M&A

3 March, 2010

Holcim's 2009 results

Table: Annual Results 2009/ 4th Quarter 2009 - Group
http://www.holcim.com/holcimweb/gc/CORP/uploads/Group_Key_Figures_AR2009.pdf

Recessionary environment in Europe and North America
The construction industry suffered a significant slump, particularly in
Europe and North America. The situation was especially acute in the US, the
UK and Spain, but the construction sector also underwent a severe recession
in Eastern and Southeastern Europe, as well as Russia.

Better position in the growth markets
Asia started out in a better position, as did much of Latin America and
Africa. Led by India and China, many of the countries remained on a growth
trajectory. This proved beneficial for Holcim, as the Group has an emerging
markets presence like no other international producer of building
materials.

(Details on Group regions after the outlook)

Robust cost management makes up for falling volumes
Volumes fell once again across all segments. In some cases, prices too came
under greater pressure. Holcim nevertheless generated operating EBITDA of
CHF 4.6 billion on consolidated net sales of CHF 21.1 billion.

The goal of streamlining processes and structures as well as lowering fixed
costs by at least CHF 600 million was significantly exceeded, reaching
like-for-like CHF 857 million. The increasing impact of the cost-cutting
measures is reflected in the organic growth in operating EBITDA: still
strongly negative in the first half of 2009, it improved significantly in
the second part of the year.

The steepest fall in the Group's operating EBITDA occurred in Europe,
followed by North America. Latin America held up well. Factoring out the
deconsolidations in Venezuela due to nationalization, the region continued
to grow. Group region Africa Middle East also performed slightly better in
year-on-year terms. In Asia Pacific, operating EBITDA showed a considerable
increase. This positive result was due in particular to a strong
performance by ACC and Ambuja Cements in India, but also to the performance
in the Philippines and Indonesia, as well as the new consolidations in
Australia.

Strong liquidity, lower net debt, balance sheet further strengthened
A series of capital market transactions and a capital increase raised a
combined CHF 7.8 billion, thus covering all financing needs. Encouragingly,
cash flow from operating activities showed an above-average increase. Net
financial debt was reduced by CHF 1.2 billion despite ongoing capacity
expansion and equity-financed acquisition, thus further strengthening
liquidity and the balance sheet. This was only possible thanks to the
rigorous cost and cash management.

Plant closures in all product segments
Holcim reacted swiftly in the second half of 2008, when a fall in demand
became apparent in a series of markets. Far-reaching measures were taken in
the cement sector. Plants in Europe and North America in particular were
shut down permanently or mothballed. All in all, 23 kiln lines with a
production capacity of more than 10 million tonnes were closed. More than
100 aggregates and ready-mix concrete plants were also closed temporarily.
This was accompanied by substantial job losses of 6 percent per the end of
2009; these were conducted in such a way as to minimize social impact.

Capacity expansion and acquisition create new potential
The Group's solid financial position enabled the 2009-2012 capacity
expansion program targeted at strategically important areas to be
continued, apart from some exceptions. The plant expansions and new
facilities in the cement sector were concentrated on growth markets, in
particular the Indian subcontinent.

The new Ste. Genevieve cement plant in the US state of Missouri deserves a
particular mention. The plant was commissioned in July, as planned.
Situated right on the Mississippi and equipped with its own port facility,
the plant - which has a capacity of 4 million tonnes - is the largest and
most modern in the US. It improves energy efficiency by around 40 percent
compared with the US sites that have been closed. The plant boosts Holcim's
market presence throughout the river system of the Midwest, right down to
the Gulf of Mexico.

The successful acquisition of Cemex Australia - now Holcim Australia - is a
significant achievement. The transaction also included the increase in the
shareholding in Cement Australia from 50 to 75 percent. Both Group
companies have been fully consolidated since October 2009. This means
Holcim can now offer not only cement but also aggregates, ready-mix
concrete and concrete elements in a strategically important, mature market.

