Aggregates Day 2012: Dallas, June 28
Strengths & Strategy Dr. Bernd Scheifele Group CEO
Slide 1 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Our value drivers
Strong asset base and excellent product portfolio – World market leader in aggregates: 19 billion tonnes of reserves in attractive markets – Very well balanced 118 million tonnes of cement capacity around the globe – Strong positions in fast growing metropolitan markets and resource areas
Significant future potential – Superior geographic footprint – Continuing cost saving & efficiency improvements – Strong Management focus on price leadership – Disciplined growth investments in emerging markets
Continuous deleveraging without harming business portfolio – Return to investment grade (below 2.8X net debt/EBITDA) – Target to get to €6.5 billion net debt – Focus on disposal of non-core assets – Mid cycle EBITDA target of €3 billion
Slide 2 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele A company with:
1. Excellent product portfolio
2. Superior geographical footprint
3. Strong Management, leadership & performance
4. Well balanced deleveraging & growth strategy
5. Significant future potential
Slide 3 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Global market leader for aggregates Top 3 global market positions in cement and ready-mixed concrete
Financial Key Figures HeidelbergCement
€m +10% Dec 2010 Dec 2011
11,762 12,902
+4% +3% 2,239 2,321 1,430 1,474
Revenue Operating EBITDA Operating income
1 #1 Aggregates #3 Cement #3 Ready-mixed concrete (2011 sales volumes ) (2011 sales volumes ) (2011 sales volumes )
254 Mt Lafarge 145 Mt Cemex 55 Mcbm
Lafarge 193 Mt Holcim 144 Mt Holcim 48 Mcbm
Holcim 173 Mt 88 Mt 39 Mcbm
Cemex 160 Mt Cemex 67 Mt Lafarge 34 Mcbm
1. Anhui Conch and CNBM not considered, as only active in China Source: Company annual reports
Slide 4 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Aggregates and Cement are key building raw materials Vertical integration is key to long-term success
Illustrative overview of cement and aggregates value chain Aggregates Cement
Asphalt Ready-mix concrete Concrete elements
PublicInfrastructure construction Non residentialCommercial ResidentialResidential Cement:Cement: 50% 50 % Cement:Cement: 20% 20 % Cement:Cement: 30 30% % Aggregates:Aggregates: 50-60% 50-60 % Aggregates:Aggregates: 20-25% 20-25 % Aggregates:Aggregates: 20-25 20-25% %
Slide 5 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele World market leader in Aggregates – focus on highly attractive mature markets
AGG plants Urban centres
Stockholm Edmonton Oslo St. Petersburg Chicago Moscow Vancouver London Seattle Toronto Frankfurt San Francisco New York Los Angeles Dallas Istanbul San Diego Atlanta Delhi Guangzhou Houston Hong Kong Mumbai Bangalore Kuala Lumpur
Singapore Aggregates Jakarta (2011 Shipments) Pilbara Core AGG countries 254 mt Brisbane Perth (~80 % of 2011 Group volumes) Sydney Lafarge 193 mt Melbourne Other AGG positions Holcim 173 mt
Cemex 160 mt
Source: Company reports. Slide 6 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Aggregates: a highly attractive product
Provides a clear inflation hedge Margin stability in a downturn scenario Highly flexible cost structure Low exposure to energy and emission regulations
2008 2009 2010 2011
Group 89 Sales volumes 88 Cement 79 78 299 15% less volume Aggregates 254 239 240
2,946 Group Operating EBITDA 2,239 2,321 1,876 2,102 Cement Aggregates 1,529 1,639 1,630 Other 663 452 586 12% less EBITDA 407 539 121 61 104
Slide 7 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Aggregates price increases historically outpaced inflation - even in downturn US – Total reserves of 11.8b ton UK – Total reserves of 1.8b ton Australia – Total reserves of 0.9b ton
140 140 160 130 120 120 140 110 100 120 100 80 90 100 80 60 70 40 80 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2002 = 100 HC aggregates sales price in local currency HC sales volumes Country CPI Index
Group aggregates volumes & margins
Operating EBITDA Margin 23.0% 23.0%
21.3% 254 239 240
Sales volume
2009 2010 2011
Aggregates reserves provide a clear inflation hedge
Slide 8 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele HeidelbergCement – Best in class in aggregates
AGGREGATES - GLOBAL
23.0% 23.0% 21.3% 21.2% EBITDA 19.7% 20.7% Margin 15.7% 14.5% 14.2% 239 240 254 196 193 193 Aggregates 143 158 173 Sales Volumes (mt) 2009 2010 2011 2009 2010 2011 2009 2010 2011
AGGREGATES – NORTH AMERICA
25.4% 24.5% 23.5% 22.8% EBITDA 20.2% 19.0% 20.2% 16.6% Margin 14.4%
Aggregates 102 105 106 112 118 113 126 124 120 Sales Volumes (mt) 20092010 2011 2009 2010 2011 2009 2010 2011
