Download - Holcim in South Asia/ · PDF fileHolcim in South Asia/ASEAN

Strength. Performance. Passion.

© 2012 Holcim Ltd

Holcim in South Asia / ASEAN Paul Hugentobler, Member of the Executive Committee

© 2012 Holcim Ltd

© 2012 Holcim Ltd

Agenda

Regional Overview and Trends 2

Business Subregion India 12

Business Subregion Lower Mekong Subregion 19

Business Subregion Indonesia 24

Regional Contribution to the Holcim Leadership Journey 31

Concluding Remarks 45

Investor and Analyst Day 2012 2

© 2012 Holcim Ltd

Holcim footprint in South Asia / ASEAN*

• Cement sales 42 mt

• FTEs 34’014

• Net Sales CHF 3.4 bn

• EBITDA CHF 0.9 bn

• Cash Flow CHF 0.5 bn

Key Figures H1 2012

Source: Corporate Controlling * Association of Southeast Asian Nations


Integrated Plant

Grinding Station

Under construction

Terminal

© 2012 Holcim Ltd

A relatively young history within Holcim Group

0

10

20

30

40

50

60

70

1912 1920 1930 1940 1950 1960 1970 1980 1990 2010

Qatar Dubai India United Kingdom Norway Ireland Serbia Croatia China New Caledonia Tanzania Sri Lanka Bulgaria Romania Honduras Poland Kosovo Madagascar Mauritius Guinea Angola Iran Malaysia Thailand El Salvador Dom. Republic Indonesia Nicaragua Guatemala French Guyana Azerbaijan Austria Ivory Coast Nigeria Namibia La Réunion Fiji Haiti Carib. Islands Panama Bangladesh Yemen Singapore Vietnam Switzerland

France Belgium

Netherlands Egypt Lebanon

Germany South Africa

Canada Brazil USA

Mexico Costa Rica Italy Colombia

New Zealand Philippines Ecuador Chile Australia Cyprus

Venezuela Spain Hungary Czech Republic Greece Slovak Republic Morocco Peru Argentina Russia

Eu

rop

e

Afr

ica

Mid

dle

Eas

t

Asia

Pacif

ic

No

rth

Am

eri

ca

Lati

n A

meri

ca

Number

of countries


© 2012 Holcim Ltd

Solid platform: 53% Holcim CEM volume, 27% of Net Sales,

33% of EBITDA in 2011

OpCo

Sales 2011 (t cem /m3 RMX)

EBITDA 2011 (CHF) at actual

2011 constant FX rates

Holcim Lanka

1.5 mt

CHF 21 m

Holcim Bangladesh

0.9 mt

CHF 8 m

Siam City Cement:

11.8 mt / 2.7 mm3

CHF 168 m

Ambuja Cement

21.5 mt

CHF 382 m

Holcim Vietnam

3.7 mt / 0.8 mm3

CHF 47 m

Holcim Malaysia

0.7 mt / 0.3 mm3

CHF 14 m

Holcim Philippines

5.3 mt / 0.1 mm3

CHF 99 m

Holcim Singapore

1.3 mm3

CHF 13 m

Holcim Indonesia

8.0 mt / 1.5 mm3

CHF 235 m

ACC

24.0 mt / 1.8 mm3

CHF 390 m

Source: Corporate Controlling Quoted companies


Integrated Plant

Grinding Station

Under construction

Terminal

© 2012 Holcim Ltd

Regional network of manufacturing sites and markets

Holcim

United Arab

Emirates

Middle East,

Holcim Madagascar

Holcim

Reunion

Australia

Australia


Integrated Plant

Grinding Station

Under construction

Terminal

© 2012 Holcim Ltd

Our regional management approach…

• Robust business growth strategy for every country;

coordinated across region to optimize capacity utilization and

flows of clinker and cement

• Lean Regional Management structure and strong local

management teams

• De-centralized but standardized philosophy deploys making

and accountability to the local management teams

• Focus on functional excellence through faster

multiplication of best practices across the region

• Focus on people development and capability building


© 2012 Holcim Ltd

…is based on a blend of skills and emotional engagement

Principles

• Ensure leadership development at both the front-line and management level

• Deploy large efforts to internationalize talent across the region and the Group

