Holcim Ltd

Good morning, everyone, and welcome to Holcim's full-year 2024 results presentation. I'm Bernd Pommerin, and I'm very happy to be joined by our CEO, Mirjan Gutovic, and our CFO, Steffen Kindler. After the presentation, you will have the opportunity to ask your questions. When you're joining by webcast, please click the button Request to Speak. And if you join by telephone, please press star 1-4 if you want to ask a question. We will repeat these instructions just before the Q&A. And with this, I directly hand over to Miljan. Miljan, please.

Thank you, Bern. Good morning to all of you and a very warm welcome to Holcim's full year results here at Zurich's Kunsthaus, a building designed by a star architect, David Chipperfield, and of course, built with Holcim's cement inside. Stefan and I are pleased to be with you today to present our results. And after that, we will turn it over to you for your questions. 2024 was a year of record performance for Holcim, in which we focused on our strategic priorities with impeccable execution by 65,000 of our employees around the world. To start, let me take you through the key highlights. For the full year, we delivered a record recurring EBIT of more than 5 billion Swiss francs for the first time in our history. This was up 11% in local currency and 6% in Swiss francs. We also achieved a new height in our earnings per share, up 5%, and 2024 free cash flow reached a record of 3.8 billion. This, of course, came with further expansion of our industry-leading EBIT margin to a record 19.1%, up a significant 150 basis points. Margin expansion was driven by our multi-billion advanced branded solutions from EcoPact and EcoPlanet to Elevate, which grew to 36% of the total net sales in 2024, up from 30% in 2023. I will come back to you with some other key drivers listed here later on in this presentation. As you can see, we are laser-focused on driving shareholders' value with our strong balance sheet, the 11% growth in our proposed dividend, which translates to 3.1 Swiss francs per share, and of course, the 1 billion share buyback, which was completed in December 2024. Therefore, we are well positioned for 2025 with a strong outlook across all our business segments and across all our markets. In terms of guidance, its mid-single-digit net sales growth in local currency with further expansion in margin and free cash flow above 3.5 billion. And yes, the planned listing of our North America business is on track to be completed in H1 this year. So let's look at some of the highlights in more details. First, let's look at the progression of our recurring EBIT and EBIT margin on the rolling 12-month basis. This shows how we have been able to further expand both consistently over consecutive quarters, culminating in the 19.1% margin and EBIT, as I said, first time above 5 billion Swiss francs. Next, earnings per share, which are up 5% versus a year ago, reached 5.7 Swiss francs. We've gone here back to 2018 to show how we have been able to grow this at compound rate over several years. Again, this is about consistent delivery. Free cash flow at 3.8 billion. Free cash flow after lease in 2024 rose 3% to reach a record cash flow of 3.8 billion and which is even more impressing, 57% cash conversion. Again, you can see the consistent progressive improvement in our cash generation over consecutive years. Now we are going to industry-leading EBIT margin. Let's zoom in further expansion of our industry-leading EBIT margin by a significant 150 basis points to 19.1%. There has been excellent development in this key financial metric over the past several years. The consistent margin expansion reflects the resilience of our business model across all market conditions and across all economic cycles. And it is grounded in Holcim's rigorous focus on our differentiated value strategy, from continuing to advance sustainable building solutions to decarbonization and circularity, driving profitable growth, all the way to empowered leadership with its strong performance culture. An important driver are the growing multi-billion brands we offer our customers to meet, I would say, their most ambitious needs. In 24, we generated 36% of the total sales from this advanced branded solution. And the year before that, we were on 30%. There are some big numbers here. For instance, Ecoplanet suppressing 3 billion in net sales. Ecopact at more than 1.5 billion. One SEM at more than 2.5 billion. And of course, our Elevate brand, more than 2 billion. Overall, customer demand for Holcim's Ecopact and Ecoplanet continues to grow. Net sales of Ecopact and Ecoplanet reached 29% and 26% of their respective categories, up substantially from the previous year. Here we set a target for Ecopack to reach more than 25% of the total ready-mix sales in 2025. And as you can see from this graph, we exceeded that a full year in advance. And it is our sustainable building solutions like EcoPact and EcoPlanet that make Holcim the partner of choice for our customers. Take a look at these projects where we add value to our customers with our sustainable, circular, durable energy and fission building solutions. The first one is European Patent Office in Vienna, with Holcim solution throughout from our eco-packed concrete to eco-cycle technology and also elevate insulation. In the US, this advanced semiconductor water manufacturing facility in Texas with one SEM and high-strength concrete. And in Ecuador, the largest social housing project in the whole Latin America is being built with eco-packed insight to provide homes for nearly 200,000 people. Another highlight is circular construction, which we are advancing as a driver of profitable growth. We have reached 10.2 million tons in recycled construction and demolition materials in 2024. That is more than 2,000 truckloads every working day of the year. And we did close four highly accretive circular construction bolt-ons in 2024 to accelerate profitable growth in UK, Germany, Belgium, and Switzerland. Value accretive M&A was another driver of expansion of our industry-leading margins. We continued our M&A execution in 2024 with 27 transactions, strengthening our geographical footprint. Just alone in fourth quarter, we closed five in Bulgaria, Croatia, France, and also two in Switzerland. We have also closed divestment of Kenya business. For the full year, Holcim continued to expand also in solutions and products, acquiring Ox Engineering Products, a US leader in advanced insulation systems for commercial and residential applications. Also, I would like to emphasize that in Latam, which I would like to remind you is our most profitable region, with the highest EBIT margins in the group, we have made significant investments in 2024. Growing across attractive markets, we made four synergetic acquisitions in the region. Two in Peru gave Holcim access to this highly profitable market, as well as growth platform for solutions and products. While we also expanded our business in Mexico with a bolt-on, and our presence in Guatemala by acquiring cement and ready mix operations. And this record performance, of course, with significant margin expansion is made possible thanks to Holcim's deeply embedded performance culture. At the end, it is down to more than 500 of our P&L leaders who are empowered to take decisions close to our customers while being accountable and focused on delivering against group targets. And Holcim established in-house business school, continuously upskilling our leaders even as it trains up new talent. With that, I would like to hand it over to Holcim CFO Stefan, who will take you through some financial highlights.

