4. 4
16.10.2005
Holcim Group Support Course for Cement Applications
Key elements
Products (cement)
Product range and composition (new / optimized products)
Application and performance positioning
EBITDA contribution - volumes, cost and price positioning
Technical service/market reach
Scope and contents of services and
Required sales and distribution, promotion and training initiatives to support the
recommended product range
Objective
PPM defines the future optimum range of products: The recommendations
are aimed at the market situation in 5 years
It also determines the necessary market reach actions to ensure the
successful implementation of the recommended portfolio
Definition of Product Portfolio Management (PPM)
5. 5
16.10.2005
Holcim Group Support Course for Cement Applications
MIC / CO2 -reduction
Integration of mineral components (Gbfs, Fly Ash, Pozzolan, Limestone)
into the product range is the most effective method for the reduction of CO2
Long term competitiveness
A stronger understanding of the application / end-user requirements and
how our products really perform against competitors can identify potential
for differentiation
How does PPM contribute to achieving Holcim’s
key objectives ?
EBITDA / RONOA
The product portfolio has a strong impact on cost, price and volume /
capacity utilization
An optimum product range contributes significantly to the achievement of
Holcim’s financial targets
6. 6
16.10.2005
Holcim Group Support Course for Cement Applications
Product portfolio project process
Cement
Market
Products/
Services
Supply
Chain
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
MIC Sourcing,
Logistics
Gap
analysis
and
opportu-
nities
Constraints
and oppor-
tunities
Product
and
service
options
Analysis Synthesis Options Evaluation
Tech. Services
& Market reach
Targeting
Key
Product
Initiatives
EBITDA
CAPEX
Qualita-
tive
issues
P
R
O
D
U
C
T
P
O
R
T
F
O
L
I
O
Pre-Analysis
7. 7
16.10.2005
Holcim Group Support Course for Cement Applications
Cement
Market
Products/
Services
Supply
Chain
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
MIC Sourcing,
Logistics
Gap
analysis
and
opportu-
nities
Constraints
and oppor-
tunities
Product
and
service
options
Pre-Analysis Analysis Synthesis Options Evaluation
Tech. Services
& Market reach
Targeting
Key
Product
Initiatives
EBITDA
CAPEX
Qualita-
tive
issues
P
R
O
D
U
C
T
P
O
R
T
F
O
L
I
O
Key challenges to develop the product / service
portfolio
8. 8
16.10.2005
Holcim Group Support Course for Cement Applications
Relevant
criteria:
Volume, price/margin, growth
Requirements, working practices, decision making process
Market mapping segmentation
Transactional
Mortars
Ready-mix
Concrete
Asphalt
Concrete
Products
Direct Sales
Direct Sales
Traders
Wholesalers
Retailers
Traders
Wholesalers
Retailers
End-users
General
Contractors
Civil
Engineering
Channels
Transformational
Masons
Self -builders
Cementitious
Materials
(cement,
mineral
components)
Supply
Basic Materials
Processing
Aggregates
(sand, gravel,
stone, recycled
aggregates)
Infrastructure
Commercial /
Industrial
Building
Housing
Demand
A
p
p
l
i
c
a
t
i
o
n
s
Applications and
Construction Fields
9. 9
16.10.2005
Holcim Group Support Course for Cement Applications
100%
80%
60%
40%
20%
0%
12%
Infra
70%
Residential
18%
Non-residential
Application segmentation
OpCo sales 1.3 Mio t – 09/2006 to 08/2007
Source: Sales data, market visits, workshop
Single houses Multi storeys Inst
Comm
Ind Infra
Mortar - 31%
Concrete - 64%
CPM - 5%
Transportation
Water
Energy
/
Comm
Plastering
Brick laying
Foundations
Slabs/beams
Floorscreed
Foundations
Columns/shear walls
Slab/beams
Other
Limited concreting in single-house construction
Tile placing
10. 10
16.10.2005
Holcim Group Support Course for Cement Applications
Tile placing
100%
80%
60%
40%
20%
0%
12%
Infra
70%
Residential
18%
Non-residential
Product per application
OpCo sales 1.3 Mio t – 09/2006 to 08/2007
Source: Sales data, market visits, workshop
Single houses Multi storeys Inst
Comm
Ind Infra
Mortar - 31%
Concrete - 64%
CPM - 5%
Transportation
Water
Energy
/
Comm
Plastering
Brick laying
Foundations
Slabs/beams
Floorscreed
Foundations