• Rely on formal levers to achieve alignment (within OpCo’s and across the region),

while focusing on informal levers to mobilize the human capital

• Identify the “pride builders” within the organization and leverage their ability to

energize people

Alig

nm

en

t Mo

tivatio

n

Vision

Values

Strategy

Integrating Mechanisms

Purpose

Pride

Commit-

ment

Top

Leaders

Team

Members

Rational

Compliance

Emotional

Commitment

Pride Bell Curve

Energize

Pride Score Indicator (PSI)

Pride builders

Achieving Alignment and Motivation


© 2012 Holcim Ltd

Best practice multiplication to accelerate delivery of bottom

line impact

OpCo Leadership OpCo Leadership OpCo Leadership

RMX, LIP (Large and Infrastructure Projects)

Finance

OH&S, Geocycle, Procurement, Manufacturing

People Exchanges

Customer Excellence (CRM, M&S)

Cross-

Regional

Bench-

marking and

Best

Practices

Sharing

Contribution to Holcim Leadership Journey


© 2012 Holcim Ltd

In the past ten years Holcim Group rapidly increased its

exposure to South Asia and ASEAN…

Indexed development of Holcim Group vs. Holcim South Asia / ASEAN (excl. the

Philippines), (2002=100)

Cement Capacity Cement Volumes Sold

Net Sales Operating EBITDA

2002 2004 2006 2008 2010 2012

1′000

800

600

400

200

0

Holcim South Asia / ASEAN Holcim Group

2002 2004 2006 2008 2010 2012

1′000

800

600

400

200

0

2002 2004 2006 2008 2010 2012

1′000

800

600

400

200

0

2002 2004 2006 2008 2010 2012

1′000

800

600

400

200

0

India acquisitions India acquisitions

India acquisitions India acquisitions

Source: Corporate Controlling


© 2012 Holcim Ltd

…paying back in increasing Operating EBITDA contribution

359

311301

285

243249

350

311297298

235

257

234

182

291

237248

291

225

264

234229

7%*

2012 2011 2010 2009 2008 2007

Q4 Q3 Q2 Q1

Development of operating EBITDA in South Asia / ASEAN (excl. the Philippines), (CHF m,

at constant exchange rates per 30.6.2012)

* CAGR of H1 results

Source: Corporate Controlling


© 2012 Holcim Ltd

Agenda





Regional Contribution to Holcim Leadership Journey 31



© 2012 Holcim Ltd

India’s short-term macro environment is challenging…

Population

GDP

Foreign

Exchange

• Subdued real GDP growth at 6 - 6.5% in 2012 as a result of acute

policy paralysis and odds of the World / Euro crisis

• Upside potential to 7% with elections approaching in 2014 and a

push to implement domestic reform

• Continuous population growth of around 2% per annum on a

current base of more than 1.2 billion raises sustainability issues

• Millions of young people aspire to be integrated into the workforce

• Rupee depreciation erodes current factor market benefits

Inflation

• Inflation remains at a high level of around 7%

• Government’s 5% inflation target un-realistic unless major reforms

ease supply pressure and infrastructure development gets pushed


© 2012 Holcim Ltd

…but long-term growth fundamentals are robust

7.5%

2010-20E

7-8%

2000-10

Sustainable GDP growth

(real GDP CAGR)

1/5 more people in India

(million people)

100 m more in cities

(million urban population)

Trade volume quadruples

(USD m)

HH Consumption doubles

(USD bn)

Infra spending doubles

(USD bn; 5 year plan)

~1,400

~18%

2020E 2010

1,185 365~475

~110

2020E 2010

583

~2,500

~4.3x

2020E 2010

534

~1,000

~2x

2020E 2010

514

800-1,000

1.5-2x

12th Plan 11th Plan

Source: McK Consumer India; Urbanisation, EIU, Planning Commission of India, 2012


© 2012 Holcim Ltd

Cement demand to grow at 8-9% p.a. over the next years

• Overall cement demand expected to reach around 341 mt in 2016

• More conservative growth assumptions in 2012/13 due to overall macro situation;

upcoming election cycle push expected in 2014

Cement demand of India 2006-2016E (mt)

