cement 5atschudin.ppt

A strong Focus on the Holcim Value Chain
Course for Cement Applications
November 2008, Holderbank
Markus Tschudin
HGRS/CS-PID

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HVC.ppt
© Holcim Group Support 2008 CCA – November 2008
External challenges in ALL Markets
 New entrants: blenders, grinders, new cement producers, imports
 Entrants applying new business models
 More aggressive price competition
 Increased competition among established cement players
 Consolidation of channels e.g. mega-distributors, RMC customers
 Changing value proposition of retailers (solution providers, shop-in-shop etc)
Pressure on margins, significant channel risks, response capabilities
Internal challenges
 Marketing experience and sales skills of staff
 Organizational responsiveness to new market demands
 Lack of systematic assessment of commercial performance
 Lack of a few and appropriate KPI's
 Effective and dynamic (faster) exchange of experience required
Inputs and Feedback from Commercial Committee
Identified Key Issues

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 Holcim Value Chain (HVC) Concept
 HVC: Process and Workshop Outcomes
 HVC: Global Synthesis
 Commercial Services ORM Targets
Agenda

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Market maturity defines Holcim’s investment focus
Ready-mix concrete
Aggregates
India
Thailand
Eastern Europe
N. America, UK
France, Spain
Aggregates
Downstream
Added value through
business integration
Market
maturity
Emerging markets Transition markets Mature markets
Value Chain
Cement
Ready-mix concrete
Ready-mix concrete
Aggregates
Aggregates
India
India
Thailand
Thailand
Eastern Europe
Eastern Europe
N. America, UK
N. America, UK
France, Spain
France, Spain
Aggregates
Downstream
Aggregates
Downstream
Added value through
Market
maturity
Added value through
Market
maturity
Value Chain
Cement
Cement
 High bag share
 Big residential segment
 Low degree of urbanization
 High bulk share
 Important infrastructure segment
 High degree of urbanization

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Holcim Value Chain (HVC)
Contractors
Transactional
Mortars
Ready-mix
Concrete
Asphalt
Concrete
Products
Cementitious
Materials
(cement,
mineral
components)
Direct Sales
Infrastructure
Commercial/
Industrial
Building
Housing
Basic Materials
Processing
Direct Sales
Aggregates
(sand, gravel,
stone, recycled
aggregates)
Supply Demand
Traders
Wholesalers
Retailers
Traders
Wholesalers
Retailers
A
p
p
l
i
c
a
t
i
o
n
s
Applications and
Construction Fields
End-users
General
Contractors
Civil
Engineering
Channels
Transformational*
Masons
Self-builders
* Concrete products to be considered as "end users" for application purposes only

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HVC Definition
 Replacement of the Business Integration Frame (BIF), taking a
broader look at the whole chain
 Map of all relevant elements of the building materials and construction
sector from the demand to the supply side
 Assessment of risks, opportunities and identification of potential
initiatives emerging from current market structures and foreseen
industry dynamics
 Framework to structure discussions on future positioning and
investment opportunities
 OpCo HVCs input for further development of group strategy
 Integration of existing management tools in the commercial area
like Segmentation, PPM, VI and Bag Channel Management
Holcim approach to identify and capture value-adding opportunities
from the end-user level to the supply side

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HVC.ppt
Decision about Holcim market position derived from
demand side and channel understanding
Infrastructure
Commercial /
Industrial
Building
Housing
Demand
A
p
p
l
i
c
a
t
i
o
n
s*
Applications and
Construction Fields
Macro
Trends
Natural reserves
Sectors growth
Demography
Foreign
investment
Government
policy
Transactional
Mortars
Ready-mix
Concrete
Asphalt
Concrete
Products
Cementitious
Materials
(cement,
mineral
components)
Direct Sales
Supply
Basic Materials
Processing
Direct Sales
Aggregates
(sand, gravel,
stone, recycled
aggregates)
Traders
Wholesalers
Retailers
Wholesalers
Retailers
End Users
General
Contractors
Civil
Engineering
Channels
Transformational
Masons
Self -builders,
Traders
Anticipate economic macro
trends’ influencing demand
side dynamics
1
Understand the end-user’s business
model & needs in order to provide
superior value and serve them
adequately
2
Identify opportunities to occupy
channel space offensively ->
first mover advantages
prevents lock out
3
Idea

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Agenda

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Ontario “Greenbelt”, Canada
Toronto
Barrie
Brownfield
OpCo. Example
Economic Macro Trend:
 Toronto land scarcity driven by
“Greenbelt” legislation
Influencing demand dynamics:
 Urban development in Barrie
area (Highway 400)
 Redevelopment of “Brownfield”
industrial wasteland
Potential value creation initiatives:
 Provide access to quality
Cement, Concrete & Aggregates
into development areas
Greenbelt
Highway
400

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HVC.ppt
Source: OECD; HVC factbases; HGRS-CS
100
1'000
10'000
100'000
0% 20% 40% 60% 80% 100% Current Holcim
bulk ratio [%]
Degree of cement market industrialization (efficiency potential)
Level of wealth
(potential for
growth)
GDP / capita 2004 [US$]
CH
FBNL
Australia
CAN
GER
Italy
Spain Singapore
Venezuela
Bulgaria
Slovakia
Croatia
Hungary
Thailand
Chile
Romania
Bangladesh
Morocco
Malaysia
Vietnam
Indonesia
Mexico
Panama
Libanon
Brazil
Argentina
Colombia
Ecuador
Costa Rica
Philippines
Sri Lanka
Nicaragua
Austria
Czech
Serbia
New Zeal.
South Africa
USA
India
La Reunion
Emerging markets
Developing markets
Transition markets
Mature markets
Four Market Types*
*Logic shall be applied to micro markets (MM)
Emergence of mega
cities (big
city markets)

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Agenda

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Multi step retail & direct
end-user concepts
4
Industrial clients value
creation strategy
3
CPM approach for
attractive markets
5
Preferred partner in PPP
consortium
6
Emerging
markets
Developing
markets
Transition
markets
Mature
markets
Emerging Commercial Focus Topics
Mega
urbanization
/cities
Stand alone AGG strategy
development
2
Improved demand side
understanding
1
Very important Medium Not important
Example follow up topics

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Agenda

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Group Operational Roadmap 2008-2012
2008 2010 2011/12
Financial
BCM
PMI
HRE
SEP
CSR
ITSCs ISO 20000 & 27001/2 implemented
Best Premium Brand perception achieved
GAV target 350 mio
LTIFR reduced by  30% p.a. (2006-09) until < 2
2% p.a. (2007-09) Procurement Benefits on Non-Capex spend
Group CO2 target achieved
r HVA 200 mio
Group ERT –20% dust,
NOX and SO2 achieved
PPM cement review completed
Net Availability:  90% / Net OEE:  85%
Op. EBITDA margin CEM > 33%
Op. EBITDA margin AGG > 27%
Op. EBITDA margin OCM > 8%
Holcim Values embedded
HPM cement implemented
Cost target per plant achieved
Plant Performance Monitor impl.
Dialogue ext. to FLM
CSR review completed
FPE implementation commenced
Core Curriculum
embedded
Dialogue
training done Dialogue QA impl.
OH&S Contractor Safety Management implemented
ACM KPI’s defined ACM KPI’s implemented
PQM implemented
2009
EMR Availability:  90%
HVC review completed
FPE implementation completed
* In line with WBCSD commitments of Holcim Group
Commercial strategy needed to achieve financial targets

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