Presentation - Italcementi Group

Italcementi Group 

Investor Event 

Ait Baha (Morocco) cement plant 

Italcementi Agadir 24-25 Group September 2010 

Investor Event 24-25 Title September 2010 

0

Welcome to Agadir 

Opening remarks 

Macroeconomic and construction cycle 

Key strategic guidelines and actions 

Focus on selected markets 

Medium term financials 

Concluding remarks 

Italcementi Group Investor Event 24-25 September 2010 

1




Ait Baha (Morocco) cement plant 


Investor Event 24-25 Title September 2010 2 2

Morocco plays a major role in Africa thanks to free trade 

agreements and enjoys a strategic status with the European 

Community 

Free trade agreements with: 

Egypt 

Tunisia 

Jordan 

Turkey 

U.S.A. 

Withdrawal of all custom duties with 

the European Community by 2012 


3

Political and cultural milestones 

Independence date: 18 November 1955 

King (23rd of the Alaouite Dynasty): Mohammed VI 

Parliament (2 Chambers) with elected representatives 

Government rests on a Parliamentary majority, with Abbas El Fassi as 

Prime Minister 

Local democracy at regional, provincial and municipal levels, with 

administrative control by Interior Minister representatives (Walis, 

Governors) 

Official language: Arabic 

Native language: Berber 

Working languages: French, Spanish (in the North) 

Religion: Islam 


4

Souss Massa Draa: one of the most important regions 

of the country 

Regional capital: Agadir 

10% of the territory 

10% of the population 

12% of GDP 

Agadir 

Main activities: 

• Agriculture 

• Tourism 

• Sea fishing 


5

Key economic indicators (2009) 

Population (mln): 32.4 

GDP (EURbn): 65.4 

Gross fixed investment (% GDP): 30.7 

Inflation (%): 1.0 

Exports (EURbn): 10.0 

Imports (EURbn): 23.6 

Expatriate remittances (EURbn): 5.2 

Tourism revenues (EURbn): 3.9 

Public deficit (EURbn): (1.4) 

Rating 

Fitch 

BBB-/stable 

Standard & Poor’s BBB-/stable 

Moody’s 

Ba1/stable 


6

Ciments du Maroc: an old and successful story 

of continuous growth 

1951: setting up by Ciments Français of Société des Ciments d’Agadir 

(SCA) 

1969: SCA listed on the Casablanca Stock Exchange 

1989: setting up of two subsidiaries in Ready-mix and Aggregates 

businesses 

1992: merger of SCA and Cimasfi a) , to form Ciments du Maroc 

1999: took control of Asmar b) and mergered with Ciments du Maroc 

2000: construction of the Laayoune grinding center 

2010: start-up of the Ait Baha plant 

a) Controls Safi plant construction 

b) Owner of the Marrakech plant 


7

Ciments du Maroc: a listed company with a shareholders 

including major Moroccan and foreign investors 

Shares listed on the Casablanca Stock Exchange in 1969 

Market capitalization: EURm 1,500 (beginning of September 2010) 

Market capitalization ranking: 8 th ITC* 62.3% 

Shareholding 

ADFD 5.4% 

CIMR 7.8% 

CDG 8.7% 

Others 15.8% 

ADFD: Abu Dhabi Fund For Development 

CIMR: Caisse Interprofessionnelle Marocaine de Retraites 

CDG: Caisse de Dépôt et de Gestion 

* Through Ciments Français 


8

Agadir plant: the birth place of Ciments du Maroc 

July 1952 


9

Ait Baha greenfield: the last major investment, increasing 

the production capacity and generating significant savings 

July 2010 


10









11

When we last met in Sept. 2008 we were anticipating … 

The global economic 

environment is deteriorating… 

Two shockwaves have halted a 

five-year-long world economic 

boom... 

Resurgent inflation and reduced 

output growth... 

Volatility dominates.... 

On balance, recessionary 

conditions.... 

… making medium term 

forecasts more uncertain 

According to most analysts, the 

risk of a full-blown depression (i.e. 

a 1929 style crisis) is still 

relatively low 

However, restoring confidence 

and reducing existing imbalances 

will take time 

World growth rates will remain 

less bright than in the recent past 

for some years ahead 

Also, the ongoing crises signal an 

urgent need to shift to a less 

leveraged, less energy-intensive 

economic system 


12

We promptly responded with a specific framework 

of actions... 

Cost savings plan - structurally lower break even point 

Capacity adjustments, but four major investments completed 

Focus on cash generation 

• Tight control on CapEx but priority on strategic investments 

(capacity and efficiency) 

• Strong reduction of Working Capital 

Reinforced our financial structure 


13

…and leveraging on our well balanced geographical 

diversification 

Cement country ranking and market shares 

BELGIUM 

3 rd -15% 

BULGARIA 

36% - 1 st TURKEY 

CANADA 

5 th -4% 

6% - 8 th KAZAKHSTAN 

U.S.A. 

7 th -5% 

2 nd -15% (*) 

MOROCCO 

2 

nd 

-25% 

2009 Revenues: Breakdown by Geography 

(after eliminations) 

3% 

14% - 4 th CHINA 

n.m. 

SPAIN 

7 th -6% 

Other Emerging Markets, 

Trading & Others 

14% 

THAILAND 

FRANCE 

2 nd -32% 

5% 

15% - 4 th EGYPT 

n.m. 

INDIA 

ITALY 

1 st -25% 

Market Share in regions 

where the Group operates 

(Italcementi estimates) 

(*) excluding Puerto Rico 

24% - 1 st GREECE 

7% - 3 rd 

Source: Italcementi analysis based on brokers’ reports 


14

We rank 5 th among international cement players… 

2009 (EURm) 

Declared capacity 

Company Mt 

Revenues EBITDA 

203 

15,884 

3,600 

203 

13,993 

3,066 

110 

11,117 

2,102 

97 

10,433 

1,906 

73 

5,006 

972 

SOURCE: Bloomberg; Company Reports 


15

…with a clear focus on cement… 

Cement + Clinker, Ready-mix, Aggregates volumes sold, 2000-2009 

Cement 

Mt 

Ready-mix 

Mm 3 

Aggregates 

Mt 

Player 

2000 2009 

2000 2009 

2000 2009 

68 141 

29 37 

176 196 

82 132 

25 42 

87 143 

47 79 

26 35 

76 239 

52 65 

16 54 

NA 168 

39 56 

18 11* 

53 39* 

SOURCE: Company data; annual reports 

(*) Calcestruzzi not included 


16

…and a fairly good profitability 

EBITDA margin, percent 

Company 2009 H1-2010 

2009 

H1-2010 

22,7 

21,4 

21,9 

21,5 

18,9 

15,8 

18,3 

17,3 

19,4 

17,7 

SOURCE: Italcementi; Company reports 


17

A still adverse short/medium term setting 

Recovery is on track but remains lacklustre and unevenly spread 

Economic policy reactions have helped, but rescue costs will have 

long-term repercussion 

Financial fragility remains a key issue and weak growth prospects will 

not help to solve the problem 

Current accounts and public debt imbalances are also a severe threat 

to the stability of the global scenario 

All in all, we have surfaced from more than a “normal” recession and 

a new, more sustainable equilibrium has to be found. This process will 

take time 


18

Agenda 

09:15 Welcome to Agadir 

M. Chaibi 

09:30 

09:50 

10:10 




C. Pesenti 

C. Fortuna 

G. Ferrario 

10:40 

Coffee break 

11:10 

Sustainable development 

Innovation 

Industrial efficiency 

Power strategy 

G. Ferrario 

S. Gardi 

E. Borgarello 

F. Vitaletti 

G. De Beni 

12:30 

First Q&A session 

C. Pesenti - ITC Team 


19

Agenda 

14:30 Focus on selected markets 

Roundtable on 

Italy 

North America 

Egypt 

Morocco 

India 

G. Ferrario 

F. Pedetta 

J.P. Meric 

F. Donegà 

M. Chaibi 

M Caneppele 

16:00 

Coffee break 

10:10 16:20 

17:00 


2010 – 2014 forecast 

Financial policy 

Final Q&A session 

Conclusions 

G. Ferrario 

G. Maggiora 

C. Pesenti - ITC Team 

C. Pesenti 


20

Vision and Mission guided by strong values 

Building our vision 

To be a world class local business building 

a better and sustainable future 

for all our stakeholders 

Building our mission 

To create value in the building 

materials sector through 

the Innovative and Sustainable 

use of natural resources for the benefit 

of our communities and clients 


21

Global forces and long term trends will continue to drive 

the growth of our industry 

Forces 

Trends 

Most relevant for 

construction/cement 

Changing 

demographics 

Experiencing 

Earth's limits 

Proliferating 

technology and 

knowledge 

Growing life sciences and healthcare 

Emerging new consumers 

Changing social values 

Shifting centers of economic activity 

Increasing link of world economies 

Growing infrastructure congestion 

Continuing urbanization and the rise of mega cities 

Entering a second "agricultural revolution" 

Accelerating green economy 

Increasing weight of public sector 

Rebounding regulation 

Key uncertainties/decisions 

▪ Market economy reversal 

▪ A post-crisis "new normal" 

▪ Inflation or deflation 

Emerging uncertainties 

▪ Green new normal 

▪ Battle for resources 

▪ Africa rising 


22



Forces 

Trends 



Changing 

demographics 

Experiencing 


Proliferating 


knowledge 




Shifting 

• More 

centers 

resources 

of economic 

will become 

activity 

supply limited vs.. growing 

demand (not only fossil fuels) 


• Widespread awareness of environmental issues will add 

Growing costs and infrastructure require higher congestion investments per output 

Continuing • Water has urbanization already become and the scarce, rise of megacities 40% gap projected in 

2030 














23



Forces 

Trends 



Changing 

demographics 

Experiencing 


Proliferating 


knowledge 






Growing • infrastructure By 2020 more congestion than 50% of world GDP will come 

from developing economies 

Continuing urbanization and the rise of megacities 

• More than 60% of population growth to 2030 will 


come from Africa, India and Middle East; of which 

Accelerating 1/3 from green Sub-Saharan economy Africa 












24



Forces 

Trends 



Changing 

demographics 

Experiencing 


Proliferating 


knowledge 








Entering • World a second trade "agricultural growth to revolution" 2020 forecasted @ 2-2.5X GDP 

Accelerating growth green economy 

Increasing • Massive weight of investment public sector on infrastructure required to cope 

with surge in demand 











25



Forces 

Trends 



Changing 

demographics 

Experiencing 


Proliferating 


knowledge 


• By 2020, developing countries will account for 

Emerging almost new consumers 80% of the world’s total urban population 

Changing • 19 social new values “megacities” (2X current) in the next 10 

years, and all in developing countries 




Continuing urbanization and the rise of mega cities 














26



Forces 

Trends 



Changing 

demographics 

Experiencing 


Proliferating 


knowledge 



• Consumers are increasingly interested in buying 

Changing “green” social values and willing to pay a “premium” for 

Shifting centers 

environmentally 

of economic 

sustainable 

activity 

products/services 

• New mindsets and regulations will create a very 


significant market for “clean tech”, fostering 

Growing infrastructure technology advancements congestion in a virtuous cycle 















27



Forces 

Trends 



Changing 

demographics 

Experiencing 


Proliferating 


knowledge 


Emerging 

• 

new 

GDP 

consumers 

growth in emerging countries will foster 

emergence of new world-class players, supported 

Changing social by innovative values developing-world business models 

Shifting centers • In developed of economic countries activitya new wave of regulation 

Increasing is link coming, of world to economies address an increasingly complex 

and interconnected business environment 


• Regulation in developing countries will evolve to 

Continuing ensure urbanization more and sustainable the rise of long megacities term growth 














28









29

Scope of this presentation 

From short 

term 

conditions 

To long term 

trends 

Hesitant and 

uneven recovery 

What lies in the 

middle, namely in the 

Plan horizon, in terms 

of GDP and 

construction 

evolution? 

Clear-cut destination, 

more uncertain path 

• Shifting centres of 

economic activity 

• Growing infrastructure 

congestion 

• Continuing urbanization 

• Shifting centres of 

economic activity 

• … 

• Accelerating green 

economy 

• Rebounding regulation 


30

The recovery is eventually on track, though at a very 

moderate pace… 

G7: Shape of Recovery after Past Recessions 

Slope of rebound 

smaller than in past 

recoveries. Resuming 

from financial crises 

is normally more 

painful 

At current rates it will 

take at least another 

year to regain 

previous cyclical 

peaks 

New signs of 

weakness emerging 

here and there 


31

… and there is limited economic policy room to exploit 

Net Government Balance/GDP (%) 

2008 

2009 

2010* 

0.0 

-2.7 

-3.3 -3.3 

-5.0 

-5.3 -5.3 -4.1 

-6.4 

-7.5 -8.0 

-11.0 -10.0 -9.8 

-11.2 

US Germany France Italy Spain 

Source: European Union; * Spring 2010 forecast 

Short Term Interest Rate: US and Euro area 

The unprecedented swelling 

of public deficits must revert 

to austerity 

Sudden change in the fiscal 

stance soon after the Greek 

crisis 

Ultra-loose monetary policy 

also ahead (close-to-zero 

policy interest rates + 

continuing quantitative 

easing) 

Credit conditions set to 

remain under stress 


32

A persisting divide between developed 

and emerging economies (1) 

GDP in ITC Developed Countries* 

(Cagr, % ch) 

2.1 

1.3 

Euro Area 

Adjustments to the 

2007-2009 

“structural break” 

continuing over 

2010-11 

North 

America 

0.3 

In the “new 

normal” we project 

moderate growth 

also in the outer 

years of the 

forecast (2012- 

2014) 

Total 

Developed 

The US will 

continue to 

outperforme 

Europe 

* Weighted by ITC cement volume sales in 2009 


33

A persisting divide between developed 

and emerging economies (2) 

GDP in ITC Emerging Countries* 

(Cagr, % ch) 

Emerging area 

still on the rise 

solidly, with 

growth largely 

“self-sustained” 

Other 

Emerging 

Total 

Emerging 

Emerging 

Asia 

China and India 

should remain the 

stars among the 

Group developing 

countries 

Marginally lower 

figures compared 

to the previous 

five years may be 

credited to Egypt 

and Morocco 



34

In the developed economies recessionary effects have 

proved the most severe in the construction sector… 

Construction Investment in ITC Developed Countries* 

CI 

0.7 

-0.3 

1.9 

4.2 

5.9 

3.0 2.7 3.6 2.6 

1.9 2.0 

1.0 

-2.9 

-8.4 

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 

Source: our calculations on national statistics and EU data; * Weighted 

by ITC's cement volume sales in 2009 excl. Greece, 2010: R1 estimates 

Cagr 1996-10: 0.9% 

-3.6 

A long and vigorous 

expansion preceded a 

dramatic construction 

slump (-15% cumulated 

fall) 

Exceptional conditions 

favouring past housing 

boom: 

• good 

macroeconomics 

• record-low interest 

rates 

• wide financial 

innovations 

GDP has begun to recover 

this year though 

construction continues to 

decline 


35

…although results - particularly in housing - have been 

widely different between the two Atlantic sides 

US: Housing investments, permits and starts 

In the US: 

