Amrize Ltd Ordinary Shares

Good morning and welcome everybody to Holcim 2023 Full Year Results. This is the Analyst and Investor Conference. I'm Nesrine Gardi and I'll be your host today. I'm very pleased to be joined by our Chairman and CEO, Mr. Jan Janisch, our CEO Designate, Mr. Miljan Gutovic, and our CFO, Mr. Stefan Kindler. After their presentation, you will have the opportunity to ask questions. We will start by taking questions from the room. If you're joining us by webcast, please click on the Q&A button and follow the instructions. And if you're dialing in from a phone, you can ask a question by joining the Q&A queue, pressing star 1-4. If you would like to drop out of the queue, you can press star 1-5. And with this, I'm handing you over to Mr. Chairman and CEO. Jan, the floor is yours.

Yes, thank you. And from my side, good morning and very big welcome to our analyst conference for the full year results. Very excited. We have a full house here today to be in this wonderful Kunsthaus, maybe the single most exciting art museum in Europe or in the world. And the most exciting part you're not aware of, it's built with EcoPlanet Sustainer. This shows you the new growth path for Holcim. This is built with the first cement globally that we have 20% construction and demolition material inside. So we literally, we take back the construction demolition waste concrete, bricks, and we recycle them 100% and put them back into our new product. And then it looks like this. Very stunning. And for those of you who have not the pleasure to be with us today in person, please visit the Kunsthaus during your next visit in Zurich and be impressed by Eco Planet Sustaino and what Holsten can build now sustainable and fully circular. Great time to meet. We have the full year results. I'm very excited to speak a bit about some of the highlights. And then I will pass over to our CFO, Stefan, who gives you more view on the region and the individual performance. And then our incoming CEO will do the outlook for 2024. 2023 has been, I would say, a very fulfilling year for us. What I like best, top performance and at the same time setting the strategy right for the future, spreading all the strong pillars. The results, we're going to speak in more detail later. Very happy. We have a record free cash flow, more than 3.7 billion Swiss francs. This is now the fifth consecutive year with a cash flow above $3 billion, and that enables Holcim to not only strengthen the balance sheet, not only return a lot of money to the shareholder, but to build a stronger foundation for the future with all the acquisitions and all the investments in decarbonization. On the strategy, I will quickly talk about these strong pillars we have from the transformation with our M&A to the rapid expansion we see in the new segment of solutions and products for the company, then our fast pace in decarbonization, but also into circular construction. And I will talk today a little bit also about branding. This is big for us going forward to have advanced branded solutions for the customers. And then I talk a little bit about the performance culture at Holcim. You have the presentation. I will not go into the detail of how we made this company with the strongest earnings profiles in the whole sector over the last few years. But I like to point out the quarter four maybe of last year. And you see here the slide that we have not We have delivered quarter by quarter in 2023. And you see the chart, we have actually increased the performance quarter by quarter. And I promised you this when we were meeting a year earlier. I told you that our margin will see increases quarter by quarter as the costs are still very high in the first half of the year. And this is what we delivered here. Also for the full year, we had the best quarter was quarter four. which is great and gives us a great confidence also going with the right momentum into 2024. A bit details here, very happy to see this fourth quarter analysis. You see the sales, 5.5% organic sales growth. And on top of that, what you don't see, we made another 3.8% growth by acquisition. So Holcim was growing more than 9% at constant currency in the fourth quarter 2023 and this enabled us to fully offset the strong Swiss franc and even in Swiss franc grow by a bit more than 2%. And then of course on the EBIT line like you can expect from us this increasing margin throughout the year achieving more than 17% of EBIT growth organically but also in the Swiss franc more than 8% EBIT growth in Swiss franc for Q4. So this is really fantastic and this is exactly where we wanted Holcim to be to finish the year with the strongest quarter and take them this position of strength into the 2024. So we have achieved the financial targets of strategy 2025 two years ahead of plan. Great timing. We have four weeks ago we announced our new strategy by listing our North American business in the U.S. and creating two champions, two growth companies with different strategic profiles, different investor profiles, and this is a perfect time to do it. We have done all the financial targets, and now we're going to unleash the next level of profitable growth for Holcim. I could show you this chart for the next two hours or so because it shows how much we have done and how strong the base is now. You see the EBIT margin. I would say it's a sector-leading EBIT margin here. And now we promised