcim s main Acquisition in N.A. in the last 5 years Aggregate Industries (2005): RMX: 96 Plants Agg: 77 Operations, 2 280M t reserves* Other: 43 Asphalt Plants Meyer Materials (2006): RMX: 25 Plants Agg: 6 Operations, 94M t reserves* Other: 1 Concrete Paving Plant Hardaway Concrete (2007): RMX: 10 Plants, 2 mobile plants Cement Plant Mothballed Cement Plant Agg Operation Lattimore Minority Stake & Long Term Supply Contract (2007): RMX: 21 Plants Agg: 6 Operations * Current status of permitted reserves 12

13 Agenda 1 The importance of North America 2 Our North American portfolio and major recent acquisitions 3 How we are reaping the benefits of these acquisitions 13

14 With the twin-leg strategy, Holcim also diversified its product portfolio, moved closer to the end customer and became a true solution provider Holcim Value Chain Supply Basic Materials Processing Channels Transactional Transformational End- users Demand Applications and Construction Fields Cementitious Materials (cement, mineral components) Aggregates (sand, gravel, stone, recycled aggregates) Direct Sales Traders Wholesalers Retailers Direct Sales Ready -mix Concrete Concrete Products Mortars Asphalt General Contractors Self - builders Masons Civil Engineering A p p l i c a t i o n s Housing Commercial / Industrial Building Infrastructure To best leverage the twin-leg strategy, Holcim tailored its organizations to the respective markets, which are different in the US and in Canada 14

15 An experienced and crisis-proven North American Management team ensures that we deliver on our promise Bernard Terver Area Manager US & CEO Holcim US Former positions: - Area Manager Andes Nations, Central America & Caribbean - CEO Holcim Colombia Will Glusac CEO Aggregate Industries US Former Positions: - President Prairie Material - President Florida Materials Division, Rinker Materials Paul Ostrander CEO Holcim Canada Former Positions: - Senior Vice President Ontario Division, Holcim Canada - General Manager Dufferin Construction 15

16 US Area Management Structure allows synergies to be captured while maintaining strong & entrepreneurial local management Structure CEO HOLCIM US B. Terver North Region EXCO Member B-H. Koch Area Manager US B. Terver CEO Aggregate Industries US W. Glusac Nort East Region Comments Allows different business models in cement and ACM to match current geographic set-up and market structures in US Maintains the required degree of entrepreneurial spirit and freedom in the companies. This ensures strong local management which is an integral part of Holcim s strategy Area Manager and his staff coordinate the companies and ensures that back office synergies are being used South Region Mid Atlandic Region Western Region Midwest Region Possibility to capture synergies from tailored service integration Coordination and arbitrage by Area Manager and his staff 16

17 In Canada on the other hand, industry structure and geographic concentration of operations require a single integrated company Structure EXCO Member B-H. Koch CEO HOLCIM Canada P. Ostrander VP Ontario & Western Region VP Quebec & Atlantic Region Comments Market & HCA (Holcim Canada) operations geographically more concentrated in Canada than in the US Higher degree of vertical integration than in the US Higher degree of consolidation on all product levels than in the US Regional structure under one VP allows the optimization of vertical integration strategy 17

18 Aggregates has proved to be more resilient to the downturn than the cement business Development of operating profit Holcim US Cement vs. Aggregates (year 2000 = 100%) 100% 104% 72% 32% 28% US Aggregates 0% -13% -10% US Cement Factors contributing to a higher crisis resilience of Aggregates compared to Cement: More flexible cost structure Shorter reaction time Benefitting more from stimulus road & highway projects 18

19 The buyout of Holcim Canada* minority shareholders allowed to get full strategic freedom and to streamline NA operations The full ownership of Holcim Canada (HCA) allowed to substantially reduce costs in North America, through: Integration of HCA s US operations into Holcim US Further centralization of Support Services between HCA and Holcim US Process standardization across HCA and HUS Tax efficiency gains Avoidance of costs for SLC* being a public company Integrated North American market strategy Through the buyout of SLC* minorities, Holcim was able to realize sustainable synergies of USD 24M p.a. * Former company name: St. Lawrence Cement (SLC) 19

20 An increasing number of support processes of our North American (NA) organizations have been standardized and centralized Accounting IT Service Centre Treasury Tax Procurement Risk Management Payroll HUS HCA AIUS HUS HCA AIUS HUS HCA AIUS HUS HCA AIUS HUS HCA AIUS HUS HCA AIUS HUS HCA AIUS Separate Service Centre Merger of Service Centres Across Operating Companies HUS = Holcim US HCA = Holcim Canada AIUS = Aggregates Industries US (acquired in 2005) Pooling of NA shared services resulted so far in cost reductions of USD 13.3M p.a., and the full potential hasn t been reached yet 20

21 Outlook Our lean North American businesses have reached the required level of flexibility to deal with any market situation Production volumes can be increased quickly, whilst keeping the current low cost levels The recovery of the North American economy is therefore expected to result in above average returns 21

22 Contact information Bernhard A. Fuchs Marco Knuchel Binit Sanghvi Investor Relations Phone Fax Mailing list: 22

23 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. As part of Holcim's global commitment to compliance with competition laws, please note that this presentation has been comprehensively reviewed by counsel in both the United States and Switzerland. 23

24 Strength. Performance. Passion. 24