Holcim Ltd · SIX:HOLN
Holcim — LafargeHolcim — FY2017 Earnings Presentation
39 slides from Holcim's earnings presentation, Mar 2, 2018
Slide 1: 2017 Results and Strategic Update
Confidential: Not to be distributed 2017 Results and Strategic Update Jan Jenisch, CEO Géraldine Picaud, CFO March 2, 2018 © LafargeHolcim Ltd 2015
Slide 2: Agenda
Agenda 01 Highlights and Key Developments 02 Financial Results 2017 03 Strategy 2022 – “Building for Growth” 04 2018 Outlook and guidance 2
Slide 3: Highlights and Key Developments
01 Highlights and Key Developments Jan Jenisch, Chief Executive Officer 3
Slide 4: Highlights and Key Developments
Highlights and Key Developments › Good progress made in 2017 across all key metrics › 4.7% sales growth and 6.1% increase in EBITDA (on like for like basis) › Reassessment of fair value of asset portfolio with impairments of CHF 3.8 billion › Merger is completed with a strong country and asset base
Slide 5: Financial Results 2017
02 Financial Results 2017 Géraldine Picaud, Chief Financial Officer 5
Slide 6: 2017 performance highlights
2017 performance highlights Good progress with growth in all key metrics Recurring Net sales EPS 4) Free cash flow EBITDA 2) CHF +4.7% 1) +6.1% 1) +11.9% 1.7 bn CHF 26.1 bn CHF 6.0 bn 3) CHF 2.35 per share +1.5% 1) Like for like 2) Recurring EBITDA replaces the former Operating EBITDA Adjusted 3) In
Slide 7: Net Sales bridge 2017
Net Sales bridge 2017 Strong like for like growth of +4.7% CHF m –2.9% +4.7% LFL –6.5% –1.1% 26’904 –1’684 1’194 26’414 –285 26’129 25’220 Net Sales 12M Scope - 1) Net Sales 12M LFL Growth Net Sales 12M FX Net Sales 12M 2016 Disposals 2016 LFL 2017 LFL 2017 1) Scope impact primarily reflects China,
Slide 8: Recurring EBITDA bridge 2017
Recurring EBITDA bridge 2017 Over-proportional increase of +6.1% like for like, in line with guidance +0.7% CHF m +6.1% CHF 343 m LFL 126 –106 278 –323 65 5’950 5’970 5’990 5’627 Recurring Scope - Recurring Volume Price over Recurring Scope - FX Recurring EBITDA 12M Disposals & EBITDA 12M cost 2) EB
Slide 9: 2017 Net sales and Recurring EBITDA per region
2017 Net sales and Recurring EBITDA per region Increased Recurring EBITDA in 4 out of 5 regions +2.0% Net Sales (CHF m) Recurring EBITDA –0.4% 7'167 (CHF m) 5’664 % LFL growth +10.5% +6.7% +3.7% 1'483 7'441 1'385 -6.9% 1'418 North America Europe Asia Pacific Group +4.7% +11.0% 26’129 +22.9% 2’944 1'
Slide 10: Europe
Europe Good progress and improving market conditions CHF m 12M 2017 12M 2016 േ LFL (% ) LFL (abs) Net Sales 7'167 7'023 2.1% 2.0% 138 Recurring EBITDA 1'385 1'334 3.8% 3.7% 50 › Market recovery overall in the region › Strong contribution from Eastern Europe (Russia, Poland, Romania) › Positive dynam
Slide 11: Middle East Africa
Middle East Africa Growth in Net sales and Recurring EBITDA in 2017 on a like for like basis CHF m 12M 2017 12M 2016 േ LFL (% ) LFL (abs) Net Sales 3'374 3'900 -13.5% 5.4% 195 1) Recurring EBITDA 1'085 1'247 -13.0% 3.5% 40 1) Contribution from share of net income from JVs: CHF 70m in full year 2017
Slide 12: Asia Pacific
Asia Pacific Net sales growth driven by India, margin pressure in South East Asia CHF m 12M 2017 12M 2016 േ LFL (%) LFL (abs) Net Sales 7'441 8'226 -9.5% 6.7% 465 Recurring EBITDA 1) 1'418 1'594 -11.1% -6.9% -96 Of which, contribution from Huaxin 126 1) Contribution from share of net income from JVs
Slide 13: North America
North America Strong growth in Recurring EBITDA in a stable market environment CHF m 12M 2017 12M 2016 േ LFL (% ) LFL (abs) Net Sales 5'664 5'584 1.4% -0.4% -20 1) Recurring EBITDA 1'483 1'335 11.1% 10.5% 140 › Continued strong contribution from the US despite decline in volumes › Good contribution
Slide 14: Latin America