341312

286263

242224212

193174160146

2016E 2015E 2014E 2013E 2012E 2011 2010 2009 2008 2007 2006

+8.9%

+8.7%

10.1 9.3 9.0 10.8 5.6 7.8 8.9 9.2

x Y-o-y growth

9.1 8.6

Source: ACC / ACL D/S workshops, CRISIL 2012, McK 2011


© 2012 Holcim Ltd

Supply surplus situation remains, however, demand / supply

ratio is improving

• Slow down in available supply growth as most capacities from the 2007 up-cycle are

commissioned by now

• New projects get delayed due to lack of financing availability, difficult land acquisition

and lengthy processes to obtain permits

• Roughly 70% excess supply is located in the South

All India demand / supply 2011-2016E (mt)

341312

286263242224

400380352

331310

290

2016E

2015E

2014E

2013E

2012E

2011

Demand / available

supply 77% 78% 79% 81%

Available supply

Demand

82% 85%

Source: ACC / ACL D/S workshops, CRISIL 2012, McK 2011


© 2012 Holcim Ltd

Holcim is competitively positioned in core growth markets


Integrated Plant

Grinding Station

Terminal

Existing ACL

Existing ACC

Under construction

• Holcim presence through ACC Ltd and

Ambuja Cements Ltd

► 11 plants and 13 grinding units with a

total capacity of ~58 mio t cement

► 50+ Ready-mix concrete plants

► Terminals along the West cost to

serve core markets

► Projects in implementation stage

include Jamul, Sindri, Kharagphur,

Mangalore, Sankrail; others in

planning

• Total sales 2011 of ~45 mt

• CHF ~3.5 bn net sales, CHF ~773 m

EBITDA (2011)

• ~23‘400 FTE (2011)

© 2012 Holcim Ltd

• “Zero Harm to People” to become a license to lead

• Capturing growth potential and sustaining our competitive position • Capacity expansion of approx. 15 mtpa over the next 5 years

• Attractive acquisition target where available for sale

• Identification of new raw material sources to ensure tomorrow’s growth (e.g.

limestone, clay, slag, fly-ash)

• Most agile and efficient supply chain of the industry to reduce costs-to-

serve • Energy, e.g. fuels, AFR, clinker factor, operational efficiencies

• Logistics (in- and outbound)

• Customer-centricity and front end-innovation across all market segments

• People and Leaders • Attracting and retaining talent remains an ongoing challenge

• Training and development of people and leaders to ensure skills at all levels

• Top quartile financial performance in the Indian cement industry

Strategic priorities for India


© 2012 Holcim Ltd

Agenda








© 2012 Holcim Ltd

*

Five heterogeneous countries constitute the LMS*…

Thailand

Vietnam

Cambodia

Myanmar

Laos

Naypyidaw

Bangkok

Vientiane

Hanoi

Ho Chi Minh City Phnom Penh

6.3

48.3

14.3

87.8

69.5

LA MM KH VN TH

Population per Country, 2011 (million)

GDP, 2011 (USD bn)

Source: World Bank, IMF

7.951.9

12.9

122.7

345.6

LA MM KH VN TH

Yangon

* Lower Mekong Subregion


© 2012 Holcim Ltd

…however, united through economic corridor approach

• Introduction of Greater Mekong

Subregion Program by ADB (Asian

Development Bank) in 1992 to

enhance economic cooperation /

development

• Economic corridor approach since

1998 to leverage potential of specific

geographic areas

• Corridors based on cross-border

physical transport linkages opening up

various development opportunities

• Physical links well progressed as of

today, economic integration has yet to

be achieved


© 2012 Holcim Ltd

Cement demand expected at more than 120 mtpa by 2020

98

872

22

2111

11111

+5.1%

+4.8%

20E

+4.6% 123

37

71

4

3

19E

118

35

68

4

3

18E

113

34

64

4

2

17E

108

33

61

3

2

16E

103

32

58

3 7

15E

98

32

55

3 6

14E

93

31

52

3 6

13E

89

30

49

3 5

12E

84

29

46

3 5

11

81

28

44

3 5

10

79

27

43

3 5

09

72

25

40

2 4

08

68

26

36

3 3

07

68

29

34

2 3

06

65

30

30

2 2

05

61

30

27

2 2

Thailand Vietnam Cambodia Myanmar Laos

Cement demand of Lower Mekong Subregion 2005-2020E (in mtpa)

• Infrastructure demand as main driver for cement demand growth in next decade

(hydropower dams, bridges and tunnels for railway projects, deep sea ports etc.)