• housing has more than 

halved over a four years 

time-span 

• the downturn has ended; 

however, the recovery is 

not in full swing 

• leading indicators still 

send ambiguous signals 

Euro area: Housing investments and permits 

In the Euro area: 

• overall less painful 

decline in both depth and 

length 

• widely uneven national 

outcomes 

• leading indicators still 

trending downwards 


36

2010 will be another year of contraction in developed 

construction markets… 

Construction in ITC Developed Countries* 

(%) 

Negative carry-over from 

Q2/10 in our major 

developed markets 

0.9 

Euro Area 

-6.2 

North 

America 

-14.5 

-2.9 

-4.9 

-7.2 

Another negative overall 

result now seems likely in 

the US given particularly 

weak non-residential 


Total 

Developed 

Further 5% contraction of 

construction markets in 

Europe with close to, or 

higher than double-digit 

negative figures in Spain 

and Greece 


37

…while prospects between Europe and North America 

should diverge remarkably in the medium term 

Construction in ITC Developed Countries* 

(Cagr, % ch) 

3.2 

4.3 

Euro Area 

In North America 

construction is 

expected to rebound 

strongly (mainly thanks 

to housing) 

North 

America 

-4.7 

2.5 

-1.4 

0.5 

Total 

Developed 

In the Euro area a mild 

recovery should set in 

during 2011 (later on in 

Spain and Greece), 

with full period results 

still slightly negative 

Even allowing for the 

recovery, in the final 

year construction 

would remain 4-5 pp 

below levels of ten 

years before 



38

… feeding slightly better results in terms of cement demand… 

On balance a 

1.4% CAGR is 

expected for 

cement demand 

in the Group 

developed 

countries 

During recoveries 

cement demand 

tends to 

outperform 

construction 

investment (not in 

France) 

Sources: elaborations on Aitec, US Geological Survey, national statistics and Eurostat data; quarterly data 


39

…which, however, will not affect the “mature” feature 

of the cement market in the developed area 

US+EU15+Japan: GDP and Cement Consumption 

(index numbers 1950=100) 

Cagr (%) 

Consumption in most 

industrialized areas is back 

to mid-Sixties levels 

Even in the “growth” period 

1983-2007 cement 

demand increased by a 

weak 1.3% p.a. (vis-à-vis 

2.8% for GDP) 

As a matter of fact, 

markets are mature in two 

respects: 

• declining weight of 

construction on GDP 

• decreasing content of 

cement per unit 

invested in 

construction 


40

Medium term construction prospects remain buoyant 

for the Group emerging countries… 

Construction in ITC Emerging Countries* 

(Cagr, % ch) 

An overall growth well 

over 6% reasonable in 

the medium term 

Asian countries 

expected to outperform 

the Med Rim ones 

Other 

Emerging 

Emerging 

Asia 

Outlook supported by: 

• strong 

macroeconomic 

context 

• margins to 

stimulate domestic 

demand 

Total 

Emerging 

• high infrastructure/ 

housing needs 

(which explains 

why construction 

far outpaces GDP 

growth) 



41

… which translates into an equally bullish cement demand 

trend 

World ex China (US+EU15+Japan): 

GDP and Cement Consumption 

(index numbers 1950=100) 

CAGR (%) 

Even considering that 

some markets are 

approaching a more 

mature stage, a CAGR of 

over 6% for the Group 

emerging seems a fairly 

cautious prospect in the 

forecast horizon 

As a matter of fact, in the 

whole emerging world, 

excluding China, cement 

demand grew 1 

percentage point p.a. 

above GDP since 1992 

(an even wider difference 

emerges taking China 

into account) 


42

To sum up 

Macroeconomic environment 

Macroeconomic environment 

Developed area 

Recovery ongoing; risks of 

another very weak year 

(2011) not negligible 

Growth remaining moderate 

also over the outer forecast 

years 

The US continues to 

outperform Europe 

Construction 

Only tepid recovery in sight, in 

some cases after 2011 

Emerging area 

Robust growth across the 

whole period 

Asia remains in the lead 

Risks of overheating in some 

countries (China, India …); 

political risks in other nations 

not clearly measurable 

Construction 

Activity continuing at close-to- 

7% average growth pace 

No industrial country (except 

Canada) expected to regain 

pre-crisis levels within the 

Plan horizon 

The US expected to far 

outshine Europe 

Reduced differences in 

performances expected 

among countries 

Construction intensity set to 

increase further in the Group 

emerging 


43






Context & guidelines 


Innovation 






44

Overview of Group strategic guidelines 

Strategic guidelines 

Strengthen performance on 

Sustainable Development 

Improve product portfolio and 

technologies through innovation 

Focus on industrial efficiency 

(“the cost leader is the industry 

leader”) 

Improve Group 

Organizational 

performance 

Be prepared to capture growth 

opportunities in emerging markets 

Target: deliver significant recovery in Group’s performance 

and prepare for the next wave of growth 


Investor Event 24-25 September 2010 45

Cement demand historical trend 

Cement demand trend in Italcementi domestic markets 

All domestic markets (Mt) 

400 

300 

450 

400 

350 

300 

255 

283 

327 

401 

370 

200 

250 

200 

150 

1996 

2000 2000 2004 2004 2005 2005 

2006 2007 

2008 

2009 

2009 


46

Key Historical Financials 

(*) Local GAAP before 2004.. 2009 figures prepared in compliance with IAS 23 and 2008 figures restated accordingly 


47

Expected cement demand trend 

Cement demand trend in Italcementi 

domestic markets/areas (Mt) 

US 1 

All domestic markets 

35 

30 

25 

0 

24 

5.9% 

32 

500 

450 

400 

0 

2007 

08 

CAGR 

2009-14 

370 

09 

4.9% 

10 

11 

470 

2014 

1 Essroc area 

2 Include Egypt, Morocco, South India, Bulgaria, Thailand, China Shaanxi, Kazakhstan, Turkey 

12 

13 

Europe 

150 

100 

0 

Emerging countries 2 2 

350 

300 

250 

0 

2007 

08 

98 

248 

09 

0.6% 

6.3% 

10 

11 

12 

13 

101 

337 

2014 


48

Expected cement demand trend by country 

Cement demand trend in ITC domestic markets (CAGR 2009-2014 percent) 

Country 

Construction market 

Cement market 

Mature 

markets 

France 

Belgium 

Italy 

Spain 

Greece 

North America 

-0.3 

-1.5 

-2.0 

0.4 

0.2 

4.3 

0.4 

0.4 

0.6 

1.0 

0.0 

5.9 

2 

Emerging 

countries 

Egypt 

Morocco 

India 

Bulgaria 

Thailand 

China 

Kuwait 

Kazakhstan 

Turkey 

6.2 

5.0 

8.6 

5-7 1 

5.6 

NA 

21.0 

8-10 1 

6-8 1 

5.4 

5.7 

4.2 

8.3 

5.9 

3.7 

7.2 

2 

2 

3.3 

9.2 

5.3 

SOURCE: Italcementi 

1 Based on gross fixed investments growth 

2 ITC local market 


49

Cement price assumptions for Italcementi markets 

Country Price Rationale 

Mature 

markets 

France-Belgium 

Italy 

Spain 

Greece 

North America 

Continuing stable dynamic in 

line with inflation 

Price recovery from 2010 very 

weak levels 

Negative trend of real prices in a 

scenario of slow recovery of the 

utilization rate 

Emerging 

markets 

Thailand 

Turkey 

China 

Bulgaria 

Morocco 

India 

Kuwait 

Kazakhstan 

Egypt 

Price recovery from 2009-2010 level 

Week real price trend because of 

overcapacity in the regional area 

Price dynamics lower than inflation due 

to pressure from new players in the 

market 

Price trend under inflation rate 

Pressure on real prices from new 

players and governmental control 

Expected trend stability increase 


50

Upward trend is expected for petcoke and steam coal prices… 

API 4 & High Pace Index + 50 HGI – FOB yearly average 2006-2014 ($/t) 

140 

API 4 & High Pace Index +50 HGI – FOB yearly average 2006-2014 ($/t) 

120 

100 

80 

120.2 

86.2 

73 

80 

Steam Coal 

CAGR 09-14=7.2% 

84 

87 

90 

60 

40 

20 

50.8 

46.3 

62.7 

55.4 

63.7 

34.0 

56 

62 

66 

70 72 

Petcoke 

CAGR 09-14=16.2% 

0 

2006 2007 2008 2009 2010 2011 2012 2013 2014 

API 4 

High +50 HGI 



51

…as well as for power prices 

ITC Group average power cost (index 2006 = 100) 

160 

140 

120 

100 

80 

2006 2007 2008 2009 2010 2011 2012 2013 2014 



52

Carbon scenario and business perspectives 

The Kyoto Protocol is still binding for signatory countries, while new 

commitments for developed countries in the period post-2012 are still to be 

negotiated 

National and regional carbon and energy efficiency constraints keep on coming: 

main developing countries, such as China and India, are running tests on sector 

trading, while progress is extremely slow in US, at least at a Federal level 

Europe target for post-2012 is emissions 20% below 1990 levels by 2020; 30% 

option still on the table; accordingly, ETS Phase 3 implementation will keep 

tackling emissions from industry and the power sector 

Details on the application of EU ETS Phase 3 are being finalized: benchmark 

based allocation applies to the cement sector, requiring a strong effort on 

improvement 

Carbon footprint reduction is becoming more and more crucial 


53

Overview of the strategic guidelines 

Context and Outlook 

Strategic guidelines 

•After huge market 

downturn, recovery 

scenario still uncertain and 

volatile 

•Decoupling of the growth 

path between emerging and 

mature countries 

•Price scenario still 

uncertain, value is to be 

captured from industrial 

efficiencies and product 

innovation 

•CO2 and other emissions 

footprint will be key to 

compete in the “new green 

normal” 

Strengthen performance on 

Sustainable Development 

Improve product portfolio and 

technologies through innovation 


(“the cost leader is the industry 

leader”) 

Be prepared to capture growth 

opportunities in emerging markets 

Improve Group 

Organizational 

performance 


54

Strengthen performance on Sustainable Development 

Main actions 

Reduce CO2 emissions per 

clinker ton: 

• Alternative fuels/biomass 

• Thermal consumption 

CO 2 

Kg/t clinker 

904 

870 

843 

Roll out best technologies to 

reduce dust, SO 2 , NO x emissions 

Dust 

g/t clinker 

209 

193 

46 

Clinker content in cement (fly ashes, 

slag, limestone, pozzolan cement): 

Base line decrease not satisfactory; 

dedicated action plan still to be 

identified 

SO 2 

g/t clinker 

633 

481 

294 

Strengthen renewable power 

generation: Italgen projects to 

supply green and cost competitive 

energy to ITC plants (i.e. Wind farm 

in Turkey, Morocco, Bulgaria, Egypt 

and hydro revamping in Italy) 

NOx 

g/t clinker 

1,595 

2007 

1,543 

2010 E 

1,255 

2014 


55

Innovation: improve product portfolio and technologies 

Technology improvements 

▪ Low temperature clinkerization 

▪ Recyclable raw materials for clinker production 

▪ Biotechnological production of clinker 

▪ Reduced water consumption 

▪ Carbon capture and 

sequestration 

Continuing innovation 

Products/Applications/Branding 

Improve product portfolio towards a more 

“green” offer, Cement 2008, percent 

Thermal 

Cement 

Alipre 

+ 

Ordinary 

Portland 

44 

Reduces 

organic 

and inorganic 

pollutants in 

the air 

Transparent 

cement 

Cement 

optimizing 

thermal 

efficiency 

of buildings 

Biodegradable 

cement bag 

Sulfoaluminate 

technology to 

assure rapid 

setting, high 

early strength 

Highperformance 

concrete 

Concrete for 

special 

applications 

Percentage of clinker 

- 

Limestone 

Multiple 

Blend 

Fly ash 

Slag 

Cement 

Pozzolan 

Others 

22 

17 

Higher clinker rate means higher CO 2 

emission on cement 

5 

5 

3 

4 


56

Improve industrial efficiency 

Main actions 

Optimize industrial processes 

(STEP) 

• Share operational best practices 

across Group countries 

• Leverage CTG competences 

and increase its role in 

performance improvement 

projects 

• Improve local skills and 

capabilities 

Focused performance 

improvement investments: 

capacity de-bottlenecking, energy 

efficiency, productivity 

improvement 

Selected major 

renewal/revamp of older 

technology capacity (e.g. 

Bulgaria, Egypt, Italy) 

Thermal 

consumption 

MCal/t clinker 

976 

920 

855 

7.0 

Labour 

productivity 

Kt cement/ 

4.9 

5.5 

2007 

2010E 

2014 

1 Operational FTE dedicated to cement production 


57

Growth opportunities: differentiated strategy in Group 

markets 

155 

Investment projects included in industrial plan 

base case 

Size of bubble depicts size of cement market 

in terms of domestic demand (2008) 

110 

South India 1 

Morocco 

Cumulated 2009-25 expected growth 

% growth 

105 

55 

Thailand 

50 

Kazakhstan 

45 

0 

-5 

-10 

China 

(Shaanxi) 1 

Turkey 

Italy 

Kuwait 

C 

Spain South 

(Andalusia) 

Egypt 

Rationalize/ 

Restructure 

Belgium 

Greece 

A 

B 

USA 1 

Pursue opportunistic 

growth/ consolidation 

Defend 

Spain North 

(N.Basque) 

France 

Bulgaria 

-15 

Lower 

Higher 

Profitability 

1 Italcementi’s regional market 


58

Cumulated 2009-25 expected cement demand growth 1 (percent) 

300 

High 

Cumulated 2009-25 expected cement demand growth 1 

(Percent) 

Low 

Growth opportunities: focused regional approach 

in new markets 

280 

260 

140 

120 

100 

80 

60 

40 

20 

0 

-20 

Not enter 

Bangladesh 

Lower 

Philippines 

Saudi Arabia 

Russia 

Iran 

Ethiopia 

Zambia 

Cameroon 

Indonesia 

Ukraine 

Angola 

Jordan 

Algeria 

Malaysia 

Libya 

Tunisia 

Qatar 

United Arab Emirates 

Medium 

Potential profitability 2 

Syria 

Tanzania 

Cambodia 

Ghana 

Vietnam 

South Africa 

Higher 

Size of bubble depicts 

size of market capacity (2008) 

Very high margins but 

high risk and/or 

difficult to access 

▪ Sub-Saharan Africa: 

approach through 

asset light initiatives 

(e.g. terminals) 

▪ South East Asia: 

medium-term 

opportunity scouting 

Good potential profitability 

▪ Additional new markets to be 

limited to Italcementi proximity 

areas 

1 Based on the structural curve where available and on estimates elsewhere 

2 Index based on the relative performance of markets on: Supply demand balance (Utilization rate 2008), Market concentration (Market share of top 3 players), Market 

conduct (Price of cement 2008; structural overcapacity of the area) 


59








Innovation 






60

Sustainable Development Key Actions 

Energy efficiency 

1 

Reduction of 

carbon footprint 

Alternative fuels and biomass 

Clinker/cement ratio 

2 

Protection of 

the environment 

Emissions to atmosphere 

Natural resources, including water 

Biodiversity 

3 

Social 

Responsibility 

Health & Safety 

Stakeholder engagement 

Support to communities 


61

Reduction of carbon footprint 

After a continuous improvement over the last few years ... 

