Amrize Ltd Ordinary Shares

Good morning, everyone, and a warm welcome to our full year results presentation of Holcim. I'm here in our conference room at Holcim with our CFO, Geraldine Picot, and we are very excited to present some more details on our year-end closing, also on the outlook, and then, of course, to have your questions and comments. Before I start with the highlights, I think I would like to convey that our sympathy and our hearts go to the Ukraine this morning with everything what's happening there since yesterday morning. I think our sympathy is with Ukraine and the people and even that Holcim has no operations there. I think we are all concerned and follow up very closely on the next developments. And I'm sure we're going to talk maybe in a bit with more background later in the Q&A session. For now, I would like to start to talk a bit about the results, the highlights, and especially about the progress we were making with our strategy, with building up our new segment solutions and products, and also our portfolio transformation. 2021 was a record year. We were able to do everything we promised in our strategy 2022. And I think we achieved fantastic results throughout the year with high growth level going back even beyond the pre-crisis level in Swiss francs, then high EBIT growth of more than 25%. and also then achieving new records on the profitability, earnings per share reaching 3 Swiss francs 98, a record return on invested capital of 8.9%. And for the third consecutive year, cash flow, which is above 3 billion Swiss francs, and also representing a new record for the year at 3.26 billion Swiss francs. And while we made quite a couple of important acquisitions, thanks to the cash flow and the good finance management, we maintained our debt leverage at 1.4 times, which gives us the right base now to do the next steps in our new strategy 2025. Let me go into some details on the strategy side. And I think first I want to share with you the targets. Now we achieved one year in advance. You see, this is what we promised to you in March 2018 to put the company on a profitable growth trajectory. This is what we have done. We have grown the business and we achieved overproportional growth in EBITDA. Then we promised you we're going to fix the cash conversion above 40%. And now it looks like that our new level will be more around 50% cash conversion and very happy to have now for the third consecutive year such strong cash flows. And this is something now we are confident to deliver to you also in the years to come. He fixed the return on invested capital. That was always a topic, if you remember back, and very happy now we are well above our capital costs, and that's also well achieved. And then we also promised to you that we're going to deleverage the company to lower interest. depth levels and also this we delivered here one year in advance. So I'm very happy and that's a strong foundation now to go into the next chapter of growth for Holcim. That's why we call our new strategy 2025 accelerating green growth. When we look at the strategic direction we're going to take here, we We want to build up our fourth segment solutions and products. And last 12 months, we made some super inroads here, first with the acquisition of Firestone, then following up on Malachi, another company focusing on roofing. Only these two acquisitions, they will already deliver $3 billion of sales in this current business here. So we're very happy that – We not only found the right targets, but we really hit the ground running with double-digit growth rates from day one. We then entered into a second technology platform of facade mortise insulation with the French PRB Group, and then also followed up with the Belgian PTB Group. So also here, a very promising field where we talk also about renovation, energy efficiency, sustainability, and double-digit growth rates. So very excited we could enter. You see here the first results already in the last year. With only nine months of Firestone, we could already expand solutions and products. We almost doubled it from 8% of group sales then to 13%. And, of course, now with the new acquisitions signed, We expect now that we are moving close to, I don't know, 20%, maybe already this year. And then the target for 2025 is 30% is within our reach. And we have many more targets we look at. And we will here accelerate the expansion. You look a bit in the details. Roofing, super exciting segment. Why is that? Because you have a lot of pricing, innovation power. You have growth. All the roofs are functional nowadays. They're insulated. They are solar roofs. They are green roofs. A huge demand for re-roofing. That's where you want to be, especially in the markets of Europe and North America. You want to be in refurbishment and repair. And we have already with Firestone, more than 60% of the sales is re-roofing. And with Malarkey, it's even at 90% of sales is re-roofing. compared to new buildings. So very exciting growth platform. We established growing like crazy now. We expect a high double digit growth for this year for these two companies. And I think we're going to have a very value creative here element of our strategy. We have then the second platform we established with the PRB Group. So they are into the sales with mortars, with insulation. Very exciting. Right in the sweet spot of renovating