An Overview of the Global Cement Industry

Ankur Agarwal (+44 (0) 207 102 9138)

ankur.agarwal@nomura.com
Nomura International plc
March 2011

ANY AUTHORS NAMED ON THIS REPORT ARE RESEARCH ANALYSTS UNLESS OTHERWISE INDICATED
PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON SLIDE 25.

Agenda
1. Overview of 2010
2. 2011 Outlook
3. Long term prospects




 









Continued decline in developed markets as the expected recovery, especially in the US,
was delayed

Robust volumes in most emerging markets, but margin pressure in some key markets
like India and Egypt driven by a combination of demand-supply dynamics and rising
energy prices

Focus on de-leveraging the balance sheet driven by a combination of cost cutting and
scaling back capital expenditure

Capacity rationalisation in developed markets with steps like mothballing and closures

Relatively muted year in terms of M&A activity

Snapshot of volumes trends in 2010

Russia

UK

Poland
German
y
Italy
Spain
Turkey

France
US

China

Morocco
Egypt

Mexico

Western Europe
Eastern Europe
Global

Indonesia

-5% to 0%
-5% to 0%
0% to 5%

> 20%

10% to 15%

India

Brazil

5% to 10%

0% to 5%

0% to -5%

-5% to -10%

-10% to -15%

<-20%
3

Source: Nomura estimates

Snapshot of pricing trends in 2010

Russia

UK

France
US

Spain

Poland
German
y
Italy

Turkey
China

Morocco
Egypt

Mexico

India

Indonesia

Western Europe

-5% to 0%

Brazil

Eastern Europe

-5% to -10%

Global

-5% to 0%

> 20%

10% to 15%

5% to 10%

0% to 5%

0% to -5%

-5% to -10%

-10% to -15%

<-20%
4

Source: Nomura Estimates

Country grid representing the price volume trend for 2010

3
Turkey

Brazil

India

Indonesia

China

Morocco

Czech

Rank of Volume Trends

Decreasing Volume

Increasing Volumes

Russia

Range of Price/Volume
Rank assigned
Change

Egypt

UK
US

Poland

0
-3

-2

-1

France
-1 Saudi Arabia
Nigeria

Italy

-2

UAE

Australia

> 10%
5% to 10%
0% to 5%
-5% to 0%
-10% to -5%
< -10%

$
#
"
"
#
$

Germany

Mexico

Algeria

Spain
-3

Rank of Pricing Trends

Decreasing Prices

Source: Company data, Nomura research

Increasing Prices

Reflected in the margin performance in 2010

Margins remained close to trough levels in 2010, driven by lack of volume recovery in
most mature markets and adverse demand-supply dynamics in some emerging
markets in a backdrop of rising energy prices

In parts of Europe, operating performance was supported by the sale of carbon
credits (carbon credit sales contributed 10.5% and 6.8% to Buzzi  and

  9M10 EBITDA, respectively. For the full year, the contribution to Lafarge
and   2010 EBITDA was 4.3% and 2.1%, respectively)
EBITDA Margin Trend
27%
25%
23%
21%

19%
17%
15%
2005

2006

2007

2008

2009

2010E

2011E

2012E

Holcim Ltd.

Lafarge S.A.

Heidelberg Cement AG

Avg of three (Cons)

Avg of three (Hist & NOM)

Mean last 5yr (Avg of three)

Peak last 5yr (Avg of three)

Trough last 5yr (Avg of three)

7

Source: Company data, Factset, Nomura estimates

Focus on deleveraging the balance sheet

Companies continued to focus on de-leveraging their balance sheets through a
combination of disposals, cost cutting and scaling back capital expenditure

Lafarge and Heidelberg Cement specifically in focus from a balance sheet
perspective given that they acquired Orascom Cement and Hanson at the peak of the
cycle

Net Debt/Equity Trend

220%
200%
180%
160%
140%
120%
100%
80%
60%
40%
20%
2005

2006

2007

2008

2009

2010E

2011E

2012E

Holcim Ltd.

Lafarge S.A.

Heidelberg Cement AG

Avg of three (Cons)

Avg of three (Hist & NOM)

Mean last 5yr (Avg of three)

Peak last 5yr (Avg of three)

Trough last 5yr (Avg of three)

8

Source: Company data, Factset, Nomura estimates

Driven by scaling back capital expenditure

Capital expenditure as a percentage of sales peaked in 2008

After 2008, the focus of the companies has been to minimise capital expenditure - not
only growth but maintenance as well
Capex/Sales Trend
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
2005

2006

2007

2008

2009

2010E

2011E

2012E

Holcim Ltd.

Lafarge S.A.