Columns/shear walls
Slab/beams
Other
Product overlap in bag applications
‘Ekspert’ used for HS concreting
'Ekspert'
23%
'Spesial' bulk
21%
'Optimal'
33%
'Spesial' bag
23%
11. 11
16.10.2005
Holcim Group Support Course for Cement Applications
Example of cement use:
Residential high rise 17 floors – Central region
General information
Total floor space 10’000 m2
Cement / m2 223 kg/m2
Cement use / application
RMX concrete:
All concrete B25
Water or plasticizer addition common
Concrete mainly placed by crane
RMX mortar:
Flooring: M200, d = 3 cm
Bricklaying: M100, d = 1 cm
Plastering: M100, d = 2 cm
Working practice:
Demolding:
- Walls / columns at ≥ 16h
- Slabs at ≥ 7 days
Concrete curing common
Product positioning:
Only strength and slump required
Cement not specified
Foundation 186 t 8%
Walls 242 t 11%
Columns 140 t 6%
Slabs 750 t 34%
Blocks 579 t 26%
Flooring 70 t 3%
Bricklaying 92 t 4%
Plastering 171 t 8%
Total 2’230 t
12. 12
16.10.2005
Holcim Group Support Course for Cement Applications
Concrete application requirements
RMX concrete Batched on site
15 to 25 MPa as RMX GU concrete (~90%)
Tendency to shift to higher strength classes
Early strength 3-5 MPa @ ~14-18hrs for demolding
columns/walls and setting time for finishing / walk on slab
Placing: Mainly pumped concrete, pumping by RMX
No specification of cement type
28d strength only requirement
Slump chosen according to placing (pumped or crane)
Mix designs mostly through certification labs
I 42.5R in PE market and for binder unit cost reduction
CEM II 42.5N fulfills RMX concrete requirements
Shift I 42.5R for RMX to II 42.5N
Very limited volume of
concrete batched on site
with bag cement: Only
remote areas with no
access to RMX concrete
and small renovation works
No special early strength
requirement: ‘Rapid’
characteristic not known /
not perceived as necessary
Bag CEM II 32.5 adequate
CEM II 32.5R
CEM II 42.5N
(CEM I 42.5R, CEM II 32.5R)
Cement
used
Requirement/
working
practice
13. 13
16.10.2005
Holcim Group Support Course for Cement Applications
Mortar application requirements
Flooring
Bricklaying Plastering Tiles placing
Spread usage of dry mix products
Easy to use
Guarantee for quality
Alternatively use of RMX lime mortar
with about 200 kg/m3 bag cement for
plastering
Adhesion, smooth
surface and no cracks
main requirements
100-150 kg/m3 bag
cement added to
RMX lime mortar
Importance of
workability: No
special strength
requirement on
cement
Main user of bag
cement: Batched
on job site
Partly delivered as
RMX mortar
Importance of
setting: Bag CEM
II 32.5 adequate
No awareness about ‘Rapid’ characteristic
Bag cement CEM II 32.5 fulfills requirements
Cement + sand Dry mix products
RMX lime + cement
RMX lime + cement
(Dry mix products)
Products
used
Requirement/
working
practice
14. 14
16.10.2005
Holcim Group Support Course for Cement Applications
Cement
Market
Products/
Services
Supply
Chain
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
MIC Sourcing,
Logistics
Gap
analysis
and
opportu-
nities
Constraints
and oppor-
tunities
Product
and
service
options
Pre-Analysis Analysis Synthesis Options Evaluation
Tech. Services
& Market reach
Targeting
Key
Product
Initiatives
EBITDA
CAPEX
Qualita-
tive
issues
P
R
O
D
U
C
T
P
O
R
T
F
O
L
I
O
Key challenges to develop the product / service
portfolio
15. 15
16.10.2005
Holcim Group Support Course for Cement Applications
0
10
20
30
40
50
60
70
Internal benchmarking
Mortar characteristics of durability/bag cements
[MPa] P1 P2
3R/4N
4R/5N
4N/R
5N/R
28d
7d
2d
Minimum
standard
requirements
7d 7d
Source: Plant lab, Oct 06 – Mar 07
7d
WD [%] 27.3 27.9 29.7 30.9 28.2 34.7
Cement I3R-S IIAV3R-S IIBV3N IIIA3N IIBS3R VA(S-V)3N
No strength
differentiation in
SR products
3N with 3R
strength
High variation (CoV > 4%)
Most cements fulfilling standard of next higher strength classes
16. 16
16.10.2005
Holcim Group Support Course for Cement Applications
0
10
20
30
40
50
[MPa]
1d
28d
IST [min] 205 203 200 197 185 228 198 198 182 188 185
Slump loss 40`
%
90/18
80
90/22
75
82/15
80
88/22
75
80/20
75
88/23
75
90/18
80
87/25
70
82/12
85
88/17
80
80/8
90
CD Comp. A
WD Comp. C
3d
Comp. B