that in 2024 it will increase So we are, I think, here also with the right momentum. Earnings per share, you see here, even in the strong Swiss franc, we were able to grow more than 15 percent on average per year. If you make this calculation in Euro and U.S. dollar, you are close to 20 percent of annual growth rate earnings per share. Cash flow is very important. We have questions how sustainable the cash flow is. It's very simple. We have now delivered five years of $3 billion plus cash flow and we have just started. I don't think the ambition of the new CEO is to... to have any weaker cash flow, this is clear and if you draw the trend line you can maybe anticipate where the cash flow is going to be in the future. Very happy, you see the cash conversion is above 50% also on a sustainable level and very happy we have now this high performance organisation established. Let's go to the balance sheet. You all know the numbers. This is, for me, very important. You need the entrepreneurial freedom to realize opportunities without always asking the banks to finance it. And we have established this for Holcim. We have a strong balance sheet, 1.2 times the net debt leverage. You've seen we have decreased the net debt by more than $5 billion over the last few years, and this is the right the right level of balance strength you can also expect from us in the future. Dividend very happy and I think I leave this to Stefan to talk about the dividend and the share buyback later. What is very important that the successful transformation we made at Holcim to build up the new segment solutions and products to focus geographically much more into North America but also strengthen Europe and Latin America is also driven by M&A. We did 97 transactions over the last five years, 97, 19 divestments, 78 acquisitions, and all value accretive from day one. I would say very well executed, and I want to share a detail with you. You all know this, that we do this very value discipline. You see here even solutions and products. businesses normally well in the double-digit multiple. I think we bought them on reasonable levels with high synergies. The Bulldogs, you see around five times multiple, so high synergistic. And then on the divestment side, we were also very disciplined to sell here for significant valuations, and all that helped us then to have this strong balance sheet and have all the cash we can also distribute to shareholders. I think this is very important and this we have been working on for the last years that we really have the most successful M&A machine. We have done 28 acquisitions last year. This is more than two a month. And you see our results. We don't have any watering down of the results. We don't have any special reporting. We take these acquisitions and we make them accretive from the first year. And here's just a couple of points I want to share with you. We just talked about that the M&A is now a very positive part of the growth. 3.8% sales growth in Q4 alone. And on the 28 acquisitions, that is around 4% for former growth, so a big part. And you can expect this to continue. We gave you guidance for this year that we're going to have more than 2% growth coming by acquisition, in addition to the organic growth, which will be also above 4%. Important to me, I like to buy family-owned companies. So 80% of the acquisitions are family-owned businesses. Family owned businesses, they have the values we look for, they have high quality products, they have high quality production, long time employees. At the same time, they're not optimized in some processes like procurement, so we are able to integrate and to execute synergies on a very significant level. We have a super M&A team in place. You see our average time from signing to closing is only four months, which is very important because you don't want that company being in uncertain times and you want to start. to integrate and realize synergies, of course, as fast as possible. So this is a very important part of the whole SYN way of M&A to have the shortest time period from signing to closing. We have a full team globally. Our local people are fully accountable on these transactions and on the business plans and the synergies. And then finally, I think it pays off when you see our results. They are not diluted by acquisitions because they are EPS accretive from year one. And also on the ROIC, they are double-digit already on year three. Maybe the last thing I want to share with you is... is our people, you know our decarbonization story. We have reduced the CO2 per net sales another 20% in 2023 alone. So we come into totally new levels of decarbonization, which is now a big part of our success, especially in Europe. I want to talk about the brands with you. This is now the new Holcim. It's about the most successful brands in building materials. We have just started the upper three brands. They were just introduced in the last four years. So this is our low carbon or our sustainable building solution brands. We have launched EcoPlanet. It's already more than two billion Swiss Franc in sales. So it's our biggest cement brand globally. We have our EcoPact, also our at least 30% CO2 reduced concrete. It's also more than one billion in sales already. And now we introduced EcoCycle, which stands for circular construction, taking all the construction and demolition materials back And building the Kunsthaus in Zurich. That's