750 

747 

50 

kg CO 2 / t cement 

740 

730 

720 

710 

717 

40 

30 

20 

10 

million t CO 2 / year 

700 

2004 2005 2006 2007 2008 2009 

0 

4% reduction 

vs. 2004 


62

Reduction of carbon footprint 

... the industrial plan 2010-14 is accelerating the trend 

38% of total 

reduction 

9% of total 

reduction 

53% of total 

reduction 

kg CO 2 / t cement 

717 

need further 

development 

11% reduction 

vs. 2009 

640 

2009 Improvement of 

energy efficiency 

Increase of 

alternative fuels 

reduction of 

clinker/cement 

target 2014 


63

Protection of the environment: emissions to atmosphere 

Group stack emissions are constantly decreasing over the last years, with the 

exception of dust, still heavily affected by the consolidation of the Egyptian 

plants starting from 2006 

2493 

dust 

SO2 

NOx 

42% reduction 

vs. 2004 

g/t clinker 

1296 

1453 

66% reduction 

vs. 2004 

440 

146 199 

2004 2005 2006 2007 2008 2009 


64

Protection of the environment: stack emissions 

The industrial plan 2010-14 is further reducing emission of SO 2 and NO x ,but 

mainly resulting in a significant reduction of dust emissions 

78% reduction 

vs. 2009 

Dust 

g/t clinker 

46,5 

2009 Impact from previous 

plan investment 

Process 

improvements and 

small CAPEX 

Major CAPEX 

E2014 

37% reduction 

vs. 2009 

SO 2 

g/t clinker 

2009 Impact from previous 

plan investment 

Process 


small CAPEX 

Major CAPEX 

293,8 

E2014 

16% reduction 

vs. 2009 

NOx 

g/t clinker 

1254,5 

2009 Impact from 

previous plan 

investment 

Process 


small CAPEX 

Major CAPEX 

E2014 


65

Protection of the environment: water 

The cement manufacturing process uses limited amount of water and has no 

major discharge. However, with population growth and economic development 

accelerating demand for everything, freshwater is becoming scarcer, and the 

full value of water is becoming increasingly apparent 


66

Protection of the environment: water 

The Group has completed the water-risk assessment of its 

sites using the Global Water Tool developed by the World 

Business Council for Sustainable Development. 

Only a limited number of plants is located in critical areas. 

The Group is taking action on all of them. Ait Baha plant in 

Morocco is a good example. 

m 3 /t cem 

0,50 

0,25 

0,00 

2007 

2008 

2009 

50 

25 

0 

million m 3 

Group water consumption 

is decreasing 


67

Protection of the environment: biodiversity 

For the cement industry, quarry rehabilitation is the starting point for the 

preservation of biodiversity and protection of ecosystems 

The Group lists 273 quarries, 74 of which contain or are 

adjacent to areas designated for their high biodiversity 

value. As of today, 221 quarries (80% of the total) have 

a rehabilitation plan in place. 

The Group has already set a new target: 90% of quarries 

with a rehabilitation plan by 2012. 


68


Safety performance is steadily improving 

since the launch of “Zero Infortuni” project 

in 2000. As of today the frequency of injuries 

has decreased by 78%, down to 5.1 Lost 

Time Injuries per million hours worked. 

Special efforts are devoted to the managing 

contractor safety. 

Occupational health issues are addressed, 

extending best local practices to all 

subsidiaries . 

As of today, 44% of potentially exposed 

workers are protected with monitoring of 

basic exposure agents at work, far beyond 

locally enforced legislation. 

78% of monitored workers are already 

aligned with the highly demanding Group 

standard. 


69


30 

Cement 

Lost Time Injuries frequency rate 

25 

20 

15 

10 

5 

23,5 

Aggregates 

Concrete 

Group 

78% reduction 

vs. 2000 

5,1 

0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 


70

Stakeholder engagement 

The Group aims to build enduring 

relationships with the communities based on 

mutual respect, active partnership and long 

term commitment. 

71% of Group cement plants have structured 

frameworks or formal agreements to engage 

with local stakeholders. 

45% of Group cement plants organised an 

Open Door event in the last 3 years. 


71


The Group supports community based 

projects that can make a difference in a 

sustainable way without creating dependency 

and supports regional development and small 

business opportunities. 

In 2009, the Group’s subsidiaries invested 

EURm 2.8 to support communities (0.6% of 

Group EBIT). Moreover, EURm 1.9 were 

dedicated to Open Door events and 

sponsorships. 

In addition, the “Fondazione Italcementi Cavaliere 

del Lavoro Carlo Pesenti” earmarked around 

EURm 2 for donations and local development and 

EURm 0.7 for sponsorships 


72


Morocco: “plages propre” initiative 


73








Innovation 






74

Product Innovation 

Creation of value for our customers with innovative and tailor-made solutions 

Products, applications and services at low cost, with consistent quality 

and sustainable for the environment and the people. 

Produced by a team of excellent people with technical, marketing and 

commercial skills 


75

Cement & Light – i.light 

i.light is the latest result of Italcementi research. 

The material is innovative because it is realized 

with a pre-mixed concrete and new additives 

which bind plastic resins, thus ensuring 

the transport of light. 

Physical and Mechanical characteristics 

Elastic Limit in flexure: 1.92 MPa 

Peak Stress: 7.70 MPa 

Post peak Response: strain hardening – plastic 

behavior 


76

Expo Shanghai 2010 - The Italian Pavilion – External view (day) 


77

Expo Shanghai 2010 - The Italian Pavilion – Internal light 


78

Expo Shanghai 2010 - The Italian Pavilion – External view (night) 


79

The new “thermal” cement for “class A” buildings 


new “thermal” cement 

Is able to ensure optimized energy 

management thanks to very low 

heat transfer coefficients 

Has the same durability and 

strength characteristics as 

conventional concrete 

Has thermal conductivity 0.15-0.5 

watt/m°K compared with 1.6 

watt/m°K (traditional concrete) 

Helps to keep the home warmer in 

winter and cooler in summer 

Material 

Traditional 

Concrete 

Insulating 

Concrete 

Thermal 

Conductivity 

(λ) 

Resistance to 

steam 

(μ) 

1.2-1.6 50-120 

0.15 8 


80

LEED certification 

i.Lab: building designed by Richard Meier 

7,500 m 2 reserved for research laboratories 

Photovoltaic panels 

High Solar performance panels (provide and 65% durable of 

materials annual energy requirements) 

Geothermal plant 

Energetic efficiency (renewable 

sources, thermal efficiency, etc.) 


81

i.Lab Awards 

i.Lab recently received two important awards. 

The first is the Good Design Award, a 

prestigious international award, created in 1950 

in Chicago (USA) by celebrated designers and 

architects like Eero Saarinen, Edgar J. 

Kaufmann Jr. and Charles and Ray Eames. 

The second is the European Greenbuilding 

Award 2010, awarded by the European 

Commission to i.Lab as the best Italian building 

for Energy Efficiency in the category “Best New 

Building”. 


82

Improve product portfolio and technologies 

Technology improvements 

•Low temperature clinkerization 

•Recyclable raw materials for clinker production 

•Biotechnological production of clinker 

•Reduced water consumption 

•Carbon capture and sequestration 

Continuing innovation 

•Improve product portfolio towards a more “green” offer 

Products/Applications/Branding 

Reduces organic 

and inorganic 

pollutants in the air 

Thermal 

Cement 

Cement 

optimizing thermal 

efficiency 

of buildings 

Alipre 

Sulphoaluminate 

technology to assure 

rapid setting, high 

early strength 

Transparent 

cement 

Biodegradable 

cement bag 

Highperformance 

concrete 

Concrete for 

special 

applications 


83

Product innovations roll out over plan period 

Underway (by 2012) 

Roll-out plan 

Business unit 

Cement and 

binders 

Product 

Alipre & 

derivatives 

TX Active 

Italy FB Spain 

Morocco 

NA Greece Turkey Egypt 

Already on the market 

Potential further 

Introductions (2012 +) 

India 

Bulgaria 

Kazakhstan 

Thailand 

RMC 

“Izycrete” 

“Acoust. Ins. 

Concrete” 

“I.Clime” 

“Roadcrete” 

“Remix” 

TX Active 

derivat. 

“Secondlife” 

Dry mortars 

“l.Tech” 

Alipre & derivat. 

I.Clime 

Others 

Admixtures 

I.Light 

Polycarboxylate 

admixtures 


84

Facts 

Around 170 dedicated R&D and Innovation staff located in Bergamo (Italy) and 

Guerville (France). 

Around 7,500 m 2 of Lab floorspace in Bergamo and the same in Guerville 

64 active patents on products and applications filed since 1994 


85

Facts 

0.4% of Group turnover invested in innovation in 2008 (0.2% in R&D), 0.5% 

in 2010 (0.3% in R&D) 

Innovation rate – defined according to strict criteria which consider a product 

innovative for only 5 years after its commercial launch – rose from about 3% 

in 2008 to 4% in 2010 

The margin on innovative products is typically 2 or 3 times that of traditional 

products 


86

Facts 

In the 2010-2014 period innovation turnover is mainly driven by mature 

markets (65% in mature markets, 35% in emerging markets) 

In the 2010-2014 period innovative product margins are mainly concentrated 

in mature markets (76%) 

In the 2010-2014 period innovation margin is mainly concentrated in the 

cement & binder (52%) and the ready mix businesses (33%). Admixtures and 

Premixes account for the remaining 15% 


87

Facts 

“Original” patents* 

Published Jul 1998-Jun 2008 – C04B Code 

ITC & CF patents ** 

Filed Jul 1998- Jun 2010 

128 

26 

61 

15 

40 

12 

37 

NOTE 

* Number of Derwent families comprising all patents relating to a specific innovation. 

The graph shows patents of the controlled companies in the International Patent 

Classification (IPC) class C04B which covers “Lime; magnesia; slag; cements; 

compositions thereof, e.g. mortars, concrete or like building materials; artificial 

stone; ceramics; refractories; treatments of natural stone” 

25 

1998-2002 

2002-2006 

2006-2010 

NOTE 

** Number of patents filed by Italcementi and Ciments Français, 

independently of the IPC class 


88

The Research and Innovation Network 

Universities Research centres Industry 

Standards, 

Regulations, 

Requirements 

R&I 

Solutions 

Architects Designers Clients 


89

Innovation as a group value 

We believe in the importance of 

innovation not only in the development 

of new products, applications and 

services, but also in our management 

approach. We must embrace change and 

be open to new ideas in order to attract 

the best talents. 

Our ambition: 

to be one of the most innovative 

cement group in the world 


90

A perfect path to creating value: down to brand and product… 

Corporate Brand 

Master Brand 

Group Innovation 

Brands 

Group Product 

Traditional Brands 

A B C D 


91

…up to an increment in corporate value 

Corporate Brand 

Master Brand 

Group Innovation 

Brands 

Group Product 

Traditional Brands 

A B C D 


92








Innovation 






93

Industrial efficiency benchmarks 2006-2009 

global trends 

Group cumulative, differences 2006-2009, EUR/calorie, EURt 

Example: FUEL cost trend vs.. 

total industrial cost trend 

+35.7% 

+41.6% 

Fuel is the biggest 

industrial cost 

(approx 60%) 

INDUSTRIAL PRICES RISE BUT: 

Electrical consumption in KWh/t 

cement -0.6% 

Heat consumption at clinker in 

calories/t clinker -3% 

Increase in alternative fuels in % of 

heat calories from 4.2% to 5.3% 

Less clinker purchased in tons (-28% 

between 2006 and 2009) 

STEAM COAL 

PETCOKE 

INCREASED ACTUAL 

PURCHASING COST 

OF ONE KCALORY, CIF 

vs. 

+22.2% 

TOTAL INCREASE 

IND.VARIABLE COST 

OF ONE TON OF CEMENT 

ACTIONS 

Effects of structured continuous 

performance improvements and 

structured programs (STEP), focused 

maintenance. 

Effects of previous additions and 

closures with actions on approx. on 1.8 

MTons capacity 

Opportunistic temporary capacity 

closures (64 kilns in 2009) in addition to 

final closures (11 kilns in 2009) all in 

mature markets to improve cost factors 


94

Step projects – Main Italian plant Calusco results, an example 

of short term impact of Step 

Results 7 months from project startup 

(EURm) 

Cost 

perimeter 

analyzed 

Total 

savings 

identified 

short 

term 

5.2 

med 

term 

2.2 

7.4 

53.1 

2.5 

Savings from other 

actions 

implemented 

Extra savings not 

planned , but achieved 

1.1 

3.6 

2.7 

Total 

investment 

required 

short med 

term term 

1.7 0.5 

2.2 

1.6 

Savings achieved 

Total 

Achieved 

0.9 

Savings to be achieved 

0.9 

Target savings on 

short term actions 

Savings in 2009 

Saving to work on 

1 Impact calculated considering same 2007 conditions for: cement mix, cement quantity, clinker quantity, raw meal quantity, purchasing unit prices, clinker value. All 

actions completed by the end of 2008. 


95

Containment of industrial working capital receives the 

highest attention. Clinker stock control has been steadily 

decreasing over the past 18 months 

Group clinker stock evolution 2009 -2010 

(index January 2009 = 100) 

100 

80 

-52% 

60 

40 


96

Under the 2010-2014 plan industrial efficiency drivers are in 

the first line of management focus, with increasing impact 

Levers 

Targets 

Performance improvements, 

operations, maintenance and SD 

investments 

Clinker to cement ratio 

Variable industrial cost efficiency 

Increased usage of alternative fuels 

New plants and renewals 

Environmental performance 

Capacity location, utilization and 

technology cost effectiveness 

Capital expenditure effectiveness 

Reduced clinker purchase 

Opportunistic stop+go of plants 

selecting the best 


97

Plan 2010-2014 shows a strong effort in improving 

industrial efficiency and then reducing industrial variable 

costs 

Group cumulative industrial variable cost, differences y/y, EUR/Ton 

+22,2% 

Vs. 

+12% 

2006-2009 2010-2014 


98

Expected evolution of industrial KPIs 

Thermal 

consumption 

MCal/t clinker 

948.4 

-10% 

24.7 

854.6 

45.4 23.7 

Total Fuel 

vs -3% 

in 2006-2009 

Power 

consumption 

KWh/t clinker 

Power 

consumption 

KWh/t cement 

(grinding only) 

78.2 

2.0 

1.5 

6.8 

1.3 

0.9 

0.5 

68.6 

-8% 

Total Power 

vs -0,6% 

in 2006-2009 

2009 

Impact from 

previous plan 

investments 

Process 

improvements 

and small 

CAPEX 

Major 

CAPEX 

Performance 

2014E 

SOURCE: Italcementi; team analysis 


99

Expected evolution of industrial KPIs 

Labour 

productivity 

7.0 

Kt cement/ 

5.0 

0.7 

0.7 

employee 1 0.5 

40% 

2009 

Impact from 

previous plan 

investments 

Process 

improvements 

and small 

CAPEX 

Major 

CAPEX 

Performance 

2014E 

SP 08-12 

SOURCE: Italcementi; team analysis 


100



Levers 

Targets 



investments 













101

Clinker/cement ratio, levers and determinants of Countries 

differentiation 

Different factors influence feasibility 

and define Countries differences 

Mix of products 

offered/ demand of 

user segments 

/competition 

Clientele mix i.e. roads vs. 

constructors vs. industrial users, 

ready mix requests, pricing 

policies on differentiated 

products…. 

