Global cement markets Current and future trends

Global cement markets Current and future trends Presented at CemTech conference Dubai, February 2015 M O R G A N S T A N L E Y R E S E A R C H Europe Morgan Stanley & Co. International plc+ Yuri Serov yuri.serov@morganstanley.com +44 20 7425 1467 Alejandra Pereda alejandra.pereda@morganstanley.com +34 91 418 1135 Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report. += Analysts employed by non-u.s. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. All information as at January 27, 2014

Global economy is continuing along a bumpy, below-par and brittle recovery path, with cycles in many countries remaining out of sync GDP growth rate 2009 2010 2011 2012 2013 2014E 2015E 2016E Developed markets Australia 1.5% 2.2% 2.6% 3.6% 2.3% 3.2% 1.9% 2.3% Canada -2.7% 3.4% 2.5% 1.7% 2.0% 2.3% 1.8% 1.5% France -2.9% 2.0% 2.1% 0.3% 0.3% 0.4% 0.7% 1.4% Germany -5.1% 3.9% 3.4% 0.9% 0.5% 1.4% 1.1% 1.8% Greece -3.1% -4.9% -7.1% -7.0% -3.9% 1.0% 2.2% 3.0% Italy -5.5% 1.7% 0.5% -2.4% -1.9% -0.4% 0.2% 1.0% Japan -5.5% 4.7% -0.5% 1.5% 1.5% 0.0% 0.6% 1.8% Netherlands -3.3% 1.1% 1.7% -1.6% -0.7% 0.7% 1.3% 1.6% Spain -3.8% -0.2% 0.1% -1.6% -1.2% 1.3% 2.2% 2.2% United Kingdom -4.3% 1.9% 1.6% 0.7% 1.7% 2.7% 2.5% 1.9% United States -2.8% 2.5% 1.6% 2.3% 2.2% 2.4% 3.3% 2.4% Emerging markets Argentina 0.1% 9.1% 8.6% 0.9% 2.9% -1.5% -1.0% 1.6% Brazil -0.3% 7.5% 2.7% 1.0% 2.5% 0.2% -0.3% 1.3% China 9.2% 10.4% 9.3% 7.7% 7.7% 7.4% 7.0% 7.2% Colombia 1.7% 4.0% 6.6% 4.0% 4.7% 4.7% 4.2% 4.5% India 8.5% 10.3% 6.6% 4.7% 5.0% 5.3% 6.3% 6.8% Indonesia 4.6% 6.2% 6.5% 6.3% 5.8% 5.0% 5.3% 5.5% Malaysia -1.5% 7.4% 5.2% 5.6% 4.7% 5.8% 5.3% 5.4% Mexico -4.7% 5.1% 4.0% 4.0% 1.1% 2.1% 3.8% 4.1% Nigeria 9.6% 10.6% 4.9% 4.3% 5.4% 6.2% 4.8% 5.2% Poland 1.6% 3.9% 4.5% 2.0% 1.6% 3.3% 3.1% 3.7% Russia -7.8% 4.5% 4.3% 3.4% 1.3% 0.4% -5.6% -2.5% South Africa -1.5% 3.1% 3.6% 2.5% 1.9% 1.3% 2.5% 3.0% South Korea 0.7% 6.5% 3.7% 2.3% 3.0% 3.4% 3.7% 3.7% Thailand -2.3% 7.8% 0.1% 6.5% 2.9% 0.6% 3.6% 4.0% Turkey -4.8% 9.2% 8.8% 2.1% 4.1% 3.3% 3.4% 3.4% Ukraine -14.8% 4.1% 5.2% 0.3% -0.0% -6.8% -4.3% 4.0% Global 0.0% 5.4% 4.1% 3.4% 3.3% 3.2% 3.5% 3.9% Global economy is continuing along the path of what Morgan Stanley economists call a bumpy, below-par and brittle (BBB) recovery The global economy remains out of sync, with many countries in different stages of their respective cycles However, overall growth is gathering pace from a recent low point in 2013 towards c.4% in 2016e This could become one of the longest expansions on record, as we are already five years away from the last global recession Oil prices, if they remain at a lower level, can add to global growth but will negatively affect oil exporting countries Two risks bear particular watching: US growth surprises on the upside and interest rates rise earlier than expected; this could harm vulnerable emerging economies Chinese rebalancing and concurrent slowdown result in deflationary pressures, which get exported thus denting growth in Asia and around the globe Source: IMF, Morgan Stanley Research estimates (E) 2

Supported by improving global economies, we see generally brighter prospects ahead for global cement demand, with a few trouble spots Consumption growth by region y-o-y% CAGR 2004 2005 2006 2007 2008 2009 2010 2004-13 2014-19 Western Europe 3.7% 1.4% 5.0% 0.0% -9.8% -19.5% -6.3% -0.5% -14.5% -6.1% -1.1% 1.1% 2.5% 4.1% 4.4% 2.4% -5.0% 2.2% Eastern Europe 8.0% 9.7% 15.7% 7.6% 0.2% -12.6% 3.0% 8.6% -4.5% 6.0% 2.2% 4.0% 4.2% 4.4% 4.1% 4.1% 3.9% 3.8% Former Soviet Union 13.5% 11.8% 13.8% 16.8% 0.2% -23.4% 9.5% 10.8% 9.6% 6.5% 2.6% -8.5% 1.9% 4.8% 3.7% 2.2% 6.3% 1.0% North America 6.8% 4.9% -0.3% -7.9% -15.8% -26.3% 0.9% 2.3% 8.7% 3.4% 6.7% 7.1% 7.3% 4.3% 2.2% 0.2% -3.0% 4.6% Latin America 4.0% 8.7% 11.9% 8.5% 5.9% -2.4% 5.6% 6.9% 4.5% 2.1% 1.9% 0.6% 0.9% 4.0% 4.0% 3.7% 5.5% 2.5% MENA 6.3% 11.1% 7.6% 11.8% 10.2% 7.8% 6.6% 1.6% 4.1% 1.5% -1.1% 3.1% 4.4% 5.1% 4.6% 4.3% 6.8% 3.4% Sub-Saharan Africa 7.7% 11.0% 11.8% 15.7% 1.9% 5.3% 3.3% 11.4% 9.6% 8.6% 3.7% 5.1% 7.0% 7.4% 7.1% 6.9% 8.6% 6.2% China 14.9% 9.6% 14.9% 13.1% 3.3% 18.3% 14.4% 10.0% 7.3% 10.0% 2.6% 2.2% 2.0% 1.5% 0.5% -0.6% 11.5% 1.3% India 4.7% 10.2% 12.2% 8.9% 5.0% 10.6% 7.2% 6.2% 6.7% 3.8% 6.1% 8.4% 9.5% 8.5% 8.0% 7.5% 7.5% 8.0% North Asia -4.1% -7.0% 2.5% -0.8% -4.3% -8.9% -2.5% 2.0% 1.8% 4.2% -0.4% 0.3% 0.4% 0.4% 0.4% 0.6% -1.8% 0.3% South Asia 6.6% 7.6% 4.3% 5.7% 8.0% 6.3% 8.2% 6.1% 7.5% 4.6% 3.8% 6.0% 6.2% 6.3% 6.0% 6.0% 6.5% 5.7% Australia/Pacific 11.3% 6.4% -0.5% 6.5% 3.8% -8.5% 1.0% 0.4% 5.3% -0.5% 1.3% -0.7% -2.5% 0.7% 2.0% 2.4% 2.4% 0.5% 9.0% 7.5% 10.7% 9.0% 1.8% 6.4% 9.6% 7.7% 5.6% 7.1% 2.5% 2.7% 3.1% 3.1% 2.4% 1.6% 7.4% 2.6% World ex-china 4.8% 5.9% 7.3% 5.5% 0.4% -4.7% 3.9% 4.8% 3.3% 3.0% 2.3% 3.3% 4.8% 5.4% 5.0% 4.5% 3.4% 4.2% EM ex-china 5.6% 7.6% 9.8% 9.3% 5.1% 0.7% 6.1% 5.8% 5.1% 3.9% 2.4% 3.4% 5.1% 5.8% 5.5% 5.2% 5.9% 4.6% 2014 marked a further step down in global ex- China cement demand growth, primarily driven by: MENA (because of wars in Iraq and Libya and a slowdown in Iran) Former Soviet Union (mostly as a result of the conflict in Ukraine) North Asia (as reform boost in Japan dissipated) Eastern Europe & Sub-Saharan Africa (slowdowns from double-digit growth in Turkey and Nigeria) This was partially offset by bottoming of demand in Western Europe, the start of an upcycle in India and better volumes in North America Source: Industry and National sources, Report, Morgan Stanley Research estimates (E) We see global growth adding c.1 pp in 2015 Almost 3/4 of global (ex-china) incremental volumes in 2015 come from five markets: India, the US, Indonesia, Saudi Arabia and Turkey Improvement in negative trends in the places like Iran, Iraq and Thailand should also contribute The region with the most negative outlook remains the Former Soviet Union, while Latin America is also subdued despite an improvement in Mexico We now project the expansion rate of 4.5% for the world ex-china after the completion of recovery 3

