Heidelberg Materials Ag · XETR:HEI
Heidelberg Materials — HeidelbergCement — Commerzbank German Investment Seminar 2017
30 slides from Heidelberg Materials's conference presentation, Jan 9, 2017
Slide 1: Commerzbank German Investment Seminar 2017
Commerzbank German Investment Seminar 2017 New York, 9 January 2017 Dr. Bernd Scheifele, Group CEO Slide 1 – Commerzbank German Investment Seminar – 9 January 2017
Slide 2: Disclaimer
Disclaimer 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 beliefs and expectations and the underlying assumptions. T
Slide 3: Contents
Contents Page 1. The new HeidelbergCement 5 2. Operational and financial performance 9 3. Accelerating growth with Italcementi (ITC) 13 4. Strategy and strengths 20 5. HeidelbergCement – the future 27 Slide 3 – Commerzbank German Investment Seminar – 9 January 2017
Slide 4: The new HeidelbergCement
Contents Page 1. The new HeidelbergCement 5 2. Operational and financial performance 9 3. Accelerating growth with Italcementi (ITC) 13 4. Strategy and strengths 20 5. HeidelbergCement – the future 27 Slide 4 – Commerzbank German Investment Seminar – 9 January 2017
Slide 5: HeidelbergCement: Best managed company in the sector
HeidelbergCement Strong Management team with long standing operational and sector expertise Best managed Continuous improvement in operational and company in the financial metrics. New initiatives started in RMC and sales supported by global competence centres sector with unique business Integration
Slide 6: The new HeidelbergCement Group
The new HeidelbergCement Group Leading vertically integrated player Global: #1 in Aggregates Global/local centres of excellence for all three core #2 in Cement business lines #3 in Ready-mix concrete €bn >17 Revenue1 and €bn >3 EBITDA1 One of the biggest global trading services 1st company in the se
Slide 7: The global footprint of HeidelbergCement today
The global footprint of HeidelbergCement today 197 million t 62,000 employees in 3,000 locations Cement capacity 60 countries on 5 continents 19 billion t AGG reserves 1,900 plants Asphalt & RMC EBITDA generation Africa North 13% America 30% Asia Pac. 23% 34% Europe Expanded reach, capacity and expe
Slide 8: Operational and financial performance
Contents Page 1. The new HeidelbergCement 5 2. Operational and financial performance 9 3. Accelerating growth with Italcementi (ITC) 13 4. Strategy and strengths 20 5. HeidelbergCement – the future 27 Slide 8 – Commerzbank German Investment Seminar – 9 January 2017
Slide 9: Continuous improvement of financial metrics and returns in the last 2 years
Continuous improvement of financial metrics and returns in the last 2 years EBITDA (LTM) in €m Continuous margin improvement and 2,673 2,541 2,613 2,634 increase in cash flow generation 2,479 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Financial cost significantly reduced Net Debt in €m 6,331 5,970 5,890 5,8
Slide 10: Constant superior returns driven by product mix, footprint and management
Constant superior returns driven by: good product mix, unique footprint and experienced management team Organic EBITDA growth Free cash flow (m€) Clean EPS (€) 1,142 4.5 9.1% 972 4.2 4.3 8.2% 884 3.9 7.0% 6.4% 669 2013 2014 2015 2016 1) 2013 2014 2015 2016 2) 2013 2014 2015 2016 2) Reliable earnings
Slide 11: Creating value and earning cost of capital
Creating value and earning cost of capital ROIC Only global player in the industry to earn premium on cost of capital in % Before ITC acquisition After ITC acquisition 11 ROIC above 10 WACC by end of 2016 9 8 7.2 6.71 7 WACC: 6.9% 6.11 5.6 5.81 6 5.0 Reduction of WACC 5 after ITC acquisition 4 3.3 3
Slide 12: Accelerating growth with Italcementi (ITC)
Contents Page 1. The new HeidelbergCement 5 2. Operational and financial performance 9 3. Accelerating growth with Italcementi (ITC) 13 4. Strategy and strengths 20 5. HeidelbergCement – the future 27 Slide 12 – Commerzbank German Investment Seminar – 9 January 2017
Slide 13: ITC integration: Progressing faster than expected
ITC integration: Progressing faster than expected Redundant HQs closed (Bergamo/Paris/Brussels) All key personnel decisions taken & implemented. HC’s management philosophy has been consequently introduced FTE reductions (1st wave) ahead of plan. Target is to HC has strong reach 1,700 reductions by y
Slide 14: Timeline and milestones of ITC acquisition
Timeline and milestones of ITC acquisition Announcement Closing of Squeeze-out of the transaction 45% stake and delisting acquisition of ITC shares Year- Year- Year- 28 Jul Integration 1 Jul 12 Oct Integration end end end 2015 preparation 2016 2016 execution 2016 2017 2018 Reduction €m 400+ Disp
Slide 15: Closure of redundant Group & local headquarters
Closure of redundant Group & local headquarters Headquarters in continental Western Europe Brussels: BeNeLux HQ (country org.) Heidelberg/Leimen: Closed: HC’s regional HQ (TEAM) Group HQ (incl. tech. support) Brussels Staff of EMEA regions Germany HQ (country org.) Heidelberg Paris Paris/Gue
Slide 16: New leadership in all major ITC countries