Clinker to Cement 

Technical 

management 

Stability of plant output, of fuel 

mix, quality of local raw materials 

etc 

Availability of 

blending 

components 

Energy (for fly ashes) or steel (for 

slag) plants closeby, economic cycle, 

scarcity of raw material (i.e. 

Pozzolane)… 

Countries’ laws and 

limitations 

Local laws on clinker minimum 

content, communication… 


102

To improve clinker/cement ratio, products portfolio 

should be moved towards blended cements 

Cement, 2008 percentage 

TARGET 

+ 

Ordinary portland 

44 

Percentage of clinker 

– 

Limestone 

Multiple Blend 

Fly ash 

Slag Cement 

Pozzolan 

Others 

22 

17 

5 

5 

3 

4 

SOURCE: Company reports, Italcementi; team Analysis 

100 


103

Further actions required on clinker/cement ratio 

and alternative fuels 

Alternative 

fuels 

Percent 

5.4 

0.4 

3.6 

1.2 

9.8 

2009 

Impact from 

previous plan 

investment 

Process 

improvements 

and small 

CAPEX 

Additional 

major 

CAPEX 

Performance 

E2014 


104

Current Alternative Fuels usage and 2014 guidelines 

Spain 

TDF (S. Tyres) 

Animal meal 

Sewage sludge 

Morocco, 

Bulgaria 

TDF ( S.Tyres) 

RDF/SRF study 

USA-Canada-Puerto Rico 

(Hazardous. waste) 

RDF/SRF 

Italy 

SRF/RDF 

TDF (Shredded tyres) 

Animal meal, 

Sewage sludge 

Biomass (vegetal) 

Belgium 

RDF, sewage sludge, 

animal meal, TDF 

Greece 

Sewage sludge 

RDF (study) 

Egypt 


Sewage sludge 

Oil base mud 

sandy oil 

RDF (future) 

France 

RDF/SRF 

Animal meal, TDF (s. tyres), 

Hazardous liquid and solid waste 

India 


Industrial waste 

TDF (tyres) 

Kazakistan, China 

Market investigation 

Turkey 

Waste oil 

TDF (Tyres) 

RDF (future) 

Thailand 


Industrial liq. waste 

TDF= Shredded Tyres 

RDF/SRF = refuse derived fuel or solid derived fuel 


105



Levers 

Targets 



investments 













106

Key industrial performance improvements in the plan: 

major investments 

Next 5 years 

Impacts beyond 2014 

2010 

2014 

New plants/ 

revamping 

Main investments from 

previous year (~EURm 

1,000) : 

• Italy: new Matera 

• Morocco: Ait Baha 

• USA: Martinsburg 

• India: Yarraguntla 

Major investments in the plan 

(~EUR 800 million) of which: 

• Bulgaria: New Devnya 

(~240 EUR m) 

• Italy: revampings and 

reorganization (~240 EUR 

m) 

• Other Major CapEx (~350 

EURm) 

Major investments in the 

plan, but completed after 

2014: 

• Egypt: Tourah wet 

line relocation (~200 

EURm in the plan 

period) 

• 7 mt/y of modern capacity 

• In place of 2.9 mt of old cement capacity 

• Ind.EBITDA improved by approx 

10EUR/t on the total capacity + extra 

capacity 

• Total impact expected steady state 150 

EURm EBITDA 

5.5 Mt/y of modern capacity 


107

Martinsburg/ WestVirginia, USA 

Full line 5,000 tpd clinker (2 Mt/y cement) in place of old 2,000tpd (0.640 Mt/y of 

clinker). Reduction of variable costs per ton ~ 45%. Opened in June 2010, 

operating since late 2009. 

Quantum leap in consumption: 

• Fuel fm 1570 to 760 Kcal/tclk 

• Power down to 130 KWh/tcem 

• Significantly reduced emissions, i.e. 

dust to lowest 15 mg/Nm3 


108

Yerraguntla/ Andra Pradesh, South India 

Full new line 5,500 tpd clinker (2.3 Mt/y cement) at lowest Group variable cost 

level. Started shipping clinker 1stQ 2010 

Very efficient new line: 

• Fuel 708 Kcal/tclk 

• Power 72 KWh/tcem 

• Variable costs at minimum in India 

• Significantly reduced emissions, i.e. dust 

down to 15 mg/Nm3 


109

Matera/ Basilicata, Southern Italy 

Old Lepol kiln revamped in new dry line with PRH. Capacity increase from 

1,650tpd to 2,200 tpd clinker (+250kt/y). ~ 30% reduction in variable cost per ton 

and sharp reduction in emissions. Started in March 2010. 

Strong reduction in consumption: 

• Fuel fm 946 to 760 Kcal/tclk 

• Power fm 141 to 122 KWh/tcem 

• Significantly reduced emissions, i.e. 

CO2 down to 830kg/Tclk, SO2 down to 

50mg/Nm 


110

Ait Baha/ South of Agadir, Morocco 

Greenfield full line 1.6Mt/y or 5,000tpd clinker and 2.2Mt cement. Two cement 

mills, plant started to ship cement in late 2009 and produce clinker in July 2010. 

Innovative closed circuit diathermic oil waste heat recovery and cooling. 

Strong reduction in consumption vs. Agadir : 

• Fuel from 996 to 725 Kcal/tclk 

• Power from 98 to 30.7 KWh/tcem 

• Significantly reduced emissions, i.e. dust down 

to 15 mg/Nm3 

• ~ 20% reduction in variable costs per ton 


111

Ait Baha, Waste Heat Recovery System (WHRS)* 

GAS 

IN 

GAS 

OUT 

In Ait Baha a large amount of thermal 

energy is available from the gas coming 

from the preheater. 

To reduce the temperature of gases, the 

most frequently applied technology is 

based on water injection in a conditioning 

tower, where the gases are cooled down by 

water evaporation. 

Strong benefits in 

resource constrained 

conditions or available 

at high cost: 

•Reduced usage of 

water and power, 

•Power generation for 

the plant. 

Innovative WHR 

on such a small 

scale (1.5 MW), 

first worldwide 

application in the 

cement sector on 

a full scale PRH. 

To avoid the use of hundreds of thousands 

of m3 of water, which would be wasted 

because dispersed as steam in the 

processed gases, the WHR system has 

been adopted with the additional 

advantage to produce electrical energy. 

In operating conditions at nominal 

production the power produced is around 

1.5 MW. The whole system is operated by 

the central control room. 

*double circuit diathermic oil + siliconic fluid and 1 stage turbine. 


112

Under 2010-2014 plan capacity location shifts from 

industrialized to emerging markets 

Levers 

Targets 



investments 













113

Capacity almost stable in volume terms, but approx 23% is 

new or renewed. Competitiveness means improved utilization 

Total net capacity 

1.6 

Emerging 

countries 

53% 

54% 

57% 

57% 

New line in 

Egypt (2015) 

Mature 

countries 

47% 

46% 

43% 

43% 

2007/2008 

2009 

2010 

2014 

Utilization 

rate 

percent 

87 77 

77 

88 


114

Greater rationalization in mature countries 

Grey clinker capacity evolution 

▪ Bessemer: -0.6 Mt 

▪ Frederick: -0.3 Mt 

▪ Italy clinker lines 

closing 

▪ Martinsburg: 

▪ Italy closures: 

▪ Matera revamping: 

▪ Italy rationalization and 

new investments 

1.5% reduction in capacity 

4 plants for 4.3 Mt capacity 

revamped or 18% of final 

capacity 

47% 

46% 

43% 

43% 

Utilization 

rate 

percent 

2008 

2009 

2010 

86 72 

71 

84 

Cluster weight on total 

2014 


115

Strong focus on emerging countries 

Grey clinker capacity evolution 

▪ Takli, Thailand 

▪ Yerraguntla: 

▪ Ait Baha: 

▪ Devnya, Bulgaria 

▪ Egypt rationalization, closures and 

revamping 

▪ Another plant/revamping (India) 

3.4 

53% 54% 57% 57% 

9% capacity 

increase 

1-2 plants for 4-5 

Mt capacity 

revamped or 15% 

of final capacity 

Utilization 

rate 

percent 

2008 

2009 

2010 

2014 

88 82 

81 

92 

Cluster weight on total 

New line 

in Egypt 


116

Shifting to dry kilns technology has a huge impact on fuel 

consumption 

Expected evolution of kilns by process type 

Does not include new line in 

Egypt (Dry with pre-calciner) 

Kilns production capacity breakdown % by technology 

Typical thermal 

consumption 

without by-pass 

MCal/t 

Wet 

Dry long 

Semi-dry 

Dry with 

preheater 

10 9 7 

1 

2 

1 

13 

16 16 

18 

19 

20 

2 

8 

18 

1 

820 

1,200 

1,050 

Dry with 

precalciner 

54 55 

61 

70 

770 

770 

2007=2008 

2009 

2010 

2014 

% mature 

markets 

47.1% 45.8% 43.4% 43.2% 


117

Similar impact of new mills on power consumption 

Expected evolution of cement mills by process type 

Mills production capacity breakdown % by technology 

Typical power 

consumption 

Kwh/t 

Open circuit 

24% 24% 24% 22% 20% 

40 

I gen 

26% 26% 26% 

22% 

20% 

40 

Ball 

II gen 

17% 17% 17% 

17% 

17% 

40 

III gen 

Vertical 

34% 

0% 

34% 

0% 

34% 

0% 

36% 

4% 

39% 

4% 

30 

40 

2007 

2008 

2009 

2010 2014 


118

Plan 2010-2014 summary 

Levers 

Targets 



investments 













119








Innovation 






120

A snapshot of Italgen 

Initially as Italcementi, and as 

Italgen since 2001, the Group has 

had links to energy production for 

more than 100 years. 

Hydro plants 

Transmission lines 

Italgen generates and distributes 

electricity through its 14 installed 

hydro power plants and 400 km of 

transmission lines across Italy. 

In 2009: 

Installed capacity: 56 MW 

Production: 308,000 MWh 

Plant availability: 99% 


121

Strongly focused on reinforcing a sustainable competitive 

position in Italy 

60 

50 

EURm 

50,7 

56,8 

48,1% 

Revenues 

EBITDA on 

Revenues 

60,0% 

50,0% 

40 

38,6 

36,8% 

40,0% 

30 

20 

13,7% 

24,1% 

20,9 

30,0% 

20,0% 

10 

10,0% 

0 

2007 2008 2009 2010 IH 

Renewable Energy 

Certificate System 300,000 

certificates sold annually 

Certification 

achieved for all 

14 hydro plants 

kWh 

Italgen joined 

Desertec Industrial 

Initiative as Associated 

Partner in March 2010 

0,0% 

Eco-Management 

Audit Scheme 

2007 2008 

2009 

2010 


122

After securing efficiency and competitiveness in Italy by 

leveraging the Group platform, new opportunities have 

been identified 

 

Energy demand is enjoying robust growth 

 

Local quality of renewable energy sources is high 

 

Competition from other players is limited 

 

Local government is introducing new regulatory framework to 

support renewable energy 

 

Our flexible internal structure is able to fit with project 

implementation requirements 


123

An international renewable portfolio was launched… 

Bulgaria a) 

Italy 

Kavarna I - 9 MW (in operation) 

Kavarna II- 9 MW (under construction) 

• 56 MW (in operation) 

Salerno - 1 MW (in operation) 

Guiglia - 6 MW (fully permitted) 

Turkey 

Bares - 142.5 MW (fully permitted) 

Morocco 

Laayoune - 5 MW (under construction) 

Egypt 

Hydro 

Solar 

Wind 

Gulf El Zeit - 120MW (under development) 

a) 49% stake in Gardawind 


124

…with a defined corporate structure 

99.9% 

1% Suez Cement 

1% Helwan 

Cement 

49 % 

99.87% 99.9% 98% 

GARDAWIND Srl 

99.9% 


125

Ongoing actions 

Various efforts are ongoing on RE project development for each pipeline 

Feasibility 

Legal and 

Permits 

Implementation 

and Erection 

Commissioning 

and Operation 

• Bulgaria 

(Kavarna I) 

(Kavarna II) 

• Morocco 

(Laayoune) 

2010 

2010 

2011 

• Italy 

(Guiglia) 

• Turkey 

(Bares) 

• Egypt 

(Gulf El Zeit) 

2011 

2012 

2013 


126

Bulgaria - Kavarna II 

Main Data 

Location 

Kavarna, Bulgaria 

Status 

Under construction 

Expected operation Q4 2010 

Installed capacity 9 MW 

Capacity factor 28-30% (2,450-2,600 h/y) 

Estimated production 22,300-23,600 MWh/y 

CO 2 savings 

Business model 

10,503-11,116 t/y 

Feed-in tariff, bilateral 

contracts 


127

Morocco - Laayoune 

Main Data 

Location 

Status 

Expected operation Q4 2011 

Installed capacity 

Capacity factor 

Estimated production 

CO 2 savings 


Laayoune, Morocco 

Under construction 

5.1MW (first step) 

36% (3,150 h/y) 

16,100 MWh/y 

12,300-13,000 t/y 

Captive use for Indusaha 

Grinding Center 


128

Turkey - Bares 

Main Data 

Location 

Balikesir, Turkey 

Fully permitted , turn-key 

Status 

EPC and financing in 

progress 

Expected operation 2012 

Installed capacity 142.5 MW 

Capacity factor 35-40% (3,100 - 3,500 h/y) 


CO 2 savings 

204,000- 232,000 t/y 


Open market, bilateral 

contract and feed-in tariff 


129

Egypt - Gulf El Zeit 

Location 

Gulf El Zeit, Egypt 

Status 

Under development 

Expected operation 2013 

Installed capacity 120 MW 

Capacity factor 

55-58% (4,800-5,100 h/y) 


CO 2 savings 

Main Data 


243,000-257,000 t/y 

Captive use to companies 

of Suez Cement Group 

Concessionary area 

(93.7 kmq) 

11.9 km 2 26.7 km 2 


130

Egypt - Gulf El Zeit - Environmental Impact Assessment 


131

Strategic guidelines and targeted goals 

From 2009…. …to 2014 

Project developer 

Assets operator and new RE pipeline developer 

Italian Market 

Diversified geographical presence 

Pioneering new Business Model 

Adopted Business Model 

Unbalanced technology mix in RE 

Balanced technology mix in RE 

Installed capacity: 56 MW 

Installed capacity: 347.5 MW 

Production: 308,000 MWh 

Production: 1,400,000 MWh 

CO2 savings: 208,000 t 

CO2 savings: 950,000 t 


132

Italgen’s role in Italcementi’s overall strategy 

Egypt : eligible as CDM 

project, PIN approved, 

PDD in progress 

Energy and 

CO2 Hedge 

Strong inverse correlation with key Italcementi cost factors 

Generating proxy offset to future volatility in CO2 emission charges 

Egypt: 

•MoU signed thanks to ITC platform. 