Source: Company annual reports. All values are as reported. Vulcan values reflect total Group EBITDA margins. Slide 9 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele A company with:
1. Excellent product portfolio
2. Superior geographical footprint
3. Strong Management, leadership & performance
4. Well balanced deleveraging & growth strategy
5. Significant future potential
Slide 10 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Strong positions in most attractive metropolitan areas
Germany Frankfurt, Munich, Stuttgart Canada Scandinavia Stockholm, Oslo, Western Provinces Copenhagen, Malmo Poland , Russia Moscow, St. Petersburg US Pennsylvania, Texas, California, Indiana, Illinois, N/S Carolina
Ghana, Tanzania Indonesia Jakarta
Australia Western Australia, North Queensland
Superior footprint delivered best results in the sector in down-turn
Operating EBITDA +219 -653 Net debt €m 2,321 8,423 €m 2,239 8,146
2,102 7,770
2009 2010 2011 2009 2010 2011
Slide 11 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Asia-Pacific Strong margins in attractive markets
Strong position in Indonesia cement …with superior margin levels and Australia aggregates…
Asia-Pacific: Asia-Pacific: 2011 Revenue 2011 Operating Income Margin
Other 19.2% Bangladesh 9% India 3% 5% +7.0 Australia 12.2% 38% China 8%
37%
Indonesia Peer average (1) HeidelbergCement
1. Cemex, Holcim, Lafarge; volume weighted based on annual reports.
Slide 12 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Australia Valuable aggregates reserve positions in mining states
Excellent growth prospects Country overview: In Western Australia and Queensland Strong economy in mining states
Market will continue to grow due to mining boom. Mining industry growing with an annual rate of 10%.
2011 sales volumes:
CEM 1.1 mt
AGG 21.7 mt
RMC 5.1 mm³
Slide 13 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Indonesia Key success story - also throughout the global crisis Excellent growth prospects Country overview & market structure
Consolidated market: Top 3 players have ~90% cement market share
GDP CAGR forecast (2012-17): 6.8%
Budget deficit (2012F): 1.0% of GDP
Inflation (2012F): 6.2%
Current cement consumption <200kg/capita
Core market: Central Java Cement plant/ Grinding plant Significant infrastructure growth Agg pit/quarry High market share prospects RMC plant
2011 sales volumes: We already announced 11mt of additional cement capacity 1.9mt cement mill (brown field) Central Java 2013 CEM 17.4 mt RMC 3.0 mm³ 4.4mt cement plant (brown field) Central Java 2015 2-2.5mt cement plant (green field) Central Java 2015-17 AGG 2.1 mt 2-2.5mt cement plant (green field) Outside Java 2015-17
Source: IMF Slide 14 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Europe: HC is present in countries with future potential Recession is expected for southern European countries only
HC Exposure (as % of 2011 Group revenue)
Average next 5 year GDP: > 2.0% : 30.4 % 2.9 % 2.5 % (*) 4.1 % Average next 5 year GDP: > 0%;< 2.0% : 15.7 % 0.6 %
Average next 5 year GDP: < 0% : 0.5 % 11.1 % 3.1 %
6.0 % 1.0 %
2.0 % 0.1 % 8.7 %
0.4 % % 1.6 % : % of Total Group Revenue 0.1 %
1.4 % 0.5 %
(*) Includes Kazakhstan & Georgia revenues also. Source: IMF April 2012
Slide 15 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Sub-Saharan Africa Strong market position in oil/mining driven regions with substantial growth potential 2011 Cement Market GDP Growth Sales in mt Position Next 5 year avrg (*)
Ghana 2.6 mt # 1 7.0%
Tanzania 1.1 mt # 1 6.8%
Togo 0.8 mt # 1 4.5%
Benin 0.4 mt Top 3 4.6%
Gold Sierra Leone 0.3 mt # 1 11.6% Diamonds Other mineral resources Others 0.9 mt Top 1-3 Oil or natural gas
Top 1-3 in Total 6.1 mt all countries
Total capacity of ~ 7 mt Partnership with IFC to further expand capacity
(*) Source: IMF April 2012; Mineral industries of Africa Slide 16 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele North America Superior product portfolio and geographical balance
Well balanced product portfolio with HC Operating in fastest growing high level of vertical integration metropolitan areas
2011 Revenue by business line NAM – 2011 Revenue breakdown (*)
100%
Vancouver, Calgary, 21% Edmonton
22% 28 % 29% 31% 36 % 36 % South Chicago, Atlantic Indianapolis Pennsylvania, New York, San Diego, LA, Baltimore 28% San Francisco Nashville, Atlanta, Charlotte, N&S Carolina Cement Aggregates RMC & Building Total NAM Houston, Dallas, Austin Asphalt Products
79% core business Strong base in California and Texas -states with significant recovery potential- (*) Excluding Building Products Business Line.