We have mostly maintained our outer years forecasts, however, 2014 and 2015 got further trimmed largely on geopolitical events and a few economic corrections Consumption Current forecast CemTech Kuala Lumpur, Jun 2014 Change in forecast Cumulative 2014E 2015E 2016E 2017E 2018E 2014E 2015E 2016E 2017E 2018E 2014E 2015E 2016E 2017E 2018E 2014-18E Western Europe -1.1% 1.1% 2.5% 4.1% 4.4% -0.6% 2.0% 3.1% 3.9% 4.2% -0.5% -0.9% -0.6% 0.2% 0.2% -1.7% Eastern Europe 2.2% 4.0% 4.2% 4.4% 4.1% 3.2% 2.8% 3.4% 3.6% 3.7% -1.0% 1.3% 0.8% 0.8% 0.4% 2.2% Former Soviet Union 2.6% -8.5% 1.9% 4.8% 3.7% -2.1% 3.8% 4.6% 4.8% 3.2% 4.7% -12.3% -2.6% - 0.5% -10.2% North America 6.7% 7.1% 7.3% 4.3% 2.2% 6.1% 7.3% 7.0% 5.7% 1.7% 0.6% -0.2% 0.4% -1.4% 0.5% -0.1% Latin America 1.9% 0.6% 0.9% 4.0% 4.0% 3.1% 2.7% 4.2% 3.9% 3.9% -1.2% -2.1% -3.4% 0.1% 0.2% -6.3% MENA -1.1% 3.1% 4.4% 5.1% 4.6% 3.1% 5.9% 5.3% 4.5% 4.2% -4.3% -2.9% -1.0% 0.6% 0.4% -7.0% Sub-Saharan Africa 3.7% 5.1% 7.0% 7.4% 7.1% 6.4% 7.2% 7.2% 7.1% 7.2% -2.7% -2.0% -0.2% 0.3% -0.1% -4.7% China 2.6% 2.2% 2.0% 1.5% 0.5% 2.8% 2.2% 2.0% 1.5% 0.5% -0.2% - - - - -0.2% India 6.1% 8.4% 9.5% 8.5% 8.0% 5.3% 7.5% 8.2% 8.2% 7.8% 0.8% 1.0% 1.3% 0.3% 0.2% 3.7% North Asia -0.4% 0.3% 0.4% 0.4% 0.4% 1.4% 0.6% 0.4% 0.4% 0.6% -1.8% -0.3% - - -0.2% -2.3% South Asia 3.8% 6.0% 6.2% 6.3% 6.0% 3.5% 5.1% 6.0% 6.1% 5.8% 0.3% 0.9% 0.2% 0.2% 0.2% 1.8% Australia/Pacific 1.3% -0.7% -2.5% 0.7% 2.0% -0.8% -2.7% -4.1% 1.2% 4.2% 2.1% 1.9% 1.6% -0.5% -2.1% 2.9% 2.5% 2.7% 3.1% 3.1% 2.4% 2.9% 3.2% 3.3% 3.0% 2.3% -0.4% -0.6% -0.2% 0.1% 0.1% -1.0% World ex-china 2.3% 3.3% 4.8% 5.4% 5.0% 3.1% 4.7% 5.2% 5.1% 4.7% -0.8% -1.4% -0.4% 0.2% 0.3% -2.0% EM ex-china 2.4% 3.4% 5.1% 5.8% 5.5% 3.2% 5.0% 5.6% 5.4% 5.2% -0.8% -1.6% -0.5% 0.4% 0.3% -2.2% The biggest decrease to the 2014 forecast came from dramatic events in Iraq in the second half of last year Lower oil prices had positive effects in some countries (e.g. Thailand, Chile, Turkey) but negative in others (e.g. Russia, Mexico, Sub- Saharan Africa) We expected a recession in Russia in 2014 as a fallout from the conflict in Ukraine, but it got moved to 2015 and worsened Deeper than initially expected economic slowdowns in Latin America and Iran also contributed to the cuts In later years there were limited changes to our forecasts In oil importing countries lower expenditure on fuel should result in higher available resources to spend on consumption and investments while for oil exporters it means lower government and corporate earnings and lower spending Source: Industry and National sources, Report, Morgan Stanley Research estimates (E) 4

Global supply-demand balance is still struggling to mend, hence average cement prices are continuing to underperform 5.0% 4.0% 3.0% 2.0% Change in production less capacity brought on line World ex-china (% of prior year production) 4.0% 2.0% It is extraordinary and probably unprecedented that for eight years, during 2008-2015, growth in new capacity additions ex-china (mostly EM) will have exceeded growth in demand 1.0% - -1.0% -2.0% -3.0% -4.0% - -2.0% Our analysis demonstrates that in most normally competitive markets capacity utilisation is the single most important determinant of cement prices this chart shows that on a global basis -5.0% -6.0% -7.0% -8.0% -9.0% -10.0% -4.0% -6.0% -8.0% The chart overlays a proxy for changes in global capacity utilisation with changes in real cement prices, clearly demonstrating the relationship although there is some year-to-year volatility 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Change in production less capacity, shifted by one year 2011 2012 2013 2014E 2015E 2016E 2017E 2018E Change in real selling price (r.h.a) The analysis suggests that cement price change (ex-inflation) will remain slightly negative in 2015 and will only turn positive in the following year The bars on the chart show the difference between incremental cement volumes and new capacity additions The bars are shifted forward by one year The line is global change in cement prices in local currencies excluding inflation Source: Industry and National sources, Report, IMF, FLSmidth, Morgan Stanley Research estimates (E) 5