Good morning. Thank you, Miljan, and good morning to all of you. Warm welcome also from my side. It's a pleasure to be here with you today. Turning first to the net sales bridge that you know, you can see that net acquisitions provided 1.1% of local currency net sales increase with an organic growth of 0.2%. The FX or the foreign exchange effect is minus 3.5% or 950 million. 40% of that, roughly 40% of that comes from mature markets. Over the same period, we reached an absolute record in recurring EBIT, with a 10.8% increase in local currency. And that takes us above 5 billion Swiss francs for the first time ever. This is a very strong performance driven by organic growth, and recurring EBIT is also up more than 6% in Swiss francs. It's worth noting that this result comes in spite of the continued appreciation of the Swiss franc throughout the period, which impacted EBIT by minus 4.8%. If we take a closer look now at how our business progressed throughout 2024 from quarter to quarter, this slide here shows how consistent our EBIT growth has been at or near double digits in each of the quarters of 2024. The sales growth showed an increasing momentum from the second to the fourth quarter, which we find is promising. Looking at the next slide, I think it is important to note that our growth was broad-based, as it usually is, and delivered over-proportional EBIT growth in all our business areas and regions in 2024. So you can see here there were some very strong growth numbers from our five segments. And now in turn, let me go into the details of those five segments one after the other. I start with North America. North America achieved a double-digit recurring EBIT growth in challenging market conditions in 2024. This was accompanied by a 330 base points increase in the margin to a record of almost 25%. We have now secured more than 200 infrastructure projects over the coming years. Infrastructure modernization, the reshoring of manufacturing, those both are expected to drive growth in 2025. Next, we go to Latin America, where we achieved an outstanding recurring EBIT margin of 36%. Also, Q4 was another excellent quarter in this high growth region, where we have now delivered 18 consecutive quarters of profitable growth. Over the course of 2024, we made four synergistic acquisitions. Milian already mentioned that, to enter a new market of Peru, to expand our business in Mexico and in Guatemala. And we see the public and private sector drive infrastructure and commercial investments in 2025 going forward. In Europe, sustainable building solutions are driving profitable growth. As you can see, EBIT grew by more than 12% in local currency to 1.3 billion Swiss francs, and our margin was up 200 basis points. We have a very active and value-accretive M&A, as described before, in Europe with 13 bold on acquisitions to accelerate profitable growth. We expect continued demand from a portfolio and premium branded solutions driving value and from the leadership in decarbonization going forward. In Asia, Middle East, Africa, EMEA has delivered profitable growth led by Australia and North Africa, really. Along with double-digit growth, we achieved strong margin expansion to 22.8%. Portfolio optimization continues with the closing of four divestments in this region and the signing of another one towards the end of 2024. To end a bit of color on our outlook, since this is a diverse region, we expect strong domestic demand in North Africa and a positive outlook in Australia, plus a price recovery in China. Our final business segment, solutions and products, has produced the largest percentage increase both in net sales and recurring EBIT, driven by our advanced roofing systems. The double-digit EBIT growth came with 100 basis points expansion of the margin. We made four acquisitions during the year to expand our commercial and residential offering. This is including the Ox Engineer Products, a leading US supplier of advanced insulation systems. For 2025, we expect a favorable outlook for both new construction and repair and the refurbishment markets. After the region, switching back to the group-level financials, on this slide you can see our consistent growth in earnings per share year on year. Our double-digit growth in recurring EBIT obviously is the biggest contributor, but also we have a boost from share buybacks at the same time while we manage all other P&L lines with discipline and relentless cost focus. So we grew earnings per share before impairments and divestments at 5.3% to a record of 5 Swiss francs 70 in 2024. And even including the additional cost of our spin-off project already included. Next, the free cash flow generation, also a number that we find is very strong. We took it to a new record of 3.8 billion Swiss francs in 2024, which is roughly 100 million higher than last year. The British shows that we did so while making 1.5 billion of capex investments. Comparing to 2023, our increase in keep free cash flow is driven predominantly by additional EBITDA of 300 million. accompanied by solid management of working capital, which was slightly offset by the higher capex I already mentioned and the timing of cash payments and cash expenses for a spin-off project. The cash conversion ratio, Milian already mentioned that before, is at a very robust 57%. The next slide, also important, shows the strength of a balance sheet. We maintain the same net financial debt leverage as in 2023 while returning a total of 2.6 billion in cash to our investors. That is even after we spend a net half a billion on acquisitions after disposals and a slightly lesser amount on a hybrid bond repayment. I look now at our dividends. This is the fourth year in a row that the board is able to propose a double-digit increase in dividends per share, taking it to a new record of 3 Swiss francs 10, up 11% from last year. As Miljan explained, that amounts to 12% annual growth in dividends since 2020, and it demonstrates our ability to drive shareholder value. Remember, too, that these dividends are paid out of foreign capital reserves and they are therefore free from Swiss withholding taxes. You know that in December we completed our latest share buyback program for a total of 1 billion Swiss franc, which was for about 2.1% of our total shares issued. And we were able to repurchase those shares at a price of 81.6 franc. When you compare this to the current share price, we probably gained quite a bit of economic value with this program. Finally, I'd like to spend a short moment on this capital allocation slide, which we find was timely to share with you. It illustrates how we have balanced yet an agile approach to capital allocation. About 40% of the 33 billion Swiss francs that we allocated in the last seven years went to growth investments. That's M&A and growth capex. 35% has been returned to shareholders through progressive dividends and share buybacks, and 25% has been for debt service, demonstrating our strong commitment to a BBB Plus or BAA1 credit rating. And with that, I'm pleased to hand it back over to Miljan, and he will continue with the presentation.