Europe to make housing more energy efficient. And also this one, we have full order books, many new products to come. And I'm very excited here to follow up with you. made already the next acquisition in that field in Belgium, the PTB Group, and you can expect also here more to come from our side. A very positive second element of this solutions and product segment is that we were able to acquire the roofing companies with a key focus on the U.S. market. And the U.S. market is the single most attractive market for building materials with growth, with different segmentations, a lot of pricing power. And you notice here that just within the last two acquisitions, we go now from $4 billion of sales in the U.S. to more than $7 billion in just one step. And you see also the portfolio, how we shift solutions and products is now already our largest business segment with more than 40% of our sales. So this is very rewarding for us and shows how much traction we have now with our strategy and with entering here solutions and products going into the future. We have on the M&A side, so I talked already about solutions and products with this framework. four acquisitions, kick-starting our ambition to become a leader in solutions and products. We are also very active on the bolt-ons. So all these valuable smaller companies in the local markets to strengthen our aggregates business, to strengthen our ready-mix concrete business. And you see here we made 12 transactions last year. This is, I would say, a record number for us since we started with these bolt-on strategy, so very rewarding acquisitions here in the local markets. Then you also see the divestments. We have signed a divestment for Brazil. We have already sold Northern Ireland, Zambia, Malawi, and the Indian Ocean. They are all closed. So you see here we are active to get a bit lighter on emerging cement markets and transform Holcim products. into solutions and products, but also strengthen our aggregates and ready-mix concrete business into the mature markets, Europe and North America. So I'm very happy here. And for those of you who have been with us at the Capital Market Days, you could also see that we did very, I would say, value accretive transactions. So we are divesting for good multiples and we are actually acquiring for attractive multiples. Now, sustainability is the next huge pillar for our strategy going forward. We make a lot of progress here. You have seen our target setting from net zero targets to science-based target initiatives. And maybe today I want to share with you two areas which I'm the most excited about. The first one is the launch of our green product ranges, EcoPact, EcoPlanet, and then the circular construction, which we are in the middle of making it a reality. And I want to share with you two more backgrounds here. First, on the global rollout of EcoPact, our green concrete products. We just started to launch it in 2020. Already now it's in all our key markets, so in the 24 biggest markets. EcoPact is a reality and already quite some traction. We sold more than 1 million cubic meters last year, which is more than 600 ready-mix trucks every single working day delivered to the customer. So quite a lot of traction. This will be ramped up now and we set the target to be at 25% of concrete sales from the eco-packed green concrete range. So very happy how we do this. It's very much appreciated by our customers, by the Green City Councils, by any company who has green procurement in place. And I'm very proud that our people are able here to follow up so fast now with the green solutions going forward. The second area I want to share with you is our scaling up of circular construction. This will be a huge part of Holcim's future. And it's actually already a huge part of Holcim today. We have last year recycled 54 million tons of waste. 54 million tons makes us in the top three of all waste recyclers in the world. And we use it as raw materials, alternative fuel. We use it into cement, into concrete. And one of the most exciting areas, we are – taking construction demolition waste and recycle it straight into new products. It's probably one of the easiest and best products to be recycled is concrete, is cementitious products. You can recycle 100% and this is what we already do. So last year alone, we did 6.6 million tons of construction demolition waste, which was recycled and putting back into our cementitious products. And this is simply more than 1,000 full truckloads every working day. So you see, we are really scaling this up. We set ambitious targets. We want to be now in the next years doubling the recycling of the waste. So while we already had a 17% growth just last year, we target that growth rate now going forward, and we want to reach 100 million tons of recycled waste as soon as possible. And that's going to be very exciting as a big part of the future of Holcim. We are scaling up everywhere. Is it in recycling centers? Is it to put the waste back in the products and processes? And here you can expect a lot from us going into the future. This was a bit the highlights I wanted to change with you from record results to the progress we make in the strategy from sustainability, fourth segment solutions and products to circular construction. And now I pass on to Geraldine, who gives us more details on numbers, results, but also on the regions.