Regionally India and North America are the most promising regions for prices Cement price change 2012 2013 2014E 2015E 2016E 2017E 2018E Western Europe 3.8% -0.6% -1.5% 0.5% 1.7% 2.8% 2.8% Eastern Europe 5.5% 5.2% 3.4% 6.0% 3.3% 4.5% 6.1% Former Soviet Union 15.4% 0.4% 1.2% 6.4% 7.7% 8.4% 8.7% North America 2.9% 4.8% 3.1% 3.5% 3.1% 2.4% 1.8% Latin America 6.3% 3.8% 6.5% 7.5% 7.9% 5.8% 6.2% MENA 9.4% 13.1% 9.5% 8.0% 7.8% 9.0% 9.1% Sub-Saharan Africa 8.9% 4.7% 6.7% 5.4% 5.1% 7.4% 7.5% China -14.5% -3.0% 3.8% 2.3% 2.0% 3.0% 3.0% India 11.2% -3.8% 0.4% 8.5% 10.0% 9.5% 9.5% North Asia 6.6% 1.0% 2.2% 1.7% 2.0% 2.3% 2.4% South Asia 3.7% 4.9% 3.9% 4.6% 5.2% 4.7% 5.1% Australia/Pacific 0.4% -0.6% -2.7% -1.3% 2.1% 2.4% 2.4% -5.1% -0.1% 3.8% 3.7% 3.6% 4.4% 4.5% World ex-china 7.3% 3.8% 3.9% 5.7% 6.1% 6.3% 6.5% ex-china, India, US 6.8% 5.1% 4.6% 5.3% 5.5% 5.8% 6.2% Cement price change ex-inflation 2012 2013 2014E 2015E 2016E 2017E 2018E Western Europe 1.3% -1.9% -2.0% -0.4% 0.3% 1.1% 1.1% Eastern Europe -1.0% - -2.1% 1.0% -1.1% - 1.5% Former Soviet Union 7.5% -5.8% -6.4% -5.6% -0.3% 1.6% 1.9% North America 0.9% 3.3% 1.4% 3.6% 1.0% 0.4% -0.2% Latin America 0.6% -2.7% -1.8% -1.4% -0.5% 0.1% 0.5% MENA -1.7% 1.3% 1.0% -1.2% -0.9% 0.3% 0.5% Sub-Saharan Africa -2.0% -3.8% -2.0% -2.1% -1.5% 0.9% 1.1% China -16.7% -5.5% 1.7% 0.3% -0.4% - - India 0.9% -12.1% -6.4% 2.4% 3.7% 3.8% 3.7% North Asia 5.4% 0.1% 0.3% - - - 0.1% South Asia -2.0% -0.4% -1.2% -0.7% 0.4% 0.2% 0.6% Australia/Pacific -1.3% -2.8% -5.0% -3.3% -0.3% - - -9.3% -4.2% 0.2% - -0.1% 0.4% 0.5% World ex-china 0.5% -2.5% -2.0% -0.4% 0.4% 1.0% 1.2% ex-china, India, US 0.4% -1.0% -1.4% -1.2% -0.4% 0.4% 0.8% Real cement prices (ex-inflation) collapsed in double digits in 2012 in China and in 2013 in India, dragging global prices down In India a recovery from an effective price war is to start unfolding after a slowdown in capacity additions and faster demand growth On the other hand, the United States is the one major market consistently showing positive pricing trends (ex-inflation) since 2012 In the US prices should continue moving ahead of inflation until we expect the recovery to run out of steam in around 2017 Looking into the future, much of the better global performance in prices is concentrated in the markets of India and the US Price change is shown in local currency In the rest of the world (ex-china) we see real cement prices turning positive only in 2017 Better energy prices will continue to help offset the effects of weak pricing in 2015, with the cost of coal and petcoke still on a downward path Source: Industry and National sources, company data, Morgan Stanley Research estimates (E) 6

Increasing industry fragmentation is also not helping with near-term price dynamics 40% 38% 36% Global cement companies: % of global sales ex-china The share in the world (ex-china) of cement sales controlled by global cement majors was rising rapidly before the financial crisis because of a strong investment drive and consolidation 34% 32% 30% A particular jump in 2004 was after the takeovers of Dyckerhoff, Indocement and RMC 28% 26% However, since the crisis it has been sliding quite visibly 24% 22% 20% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 % of global sales (ex-china) 2010 2011 2012 2013 2014 Partially this is explained by a higher weighting of Western Europe in the portfolios of these companies compared with the region s weight in global volumes However, undeniably this is also because of a substantial influx of new capacity investments from other companies and especially many newcomers Global companies are those where the domestic market does not dominate the business make-up: Buzzi Unicem, Cemex, HeidelbergCement, Holcim, Italcementi, Lafarge Source: Company Data, Industry and National sources, Report, Morgan Stanley Research 7

In this presentation we also look beyond the forecast period what will the world of cement look like in 25 years, in 2040? Estimates on the following pages do not represent our official forecast, they are an exploratory scenario of what global cement consumption may look like in the long term Any long-range forecasts are inherently uncertain and should be viewed with caution We rely on third party forecasts as a key input into our calculation rather than our own long-term GDP forecasts produced by IHS and population projections from the UN Besides the economic and demographic dynamics, even though they are the most important factors, there are plenty of other drivers for cement consumption, which are hard to capture scientifically, including availability and traditional use of materials, household formation rates, as well as the country terrain However, given that a typical cement plant lasts for some 50 years, it is important to have an idea of the direction of future long-term development globally and by region to inform today s investment decisions Analysis shows that the regional composition of global cement consumption will change significantly over the next 25 years with widely different potential for growth for different regions 8

Fundamental cement demand properties underlie our long-term estimates Consumption per capita (kg) Consumption per unit of GDP (kt / 2010 PPP USD) 1,000 900 Libya Spain 800 Greece Portugal Italy 700 Tunisia Malaysia Slovenia Turkey 600 Taiwan Switzerland Egypt 500 Algeria Australia Morocco Kazakhstan Poland Czech Republic Japan Hong Kong 400 Russia Iraq Hungary Norway Germany United States Gabon Canada 300 Brazil Argentina United Kingdom BoliviaColombia 200 India Indonesia Nigeria 100Ethiopia Consumption per capita vs. GDP per capita, 2003 2012 10 20 30 40 50 200 Afghanistan 180 160 Togo 140 Laos 120 100 Vietnam Egypt China GDP per capita (2010 PPP USD k) Algeria 80 IraqTunisia Oman Libya Ethiopia 60 India Turkey Indonesia Malaysia 40 Nigeria Brazil Colombia Russia South Korea Portugal Italy Hungary New Zealand Taiwan Switzerland 20 United Kingdom United States Cement intensity of GDP vs. GDP per capita, 1998 2012 10 20 30 40 50 GDP per capita (2010 PPP USD k) Economics and demographics are the key drivers of cement demand to produce our long-term estimates we rely on two well-established relationships between cement consumption, GDP and population First, the cement bell curve shows that cement consumption per capita tends to rise initially with rising GDP per capita, but then falls as countries mature In the development phase the country builds its industrial base and infrastructure and growing incomes allow consumers to invest in their own housing In later stages of development, the drivers of growth go into reverse and demand for cement tends to fall Secondly, cement intensity of GDP is usually highest at early stages of a country s growth, but it tends to be significantly lower in developed economies Investment is paramount for early economic growth As the structure of the economy transforms to become more manufacturing and then service orientated, importance of investments falls As inputs we use long-range GDP forecasts from IHS and population projections by the United Nations Source: Industry and National sources, Report, Morgan Stanley Research 9

Other sources of variability in demand also influence the result Consumption per capita (kg) Country ruggedness vs. cement consumption per capita 1,000 Lebanon 900 Taiwan Greece 800 Israel Italy 700 Austria Slovenia Switzerland 600 Japan Turkey 500 Croatia Germany 400 France Slovakia Poland Mexico Norway Denmark Russia 300 United Kingdom Chile Argentina 200 100 Terrain is one of the factors that differentiates cement consumption rates between countries Countries with a rugged terrain require more cement-intensive methods of building Transportation infrastructure in mountainous areas needs more tunnels and bridges There are other reasons, of course, for differences in cement demand Availability and traditional use of materials differs (cement vs. bricks vs. timber) Household formation rates differ between countries - - 10% 20% 30% 40% 50% 60% 70% 80% Country ruggedness index We have made manual adjustments to account for some of the most obvious irregularities, although this exercise is necessarily imprecise Source: N. Nunn and D. Puga "Ruggedness: The blessing of bad geography in Africa", published in Review of Economics and Statistics, Feb 2012, Morgan Stanley Research. The analysis is based on the period from the early 1990s to 2010. Only countries with GDP per capita higher than $10,000 are included (PPP basis, constant 2010 prices), excluding countries that experienced construction bubbles, like Ireland or Spain. 10

Total long-term cement demand estimate comes close to 4.5 billion tonnes, around the average level of next five years, with the world s regions much more balanced 5,000 4,500 Global cement consumption (mt) Long-term cement consumption should increase strongly in emerging markets ex- China, near stagnate in developed markets and fall dramatically in China 4,000 690 3,500 3,000 2,500 915 925 China and India would make up just over 20% of global demand each in 2040, compared to 60% for China and 6% for India now 2,000 1,500 1,000 500 460 390 380 315 Sub-Saharan Africa is set for the biggest break-through, increasing to 10% of total demand from negligible levels now - 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014E 2016E 2018E Developed markets Eastern Europe Latin America MENA Sub-Saharan Africa China India Asia ex-china/india 345 2040E Developed markets and MENA could deliver sub-1% growth beyond the forecast period while Latin America and Asia look set to expand their shares Source: Industry and National sources, Report, Cembureau, IHS, UN, Morgan Stanley Research estimates (E) 11