Thank you, Stefan. So we are making excellent progress on the planned listing of our North American business. It's expected by the end of the first half of 2025. We announced last week that the new North American company would be called Amrise and that it would be listed on the New York Stock Exchange. Amrise, of course, will comply with all SEC rules applicable to U.S. domestic issuers. They will be reporting in U.S. GAAP and seek inclusion in the relevant U.S. equity indices. In January, the Holcim board proposed Jan Jenis as a chairman and CEO designate of AmRise, along with nine designated independent board directors to AmRise board. And today we are taking the first important step with AMRAI's public filing of its Form 10 registration statement with the U.S. Security and Exchange Commission, sharing information about AMRAI's business and its financial statements under U.S. GAAP. Turning now to our outlook and guidance, As you can see from our full year results today, Holcim is a growth company with a resilient business model across all market conditions and economic cycles. Building on its record performance, full year performance in 2024, Holcim has a strong outlook across all of our business segments and geographies. In North America, growth will continue through infrastructure modernization and reshoring of manufacturing. The growth in Latam will be driven by public and private sectors, infrastructure and commercial investments. In Europe, we will see continued strong demand for sustainable building solutions to drive the profitable growth. Asia, Middle East, and Africa, strong demand we expect in North Africa, positive outlook in Australia, and price recovery in China. And solutions and products, of course, favorable outlook for both new construction and also repair and refurbishment. Therefore, Holcim, we are well positioned for 2025 to continue with this profitable growth. We are guiding mid-single-digit net sales in growth in local currency, over-proportional growth in recurring EBIT, further expansion in EBIT margin and free cash flow above 3.5 billion. And of course, we will continue double-digit growth in recycled construction and demolition materials. Finally, we have some exciting dates to announce for your diary. There will be a dedicated investor days for both Amrise on Tuesday 25th of March in New York City and also for Holcim in Zurich on Friday 28th of March. Of course, we will be sharing during these two days more details about companies, their distinct strategies, capital structure, capital allocation priorities, and you are also interested in financial targets. We hope to see as many of you there as possible. With that, I'm happy to conclude and hand it over to you, Ben.

Thank you so much, Emilian. With this, we are starting our Q&A. As a reminder, if you want to ask questions via the webcast, please click the button, request to speak. If you want to raise questions via the phone, please dial in star one four. We are now starting with the questions from the room. The first one was Arnaud Pinatel from Onfield. Arnaud, please.

Yes, good morning, congratulations for this good year. My first question will be on your decarbonization and your CCS project. I was very impressed to see Holcim getting the funding of the EU innovation funds for six plants, if I'm right, which is seven, sorry. which is well above what we have seen for others. I think the number two is just getting two plants financed. And if my calculations are right, you are getting a little bit less than 1 billion euros of funding to upgrade your network and modernize your network in Europe. So I would have two questions. First, how do you do that? How do you make it happen well above your competition when you're not headquartered in the European Union? And secondly, I suspect that modernizing this network of plants will offer massive savings opportunity. Not mentioning the cost of CCS, but looking at the way you convert old obsolete KINs into state-of-the-art new KINs, you should reduce your cash cuts quite significantly in certain of these savings. So could you help us to quantify what could be the savings in the coming years for Olsim? My second question will be related to Ukraine. You're not directly exposed to Ukraine. But am I right to think that you could benefit from peace in Ukraine through two points? First, we can see at the moment Turkish exporters raising their FOB price because they are trying to supply more exports to Gaza, Syria, and probably tomorrow to Ukraine. And that is obviously a relief for the imports market in Europe and probably in the US. So do you factor that into the pricing announcement for 2025? And secondly, I have in mind that Ukraine has increased quite massively its exports to some of your countries in Eastern Europe, probably capping the pricing momentum in certain markets like Poland. Moldova and so could it be obviously good news if Ukrainian plants were redirecting their volume domestically and allow them to regain the market share that Ukrainian imports took in Poland and Moldova in the coming year. That's it. Okay.

