HeidelbergCement Group Presentation

April 2014 1 - Group Communication & IR

HeidelbergCement – for better building Group Presentation 2014


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


HeidelbergCement in the world

Cement Aggregates

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


HeidelbergCement in figures 52,560 employees Core business

– Aggregates – Cement – Downstream activities

2,500 locations in more than 40 countries – 538 production sites for sand, gravel, and crushed rock – 102 cement and grinding plants – 1,307 ready-mixed concrete plants – 101 asphalt plants

Cement capacity 128 million tonnes Aggregates reserves 19 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 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

Regional responsibilities:


2013: Best result since beginning of the financial crisis

1) Adjusted for consolidation and exchange rate effects

Strong operational performance, but results affected by high negative exchange rate effects

– Revenue: €bn 13.94 (-1%; like-for-like1) +3%) – Operating income: €bn 1.6 (±0%; like-for-like1) +5%) – Net profit: €m 945 (+79%) – Earnings per share more than doubled to €3.98 (2012: €1.52)

Growth in attractive markets continues – 2013: 5 mt new capacities commissioned – 2014: around 5 mt to come on-line in Indonesia, Togo, Ghana, Burkina Faso, Tanzania, and

Kazakhstan Continuous focus on performance and margin improvement

– Price increases contributed €m 252 to margin improvement in 2013 “PERFORM” and “CLIMB Commercial” very succesful

– “FOX 2013” achieved €m 391 of cash-relevant savings in 2013 (€m 1,158 since 2011) – “LEO”: Logistics optimisation on track with a target of €m 150 cost reduction


7888 89

2013 2011

91

2012 2010

240 254 243

2013 2011

241

2012 2010

35 39 39

2013

40

2012 2010 2011

9 10 9

2010 2012 2013

9

2011

+1% +6%

+12%

+5%

+3% -1%

+0%

±0%

+12% -4%

+3%

-10%

Ready-mixed concrete (mm3)

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

January–December Development of sales volumes


511 534 529

0

100

200

300

400

500

600

700

800

900

1.000

2013

945

20122) 2011 2010

5,000

0

10,000

15,000

13,936

2013 2012

14,020

2011

12,902

2010

11,762

+10%

+5%

1,400

1,600

1,200

1,000

800

1,800

2010

1,430

2011

1,474 1,607

2013 0

200

400

600

1,604

20122)

+3%

-1%1) +9% ±0%1) +9%

-1%

Revenue Operating income Profit for the financial year

Key figures (€m)

+79%

1) Adjusted for consolidation and exchange rate effects: Revenue +3% and operating income +5% 2) 2012 figures have been restated due to the retrospective application of IAS 19R and IFRIC 20


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, 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%

26%

10%

25%

31%

Revenue in 2013

44% emerging markets

56% mature markets


High aggregates reserves of 19 bnt Focus on mature markets

North America 2012 2013

Aggregates sales (mt) 104.5 104.1

Total aggregates reserves: 13.2 bnt


2012 2013



Eastern Europe- Central Asia

2012 2013




2012 2013


Total aggregates reserves: 0.3 bnt Asia-Pacific 2012 2013


Total aggregates reserves: 1.3 bnt 2%

17% 7% 5%

69%


86% mature markets

Aggregates reserves

Total AGG reserves: ~ 19 bnt - Thereof mature markets: ~ 16 bnt Years of production: ~ 60 y

High intrinsic value potential


Cement capacity of 128 mt: focus on emerging markets GDP prognosis 2012–2017 in %*

+2.9%

+1.6% +3.4%

+5.5%

+7.8%


2012 2013

Cement sales (mt) 9.2 9.6

Total cement capacity: 12.1 mt p.a.


2012 2013



Eastern Europe-Central Asia

2012 2012



Asia-Pacific 2012 2013



North America 2012 2013



9%

30%

24%

11%

26%

* Source: International Monetary Fund


37% mature markets

Cement capacity


Production sites in 10 countries – mature markets

UK second largest market area in the Group

Market leader in cement in most countries of the Group area

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

Production of concrete parts and paving blocks in some countries; market leader in bricks in the UK


Cement/grinding 29 GGBS 3 Cement terminals 58 Aggregates 169 Asphalt 38 Ready-mixed concrete 570 Concrete products 34 Bricks 22


Eastern Europe-Central Asia Production sites in 11 countries – growth markets Market leader in cement in most countries of the Group area

– Expansion of cement capacities in Kazakhstan Expansion of aggregates and ready-mixed

concrete activities

Cement/grinding 22 Cement terminals 28 Aggregates 67 Ready-mixed concrete 206 Concrete products 3


Cement/grinding 16 GGBS 1 Cement terminals 35 Aggregates 208 Asphalt 39 Ready-mixed concrete 146 Concrete products 71 Bricks and roof tiles 21

Leading positions in aggregates, cement, ready-mixed concrete, asphalt, and building products, e.g. pipes, precast concrete parts, roof tiles, and bricks

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

Building products are divided into product areas

North America


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 three cement plants

Cement/grinding 17 Cement terminals 12 Aggregates 79 Asphalt 22 Ready-mixed concrete 309 Concrete products 2

Asia-Pacific


Cement/grinding 14 Cement terminals 8 Aggregates 15 Asphalt 2 Ready-mixed concrete 76

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

– Expansion of cement capacities (e.g. in Togo, Ghana, 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


Revenue: €m 941

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

– 13.6 mt cement, clinker, and other building products in 2013 – 4.9 mt coal and petroleum coke in 2013

– Worldwide trading network with offices in five 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 (2015/17): 2−2.5 mt cement

Brownfield Greenfield

Burkina Faso (2014): 0.65 mt cement

Ghana: 1.0 mt cement (2012) 0.8 mt cement (2014)

Indonesia – outside Java (2015/17): 2−2.5 mt cement

Indonesia (2015): Citeureup expansion 4.4 mt cement

Togo (2014): 1.5 mt clinker

Indonesia (2013): 1.9 mt cement

Togo (2016): 0.25 mt cement

Tanzania: 0.25 mt clinker (2012) 0.7 mt cement (2014)

Liberia (2013): 0.5 mt cement

Expansion – around 5 mt to come on-line in 2014

Further growth in attractive emerging markets at efficient investment costs


HeidelbergCement strategy Dual external growth strategy

– Cement in emerging markets – Aggregates and downstream activities such as ready-mixed concrete and

concrete products 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 2013

783 612

1990 2013

-22%

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


Continued strong recovery in the USA and the UK Growing demand in Asia and Africa Strong development in Germany, Poland, and Russia; stabilisation of other

European markets, especially in Benelux, the Czech Republic, and Hungary Further price increases supported by “PERFORM” and “CLIMB commercial”

programmes Target: keep energy costs flat; slight to moderate increase in the costs for raw

materials and staff

Outlook 2014

Sales volume growth in all Group areas Increase in revenue, operating income, and profit for

the financial year1) Further decrease in financing costs Reduction of net debt

1) Adjusted for consolidation, exchange rate, and one-off effects


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

HeidelbergCement Group Presentation

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