•New cement licences released only if 

captive energy production assured 

Morocco: 

• 5 MW permitted only for captive use 

• New law on RE just approved (March 2010) 

”Énergie Renouvelable” now the market is open 

Project development skills, leveraging ITC platform 

Value 

Creation 

Opportunity 

Initial development cost is valuable as ‘goodwill’ once 

the project is fully permitted, EPCs established and 

financing (project-based) secured 

Turkey 

Potential for deconsolidation and valorization through 

opening to partnerships for minority/majority stakes 

Turkey 

Egypt 


133

Conclusions 

Coherently with our centenary mission, we are contributing 

to secure Group energy needs and… 

Kavarna - Bulgaria 

Salerno - Italy 

Vaprio d’Adda - Italy 

…be sure, we are doing our best to be ready for the next 

“Green new Normal” wave of growth 

شكراً‏ 

Thank you 


134









135

Summing up 

Realistic basic assumptions for future cement market trends for both 

volumes and prices 

Pricing pressures on key production factors 

Sustainability, innovation and efficiency are the levers for delivering 

significant recovery in Group’s performances while increasing 

financial flexibility 

1,800 

EBITDA, 2007-14 (EURm) 

1,400 

1,000 

2007 

08 

09 

10 

11 

12 

13 

2014 


136










2009 Revenues: Breakdown by Geography* 

India 

3% 

Bulgaria China 

2% 1% Kazakhstan 

1% 

Turkey 

Thailand 

3% 

3% 

Other and 

trading 

4% 

Italy 

17% 

Morocco 

6% 

Egypt 

16% 

France 

27% 

N. America 

8% 

Spain 

4% 

Greece 

2% 

Belgium 

3% 

Focus on next pages 

(*) after eliminations 









Italy 

North America 

Egypt 

Morocco 

India 






Italy 

Matera (Italy) cement plant 

Investor Event 24-25 September 2010 140 

Italcementi Group Title 140 

Agadir 24-25 September 2010

GDP and population evolution 

Population evolution in Italy 

64,0 

62,0 

60,0 

58,0 

56,0 

Immigration 

effect 

54,0 

52,0 

1982 

1987 

1992 

1997 

2002 

2007 

2012 

2017 

2022 

2027 

2032 

2037 

2042 

2047 

population 

year 

GDP evolution Construction investment 

6% 

8% 

1980 

1982 

1984 

1986 

1988 

1990 

1992 

1994 

1996 

1998 

2000 

2002 

2004 

2006 

2008 

2010 

2012 

2014 

Var. % y/y 

4% 

2% 

0% 

-2% 

-4% 

6% 

4% 

2% 

0% 

-2% 

-4% 

-6% 

-6% 

-8% 

years 

years 



Var. % y/y 

1980 

1982 

1984 

1986 

1988 

1990 

1992 

1994 

1996 

1998 

2000 

2002 

2004 

2006 

2008 

2010 

2012 

2014 

Source: ISTAT, ITC estimates

Cement market: historical and medium-term trend 

50.000 

45.000 

Ktons 

1986/1992 

+23% 

1996/2006 

+36% 

40.000 

35.000 

30.000 

1981/1986 

-15% 1992/1996 

2006/2010 

- 23% 

-27% 

25.000 

20.000 

15.000 

10.000 

5.000 

- 

Source: AITEC, ITC estimates 



Italian cement market final destination 

All segments are suffering… 

45 

40 

Public Works Non Resid. Residential 

Cement consumption (Mt) 

35 

30 

25 

20 

15 

33% 

31% 

34% 

31% 

36% 

29% 

10 

5 

- 

36% 35% 35% 

2008 ACT. 2009 ACT. 2010 FOR. 

Source: ITC estimates 



Production capacity vs market volumes (Mt) 

2007 

2008 

2009 2010e 

CAGR ‘07-’10 

Capacity a) 

49.6 

49.6 

49.0 

49.3 

Consumption 

46.4 

41.8 

36.1 

34.2 

-9.6% 

Import 

5.2 

4.1 

3.7 

2.6 

Export 

2.8 

2.6 

2.0 

2.3 

Over-capacity 

5.6 

9.3 

14.6 

15.4 

Utilization rate 

89% 

81% 

70% 

69% 

Source: ITC estimates 

a) Cement equivalent of clinker capacity ( clk/cem ratio = 0.75) 



Price evolution in last 10 years 

Current price at 2001 level 

INDEX 2000 =100 

140 

130 

120 

-21.1% 

110 

100 

90 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 H1 

2010 



Cement players in Italy: market shares 

ITALCEMENTI 

BUZZI UNICEM 

COLACEM 

CEMENTIR 

HOLCIM 

SACCI 

ROSSI 

BARBETTI 

CALME 

GRIGOLIN (gr.) 

ZILLO 

MONSELICE 

CEM. COSTANTINOPOLI 

MOCCIA 

BETONCEM (gr.) 

LUCANIA 

CEM. CENTRO ITALIA (gr.) 

VICAT (gr.) 

BAUMIT (gr.) 

CEM. LAURIANO (gr.) 

BETON CANDEO (gr.) 

TASSULLO (gr.) 

DIANO (gr.) 

CEM. VICTORIA 

CEM. ARIANO 

IMPORTAZIONI 

(gr.) = Grinders 

# operators: 25 

+ terminalists 

Source: our estimates on Aitec data 



ITC: 2010 clinker production capacity 

Sarche 

Calusco 

Rezzato 

Broni 

Novi L. 

Borgo 

Pontassieve 

Monselice 

Ravenna 

Trieste 

Zone 

North 

Center 

South + Island 

Clinker capacity 

(Mlt) 

4 

1.6 

4.1 

Montalto 

Colleferro 

Scafa 

Guardiaregia 

Total 9.7 

Salerno 

Matera 

Samatzai 

Castrovillari 

Grinding Center (4) 

Isola d.F. 

Vibo V. 

Cement plant (17) 

Porto Emp. 



Go to market model 

 

 

 

 

 

5 Commercial areas 

15 Sales offices 

3 Key account manager 

3 Product managers 

3 Market managers 

Sales office 

Area Headquarter 

7,000 customers (out of a 

total 15,000) 

A homogeneous presence in 

all market channels 



Steady improvement 

Environment 

Clinker ratio trend 

clinker ratio trend 

2008 index=100 

Index 2008 =100 

Alternative fuel 

Alternative fuel 

2008 index=100 

Index 2008 =100 

100,0 

99,5 

99,0 

98,5 

98,0 

-1.4% 

300 

250 

200 

150 

100 

50 

183% 

97,5 

2008 2009 Target 2010 Target 2011 

0 

2008 2009 Target 2010 Target 2011 

Innovation 

Innovation rate 



Fixed and variable cost savings 

2009 vs. 2008 2010 Forecast vs. 2009 

-17.1% 

-8.1% 

-8.2% 

-3.8% 

-1.8 

-4.0% 

Savings on 

Fixed costs 

09vs08 

Savings on 

Variable 

Costs 

09vs08 

Total Cost 

Savings 

09 vs08 

Savings on 

Fixed costs 

10vs09 

Savings on 

Variable 

Costs 

10vs09 

Total Cost 

Savings 

10vs09 



Reduction of Operational Working Capital achieved 

(EURm) 

(108.4) 

(56.8) 

(23.5) 

Act Dec of 2009 

vs.. Dec 2008 

Act June 2010 

vs. Dec 2009 

For Dec 2010 

vs. Dec 2009 



How can the industry recover from the current situation? 

The whole sector is suffering 

the current situation 

Potential conditions for some 

restructuring 

Obsolete and critically located 

plants 

Plants with limited reserves 

of raw materials 

Overcapacity 

SHORT TERM 

MEDIUM TERM 

Heavy competitive pressures on 

market not sustainable vs. 

investment requirements to 

upgrade the industrial network 

Industry restructuring/ 

consolidation 



Our plan: revamping, industrial efficiency, fixed cost 

reduction and innovation 

Revamping 

Variable cost today is at 2007 

levels due to efficiency recovery 

and reduced energy costs: 

additional improvements are 

expected through plants 

revamping and further 

optimization of fuel mix 

Already identified core plants 

Other plants 

New grinding centres 

Other grinding centres 

Reduction of fixed production 

cost partially offsets the 

negative impact of volumes: 

further actions are planned to 

optimize plant structure 

Exploit the full potential of 

innovative products 



Planned improvement of industrial KPI’s 

Thermal consumption 

960 

Mcal/kg clinker 

920 

880 

840 

800 

-9.0% 

2009 2014 

Clinker power consumption 

kWh/ton clinker 

85 

80 

75 

70 

-9.6% 

2009 2014 



Conclusions: 

Improvements in the next future should come from: 

Efficiency: 

• Industrial efficiency (e.g.: alternative fuel usage, technical performance) 

• Labour productivity – FTE optimization 

• Plants revamping (Rezzato/Monselice) 

• Network rationalization 

We expect to have a positive impact on EBITDA at steady state in the region of 

EURm70 at current market conditions 

Market: 

• The current average market price is not sustainable for the industry 

• A price range similar to other European markets 

(Spain/Germany/Austria) should have a positive impact on EBITDA at 

steady state in the region of EURm75-80 

• Some partial help could also come from a slight increase in volumes 









Italy 

North America 

Egypt 

Morocco 

India 






North America 

Martinsburg, WV (USA) cement plant 


Title 

157 


Over the last 45 years, the US population grew 1.1%/y to 

306M and its economy by 2.7%. Similar growth are expected 

by 2014. 

Inhabitants, millions 

350 

300 

250 

200 

150 

100 

50 

0 

1964 1974 1984 1994 2004 2014 

Population 

Real GDP 

20 

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

Real GDP (trillions, 2009$) 

SOURCES: US Census Bureau, US Commerce Dept 

Outlook 2010-2014 

GDP to grow 2.5% (CAGR) 

Construction to grow 4.3%, mainly from public works 

• 2009 Stimulus Plan: $Bn140 in infrastructure, of which $50Bn into highways 

• Sept. 2010: Obama proposal for US$50Bn in transportation infrastructure 

SOURCES: Italcementi estimates 



From 1993 to 2006, the US cement market grew 3.7% a 

year to 127 Mt. Since then it has fallen 45%. PCA forecasts 

120 Mt in 2015 

150 

Cement consumption in USA (mainland) 

Mt 

1993/2006 

127 Mt 

120 Mt 

100 

1973/1993 

PCA Sep 2010 

forecast 

2010-2015 

50 

1928/1946 

1946/1973 

70 Mt in 

2009 

1900/1928 

0 

1900 1915 1930 1945 1960 1975 1990 2005 2020 

SOURCES: USGS, PCA 



The Top 5 cement producers in North America have 63% 

market share. ITC ranks 7 with 5% market share 

Main 

Competitors 

Market share 2009 

% Rank 

Recent moves 

Lafarge 

16 

1 

Minorities buy out 

Holcim 

14 

2 

Built 4 Mt/y Ste Genevieve on Mississippi 

Heidelberg 

13 

3 

Integrate Hanson’s volume 

Cemex 

12 

4 

Reduce costs post Rinker 

Buzzi 

8 

5 

Modernize Festus to 2+ Mt/y 

Ash Grove 

7 

6 

Italcementi 

5 

7 

Shut 11 kilns; modernize Martinsburg 

Votorantim 

4 

8 

TXI 

4 

9 

Titan 

2 

12 

Vicat 

2 

13 

SOURCES: Company’s Annual Reports, ITC analysis 



In North America, Italcementi is focused on cement 

and located in the Northeast and Puerto Rico 

Sales breakdown 

Market presence 

RMC 

17 

Other 

5 

78 

Cement 

% of 2009 total revenue 

Puerto Rico 



In the Northeast (total market cement capacity of 31.7 Mt), 

Italcementi ranks second among 11 players 

Geographical distribution 

of plants and grindings 

Capacity installed 

in Essroc market area, 2009 

Essroc Area 

2009 

Lafarge 7.3 

Italcementi 5.3 

Heidelberg 4.2 

Votorantim 3.9 

Cemex 3.0 

Holcim 2.6 

Buzzi 2.4 

Titan 1.1 

Eagle Materials 1.0 

6.0 since end 

2009 with 

2.0Mt new 

Martinsburg 

line 

Cementos Portland 0.6 

Amstrong 

0.3 

Mt 

SOURCES: ITC analysis 



Italcementi’s network is based on 6 full-cycle plants, 

2 grinding centers and 20 terminals 

2010 Preliminary Budget Sourcing 

CT. QUEBEC a) 

Montreal 

ESSEXVILLE 

Toronto 

PICTON 

Osweg 

o 

Rocheste 

r 

East Baldwin 

Bow 

Chicago 

Windsor 

Palmer 

LOGANSPORT 

SPEED 

Fairfield 

Wilder 

Clevelan 

d 

Columbus 

Nitro 

Bessemer 

MBO 

Leetsdale 

MARTINSBURG 

Richmond 

NPT News 

NAZARETH 

Baltimore 

Frederick 

40 RMC plants 

3 aggregates pits 

Cement Plant 

Grinding 

Cement Terminal 

Ciment Quebec a) 

200 mi 

200 km 

Salisbury 

Charlotte 

Smithfield 

PUERTO RICO 

a) Joint-venture in which ITC holds 50% 



Revenue and EBITDA were severely affected 

by the market slump 

Revenues 

US$M 

750 

828 

830 

736 

559 

EBITDA 

161 

196 

174 

78 

3 

a) 

2005 2006 2007 2008 2009 

IFRS figures 


a) including US$14M of non-recurring charges 


Since 2006, ITC significantly optimized its network, 

reducing its total industrial costs a) by 20%... 

Shut 11 kilns 

‣ 4 (b) in Nazareth in 2006 

‣ 2 (c) in Frederick in 2008 

‣ 2 (c) in Bessemer in 2009 

‣ 3 (c) in Martinsburg in 2009 

Replaced 1.8 Mt obsolete 

cement capacity by brand 

new Martinsburg 

production line 

Reduced cost factors: 2005 2010 d) 

Heat consumption (th/t CK) 1200 900 

Power consumption (kWh/t CT) 156 146 

Manpower (FTE, Cement business only) 1348 883 

Total closure of 2 plants (Frederick and Bessemer) 

Resulting industrial savings (% of industrial costs a) ) 20 

a) Like-for-like on 2010 volume b) Long dry process 

c) Wet process d) Budget 



… and greatly improving its environmental footprint 

Shut 11 kilns 

‣ 4 (b) in Nazareth in 2006 

‣ 2 (c) in Frederick in 2008 

‣ 2 (c) in Bessemer in 2009 

‣ 3 (c) in Martinsburg in 2009 

Replaced 1.8 Mt obsolete 

cement capacity by brand 

new Martinsburg 

production line 

Reduced environmental footprint: 2005 2010 d) 

CO 2 (kg/t CK) 1004 842 

SO x (kg/t CK) 2.7 1.3 

NOx (kg/t CK) 3.2 1.7 

Fugitive Dust 13 ESP’s (b) 100% Baghouse 

b) Long dry process c) Wet process d) Budget 



Over 6 years, Italcementi has significantly modernized 

its industrial network 

2005 2011 

Kiln technology 

% of capacity 

Precalciner 

Preheater 

Long Dry 

Wet 

8% 

43% 

18% 

31% 

36% 

47% 

10% 

7% 

Kiln size 

kt clinker/year 

365 

640 

Kiln vintage 

Year 

39 

28 

Thermal 

consumption 

Mcal/t 

1200 

870 



Italcementi benefits from good locations and can leverage 

its modern plants on the East Coast 

Strengths 

Key plants well located to serve major markets, with good, long term 

reserves 

2 large modern plants on East Coast: Martinsburg and Nazareth 

Low cost water distribution on Great Lakes 

Strong package business/brand 

Opportunities 

Market growth opportunities in Martinsburg area 

Speed and Picton still have opportunities for improvement 

Further ready mix development 

Leverage good rail connections to support market coverage 

Potential new Federal Infrastructure program 



Italcementi’s performance is expected to improve, thanks to 

ongoing actions and planned investments 

Main actions: 2010 to 2014 

Increase sales 

volume 

• Increase sales volume through market growth and better market 

positioning 

• Develop terminal network to support market coverage 

Improve 

industrial 

performance 

• Leverage full benefit of new Martinsburg and of modernized 

Nazareth 

• Leverage increased labour productivity 

Reduce logistic 

costs 

• Optimize logistic flows, in order to address relevant markets 

• Develop rail transportation from Martinsburg 

Sustainable 

development 

• Adapt plants to upcoming environmental regulations (Hg, CO2) 

• Increase Alternate Fuels usage 

• Improve & Sustain Safety performance 



Martinsburg, WV. Capacity: 2 Mt/y cement. 