I'll start with Ukraine first. I hope this peace comes sooner than later. I think that's a starting point and that's the most important thing. You're completely right. Demand in Ukraine is extremely low, so the local producers are exporting around Ukraine. We are seeing exports in Moldova, Romania, Hungary, Poland. If the war stops, local demand will pick up, which will ease the pressure in these countries, so the market dynamics will be much better. And secondly, yes, you're right that we can supply if there is a need, as we have extremely strong positions in Moldova, Romania, and Poland. The first question on CCS, well, what's the secret behind our success? First, yes, last year we got our seventh funding. It was in your home country. It's a plan that has been modernized two years ago. And now we are entering into the next chapter for this plant, and that is carbon capture storage. I think what we did differently a few years back is that we created independent teams to tackle this project. Just imagine us, for years our technical expertise was in cement production, but with this we brought people with different set skills in chemical engineering, electrical, mechanical processing, and this helped us to build best in class scenarios that we submitted to the eu innovation fund and the result is as you said close to a 1 billion funding on these seven projects regarding your question on the cost Maybe you were with us in Oberg last year. This is going to be the latest state-of-the-art plant with the most advanced technology, and yes, we are expecting significant savings. Probably I will be able to tell you more details next year as we are planning to commission this plant at the beginning of 2027.

The next question comes from Remo Rosenau from Helvetische Bank. Remo, please.

Thank you. There were a few extra costs this year, right? Like legal costs, asset write-offs, goodwill impairments, book losses from disposals and so on and so forth, which were around 350 million more, higher than last year. Could you elaborate a bit on those? I mean, how much of those were really one-offs? Because also last year you had some of that. And how much of them were exclusively related to the spin-off so that they were really one-offs for this year? And then on the legal costs, are these again attached to the spin-off or are there any litigations looming in the background or whatever? Okay.

I'll pass. Yeah, okay, look, happy to take that question. As you correctly say, our EBIT was up 300 million, our net profit is down roughly 100 million, so we got 400 to explain. Can you make the math very easy? It's only a few things. There's the cost for the spin-off, which is short below a quarter of that. then there is some impairment charges that we take for the success of these CCUS projects. So we revamp our factories and some parts of the equipment become idle. So the revamping of our cement infrastructure in preparation of the CCUS takes some impairments. And then lastly, the last portion has got to do with disposals. Not all the businesses we dispose at this point in time, and you see this in our annual report, also the last year and this year, can be disposed at an accounting gain. So we dispose some of them at an accounting loss, predominantly South Africa. And last year also we had the benefit of Russia still down below these lines. Russia was not an operating profit anymore. It was shown further down below, and that absence of that profit after the divestment is also. So these four things are really driving more than 95% of that difference. And if you summarize to your question, yes, they're all one-off.

But just to confirm, no extraordinary legal expenses have been incurred in 2024?

Correct, thanks for... So legal is no big issue? No, legal is flat.

Okay, good.

Thank you.

Martin Huesler from ZKB. Martin, please. Thank you. A question to North America. You were mentioning those 200 projects. Just generally, what has delayed the process of execution of those projects? And is there a certain risk that projects may be delayed further or even cancelled once the Infrastructure and Job Act runs out? What's your view on that?

So yes, Martin, good question. We reported this year 200 projects which we are actively involved in. If you recall, the first time we reported this was in January 2024 and we were on less than 100 projects. We talk about projects in roads, airports, tunnels, bridges and so on and so on. If you're referring about changes, obviously we had a significant change in the administration in the US. I think they will even accelerate these projects. The whole narrative of a new government in the US, it is all about... US, it's all about infrastructure, and they are talking about simplification. They want to simplify procedures which will accelerate all these massive projects in oil and gas and mining. And also, what we are seeing, they are heavily encouraging public-private partnership which will be extremely beneficial on the infrastructure but also on the commercial side. So I am not expecting any delays. We are seeing that the momentum continues and I expect that probably next year we will be talking about 300 of these projects.

Okay, thank you. Maybe a second question on the CAPEX for the future as all those CCUS projects become now more, let's say, in a ramping up phase until 2030. What's the impact there on incremental CAPEX and what's your best guidance for maybe this and next year for the overall group in CAPEX?

So we are averaging around 1.4, 1.5 billion and all these projects, what is coming as of probably 26, 7, 8, it will be phased out. For instance, the last project that we received the funding, this will probably kick in, be commissioned in 31, 30. So there is a nice phasing from today until all these projects are up and running or we can say commissioned.

And if I may add, Miljan, we're also shifting also our CAPEX envelope, right? We're making great progress in lowering our maintenance, but not by doing less maintenance, but by doing it more efficiently and by purchasing better on our maintenance parts so that we have a shift within our overall envelope to have more of our CAPEX available for growth and green transformation.

The next question comes from Lothar Lobinetsky from Octavian. Lothar, please.

Yes, good morning. Thanks. I got two questions. One, solution and products local sales growth was up 7.4%. I was wondering whether you can give us the organic number and more importantly what you expect for the current year because it's probably a sector which is not so much or division which is not so much benefiting from infrastructure projects.

I'll tackle the second question and you do the first. On the solutions and products, if you recall, our roofing business, this is the biggest chunk of solutions and products. 80% of our sales are coming from repay and refurbishment. And this market is growing rapidly. So that's why we have a very favorable outlook for solutions and products, specifically our roofing business for 2025, as we strongly believe that repair and refurbishment market will continue to grow.

Yes, so our trajectory for solutions and products that we gave was always that in the mid-term trajectory should be up about high single digits, about double digits, and this is our organic ambition that we still have going forward.

