Holcim in Azerbaijan - Joint Chambers of Commerce · 2015. 7. 10. · Holcim annual cement capacity...

© 2014 Holcim

Holcim in Azerbaijan Investing successfully in Azerbaijan, Holcim’s perspective

Holcim Emerging Europe, 2014-10-16

Holcim Azerbaijan, Commercial Team

Winners of the “Holcim Customer Excellence Award for Europe , CIS and CAS”

© 2014 Holcim

Agenda

The Holcim Group at a glance

History of Holcim Azerbaijan

Holcim Azerbaijan today

Lessons Learned

Holcim Emerging Europe, 2014-10-16 2

© 2014 Holcim

Holcim at a glance

130 cement plants around 200 limestone quarries /

450 aggregates operations

1’150 RMX plants in the world

> 70’000 employees

over 5’000 own RMX trucks / more

than 3’000 subcontracted over 1’600’000’000 cement bags sold

Presence on all five continents and in around 70 countries

2013 Net sales of CHF 19.7 bn and operating EBITDA of CHF 3.9 bn


© 2014 Holcim

5

60

17

26

26

11

19

3

5

68*

4

12

7

11

Holcim annual cement capacity as of December 31, 2013: 206 Mt * China not consolidated

Over the past 10 years Holcim invested about CHF 28 billion to establish a

global footprint unmatched in the industry

Well positioned to address growth in cement demand

4 Holcim Emerging Europe, 2014-10-16

© 2014 Holcim

Agenda




Lessons Learned


© 2014 Holcim

• Until 1999: Cement as State Company

State owned Garadagh Cement is the only local

cement manufacturer in Azerbaijan

• September 1999: Holcim Enters Azerbaijan

Holcim wins the tender to acquire 86% of the

share capital of Garadagh Cement

• 1999 – 2007: Optimizing Existing Assets

Holcim invests in Azerbaijan approx. EUR 60 mio

to enhance the acquired production facility

• 2007: Privatization completed

Privatization is fully endorsed by the State

Property Committee

• 2008 – 2012: Major upgrade of Garadagh plant

Hocim embarks on a 300-mio-EUR project to

upgrade the local cement manufacturing plant

• Today: Established, trusted cement supplier

Holcim Azerbaijan with a solid position as cement

supplier; relied upon for complex large

construction projects as much as for do-it-yourself

masonry applications

A short history of Holcim in Azerbaijan

Garadagh plant, prior to upgrade


© 2014 Holcim

• Strong economic growth

during the first 8 years of

Holcim in Azerbaijan

• Solid prospects for further

growth in the future

• Increasing cement

demand, limited capacity

by the local manufacturer

Holcim to cover it

• Need for further

construction in all sectors:

infrastructure, commercial

and residential

• Holcim decides to

upgrade its cement plant

in Azerbaijan

In 2007, the economic development and the trends in the

construction industry encouraged Holcim to further invest

25 %

35 %

26 %

10 %11 %11 %10 %11 %7 %

0

10

20

30

40

2007 2006 2005 2004 2003 2002 2001 2000 1999

*Annual percentage growth rate of GDP at market prices based on constant local currency

Source: World Bank statistics, Own estimations, Customs and Railway


GDP growth, annual [%]*

Market demand [mt]

0

1

2

3

4

70

80

90

100

110

2000

2,6

2007 2006

3,2

2005

2,5

2004

2,3

2003

2,1

2002 2001 1999

1,9

Market demand [mio t pa.a.] Holcim AZ apacity utlization [%]

Holcim AZ capacity utilization [%]

© 2014 Holcim

• Project scope: New kiln, limestone extraction and processing equipment, new

mills, silos, storage halls

• Cement production capacity increased from 1.3 mio t to 1.7 mio t cement p.a.

