Holcim Ltd · SIX:HOLN
Holcim — LafargeHolcim — Investor Day (November 2016)
21 slides from Holcim's investor day presentation, November 2016
Slide 1: Capital Markets Day 2016
Capital Markets Day 2016 Update on financials and capital allocation Ron Wirahadiraksa, Chief Financial Officer © LafargeHolcim Ltd 2015
Slide 2: 2016: solid progress towards our 2018 targets
2016: solid progress towards our 2018 targets • Synergies delivery ahead of schedule • Ongoing cost discipline • Capex below CHF 2bn in 2016 • Significant improvement in Operating FCF in 2016 • Divestment targets exceeded, program extended • Net debt expected to be around CHF 13.3bn1 at year-end 201
Slide 3: Strengthening of Group financials
Strengthening of Group financials CHF m Like-for- Like-for- Q3 2016 Q3 2015 +/- 9M 2016 9M 2015 +/- like like Net Sales 7,036 7,824 -10.1% -3.1% 20,378 22,041 -7.5% -1.8% Operating EBITDA adj. 1,685 1,645 2.4% 10.5% 4,214 4,356 -3.3% 2.0% Operating EBITDA margin adj. 23.9% 21.0% 293bp 295bp 20.7% 19
Slide 4: Delivering significant improvement in operating free cash flow
Delivering significant improvement in operating free cash flow CHF bn Operating EBITDA 3.7 3.9 • Pricing discipline, cost management and synergy delivery Change in net working capital • Usual effect of seasonality Operating FCF • Continued tight management of net -1.3 -1.4 working capital 0.3 +1.0 C
Slide 5: EBITDA synergies ramp up ahead of schedule
EBITDA synergies ramp up ahead of schedule CHF m 1‘100 Initial synergy target for • Ramp up ahead of schedule run rate 2017 • Overall synergies adjusted for 680 scope to CHF 1bn • Full synergies of CHF 1bn Synergy target expected to be already achieved 1'000 adjusted at the end of 2017 for scope imp
Slide 6: On track to reach our target of 7% SG&A as % of Net Sales
On track to reach our target of 7% SG&A as % of Net Sales Percentage of net sales Synergies of CHF 157m delivered2 Selected actions Further SG&A optimization • Group headquarter and central functions right-sizing • Site consolidation in overlapping countries (e.g., US) 9.4% ~8.7% • Integration of ma
Slide 7: On track for financing and working capital synergies
On track for financing and working capital synergies Delivering financing synergies Delivering working capital improvements CHF m Working capital days improvements 200 (out of net sales) 6 125 4 100 2 20 H2 2015 FY 2016 FY 2017 Run rate FY 2015 FY 2016 FY 2017 over time Out of which CHF 95m Totaling
Slide 8: Strong CAPEX discipline; 2016 below CHF 2bn
Strong CAPEX discipline; 2016 below CHF 2bn CHF bn Historic 2016 2017 2018 2.8-2.9 < CHF 3.5bn <2.0 <2.0 Expansion 1.2 0.5 Maintenance 0.7 Run rate 9M actuals Planned Planned Run rate last 4 years © 2016 LafargeHolcim 8
Slide 9: CHF 3.5bn divestment program exceeded
CHF 3.5bn divestment program exceeded Scope Impact (closing to Dec)1 Scope Impact (full year)1 EV Announced divestments (closing dates) Net Sales Op EBITDA adj Net Sales Op EBITDA adj @ 100% • South Korea (Q2) • Saudi Arabia (Q2, equity accounted) • Sri Lanka (Q3) • Lafarge India (Q4) CHF 495m CHF
Slide 10: Net debt expected to be reduced to around CHF 13.3bn by the end of 2016
Net debt expected to be reduced to around CHF 13.3bn by the end of 2016 CHF bn 18.3 16.5 Taking into account ~13.3 • CHF 3.5bn proceeds from the disposal program expected by YE 2016 • Divestments of Vietnam and China are expected to close in Q4 • CHF 0.3bn share purchase in India announced on Novemb
Slide 11: Securing sustainably lower financing costs