Thank you, Jan. And good morning, ladies and gentlemen. I'm very pleased to share with you some more details on our achievements in 2021, and just not only with regards to the financials, but also the sustainability KPIs in view of our strategy 2025, accelerating green growth. 2021 has been a record year and has been a year of strong growth. Our net sales were up by more than 11% on a like-for-like basis, driven by both volume and price rises. Also boosted by a strong pricing and cost control, our recurring EBIT grew over-proportionally by close to 26% like-for-like. Our earnings per share before impairment and divestment followed the same trend, ending at 3.98 Swiss francs per share, This is 30% above the level of 2020. And once again, we achieved a high cash conversion at 50%. We generated 3.3 billion of free cash flow, which is above the records which were set the two preceding years. Let's move to the volumes. And cement or volume grew by 5% like for like. And all the regions contributed to this growth, with some countries recording an excellent performance, such as India, which benefited from a strong volume growth after the severe lockdowns of 2020. But also Latin America recorded an outstanding performance with key markets of Mexico, Argentina, Ecuador, all experiencing strong volume growth from infrastructure projects. Our aggregate business lines in volume grew by 3.9%, and to be noted here, the good performance of the UK and the high double-digit growth of China. Our ready-mix concrete business line grew by 7.3%, driven by the key markets of India, France, and Mexico. Let's move on to our net sales. We are proud to report that we reached 26.8 billion Swiss francs of net sales, up 16% compared to 2020 and above the level of 2019. If we look at the price, at the scope effect to start with, the scope effect of almost 1.6 billion here, this is mainly attributable to the nine months of consolidation of Firestone building products that we acquired beginning of Q2 2021. But also all the bolt-ons we have acquired during the last 12 months contributed to this positive impact. The light foliar growth amounted to 11.3%. And this reflects the rises in prices and in volumes. The pricing impact account for 5.2%. The volume impact accounts for 5.1%. Finally, the currency translation was negative, and that was mainly due to the Argentinian peso and the Nigerian era. It accounts for minus 2.2%. Let's go to the profitability. We here have also recorded a record growth and a record level of EBIT. In total, our recurring EBIT grew by 25.5%, and it was driven by an impressive like-for-like growth of 25.7%, representing 943 million Swiss francs. The volume performance of 603 million Swiss francs is the first contributor to this impressive result. Also reflecting the strong pricing, We have a price of a cost that is positive for 2021 at 317 million Swiss francs, a very solid result achieved despite an energy cost inflation of 24% throughout the 2021 year. The scope effect you can see here of 154 million Swiss francs represent a growth of 4.2% and it's mainly attributable to Firestone. And we have a negative forex impact of minus 4.4% that is mainly attributable to the Argentinian peso. If we look at our performance across all business segments here, well, you can see that all the business segments grew organically with another proportional recurring EBIT growth and a positive price over cost for all business segments. Our net sales grew by 13.3%. And here you have a volume impact of 5% and an impressive strong pricing impact of 6.7%. Our aggregates business line in volumes grew by 3.9% and the price impact accounted for 1% on average. On the ready mix concrete business line, we grew in volume by 7.3% and here the price increase accounted for 2.9%. And on our solutions and products, well, with the recent acquisition of Firestone billing product, the net sales of solution and product represent actually 15% of the total group net sales in Q4. With the recent announced acquisition of PRB and Malarkey, this share is going to increase further as we embark on our strategy 2025. If we look At the regions now, well, all the regions have expanded their margins, and I will now comment into more detail. Let's start with North America. North America had an outstanding performance in the year and in Q4, especially with a strong volume demand in Q4 that has been across all the business segment that was boosted by an expanding economy in the U.S., The strong pricing trends were also experienced in Q4, worth noting that the price over cost was positive in North America in Q4. And we look forward to another great year for the region here. As we can see, it's fully supported by a full order book and also with the pipelines, the bolt-ons we have in our pipelines. If I go to Latin America, the region delivered a very strong performance here. The market demand, as in previous quarters, was boosted by residential and infrastructure projects. Additionally, we have added new production lines in Mexico and in Argentina, and we are continuing to roll out all the GACO Firestone product, the liquid applied membranes, through the Desenza retail network. If we move on to Europe, Europe also delivered a very good set of results and the demand has been strong in Europe for the year. Quite strong in Western Europe, even stronger growth we've seen in Eastern Europe. We had a positive price over cost for the full year in Europe, which helped to contain the power inflation in Q4. We had a strong execution of our green capex. They're going to also deliver good results in 2022, as well as the Bolton pipeline that we're having that's going to help to fuel growth. Let's now move on to Middle East and Africa. We had here also a solid set of results in Q4 and for the entire year. Solid and good market trends were seen in Nigeria and in Kenya for the Q4. Egypt saw a significant price improvement despite being impacted by the production quotas for cement output. The region achieved