New leadership in all major ITC countries North America Kazakhstan New General Managers in all major ITC France Morocco country organizations Italy Egypt Spain Thailand HC’s bonus system for country management India already completely implemented Trading Local management approach and strong signal o
Slide 17: Significantly more synergies than initially expected
Significantly more synergies than initially expected Key drivers ~10% of target’s revenue Higher than expected synergies from = best in class Operations, SG&A and Purchasing Identification of additional synergies from Trading, Finance and Market Updated run-rate synergy expectations In €m 400+ 1
Slide 18: Acquisition at the trough of the cycle
Acquisition at the trough of the cycle ITALY Cement Consumption* FRANCE Cement Consumption* -52% -29% 3.2% 41.7 24.8 3.6% 21.4 19.9 19.7 19.8 28.1 18.6 17.6 18.0 18.7 19.3 25.2 21.9 20.5 20.1 20.2 20.8 21.6 22.4 Peak 2011 2012 2013 2014 2015 2016 2017 2018 2019 Peak 2011 2012 2013 2014 2015 2016 201
Slide 19: Strategy and strengths
Contents Page 1. The new HeidelbergCement 5 2. Operational and financial performance 9 3. Accelerating growth with Italcementi (ITC) 13 4. Strategy and strengths 20 5. HeidelbergCement – the future 27 Slide 19 – Commerzbank German Investment Seminar – 9 January 2017
Slide 20: Best-managed company in the sector
Best-managed company in the sector Value creative vertically integrated business Market leading Strong operating Unique de-centralised management model margin leverage improvement Integration speed Timely reaction to changes in the markets Track record in Strong cash cost efficiency generation Conti
Slide 21: Cement: Significantly enhancing efficiency
Cement: Significantly enhancing efficiency Starting point HC was not competitive regarding Realistic and measurable targets (2004) cash cost per ton Cement capacity (mt) Number of employees (’000) Reorganisation of HeidelbergCement Technology 25.8 117.2 Centre (HTC) 91.5 WIN: reorganisation an
Slide 22: Aggregates: A top performer in the industry
Aggregates: A top performer in the industry Hanson Aggregates was underperforming / EBITDA margin Starting point EBITDA margin below peer group (2006 / 2007) Hanson Aggregates was clearly seen as partially (2007) 24.2% 25.1% undermanaged Setup of Competence Centre Materials (CCM) 16.1% 15.7% (
Slide 23: Ready-mix: New Competence Centre sets clear saving targets
Ready-mix: New Competence Centre sets clear saving targets Ready-mix margins of big cement companies are typically below best managed privately-owned New activity ready-mix companies Key focus areas are materials and logistics (80% of costs) Improvement opportunities Saving targets in €m REVENUE
Slide 24: Vertical integration: Assets, Process, Business
Vertical integration: Assets, Process, Business CEM AGG RMC ASP Level 3 Business Mind-set, Cross BL Behaviour, Value Chain Approach integration Level 2 Processes, Systems, Functions Process integration (Shared Service, Integrated IT Platform...) Level 1 Plant Network, Raw Material Reserves Asset int
Slide 25: Sales is a Science: Digitalisation and process standardisation
Sales is a Science: Digitalisation and process standardisation New Group Function is Market Intelligence and Sales Processes based on two pillars Market model: Sales process: Mix of external and internal information Structured sales planning: used to forecast market development Daily, weekly,
Slide 26: HeidelbergCement – the future
Contents Page 1. The new HeidelbergCement 5 2. Operational and financial performance 9 3. Accelerating growth with Italcementi (ITC) 13 4. Strategy and strengths 20 5. HeidelbergCement – the future 27 Slide 26 – Commerzbank German Investment Seminar – 9 January 2017
Slide 27: Mid-term targets 2019 unchanged
Mid-term targets 2019 unchanged Revenue EBITDA ROIC Leverage EPS Payout ratio > €bn 20 > €bn 5 >10% 1.5 – 2.5x ~ € 11 40% – 45% Market pressure in Indonesia Downsides Increased competition in Africa Impact of the elections in US, Italy, Germany and France Uncertainties Consequences of Brexit
Slide 28: US will continue to be strong
US will continue to be strong Continued recovery is expected across all segments Further increase in margins leading to highest profitability levels in history Significant potential from new infrastructure program in mid-term PCA’s Trump Infrastructure Scenario Regional Funding Allocations Overview
Slide 29: Dividend policy
Dividend policy Dividend per share in € Payout ratio1 40% – 45% Ordinary dividend payout ratio 1.30 40% to 45% by the end of 2019 30.5% 0.75 Progressive increase based on affordability and sustainability 2014 2015 2019 1) Payout ratio calculated based on clean EPS, excluding “Additional Ordinary Res
Slide 30: Reiterating capital allocation priorities
Reiterating capital allocation priorities Free cash flow Progressive dividend Return capital to generation shareholders Deleveraging for solid IG ratings Potential share buy-back Invest in organic growth Available cash Disciplined M&A Slide 30 – Commerzbank German Investment Seminar – 9 January 2017
HeidelbergCement — Commerzbank German Investment Seminar 2017 on 6ix