Holcim with longest setting times
1d / 3d strength of PPC better than OPC 43 and in range of OPC 53
Standard 28d limit
WD
CD
WD
OPC 53
OPC 43
PPC
A C
B
Concrete benchmarking for M20, 350 kg/m3
cement
17. 17
16.10.2005
Holcim Group Support Course for Cement Applications
Cement
Market
Products/
Services
Supply
Chain
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
MIC Sourcing,
Logistics
Gap
analysis
and
opportu-
nities
Constraints
and oppor-
tunities
Product
and
service
options
Pre-Analysis Analysis Synthesis Options Evaluation
Tech. Services
& Market reach
Targeting
Key
Product
Initiatives
EBITDA
CAPEX
Qualita-
tive
issues
P
R
O
D
U
C
T
P
O
R
T
F
O
L
I
O
Key challenges to develop the product / service
portfolio
18. 18
16.10.2005
Holcim Group Support Course for Cement Applications
Technical Service: Needs and gap analysis
Customer Main focus / needs Supporting activities
IHB
Basic mix design / application
advice
On site support
Application advice
Practical support
Inter-
mediaries
Complaint handling
Training sales force
Regular meetings
Trouble shooting
Owners,
specifiers
Durability / service life
Specification support
Courses / seminars
Specification guidelines
Contractor
Trial mixes / mix optimization
Workforce training
Activities started
RMX
Mix design optimization
Complaint handling
No dedicated offer as
currently low presence in
the market
Pre-cast
Mix design optimization
Cost / cycle time reduction
Needs fulfilled / partially / not fulfilled:
Adequate Technical Service for trade segment
Develop specific support for growing professional segment
/ /
19. 19
16.10.2005
Holcim Group Support Course for Cement Applications
Cement
Market
Products/
Services
Supply
Chain
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
MIC Sourcing,
Logistics
Gap
analysis
and
opportu-
nities
Constraints
and oppor-
tunities
Product
and
service
options
Pre-Analysis Analysis Synthesis Options Evaluation
Tech. Services
& Market reach
Targeting
Key
Product
Initiatives
EBITDA
CAPEX
Qualita-
tive
issues
P
R
O
D
U
C
T
P
O
R
T
F
O
L
I
O
Key challenges to develop the product / service
portfolio
20. 20
16.10.2005
Holcim Group Support Course for Cement Applications
Relevant plant constraints for product decisions
Clinker
Cement Mill
Cement Silos
MIC Storage
Blending
Facility
Feeding / weigh
system
Slag dryer
Cement Terminal
Cement &
MIC Silo
Blending
Facility
Cement Plant
Feasibility, potential CAPEX and impact
on capacity has to be evaluated
21. 21
16.10.2005
Holcim Group Support Course for Cement Applications
CD
MK
ALC
NA
BEL
WD
CU
Current and future FA volumes
3.7
10.1
3.2
4.5
Cement
Total South - West
21.5 Mio t
5.1
4.6
6.2
Land filled
Wet
discharge
Dry
discharge
2.5
3.1
Traded/
concrete
Additional
2010
Pro-active sourcing
required
BEL beside Bellary power
plant
Significant add. FA 2008
Sufficient FA available
NA beside Nasik
power plant
FA secured
Strong FA traders
Plant
Grinding station
Power plant
ACC FA sources
Future
Future
Sufficient FA availability for WD/BEL/CU cluster and NA area expected
Tight supply situation in MK and CD, proactive FA sourcing required
Source: ACC, HGRS, Holtec
Current / future limited
FA available
Pro-active sourcing
required
500 km
22. 22
16.10.2005
Holcim Group Support Course for Cement Applications
0
10
20
30
Variable cost of constituents in cement
CD MK
[USD/t]
0
10
20
30
14.9
Clk Gyp
phos
FA
CSTPS
FA
MSEB
(10.1)
D var (8.5) (5.6)
LS
Gyp
mar
13.0 (4.5) (14.4) (14.7)
0
10
20
30
Clk
NW
FA
RTPS
LS
Gyp
phos
Clk
0
10
20
30
Clk FA
RTPS
LS
Gyp
phos
Gyp
mar
10.4 (11.5) (6.3) 13.2 14.2 (9.4) (4.1)
NW
(1.1)
EW
(6.5) (1.6)
Clk FA
Mettur
LS
Gyp
mar
Gbfs
Hospet
Gbfs
Jindal
D var
D var
D var
[USD/t]
FA first priority MIC for cost and CF reduction
23. 23
16.10.2005
Holcim Group Support Course for Cement Applications
National cement standards
Min. clinker Min.-max. FA Max. minor constituent
Min.-max. Gbfs
Note: Additional standards: BS EN 197-1 , SR cement, white cement, Ggbfs and FA as concrete addition
Legend:
HSBC (MS 1388)
PzPFC (MS 1520)
BC (MS 1389)
MC (MS 794)
PPFC (MS 1227)
PSC (MS 1389)
OPC&RHPC
MS
Standards
[%]
0 10 20 30 40 50 60 70 80 90 100
95% (incl. gyp.) 5%
65% (incl. gyp.)