Okay. And then I noticed that you achieved your really impressive margin improvement despite a spike in the cost for corporate and trading when the top line was down. So the increase from 111 to 200. What triggered this steep rise? In corporate costs, trading costs.

Yeah, in corporate costs. Look, we took some unusual items in the fourth quarter that we decided to book into this year. It has mainly got to do with incidents in factories that we took into our corporate captive. So non-recurring items on the midterm, you can expect that the corporate cost will come back down to the level that you had as a run rate in the past. So a few unusual items that we decided to book in the fourth quarter.

Which you didn't quantify as one, which is fair.

Yeah.

Thank you.

Okay, we are now switching to the webcast. The first question here comes from Elodie Rawl from JP Morgan. Good morning, Elodie. Good morning.

Hi, good morning. Thank you for taking my questions. My first one is an easy one on the expectations on 2025 operating profit coming from acquisitions already closed and FX. So that's my first question. My second question is on the There's a lot of debate at the moment, so I was wondering if you could give us an update on your views on if there's going to be any delay, the implications for the business. That would be quite helpful. And I had a last question regarding the upcoming split of the business, but not related to your U.S. cement operations. and your U.S. imports coming from your non-U.S. subsidiaries, so Europe and Africa. I was wondering what will happen to these imports after this cheat. Thanks very much.

So I'll tackle the last two questions, Elodie, and thank you for joining, and Stefan will answer the first one. On the U.S. cement, we do have some exports from Algeria, but the market in Algeria is very strong. It's picking up. So for me, this is not a worry. I think your question was regarding the latest discussions in Europe regarding EU, ETS, CBAM, and so on. I do have a very positive view on this, in fact. What we heard this week, actually, that Europe is moving from green deal to clean industrial deal. Europe wants to simplify things. They want to simplify processes, procedures, policies. Europe is making statement that they will be fostering innovations. And in addition to this, they want to provide more financial incentives to companies like Holcim to decarbonize. So I'm very optimistic about these moves and I believe that Holcim is well positioned to capture these opportunities. Stefan?

Elodie, I think your question was about scope, right? I haven't fully understood the first part, but if not, then please correct me. I think it was about scope. And the answer here is the scope that you see in our bridge on the acquisitions, the EBIT contribution of those is just in the first 12 months. So in the first 12 months, the EBIT contribution of acquisitions is relatively low because you have usually costs to bring the accounting up to our standards and bring the IT up to our standards. So the contribution you see in scope is not representative of what these projects deliver over the long term. Now, to give you a bit of color, the acquisitions we do need to be EPS-accretive in the first year and need to have group ROIC in the third year. They need to be margin-accretive as well. So basically, and we have a strong process of after-action review on those, so basically I would say more than 90% of the acquisitions we do hit these thresholds also in hindsight. Therefore, contributions from our M&A strategy is very, very strong. Out of those 22 deals we did last year, we can safely assume again another 20 will hit our financial thresholds. It is not reflected in scope because this is just the first 12 months.

Thank you for that. My question was more forward-looking. What is it that you expect for 2025 from those acquisitions already in the bag? And second, the FX expectation that you have also for the year. Thank you.

All right. So for the M&A that we have in the bag, look, this is a pipeline, right? Our M&A team manages a pipeline of, I would say, roughly 20 projects at any given point in time that are executing throughout time. I cannot give you the exact number for this year, but if you look at 24 and 23, it's probably a good guidance of the amount of projects that we would execute in current scope for this year as well with the same kind of metrics. And again, in the same kind of fields that we've done in the last year, the same kind of geographies and the same kind of business segments. Now, for FX, we do not really guide on FX, as you know, assuming current spot rates that could be around 2% to 3% negative on net sales and 3% to 4% negative on EBIT. But again, I don't have a crystal ball. You guys, there are other people in this world who are much better at forecasting currency fluctuations. But this is probably what we would see.

Okay, thank you.

Thank you, Elodie. So the next question on the line is from Luis Prieto from Kepler. Good morning, Luis.

Good morning, and thanks a lot for your time and answering our questions. I had a couple of brief ones. The first one is regarding a peer of yours who's closing down kiln capacity in Europe, as well as implementing a relatively ambitious cost savings plan. Do you feel that you could end up going down the same route And the second question is even simpler. Regarding Ambrose's mirror listing in Europe, should we see it as temporary in nature or is there a full commitment to sustain it over the long term? Thank you.

Good morning, Louis, and thank you for your questions. I will tackle the first one, and Stefan will talk about MRI's double listing. Regarding closing the plants, what I am seeing in the future that some of our existing facilities will be converted from producing clinker to producing something else. This could be calcined clay or some other novel supplementary cementitious materials. In the past few years, we have optimized our production footprint in Europe, and I would not say that we will be seeing any drastic moves in the next few years.

We announced that a couple of weeks back that we will do a listing on the New York Stock Exchange and we will also do a listing in Zurich here at the Swiss Stock Exchange. We have not given any timeline to that. Why have we maintained a Swiss listing? This is, in many conversations with our shareholders, we felt this is a courtesy to our Swiss shareholder base, but we have no, and we think this is a very good decision in the interest of our shareholders, but we have not given this any timeframe. So what we should focus in this deal is really, it's a great opportunity for value creation on both sides of the Atlantic and for both companies.

Understood. Thank you very much.

Just as a reminder, if you want to ask questions via phone, please press star one four. And the next one in the line is Gregor Kuglic from UBS. Good morning, Gregor.