Proposed dividend
As in previous years, the Board of Directors will propose at the Annual
General Meeting that one-third of the net income attributable to
shareholders of Holcim Ltd of CHF 1.5 billion be distributed to the
company's shareholders. This will give a cash dividend of CHF 1.50 per
registered share.

Non-binding advisory vote on the compensation report
At the Annual General Meeting of May 6, 2010, the shareholders will be
consulted for the first time on the Board of Directors' compensation
report. Holcim firmly believes that its compensation system is competitive
and its managers are motivated by a proper set of objectives, but also that
the system stands up to public scrutiny.

Changes in the Board of Directors and the Executive Committee
H. Onno Ruding, member of the Board of Directors of Holcim Ltd since 2004,
will be stepping down from this office at the forthcoming Annual General
Meeting for reasons of age. The Board of Directors proposes to the Annual
General Meeting of May 6, 2010 that Beat Hess, since 2003 Legal Director
and member of the Executive Committee of Royal Dutch Shell Group, Den Haag,
Netherlands, be elected to the Board. Beat Hess, 61, Swiss national, holds
a doctorate in law and is admitted to the bar. From 1977 to 2003, he was
initially Legal Counsel and subsequently General Counsel for the ABB Group.
He is also member of the Board of Directors of Nestlé S.A., Vevey,
Switzerland.

The Board of Directors of Holcim Ltd has appointed Roland Köhler, since
2005 member of the senior management and responsible for Corporate Strategy
& Risk Management, a member of the Executive Committee, effective March 15,
2010. In his new role, he will lead the central service and support
functions of the Group. Roland Köhler, 56, Swiss national, is a graduate in
business administration from the University of Zurich. In 1988, he was
appointed Head of Finance and Administration of a Swiss construction
materials group. In 1994, he joined Holcim, and from 1995 to 1998, he was
Head of Corporate Controlling. Between 1999 and 2002, Roland Köhler
developed a concept for an integrated and Group-wide business risk
management. Since 2005, he was engaged in shaping the Holcim strategy on
Group and country level as member of the senior management. He has also
been a member of the leadership teams for major acquisitions, such as
Aggregate Industries and Cemex Australia.

Group outlook 2010
It is unclear how the building materials markets will perform in the
current financial year. Uncertainty is at a high level, especially with
regard to developments in Europe and North America. Much depends on whether
the stimulus programs designed to expand infrastructure will indeed be
implemented as proposed. Any revival in construction activity across a
broad front will also be contingent upon stimuli from residential and
commercial construction.

Many emerging markets start off from a better position. In particular,
Holcim's Group region Asia Pacific - also thanks to the acquisition in
Australia - is likely to continue growing. Group regions Latin America and
Africa Middle East are also likely to experience a stable business
performance.

Despite their confidence in the Group's strength and solid positions in
important markets, the Board of Directors and Executive Committee refrain
from communicating any detailed forecasts. The cost advantages gained in
2009 will be retained, and in 2010 the Group will continue to do whatever
is required to strengthen the efficiency of its processes and
competitiveness. Holcim will therefore start the next upturn from a
stronger position, and will be able to get back on track toward achieving
its long-term growth targets.

Detailed information on Group regions:

Challenging economic situation in Europe

Table: Annual Results 2009/4th Quarter 2009 - Group region Europe
http://www.holcim.com/holcimweb/gc/CORP/uploads/Europe_AR2009.pdf

Aggregate Industries UK reported volume declines in all segments. However,
deliveries of aggregates and ready-mix concrete for large construction
projects related to the 2012 London Olympics and to infrastructure projects
in Scotland cushioned to some degree the market-induced drop in volumes.
Sales of asphalt were supported by government stimulus packages in the road
building sector.