• Result: a new plant, energy efficient and clean, producing top quality cement

Holcim’s bet on Azerbaijan’s development: The upgrade of

the Garadagh plant, an investment of EUR 300 mio

Cement plant Garadagh in 2007 After modernization & expansion

Dark grey = Demolished

Light grey = Preserved structures

Blue = New structures

Light grey = Preserved structures


© 2014 Holcim

Agenda




Lessons Learned


© 2014 Holcim

Holcim Azerbaijan’s organization:

An international team of motivated professionals

Rossen Papazov

CEO

Oliver Wilke

CFO

Ruslan Aghabayli

HR

Carlos Terres

CEO

Ali Huseynov

Plant manager

4 Azerbaijani nationals working for Holcim abroad, e.g.

• Commercial performance team Holcim Europe

• Corporate Internal Audit

+

Holcim Azerbaijan led by an international management team

Young talents from the pool of highly qualified employees were selected for

high-profile international assignments, to prepare the leaders of tomorrow

“Global standards - local management”

Holcim Azerbaijan

> 400 FTEs


© 2014 Holcim

• Supporting

European norms &

standards

• Providing high

quality products

responding to

consumer needs

• Advising in all type

of cement

applications

• Offering solutions

for the fast-growing

construction

industry

Holcim’s role in the Azerbaijani Construction industry:

Bringing the sector to the next level

“Heydar Aliyev Cultural Center“, Baku


© 2014 Holcim

Our business today: 2013 was a year of exceptional

performance...

6%2%0%5%

9%11%

25%

35%26%

10%11%11%10%11%7%

0

20

40

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

• Azerbaijan

continued on a path

of growth despite

the economic crisis

• Cement demand

hike restarted from

2011

• Holcim Azerbaijan

with a record result

in 2013:

Net sales:

Approx.

170 mio EUR


*Annual percentage growth rate of GDP at market prices based on constant local currency

Source: World Bank statistics, Own estimations, Customs and Railway,

0

1

2

3

4

5

70

80

90

100

110

1,9

2,6

2005 1999 2003

2,1

2010 2011 2009 2008 2002 2012

4,3

2013

3,7 3,1

2,7 3,0

3,7

2001 2007

3,2

2,3

2006 2000

2,5

2004

Market demand [mio t pa.a.] Holcim AZ apacity utlization [%]

Market demand [mt] Holcim AZ capacity utilization [%]

GDP growth, annual [%]*

© 2014 Holcim 13 Holcim Emerging Europe, 2014-10-16

... but in 2014 we were already confronted with a series of

tough challenges

Challenges

• New entrants with local manufacturing

facilities: Akkord and Norm

• Growing cement imports fueled by

attractive import price parity at IR-AZ

border > 30 EUR/t below local price level

Immediate results

• Holcim cement sales volumes lower by

approx. 20% vs. last year, price pressure

Our response

• Strengthen customer focus through

special services and products

• Optimize production processes to retain

cost leadership amongst local producers

• Insist on enforcement of a level playing

field with subsidized Iranian cement

Source: Own estimations, Customs and Railway, public announcements by Norm and Akkord,

We are fully confident that we will meet these challenges, and

Azerbaijan will remain a highly successful company in Holcim’s portfolio

Baku

50 km

Armenia

Georgia Russia

Iran

Plant

Grinding Station

Holcim

Garadagh

Clinker Flows

Cement Flows

Akkord

New entrant

Turkey

Norm Sement

New entrant

© 2014 Holcim

Healthy fundamentals in natural resources

Sufficient oil and gas resources to fuel the

future development of the economy

Not only oil and gas

Clear strategy, fully endorsed by the highest

authorities in the country, to diversify

progressively the Azerbaijani economy in new

sectors and across regions

An attractive place to live and invest

Very safe living and working environment

Good infrastructure, being constantly

developed

Manageable, ever reducing bureaucracy

Conveniently located, to become a future

regional business hub

People

Young, qualified, motivated and eager to

learn local work force

Why investing in Azerbaijan?

Some of the main reasons, based on our experience

“The Crescent” project, Baku


© 2014 Holcim

• Tap into the local talent pool Good command of English, solid technical preparation

and precision distinguish the young Azeri workforce:

Use this resource from onset to minimize ramp up

time and gain local knowledge

• Work closely and proactively with local

authorities Be transparent and open with your plans and projects,

involve local authorities proactively to foster a good

working relationship

• Establish a strong corporate governance Establish a robust corporate governance comprising

local experts as advisors (e.g. boards, committees) to

best guide you in the investment and to capitalize on

the continuously improving, more and more business-

friendly regulatory environment

Lessons learned

“The flame towers”, Baku


Strength, Performance, Passion

Holcim in Azerbaijan - Joint Chambers of Commerce · 2015. 7. 10. · Holcim annual cement capacity...

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