• Urbanization and development of 2nd and 3rd tier cities will be main drivers

Source: Holcim estimates


© 2012 Holcim Ltd

Competitive positions in South Vietnam and Thailand

SCCC / Holcim Vietnam’s positions in the Lower Mekong Subregion

SCCC / HVL Integrated Plant

SCCC / HVL Grinding Station

SCCC / HVL Terminal

Cost Competitive Position (Core)

Border Sales

Holcim Vietnam

We still need to network

these regions with an

expanded asset

footprint


© 2012 Holcim Ltd

Agenda








© 2012 Holcim Ltd

Indonesia is growing faster and gaining confidence

Middle class population is growing fast

GDP growth is promising Infrastructure investment priorities are set

205

2

Rail

37

Airport

4

Energy

78

Port

13

Road

39

Total Others

4

ICT

28

Utility

(USD bn)

Indonesia’s investment ratings upgraded

• Moody’s Baa3 (investment grade)

• Fitch’s BBB- (investment grade)

• Standard & Poor’s BB+ (one notch

to investment grade)

600

400

200

0

5.9%

6.3%

5.8%

5.5%

2020 2011 2002

Real GDP per capita

2020

269

171

98

2011

246

72

174

10%

-6%

1%

CAGR

(millions)

Middle Class Others

(USD bn at 2005 prices)

Source: Central Statistics Bureau, MP3EI, HIL analysis


© 2012 Holcim Ltd

Investment priorities backed by economic corridor

approach Indonesia’s Economic Corridors

Medan

Palembang

Jakarta

Surabaya

Yogyakarta

Pontianak

Banjarmasin

1

1

2 Java

Industry and social

provisions

3 Kalimantan

Mining and energy

reserves

4 Sulawesi

Fishery, energy, mining

5 Bali – Nusa Tenggara

Tourism, national food

support

6 Papua – Kepulauan

Maluku

Fishery, energy, mining

2

3

4

5

6

Sumatra

Production/processing of

natural resources

Source: MP3EI


© 2012 Holcim Ltd

Indonesia’s cement demand growth shows a strong track

record and is expected to continue its growth path

Cement demand of Indonesia 2005-2020E (in mtpa)

31 32 34 38 38 4148

55

+6.0%

+6.3%

+8.3%

20E

89

19E

84

18E

79

17E

75

16E

70

15E

66

14E

62

13E

59

12E 11 10 09 08 07 06 05

Main drivers are urbanization (in Java) and infrastructure and housing development

(Sumatra, Kalimantan)

Capacity - exisiting & new players - with local clinker only

Capacity - existing players - with local clinker only

Cement Demand

Source: HIL analysis


© 2012 Holcim Ltd

Holcim Indonesia’s existing footprint is concentrated in

Java

Existing footprint 2012

Johor Bahru

Cement Grinding

1.2 mtpa

Ciwandan

Cement Grinding

0.7 mtpa

Naragong Plant

2 kiln lines of 4’600 tpd

and 8’000 tpd

3.9 mtpa clinker

4.7 mtpa cement

Tuban Plant (as of 2014)

1 kiln line of 4’000 tpd 1.2

mtpa clinker

1.7 mtpa cement

Cilacap Plant

1 kiln line of 7’800 tpd

2.4 mtpa clinker

2.9 mtpa cement

Grinding plant Cement plant Cement flow Clinker flow Under construction

Holcim

(Malaysia)


