Crh Plc · NYSE:CRH
Crh — Investor Day (November 2010)
19 slides from Crh's investor day presentation, November 2010
Slide 1: CRH Investor Day 2010: Emerging Markets
CRH Investor Day 2010 EMERGING MARKETS ALBERT MANIFOLD CHIEF OPERATING OFFICER
Slide 2: Emerging Markets – Introduction
2 Emerging Markets – Introduction y Our Emerging Markets presence y Our approach to investing in Emerging Markets y How we have built our Emerging Markets positions { CEE { Asia y Our expectations for Emerging Markets { Short term { Long term CRH Investor Day, November 2010
Slide 3: Emerging Markets – Our Presence
3 Emerging Markets – Our Presence y Focussed on 3 core regions { CEE { India c15% { China of EBITDA & y Other regional Emerging Market exposure Net Assets { South & East Mediterranean { South America { Africa Portfolio approach to Emerging Markets Principally heavy‐side entry in quality assets CRH I
Slide 4: Emerging Markets – Our Approach
4 Emerging Markets – Our Approach y Resources backed – Buy & Build { Building businesses around core assets { Improving core asset through Capex and Operational Excellence { Roll out Vertical Integration model in pace with market developments y Successful track record of progressive investment to me
Slide 5: Emerging Markets – Our Approach
5 Emerging Markets – Our Approach y Unique strategy { Buying good resource‐backed assets…. { ….and building core assets by acquisition/capex { Developing significant downstream investments…. { ….offering multiple growth opportunities y Facilitated by our Federal structure { Benefits of strong centra
Slide 6: Emerging Markets – Our Core Regions
6 Emerging Markets – Our Core Regions N. East China CEE early 2007 1995 South India mid 2008 A broad portfolio of development opportunities… An approach tailored to each individual market CRH Investor Day, November 2010
Slide 7: Emerging Markets – Overview of our Core Regions
7 Emerging Markets – Overview of our Core Regions CEE China India % Global construction demand ~4% ~50% ~10% Growth forecast +5% +8% +8% Potential cement market +20yrs ~120mtpa ~1.5Bn ~1Bn Long term prospects 9 9 9 Short term returns 9 ? ? Vertical Integration 9 ? ? When? Now 5‐10yrs 10‐15yrs CRH In
Slide 8: Emerging Markets – Our CEE Portfolio
8 Emerging Markets – Our CEE Portfolio y 1995: Initial investment in Poland – Cement plant 2.3mt y 1997: Acquired 2nd operating facility y 1998: Completed construction of largest cement kiln in Europe y 1998‐2010: Developed downstream businesses ... Now 65% Sales “Last in” – But today #1 in Building
Slide 9: Emerging Markets – Our CEE Portfolio
9 Emerging Markets – Our CEE Portfolio y Poland CEE { #1 in Building Materials Product Line Poland Ukraine Russia Baltics { Broadest market coverage Cement 9 9 { Most vertically Integrated Aggregates 9 9 { Most profitable RMC 9 9 9 9 Pavers 9 y Ukraine Asphalt 9 { Core resource backed asset Aerated
Slide 10: Emerging Markets – Investing in Asia
10 Emerging Markets – Investing in Asia y Very different challenges to other emerging markets { High growth rates { Rapidly expanding industries – new capacity { Poor pricing – lack of discipline { Unsophisticated construction { Culture, language, remoteness y However… { 50% of the world’s populatio
Slide 11: Emerging Markets – Our strategy for Asia
11 Emerging Markets – Our strategy for Asia y Tailored approach – CEE strategy would not suffice { Broad model successful { But needed to adjust y Development teams on the ground { Visited all major SE Asian economies over 10 years y Decided to focus on India and China { Required differing strategie
Slide 12: Emerging Markets – Asia Market characteristics
12 Emerging Markets – Asia Market characteristics Indian Market Chinese Market y Fragmented cement industry y Later in growth phase y Low per capita usage (180kg) y High per capita usage (1,250kg) y Early initial growth phase y New capacity slowing (halt 2014‐16) y 800mt+ new capacity next 20 years
Slide 13: Emerging Markets – India: Initial Investment
13 Emerging Markets – India: Initial Investment y Focus on Southern India y Andhra Pradesh had right characteristics { Population, demographics, FDI, fragmented y Good prospects for short term returns Andhra Pradesh … and long term growth y Found a suitable business partner { MyHome 50:50 JV 3mt cem
Slide 14: Emerging Markets – India: Rolling out CRH model
14 Emerging Markets – India: Rolling out CRH model y Excellent resource‐backed core asset Kiln stops Clinker Factor { CRH Op.Excellence program roll out 79% { Now lowest cost producer in CRH 87 72% y Develop the asset through capex 50 { Expanding capacity by >30% { Significant investment in infrastr
Slide 15: Emerging Markets – China: Our Approach
15 Emerging Markets – China: Our Approach y Different market ‐ different approach y Extensive research for regional opportunities y Understanding industry structure y Logistics & competition key { Cement trade exposed to water transport (eastern sea board, 3 great rivers) { Had to adapt our strategy
Slide 16: Emerging Markets – China: First steps
16 Emerging Markets – China: First steps y China – A significant management challenge { Enormous cultural differences { Intensely competitive y 1st investment was part of our market research { Acquired 100% of cement business in NE China { Small business (cost c€20m) – reduced risk y Used this busin
Slide 17: Emerging Markets – China: The Next Step
17 Emerging Markets – China: The Next Step y To be a Top 10 player – needed to invest { in a substantial business { Market consolidating quickly { Capacity additions slowing y Northeast China – key region (100m pop.) { Yatai Cement { #7 in China….#1 in North East y Acquired 26% stake in Yatai Cement
Slide 18: Emerging Markets – Our Core Portfolio
18 Emerging Markets – Our Core Portfolio y CEE: { Poland #1 Building Materials, most vertically integrated, most profitable { Ukraine New modern cement facility 2011 – rolling out vertical integration { Russia Tentative initial investments Contributing c10% of Group EBITDA y Asia: { India 1st invest
Slide 19: Emerging Markets – Going Forward
19 Emerging Markets – Going Forward y Invested in core Emerging Markets – CEE, China, India { Continue to look at others – SE Asia, Sth America y Key now is to invest at the appropriate pace and scale { Not too much, too soon ….nor too little, too late y Committed to broadening and deepening our Eme