Latin America Strong performance in Net sales and margins CHF m 12M 2017 12M 2016 േ LFL (% ) LFL (abs) Net Sales 2'944 2'773 6.1% 11.0% 294 Recurring EBITDA 1'055 885 19.3% 22.9% 201 › Strong increase in Net Sales and Recurring EBITDA in Mexico, despite less favorable macroeconomic indicators › Reco
Slide 15: Reassessment of the fair value of the asset portfolio
Impairments Reassessment of the fair value of the asset portfolio Impairment charge of CHF 3.8 billion › Country macro-economic / political volatility › Reassessment of WACC for some countries › Adaptation to market dynamics › No cash impact (CHF m) Goodwill / Country book value 2’724 Specific Prope
Slide 16: Financial performance 2017
Financial performance 2017 EPS before impairment and divestments of CHF 2.35, up 11.9% Impairment & 2017 before 2016 before CHF m 2017 Divestments impair. & divest. impair. & divest. variation Net Sales 26'129 26'129 26'904 -775 Recurring EBITDA 5'990 5'990 5'950 40 Depreciation & Amortization -2'30
Slide 17: Free Cash Flow
Free Cash Flow CHF 1’685 million of Free Cash flow generation CHF m 198 -263 40 280 1’660 -231 1684 1’685 FCF 12M 2016 Rec. EBITDA Change in Net Working Capex Net Financial expenses paid net Others FCF 12M 2017 Capital 17
Slide 18: Net Financial Debt Dec 2016 to Dec 2017
Net Financial Debt Dec 2016 to Dec 2017 Net debt / Recurring EBITDA at 2.4x CHF m 14'724 –1’685 266 14'346 378 500 237 –1’286 1’212 NFD FCF Disposals Group Non-controlling Share buy-back FX 1) Others 2) NFD (Dec 2016) shareholders interest (Dec 2017) Dividends 1) Mainly due to EUR appreciation 2) In
Slide 19: Attractive dividend policy
Attractive dividend policy CHF 2 dividend per share proposed at next AGM Dividend per share CHF m Comments: › 2017 full year dividend of CHF 2.0 per 2.0 2.0 share to be proposed at AGM on 8 May 2018 1.5 › Share buyback programme is discontinued with CHF ~581 million completed 2015 2016 2017 1) 1) Pr
Slide 20: Strategy 2022 – Building For Growth
Confidential: Not to be distributed 03 Strategy 2022 – “Building For Growth” Jan Jenisch, Chief Executive Officer 20
Slide 21: Building Materials market is highly attractive
Building Materials market is highly attractive Five megatrends driving growth of 2 - 3% per annum Global population Urbanization and Increased demand for Digitalization Increased demand for growth and megacities – better living opens new avenues sustainable changing Approx. 2.5 billion standards for
Slide 22: Cement demand is forecasted to grow faster than GDP
LafargeHolcim’s business segments are set to grow sustainably Cement demand is forecasted to grow faster than GDP Global cement demand (without China) 3'000 2'500 Mt Cement demand 2'000 2 - 3% 1'500 Expected annual 1'000 cement growth until 2030 500 - 2000 2005 2010 2015 2020 2025 2030 Growth dynami
Slide 23: Building Materials is a fragmented CHF 2'500 billion Market
Building Materials is a fragmented CHF 2’500 billion Market Many opportunities for growth and acquisitions Global Building Materials Market Building Materials Market w/o China CHF~2’500 billion CHF ~1’750 billion Cement ~CHF 200 billion ►LH market share of ~8% Aggregates ~CHF 220 billion ►LH market
Slide 24: LafargeHolcim is well positioned
LafargeHolcim is well positioned Our strengths provide an excellent platform for profitable growth › Excellent global footprint and 2017 performance by business segment asset base › Four attractive business segments Ready Mix Concrete Aggregates Volume 50.6 Mm3 Volume 279 Mt Net Sales CHF 5’263m Net
Slide 25: Strategy 2022 – Building for Growth
Strategy 2022 – “Building for Growth” Our four value drivers for top & bottom line growth Growth Simplification & Financial Vision Performance Strength & People 25
Slide 26: Shifting gears to growth – top & bottom line
Strategy 2022 – “Building for Growth” Shifting gears to growth – top & bottom line › Capture opportunities in the growing building material market › Utilize best asset base to grow faster than the market › More investments in “Growth Plus” markets › Execute more aggressive market strategies for Aggr