Good morning. I hope you can hear me well. So I want to ask one, I guess, precise question on your mid-single-digit growth outlook for this year in local currencies. Just remind us what you've assumed there for M&A. and how much is sort of organic. And then I guess within that, what kind of pricing, if you appreciate, you may not want to be drawn in specific details, but like directionally, what kind of pricing are you looking at for your main markets in 25, please? And maybe a third question. So in your guidance, have you assumed, I guess, the closing and disposal of Nigeria, which I guess was announced? And if you just remind us, how much EBITDA finally contributed last year, so we just know how much we need to take out for that. Thank you.

Good morning, Gregor, and thank you for your questions. First, on the middle single digit, I would say two-thirds organic and one-third acquisition. Pricing, so far it has been good. We started working on this late last year. The goal is to have pricing above inflation. However, in some markets where we have extremely high inflation, we would probably go double digit. On Nigeria, this is not included because we expect this deal to be closed towards the end of this year.

Thank you.

Thank you, Gregor. The next question comes from the line of Arno Lehmann of Bank of America. Arno, good morning.

Good morning and thank you very much, gentlemen. Two questions on my side, please. The first one is regarding the capital allocation of Olsim Remain Co. I appreciate, I'm sure you'll give a lot more detail at the CMV in Zurich, but do you feel the need to re-diversify Olsim Remain Co. in terms of the product applications? I appreciate a small part of solutions and products We remain consolidated in Zurich, but it's going to be a lot smaller. So would you go for several mid-size or even large acquisitions outside of cement, aggregates, concrete, and asphalt? Or will you focus your business more on cash returns? That's my first question. My second question, hopefully more simple. Do you have an idea of the cost of the spin-off in total and how much was included in the 2024 P&L and cash flow?

Thank you very much. I'll tackle the first one. You tackle the second one, Stefan. Good morning, Arnaud, and thank you for your question. Capital allocation will be discussed on 25th of March and 28th of March. Regarding S&P in the upcoming capital market day for Holcim after the spin-off, we will provide sufficient data so you can assess our capital allocation in the years to come. But just to give you a little bit more details, We have built up our solutions and products business outside North America. If you recall a few years ago, we acquired a few companies in the motor segment, PRB, Compactuna, Cantiliana, and we continued. Also, we have made some acquisitions in Latin America where we have great synergies with our Dissensa network. So this will be one of the topics discussed in the upcoming Capital Market Day for Holcim on 28th of March this year.

Yeah, for the cost of our spin-off, Arno, great question. I know you and I, we had a debate back then when we announced the spin-off, and I told you the number you guessed is way too high. It is. The cost impact this year was 95, and the cash impact this year is about 65. The cost impact next year will be 70 and the balance in the cash. What is this money for? This money is mainly for preparing our filing that we successfully did today. You know, there's a lot of work to be done from an accounting and from a legal standpoint. Audit, it has to be audited. All these numbers that we submit to the SEC are audited like a full year, full company audit. I would say this is the largest part of the fees we incurred here. And then, of course, as we go through the year, when we reallocate the capital between the two companies, some refinancing will be done, and that cost is also already here. So this is an all-in that I'm giving you there.

That's very helpful. Thank you very much.

The next question comes from Ross Harvey from Davie. Good morning, Ross. Ross, can you hear us? It seems not. So I would suggest we return to questions from the audience here. Any questions still here from the room? If that's not the case, when... Sorry. Please.

I'm just wondering about the eco-pack and eco-planet products. Can you elaborate more? What are the current sales breakdown by country? You mentioned next year Europe will have strong demand. How about other regions? What are the drivers of Europe demand and what not about other countries?

Good morning. Thank you for the question. Ecopact was launched approximately four years ago. And today we can proudly say that this product is sold all the way from Mexico City to Sydney. And we disclosed that it did reach 29% of the total sales. in the ready mix. We do not go into details per countries, but the big demand for this product is actually coming from Europe, but we are also seeing a very positive ongoing momentum in U.S., countries in Latin. As you saw, we gave an example in this big housing project we did in Ecuador. This was actually an eco-packed product. So I would expect that the trend continues and this will be one of our key initiatives for the future for Holcim after the spin-off.

Thank you. Tobias, please, in the second row.

Hi, also from my side. Maybe just an educational or understanding question. Outside of Europe, carbon capture, any potential to see there deployed as well some projects, mainly especially Latam and North America? And if not, what needs to be changed to see maybe there also a stronger decarbonization trend?

Thank you for the question, Tobias. Yes, we do have the projects outside Europe. We even published, we are doing feasibility studies in US. But what is interesting, and I would like to elaborate on this, We see a potential in the countries in North Africa where one option is to go instead of storage for utilization. Captured CO2 is valuable raw material that is currently used in agriculture, in fertilizers, it's needed for the production of sustainable aviation fuel. And I believe the more focus will be on utilization part outside Europe than on the storage. But we do have several projects that we are working on. in Morocco, Algeria, Egypt, and UAE. At the moment, we are still investigating how do we approach this topic in Latin America.

Thank you, Miljan. We take another question from the webcast. It is Bridges Zia from HSBC. Good morning, Bridges. Can you hear us?

Good morning. Yeah, we can. Perfect. Good morning. Just one question from my side on the guidance. The mid-single-digit revenue growth, how does that split between North America and the rest of the business?