Thermal consumption: 760 MCal/t CK. 150 employees 









Italy 

North America 

Egypt 

Morocco 

India 






Egypt 

Suez plant (Egypt) 


Investor Event 24-25 Title September 2010 172

Egypt is experiencing a positive growing cycle driven by 

political stability, economical reforms and internal consumption 

Economic reforms implemented since 2004, including reduced corporate 

income taxes, privatization, foreign trade and investment liberalization, and 

increasing banking supervision, helped Egypt to pull through the global crisis 

relatively untouched. 

Egypt with 78 million inhabitants has the Arab world’s largest population and a 

quickly expanding youth demographic. 

2008 2009 2010 05-09 09-14 

Actual Actual Forecast CAGR CAGR 

Population growth (%) 1.8 1.8 1.6 1.8% 1.6% 

Gross Domestic Product (% yoy) 6.0 4.6 4.5 5.5% 4.5% 

Inflation (% annual average) 18.3 11.8 8.0 7.4% 6.6% 

Construction (% yoy) 11.9 14.2 4.0 8.7% 6.2% 

Sources: Italcementi and Business Monitor International 



Construction sector growth has boosted cement 

consumption 

Grey Cement 

Egypt Market 

Volumes 

Mt 

CAGR 2005-09 

+13.9% 

28.5 30.1 34.5 38.5 

CAGR 2009-14 

+5.7% 

48.0 49.6 53.1 56.3 59.7 63.2 

2005 2006 2007 2008 2009 2010F 2011F 2012F 2013F 2014F 

Egypt grey cement market outlook 

Structural demand (Mt) 

Cement final destination 

Source: Ministry of Investment 



Demand and supply balance has lead the government to 

announce the issuance of new licenses for an increased 

clinker capacity of almost 17mt within 2014. 

Cement Market 

Grey Clinker Supply / Demand Balance (Mt) 

Volumes / MT 2008 

2009 2010 2014 

Supply 

Clinker plant capacity 41.3 43.0 47.1 59.9 

Clinker production 38.3 40.9 44.9 59.3 

Domestic Utilization Rate 93% 95% 95% 99% 

(A) 

(B) 

(B/A) 

Demand 

Clinker domestic consumption 

35.0 41.9 43.8 56.0 

Balance 

Clinker balance 3.3 ‐1.0 1.1 3.3 

Source: Italcementi 



Italcementi is the largest cement producer within 

a fragmented supply market 

Volumes 2009 in Mt Market Share % 2009 


11.7 

Lafarge 

Cemex 

Titan 

Cimpor 

Sinai 

NCC 

Misr Beni Suef 

5.7 

4.3 

4.2 

3.5 

3.1 

1.9 

9.6 

Misr Beni Suef 

4,0% 

Sinai 

7,3% 

NCC 

6,4% 

Cemex 

11,9% 

South 

Valley 

2,0% 

Cimpor 

8,6% 

Qena 

3,7% 

Titan 

8,9% 

Others 

2,8% 


24,4% 

Lafarge 

20,0% 

Qena 

1.8 

South Valley 

0.9 

Others 

1.3 

Source: Ministry of Investment 



Italcementi volumes and prices have risen steadily, but market 

share has decreased because of additional capacity 

Market Share 

30.1% 

30.9% 

30.6% 

28.3% 

1 

2 

24.4% 

ITC Egypt 

Volumes 

M tons 

14 

12 

10 

8 

6 

4 

2 

0 

8,6 9,3 10,6 10,9 11,7 

5,9 6.1 

2005 2006 2007 2008 2009 H1 2009 H1 2010 

ITC Egypt 

OPC Bags Exwork 

price 

EGP/t 

2007 2008 2009 2010 



To follow market growth trends, Italcementi invested 

significantly in operational efficiency projects… 

Increased clinker and cement production by improving plant reliability 

Decreased the clinker cement ratio by enlarging the product range 

Decreased fuel consumption and improved fuel mix 

Improved labour productivity 

Implemented Group sustainable development policies with special focus on 

environment and social responsibility 



…and the results are confirmed by the key performance 

indicators… 

Cement production (kt/year) 

Clinker/cement ratio 

13000 

12500 

Δ= -1,4% 

Δ 2007-2010 = -2,8% 

12000 

Δ= -0,1% 

11500 

Δ= -1,3% 

11000 

10500 

2007 2008 2009 2010 

2007 2008 2009 2010 

100% 

Fuel Mix Mix 

6 

Cement production/Staff 

(kton/FTE) 

(kton/FTE) 

80% 

60% 

40% 

20% 

44% 

56% 

GAS 

52% 48% 

48% 

OIL 

53% 

52% 47% 

4 

0% 

2007 2008 2009 2010 

2 

2007 2008 2009 2010 



… and the financial results (EGPm) 

Revenue 

Rec. EBITDA 

1.910 

3.543 4.167 

5.313 6.138 

892 

1.602 1.783 1.915 2.030 

2005 2006 2007 2008 2009 

2005 2006 2007 2008 2009 

Cash Flow 

577 

1.348 1.212 

1.584 1.736 

2005 2006 2007 2008 2009 

IFRS compliant 



Italcementi’s challenges in a fast changing environment 

In a country where: 

Less than 10 years ago, Egypt was an export oriented low-cost cement 

producer: now it is importing and has production costs close to the 

Mediterranean average 

The cost of thermal and electrical energy nearly doubled together with raw 

material costs in less than 24 months 

Government intervention in the cement sector has been intense (licensing, 

price monitoring, taxation, export ban, etc.) 

Growth in cement consumption has been faster than expected 

The Group should balance its growth portfolio 

Italcementi has 3 main challenges: 

Defend profitability 

Respond to market needs 

Balance geographical exposures 



Actions to defend profitability 

Continuous efficiency program aimed at raising: 

Production by de-bottlenecking and improved reliability 

Productivity by improving quality of personnel 

Fuel energy optimization 

Product portfolio 

Vertical integration 



Actions in response to market needs 

Organic growth 

Investment in a brown field site to replace old kiln technology at the Tourah 

and Helwan plants (1mt/y) and increase capacity (1mt/y), in response to market 

and efficiency needs and for proactive sustainable development action. 

Total investment is expected to be in the region of 200-250 EURm and should 

have an incremental EBITDA of approx 50 EURm/y. 



Action to balance geographical exposure 

To exploit Egypt as a platform for future investments in the region, as already 

done in Kuwait for the cement and ready-mix operation. 

Continuous scouting activities to capture the best development opportunities. 



The financial health of Italcementi in Egypt is helping the 

Group to achieve is objectives in the region 

The strong Egyptian balance sheet combined with the positive 

market outlook and steady cash flow generation contribute to the 

accomplishment of the three mains goals and the growth plans for 

the Egyptian subsidiary. 









Italy 

North America 

Egypt 

Morocco 

India 






Morocco 


Investor Event 24-25 September 2010 187 187 

Title 

Ait Baha (Morocco) cement plant

Morocco’s population is relatively young, mainly concentrated 

in the north-west, and increasing moving to urban areas 

Demographics and urbanization 

Population 

Population 2007: 32.4m (45 inhab/Km 2 ) 

CAGR: 02-07: 1.7% 

07-12: 1.4% 

Life expectancy at birth: 2003-07: 69.9 years 

2008-12: 72 years 

Age pyramid (2007): 

29% (0-14 years) 

63% (15-64 years) 

8% (>65 years) 

Casablanca 

3.6 

Agadir 

0.4 

Rabat 

0.7 

Fes 

0.7 

Marrakech 

0.7 

Urbanization 

45000 

(Rural and urban population trends) 

40000 

35000 

30000 

25000 

total 

70% 

CAGR 2000/12 

Total: 1.4% 

Urban: 2.5% 

20000 

15000 

10000 

5000 

46% 

urban 

rural 

63% 

CAGR 2012/25 

Total: 1.1% 

Urban: 2.0% 

Largest city population (mln) 

0 

1986 1990 2000 2012 2025 



Overall situation is positive with real GDP growth in recent 

years and forecast for the next few years 

Key indicators 

Real GDP growth (%) 

Gross fixed investment (% GDP) 

Consumer price inflation (%) 

Sources of GDP 

2005 2006 2007 2008 2009 

a) 

2010 

a) 

2011 

a) 

2012-14 

3.0 7.8 2.7 5.6 4.9 4.0 4.0 4.5 

27.5 28.1 31.2 33.0 30.7 32.0 32.0 32.0 

1.0 3.3 2.0 3.7 1.0 1.1 2.2 2.4 

a) Forecasts 

2009 

55,1% 

16,8% 

28,1% 

Agriculture 

Services 

Industry 



Construction outpacing GDP growth in recent years driven by 

real estate projects and infrastructure modernization under 

implementation 

Expenditure in EBITDA – index 2002 = 100 

Projects under implementation 

Residential 

• Social housing programmes 

• Self-construction 

Non-Residential 

• Growing demand for service buildings 

(schools, hospitals, stadiums) 

• Commercial buildings 

• Financial centres 

• Tourist facilities: hotels, resorts, 

entertainment structures 

Residential and non-residential benefiting 

from low interest rate, private investment 

and governmental social housing program 

(with fresh tax benefits on home builders 

introduced with the 2010 budget) 

Increasing infrastructure 

Investment in tourism development 

Civil Works/ Infrastructure 

• Road/rail network 

• Public transport 

• Ports/airports 

• Power generation 

• Water projects (including desalination) 

• Utilities 



Acceleration growth in cement demand over the last 7 years, 

to 14.5 Mt in 2009 … 

Cement demand since 1990 

Kt 

14.5 Mt 

+ 3.4% vs. 2008 

~450 kg pro capita 

8.0% 

CAGR 

3.4% 

4.5% 

Acceleration boosted by: 

• 2002: 50 DHM/t. cem. tax (100 from 2004) 

to finance Social Housing Programme 

• 2003: tax exemptions for social housing builders 



… mostly concentrated in the Northern and coastal part of 

Morocco, with central regions growing very fast, and demand 

mainly driven by residential activity 

Breakdown by region 

Tanger 

Cement demand breakdown 

Tetouan 

Breakdown by final destination 

2 

Rabat 

Casablanca 

4 

cement demand growth a) 

Settat - Ben Ahmed 5 

3 

Safi 

1 

Marrakech 

Agadir 

Top 5 regions in terms of 

a) CAGR 2009 vs. 2007 

1- Tadla-Azilal: +21.8 % 

2- Taza-Al Hoceima: +20.6 % 

3- Fes-Bouleman: +14.5 % 

4- Gharb-Cherarda: +13.5 % 

5- Chaouia-Ourdigha: +10.1 % 

Fes 

Meknes 

Nador 

Beni-Mellal 

Cement demand 

(2009, kt) 

200-400 

401-600 

601-800 

801-1000 

1001-1200 

1201-1400 

1401-1600 

>1600 

Non residential 

6% 

Infrastructure 

14% 

Residential, 80% 

(including civil engineering 

for social housing programme) 



18.8 Mt cement capacity a) in 2010, with the entry 

of a new independent player 

Cement plant 

Grinding center 

Capacity a) (2010, Mt)* 

Lafarge: 6.3 

ITC: 5.7 

Holcim: 4.0 

Cimpor: 1.2 

Cimat: 1.6 

Total: 18.8 

Market share (2009, %)* 

Lafarge: 41 

ITC: 26 

Holcim: 24 

Cimpor: 9 

a) Cement equivalent to clinker 

* Ciments du Maroc estimates 



Full utilization of Morocco cement plant capacity over 

the last four years with the recent high domestic demand 

resulting in a sharp fall in exports 

Cement plant utilization rate a) 

Cement & Clinker 

exports less imports (kt) 

a) Based on cement equivalent to clinker locally produced 



... with long term 5% CAGR in structural demand, 

thanks to favourable changes in cement demand drivers 

Change in cement demand drivers 

16 

14 

12 

10 

8 

6 

4 

The cement sector has enjoyed buoyant growthin recent 

years, having benefited from big infrastructure projects such 

as the deepwater port on the Mediterranean, the development 

of six new tourist resorts, important public housing programs, 

and construction of roads, dams and power plants. 

2009 

14,5 Mt 

Technological factors 

• Change in housing 

characteristics 

• Increasing competitiveness of 

cement vs. other building 

materials 

• Introduction of new building 

technologies 

• Change in building code 

• Improvement of concrete 

quality 

2 

Demographic factors 

- 

1960 

1962 

1964 

1966 

1968 

1970 

1972 

1974 

1976 

1978 

1980 

1982 

1984 

1986 

1988 

1990 

1992 

1994 

1996 

1998 

2000 

2002 

2004 

2006 

2008 

2010 

2012 

• Deficit of 1 million housing 

units to recover 

• Decrease in emigration 

• Increase in transit migration 

(becoming permanent settlers) 

• Increased return migration rates 



Italcementi has developed a large industrial network 

in the Southern region of the country ... 