Slide 17 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele A company with:
1. Excellent product portfolio
2. Superior geographical footprint
3. Strong Management, leadership & performance
4. Well balanced deleveraging & growth strategy
5. Significant future potential
Slide 18 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Our management team
Dr. Bernd Scheifele Dr. Lorenz Näger Dr. Dominik von Achten Mr. Daniel Gauthier Mr. Andreas Kern Dr. Albert Scheuer
CEO CFO North America NW Europe, Africa Central Europe Asia Mediterranean Central Asia Oceania
• Group HR • Finance, Acc., • Purchasing • Environmental • Sales and • Heidelberg • Strategy and Controlling, Taxes • Competence Center Sustainability marketing Technology Center Development • Insurance & CRM Materials • Group Services • Secondary Cement
• Comm. & IR • IT (CO 2, Fuels, cementitious • Legal • Shared Service Trading) materials • Compliance Center • Internal Audit • Logistics
• Education : • Education : • Education : • Education : • Education : • Education : Law Business Law / Economics Mining / Engineering Business Mechanical Administration Administration Engineering
• At HC since: • At HC since: • At HC since: • At HC since: • At HC since: • At HC since: 2005 2004 2007 1982 1983 1992 (before: Chairman of Supervisory Board) Top management represents an excellent mix of long- term insiders and outsiders with a unique skill set
Slide 19 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele HC is the standard-setter in the industry in many respects
1 HC has set standard re. organizational structure
2 HC has set standard re. cost savings programs
3 HC has set standard re. investment costs per tonne
Slide 20 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele HC is pioneer in integrated management structure which is copied by peers with considerable time lag
Streamlining of administrative functions in Europe announced back in SeptemberSeptember 20052005 !
Slide 21 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele HeidelbergCement’s unique organizational approach All business is local: country management is in charge
Management with line management Core principles of top as well as functional responsibilities management organization
Quarterly Balance between local responsibility and Top Management Management global standards Meeting (CEO, CFO, Area-VS) Participants – Local managers focus on market and cost leadership Country Management (GM, CFO) – Standardized back office business processes Flat hierarchies, efficient structures and clear reporting lines (not top heavy) CEM AGG RMC Functions Vertically integrated management (Director) (Director) (Director) (Director) approach across product lines.
Profit Dual responsibilities on Managing Board Maximization Regional Management Team level (line management and cross-area Across Business coordination) Lines Regional Management Team
Integrated management philosophy is clearly enabled by simple, efficient and robust organizational setup
Slide 22 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Excellent track record of managing change projects Target Project Key facts realization
• Reorganization and FTE efficiency 2006 "win Europe" • IT standardization and country SSCs €m88 170% • 37% G&A FTE reduction
• Focus on Group/NAM/UK 2007 Hanson • > 500 integration projects worldwide - integration • Synergy areas: Market, SG&A, Purchasing, IT, OpEx, €m506 145% 2010 Logistics, Tax, and Insurance.
• Capacity reduction 2009 Fitness • Operational improvements (Alternative Fuels, Clinker program factor) €m550 220% • Rightsizing of commercial and staff organizations
Fitness Plus • Further improve cost structure 2010 • Focus on purchasing and maintenance costs €m323 108% program • Production & Process optimization
• CLIMB (Quarry Optimization) 2011 >> €m384 190% 2011 • OPEX (Operational Excellence) - Fox 2013 • Working capital optimization 2013 • €m850 cash savings targeted
Over €1.8 billion savings and more than 10,000 FTE reduction in the last 5 years as a result of TIMELY implemented projects
Slide 23 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Significant increase in FTE efficiency
62,916
Average number of employees 56,723 -9,017 54,655 53,899
299
254 239 240 89 88 79 78
2008 2009 2010 2011
Cement sales volumes Aggregates sales volumes Meanwhile, >10mt cement capacity has been added !