Thank you, Bridges, for the question. Let's leave that for the capital market day, so I don't want to steal the momentum here. But all of this long-term outlook and also mid-term, short-term outlook will be provided in more details in the upcoming capital market dates on 25th and 28th of March.

Thank you, Miljan. The next question comes... Yeah, go ahead, Bridges. Sorry.

No, no, I'm done. Thank you.

Okay, perfect. So we take the next question from Tobias Werner from Stiefel. Tobias, good morning.

Yeah, good morning. Thanks for taking my questions, and hello to the awesome team. Three questions, if I may. Number one, when I look at the Form 10, I can see that Amrise seems to be taking on $5 billion of debt, $3 billion through bond issues, and $1.7 billion... through transfers. So that implies, in my mind, a net debt EBITDA of 1.4. And then if you take out the balance, you're left with Holcim, Romainco at 1.1, 1.2. Stefan, question to Stefan. Is that the right math?

So what you see in the Form 10 is really you see carve-out financials. So what does that mean? That means we have just shown you North America as a standalone company minus the intercompany debt. A forward-looking statement on capital allocation and debt structure has not been included here. That will be given to you at the Capital Market Day. So very simply, today North America is part of our group, they're financed by the group, and we carved that out in a way as if they had to finance all of that on their own. Now, we will, of course, rejuggle that in a little bit of a different way once we do the final capital structures, and that will be educated to you at the capital market stage. But let me please repeat one very important point here, and that is a year ago when we announced this spin-off, we said that we want to equip both companies with a strong BBB plus credit rating. Now, the financial strength of Holcim is very good today as it was back then, and that puts us into a very comfortable position to give both companies this strong BBB+, respectively BAA1 credit rating, or rather give them a capital structure that allows the credit rating agencies to give that rating. And that process with the rating agencies has been completed. We know exactly what we have to do. We did through this rating assessment process, we know exactly what kind of capital structure we have to give each company in order to achieve that. And that's what we're going to do. So please don't deduct the capital structure from the Form 10.

Okay, thank you. Secondly, Initially, you know, fellow analysts and myself were wondering how you're going to manage the flow back. You've got a dual listing in place. You don't have a share buyback at this point in time. Does that mean that you won't have one in case you sense or feel that a flow back may still be an issue?

Look, flow back is one topic, flow forward is a totally different topic. So we need to not look at the glass half empty here. We're doing this whole spin-off because we believe that we're creating value. We're creating value by tapping into an investor pool in the United States while maintaining an investor pool here in Europe and especially in Switzerland. So our job is of course to mitigate risks, but our job is also to tap into the opportunities. And when we travel around the world, I think between the CEO, myself, the chairman, and Bernd's team, Bernd, we have seen about 2,000 investor interactions in the last 10 months, I would say. So we have a pretty good feel where our investors stand. That is not to say that there's nothing to be done here, but the focus for us needs to be on the opportunity.

Okay, thank you. And then the last question probably for Mian. When we look at slag cement in Europe, dependent on obviously the steel industry, and the steel industry is decarbonizing itself and it's got massive problems in the UK, Do you feel a sense that you're going to be challenged in increasing sort of that part of the slack-based cement you can deliver out of Europe, or will you be sourcing from, you know, abroad, i.e. Asia or China, and that will fill the gap?

Good question, Tobias. Look, first of all, my long-term goal is that I produce all these products internally. So that's why I was referring, when someone asked me the question about closing the plants. In the future, I would like to see the production from clinker move to some other materials like alzheimer's clay, or recycled construction demolition fines. And this will be the future for Holcim in Europe. Less dependence on slag and fly ash, developing new generation of supplementary cementitious materials.

Great, thank you very much.

Thank you, Tobias. The next one is Ross Harvey from Davie. Good morning, Ross.

Hi, thank you very much. So two questions from me, if I can. Firstly, just a simple question in regards to the net sales guide. Just noticing by region, LATAM and AMIA would have been relative outperformers in 2024. I'm just wondering, can you guide to what segments you see best sales growth, excluding FX, in 2025? Any initial thoughts on that would be helpful. Secondly, based on the Form 10, which is obviously a very exciting and excellent document, it looks like the pro forma net debt for Amrise will be about $3.1 billion. which looks like the leverage will be about one times and the remain code therefore leverage will probably be about 1.3 times. Looks very reasonable. Just am I correct in saying that? Is that the initial guidance? And I'm just wondering, is it a fair long-term level to think about for the remain code? Thank you.

I'll tackle, Ross, I'll tackle your first question on the net sales and then Stefan will answer the second one. So on the net sales for 2025, we do expect some growth in local currencies in Europe and the more will come from EMEA and LATAM. In LATAM, we are, for instance, we are seeing a very good recovery in some countries where Markets were challenging last year, like Argentina and Ecuador, and this will drive stronger growth, mid-digit in local currency for Holcim. Stefan?

Yeah, so I answered that question before when somebody else asked it. In the Form 10, you have a couple of financial disclosures. There's mainly the carve-out financials, and then there's also pro forma disclosures. But look, the carve-out financials, what this means is you take the current group and you carve out the U.S. entity and you neutralize basically what you have today in intercompany financing and you just assume they had to finance this on the outside market. Now, going forward, we're going to reallocate that because what we did as a group doesn't have to be the same as what each company does as a standalone. I said that before. So basically how we're going to reshift that is we're going to make sure that each of the company has a strong triple B plus credit rating and I said that before. We have worked with the rating agencies. We now have a good understanding of the thresholds of debt levels and cash levels that we can put in those companies in order to achieve these BBB plus credit ratings. Our balance sheet is very strong, strong enough to achieve that comfortably and this is what we're going to do and we're going to give this information in a bit more detail at the capital market stage. I know the Form 10 is a fantastic document. It is not that fantastic to make forward-looking estimations out of it.