Plants: 4 

ISO certificates: 9001 & 14001 

Grinding centers: 1 

Clinker capacity (kt): 3,920 

Cement capacity (kt): 5,840 

Sales volumes (2009, kt): 3,689 

Market share (2009, %): 26 

Cement plant 




... reinforced by the new Ait Baha greenfield 

Start-up: 2010 

Clinker capacity (kt): 1,550 

Cement capacity (kt): 2,200 

ITC capacity increase: + 31% 

Technology type: dry (modern) 

 

Self-production of power through heat 

recovery 

Achievement 

3 3 years ITC ITC team team work work 

Layout 



Ait Baha plant: the most technological advanced, the biggest 

kiln in the country, generating significant savings 

Savings vs.. old Agadir plant 

Heat consumption: - 24% 

Power consumption: - 20% 

Variable costs: - 20% 

Fixed costs: - 10% 

CO 2 emissions: - 15% 



Investments are already engaged to improve the efficiency 

of the other plants 

Safi capacity: 

+ 25 kt of clinker per year 

Marrakech de-bottlenecking: 

+ 60 kt of clinker per year 

Laayoune wind farm (5 MW): 

Savings of 1 EURm per year 



An historical vertical integration in the ready-mix business with 

a strategic presence in the largest cities of the Central region, 

and in aggregates 

Ready-mix business 

Market (2009, Mm3): 4.6 

Batching units: 23 

Market share (2009, %): 17 

Sales volumes (2009, Mm3): 0.8 

Aggregates business 

Market (2009, Mt): 130.0 

Quarries: 3 

Capacity (Mt): 2.7 

Sales volumes (2009, Mt): 2.6 



2009 full year snapshot on sales volumes 

and recurring EBITDA 

Cement (kt) Aggregates (kt) Ready-mix (km3) 

-0.9% -0.7% -10.8% 

Volumes 

Cement (EURm) Aggregates (EURm) Ready-mix (EURm) 

+41.2% 

Recurring 

EBITDA 

-12.9% -1.7% 



Positive price effects and efficient procurement management 

have generated a sharp rise in recurring EBITDA margin 

versus 2008 

350 

70% 

300 

60% 

250 

50% 

200 

43.8% 43.0% 

37.9% 

41.3% 

40% 

150 

30.8% 

30% 

100 

20% 

50 

10% 

0 

2005 2006 2007 2008 2009 

Turnover Recurring EBITDA % Recurring EBITDA 

0% 



Outlook and Actions 

The new entrant to the cement market is challenging historical market shares 

with pressure on sales prices 

Strategic actions to consolidate our market share are currently defined and 

ongoing 

The shutdown of the Agadir plant is an upcoming issue, land propertie values 

are a strategic opportunity 

Other major investments for improving industrial efficiency are already planned 

and/or launched (Safi, Laayoune wind farm, Marrakech plant 

de-bottlenecking, alternative fuels) 

The integration strategy between Cement and Materials continues to be 

reinforced on a regular basis 

The development of the ready-mix business as a strategic distribution channel 

for cement in the medium/long term is a major priority 



Conclusions 

In 2010: 

We shall exploit the benefits from the completion of the Ait Baha plant 

We are improving our operating results 

We will continue the optimization of working capital begun in 2009 

In 2011: 

We will begin industrial cement network rationalization 

We will capture the full impact of the Ait Baha plant efficiency 

We will significantly reduce the environmental impact of our cement plants 

We will begin to reap the benefit of other industrial efficiency investments 

A solid and efficient sustainable platform ready for new strategic developments 









Italy 

North America 

Egypt 

Morocco 

India 






India 

Yerraguntla :New Clinker Plant 


Italcementi Group Title 206 


The strong Indian economy can sustain long-term high growth 

Key Growth Drivers 

Strong demographics 

Stable political environment 

Internal demand driven; less export reliant 

Healthy financial sector 

Aggressive Infrastructure plan of 1,000$bn 

(2013-17) 

17,0% 

14,0% 

Million 

1500 

1000 

500 

0 

Population & Urbanization rate 

40% 

30% 

26% 28% 

1991 2001 2008 2030 

GDP 2010 GDP 2030 

>1 $tn 

4-5x 

9,2% 9,3% 

7,5% 

9,0% 

7,0% 

6,5% 

8,0% 8,6% 

8,0% 8,0% 

65 

80 

97 

117 

Urban 

144 

161 

Rural 

180 

201 

225 

252 

2006 2007 2008 2009 E2010 2010-14 

GDP% Construction% 

Source: ITC estimates, CMIE, EIU, World Bank, other analysts 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 

Infrastructure Plan XI & XII ($bn) 



Cement demand: housing and infrastructure to drive growth 

350 

Demand evolution (mt) 

+100mt 

Per capita consumption: great 

potential 

300 

250 

200 

150135 

100 

151 

164 

179 

193 

210 

229 

250 

272 

42 47 53 59 62 67 72 79 85 

50 

0 

INDIA 

2005-09 : 9.4% (actual) 

2009-14 : 9.0% (forecast) 

+30mt 

SOUTH 

2005-09 : 10.6% (actual) 

2009-14 : 8.3% (forecast) 

297 

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

South India demand is ~30% of All-India 

92 

1200 

1000 

800 

600 

400 

200 

0 

Kg/ Person (2009) 

1091 

490 

427 403 

317 

170 

China W.Europe World Japan US India 

India Demand Source (2010-14) 

Housing continues to be major growth driver 

Infrastructure contribution 2014, +10% vs. 2009 

Source: ITC estimates, CMIE, JP Morgan, other analysts 

Residential 

55% 

Infrastructure 

30% 

Nonresidential 

15% 



Cement supply evolution: South leading capacity additions 

Capacity (mt) year end (by region) 

400 

200 

0 

322 

335 348 361 

301 

50 

50 

50 54 

270 

48 

39 

39 

41 43 

216 42 

39 

191 

64 67 70 71 

38 

164 172 31 

30 30 

64 

60 

49 51 51 51 

24 26 

25 25 

27 

49 46 

31 33 40 38 

29 30 34 

34 

55 59 61 73 92 104 120 128 136 142 

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

A strong wave of capacity 

additions will take the total 

India installed capacity to 

~360mt by 2014 (+67% vs. 

2008) 

South. West North Central East 

Cumulated capacity addition (mt) (by region) 2009-14 

13 

22 

23 

145mt 

18 

69 

South has attracted highest capacity additions 

(~48%) following recent high profitable cycle 

Most new entrants are also expected in South 

Market. 



South capacity utilization expected to drop to 73% by 2012 

before starting to recover 

96% 97% 

93% 

88% 

86% 

77% 

74% 73% 74% 

124 

112 

98 

34 

30 

79 23 

12 

65 9 

10 

9 

55 57 

60 

2 

8 

2 

5 

4 

5 

8 

5 

5 

42 47 53 59 62 67 72 79 

(million tons) 

132 

34 

13 

85 

77% 

139 

32 

15 

92 

Capacity Utilization 

Estimated Available 

Capacity 

Unutilized Cap. 

Net Exports 

Demand 

CAGR 09-14: 8.3% 

10,0 

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

0,0% 

A long run of high saturation (2005-09) led to strong profits and cash flows for 

the industry 

Reinvestment by existing players plus new players have further fragmented 

the market 

Recovery expected from 2013 while possible consolidation moves can help 



ITC in India : milestones 

JAN ’01 - Start-up of a 50 / 50 JV with KK Birla Group in Zuari Cement Ltd (ZCL) 

Yerraguntla plant (South Andhra Pradesh), 2.2 MT capacity. 

JAN ’02 - Acquisition of Sri Vishnu Cement Ltd. 

Sitapuram plant (Central Andhra Pradesh), 1.3 MT capacity. 

JUN ’06 - Zuari Cement becomes a 100% subsidiary of ITC. 

JAN ’07 - Sri Vishnu Cement merges into Zuari Cement. 

MAY ’07 - 

Launch of “PRIMO” premium cement. 

MAR ’08 - Sitapuram 43MW captive power plant startup 

MAR’10 - Commissioning of Yerraguntla second line, 2.0 MT clinker capacity 

(to be followed by Chennai grinding centre ,1 MT cement by July2011) 



ZCL: strongly rooted in the vast South India market with 

potential to expand to East & Maharastra 

2002 2009 2011 

ZCL Capacity (mt) 3.5 3.5 6.0 

South Market Share 6.8% 4.9% 5.7% 

Recently commissioned 

Yerraguntla brown-field 

expansion and upcoming 

Chennai grinding unit will boost 

ZCL market share. 

Geographical expansion to high 

potential secondary markets 

(Maharashtra and East) helps to 

increase volumes and improve 

margins. 

Maharashtra 

Mumbai 

20.9 M.inhab. 

Main Cities 

Full Cycle 

Plant 

Grinding 

Bangalore 

6.4 M.inhab. 

South India 

Hyderabad 

6.2 M.inhab. 

ITC Yerraguntla 

2009: 2.2mt 

2010: 3,7mt 

Chennai 

7.2 M.inhab. 

Chennai GU 

2011: 1,0mt 

East markets 

ITC Sitapuram 

2009:1.3mt 



10 years of successful presence of ITC in highly competitive 

South India 

ITC entered India at the right time and, over a decade of continuous 

improvements, has established a solid and profitable presence in one of the 

most challenging and competitive environments. 

This has been achieved through a predominantly indigenous management team 

and a strong local focus 

Industrial performance 

• 65% local coal (cost advantage vs. competitors) 

• 82 Kwh / ton of cement (-15% reduction) 

• 30% decrease in work-force 

Reinforced industrial footprint 

• 43 MW captive power plant (Sitapuram) 

• Sitapuram railway connection 

• Yerraguntla 2 nd line 

• Chennai grinding unit 

• ~25M$ investments planned over 5 years to further improve industrial performance : 

7M$ per annum in energy and fuels 



Sustainable Development: a continuous commitment 

Relentless improvement of Safety results 

(zero frequency rate in 2009 and 2010) 

2 CDM projects under certification process 

(wet fly-ash) 

Alternative fuels project under execution in 

Yerraguntla 

Continuous support to nearby communities in 

schooling, medical assistance and 

infrastructures 

Potable water treatment plants covering 6 

villages surrounding our plants 

Green belt: 15,000 trees planted each year 

~30M$ investment planned over next 5 

years 



Zuari Cement: from rookie to top brand position 

Primary Market spanning most of South India (30% of 

total India), with initial presence in Maharashtra (West) 

and Orissa (East) to expand further 

Traditional focus on “Trade” segment (60-70% of sales) 

to optimize operations 

Main cities Bangalore and Chennai as ZCL strongholds, 

taking advantage of Yerraguntla proximity 

Solid reputation in the market, aggressive brand-building 

and leverage on ITC innovative products (“TX” planned 

launch next year, followed by Transparent Cement) 

Innovative advertisement (eg. Web 2.0 platform) and 

customers retention schemes 



ZCL performance: steady improvement in volumes 

and brand positioning ... 

3.600 

3.507 

3.100 

CY (Jan-Dec) 

2.925 

3.252 3.258 

3.240 

2.600 

2.100 

2.244 2.280 

2.657 

1.600 

1.693 

1.100 

600 

100 

-400 

Brand 

position 

2002 2003 2004 2005 2006 2007 2008 2009 H1 2010 

Sales - Cement+Clinker (kt) 

Price trend 

C+ B B+ A A/A+ A/A+ 

A/A+ 



…supported by strong industrial performance 

has enhanced profitability… 

Turnover EBITDA (%) 

14000 

CY (Jan-Dec) 

70,0% 

12000 

60,0% 

10000 

50,0% 

8000 

40,0% 

6000 

30,0% 

4000 

20,0% 

2000 

10,0% 

0 

2002 2003 2004 2005 2006 2007 2008 2009 H1 2010 

Turnover (mINR) EBITDA % 

0,0% 



…and has made ZCL a consistent top financial performer in 

the South 

EBITDA % evolution (*) 

CY (Jan-Dec) vs.. South market leaders 

24,8% 

33,9% 

34,0% 

28,9% 

38,2% 

37,6% 

36,3% 

34,7% 35,0% 

32,1% 

31,0% 

31,8% 

25,4% 

25,4% 

22,6% 

Madras Cements 

Zuari Cements 

21,1% 

20,3% 

11,9% 

9,0% 

11,7% 

10,4% 

15,2% 

12,7% 

12,2% 

India Cements 

2003 2004 2005 2006 2007 2008 2009 H1 2010 

(*) Zuari: EBITDA adjusted for like to like comparison with competitors’ results 

Competitors: local GAAP (source: BSE) 



ITC: ready to grab opportunities for rapid growth 

ITC is evaluating all the options (organic and inorganic ) to establish itself as a 

leading player in the South and adjacent markets. 

Greenfield 

~ 2 Mt clinker/y 

Mumbai 

20.9 M.inhab. 

Bangalore 

6.4 M.inhab. 

Sitapuram 

Grinding center (under evaluation) 

Cement plant 

Hyderabad 

6.2 M.inhab. 

Yerraguntla 

Chennai 

7.2 M.inhab. 

Grinding centre (under construction) 

New production facilities (under evaluation) 

Major Metropolitan Areas 

(Estimated Million inhabitants) 

Second line 

~ 2 Mt clinker/y 

Second line 

~ 2Mt clinker/y completed 


1Mt/y under 

construction 

Organic 

ZCL has ready options for brownfield 

(Sitapuram) and green-field 

projects (North Karnataka) 

Localize production in grinding 

centers to allay logistic constraints 

(Orissa in the East, Kerala/ Tamil 

Nadu in the South , …) 

Non organic 

Despite recent fairly high priced 

acquisitions , we expect valuations / 

expectations to ease 

Plenty of room for further 

consolidation in South and 

other adjoining regions 

To diversify geographically, actively 

considering opportunities beyond 

current South markets 









2010-2014 forecast 

Financial Policy 




Group sales volumes by business expected 

to grow by 3.7%-4.1% 

Volumes, 2009-14 

Ready-mix volumes sold 

Million Mc 

11.2 

4.1% 

13.7 

Cement and clinker volumes sold 

Million tons 

55.7 

3.7% 

66.8 

2009A 10 11 12 13 2014 

39 44 

CALCESTRUZZI not included 

Aggregates volumes sold 

Million tons 

2009A 10 11 12 13 2014 

55 57 

39.1 

4.0% 

47.5 

x 

CAGR 

1 Excluding export and eliminations 


Percentage of emerging 

countries on total 1 

2009A 10 11 12 13 2014 

8 14 

CALCESTRUZZI not included 


CapEx to support future significant growth 

4.0 

0.3 0.4 

0.4 0.4 

EURbn 

2.0 

1.0 1.1 

0.0 

1.3 1.2 

2005‐2009 2010‐2014 

Sustaining and other investments 

Strategy investments (w/o major) 

Major projects 

Performance investments 

3 EURbn; 10.7% 

on cumulated 

revenues 

3.1 EURbn; 10.9% 

on cumulated 

revenues 



Major projects included in the industrial plan 

Bulgaria 

Devnya 

New Line 

2.9 mt/y 

cement capacity 

Efficiency 

Capacity 

Sustainability 

240 EURm 

2010 - 2012 

Egypt 

Wet Line 

Relocation 

Efficiency 

Capacity 

Sustainability 

200 EURm 

2012 - 2014 

Italy 

2 Kilns 

Revamping 

Efficiency 

Rationalization 

240 EURm 

2011 - 2014 

India 

Sitapuram 

New Line 

Capacity 

100 EURm 

2013 - 2014 

..... …….. …. EURm 

……… 



Deliver significant recovery in economic performance 

EBITDA, 2007-14 (EURm) 

1,800 

1,400 

Further growth options and 

capacity increase to be evaluated 

Market share increase 

in selected countries 

Market volumes recovery 

1,000 

EBITDA evolution with 

industrial efficiencies1 

2007 

08 

09 

10 

11 

12 

13 

2014 

Tight cost and cash 

management (e.g. working 

capital, etc.) 