Sub-Saharan Africa looks set to be the fastest growing region, followed by India, while China would have to undergo a dramatic adjustment Consumption (mt) 1974 1979 1984 1989 1994 1999 2004 2009 2014E 2019E 2040E Developed markets 357 370 330 377 365 400 419 306 287 328 345 Eastern Europe 174 195 199 220 112 112 142 166 215 242 315 Latin America 48 68 64 77 95 112 112 153 188 214 380 MENA 29 56 96 84 108 120 157 249 282 348 390 Sub-Saharan Africa 16 19 20 21 24 31 44 68 96 133 460 China 36 74 122 210 391 557 927 1,614 2,461 2,600 925 India 14 20 29 45 53 96 123 193 257 385 915 Asia ex-china/india 43 60 75 104 177 160 217 259 327 420 690 717 862 934 1,140 1,325 1,589 2,141 3,007 4,113 4,669 4,420 World ex-china 673 787 810 930 934 1,032 1,215 1,393 1,652 2,070 3,490 EM ex-china 316 417 480 552 569 632 795 1,087 1,365 1,742 3,145 CAGR, period prior to year shown 1974 1979 1984 1989 1994 1999 2004 2009 2014E 2019E 2040E Developed markets 3.4% 0.7% -2.3% 2.7% -0.7% 1.9% 0.9% -6.1% -1.3% 2.7% 0.2% Eastern Europe 5.9% 2.3% 0.4% 2.0% -12.7% 0.0% 4.9% 3.2% 5.3% 2.4% 1.3% Latin America 9.3% 7.3% -1.4% 3.9% 4.3% 3.3% -0.0% 6.4% 4.1% 2.6% 2.8% MENA 12.5% 14.2% 11.5% -2.5% 5.2% 2.2% 5.5% 9.7% 2.5% 4.3% 0.5% Sub-Saharan Africa 9.2% 3.2% 0.6% 1.4% 2.3% 5.3% 7.2% 9.1% 7.4% 6.7% 6.1% China 10.2% 15.5% 10.4% 11.5% 13.2% 7.3% 10.7% 11.7% 8.8% 1.1% -4.8% India 0.9% 6.9% 8.4% 9.0% 3.2% 12.6% 5.1% 9.4% 6.0% 8.4% 4.2% Asia ex-china/india 13.6% 7.2% 4.3% 6.9% 11.2% -2.0% 6.3% 3.5% 4.8% 5.1% 2.4% 5.5% 3.8% 1.6% 4.1% 3.1% 3.7% 6.1% 7.0% 6.5% 2.6% -0.3% World ex-china 5.0% 3.2% 0.6% 2.8% 0.1% 2.0% 3.3% 2.8% 3.5% 4.6% 2.5% EM ex-china 7.0% 5.7% 2.9% 2.8% 0.6% 2.1% 4.7% 6.4% 4.7% 5.0% 2.9% In Sub-Saharan Africa growth could be rapid, but even after 25 years at this pace consumption per capita wuold still come out below 300 kg, suggesting further potential In China the rebalancing of an investmentheavy economy would result in a substantial correction Although very deep, this kind of fall is not unprecedented Countries like Japan, South Korea and especially Taiwan have had adjustments of similar, even if a bit smaller magnitude We expect practically no growth in developed markets beyond the recovery over the next five years MENA, the region with the second highest per capita rates, looks unlikely to grow much as well, especially if long-term hydrocarbon prices do not increase strongly Source: Industry and National sources, Report, Cembureau, IHS, UN, Morgan Stanley Research estimates (E) 12

Over time cement consumption is set to about double in emerging markets ex-china 3,500 Global cement consumption ex-china/dm (mt) There is still significant potential for structural growth in most emerging economies in the world 3,000 2,500 2,000 690 915 The largest absolute increase is estimated for India and the largest percentage rise is reserved for Sub-Saharan Africa 1,500 1,000 460 390 Analysis shows that in the long-term the split of cement consumption much more closely follows the shares of population in the world 500 380-1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014E 2016E 2018E Eastern Europe Latin America MENA Sub-Saharan Africa India Asia ex-china/india 315 2040E with the exception of Sub-Saharan Africa, where it should still remain short of the appropriate level given an extremely low starting point Source: Industry and National sources, Report, Cembureau, IHS, UN, Morgan Stanley Research estimates (E) 13

In developed markets cement consumption per capita is set to remain at c.350 kg, unchanged after the completion of the current recovery 1,000 900 Consumption per capita (kg) What has happened in developed markets in the financial crisis was not a disaster, but a conversion of regional consumption per capita rates 800 700 600 500 400 In Western Europe North, cement consumption peaked long ago, in the early 1970s, following the completion of post-war reconstruction 600 500 400 300 300 200 100-1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014E 2016E 2018E Western Europe, North North America Western Europe, Mediterranean Developed Asia/Australia Consumption per capita vs. GDP, developed markets 30 25 20 15 The Mediterranean countries went further given a lower starting point, but then consumption was over-stimulated first by EU accession, and then by the credit bubble, before a recent collapse The trajectory in Asia (mainly, Japan) was similar until the early 1980s, followed by an asset bubble, which has been deflating for the past 20 years now In North America consumption per capita has cycled around c.325 kg for the past 60 years there is no reason to suggest that this will change 200 100 10 5 In the long-term we expect consumption per capita in developed markets to remain at c.350 kg - 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016E 2019E Consumption per capita (kg) Consumption per unit of GDP (kt / 2010 PPP USD) (r.h.a.) - 2040E while cement intensity of GDP should continue its downward exponential trend Source: Industry and National sources, Report, Cembureau, IMF, Morgan Stanley Research estimates (E) 14

In China cement consumption is near the levels where it tends to peak; we think it will have to go down from here 30 25 Cumulative consumption per capita to peak (tonne) Cumulative consumption per capita through history shows how much a country has built in total for each resident 20 15 10 Calculated from 1950 (since after the end of World War II), the measure has reached c.20 tonnes on average when consumption per capita peaked 5-1,800 1,600 Western Europe South Korea - China Australia North America Japan Consumption per capita vs. GDP per capita Hong Kong Taiwan China is already above that level; we expect a turn in the next few years even though consumption per capita is forecast to go further up before it peaks This view is supported by the government efforts to re-focus the economy from an investment-driven to consumption-led model Consumption per capita (kg) 1,400 1,200 1,000 800 600 400 200-5.0 10.0 15.0 20.0 25.0 GDP per capita (2010 PPP USD k) 30.0 35.0 China in 2040 40.0 At the same time, China faces fundamental headwinds from a reversal of the demographic tide, slowing growth in productivity, overcapacity in many sectors and balance sheet deleveraging Experiences of other Asian countries also support this forecast; in their context our long-range estimate for China appears reasonable China Japan South Korea Taiwan Source: Industry and National sources, Report, Cembureau, IMF, IHS, UN, Morgan Stanley Research estimates (E) 15

The biggest global challenge will be how to absorb massive Chinese capacity, which will be freed up Change in cement consumption (mt) 2019-2040 Almost 1.7 billion tonnes of cement is the estimated reduction in demand in China to 2040 1,500 1,000 Asia ex- China/India, 270 India, 530 A clear concern for the global cement industry would be how much of this amount will be exported to other markets 500 - (500) Eastern Europe, 70 Sub-Saharan Africa, 325 Latin America, 165 China, (1,675) MENA, 40 Developed markets, 20 The answer is probably a small portion given that most plants are away from the coast but even 15% would cover almost all of the incremental needs in the rest of Asia ex-india At the same time, India is estimated to add more than half a billion tonnes of cement in addition to the growth forecast for the next five years (1,000) (1,500) And in Sub-Saharan Africa the estimated increase in volumes is to c.3.5x the 2019 level (and almost 5x compared to today) (2,000) Source: IHS, UN, Morgan Stanley Research estimates (E) 16