how EcoCycle brands are huge. We have recycled last year 8.4 million tons of construction demolition material. This is 1,500 full truck loads every single working day of the year. 1,500 food truckloads coming in, being recycled and reused as a raw material or in the finished product. Fantastic story and we can talk more about it, how this is profitable and this is a totally new growth segment for Holcim going forward. Then we have very strong brands on the other side of the Atlantic. We have in Latin America, we have the flagship brands. for cement dishes are Pasco and Fuerte, both together, also 1 billion Swiss Franc brands. And they are the flagship brands. People go to the store, they don't buy cement, they buy a Pasco, they buy Fuerte. And in North America, our story is very branded. We have the biggest... most successful, sematicious brand with one stem. It's a two billion brand already. And we have our roofing business is branded under, for flat roofing, is branded under Elevate, also a two billion brand. So altogether, only the six brands you're seeing, they account for 30%. of Holcim's turnover and this is the way going forward. Everything we do, we want to brand for the customer with having the high quality, high sustainability promise for the customer. Our people, and you know we are big on performance culture at TOLSEM and this is a bit the background around it. We have this deeply embedded performance culture at TOLSEM, more than 500 profit and loss leaders. Every single Swiss franc has only one owner at TOLSEM. And we have established that over the last five years. and it enables us of course to have accountability, have the responsibility and at the same time be the closest to the customer. I don't want to take a decision from Switzerland on a US customer or a Mexican customer or a customer in Spain. This is best done by our locally empowered people. But to do that you need to give them the empowerment But also, of course, you have to put them in your performance framework, which is the second bullet. We have transparent and accountable performance management. We all work around the globe on the same KPIs, starting with growth, EBIT, pre-cash flow, and return on invested capital, and everyone incentivized on the same metrics. And this is, if you ask me for one reason, we have the strongest margins in the industry. It is our performance culture. The proven track record we just talked about, our system of M&A, what we have developed over the last five years, is also around the people. And we have very high... satisfaction of our staff. We have the highest employment engagement scores for this Gallup employee survey. We have more than 90% of the people participating and very important it holds them. Customers and employees are our two highest values in the company. We have our own business school, and we work very hard to make sure we have 85% of our promotions coming from within the company. I think with this, it's a bit the background, what I think we have established. Now, I told Sam what I like the best. We have performance quarter by quarter. At the same time, we established these strategic foundations to go into the future very strongly. And with this, I hand over now to our CFO, Stefan, who gives you more details on the financials.

Thank you very much, Jan, and good morning, everybody, also from my side. I would actually also like to start with Q4. Q4 was our strongest quarter. We had tremendous momentum towards the end of the year, which we intend to carry over into last year. When you look at our Q4 sales, we grew by 5.5% organically, but we grew by more than 2% on an absolute basis against the strong Swiss franc. Something that's worth highlighting here is the 3.8% growth from acquisitions. Remember, in the fourth quarter was the first time where we didn't have the effects anymore from the divestments of India and Brazil because those were completed in Q3 2022. So this is only acquisitions, mainly a bold-on strategy and the acquisition of Juralast. And you see a beautiful run rate of 4% here, which also proves to the point that Jan mentioned earlier. Same when we look at our recurring EBIT. Again, strong momentum in the last quarter, almost 18% organic growth in recurring EBIT. 8% on an absolute basis, showing that with our organic growth, we're able to offset the strong currency headwinds in the last quarter. A couple of records here. The EBIT growth in the last quarter was actually the strongest of every quarter in 2023. The 1.117 billion is the highest fourth quarter we ever had. And so we achieved a couple of new levels here also in the fourth quarter. Again, pointing to the momentum I mentioned earlier. Across the regions in Q4, you see that it was broad-based. We had profitable growth across all regions. You see especially that on the recurring EBIT side, we grew double-digit in all of our five business segments, again pointing to the very strong finish of the year. Now let's look at the full year numbers. We start with sales. We achieved sales of a bit more than 27 billion Swiss francs. That's an organic growth of 6.1%. You see in the column left to that, acquisitions and divestments had a negative impact of almost 1.8 billion. That is driven by the divestment of India and Brazil and the acquisitions of EURLAS and our bolt-on strategy. As I said earlier, in the first three quarters here, still the divestments are having an