© 2012 Holcim Ltd

Tuban – Construction work is proceeding according to plan


© 2012 Holcim Ltd

• Enhance cost leadership position in Java through

commissioning of first line in Tuban (East Java) end of 2013

• Catch up with fast growing Java and the Islands through

second line in Tuban

• Expand asset footprint in Southern Sumatra to further optimize

cost-to-serve position in this key market

Footprint strategy to improve competitiveness across

Indonesia


© 2012 Holcim Ltd

Agenda








© 2012 Holcim Ltd

Holcim Leadership Journey

Regional contribution

Capturing

more

than CHF

500 m

Organizational capability building and skills development critical to sustain performance

improvements

All workstreams to be supported by extensive capability / skills building programs across region

Commercial and Logistics (outbound)

• Refinement of Price and Margin

Management

• Sales Force training

• New products and services

• Improve logistics infrastructures,

processes and fleet management

capabilities (cycle time reduction)

Energy Activation (Project EARN)

• Coal/Petcoke sourcing and pooling

• Alternative/renewable energy

• Expand Geocycle business

• Increase efficiencies across

manufacturing (e.g. automation)

• Application of grinding aids

• Mineral components

applications/enhancers

Procurement

• Bottom-up assessment by

OpCo’s and HGRS

Corporate Procurement

• Further savings from local

procurement activities to be

expected

RMX / AGG

• Increase of RMX business

• Expand Value Added

Solutions applications and

penetrate LIP (Large and

Infrastructure Projects)

segment

Finance

• Fixed cost reduction

• NWC reduction/optimization

• Disposal of non-operating

assets


© 2012 Holcim Ltd


Example: Customer Excellence

Project SMX (Sales & Marketing Excellence) in ACC, India

2007-2009

SMX

2010

SMX EDGE

2010-2011

30:30

2011-2012

Institutionalizing

Excellence

• Develop market

understanding

• Improve market

discipline

• Build loyalty among

channel partners

• Strengthen

frontline capability

• Up-skill change

agents (coaches as

force multipliers)

• Improve channel

health

• Sell out 30 mt

profitably

• Develop market

and build loyalty in

preparation for

over-supply

situation

• Strengthen

organization

capacity and

capabilities to

enhance

sustainability

5 critical workstreams

Leadership

Journey

Develop and

deploy through

coaches

Tools and modules

Governance

Performance cells


© 2012 Holcim Ltd

2009/2010 2011 2012 2013

Conduct sanity checks regarding tools & processes

Track implementation on country & regional level

Conduct region-wide expert training for Pricing Managers

Implement region-wide Community of Practice

Conduct country specific training for Sales Force

Train Pricing Managers on country level

Define SOPs1) for most critical pricing processes

Develop approach for B2B customers

Launch tools & processes for retail customers

Improve price & margin transparency

Review & assess existing pricing policies

Build

the

fou

nd

atio

n

Develo

p

capabili

ties

Ensure

susta

inabili

ty

1) SOP: Standard Operating Procedure

Way

forward


Example: Pricing and Margin Management, 2009-2013


© 2012 Holcim Ltd

• Growing populations, larger savings and rapid

urbanization drive higher construction growth in

Asia (Ø 2010-2020E)

• India: 8.8% p.a.

• Thailand: 4.9% p.a.

• Indonesia: 6.6% p.a.

• Vietnam: 9.6% p.a.

• Global: 5.2% p.a.

• India’s will be the world’s third largest construction

market by 2020E (7% of global share)

• India and Indonesia as main contributors of global

construction growth between 2010-2020E (after

China and the US)

Our opportunity

The continuing shift of construction growth towards Asia

Upper picture: Central Embassy development, Bangkok, includes a 30 storey five star hotel

Lower picture: Menara Palma, Golden Triangle, Central Business District, Jakarta Source: Global Construction 2020, 2011


© 2012 Holcim Ltd

Our opportunity

Construction growth in Emerging Asia

Construction Market Outlook until 2016 (USD bn)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

1′400

1′300

1′200

1′100

1′000

900

800

700

600

500

400

300

200

100

0

Europe

North America

Africa Middle East

Latin America

Asia Pacific

(emerging markets)

Asia Pacific

(developed markets)

Forecast

Source: BMI Market Outlook, 2012


© 2012 Holcim Ltd


Example: Value Added Solutions (SpeedCrete)