The trend growth rate for consumption per capita in emerging markets (ex-china) comes to 1.8%, close to the average of the last 40 years; in developed markets it will be zero Consumption per capita change, EM ex-china Consumption per capita change, DM 12.5% 12.5% 10.0% 10.0% 7.5% 7.5% 5.0% 5.0% 2.5% 2.5% -2.5% -2.5% -5.0% -5.0% -7.5% -7.5% 17 Source: Industry and National sources, Cembureau, Report, IMF, Morgan Stanley Research estimates (E) - 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014E 2016E 2018E 2032E 2034E 2036E 2038E 2040E Emerging markets ex-china 12.5% Consumption per capita change, world ex-china 10.0% 7.5% 5.0% 2.5% -2.5% -5.0% -7.5% - 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014E 2016E 2018E 2032E 2034E 2036E 2038E 2040E World ex-china - 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014E 2016E 2018E 2032E 2034E 2036E 2038E 2040E Developed markets Consumption per capita (kg) 500 400 300 200 100-1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014E 2016E 2018E 2040E Developed markets Emerging markets ex-china

Regional cement forecasts: developed markets Cement consumption Western Europe, change y-o-y% France 8.2% -6.7% -3.8% -5.3% -3.2% 0.9% 3.6% 3.1% 2.7% Germany 11.0% -3.5% -2.2% 2.6% 1.1% 1.5% 1.5% 0.2% -2.1% Greece -35.0% -32.5% -7.5% 5.0% 7.5% 9.0% 9.0% 7.5% 2.5% Italy -3.2% -22.1% -14.9% -7.1% -1.6% 1.2% 3.9% 6.9% 6.0% Spain -16.4% -34.0% -20.1% 0.3% 6.2% 6.1% 13.2% 16.8% 6.6% United Kingdom 7.6% -7.1% 11.9% 4.3% 3.5% 3.8% 5.0% 3.2% 1.5% Others 4.0% -9.9% -3.7% -0.4% 2.0% 2.7% 2.4% 2.0% 2.0% -0.5% -14.5% -6.1% -1.1% 1.1% 2.5% 4.1% 4.4% 2.4% North America, change y-o-y% Canada 0.6% 7.0% -3.5% 0.2% -1.3% 0.7% 3.0% 2.6% 2.0% United States 2.6% 8.9% 4.2% 7.4% 8.0% 8.0% 4.4% 2.1% 0.0% 2.3% 8.7% 3.4% 6.7% 7.1% 7.3% 4.3% 2.2% 0.2% Australia/Pacific, change y-o-y% Australia 0.7% 4.8% -1.3% 0.8% -1.8% -3.7% 0.1% 1.8% 2.3% Others -1.0% 8.2% 3.5% 4.1% 4.0% 2.8% 2.8% 2.9% 2.9% 0.4% 5.3% -0.5% 1.3% -0.7% -2.5% 0.7% 2.0% 2.4% Source: Industry and National sources, Report, Morgan Stanley Research estimates (E) France Very poor sentiment and high government debt keep construction trends under pressure Better (but still falling) new housing volumes should start flattening the negative trajectory into 2015 Germany Despite industry hopes, this is not a growth market A post-crisis bounce in new housing has run its course; no further expansion is likely given worsened demographics with other sectors barely growing too Spain After an -80% fall cement demand has bottomed We see the start of a recovery from 2015, initially driven by government investments in infrastructure United States Outlook is well supported, with residential and nonresidential construction both adding to expansion Lower oil prices impact on shale business may be a concern, but total economic effect should be positive Australia Housing boom of last year seems to be fizzling out as the economy slows and unemployment creeps up At the same time, the resources 'capex cliff is set to produce falls in private infrastructure of above 20% 18

Regional cement forecasts: Eastern Europe and the Former Soviet Union Cement consumption Eastern Europe, change y-o-y% Poland 21.3% -16.6% -8.5% 6.1% 3.4% 6.9% 5.8% 3.8% 3.5% Romania 4.3% 3.5% -7.3% 0.8% 3.5% 3.8% 4.0% 4.0% 4.0% Turkey 9.5% 1.0% 15.7% 1.6% 4.5% 3.8% 4.3% 4.3% 4.5% Others -1.2% -10.5% -3.9% 1.6% 3.1% 3.3% 3.7% 3.5% 3.4% 8.6% -4.5% 6.0% 2.2% 4.0% 4.2% 4.4% 4.1% 4.1% Former Soviet Union, change y-o-y% Russia 15.6% 13.2% 7.0% 2.5% -13.5% -0.5% 3.5% 2.5% 0.0% Ukraine 15.3% -6.2% -1.5% -10.5% -10.5% 6.5% 11.0% 5.0% 4.5% Others 0.0% 8.0% 8.4% 6.8% 3.2% 5.5% 5.6% 5.5% 5.4% 10.8% 9.6% 6.5% 2.6% -8.5% 1.9% 4.8% 3.7% 2.2% Source: Industry and National sources, Report, Morgan Stanley Research estimates (E) Poland After a tremendous Q1 2014 and difficult following months the market seems to be finding its footing We expect a pause in growth in 2015, but reacceleration afterwards with infrastructure leading the way driven by new EU funds Turkey Demand slowed progressively through 2014 due to higher interest rates and a slowing economy We expect a moderately positive outlook despite high levels of construction, as lower oil prices will be clearly beneficial for the Turkish economy Russia Demand in 2014 stayed up despite an unfolding geopolitical crisis supported by a mini-housing boom as people looked for protection against uncertainty 2015 does not promise anything positive after the oil price has collapsed and short-term interest rates have been hiked to 17% Ukraine Economic crisis and a war in the east of the country destroyed non-residential and infrastructure demand, even as housing continued to grow slightly Further economic restructuring will ensure further falls, though we see a later bounce from low levels 19

Regional cement forecasts: Latin America Cement consumption Latin America, change y-o-y% Argentina 11.9% -8.3% 11.8% -3.5% -1.0% 2.6% 5.0% 4.0% 3.5% Brazil 8.0% 7.0% 2.3% 2.0% -3.5% -3.5% 3.5% 3.5% 2.7% Colombia 13.8% 3.4% 3.5% 9.8% 4.0% 4.0% 5.5% 5.5% 5.0% Ecuador 7.9% 5.6% 9.5% -2.0% 2.5% 4.0% 5.5% 5.0% 5.0% Mexico 2.3% 2.5% -5.8% 3.8% 4.0% 3.0% 3.5% 4.0% 4.0% Others 6.6% 6.1% 5.2% 0.3% 3.0% 3.5% 4.3% 4.3% 4.3% 6.9% 4.5% 2.1% 1.9% 0.6% 0.9% 4.0% 4.0% 3.7% Source: Industry and National sources, Report, Morgan Stanley Research estimates (E) Argentina The cement industry is continuing on a rollercoaster ride with demand falling again in 2014 The economy is in a two year recession with the elections later in the year not helping confidence Brazil The economy has struggled since 2012, the end of commodity & credit booms is putting further pressure Significant fiscal consolidation is a major headwind A recent corruption scandal around Petrobras and construction companies creates more uncertainty Colombia The economy leapt from a cyclical downturn in 2014 The country is expected to roll out a substantial infrastructure programme supporting future demand However, lower oil prices will be very unhelpful Mexico Construction is recovering from a plunge in 2013 The outlook should be positive, with the government looking to make a large push into infrastructure and structural reforms progressing if not for the plunge in the price of crude oil 20