Slide 24 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Top 5 leadership principles at HeidelbergCement
1.1 Customer orientation – External : Regular customer surveys and Group-wide complaint management – Internal : Internal customer surveys – Strong local brands : All business is local 2.2 Closeness to the business – Know your sites, people, markets and customers as well as your competitors 3.3 Simplicity – Avoid complexity – Fight bureaucracy, be accessible 4.4 Realism – Be realistic – Hope is not a strategy
5.5 Integrity & loyalty – Be open and honest – Act solely on the basis of what is in the best interest of the company
We live our strong corporate culture!
Slide 25 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Performance culture: a key aspect of the company
Performance and results orientation • Quarterly management meetings (Group level) • Performance-based compensation down to 4 th management level • Regular (every 2 years) management appraisals (ABC analyses) down to level 3
Execution / Accountability • Managers are responsible for delivering the promised results
Internal and external benchmarking • Key performance indicators for core production processes and administrative functions (e.g. cement, aggregates and RMC plant, purchasing, SSC) • Site rankings • Financial competitive analysis per country
Speed • Sense of urgency • Fast decision making • Avoidance of big company syndrome
Focus on permanent efficiency increase in all areas and cost leadership
Slide 26 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Long-term bonus linked to ROIC and share-price
2/3 Group share of net profit Annual bonus (70% of fixed salary) 1/3 individual targets
50% EBIT 50% Management comp. (3 years) Long-term bonus 50% ROIC (90% of fixed salary) 50% TSR vs. DAX30 x absolute HC – 50% Capital market comp. 1) share-price dev. (4 years) 50% TSR vs. MSCI 2) (Cap 2.5x)
Bonus targets based on on mid-cycle targets
1) Calculated based on virtual shares; TSR = Total Shareholder Return; 2) MSCI World Construction Materials Index
Slide 27 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele A company with:
1. Excellent product portfolio
2. Superior geographical footprint
3. Strong Management, leadership & performance
4. Well balanced deleveraging & growth strategy
5. Significant future potential
Slide 28 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Dual Strategy of Deleveraging and Growth Target: Return to investment grade
€m Allocation of free cashflow TARGETS
CapEx for 588 business > €m350 additional EBITDA (*) development
Free cashflow generated last 2 years: €m1,683 909 Debt Payback < 2.8 Net Debt/EBITDA multiple
186 Dividend 30% to 35% payout ratio
Disciplined usage of free cashflow On track to return to investment grade
(*) Based on already announced expansion program 2011-2014.
Slide 29 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Continuous deleveraging without harming business portfolio 2009 2010 2011 Target
Net debt/EBITDA 4.0x 3.6x 3.3x below 2.8x
2,321 2,239 Operating EBITDA 2,102
8,423 8,146
7,770
Net debt
6,500
Dec-09 Dec-10 Dec-11
Slide 30 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Focus on growing cement in emerging markets; aggregates
in developed world Sweden - Rimbo AGG: 0.5mt Norway - Jelsa Poland - Górazdze AGG: 10mt USA – Rocky Mount CEM: 1.4mt - €76/t AGG: 1.5mt Belgium - Quenast Russia - Tula AGG: 2mt CEM: 2mt - €174/t
Bangladesh Kazakhstan - Shetpe CEM: 0.8mt - €16/t CEM: 0.8mt - €160/t Burkina Faso CEM: 0.7mt - €59/t India - Damoh USA – Plum Run CEM: 2.9mt - €82/t Indonesia Liberia AGG: 1mt CEM: 2-2.5mt - €165/t CEM: 0.5mt - €22/t Indonesia Indonesia (outside Java) CEM: 1.9mt - €50/t CEM: 2-2.5mt - €205/t Ghana Togo CEM: 1mt - €16/t Indonesia CEM: 1.5mt – 112€/t Indonesia CEM: 1.5mt - €15/t CEM: 4.4mt - €112/t Australia – Farleigh Australia – Red Hill AGG: 1.1mt AGG: 1.3mt
Australia – Kulnura AGG: 1.8mt 75 % of expansion CapEx is spent in emerging markets Well planned brown/green field projects; lowest cost in the sector
Slide 31 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele A company with:
1. Excellent product portfolio
2. Superior geographical footprint
