HeidelbergCement Group Presentation

April 2015 1 - Group Communication & IR

HeidelbergCement Group presentation

Scantogo clinker plant in Togo


HeidelbergCement: history and development

1873 Foundation

1977 Lehigh, USA

1989 Central and Eastern Europe

1993 CBR

1995/96 China, Turkey

1999 Scancem

2001 Indocement, Indonesia 2002/03

2005/06 Kazakhstan, India, Georgia

2007 Hanson

2010 Democratic Republic Congo

Market leader in Romania, Ukraine, Germany

Founded in 1873; today, no 1 in aggregates and one of the largest cement producers in the world

2014 Sale of building products North America & UK


HeidelbergCement in the world

Cement Aggregates

  No 1 in aggregates   No 2 in ready-mixed concrete   No 3 in cement


HeidelbergCement in figures   45,000 employees   Core business

–  Aggregates –  Cement –  Downstream activities: ready-mixed concrete and asphalt

  2,350 locations in more than 40 countries –  500 production sites for sand, gravel, and crushed rock –  102 cement and grinding plants –  1,300 ready-mixed concrete plants –  110 asphalt plants

  Cement capacity 129 million tonnes (incl. joint ventures)   Aggregates reserves 18 billion tonnes


Managing Board – responsibilities since 2009

Dr. Bernd Scheifele Chairman of the Managing Board

Dr. Lorenz Näger Chief Financial Officer

Dr. Dominik v. Achten Deputy Chairman and North America

Daniel Gauthier Western and Northern Europe (excl. Germany), Africa-Mediterran. Basin, Group Services

Andreas Kern Eastern Europe-Central Asia, Germany

Dr. Albert Scheuer Asia-Pacific


2014: Best year in operational terms since financial crisis

1) Adjusted for consolidation and exchange rate effects

  Strong operational performance despite negative exchange rate effects –  Sales volumes rose in all business lines –  Revenue up 4% to €bn 12.6 (like-for-like1) +8%) –  Operating income up 5% to €bn 1.6 (like-for-like1) +13%) –  Net debt significantly reduced to €bn 6.9

  Disposal of the building products in North America and the United Kingdom   Expansion in attractive markets continues

–  2014: more than 5 mt new capacities commissioned in Africa, Indonesia and Kazakhstan –  2015: more than 5 mt to come on-line in Indonesia and Africa

  Continuous focus on performance and margin improvement programmes –  “PERFORM” in the cement business, “CLIMB Commercial” in the aggregates business

and “LEO” for logistics optimisation were very successful –  Start of “Continuous Improvement Program” (CIP) to safeguard the achievements of the

past and continuously improve cost savings and efficiency in the cement business


88 8978

2013* 2012 2011 2014

82 254 243 231

2014

244

2012 2011 2013*

39 39 35

2014

37

2012 2011 2013*

10 89

2014

9

2012 2011 2013*

+1% +5% +6%

+0%

+11%

-4%

+5%

-10%

Ready-mixed concrete (mm3)

Cement (mt) Aggregates (mt) Asphalt (mt)

January–December Development of sales volumes

*Amounts restated


534 529

933

0 2014

687

2013* 20122) 2011

400

200

300

100

1.000

900

800

700

600

500

5,000

0

12,128

2014 2012

12,614 14,020

2013* 2011

10,000

15,000

12,902

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0 2014

1,595

2013*

1,519

2012

1,604

2011

1,474

+4%1)

+9% +5%1) +9%

-1%

Revenue Operating income Profit for the financial year

Key figures (€m)

-26%

1)  Adjusted for consolidation and exchange rate effects: revenue +8% and operating income +13% 2)  2013 profit for the financial year includes non-recurring effects of €m 420

*Amounts restated

2)


  Eastern Europe- Central Asia

Bosnia-Herzegovina, Croatia, Czech Republic, Georgia, Hungary, Kazakhstan, Poland, Romania, Russia, Slovakia, Ukraine

Group areas and countries

  North America Canada USA

  Group Services

  Asia-Pacific Bangladesh, Brunei, China, India, Indonesia, Malaysia, Singapore

Australia

  Western and Northern Europe

Belgium, Denmark, Estonia, Germany, Iceland, Latvia, Lithuania, Netherlands, Norway, Sweden, UK