Regional cement forecasts: Middle East and Africa Cement consumption MENA, change y-o-y% Algeria 3.2% 5.1% 9.7% 5.8% 1.0% 3.8% 3.4% 3.3% 3.9% Egypt 0.9% 5.0% -2.0% 3.6% 4.3% 4.3% 4.4% 4.5% 4.5% Iran 2.9% 2.9% -0.7% -6.5% 0.7% 2.2% 2.7% 2.7% 2.7% Iraq 36.8% 12.5% 8.8% -20.0% -10.0% 8.1% 20.0% 14.5% 9.6% Morocco 10.7% -1.6% -6.3% -5.4% -2.0% 4.0% 7.8% 6.9% 5.9% Saudi Arabia 13.7% 12.7% 4.4% 2.4% 7.5% 5.0% 3.4% 3.4% 2.9% UAE -8.7% -18.5% -10.5% 4.3% 7.5% 10.0% 10.0% 7.0% 5.1% Others -14.0% 1.0% 3.4% 0.8% 4.8% 4.2% 5.2% 4.4% 4.7% 1.6% 4.1% 1.5% -1.1% 3.1% 4.4% 5.1% 4.6% 4.3% Sub-Saharan Africa, change y-o-y% Nigeria 8.3% 7.7% 14.4% 0.3% 3.5% 7.2% 9.0% 8.0% 8.0% South Africa 3.3% 2.9% 5.3% -1.6% 2.5% 3.0% 3.5% 3.8% 3.3% Others 14.6% 11.8% 7.3% 5.9% 6.1% 7.7% 7.5% 7.4% 7.2% 11.4% 9.6% 8.6% 3.7% 5.1% 7.0% 7.4% 7.1% 6.9% Source: Industry and National sources, Report, Morgan Stanley Research estimates (E) Algeria Government has extensive plans for investments in rail, road and housing projects however falling oil prices are resulting in an unsustainable budget deficit rationalisation of spending has started, which will lead to slower growth Egypt Financial assistance from Gulf states has brought stability, as well as funding for investments Political stabilisation is helping with market confidence, which is supportive for the outlook Production has been affected by gas supply issues; the industry is gradually moving to the use of coal Nigeria Growth has come to a sudden halt initially for the industry s operational issues, but now the reduction in oil earnings is creating further obstacles to growth Displacement of imports with local cement will go on Saudi Arabia The construction industry has been adjusting to new legislative environment for expatriate labour The pipeline of infrastructure projects is vast and investments should re-accelerate despite falling oil prices, but oil will probably temper future growth 21

Regional cement forecasts: Asia-Pacific Cement consumption China 10.0% 7.3% 10.0% 2.6% 2.2% 2.0% 1.5% 0.5% -0.6% India 6.2% 6.7% 3.8% 6.1% 8.4% 9.5% 8.5% 8.0% 7.5% South Asia, change y-o-y% Bangladesh 6.7% 3.8% -3.0% 10.0% 6.4% 7.8% 8.0% 8.0% 8.0% Indonesia 16.0% 16.1% 7.6% 1.6% 7.8% 8.4% 8.0% 6.8% 6.5% Malaysia 7.1% 4.8% 0.5% 5.2% 4.2% 5.4% 5.0% 5.0% 5.0% Pakistan 0.7% 8.7% 2.1% 7.7% 6.8% 6.4% 6.0% 6.0% 5.5% Philippines 1.1% 17.7% 7.8% 9.2% 7.8% 5.8% 7.5% 6.5% 6.5% Thailand 4.6% 10.9% 10.0% -0.4% 5.8% 4.0% 4.5% 4.5% 4.5% Vietnam -2.0% -7.5% 2.0% 4.0% 4.6% 4.6% 4.6% 4.7% 5.5% Others 14.0% 12.2% 4.1% 2.3% 3.7% 6.4% 6.8% 6.8% 6.9% 6.1% 7.5% 4.6% 3.8% 6.0% 6.2% 6.3% 6.0% 6.0% North Asia, change y-o-y% Japan 2.0% 4.5% 6.3% -0.3% - -0.5% -0.5% -0.5% - South Korea -1.9% -1.6% 2.8% -1.6% 0.5% 0.5% 0.5% 0.5% 0.5% Taiwan 7.2% -1.1% 2.4% -0.8% -2.9% -0.5% -0.5% -0.5% -0.5% Others 12.6% 7.4% 3.9% 3.3% 3.4% 3.5% 3.6% 3.4% 3.3% 2.0% 1.8% 4.2% -0.4% 0.3% 0.4% 0.4% 0.4% 0.6% China Property market correction appears to have started with both sales and starts falling Infrastructure demand has remained resilient so far, but it may be affected as fewer land purchases will hit the funding of local governments India The election of a government with a strong mandate for development promises an inflexion in investments Macro indicators have been improving with inflation falling to multi-year lows; the Central Bank has now started the interest rate reduction cycle Cement demand has already shown signs of acceleration growing by c.9% since May Indonesia The market experienced rapid growth in 2011-2012 with a property boom stimulated by low interest rates Subsequent interest rate rises have slowed property demand significantly in recent quarters, with elections in 2014 bringing further instability The main issue facing the industry now is a large influx of new capacity Source: Industry and National sources, Report, Morgan Stanley Research estimates (E) 22

Recent cement trends Africa & Middle East Asia China 20% 20% 30% 15% 15% 20% 10% 10% 10% 5% 5% 0% 0% 0% -10% -5% -5% -20% -10% -10% -30% Mar '08 Jul '08 Nov '08 Mar '09 Jul '09 Nov '09 Mar '10 Jul '10 Nov '10 Mar '11 Jul '11 Nov '11 Mar '12 Jul '12 Nov '12 Mar '13 Jul '13 Nov '13 Mar '14 Jul '14 Nov '14 30% 20% 10% 0% -10% -20% -30% Mar '08 Jul '08 Nov '08 Mar '09 Jul '09 Nov '09 Mar '10 Jul '10 Nov '10 Mar '11 Jul '11 Nov '11 Mar '12 Jul '12 Nov '12 Mar '13 Jul '13 Nov '13 Mar '14 Jul '14 Nov '14 20% 10% 0% -10% -20% -30% Mar '08 Jul '08 Nov '08 Mar '09 Jul '09 Nov '09 Mar '10 Jul '10 Nov '10 Mar '11 Jul '11 Nov '11 Mar '12 Jul '12 Nov '12 Mar '13 Jul '13 Nov '13 Mar '14 Jul '14 Nov '14 Mar '08 Jul '08 Nov '08 Mar '09 Jul '09 Nov '09 Mar '10 Jul '10 Nov '10 Mar '11 Jul '11 Nov '11 Mar '12 Jul '12 Nov '12 Mar '13 Jul '13 Nov '13 Mar '14 Jul '14 Nov '14 20% 15% 10% 5% 0% -5% -10% Mar '08 Jul '08 Nov '08 Mar '09 Jul '09 Nov '09 Mar '10 Jul '10 Nov '10 Mar '11 Jul '11 Nov '11 Mar '12 Jul '12 Nov '12 Mar '13 Jul '13 Nov '13 Mar '14 Jul '14 Nov '14 20% 10% 0% -10% -20% -30% Mar '08 Jul '08 Nov '08 Mar '09 Jul '09 Nov '09 Mar '10 Jul '10 Nov '10 Mar '11 Jul '11 Nov '11 Mar '12 Jul '12 Nov '12 Mar '13 Jul '13 Nov '13 Mar '14 Jul '14 Nov '14 Mar '08 Jul '08 Nov '08 Mar '09 Jul '09 Nov '09 Mar '10 Jul '10 Nov '10 Mar '11 Jul '11 Nov '11 Mar '12 Jul '12 Nov '12 Mar '13 Jul '13 Nov '13 Mar '14 Jul '14 Nov '14 Eastern Europe India Latin America 20% 15% 10% 5% 0% -5% -10% Mar '08 Jul '08 Nov '08 Mar '09 Jul '09 Nov '09 Mar '10 Jul '10 Nov '10 Mar '11 Jul '11 Nov '11 Mar '12 Jul '12 Nov '12 Mar '13 Jul '13 Nov '13 Mar '14 Jul '14 Nov '14 North America Western Europe Graphs show unweighted average across the markets belonging to each region. The change y-o-y is a 3-month moving average, with the exception of the last two months. Source: Industry and National Sources, Bloomberg, Datastream, Morgan Stanley Research 23

