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Holcim launches its ‘Leadership Journey 2012 – 2014’

World Cement,

Holcim Ltd is to launch a programme to strengthen its market and cost leadership. The ‘Holcim Leadership Journey’ will include specific measures to increase operating profit by at least CHF 1.5 billion by the end of 2014.

The baseline is the financial year 2011 (excluding 2011 one-off charges of CHF 375 million and without fluctuations in currency, changes in scope of consolidation and under similar market conditions).

CEO Bernard Fontana said: “After intensive discussions at the senior management level and based on close collaboration with the Group companies, I am confident that we will achieve these targets. At least CHF 150 million positive impact will be achieved in 2012.” The ‘Holcim Leadership Journey’ focuses on the following areas:

Customer excellence by improving customer focus and innovation (additional operating profit by end of 2014: CHF 500 million)

The focus will be on measures to strengthen the management of customer value and loyalty, margin and prices, as well as sales force. Holcim will also implement standardised performance indicators across the whole Group to measure the progress in marketing and sales. Customers will benefit from Holcim’s increased understanding of their needs. The Group’s ability to innovate in fields such as integrated market solutions, new materials, or low CO2 solutions will enable it to fully meet those customer needs with improved products and services.

Increasing energy efficiency and the use of alternative fuels and raw materials (additional operating profit by end of 2014: CHF 300 million)

Holcim will increase its energy efficiency and the use of alternative fuels and raw materials. Various measures are planned: from clinker grinding improvements and kiln burner updates, to optimisation of the fuel mix in cement production and initiatives in the field of energy procurement. The cost reduction measures will be supported by some ‘fast return’ Capex projects.

Reduction of logistics costs (additional operating profit by end of 2014: CHF 250 million)

Holcim sees a substantial cost reduction potential through optimised truck cycles, the reduction of the waiting time for trucks and optimization of routes based on real-time GPS equipment, not only to construction sites, but also between plants and distribution units. Holcim will also review third party transportation contracts.

Streamlining of the procurement process globally (additional operating profit by end of 2014: CHF 250 million)

At the forefront are measures to improve processes, standardisation, planning and volume pooling of procurement and a diversification of the supplier base in all geographical areas, including China. Holcim plan to strengthen the sourcing platforms on different levels (regional, global) and to renegotiate existing contracts.

Increasing fixed costs savings (additional operating profit by end of 2014: CHF 200 million)

Holcim will reduce support process costs across all levels of the company and make better use of existing service centres and support units to reduce the use of external services and consultants. Additionally, Holcim will review the entire asset base across all segments with low utilisation levels. In this context, the size of the local footprint will also be reviewed.

Further reduction of net working capital and selective divestments

In addition to further reduction of net working capital, selective divestments may also occur.

Reduction of the investment cost per tonne of new cement capacity

For future expansion projects, the total investment cost per tonne of new capacity cement will be reduced by 20%, based on regional reference costs, by reviewing design standards, optimising equipment procurement and broadening the supplier base.

Further development and generation of talents and leaders, as well as strengthening of the social dialogue with all stakeholders

To support growth, the Holcim Group needs a broad range of talents and experienced leaders in management roles and functions. The ‘Holcim Leadership Journey’ will strengthen the development of talents and managers as well as the social dialogue with all stakeholders. Furthermore, Holcim will continue to give highest priority to occupational health and safety with the goal of ‘zero harm to people’.

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