• SpeedCrete is a

fast-track repair

service for

infrastructure

ensuring

uninterrupted

business

• Main strengths • Easy to place

• High performance

and durability

• Holcim-owned

technology

Port Authority of Jakarta: Same day services


© 2012 Holcim Ltd


Example: Innovation Hub in Singapore

• The Centre of Excellence (CoE) was

built with the support from the

Singapore Economic Development

Board (EDB)

• Aligned with Government of

Singapore economic development

priorities

• The CoE is dedicated to the

development of sustainable and

value-adding services

encompassing green solutions,

productivity enhancing solutions,

customized solutions and innovative

materials technology solutions


© 2012 Holcim Ltd

• Fast urbanization and infrastructure

need in Asia require a focus on Large

and Infrastructure Projects (LIP)

• Regional Team has been evoked to • build-up capabilities

• foster segment-specific domain

expertise

• leverage global and regional network

• The vision of “Building Asia Together”

led to the successful LIP Forum in

Singapore with more than 240

participants from more than 140

companies


Approach to Large and Infrastructure Projects


© 2012 Holcim Ltd


Organization to serve Large and Infrastructure Projects

Head of Regional

AGG & RMX

Team

Regional

Support

LIP Coordinator

Regional

Commercial

Coach

Regional AGG &

RMX Team

LIP Core Team Solution Selling /

VAS

Concrete

Technology

HGRS Global

LCP* Team

Regional

functional team

with OpCo

representatives

Representative

from regional

Innovation Hub

in Singapore

Functional Team

within Holcim

Group Support

* LCP = Large Construction Projects


© 2012 Holcim Ltd


Cost Leadership in Energy

Measure for

transparency

Best practice

sharing through

regional com-

munities of

excellence Develop

Capabilities

(People) and

Capacities

(Infrastructure)

Create

academy and

equip them to

drive energy

projects

Drive on-ground

cultural change

Create

competitive

advantage

EARN

(Energy

Activation across

our Regional

Network)

How will we get

there? Where do we want

to be?

Achieve 10%

reduction in annual

energy costs by

2015:

“USD 200 m annual

savings”

Where we are

today?

• Energy is 43% of

our overall costs

• Cost of energy will

continue to raise at

~ 10% CAGR

• Our regions energy

expenditure will be

~ USD 1.9 bn in

2014

“New energy culture

to improve efficiency

of production,

products and

consumption to

reduce or limit energy

usage”


© 2012 Holcim Ltd


Cost Leadership in Energy

• Reduction of energy cost by USD 150 million annually by 2014

• Introduces a new standard for Energy Management Excellence building on

elements covering operations as well as sourcing

Capabilities (People) and Capacities (Supply Chain-Infrastructures)

Development

Lean Energy Culture

Coal

Sourcing

and

Pooling

Alternative

and

Renewable

Energy plus

CO2

Reduction

Thermal

Energy

Process

Admixtures

and Clinker

Factor

Reduction

EARN

Objectives

EARN

Set-up

Electrical

Energy

Process

Energy

Management Excellence


© 2012 Holcim Ltd


Cost Leadership in Logistics

New ACC set-up in East India region

Plant set-up in a Hub-and-Spoke

System delivers significantly lower

cost-to-serve due to:

• Clinker production close to raw

materials (limestone, coal)

• Lower cargo volumes due to clinker

transportation to grinding units vs. direct

cement dispatches

• Grinding units are located close to the

market and in vicinity to mineral

components for blending (fly ash)

• Savings of approx. 6 USD/t

Hub-and-Spoke system to improve cost competitiveness through

supply chain optimization


© 2012 Holcim Ltd

Plenty of opportunities to catch!


Grinding

Capacity

Expansion

Bangladesh

Footprint in

Myanmar

Footprint in

Cambodia

Footprint in

Sumatra Capacity Expansion in

East Java

Footprint in

Kalimantan

Capacity Growth in South

Vietnam

Capacity Expansion

in Thailand

Capacity

Expansion India

Capacity

Expansion Sri

Lanka Capacity Expansion

Malaysia

Capacity Expansion

in the Philippines

© 2012 Holcim Ltd

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.

47 Investor and Analyst Day 2012

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