Appendix: cement consumption and production by country Consumption of cement (mt) Western Europe France 21 20 19 18 18 18 18 19 20 Germany 27 26 26 27 27 27 28 28 27 Greece 4 3 2 3 3 3 3 4 4 Italy 33 26 22 20 20 20 21 22 24 Spain 20 14 11 11 11 12 14 16 17 United Kingdom 11 11 12 12 13 13 14 14 14 Others 37 33 32 32 32 33 34 35 36 Eastern Europe Poland 19 16 14 15 16 17 18 18 19 Romania 7 8 7 7 7 8 8 8 9 Turkey 52 53 61 62 65 67 70 73 77 Others 21 19 18 18 19 19 20 21 22 Former Soviet Union Russia 58 65 70 71 62 62 64 65 65 Ukraine 10 10 10 9 8 8 9 9 10 Others 26 28 30 32 33 35 37 39 41 North America Canada 9 9 9 9 9 9 9 10 10 United States 72 79 82 88 95 103 107 109 109 Latin America Argentina 11 10 12 11 11 11 12 13 13 Brazil 64 68 70 71 69 66 69 71 73 Colombia 10 10 11 12 12 13 14 14 15 Ecuador 6 6 7 6 7 7 7 8 8 Mexico 39 40 38 39 41 42 43 45 47 Others 43 46 48 48 49 51 53 56 58 MENA Algeria 20 21 23 24 24 25 26 27 28 Egypt 49 51 50 52 54 56 59 62 64 Iran 56 58 58 54 54 55 57 59 60 Iraq 16 18 20 16 14 15 18 21 23 Morocco 16 16 15 14 14 14 15 17 17 Saudi Arabia 47 53 55 57 61 64 66 68 70 United Arab Emirate 12 10 9 9 10 10 12 12 13 Others 54 55 57 57 60 63 66 69 72 Sub-Saharan Africa Nigeria 17 18 21 21 22 24 26 28 30 South Africa 11 12 12 12 12 13 13 14 14 Others 50 56 60 64 67 73 78 84 90 China 2,032 2,181 2,400 2,461 2,516 2,565 2,603 2,616 2,600 India 219 234 243 257 279 305 331 358 385 North Asia Japan 43 45 47 47 47 47 47 47 47 South Korea 45 44 45 44 45 45 45 45 46 Taiwan 13 13 13 13 12 12 12 12 12 Others 12 13 13 14 14 15 15 16 16 South Asia Bangladesh 15 15 15 16 17 19 20 22 24 Indonesia 49 57 61 62 67 72 78 83 89 Malaysia 18 19 19 20 21 22 23 24 25 Pakistan 23 25 25 27 29 31 33 35 37 Philippines 16 18 20 22 23 25 27 28 30 Thailand 28 31 34 34 36 38 39 41 43 Vietnam 49 46 46 48 50 53 55 58 61 Others 29 32 34 35 36 38 41 43 46 Australia/Pacific Australia 10 10 10 10 10 9 9 10 10 Others 2 2 2 2 2 2 2 2 2 World 3,580 3,770 4,030 4,130 4,240 4,370 4,510 4,620 4,690 ex-china 1,548 1,589 1,630 1,669 1,724 1,805 1,907 2,004 2,090 Source: Industry and National sources, Report, Morgan Stanley Research estimates (E) Western Europe France 19 18 17 16 15 15 16 16 17 Germany 34 32 31 31 32 32 33 33 33 Greece 6 5 5 5 5 6 6 6 6 Italy 33 26 23 22 21 21 22 24 25 Spain 22 16 13 14 15 15 17 19 20 United Kingdom 9 8 8 9 9 9 10 10 11 Others 39 37 36 35 36 36 37 38 38 Eastern Europe Poland 19 16 14 15 16 17 18 19 19 Romania 8 8 7 7 7 7 8 8 8 Turkey 63 63 71 70 72 75 78 82 87 Others 24 22 22 23 23 24 24 25 26 Former Soviet Union Russia 56 62 66 68 60 60 62 64 64 Ukraine 11 10 10 9 8 9 9 10 10 Others 25 28 29 33 36 39 42 44 46 North America Canada 11 12 11 11 11 12 12 13 13 United States 66 72 75 80 87 94 98 99 100 Latin America Argentina 12 11 12 11 11 11 12 12 13 Brazil 64 69 71 72 70 67 70 72 74 Colombia 11 11 11 12 12 13 13 14 15 Ecuador 6 6 6 6 6 7 7 7 7 Mexico 41 42 39 41 43 44 45 47 49 Others 44 47 50 50 51 53 55 58 60 MENA Algeria 19 19 19 19 19 21 23 25 26 Egypt 49 53 51 53 55 58 61 64 66 Iran 66 69 71 67 65 67 68 70 73 Iraq 5 8 7 5 5 5 7 9 11 Morocco 16 16 15 14 14 14 15 17 17 Saudi Arabia 48 53 56 57 61 64 66 68 70 United Arab Emirate 16 14 16 16 17 18 19 20 21 Others 50 50 51 51 54 56 59 62 65 Sub-Saharan Africa Nigeria 12 17 20 20 21 24 27 29 31 South Africa 12 12 12 12 13 13 13 14 14 Others 41 49 53 58 65 73 81 87 93 China 2,058 2,193 2,404 2,465 2,518 2,567 2,604 2,616 2,600 India 220 235 244 258 280 306 332 359 386 North Asia Japan 52 53 56 56 55 55 54 54 55 South Korea 48 47 47 47 47 47 47 47 48 Taiwan 17 16 17 15 15 15 15 15 14 Others 9 9 10 10 10 11 11 12 12 South Asia Bangladesh 15 15 15 16 17 19 20 22 24 Indonesia 49 55 59 60 66 73 80 85 91 Malaysia 21 22 21 22 23 24 25 27 28 Pakistan 32 33 34 35 36 37 38 41 43 Philippines 16 19 20 22 24 25 27 29 31 Thailand 40 44 47 46 47 48 49 50 52 Vietnam 52 47 48 51 53 56 58 61 64 Others 10 11 12 14 15 17 19 21 23 Australia/Pacific Australia 9 9 9 9 9 9 9 9 9 Others 2 2 2 2 1 1 1 1 1 World 3,580 3,770 4,030 4,130 4,240 4,370 4,510 4,620 4,690 ex-china 1,522 1,577 1,626 1,665 1,722 1,803 1,906 2,004 2,090 24