3. Strong Management, leadership & performance
4. Well balanced deleveraging & growth strategy
5. Significant future potential
Slide 32 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele High confidence to reach mid-cycle target of €bn3 in
op. EBITDA Three most Operating EBITDA (€m) important drivers are clearly visible
3,000 3,000 2,946
2,500 2,321 2,239 2,102 Growth 2,000 investments
1,500 US economy recovery 1,000
FOX 2013 500 LEO PERFORM
0 2008 2009 2010 2011 Mid cycle target
Slide 33 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele US recovery is already visible
Total Cement Consumption
Residential Non Residential Public 8.3% +53% 11.7% 107.8
13.8% 99.6 89.2 7.4% 3.7% 78.3 72.9 70.3
47.7 45.5 43.1 40.6 38.8 38.6 34.7 31.7 26.6 25.4 20.3 18.1 16.3 22.4 19.5 17.4 15.3 16.3
2011 2012 2013 2014 2015 2016 Source: PCA Spring 2012 Forecast. Slide 34 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele €1 billion savings by 2014 on track
€m850 cash savings from “FOX 2013” €m150 potential on top of “FOX 2013”
CLIMB: aggregates margin improvement OpEx: Cement energy cost savings New Logistics Optimization Project: “LEO” Working capital improvement Purchasing savings €m 900 850 Supply chain excellence program 800 Process improvements over the entire supply 700 chain based upon internal benchmarking 600 500 1. Optimisation of transport network 400 384 Renewal of dispatching and allocating methods 300 262 204 200 2. Fleet restructuring 100 Optimising the fleet structure in cooperation with 0 our service providers 2011A 2012 2013 TOTAL FOX
Cumulated cash savings of €m850 targeted; €m150 additional cost savings by 2014 of which €m220 directly PL
Slide 35 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele CLIMB: A global quarry optimization project
Investigate all possible layers Assure sustainable improvement Define new potentials
Product portfolio improvement Increase cost efficiency in all layers Clear identification & immediate implementation of potentials Continuous improvement of pricing
€m120 recurring EBITDA improvement by 2013 Further strengthen “best in class” position in aggregates margin
Committed improvement potential 2011 m€ 31.4 (+217%) Targeted 14.5 2011 savings substantially exceeded the targets ! Delivered 45.9
Slide 36 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele We will do pilots for our logistics optimization project: LEO
Identified key levers Improvements based on new, integrative SCM structures 1. Centralized dispatching system
2. Bundling of demands new way exploited of working 3. Fleet optimization RMC improvements performance 4. Bundling and sourcing of trucks operational excellence time best practice
HeidelbergCement’s Challenges Integrative SCM organization
High transport cost in Country GM overall company Objective: AGG CEM RMC SCM Reduce transport cost globally by High diversity of practices, processes, at least 10% and organizations
Saving levers understood. Pilots confirm €m150 savings potential
Slide 37 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele PERFORM: launch of a Group initiative for pricing performance
What are the measures? What is the final target?
Pricing Excellence And Realization For Margin improvement
P E R F O R M
Slide 38 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele P E R F O R M PERFORM will focus on Europe and US
Operating Line Operating Line CEM RMC
Actions prepared on country level Action plan with involvement from the Group prepared on country level during concept phases
Europe US
Belgium Bosnia Czech Rep. Germany
West North Hungary Netherlands Norway Poland South USA
RomaniaSweden UK Ukraine
Target is to have first measures effective in second half 2012
Slide 39 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele P E R F O R M PERFORM concentrates on three levers
1
Sales force
Skills Motivation Training Bonus
2 3
Data Tools Consistent transparency pricing policy
ERP- CRM/ market Price General pricing Services/ data intelligence Argumentation structure Surcharges
Slide 40 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele P E R F O R M Straight timeline enables to see first effects within 2012