impact. And we have foreign exchange effects last year of almost 7% on sales. Recurring EBIT, a similar picture. We had recurring EBIT growth of 14.7% organically. We achieved a new record of 4.76 billion Swiss Francs recurring EBIT. So we're slightly up against last year, against the strong Swiss Franc. And what you see on this chart, which I want to highlight, is we offset more than 400 million of translation effects from currencies. These are about 60% in mature markets, 40% in emerging markets. So it's across the board. The Stroll's Fist Strength is something that we work to overcome every year. Now let me quickly go through the regions with you. What you see here that we had a very strong earnings profile with a broad-based growth across all our regions. And we see a bit more detail on the next page. It's just a few highlights by region starting with North America. We had record net sales and recurring EBIT here with a strong margin of almost 22%. Latin America is the 14th consecutive quarter of profitable growth, with record recurring EBIT and a strong margin of above 34%. Europe, strong record in net sales and recurring EBIT, with a margin of almost 16%. Asia, Middle East, and Africa, strong margin expansion here of more than 5 percentage points to 21.2%, and here also remarkable the divestments that we signed last year and that will be concluded in this year. Looking at solutions and products, we talked a lot about solutions and products in the last quarterly earnings course. Now we can reaffirm that we have positive growth momentum in the fourth quarter of last year. And with the sales stabilized now, we also see the margin expanding again. For the sake of completeness, I showed you this chart, I think, since the half-year mark to explain to you what the stocking and destocking means. So I'm probably going to show it for the last time now because that story is complete. You see the effect of stocking here in Q2, Q3 2022, and you see the reverse effect of destocking in Q4 2022 and Q1 2023. But then you see now that the levels of our revenues are normalized. So I think we retire this chart now and call the story complete. When we look at financial performance in the P&L, we start with a record recurring EBIT that I already mentioned of $4.76 billion. And then you see in the lines in between here, Actually you see not a lot. This is because in our company we put everything into a recurring EBIT. There we don't put a lot of entries in those lines below and therefore what we do in recurring EBIT is really also reflected in our EPS. You see down here we have a record EPS of 5.42 Swiss Francs per share. That's up more than 9% before divestments impairments. And we allow ourselves here to exclude the DOJ resolution from last year in order to make this comparable. So a very strong increase in earnings per share. Record free cash flow. We talked about that a lot. 3.7 billion or a bit more than 3.7 billion free cash flow. You see the bridge here. It's nothing unexpected. The change in working capital, the capex, taxes, financial expenses and a mix of other things. What I want to highlight on this chart is there are no one-off effects here. There's nothing that we did in one year that will not be repeated. We have a free cash flow above 3 billion now since five years in a row, and we achieved this level consistently. A record this year, but with very, very good opportunities into next year again. Looking at our net debt, you see the bridge here. Remember, please, that our net debt in 2022 was particularly low at the debt leverage of 0.9 because we had the proceeds from the sale of India. And now this year you can see with the free cash flow, the acquisitions that we did, but also with the more than 3 billion Swiss francs returned to shareholders in 2023, we're now at a net debt level of 7.9 billion, which is a debt leverage of 1.2. Very important here for us to say we're committed to a strong investment credit rating, BBB+, and our balance sheet comfortably affords that. Looking a little bit into shareholder returns now, we have good results, so the next question is what does that mean for the shareholder? Well, what has it meant for the shareholder in the past? In the past years, you see, we returned 8.8 billion Swiss francs to the shareholder, roughly two of those to buyback, six of those to dividends. And while we strengthened our balance sheet, we returned to the shareholder and strengthened our balance sheet, And this is why we're coming from a position of financial strength. And what does that mean going forward? That means two things. Number one, we increase our dividend by 12% from 2.5 Swiss francs to 2.8 Swiss francs. Remember, we pay this dividend from foreign capital contributions, so there's no withholding tax. We think we probably have the best dividend policy in the SMI. What we also do, we launch a share buyback program of 1 billion Swiss francs to be completed in 2024. Remember, in 2023, we already had a share buyback program of 2 billion. That was rather triggered by the strong proceeds from the India sales. Now this share buyback program is triggered by our strong financial results, the strong cash flow, and a very healthy balance sheet. We're going to pay this out of cash on corporate level. There's no additional bonds or debt going to be issued. It's going to be paid out of cash. With that, I would like to pass on to Miljan for the outlook.