  Africa- Mediterranean Basin Benin, Burkina Faso, DR Congo, Ghana, Liberia, Sierra Leone, Tanzania, Togo

Israel, Spain, Turkey


HeidelbergCement’s Group areas Split up into mature and emerging markets

North America Western and Northern Europe

Asia-Pacific

Eastern Europe-Central Asia

Africa- Mediterranean Basin

8%

24%

10%

25%

33%

Revenue in 2014

42% emerging markets

58% mature markets


High aggregates reserves of 18 bnt: focus on mature markets

North America 2013 2014

Aggregates sales (mt) 104.1 110.5

Total aggregates reserves: 12.7 bnt

Western and Northern Europe 2013* 2014



Eastern Europe- Central Asia

2013* 2014




2013* 2014


Total aggregates reserves: 0.3 bnt Asia-Pacific 2013’ 2014


Total aggregates reserves: 1.4 bnt 2%

17% 7% 5%

69%

14% emerging markets

86% mature markets

Aggregates reserves

Total AGG reserves: ~ 18 bnt - Thereof mature markets: ~ 16 bnt Years of production: ~ 80 y

High intrinsic value potential *Amounts restated


Cement capacity of 113 mt: focus on emerging markets

GDP prognosis 2012–2017 in % by International Monetary Fund

+2.9%

+1.6% +3.4%

+5.5% +7.8%


2013* 2014

Cement sales (mt) 6.6 6.4

Cement capacity: 9.5 mt p.a. (Additional capacity of JV: 3.8 mt p.a.)

Western and Northern Europe

2013 2014


Cement capacity: 32.8 mt p.a.


2013* 2014



Asia-Pacific 2013* 2014



North America 2013* 2014



10%

30%

24%

11%

25% 64% emerging markets

36% mature markets

Total cement capacity incl. JV

Total cement capacity incl. joint ventures: 129 mt

*Amounts restated


  Production sites in 11 countries – mature markets

  Market leader in cement in most countries of the Group area

  Tight network of production sites for aggregates and ready-mixed concrete

Western and Northern Europe

Cement/grinding 26 GGBS 3 Cement terminals 60 Aggregates 147 Aggregates terminals 47 Ready-mixed concrete 585 Asphalt 42 Concrete products/precast 30



  Production sites in 11 countries – growth markets   Market leader in cement in most countries of the

Group area -  Cement capacity expanded in Kazakhstan

  Expansion of aggregates and ready-mixed concrete activities

Cement/grinding 22 Cement terminals 22 Aggregates 67 Aggregates terminals 6 Ready-mixed concrete 207 Concrete products/precast 3


  Leading positions in aggregates, cement, ready-mixed concrete, and asphalt

  Production sites mainly in the eastern part of the USA, in the southwest and on the west coast of the USA, as well as in the western provinces of Canada

  Integrated market approach for cement, aggregates, asphalt, and ready-mixed concrete in four regions: North, South, West, and Canada

North America

Cement/grinding 16 GGBS 1 Cement terminals 47 Aggregates 187 Aggregates terminals 18 Ready-mixed concrete 149 Asphalt 48 Concrete products/precast 3


  Asia –  Activities in 7 countries: Bangladesh, Brunei, China, India,

Indonesia, Malaysia, Singapore –  Expansion of cement capacities in Indonesia –  Strong market position in aggregates and ready-mixed concrete

in Malaysia; expansion in Indonesia   Australia

–  Mainly production of aggregates and ready-mixed concrete –  Production sites on the east coast, Tasmania, and in the

south west –  50:50 joint venture in four cement plants

Asia-Pacific

Cement/grinding 18 Cement terminals 10 Aggregates 84 Ready-mixed concrete 298 Asphalt 20 Concrete products/precast 2


Africa-Mediterranean Basin   Africa

–  Production sites in 8 countries: Benin, Burkina Faso, DR Congo, Ghana, Liberia, Sierra Leone, Tanzania, and Togo

–  Mainly cement production and little production of aggregates; market leader in most countries

–  Cement capacities expanded in Togo, Tanzania, and Burkina Faso   Mediterranean Basin

–  Production sites in Turkey, Israel, Spain –  Turkey: leading position in cement and ready-mixed concrete;

production of aggregates –  Israel and Spain: ready-mixed concrete and aggregates