Slide 27: Develop Solutions & Products into a 4th business segment
Develop “Solutions & Products” into a 4th business segment More focus and accountability on attractive market segments › Current Solutions & Products segment includes precast, concrete products, asphalt, mortars, contracting & services › Sales 2017 of CHF 2.1 billion, solid margins and low capital i
Slide 28: Simplification & Performance
Simplification & Performance Cost disciplined operating model and corporate light structure Implement a simpler, country-focused operating model › Eliminate one layer of management - country focused organization with 35 markets (up from 20) reporting directly to group management › Two corporate busi
Slide 29: Financial Strength
Financial Strength Disciplined value creation Returns Balance sheet Realize value Investment Pay shareholders an Committed to Fund growth through Disciplined, targeted attractive dividend maintaining a strong divestment of and value creative balance sheet selected assets investments including bolt o
Slide 30: Vision & People
Vision & People Building a culture of trust, integrity and entrepreneurial leadership Our vision is to be a global blue chip company in the attractive and growing building materials market. Construction and improving living conditions are fundamental needs of a growing and urbanizing world populatio
Slide 31: Strategy will deliver attractive returns
Strategy 2022 – “Building for Growth” Strategy will deliver attractive returns Net sales Recurring FCF to Recurring Return on growth EBITDA growth EBITDA Invested Capital 3 - 5% at least 5% > 40% > 8% annually annually Net sales and Recurring EBITDA at constant exchange rates 31
Slide 32: New group management in place
Strategy 2022 – “Building for Growth” New group management in place North Latin Europe* MEA* CEO* Asia* CFO* Growth & HR* America* America* M. Cobuz S. Sebbar J. Jenisch M. Kriegner G. Picaud Performance* C. Luscombe R. Thibault O. Osswald U. Bleisch China Trading Health & Strategy Sustainability Co
Slide 33: Execution of strategy under way, new organization in place
Strategy 2022 – “Building for Growth” Execution of strategy under way, new organization in place New group management in place One layer of management eliminated with 35 markets (up from 20) reporting directly to group management Empowerment of countries, full accountability and P&L responsibi
Slide 34: Disciplined execution and well defined milestones
Strategy 2022 – “Building for Growth” Disciplined execution and well defined milestones › Complete review of asset portfolio and › New operating model fully investment / divestment options established in Q1 › Growth plans established in all key › New run rates on costs and margins markets for Cement
Slide 35: Outlook 2018 and guidance
04 Outlook 2018 and guidance Jan Jenisch, Chief Executive Officer 35
Slide 36: 2018 Outlook & Guidance
2018 Outlook & Guidance › Net Sales growth of 3 - 5% on a like for like basis › Increase in Recurring EBITDA of at least 5% on a like for like basis › Capex spend below CHF 2 billion › Execute Strategy 2022 across all four business segments and countries 36
Slide 37: 2018 Upcoming Events
2018 Upcoming Events › May 8, 2018: AGM and Q1 2018 earnings release › July 27, 2018: Half year earnings release; new segmental reporting › October 26, 2018: Q3 earnings release › November 2018: Capital Markets Day 37
Slide 38: Disclaimer
Disclaimer These materials are being provided to you on a confidential basis, may not be distributed to the press or to any other persons, may not be redistributed or passed on, directly or indirectly, to any person, or published or reproduced, in whole or in part, by any medium or for any purpose.
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