CEMENT 2022 011030knezevic.ppt

Product Portfolio Management
Course for Cement Applications 2008
Eduard Knezevic
HGRS/CS

2
16.10.2005
Holcim Group Support Course for Cement Applications
Learning objective
 Understand the concept of proactive product portfolio management
(PPM) / product portfolio management review (PPMR)

3
16.10.2005
Agenda
 Concept of PPM
 Concept of PPM Review
 Summary

4
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
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
portfolio

15
16.10.2005
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
16.10.2005
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
16.10.2005
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
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
portfolio

18
16.10.2005
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
16.10.2005
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
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
portfolio

20
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
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
portfolio

25
16.10.2005
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
16.10.2005
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
16.10.2005
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
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
16.10.2005
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
portfolio
Pre-Analysis

29
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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
16.10.2005
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

36
16.10.2005
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

37
16.10.2005
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
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
portfolio

38
16.10.2005
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
16.10.2005
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

40
16.10.2005
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
16.10.2005
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

42
16.10.2005
Agenda
 Concept of PPM
 Summary

43
16.10.2005
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

44
16.10.2005
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)

45
16.10.2005
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
16.10.2005
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
16.10.2005
 Overview of product initiatives and achieved EBITDA contribution
 Positioning of current products
 Application performance of current products
 QA / QC of current products
 Next steps

48
16.10.2005
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
16.10.2005
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
16.10.2005
 Overview
 Options
 Evaluation
 Technical service and benchmarking
 Next steps

51
16.10.2005
Agenda
 Concept of PPM
 Summary

52
16.10.2005
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

CEMENT 2022 011030knezevic.ppt

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