Cement/grinding 16 Cement terminals 6 Aggregates 18 Ready-mixed concrete 75 Asphalt 2


Revenue: €m 1,077

Group Services   HC Trading

–  One of the largest cement and clinker trading companies in the world –  Deliveries via sea routes to own locations and other cement companies

–  15.1 mt cement, clinker, and other building products in 2014 –  6.4 mt coal and petroleum coke in 2014

–  Worldwide trading network with offices in 15 countries


Vancouver

San Francisco Los Angeles Dallas

Atlanta New York

Toronto

Chicago London Frankfurt

St. Petersburg Moscow

Istanbul Delhi

Mumbai Bangalore

Guangzhou Hong Kong

Singapore

Kuala Lumpur

Jakarta

Perth

Edmonton

Seattle

San Diego Houston

HeidelbergCement well positioned in attractive micro markets Cement

Aggregates Metropolis

•  Strong market position in urban centers (Frankfurt, Munich, London, San Francisco, Los Angeles, Jakarta, Kuala Lumpur, Hong Kong, Sydney…)

•  Nearby important raw material markets (Western Canada, Texas, Norway, Ghana, Tanzania, Australia)

Brisbane Sydney

Melbourne


Kazakhstan (2014): Shetpe 0.8 mt cement

India (2013): Damoh 2.9 mt cement

Indonesia (2020/25): 2−4 mt cement

Brownfield Greenfield

Burkina Faso (2014): 0.8 mt cement

Ghana: 1.0 mt cement (2012) 0.8 mt cement (2015)

Indonesia – outside Java (2020/25): 2−4 mt cement

Indonesia (2015): Citeureup expansion 4.4 mt cement

Togo (2014): 1.5 mt clinker

Indonesia (2014): 1.9 mt cement

Togo (2017): 0.25 mt cement

Tanzania: 0.25 mt clinker (2012) 0.8 mt cement (2014) "

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Liberia (2013): 0.5 mt cement

Expansion – over 5 mt came on-line in 2014

Further growth in attractive emerging markets at efficient investment costs

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HeidelbergCement strategy   Dual external growth strategy

–  Cement in emerging markets –  Aggregates and ready-mixed concrete in mature markets and North America

  Focus on continuing increase in efficiency in all areas and cost leadership

  Performance and result-oriented corporate culture   Proximity to operating business   Openness and fairness as soft factors of success


Building on sustainability   Economy

–  Long-term prospects to everyone connected with our economic activities

  Ecology –  Climate protection, saving natural resources,

minimising environmental impacts   Social responsibility towards our employees and

communities –  Opportunities for personal and professional

development –  Open dialogue with local communities –  Involvement in numerous local social activities


5.5%

21.0%

1990 2014

783 609

1990 2014

-21%

Biodiversity and natural resources

 Alternative fuel rate (in % of fuel mix)

 Cement with low clinker content  Recyclable products   Innovative products:

e.g.TioCem®

Occupational health and safety

Using waste as a resource

Protection of climate and environment

Sustainable construction

 Zero accidents mentality  Policies introduced  Compliance

 Conservation of resources  Restoration of quarries  Promotion of biodiversity  Dialogue with stakeholders

 Reduction of specific CO2 emissions (kg CO2/t of cement)

Long-term commitment for sustainability

Sustainability at HC


  Solid growth in key markets -  Continued recovery in the USA and UK -  Good development in Germany, Australia and Northern Europe; further stabilisation in

Eastern Europe -  Rising sales volumes in Indonesia and India due to growing demand and expanded capacities -  Solid growth in Africa due to high demand and additional capacities

  Significant tailwind -  Strong decline in oil price will have positive effect on energy costs -  Positive currency effect driven by weak euro

  New capacities in Indonesia and Africa will contribute to the result

Outlook 2015

  Sales volume growth in all Group areas   Significant increase in revenue, operating

income, and profit for the financial year   Earn cost of capital   Decrease in financing costs


Conclusion

  HeidelbergCement is a company with

–  excellent market position and attractive product portfolio

–  strong corporate culture with strict focus on costs

  HeidelbergCement focuses on increasing liquidity and deleveraging with the clear goal to return to investment grade

  Disciplined investment policy: focus on emerging markets

HeidelbergCement is well positioned to benefit over-proportionally from economic recovery


for better building

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HeidelbergCement Group Presentation