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Holcim Leadership Journey 2012 - 2014

May 14, 2012

Holcim Ltd 2012


Summary of the Holcim Leadership Journey 2012 - 2014
Focus on health and safety strengthen the social dialog
Development and generation of leaders and talents
By 2014 Holcim will have additional operating profit of more than
CHF 1.5 billion the base line is the financial year 2011
(excluding one-off charges 2011 of CHF 375 million and without
fluctuations in currency, changes in scope of consolidation and
similar market conditions)
Customer excellence additional operating profit CHF 500 million
Cost leadership additional operating profit > CHF 1 billion
One-off cash costs to achieve savings < CHF 200 million
Expansion CAPEX: Total Cost of Ownership per tonne of capacity
to reduce by 20% for each new project
Further Net Working Capital improvement and selective
divestments 2
Holcim Ltd 2012 May 14, 2012
Operating Profit growth of > CHF 1.5 bn by 2014
CHF million
4,000

3,500

3,000

2,500

2,000

1,500

1,000

,500

,0
1)
2011 2012 2013 2014

Operating Profit Customer Excellence Cost Leadership

1) Operating Profit 2011 (CHF 1,933 million) excluding one-off items (CHF 375 million) = 2,308 million 3
Holcim Ltd 2012 May 14, 2012
Where and by when?
All figures in million CHF 2012 2013 2014
Customer Excellence (operating profit impact) 50-100 150-200 500
-Customer focus
-Value management
-Pricing policies
-Marketing and sales forces skills and motivation

Cost Leadership (operating profit impact) 100-200 400-500 > 1,000


-Energy and AFR > 300
-Logistics > 250
-Procurement > 250
-Fixed cost > 200

Total increase in operating profit 150-300 550-700 > 1,500

Cash cost to achieve the savings (one-off) < 80 < 120

Additional CAPEX net 1) 0-40 100-180 100-180

1) Additional CAPEX net will come from prioritization of CAPEX based on the speed of the returns (ROIC).
Current energy fund of CHF 100 million will be maintained through the period 2012 - 2014 4
Holcim Ltd 2012 May 14, 2012
How? Customer Excellence CHF 500 million
Definition and further systematic development of Holcim
commercial and marketing performance indicators to
measure the progress
Margin and price management
Price, cost and margin transparency per customer
Market business intelligence tools to be further developed
Highly trained workforce dedicated to price and margin
management in all operating companies
Systematic pricing policies covering all the elements of the
pricing model
Product and service innovation

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Holcim Ltd 2012 May 14, 2012
How? Customer Excellence CHF 500 million cont.
Customer Value Management
Systematic processes to be implemented
Profit generating tailor-made value proposition to existing
and new customers
Brand management
Operational Net Promoter Score (NPS) program
Marketing and selling prices
Procedures and processes supporting tactical behaviours
Tailored capability development programs
Motivation and incentive systems
Benchmark senior leadership knowledge and culture of
marketing and sales
Gap analysis
Training
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Holcim Ltd 2012 May 14, 2012
How? Energy and AFR > CHF 300 million
Increased use of Alternative Fuel and Raw Materials
(AFR)
Improve energy efficiency through
Grinding optimization
Fan optimization and filters
Burner updates and optimization
Fuel mix optimization
Increase usage of petcoke
Increase usage of low rank coal
Increase usage of natural gas where relevant
Energy procurement
Contract management and re-negotiation
Capture opportunities on spot market
Portfolio optimization
Strategic initiatives
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Holcim Ltd 2012 May 14, 2012
How? Logistics > CHF 250 million
Reduce Ready-mix truck cycle and waiting times
Dynamic optimization of the chosen routes based on
real-time GPS equipment to minimize cost to market
and selectively choose means of transport (road, rail,
ship etc.)
Optimize logistics and routes between sites (e.g. India)
Review outsourcing options and re-negotiate 3rd party
contracts and measure supplier performance
Preliminary indication is that savings of at least 5% of
logistics cost is achievable
Each lever applies differently according to local
configuration in order to deliver > CHF 250 million
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Holcim Ltd 2012 May 14, 2012
How? Procurement > CHF 250 million
Cross functional standardization and increased volume
pooling
Diversification of supplier base in all areas (e.g. China)
Leverage global sourcing categories
Change from local to regional / hub and
From regional / hub to global sourcing where appropriate
Local (re-)negotiation
Overall savings through these measures with
specialized procurement experts of > CHF 250 million
Global / regional / local organization

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Holcim Ltd 2012 May 14, 2012
How? Fixed Cost > CHF 200 million
Support Process Cost (SPC)
Benchmark levels for administrative functions and
simplification of administrative processes
Strengthen use of service centres
Reduce external service and consultants

Cost optimization of industrial footprint and right sizing


Review of the entire asset base across all segments with
low utilization levels
Right-sizing of ready-mix supplies where appropriate

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Holcim Ltd 2012 May 14, 2012
The five areas of operating profit growth by 2014

Customer Excellence
CHF 500 million

Fixed cost Energy and AFR


> CHF 200 million Operating Profit > CHF 300 million

> CHF 1,500 million

Procurement Logistics
> CHF 250 million > CHF 250 million

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Holcim Ltd 2012 May 14, 2012
Disclaimer

Cautionary statement regarding forward-looking statements


This presentation may contain certain forward-looking statements
relating to the Groups 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.
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Holcim Ltd 2012 May 14, 2012