Securing sustainably lower financing costs New bonds issued Capital market maturities Bonds prepaid Optimizing credit facilities portfolio: Capital market debt CHF m Lafarge and Holcim credit facilities replaced by new after bonds prepayments LafargeHolcim facilities, with lower fees 4000 3500 Step-
Slide 12: Updated mid term Group targets
Updated mid term Group targets1 Free Cash Flow Capex ROIC • CHF 2.8bn-3.3bn run rate by 2018 • Below CHF 2.0bn for 2016 • 300bps improvement • CHF 5.0 per share run rate by 2018 • Below CHF 3.5bn for 2016-2017 from 2015 level by 2018 • CHF 7.5bn cumulative 2016-2018 • Below CHF 2.0bn run rate by 201
Slide 13: On track to reach 2018 targets updated for scope and forex
On track to reach 2018 targets updated for scope and forex CHF bn Updated targets for Original scope and Additional targets Scope impact1 Forex2 forex3 cost savings Others5 New targets Adjusted Operating 8.0 (0.7)4 (0.5) 6.8 0.2 7.0 2018 EBITDA Operating FCF 2018 3.5 - 4.0 (0.5) (0.3) 2.7 - 3.2 0.1
Slide 14: 2016-2018: Strong growth expected in adj. Operating EBITDA
2016-2018: Strong growth expected in adj. Operating EBITDA CHF bn ~1.4 7.0 >5.8 -0.35 0.4 -0.15 -0.1 >5.35 Adjusted Op. Estimated Estimated Pro-forma Synergies Estimated Underlying Adjusted Op. EBITDA full year scope impact2 Forex impact3 adjusted scope impact4 business activity EBITDA 2018 expectat
Slide 15: Drivers of underlying business activity
Drivers of underlying business activity Growth and cost initiatives Market and macro-economic assumptions further underpinning our targets • Underlying cement market volume growth of 2% • Commercial excellence initiatives delivering in 2017 and 2018 • Operational leverage • Recovery and acceleration
Slide 16: 2016-2018: Significant improvement in Operating FCF generation
2016-2018: Significant improvement in Operating FCF generation CHF bn 7.5 2.8-3.3 X4 0.7 Op. FCF Proforma Op. FCF updated Cumulative op. FCF 20151 target 2018 updated 2016-2018 1) Operating FCF adjusted for merger, restructuring and other one-offs © 2016 LafargeHolcim 16
Slide 17: Strong free cash flow generation underpinning sustainable growth and cash returns
Strong free cash flow generation underpinning sustainable growth and cash returns to shareholders Committed to maintain a solid investment grade rating 1 2 3 4 Grow organically Manage actively Sustain an Return excess with targeted portfolio attractive cash to capex dividend policy shareholders © 20
Slide 18: Committed to maintain a solid investment grade rating
Committed to maintain a solid investment grade rating FY 2015 Q3 2016 LTM Outlook Net financial debt / 3.0 2.9 Improving adj. operating EBITDA1 Cash Flow from operating activities / 14.8% 18.6% Improving Net financial debt1 1) Based on reported numbers © 2016 LafargeHolcim 18
Slide 19: Targeted resource allocation…
Targeted resource allocation… 1 Organically grow with targeted capex 2 Actively manage portfolio Max run rate 2018 at CHF 2bn Review business performance with strict criteria • Max. of CHF 3.5bn in 2016-2017 • Balance divestments to actively manage portfolio • Continued investment in maintenance and
Slide 20: …while returning cash to shareholders
…while returning cash to shareholders Return excess cash to shareholders, 3 Sustain an attractive dividend policy 4 commensurate with solid investment grade rating Minimum of CHF 2 per share going forward Strong improvement in cash available • CHF 2 per share to be proposed at next AGM in to be retu
Slide 21: Concluding remarks
Concluding remarks • Delivering on synergies, EBITDA growth and Capex discipline • Strong operating FCF improvement as of 2016 on the back of EBITDA, Capex, Finance & Tax improvement • Improving pricing and margins going forward, additional focus on growth • Pro-active portfolio management res