65%
40%
5%
6-35%
36-65%
6-35%
Portland cement + AE + other plasticising material
Gbfs, Pozz, FA, LS
5%
65% 35-50%
15-50% 50-85% 5%
5%
24. 24
16.10.2005
Holcim Group Support Course for Cement Applications
Cement
Market
Products/
Services
Supply
Chain
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
MIC Sourcing,
Logistics
Gap
analysis
and
opportu-
nities
Constraints
and oppor-
tunities
Product
and
service
options
Pre-Analysis Analysis Synthesis Options Evaluation
Tech. Services
& Market reach
Targeting
Key
Product
Initiatives
EBITDA
CAPEX
Qualita-
tive
issues
P
R
O
D
U
C
T
P
O
R
T
F
O
L
I
O
Key challenges to develop the product / service
portfolio
25. 25
16.10.2005
Holcim Group Support Course for Cement Applications
Gap analysis (1/3)
Issues Potential
Bag
Product
strategy
RMX
Production at clinker limit
‘Product A’ and ‘Product B’ with
similar performance in mortar and
concrete
Focus on CF reduction for PP 2011
Potential to eliminate product
overlaps and reduce CF
Performance overlap in bag
Workability main bag requirement
Competitors products with lower
strength performance
Price ceiling in transactional channel
High share of plastering
‘Product B’ performance suitable
for GU RMX applications
Need for HS RMX cement for
special projects and infrastructure
Potential to unify bag products
Evaluate optimum composition for
GU bag product
Potential for plastering solution
Evaluate optimum MIC and exploit
composition potential for GU and HS
RMX composite cement
Minimize application overlaps
26. 26
16.10.2005
Holcim Group Support Course for Cement Applications
Proposed key product and service initiatives 2012
Main initiatives 2nd priority
Service initiatives
Supporting initiatives
Split current HRF / HQC into 2 products
- High early strength product for CPM
- GU bulk for RMX / contractors
Low alkali product for infrastructure projects
Sales 2012
4.8 Mio t/y
Industrialized
markets
Rural markets
Proactive TS offer for industrialized bulk customers
Dedicated masonry product
Dedicated masonry product
Special binder for soil-CEM-mixing / RCC
Mortar
Concrete
RMX
CPM
Mortar
HRF
Niche
HQC
HTS
Product initiatives
27. 27
16.10.2005
Holcim Group Support Course for Cement Applications
Product portfolio project process
Cement
Market
Products/
Services
Supply
Chain
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
MIC Sourcing,
Logistics
Gap
analysis
and
opportu-
nities
Constraints
and oppor-
tunities
Product
and
service
options
Pre-Analysis Analysis Synthesis Options Evaluation
Tech. Services
& Market reach
Targeting
Key
Product
Initiatives
EBITDA
CAPEX
Qualita-
tive
issues
P
R
O
D
U
C
T
P
O
R
T
F
O
L
I
O
28. 28
16.10.2005
Holcim Group Support Course for Cement Applications
Cement
Market
Products/
Services
Supply
Chain
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
MIC Sourcing,
Logistics
Gap
analysis
and
opportu-
nities
Constraints
and oppor-
tunities
Product
and
service
options
Analysis Synthesis Options Evaluation
Tech. Services
& Market reach
Targeting
Key
Product
Initiatives
EBITDA
CAPEX
Qualita-
tive
issues
P
R
O
D
U
C
T
P
O
R
T
F
O
L
I
O
Key challenges to develop the product / service
portfolio
Pre-Analysis
29. 29
16.10.2005
Holcim Group Support Course for Cement Applications