In Northern France, Holcim France Benelux sold less cement for housing and
commercial buildings. In the east of the country, sales were depressed by
an increase in imports. Sales of aggregates also declined following the
completion of the TGV Est high-speed rail line. As a result of
acquisitions, ready-mix concrete volumes developed better than the market
as a whole. While major projects softened the declining demand for
construction materials in Belgium, ready-mix concrete prices continued to
come under increasing pressure. The Group company in the Netherlands
benefited from projects to expand the road network and coastal defenses.

Due to a rise in exports, Holcim Germany saw a slight increase in cement
sales. Shipments were positively impacted by the start of construction work
on the Nord Stream gas pipeline and the widening of the Bremen-Hamburg
motorway to six lanes. Cement sales in Southern Germany were virtually
stable due to road and infrastructure construction. The increase in sales
of aggregates posted by Holcim Southern Germany was due to acquisitions.
The purchase of additional ready-mix concrete facilities by the two German
Group companies served to counter the negative market trend.

Holcim Switzerland's cement deliveries virtually matched the high level of
the previous year and volumes of gravel, sand and ready-mix concrete were
even higher. The Group company benefited from a continued solid level of
orders for the residential construction sector, and various large
commercial and motorway expansion projects. Despite delivering sizable
orders of construction materials for the expansion of the Milan metro and
inner-city housing projects, Holcim Italy suffered from the generally weak
state of construction activity in the north of the country. Holcim Spain
was only partly able to compensate for the precipitous decline in
residential construction through increased deliveries in the infrastructure
sector. Through the successful integration of Tarmac Iberia's aggregates
and ready-mix concrete business, the Group company has strengthened its
market position.

In Eastern and Southeastern Europe, the cement sales of all Group companies
were severely impacted by the economic crisis. Domestic sales of Holcim
Bulgaria and Holcim Slovakia suffered greatly, in part because of massive
cement imports. Volumes decreased significantly in Hungary, the Czech
Republic and Romania. Holcim Croatia and Holcim Serbia fared slightly
better. The continuation of transport related infrastructure projects, some
of which benefited from EU financial support, led to a certain degree of
stabilization in certain places. For instance, progress on the construction
of Prague's orbital motorway dampened the impact of the decline in volumes
experienced by Holcim Czech Republic, while bridge building works on the
River Sava boosted deliveries by Holcim Serbia.

After the massive decline in the first half of the year, sales at
Russian-based Alpha Cement stabilized near the end of the year in and
around Moscow. Export shipments to Western Kazakhstan also picked up.
However, in comparison with 2008, the Group company posted a significant
decline in cement sales and sales prices. In Azerbaijan, Garadagh Cement
saw volumes and prices depressed by a combination of market factors and a
rise in cement imports.

Consolidated delivery volumes in Group region Europe declined in 2009,
albeit less sharply in the second half of the year. Cement shipments fell
by 20.2 percent to 26.9 million tonnes. Sales of aggregates declined by
19.7 percent to 78.4 million tonnes, and ready-mix concrete sales
contracted by 19 percent to 17 million cubic meters.

Operating EBITDA for Group region Europe decreased by 38.5 percent to CHF
1.2 billion as a result of market conditions and currency factors. The
systematic broad-based implementation of cost-cutting measures increasingly
eased the pressure on the income statement during the course of the year.
Holcim Switzerland was the only Group company to post an improved result.
All other companies reported a much weaker performance compared with the
previous year. This was particularly true of Holcim Spain, the companies in
Eastern and Southeastern Europe, and Alpha Cement. At -33.3 percent,
internal operating EBITDA development was negative.

Within Europe, the construction sector is unlikely to make significant
progress in the UK, Spain or Italy. The situation will also remain
challenging in most of the countries of Eastern and Southeastern Europe,
including Russia. In the other markets supplied by Holcim, a more stable
recovery is emerging. At present it is difficult to assess the speed with
which it will impact demand for construction materials and whether it is
sustainable. The programs to cut costs and adjust capacity will be
systematically pursued.

Source: http://www.aggregateresearch.com