Okay, thank you. I'm looking forward to the CMDs.

Very clear, Stefan. The next question on the line is from Harry Dow from Redburn Atlantic. Good morning, Harry.

Yes, morning. Thank you. I think I've got three questions, if possible. Firstly, just on the margin growth guide, I wonder if you could give us some colour around the assumptions within that, maybe around energy costs for this year, maybe some core operating cost lines like wage inflation and others. And then secondly, we talk about price recovery in China. I wonder if you could give just a bit more background around the, potentially the logic around that, whether you see volumes improving in China and just how you kind of think you're going to see some price recovery. And then thirdly, I think it's coming back on one of the questions asked earlier around divestments and the impact on EBIT. I appreciate some of the big ones that haven't closed yet, but on some of the ones that have completed, is there a number you could give us on what to assume comes out of them? for those that have completed.

Thanks. Thank you, Harry. Thanks for the question. Regarding the price recovery in China, I think what we saw, at least in the last two, three months, we are seeing very positive signs. Currently, the pricing is above a previous year's level. But please keep in mind that we are not consolidating business in China, so the impact on our bottom line is negligible. What is promising is that the government has made some heavy announcements regarding the investments in infrastructure, and hopefully this will drive a construction recovery in China. Your third question is on divestments. We did complete all these small to mid-sized divestments in 2024, South Africa, Uganda, Kenya, Russia, and Tanzania. The impact was relatively low. Russia was a big country, but that was already deconsolidated. in 2022, so the impact was, as I said, relatively low. And on the margin expansion, Stefan, if you would like to talk more about this?

Yes, look, we think our margin expansion is going to stay healthy going forward. Miljan has elaborated a lot about how we're going to create value through our portfolio again this year. When you look at how we created margin in the past, it was... It was through EcoPact, EcoPlanet and through our solutions and products. So through creating branded premium solutions that we can leverage and offset any inflationary impact. Now, also in 2025, we will have a close look at our cost base again, as we always do. So we need to keep a relentless focus on cost, as we always do. Great opportunity maybe also in logistic costs as global supply chains become open. I said this a year ago, and I still say it now. This is an ongoing opportunity. But really, the value is also created from the portfolio and the innovations we have there. I think that's the story on our margin. Great. Thank you.

Perfect. We take another question from the room. Tobias Schulte, please, again.

Thanks again. A question on the free cash flow. You generated a bit above 3.8 billion, and you're guiding for above 3.5 billion. and on top we should expect growth and margin improvements. So I was wondering why should we expect a lower free cash flow in 2025? Or is the guidance really set the bar is very low?

Always, even last year at the beginning of the year we are cautious. We want to see what's out there when it comes to the capex investments generally in organically and M&A. So we are always cautious at the beginning of the year regarding cash guidance. But Tobias, you saw the chart we showed, progress that we have made over the years. We started well below 2 billion in 2018 and in 24 we reached the next level of 3.8 billion. So I believe we have a proven record of free cash generation at Holcim. Thank you.

The next question, again, from the line, it's Efrem Aravi from Citi. Efrem, good morning.

Thanks for taking my question. Sorry, I was just browsing through the F10, and I may not have got these numbers perfectly, but if I look at Amrise's EBITDA and free cash flow growth year-on-year in 2024, on U.S. capital, $330 million and $280 million, and for Wholesome as a group, The EBITDA growth was about 229 Swiss francs, and pre-cash flow about 100 million Swiss francs. So I know that it's different gaps, but should I read from this that kind of the remain co, you know, was basically flat year on year, and most of the growth came from Amrise. Would that be a fair conclusion, or is it down to the vagaries of GAAP versus IFRS?

Yeah, please be careful, right? We have different definitions. I'm sorry for that. I gave a little lecture on carve-out financials before. Now I'm going to give a little lecture on US GAAP versus IFRS. There are different definitions on free cash flow. IFRS is after lease. US GAAP is before lease. The US GAAP conversion treatment is different. If I wanted to bridge that now for you, we would all need to take a chair and a bit of time. So I would ask for getting in touch with the IR departments and bringing that question back for the capital markets days, where is the right moment for both companies to go into those details, okay? But please keep in mind, there are two things between the group in that there's a carve out and there's a US gap transition and a different currency.

But therefore, regardless how you split it, you will end up with the two very profitable companies on both sides of the Atlantic Ocean. That's the key message, I think.

Perfect. I think this was probably the last question for today. Thank you so much for joining everyone. If there are any further questions, please reach out, especially to the IR team. We are more than happy to help. And with this, I hand it back to Emilian for any concluding remarks.

So once again, thank you very much for coming here physically, but also people that are on the video. All what we presented today, this is due to the 65,000 of Holcim employees, including some of these people that are here in the room. Without them, this is not possible, and I take this opportunity to thank them for their hard work, for their efforts and commitment. It was an outstanding job. And that's why having all these people around me, next to me, I feel comfortable that 2025 will be another record year for Holcim. Thank you very much.