New
product portfolio 2012
Project methodology for second project phase
‘Current
MIC’
‘FA’
‘Gbfs’ /
‘Ggbfs’
Reference
scenario 2012
‘Reference’ ‘Ideal PP’
Product
initiatives
Current portfolio New products with adjusted targets
HRF
HQC
HTS
HEW
HRF
HQC
HTS
HEW
Evaluate optimum MIC usage
DEBITDA
Qualitative criteria
Sensitivity
Niche
Niche
Additionally on request:
OPC type V for Durability
4.8 Mio t/y
Bag-bulk ratio adjusted
Incl. separate LS/PZ
grinding in CL
4.8 Mio t/y
Assess options to maintain MS of 26% and
increase sales to 5.8 Mio t/y
Current set
up in HN
2nd line in
HN
5.8 Mio t/y
Bag-bulk ratio adjusted
5.8 Mio t/y
Assess implication on short term product
portfolio strategy (until 2nd line in operation)
30. 30
16.10.2005
Holcim Group Support Course for Cement Applications
Special
products
New PP
2012
Overview of OpCO sales volumes 2012
Reference
2012
[Mio t]
HTS
HRF
HQC
Niche
HEW
4.8 Mio t 5.8 Mio t
Bulk ratio
Special
products
New PP
2012
Reference
2012
Niche 80
HQC 160
HTS
2’960
HQC /
HRF
1’540
HTS
3’180
HRF
1’380
AAR
Niche 80
6.0
5.0
4.0
3.0
2.0
1.0
0.0
HEW
220
HEW
220
HTS
3’460
HTS
3’250
SB/RCC1)
SB/RCC1)
AAR
HQC /
HRF
2’220
HRF
1’980
HQC 240
Niche 110 Niche 110
34% 37% 40% 43%
1) Volume potential max. 300’000 t/y
[‘000 t] [‘000 t]
31. 31
16.10.2005
Holcim Group Support Course for Cement Applications
Bag cements:
Current performance and future targets
20
30
Mortar
strength
[MPa]
60
40
50
28d
Future targets
3d
Average strength
1d
Future internal target ranges
Legend:
10
Current performance
‘HTS’ ‘MC 22.5’
Bag Application segments
0
Internal minimum
targets
44
26
35
12
‘PCB 30’ ‘HTS’ ‘HEW’
44
26
12
~35
~25
8
Masonry performance corresponding to ‘PCB 30’
32. 32
16.10.2005
Holcim Group Support Course for Cement Applications
Bulk cements:
Current performance and future targets
10
Concrete
strength
[MPa]
30
20
28d
Future targets
Average strength
1d
Future internal target ranges
Legend:
Current performance
‘HRF’
‘HQC’
HQC
HVL
Nghi
Son
Bulk Application segments
0
31
10
33
8 8
7d
24 24
31
10
24
31
24
‘HMP’
24
6
‘AAR’
‘HMP’
8
25
31
24
3d
10
8
New RMX cement with application oriented early strength performance
33. 33
16.10.2005
Holcim Group Support Course for Cement Applications
Cement HTS HEW HRF HTS HRF HQC HTS HRF HQC
Blaine [cm2/g] 4’700 ~5’000 4’000 5’000 4’100 3’800 4’000 4’000 4’000
Specific energy
[kWh/t]
38 35 37 35 33 32 Blend Blend Blend
Variable cost
[USD/t]1) 18.3 16.5 19.8 50.2 59.4 60.0 50.1 61.5 62.1
HN CL
TV
1) Cost of grinding aid (0.7USD / t) and air entrainer (1.0 USD / t) included
Note: Additional performance improvement possible with gypsum addition in LS grinding in CL
Product compositions for ‘Current MIC’ option
57%
67% 83% 65% 81% 83% 65% 84% 85%
39%
20%
12%
14%
14% 12%
12%
11% 10%
8% 16% 19%
4%
5% 5% 5% 5% 5% 4% 5% 5%
HRF in CL with limited improvement
potential due to late strength targets
Gypsum
Pozzolan
Limestone
Clinker
Legend:
34. 34
16.10.2005
Holcim Group Support Course for Cement Applications
EBITDA contribution per product initiative in 2012
‘Current MIC’
Sales volume [Mio t/y] 4.80 4.85 5.8 4.85 5.8 4.85 5.8
CF / D CF [%] 72.0 71.4 / -0.6 71.0 / -1.0
Clinker import HN / TV [‘000 t/y] 80 / 1’050 65 / 1’075 40 / 1’065