Postponement of some major 

investments 


Continue with renewal of industrial footprint 

through available cash flow (especially in the 

second part of the plan) 

Be ready to capture growth opportunities 

Commissioning of the 

renewed plants 

(Bulgaria, Italy, ……......Egypt) 

1 Including effect of basic assumptions on prices and costs 



ITC Group evolution in cement capacity, revenues 

and EBITDA 

1996 2000 2004 

2008 

Industrial 

Plan 2014E 

Cement 

Capacity ( * ) 

15% 

35% 

46% 

52% 

55% 

42 mt 55 mt 68 mt 

73 mt ~80mt 

11% 

14% 

16% 

Revenues 

36% 

43% 

(after 

eliminations) 

14% 

15% 

21% 

EBITDA 

recurring 

45% 

46% 

(*) Full capacity included for all shareholdings ≥ 33% 

Mature countries 

Emerging countries 

Further growth options 



In summary, based on scenario assumptions and action plan 

Recovery of volume and profitability at pre-crisis level, but better operating 

leverage thanks to higher efficiency of industrial network… 

…cumulated cash flow from operating activities of ~4.4 EURbn 

over next 5 years … 

…total industrial investments over next 5 years at ~ 3 

EURbn, leaving room … 

… to take advantage of additional organic or 

non-organic growth opportunities and/or 

compensate for market downside risk 









2010-2014 forecast 

Financial Policy 




Financial Management Policy 

Steady long term policy aiming to ensure support for the Group’s long term growth 

across cycles 

Balance Sheet 

Management 

Coherent with BBB/Baa2 mid-cycle rating 

Liquidity 

Management 


Investor Event 24-25 September 2010 

228


Steady long term policy aiming to ensure support for the Group’s long term growth 

across cycles 

Dividend 

Policy 

Leverage / 

Gearing 

Balance Sheet 

Management 

Debt Structure 


Sources 

Diversification 

Liquidity 

Management 

Term Structure 

Liquidity 

Support 



229


Key metrics targets at mid-cycle within BBB/Baa2 expected ranges 

Dividend 

Policy 

Leverage / 

Gearing 

Balance Sheet 

Net 

Management 

Debt / EBITDA 

Target 2009 


2.0x – 2.5x 2.5x 

Coherent with GCF BBB/Baa2 / Net Debt mid-cycle 30% rating – 35% 29.8% 

Sources 


Liquidity 

EBITDA Management / Net Interest 

Net Debt / Total Equity 

Liquidity 

Support 

> 6x 9.1x 


< 70% 52% 



230


Moderate dividend policy at holding level to ensure preservation of appropriate 

gearing and leverage 

Dividend 

Policy 

Leverage / 

Italcementi Payout GearingRatio 2004-2009 

Balance Sheet Normalized Debt payout Structure in the 25% 

75% 

0.36 

Management 

0.40 range at ITC level 

70% 

0.36 

0.33 

0.35 o Willing to significantly sacrifice 

65% 

0.30 

60% 

Coherent with BBB/Baa2 mid-cycle absolute rating DPS levels in lower part 

DPS (Ord) 

0.30 

55% 

of the cycle 

47% 

50% 

0.25 

Liquidity Payout ratios progressively 

45% 

0.18 Management 

0.20 

40% 

Sources 

increasing at lower levels of Group 

Payout 


35% Diversification 

25% 24% 23% 25% 38% 0.12 0.15 structure to maximize cash 

30% 

upstreaming, allowing for CapExrelated 

debt servicing 

25% 

0.10 

20% 

Liquidity 

0.05 

15% 

Support o Listed operating subsidiaries 

10% 

0.00 

payout in 60-80% range 

2004 2005 2006 2007 2008 2009 



231


While our equity structure remains for the time being complex (two holdings), 

we are determined to remove a key constraint to debt management… 

Dividend 

Policy 

Leverage / 

Gearing 

Balance Sheet 

Significantly reduce structural subordination 

Management 

(to the 20-25% area) 



Sources 


Liquidity 

Management 


Liquidity 

Support 



232


… while reaffirming long term policy commitments to rating agencies and 

debt holders 

Maintain a long-dated debt maturity Dividend profile 

(>3 years at all times) Policy 

Ensure significant 

Leverage 

liquidity 

/ 

back-up headroom 

(>2 years of 

Gearing 

debt maturities at Balance all times) Sheet 

Management 


Tap bond markets for approx 50% of total debt 


and maintain strong banking relationships 

Sources 


Liquidity 

Management 


Liquidity 

Support 



233

2010 Refinancing Plan 

Beginning in Q1 2010, we launched a global refinancing plan that will reorganize 

the Group’s debt structure with several goals 

Create synergies across 

holding company levels 

Remove structural 

subordination 

Reinforce funding 

sources diversification 

Reinforce liquidity 

backup headroom 

Mitigate ‘liquidity 

insurance’ cost increase 

Tap financial markets on largest available funding 

base – ITC to be the ‘market interface’ for the 

Group, funding CF on interco basis 

Historical two-tier approach to Group debt structure 

was a negative in rating analysis for both ITC and 

CF 

Provide bond market access to ITC – previously 

relying exclusively on bank funding while CF was 

the bond issuer 

Safely bridge the Group towards a more favourable 

phase of the business cycle 

Right-size unutilized liquidity back-up lines to offset 

higher fee levels due to new bank market 

conditions 



234

2010 Refinancing Plan 

Execution of the plan is following a clearly laid out sequence that builds on each 

step’s success as precondition to the next 

 

ITC Inaugural EMTN Issue 

Refinance prepayment of CF USPP Notes 

Replenish liquidity backups by refinancing 

CF’s outstanding CP and part of ITC’s RCFs 

Q1 

 

ITC Syndicated Backup Facility 

Replace 2012 CF Syndicated Backup RCF 

and other maturing bilaterals 

Q3 

ITC Commercial Paper Program 

Replace CF Commercial Paper program 

Q4 

ITC refinancing of 

EURm500 CF 2017 Bond 

Further reduce CF third party debt, 

structural subordination 

TBD 



235

Debt Profile before and after the Bond issue – Groupwide view 

March bond issue was key first step in the plan, resulting in longer average debt 

life and reduced structural subordination at Group level 

Bonds outstanding were 40% of gross debt vs. 29% at 2009 year-end 

Gross Debt Breakdown by Borrower 

as of 31/12/2009 

Gross Debt Breakdown by Borrower 

as of 30/6/2010 

EURm 

3.500 

EURm 

3.500 

Italcementi ex CF Group 

Italcementi ex ITC Finance S.A. and CF Group 

3.000 

Ciments Français Group 

3.000 

Italcementi Finance S.A. 

2.500 

1.137 

3,165 ( * ) 64% of total 

Average Life: 4.1 years 

2.500 

1.059 

3,283 ( * ) 44% of total 



2.000 

1,020 193 477 445 217 813 

2.000 

772 

643 201 477 351 257 1,355 

1.500 

1.500 

55 

1.000 

500 

0 

2.028 

Gross 

Debt 

231 

70 

789 

743 

2 330 327 

176 

191 

147 118 41 

0-1yr 1-2yr 2-3yr 3-4yr 4-5yr 5+ yr 

1.000 

500 

0 

1.451 

Gross 

Debt 

761 

103 

12 

528 3 439 228 232 

539 

198 

38 123 25 

0-1yr 1-2yr 2-3yr 3-4yr 4-5yr 5+ yr 

(*) Excluding MTM of derivatives instruments 



236

Liquidity Profile as is – Groupwide view (as of June 30, 2010) 

Long term debt issuance has not addressed back-up lines maturities, mostly at CF 

Liquidity headroom nearing policy limit 

Unutilized Backup Lines Maturity Profile 

Liquidity Backup vs. Maturing Debt* 

EURm 

3.500 

3.000 

Italcementi ex ITC Finance S.A. and CF 

Group 


EURm 

3.500 

3.000 

Available Backup Lines 

Cumulated Matured Debt** 

Available Backup lines + Eurozone Cash 

2.500 

2.000 

2,456 

670 



2.500 

2.000 

2.6 years of 

liquidity headroom 

150 

511 800 330 195 420 200 

1.500 

1.500 

67% of total 

1.000 

1.000 

1.636 

500 

0 

100 800 

( 

*** ) 150 

100 

320 

261 

230 195 100 150 

50 

Total 0-1yr 1-2yr 2-3yr 3-4yr 4-5yr 5+ yr 

500 

0 

Y0 Y1 Y2 Y3 Y4 Y5 Y>5 

(*) EURm 373 of outstanding BdT classified on Balance Sheet as L/T debt are shown here as 0‐1 yr maturity following rating agency analysis; unutilised M/T credit lines are shown gross of the same amount 

(**) Excluding MTM of derivatives instruments (***) 1‐yr swing line, additional €150M still outstanding as CF line replaced in July 



237

New ITCFIN Revolving Credit Facility 

On September 22, we entered into a new RCF providing a fundamental shift in our 

liquidity backup structure 

Thanks to an effective transaction process we believe optimal terms have been 

achieved, well inside preliminary indications received in April-June 

Borrower 

Guarantor 

Bookrunners 

Participants 

Tenor 

Amount 

Financial 

Covenant 

Italcementi Finance SA 

Italcementi SpA 

8 core relationships (club deal) 

8 additional core relationships 

5 years bullet 

EURm 920 vs. EURm 800 minimum target 

Consolidated Net Debt / EBITDA: max 3.75x 

Acquisition Event allows 12 month bump to max 4.0x 



238

Liquidity Profile Proforma for New Transaction – Groupwide view 

Thanks to the new facility and the cancellation of short-dated lines, 

80% of liquidity backup is now managed at top Group level with 3.9 years 

of ‘headroom’ 

Unutilized Backup Lines Maturity Profile 

Liquidity Backup vs. Maturing Debt* 

EURm 

3.500 

3.000 

2.500 

2.000 

2,261 

545 

Italcementi ex ITC Finance S.A. 

and CF Group 




EURm 

3.500 

3.000 

2.500 

2.000 

Available Backup Lines 

Cumulated Matured Debt** 

Available Backup lines + Eurozone Cash 

3.9 years of 

liquidity 

headroom 

561 0 105 205 270 1,120 

1.500 

1.500 

1.000 

1.270 

20% of total 

150 

1.000 

500 

0 

100 

920 

500 

446 

350 

111 

( 

*** ) 270 

25 205 

0 80 

50 

0 

Total 0-1yr 1-2yr 2-3yr 3-4yr 4-5yr 5+ yr 

Y0 Y1 Y2 Y3 Y4 Y5 Y>5 

(*) EURm 373 of outstanding BdT classified on Balance Sheet as L/T debt are shown here as 0‐1 yr maturity following rating agency analysis; unutilised M/T credit lines are shown gross of the same amount 

(**) Excluding MTM of derivatives instruments (***) Proforma for new swing lines signed in July 



239

Financial Management - Conclusions 

A pivotal year to reinforce our financial policies to prepare the ground for the 

execution of our industrial strategic plan 

Dividend 

Policy 

Leverage / 

Gearing 

Balance Sheet 

Management 



Sources 


Liquidity 

Management 


Liquidity 

Support 



240










In summary: focus on efficiency, sustainability and 

innovation in an uncertain and volatile scenario (1/2) 

Conservative macroeconomic scenario and demand recovery still uncertain 

and volatile in the medium term 

• Decoupling of growth pattern between Emerging markets (still growing) and 

Mature (delayed and slow recovery in most economies) 

• Price scenario still uncertain with increasing pressure in selected markets 

• Risk of a “double dip” not to be ruled out 

Key actions focused on delivering recovery of Group’s economic performance, 

enhancing environmental sustainability and generating financial resources for 

the next wave of development 

• Selected investments to upgrade plant technology and environmental 

sustainability coupled with continuous improvement of industrial efficiency 

• Research and Innovation to improve technologies and product portfolio 

• Marked improvement of Group organizational performance 



In summary: selective approach to development 

opportunities with flexibility to withstand market downside 

risks (2/2) 

Selective approach to development options in light of the available cash 

• Industrial network restructuring in mature domestic markets (e.g.: Italy, 

Bulgaria, France initial steps) 

• Mix of options (expansion CapEx and bolt-on acquisitions) 

• To capture growth in domestic emerging markets (e.g.: Morocco, India, Egypt 

and China/Shaanxi) 

• To enter new emerging markets, also to capture synergies with current 

presence 

Ability to withstand the negative impact of a possible further worsening of the 

macroeconomic scenario and associated market downside risk by: 

• Continued tight cash management (maintenance CapEx and operating 

working capital) 

• Continuous alignment of current capacity and capacity expansion projects to 

the specific dynamics of each market 



A concrete plan in a fragile planet 



Disclaimer 

This presentation contains forward-looking statements regarding future events and future results of Italcementi and its 

affiliate Ciments Français that are based on the current expectations, estimates, forecasts and projections about the 

industries in which Italcementi and Ciments Français operate, and on the beliefs and assumptions of the management 

of Italcementi and Ciments Français. In particular, among other statements, certain statements with regard to 

management objectives, trends in results of operations, margins, costs, return on equity, risk management, 

competition, changes in business strategy and the acquisition and disposition of assets are forward-looking in nature. 

Words such as ‘expects’, ‘anticipates’, ‘scenario’, ‘outlook’, ‘targets’, ‘goals’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, 

‘seeks’, ‘estimates’, as well as any variation of such words and similar expressions, are intended to identify such 

forward-looking statements. Those forward-looking statements are only assumptions and are subject to risks, 

uncertainties and assumptions that are difficult to predict because they relate to events and depend upon 

circumstances that will occur in the future. Therefore, actual results of Italcementi or of its affiliate Ciments Français 

may differ materially and adversely from those expressed or implied in any forward-looking statement and neither 

Italcementi nor Ciments Français does assume any liability with respect thereto. Factors that might cause or 

contribute to such differences include, but are not limited to, global economic conditions, the impact of competition, or 

political and economic developments in the countries in which Italcementi and Ciments Français operate. Any 

forward-looking statements made by or on behalf of Italcementi or of Ciments Français speak only as of the date they 

are made. Neither Italcementi nor Ciments Français does undertake to update forward-looking statements to reflect 

any change in their expectations with regard thereto, or any change in events, conditions or circumstances which any 

such statement is based on. The reader is advised to consult any further disclosure that may be made in documents 

filed by Italcementi with Borsa Italiana S.p.A (Italy) and by Ciments Français with the Autorité des Marchés Financiers 

(France). 

The Manager in Charge of preparing Italcementi SpA financial reports, Carlo Bianchini, hereby certifies pursuant to 

paragraph 2 of art. 154-bis of the Consolidated Law on Finance (Testo Unico della Finanza), that the accounting 

disclosures of this document are consistent with the accounting documents, ledgers and entries. 

This presentation has been prepared solely for the use at the meeting/Analyst Meeting with investors and analysts at 

the date shown below. Under no circumstances may this presentation be deemed to be an offer to sell, a solicitation 

to buy or a solicitation of an offer to buy securities of any kind in any jurisdiction where such an offer, solicitation or 

sale should follow any registration, qualification, notice, disclosure or application under the securities laws and 

regulations of any such jurisdiction.

Presentation - Italcementi Group

Create successful ePaper yourself

Delete template?

Save as template?