Strength. Performance. Passion. On the move Annual Report 2013 Strength. Performance. Passion. Annual Report 2013 Holcim Ltd Holcim is one of the world’s leading building materials companies and has a presence on all continents. With its innovative products and services and a commitment to sustainable construction, Holcim is contributing to the success of its customers around the world – as a trusted partner for more than 100 years. In 2013, the Group’s global workforce of around 70,000 employees continued to work hard in order to further strengthen Holcim’s position as a market leader in cement, aggregates, and ready-mix concrete. This Annual Report describes specific exemplary projects that were initiated as part of the Holcim Leader- ship Journey, which was launched in 2012 and is key to the future success of the Group. These initiatives and the motivated employees behind them each contribute toward reaching the target of increasing operating profit by at least CHF 1.5 billion by the end of 2014 – under similar market conditions and with the 2011 financial year as a base line. This journey around the Holcim world with stories of different topics provides an in-depth view into the variety of measures that make up the Holcim Leadership Journey. Key figures Group Holcim 2013 2012 1 ±% ±% like-for- like Annual cement production capacity million t 206.2 209.3 –1.4 –0.3 Sales of cement million t 138.9 142.3 –2.4 –1.2 Sales of mineral components million t 4.1 4.8 –14.8 –3.8 Sales of aggregates million t 154.5 158.2 –2.4 –0.8 Sales of ready-mix concrete million m 3 39.5 45.3 –12.9 –7.4 Sales of asphalt million t 8.9 9.1 –2.0 –0.1 Net sales million CHF 19,719 21,160 –6.8 +0.2 Operating EBITDA million CHF 3,896 3,889 +0.2 +7.0 Operating EBITDA adjusted 2 million CHF 3,896 4,128 –5.6 +0.8 Operating EBITDA margin % 19.8 18.4 Operating EBITDA margin adjusted 2 % 19.8 19.5 Operating profit million CHF 2,357 1,749 +34.8 +43.7 Operating profit adjusted 2 million CHF 2,357 2,485 –5.1 +1.1 Operating profit margin % 12.0 8.3 Operating profit margin adjusted 2 % 12.0 11.7 EBITDA million CHF 4,332 4,352 –0.5 Net income million CHF 1,596 1,002 +59.3 Net income margin % 8.1 4.7 Net income – shareholders of Holcim Ltd million CHF 1,272 610 +108.4 Cash flow from operating activities million CHF 2,787 2,643 +5.4 +12.5 Cash flow margin % 14.1 12.5 Net financial debt million CHF 9,461 10,325 –8.4 –4.0 Funds from operations 3 /net financial debt % 33.4 30.5 Total shareholders' equity million CHF 18,677 19,234 –2.9 Personnel 70,857 76,359 –7.2 –5.4 Earnings per share CHF 3.91 1.89 +106.9 Fully diluted earnings per share CHF 3.91 1.89 +106.9 Payout million CHF 425 4 374 +13.6 Payout per share CHF 1.30 4 1.15 +13.0 1 Restated due to changes in accounting policies. 2 E x c l u d i n g restructuring costs in 2012. 3 Net income plus depreciation, amortization and impairment. 4 Proposed by the Board of Directors for a maximum payout of CHF 425 million from capital contribution reserves. Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided. All ratios and variances are calculated using the under- lying amount rather than the pre- sented rounded amount. Principal key figures in USD (illustrative) 2013 2012 1 ±% Net sales million USD 21,276 22,602 –5.9 Operating EBITDA million USD 4,203 4,154 +1.2 Operating EBITDA adjusted 2 million USD 4,203 4,409 –4.7 Operating profit million USD 2,543 1,868 +36.1 Operating profit adjusted 2 million USD 2,543 2,654 –4.2 Net income – shareholders of Holcim Ltd million USD 1,373 652 +110.5 Cash flow from operating activities million USD 3,007 2,823 +6.5 Net financial debt million USD 10,634 11,284 –5.8 Total shareholders' equity million USD 20,992 21,021 –0.1 Earnings per share USD 4.22 2.02 +109.0 Principal key figures in EUR (illustrative) Net sales million EUR 16,022 17,548 –8.7 Operating EBITDA million EUR 3,165 3,225 –1.9 Operating EBITDA adjusted 2 million EUR 3,165 3,423 –7.5 Operating profit million EUR 1,915 1,450 +32.1 Operating profit adjusted 2 million EUR 1,915 2,061 –7.1 Net income – shareholders of Holcim Ltd million EUR 1,034 506 +104.1 Cash flow from operating activities million EUR 2,264 2,192 +3.3 Net financial debt million EUR 7,717 8,552 –9.8 Total shareholders' equity million EUR 15,235 15,930 –4.4 Earnings per share EUR 3.18 1.57 +102.7 Holcim Ltd Corporate Communications Markus Jaggi Phone +41 58 858 87 10 Fax +41 58 858 87 19 communications@holcim.com Holcim Ltd Investor Relations Bernhard A. Fuchs Phone +41 58 858 87 87 Fax +41 58 858 80 09 investor.relations@holcim.com Annual Review 2013 8 Shareholders’ Letter 12 Interview with the Executive Committee 16 Value-Driven Corporate Management 22 Key Success Factors 22 Holcim Leadership Journey 28 Organization and Management 44 Innovation 52 Capital Market Information 64 Sustainable Development 69 Environmental Commitment and Social Responsibility 69 Human Resources 75 Business Review 86 Group Region Asia Pacific 86 Group Region Latin America 90 Group Region Europe 94 Group Region North America 98 Group Region Africa Middle East 102 Corporate Governance 113 Remuneration Report 134 Financial Information 145 MD & A 145 Consolidated Financial Statements 161 Key Management Compensation 237 Company Data 248 Holding Company Results 254 5-Year-Review 263 Articles about the special topic Holcim Leadership Journey can be found on the following pages: page 34: OH&S and Customer Excellence ; page 56: Procurement and Logistics; page 78: Energy and AFR; page 104: Fixed Costs and Investments Costs Contents 8 Consolidated key figures for North America Net sales in million CHF 3,171 Net sales in % of Group turnover 15.6 Operating EBITDA in million CHF 494 Cement and grinding plants 17 Aggregates plants 116 Ready-mix concrete