LS / PZ [‘000 t/y] 690 / 400 750 / 380 790 / 360
Grinding utilization HN / TV [%] 2) 102 / 100 101 / 100 101 / 100
Clinker utilization HN [%] 2) 100 100 100
CAPEX required [Mio USD] - 1.54) 1.55)
1) Commercial margin 12 USD/t 2) OEE = 85% 3) Additional sales delivered to TV market according current BP
4) Cement silo for HQC: 2’500 tons including connections 5) Cement silo for HEW: 2’500 tons, including connections
‘Reference’ ‘Split HRF and HQC’ ‘Masonry’
- 0.6 12.0 2.6 14.0 4.0 15.4
0.0
15.0
1.03)
1.4
1.4
5.0
10.0
0.6
11.4
Incremental EBITDA
[Mio USD/y]
Volume impact
VC impact
LPC impact 1)
1.6
11.4
35. 35
16.10.2005
Holcim Group Support Course for Cement Applications
Cement HTS HEW HRF HTS HRF HQC HTS HRF HQC
Blaine [cm2/g] 4’700 ~5’000 4’000 4’400 3’800 3’900 4’000 3’750 3’900
Specific energy
[kWh/t]
38 35 37 33 35 36 Blend Blend Blend
Variable cost
[USD/t]1) 18.3 16.5 19.8 50.0 59.8 60.2 53.0 61.8 63.1
HN CL
TV
Product compositions for ‘Gbfs’ option
57%
67% 83% 62% 75% 78% 63% 76% 81%
4%
5% 5% 5% 5% 5% 5% 5% 6%
39%
20%
12% 7%
4% 7% 14% 5% 5%
8%
16%
10%
16% 10% 10%
8%
14% 8%
Gypsum
Ggbfs
Gbfs
Pozzolan
Limestone
Clinker
Legend:
1) Cost of grinding aid (0.7USD / t) and air entrainer (1.0 USD / t) included
Note: Additional performance improvement possible with gypsum addition in LS grinding in CL
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Holcim Group Support Course for Cement Applications
12.0
EBITDA contribution per product initiative
‘Slag with additional mill in TV / CL’
Incremental EBITDA
[Mio USD/y]
Sales volume [Mio t/y] 4.8 5.8 5.8 5.8 5.8
CF / D CF [%] 72.0 69.3 / -2.7 69.5 / -2.5 69.3 / -2.7
Clinker import HN / TV [‘000 t/y] 80 / 1’050 0 / 1’900 0 / 875 0 / 860
LS / PZ / Gbfs [‘000 t/y] 680 / 410 575 / 420 / 485 590 / 420 / 455 650 / 390 / 435
Grinding utilization HN / TV [%] 1) 102 / 98 79 / 100 79 / 93 88 / 93
Clinker utilization HN [%] 1) 100 100 100 100
CAPEX required [Mio USD] - ~1002) ~1003) 1.54)
10
5
15
25
20
TV CL
1) OEE = 85% 2) Additional mill of 70 t/h for slag grinding 3) New mill of 55 t/h for slag grinding
4) Cement silo for HEW: 2’500 tons 5) Logistic disadvantage to HCMC of supply from TV versus CL: ~3.30 USD/t 6) CM 12 USD/t
0
30
- 12.0 23.4 26.9 28.3
‘Reference’ ‘Split HRF and HQC’ ‘Masonry’
Logistic impact 5)
Volume impact
VC impact
LPC impact 6)
26.6
-0.1
1.4
-3.1
26.6
-1.3
1.6
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Holcim Group Support Course for Cement Applications
Cement
Market
Products/
Services
Supply
Chain
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
MIC Sourcing,
Logistics
Gap
analysis
and
opportu-
nities
Constraints
and oppor-
tunities
Product
and
service
options
Pre-Analysis Analysis Synthesis Options Evaluation
Tech. Services
& Market reach
Targeting
Key
Product
Initiatives
EBITDA
CAPEX
Qualita-
tive
issues
P
R
O
D
U
C
T
P
O
R
T
F
O
L
I
O
Key challenges to develop the product / service
portfolio
38. 38
16.10.2005
Holcim Group Support Course for Cement Applications
Summary of option evaluation
Final product portfolio with 1 kiln line in HN
‘Current MIC’
‘Gbfs
new mill TV/CL’
‘Ggbfs’ ‘FA’ ‘Ideal PP’
Production w. cur-
rent set-up [Mio t/y]
4.85 5.8 5.5 5.2 5.0
CF / D CF [%pt]
71.0 / -1.0
TV: 69.3 / -2.7
CL: 69.5 / -2.5