2012 Juli Aug. Sept. Okt.
1.1 Define main content of sales trainings
1.2 Identify an choose local trainer 1 1.3 Carry out sales trainings
1.4 Check Bonus systems Sales force Sales 1.5 Implement amended bonus system
2.1 Check and improve ERP-data in case
2.2 Check and supplement CRM-data in case
2.3 Define content of price argumentation 2 documents Data Data 2.4 Create communication document on country level and assure proper transparency future organization
3.1 Check pricing systems
3 3.2 Consideration of services and surcharges policy
Pricing Pricing 3.3 Optimize pricing systems in case
Slide 41 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Outlook
Slide 42 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele So far economic growth is on the recovery path… … however, there are numerous macro economic risks IMF forecast April 2012
8 US: 2.1%. Economy remains on a moderate expansion path 5.7% emerging market 6 countries Euro zone: -0.3%. Stronger 4 3.5% world outlook for core (e.g. Germany +0.6%) to compensate weaker 1.4% industrialized 2 countries growth in periphery (e.g. Italy - 1.9%). 0 EM: 5.7%. Deceleration but no -2 hard landing in Asia. Expect return to robust growth in China, -4 2009 2010 2011 2012e 2013e despite recent weak data.
Grexit PIIGS sovereign debt U.S. fiscal cliff North African rumors Israel / Iran conflict
Slide 43 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Company outlook 2012 confirmed
Sales volumes growth based on demand development and capacity additions in 2011 and 2012
Increase in revenue and operating income driven by sales volumes growth, price increases, and cost savings
Further reduction of net debt based on continued free cash flow generation
HeidelbergCement to benefit from further economic growth and cost-saving measures in 2012
Slide 44 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Targets 2012 unchanged
2012 Cash savings €m 200 CAPEX (*) ~ €m 980 Maintenance(**) ~ €m 490 Expansion ~ €m 490 Cost of gross debt ~ 6.7% Operational tax rate(***) 18% - 20%
Mid-cycle targets unchanged:
Operating EBITDA €bn 3 Net debt / Operating EBITDA < 2.8x
(*) Before any currency impacts (**) Including improvement capex (***) Assuming full US tax asset recognition
Slide 45 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Our value drivers
Strong asset base and excellent product portfolio – World market leader in aggregates: 19 billion tonnes of reserves in attractive markets – Very well balanced 118 million tonnes of cement capacity around the globe – Strong positions in fast growing metropolitan markets and resource areas
Significant future potential – Superior geographic footprint – Continuing cost saving & efficiency improvements – Strong Management focus on price leadership – Disciplined growth investments in emerging markets
Continuous deleveraging without harming business portfolio – Return to investment grade (below 2.8X net debt/EBITDA) – Target to get to €6.5 billion net debt – Focus on disposal of non-core assets – Mid cycle EBITDA target of €3 billion
Slide 46 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Thank you very much for your attention!
Slide 47 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele Safe Harbour Statement
Unless otherwise indicated, the financial information provided herein has been prepared under International Financial Reporting Standards (IFRS).
This presentation contains forward-looking statements and information. Forward-looking statements and information are statements that are not historical facts, related to future, not past, events. They include statements about our believes and expectations and the assumptions underlying them. These statements and information are based on plans, estimates, projections as they are currently available to the management of HeidelbergCement. Forward-looking statements and information therefore speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. By their very nature, forward-looking statements and information are subject to certain risks and uncertainties. A variety of factors, many of which are beyond HeidelbergCements’ control, could cause actual results to defer materially from those that may be expressed or implied by such forward-looking statement or information. For HeidelbergCement particular uncertainties arise, among others, from changes in general economic and business conditions in Germany, in Europe, in the United States and elsewhere from which we derive a substantial portion of our revenues and in which we hold a substantial portion of our assets; the possibility that prices will decline as result of continued adverse market conditions to a greater extent than currently anticipated by HeidelbergCements’ management; developments in the financial markets, including fluctuations in interest and exchange rates, commodity and equity prices, debt prices (credit spreads) and financial assets generally; continued volatility and a further deterioration of capital markets; a worsening in the conditions of the credit business and, in particular, additional uncertainties arising out of the subprime, financial market and liquidity crises; the outcome of pending investigations and legal proceedings and actions resulting from the findings of these investigations; as well as various other factors. More detailed information about certain of the risk factors affecting HeidelbergCement is contained throughout this presentation and in HeidelbergCements’ financial reports, which are available on the HeidelbergCement website, www.heidelbergcement.com. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement or information as expected, anticipated, intended, planned, believed, sought, estimated or projected.
Slide 48 – 28 June 2012 Aggregates Day HeidelbergCement 2012 – Dr. Bernd Scheifele