Holcim Investor Day 2012: Holcim Leadership Journey and growth opportunities in emerging markets
Holcim will illustrate the Holcim Leadership Journey announced in May 2012 by means of practical examples and elaborate on the growth opportunities in emerging markets in Asia and Latin America.
At the investor and analyst event which takes place every two years, Holcim will explain the program announced in May 2012 to further strengthen market and cost leadership, the Holcim Leadership Journey, in more detail. The Holcim Leadership Journey aims to sustainably improve the return on invested capital and increase operating profit by at least CHF 1.5 billion by the end of 2014 compared to 2011. Highest attention is paid to occupational health and safety and the development of talent and leaders. Measures in the areas of customer excellence and cost leadership are core elements of this program which will be explained by means of various practical examples. The leaner and more efficient organizational structure implemented as of the beginning of September will ensure the dissemination of the measures presented across the whole Group.
Work streams and measuring target achievement
Achievement of the Holcim Leadership Journey targets will be measured in six work streams – customer excellence, energy, alternative fuels and raw materials (AFR), logistics, procurement and fixed costs. Volume, price and specific aspects of each work stream will be taken into account. The baseline is the operating profit 2011 (excluding 2011 one-off charges of CHF 375 million, fluctuations in currency and changes in scope of consolidation, and under similar market conditions).
Value creation through new solutions and innovation
Through measures to strengthen customer value, customer loyalty, sales volumes and prices, additional operating profit of at least CHF 500 million will be achieved by the end of 2014. Holcim differentiates itself through new products, services and integrated solutions which create additional value for both the customer and Holcim. A tangible example of this is Holcim Indonesia’s SpeedCrete repair service, which allows damaged road surfaces to be repaired overnight so as to avoid hampering traffic flow during rush hour. This technology was acquired from Holcim Canada and further developed.
Profit growth through cost leadership
Additional operating profit of more than CHF 1 billion will be achieved by strengthening cost leadership through measures in the areas of energy, AFR, logistics, procurement and fixed costs. For example, through a specially developed approach Group companies can analyze the business potential of AFR in their market and identify and implement respective measures. The program “Fast return CAPEX” aims to identify efficiency improving projects with a fast return on investment. Of the 102 projects submitted to date, 47 fulfilled the criteria and were approved for implementation. Corresponding investments amount to CHF 144 million, with a payback period of between 8 months and 4 years. In order to benefit from increased purchasing power, procurement will be bundled on Group level as far as useful with the potential of increasing central spending from CHF 600 million up to CHF 4 billion. Several examples of cost optimization measures currently being deployed will be presented, including a wave of logistics optimizations in Latin America, the deployment of standardized business processes in Europe and procurement optimization in the US, each of them corresponding to cost savings of more than CHF 20 million per year.
Growth in emerging markets
Growing population as well as demand for infrastructure and housing and increasing wealth in emerging markets in Asia and Latin America will provide for continued growth. Impressive examples are India and Indonesia, which will experience growth in their gross domestic products of 6 to 8 percent annually until 2020. In India alone, infrastructure spending is expected to double to approximately USD 1000 billion. Holcim is significantly expanding production capacities in both countries to be able to efficiently serve rapidly growing demand. In addition, the Group has numerous expansion opportunities in other markets in Asia and Latin America.
Holcim has an excellent strategic footprint in these markets and will be able to profit from this expected growth. Across the whole Group, the Holcim Leadership Journey will be crucial in generating the necessary funds for further growth in the emerging markets of Asia and Latin America.
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Holcim is one of the world's leading suppliers of cement and aggregates (crushed stone, gravel and sand) as well as further activities such as ready-mix concrete and asphalt including services. The Group holds majority and minority interests in around 70 countries on all continents.
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The full documentation of the presentations is available at www.holcim.com/investors. A video recording of the speeches will be uploaded in the morning of the following day.
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Corporate Communications: Tel. +41 58 858 87 10
Investor Relations: Tel. +41 58 858 87 87
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