66.8 / -5.2 68.9 / -3.1 68.7 / -3.3
D EBITDA1)
[Mio USD/t] 3.4
TV: 12.7
CL: 16.2
1.72) 4.43) 6.22)
CAPEX
[Mio USD]
3.0 ~100 16.0 23.5 8.0
NPV4) [Mio USD] 19.2 5.9 -4.9 5.3 32.5
MIC supply
Independent
Dependency on
Gbfs supply
and price
Dependency on
Ggbfs supply
and price
Dependency on
FA supply and
price
Dependency on
Ggbfs supply for
HRF
Manufacturing
complexity
Lowest, focus
on product
introduction only
High
complexity
Low increase of
complexity
Low increase of
complexity
Low increase of
complexity
Marketing
effort
Lowest efforts
High efforts by
TS / sales
Superior PP to
‘Current MIC’
High efforts by
TS / sales
Superior PP to
‘Current MIC’
High efforts by
TS / sales
Superior PP to
‘Gbfs’ / ‘Ggbfs’
High efforts by
TS / sales
Best product
portfolio
1) Including margin of LPC imports 2) Ggbfs 40 USD / t at mill inlet, all plants 3) FA 20 USD / t in HN 4) WACC 15.3%, perpetuity
39. 39
16.10.2005
Holcim Group Support Course for Cement Applications
Production &
logistics
issues
Technical
evaluation
Performance /
composition
defined
Clarification of:
Standards, norms
Prod. / log. / sourcing
possib. and constr.
Product development:
Optimization based
on acceptance tests
Manufacturing:
Production optimized and
required volumes secured
Logistics
Supply to market secured
New Product Introduction process (NPI)
Structured product introduction process after PPM recommendations
Cross-functional team prerequisite for successful product launch
Analysis &
Targeting
Strategy &
Development
Planning Preparation
PPM input
Product Introduction
Launch
Time
~2 months ~4 - 6 months ~2 months ~3 months
Opportunity for
new product
identified
Commercial
evaluation
Targeting:
Product advantage
User segment
Channel, price
Brand strategy:
Product value
proposition
Naming & bag
Marketing Plan:
Marketing mix
Sales
approach
Tech. service
Training
Preparation
of launch
Commercial
issues
Start of NPI Decision for
introduction
Production
release
Sales
release
Acceptance testing:
Large scale jobsite
trials with end users
Application
performance
benchmarking
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16.10.2005
Holcim Group Support Course for Cement Applications
Summary – final recommendations
Product
optimization
Adjust composition of PPC after implementation of manufacturing
improvement measures according to ACL’s plan
Add 5% LS as performance improver in OPC
Penetration
of non-trade
segment
Introduce ‘Quality Committee’ to ensure alignment of market
feedback, benchmarking and manufacturing
Focus on segments with high profitability (sleepers) / segments that
can be penetrated with PPC products (cluster A) and large projects
demanding PPC/OPC-bundles (cluster B)
Support non-trade strategy with
Products
- Introduce PPC plus
- Lobbying for PPC grades in standards
- Evaluate introduction of DM products in separate feasibility study
Services
- Adapt CSS-offer to cluster A requirements
- Bulk deliveries
Organization: Establish a KAM for large projects, hire staff with
relevant experience
Benchmarking
process
Sales
strategy
Evaluate potential to increase share of trade sales (up to capacity
limit)
41. 41
16.10.2005
Holcim Group Support Course for Cement Applications
2008 2009 2010 2011 2012
Roadmap
5% LS add.