a positive price over cost in Q4 on the back of a strong pricing. Let's now move on to APAC. APAC delivered a resilient set of results. In 2021, the volume grew across all business segments. We also achieved a positive pricing in the region, which helped to partially offset the cost inflation in Q4. Worth noting, in China, we experienced significant price hike of above 40% in Q4. Let's now look at the full P&L before impairment and capital gain or losses on our divestments. The recurring EBIT grew by 25%, representing 936 million Swiss francs in total, as I mentioned before. Then our restructuring litigation and other non-recurring items grew by 105 million Swiss francs due to a litigation one-off. We have continued to reduce our financial expenses despite the acquisition of Firestone. We have generated 67 million of savings. Our effective tax rate has remained stable at 25%. And finally, The results of our subsidiaries with minority shareholders have improved, especially India. This is why the net income attributable to the non-controlling interest have increased. Well, all in all, our earnings per share has amounted to 3.98 Swiss francs per share. This is a growth of 30% compared to 2020, which is overproportional to the EBIT growth. Let's go to the free cash flow. And here, we are super proud to report a record free cash flow of 3,264 million Swiss francs. This is 50% of the EBITDA. And effectively, the EBITDA, with the recovery in volume and the strong prices, has increased significantly. But this was mechanically offset by higher working capital and higher capex as the business activity rebounded. But whilst noting that with regards to the working capital, actually in terms of numbers of days, we've improved slightly compared to December 2020, showing that this is still an area of focus even as our markets return to growth. So we incurred a non-recurring litigation item. We paid more tax due to there being higher taxable profits. And this was partially mitigated by reduced financial expenses. So all in all, a record free cash flow, 14 million above the record of last year. As you can see here, this is the third consecutive year where we generate a free cash flow above 3 billion Swiss francs. In total, we are above 9.5 billion of free cash flow generated for the last three years. Let's go to the net debt. Our net debt is below 10 billion Swiss francs. We have generated 3.3 billion of free cash flow. We have spent 3.4 billion in acquisitions, mainly Firestone and the Boltons. We have distributed close to 1.4 billion of dividends, 1.2, a little bit more than 1.2 to the whole SIM shareholders, and 0.1 billion to the minority shareholders of our controlled subsidiaries. If I go to the leverage here, well, we have maintained our leverage at 1.4. We've reached the same level as 2020, and this despite the acquisition of Firestone building products. That leaves us with a very strong balance sheet that will allow us to continue our acquisitions. If I go to the return on invested capital here, you can see that in 2020, the continuous improvement has been temporarily stopped due to the crisis. But in 2021, we did a strong catch up to 8.9%. Therefore, here, our target of the strategy 2022 of 8% is significantly exceeded one year in advance. Following these excellent and record results, we're happy here to confirm that we will propose an increased dividend to the AGM of 2.2 Swiss francs per share. It will be a cash dividend fully paid out from the foreign capital contribution reserve. And as you know, it will not be subject to Swiss withholding tax. And last but not least, let's go to our sustainability KPIs. Here we have continuous to improve and to remain the leader of our industry by improving here the footprint. Our CO2 emitted per ton have reduced by 1%. The increased effort that we made during 2021 in green capex will deliver even more results in 2022. The recycled waste has increased by 17%, which is above the cement production. And this is also demonstrating what we do in circular economy, which is fully embedded in our strategy. About fresh water consumption, actually, we have continued there with a 5% reduction of fresh water withdrawn. We are well on track to reach our 2025 target. and our 2030 target. And last but not least, we have significantly improved here the money we spent on social initiatives and social projects. With this, I hand over to Jan.

Yeah, thank you, Geraldine. We come to the outlook and to the guidance for this business year 2022. We are very confident about the year. This year 2022 is about growing Holcim. We have good demand levels in all our key markets. So we expect very healthy growth in our traditional business. Then in addition, our expansion in solutions and products will show significant results by taking the acquisitions in, but also by double digit growth rates here from this segment. So 2022 will be about growth, will be about further acceleration towards our sustainability targets. I'm very excited now to scale up our green products ranges eco-packed eco-planet and also making a circular construction a reality this will be a big part of the wholesome future here to build new with old and we have everything in place to make this happen we are also positive on the operating profit growth we we will see another increase in profit at this early stage of the year. We cannot give a precise guidance on this. We also have cost inflation where we are confident we will balance them out like we did in 2021. But nevertheless, I think we have to wait here a little bit more till we give a more precise guidance where we are confident giving a guidance already as of today is on the free cash flow. After three years of more than 3 billion of free cash flow, we are confident that this is also the right level for this business here. So we are guiding that we will have a free cash flow of above 3 billion Swiss francs also for 2021. I think with this, I'm excited to open the floor for your questions and comments.