and asphalt plants 263 Personnel 6,791 Consolidated key figures for Latin America Net sales in million CHF 3,349 Net sales in % of Group turnover 16.5 Operating EBITDA in million CHF 938 Cement and grinding plants 27 Aggregates plants 18 Ready-mix concrete plants 119 Personnel 11,181 Higher operating EBITDA margin and net income Annual Review 2013 9 Consolidated key figures for Asia Pacific Net sales in million CHF 7,282 Net sales in % of Group turnover 35.9 Operating EBITDA in million CHF 1,473 Cement and grinding plants 51 Aggregates plants 84 Ready-mix concrete plants 320 Personnel 34,080 Consolidated key figures for Africa Middle East Net sales in million CHF 884 Net sales in % of Group turnover 4.4 Operating EBITDA in million CHF 283 Cement and grinding plants 12 Aggregates plants 5 Ready-mix concrete plants 17 Personnel 2,128 Consolidated key figures for Europe Net sales in million CHF 5,611 Net sales in % of Group turnover 27.6 Operating EBITDA in million CHF 946 Cement and grinding plants 35 Aggregates plants 203 Ready-mix concrete and asphalt plants 463 Personnel 15,868 [...]... the Holcim Foundation for Sustainable is difficult to manage The city therefore offered Construction The Foundation was set up by Holcim plenty of illustrative material to stimulate reflection in 2003 and remains decidedly forward-looking – like on the “Economy of Sustainable Construction” A discus- sustainable construction itself sion panel and poster competition for invited students from every continent... invited students from every continent concluded the program The Holcim Foundation invites submissions for its international Holcim Awards every three years The As the numerous media reports about the Fourth competition is arranged in two stages; it acknowl- International Holcim Forum demonstrate, the event edges sustainable construction projects that excel gives Holcim an excellent opportunity to bring... economically, initially in commitment to sustainable construction to a wider five geographical regions and then at global level audience and make a significant contribution to the The fourth competition cycle is currently underway promotion of new technologies and concepts The specialist articles on the topic “Economy of Sustainable A Holcim Forum is held every three years – the fourth Construction”... staff Non-compliance with the Code of Conduct automatically triggers disciplinary sanctions Occupational health and safety has the highest priority As a consequence, the company focuses on the vision of “zero harm to people” The Occupational Health & Safety function reports directly to the Group 24 Key Success Factors Customer excellence: Activities must center on creat- Continued value creation ing... reversing the consolidation trends of the last decade? Bernard Fontana: We believe that consolidation will continue The experience of the last few years and the current economic environment has led to a more cautious approach toward acquisitions across the industry However, for Holcim, value-creation for all stakeholders is key If there are opportunities that meet our criteria of value creation, strategic... portfolio Fixed costs: Holcim has long attached great impor- of ongoing activities that will lead to a continuous tance to the optimization of fixed costs The actual reduction of the specific energy consumption, an opti- economic conditions call for a reduction in fixed costs mization of the fuel mix, and improved sourcing of The target is fixed costs savings of at least CHF 200 energy Of the total targeted... Trading, the Group also holds a lead- locations Holcim runs these business units as profit- ing position in cement, clinker, mineral components, able operations and not only as sales channels for and solid fuels trading Holcim Trading also offers a cement These operations are regularly monitored in full range of trading services to members of the Holcim order to enhance their profit contribution Group,... CHF 3.9 billion Net income significantly increased by 59.3 percent to CHF 1.6 billion, reflecting our culture of cost control in production, logistics, and administration 12 Shareholders’ Letter Holcim Leadership Journey on track The Holcim Leadership Journey made a significant contribution to the positive result and achieved the objectives set for 2013 The various workstreams of the Holcim Leadership... commence production at a new values are practiced on a Group-wide basis and can grinding plant with an annual capacity of 1.1 million be summed up in the motto “Strength Performance tonnes in Port Kembla In Tuban, line one will be fully Passion.” commissioned early in the year, adding 1.6 million tonnes of cement and in 2015 the second identical kiln line will come on stream, adding 1.6 million tonnes Also... construction must be economical inhabitants of the Indian metropolis have to fight for Networking construction experts around the globe a roof over their heads The challenges facing Mumbai’s and providing a platform for the exchange of views authorities are enormous: There is a lack of green on sustainable construction – this is one of the top spaces, the air and water are polluted, and the traffic . Passion. On the move Annual Report 2013 Strength. Performance. Passion. Annual Report 2013 Holcim Ltd Holcim is one of the world’s leading building materials companies and has a presence on. the consistent implementation of the Holcim Leadership Journey. 13 Shareholders’ Letter Holcim Leadership Journey on track The Holcim Leadership Journey made a significant contribution to the. corporate management. On the one hand, for this the expertise of each individual plays an important role, whilst on the other it is only through the cooperation of all members of the Executive Committee