Appendix: change in cement consumption and consumption per capita Change in consumption of cement Western Europe France 8.2% -6.7% -3.8% -5.3% -3.2% 0.9% 3.6% 3.1% 2.7% Germany 11.0% -3.5% -2.2% 2.6% 1.1% 1.5% 1.5% 0.2% -2.1% Greece -35.0% -32.5% -7.5% 5.0% 7.5% 9.0% 9.0% 7.5% 2.5% Italy -3.2% -22.1% -14.9% -7.1% -1.6% 1.2% 3.9% 6.9% 6.0% Spain -16.4% -34.0% -20.1% 0.3% 6.2% 6.1% 13.2% 16.8% 6.6% United Kingdom 7.6% -7.1% 11.9% 4.3% 3.5% 3.8% 5.0% 3.2% 1.5% Others 4.0% -9.9% -3.7% -0.4% 2.0% 2.7% 2.4% 2.0% 2.0% Eastern Europe Poland 21.3% -16.6% -8.5% 6.1% 3.4% 6.9% 5.8% 3.8% 3.5% Romania 4.3% 3.5% -7.3% 0.8% 3.5% 3.8% 4.0% 4.0% 4.0% Turkey 9.5% 1.0% 15.7% 1.6% 4.5% 3.8% 4.3% 4.3% 4.5% Others -1.2% -10.5% -3.9% 1.6% 3.1% 3.3% 3.7% 3.5% 3.4% FSU Russia 15.6% 13.2% 7.0% 2.5% -13.5% -0.5% 3.5% 2.5% 0.0% Ukraine 15.3% -6.2% -1.5% -10.5% -10.5% 6.5% 11.0% 5.0% 4.5% Others 0.0% 8.0% 8.4% 6.8% 3.2% 5.5% 5.6% 5.5% 5.4% North America Canada 0.6% 7.0% -3.5% 0.2% -1.3% 0.7% 3.0% 2.6% 2.0% United States 2.6% 8.9% 4.2% 7.4% 8.0% 8.0% 4.4% 2.1% 0.0% Latin America Argentina 11.9% -8.3% 11.8% -3.5% -1.0% 2.6% 5.0% 4.0% 3.5% Brazil 8.0% 7.0% 2.3% 2.0% -3.5% -3.5% 3.5% 3.5% 2.7% Colombia 13.8% 3.4% 3.5% 9.8% 4.0% 4.0% 5.5% 5.5% 5.0% Ecuador 7.9% 5.6% 9.5% -2.0% 2.5% 4.0% 5.5% 5.0% 5.0% Mexico 2.3% 2.5% -5.8% 3.8% 4.0% 3.0% 3.5% 4.0% 4.0% Others 6.6% 6.1% 5.2% 0.3% 3.0% 3.5% 4.3% 4.3% 4.3% MENA Algeria 3.2% 5.1% 9.7% 5.8% 1.0% 3.8% 3.4% 3.3% 3.9% Egypt 0.9% 5.0% -2.0% 3.6% 4.3% 4.3% 4.4% 4.5% 4.5% Iran 2.9% 2.9% -0.7% -6.5% 0.7% 2.2% 2.7% 2.7% 2.7% Iraq 36.8% 12.5% 8.8% -20.0% -10.0% 8.1% 20.0% 14.5% 9.6% Morocco 10.7% -1.6% -6.3% -5.4% -2.0% 4.0% 7.8% 6.9% 5.9% Saudi Arabia 13.7% 12.7% 4.4% 2.4% 7.5% 5.0% 3.4% 3.4% 2.9% United Arab Emirate -8.7% -18.5% -10.5% 4.3% 7.5% 10.0% 10.0% 7.0% 5.1% Others -14.0% 1.0% 3.4% 0.8% 4.8% 4.2% 5.2% 4.4% 4.7% Sub-Saharan Africa Nigeria 8.3% 7.7% 14.4% 0.3% 3.5% 7.2% 9.0% 8.0% 8.0% South Africa 3.3% 2.9% 5.3% -1.6% 2.5% 3.0% 3.5% 3.8% 3.3% Others 14.6% 11.8% 7.3% 5.9% 6.1% 7.7% 7.5% 7.4% 7.2% China 10.0% 7.3% 10.0% 2.6% 2.2% 2.0% 1.5% 0.5% -0.6% India 6.2% 6.7% 3.8% 6.1% 8.4% 9.5% 8.5% 8.0% 7.5% North Asia Japan 2.0% 4.5% 6.3% -0.3% 0.0% -0.5% -0.5% -0.5% 0.0% South Korea -1.9% -1.6% 2.8% -1.6% 0.5% 0.5% 0.5% 0.5% 0.5% Taiwan 7.2% -1.1% 2.4% -0.8% -2.9% -0.5% -0.5% -0.5% -0.5% Others 12.6% 7.4% 3.9% 3.3% 3.4% 3.5% 3.6% 3.4% 3.3% South Asia Bangladesh 6.7% 3.8% -3.0% 10.0% 6.4% 7.8% 8.0% 8.0% 8.0% Indonesia 16.0% 16.1% 7.6% 1.6% 7.8% 8.4% 8.0% 6.8% 6.5% Malaysia 7.1% 4.8% 0.5% 5.2% 4.2% 5.4% 5.0% 5.0% 5.0% Pakistan 0.7% 8.7% 2.1% 7.7% 6.8% 6.4% 6.0% 6.0% 5.5% Philippines 1.1% 17.7% 7.8% 9.2% 7.8% 5.8% 7.5% 6.5% 6.5% Thailand 4.6% 10.9% 10.0% -0.4% 5.8% 4.0% 4.5% 4.5% 4.5% Vietnam -2.0% -7.5% 2.0% 4.0% 4.6% 4.6% 4.6% 4.7% 5.5% Others 14.0% 12.2% 4.1% 2.3% 3.7% 6.4% 6.8% 6.8% 6.9% Australia/Pacific Australia 0.7% 4.8% -1.3% 0.8% -1.8% -3.7% 0.1% 1.8% 2.3% Others -1.0% 8.2% 3.5% 4.1% 4.0% 2.8% 2.8% 2.9% 2.9% World 7.7% 5.6% 7.1% 2.5% 2.7% 3.1% 3.1% 2.4% 1.6% ex-china 4.8% 3.3% 3.0% 2.3% 3.3% 4.8% 5.4% 5.0% 4.5% Source: Industry and National sources, Report, Morgan Stanley Research estimates (E) Consumption per capita (kg) Western Europe France 339 315 302 285 274 276 284 292 298 Germany 341 328 320 328 331 336 341 341 334 Greece 360 243 226 238 256 279 304 327 336 Italy 553 430 365 337 330 333 344 367 387 Spain 437 289 231 233 248 263 299 350 374 United Kingdom 179 170 189 196 202 208 218 223 225 Others 429 385 369 366 372 380 387 393 399 Eastern Europe Poland 485 404 370 392 406 434 459 476 493 Romania 348 361 335 361 376 392 410 428 448 Turkey 707 705 798 802 830 852 880 909 941 Others 321 288 277 282 291 301 312 323 335 FSU Russia 403 455 485 498 430 428 443 454 454 Ukraine 227 213 210 189 169 181 201 211 221 Others 272 290 310 328 335 350 366 382 399 North America Canada 258 272 260 258 252 251 256 260 263 United States 231 250 259 276 296 318 330 335 333 Latin America Argentina 281 255 282 269 263 267 277 285 292 Brazil 324 343 348 352 337 322 331 340 347 Colombia 221 225 231 250 257 264 276 288 299 Ecuador 374 388 418 404 407 417 434 449 465 Mexico 338 342 318 327 337 344 352 363 373 Others 240 251 260 257 261 267 274 282 290 MENA Algeria 534 549 596 618 612 624 634 644 658 Egypt 612 628 599 608 622 636 651 667 684 Iran 750 764 749 691 687 694 704 714 724 Iraq 490 534 563 437 381 400 467 519 553 Morocco 501 488 452 424 411 424 453 479 503 Saudi Arabia 1,655 1,813 1,842 1,847 1,946 2,004 2,032 2,060 2,078 United Arab Emirate 1,369 1,083 941 953 995 1,063 1,137 1,183 1,206 Others 553 547 553 545 559 571 588 602 619 Sub-Saharan Africa Nigeria 107 112 125 122 123 128 136 143 150 South Africa 218 221 230 223 225 229 234 240 244 Others 77 84 88 90 93 98 103 107 112 China 1,508 1,611 1,763 1,800 1,830 1,858 1,876 1,875 1,855 India 181 190 195 204 218 236 253 270 286 North Asia Japan 333 349 372 372 373 372 371 371 373 South Korea 897 879 899 881 882 882 883 883 884 Taiwan 551 542 554 548 531 527 523 519 515 Others 352 375 387 397 408 420 432 444 455 South Asia Bangladesh 96 99 94 103 108 116 123 132 141 Indonesia 202 231 245 246 261 279 298 313 329 Malaysia 612 632 626 648 664 688 710 733 757 Pakistan 130 138 139 146 153 160 166 173 179 Philippines 166 192 203 218 230 239 252 263 274 Thailand 416 459 503 498 525 543 565 589 613 Vietnam 560 513 517 533 551 571 591 612 639 Others 186 206 211 213 218 229 242 255 270 Australia/Pacific Australia 423 435 422 420 408 388 384 386 390 Others 143 151 154 157 160 162 164 165 167 World 513 536 567 574 583 594 606 613 615 ex-china 273 278 282 285 291 301 313 324 335 25