Product
optimization
Penetration of
non-trade
segment
Benchmarking
Sales strategy
New capacities
Clk optimization RB
Continuous process
Adjust
Enter cluster A
Adapt CSS offer and introduce bulk
NPI New product PPC plus
Rauri / Dadri I / Nalagarh Dadri II / Jhalawar / Marwar
Enter cluster B
KAM preparation KAM
Clk optimization DL
PPC optimized
Option 1: Enter cluster C
Option 2: Increase penetration in cluster A and B
Option 3: Increase penetration in trade segment
Sleepers OPC 53 S (earlier possible, depending on priorities)
Lobbying for PPC grades Lobbying for change in gov. specifications
Evaluate DM production
43. 43
16.10.2005
Holcim Group Support Course for Cement Applications
Product Portfolio Management process
Product
portfolio
A
Timeline
GC activities
Market changes
PPM
Moment A
PPMR
Moment B
~ 2-3 years
Market
situation
A
Market
situation
B
Product
portfolio
B
PPMR
corrective
actions
PPM recom-
mendation
A
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16.10.2005
Holcim Group Support Course for Cement Applications
Key elements
Update information base of the PPM recommendations
Update on changes in the assumptions for recommended product initiatives
Assess implementation progress, results and action plans
Identify status per product initiative including financial result and corrective
actions
Evaluate potential for new product initiatives
QA / QC systems for application oriented product range
Identify key learnings from product initiative implementation
Recommendation of corrective actions and next steps
Objective
Ensure PPM recommendations’ sustainability and fully exploit product
initiatives potential
Product Portfolio Management Review (PPMR)
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16.10.2005
Holcim Group Support Course for Cement Applications
Product Portfolio Management Review process
Analysis Synthesis
Status
implementation
Product initiatives
Corrective
actions
Implementation
progress / results per
Product initiative and
potential new
Product initiatives
Validity check
recommended
Product initiatives
Key
learnings
and
next Steps
Recommendation
Market and
Application
Segmentation
Relative
Product
Performance
Manufacturing,
Sourcing,
Logistics
Update PPM info base
Tech. Services
& Market reach
46. 46
16.10.2005
Holcim Group Support Course for Cement Applications
Structure of a PPMR - 1
PPM information base update
Implementation progress of product initiatives
Corrective actions and new product initiatives
Overview and summary
Next steps
47. 47
16.10.2005
Holcim Group Support Course for Cement Applications
Structure of a PPMR - 2
PPM information base update
Implementation progress of product initiatives
Overview of product initiatives and achieved EBITDA contribution
Positioning of current products
Application performance of current products
QA / QC of current products
Corrective actions and new product initiatives
Overview and summary
Next steps
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16.10.2005
Holcim Group Support Course for Cement Applications
Status of initiative implementation - 2007
Recommended PPM initiatives Activities performed by HA
Activities recommended in PPM 2003
Other / additional HA activities
Optimization
Product
initiatives
Cost optimization of CPC 30R Implemented
Bulk product strategy:
New GU bulk CPC 40 for VI RMX
Bag product strategy
Introduction of new masonry cement
Implemented for RMX VI
Implemented
CPC 40 sold in bulk to industrial and
CPC 30 R to informal block producers
Optimize CPC 40 and start production in
MP, OZ and RA
CPEG 30 RS/BRA implemented in TC
Implemented, not including MP
Niche product strategy
Start production of CPC 30 RS in TC
Introduction of CPC 30R for block
producers
Replace CPO 30R RS in OZ
by CPC 40 RS
Introduction of CPC 40 allowing free
storage to keep production of
CPO 30R RS
Additionally sold to 3rd party RMX/CPM
49. 49
16.10.2005
Holcim Group Support Course for Cement Applications
Realized incremental EBITDA 2007 related to
PPM initiatives 2003
PPM recommendation Realized Differences
Legend:
Durability
New Mortero
Optimization
D EBITDA
[Mio USD/y]
Block Cement
DEBITDA
corrected by
-
Exchange rate
/ RMX
Volume Cost
PP/
composition
Volume 8.7 Mio t/y 8.3 Mio t/y
Variable cost Assumption 2007 Actual 2007
CF 67.9% 66.9%
Block cement
initiative not
implemented to
avoid spill over of
special bag product
into general use bag
segment
Realized additional
sales of Mortero did
not fully meet PPM
volume projections
Additional
optimization
initiatives lead to a
positive impact
VI RMX1)
7.8 6.4 10.1 6.9
6.8
2.3
4.4
0.2
1.1
4.9
4.1
0.6
3.9
2.1
-0.2
0.7
4.1
2.2
-0.2
0.7
2.1
3.3
1.9
-0.2 Δ
1) Logistics and operational benefit of RMX operations not considered
50. 50
16.10.2005
Holcim Group Support Course for Cement Applications
Structure of a PPMR - 3
PPM information base update
Implementation progress of product initiatives
Corrective actions and new product initiatives
Overview
Options
Evaluation
Technical service and benchmarking
Overview and summary
Next steps
52. 52
16.10.2005
Holcim Group Support Course for Cement Applications
Summary of product portfolio approach
A comprehensive market / application segmentation is the base for
a successful PPM strategy
Product performance requirements are determined by the related
product applications
Supply chain constraints are decisive for the feasibility of product
options
Technical Services are part of PPM strategy and have to support
the selected product initiatives
PPM contributes strongly to achieving Holcim’s CO2 and EBITDA
targets and supports overall competitiveness
The PPM is formally reviewed after 18 to 24 months to ensure the
recommendations’ sustainability and to fully exploit the potential