Heidelberg Cement AG

Avg of three (Cons)

Avg of three (Hist & NOM)

Mean last 5yr (Avg of three)

Peak last 5yr (Avg of three)

Trough last 5yr (Avg of three)

Source: Company data, Factset, Nomura estimates

Majority of the capacity addition in emerging markets

Total Capacity Additions excl China (mta)

FLSmidth expects new global contracted kiln

160

capacity of c65MT in 2011, which is in line

140
120

with the expected annual average additions

100

In 2010, the

majority of capacity additions

80

60

were in emerging markets ( 48% in Asia, ex

40

China, and 29% in Middle East and Africa

20

2008

2009

2010

2008

2009

2011E

2007

2007

2006

2005

2006

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

2010 Capacity Addition breakup (excl China)

Capacity Additions breakup excl China (mta)
160
140
Africa
13%

Rest Asia
13%

120
100

80
60

Middle East
16%

40

20

Europe
8%
Russia
0%

Rest Asia

India

Europe

South America

Middle East

Africa

2010

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1990

North
America
0%

1992

Latin
America
15%

1991

India
35%

North America

10

Source: FLSmidth

Capacity closures driven by market conditions

Significant capacity closures in Europe and North America dictated by weak
market conditions

Capacity closures in some markets in Europe like Italy, Spain, delayed because
companies continue to benefit from carbon credits allotted on production volumes
based on pre-crisis levels
25

45%
40%

20

35%
30%

15
25%
20%
10
15%

10%

5%
0

0%
Rest of Europe

Russia

US

Mexico

Capacity Closure in MT (LHS)

Italy

Spain

Turkey

UK

Closure as a % of 2008 consumption (RHS)

Source:, Company Reports (highlights approximate closures indicated in 2008-09) Nomura estimates, China also phased out 101MT of vertical kiln capacity in 2008-09(c7% of
2008 consumption) and , according to the Chinese government, will phase another 30MT in 2010 and 65MT in 2011

11

Snapshot of cement consumption by region

Centre of gravity of cement consumption moving towards the east

China was the driver in the past five years; in the next five years India, Indonesia
likely to be the fastest growing countries in Asia

Cement consumption by region in 2005

Middle East
4%
Africa
4%

Cement consumption by region in 2010

Middle East
5%
Africa
4%

Europe
16%

Europe
10%

North America
2%
Latin America
5%

North America
6%
Latin America
5%

Asia Pacific ex
China
14%

China
46%
Asia Pacific ex
China
19%

Source: CEMBUREAU, Nomura estimates, 2005 absolute consumption of 2253MT and 2010 estimate of c3009MY

China
60%

12

Snapshot of utilisation rates

In spite of capacity closures in Europe and North America, utilisation rates
remained low

In the case of emerging markets (ex Eastern Europe), while utilisation
rates were lower than the peak in 2008 driven by new capacity additions,
they were still at a reasonable level
120%

100%

80%

60%

40%

20%

0%
Western Europe

North America

Eastern Europe

Middle East

Asia

Latin America

Africa

Source: Company data, Cemnet, PCA, Nomura research

13

Agenda
1. Overview of 2010

2. 2011 Outlook
3. Long term prospects

14

Outlook for 2011

Region

Global com panies w ith their cem ent business exposure

in m ajor m arkets

Asia-Pacific
China
Holcim, Lafarge, CRH, Heidelberg, Cimpor, Italcementi

2011
2011
Wholesale
Real GDP
Price
grow th
Index
forecast
(% y-o-y)
Price Vol Margin
2011 Outlook



##

9.8%

4.9%

India

Holcim, Italcementi, Lafarge, Heidelberg, CRH, Vicat, Cimpor



8.5%

8.1%

Indonesia

Holcim, Lafarge, Heidelberg



6.5%

7.2%

Australia
Am erica
USA

Holcim, Heidelberg

3.3%

3.4%

Buzzi, Holcim, Lafarge, Heidelberg, Cemex, Vicat, Italcementi

3.0%

2.3%

Brazil

Holcim, Lafarge, Cimpor

4.4%

5.5%

Mexico
Europe
Russia

Buzzi, Holcim, Lafarge, Cemex

4.0%

3.9%

Buzzi, Holcim, Lafarge

4.1%

9.6%

Spain

Italcementi, Cemex, Cimpor, Lafarge, Holcim



0.6%

2.9%
2.3%

Italy

Buzzi, Italcementi, Cementir, Holcim

1.0%

Germany
France

Buzzi, Heidelberg, Cemex, Lafarge, Holcim

Italcementi, Lafarge, Vicat, Holcim







=
+

3.0%
1.6%

2.1%
2.1%

Poland

CRH, Buzzi, Heidelberg, Cemex, Lafarge



4.5%

3.8%

UK

Holcim, Lafarge, Heidelberg, Cemex

1.9%

4.1%

Czech
Buzzi, Heidelberg, Holcim, Lafarge
MENA
Saudi Arabia Lafarge's likely exposure of c1% starting 2011

1.4%

2.5%

5.0%

5.6%

Egypt

Lafarge,Italcementi, Heidelberg, Cemex, Cementir, Vicat, Cimpor

1.2%

12.1%

Algeria

Lafarge, Buzzi

Morocco

Italcementi, Lafarge, Holcim, Cimpor

5.9%

2.6%

Nigeria

Lafarge

7.4%

8.5%

5.1%

3.3%

    !"#$  $$ $ 

Source: Euroconstruct, PCA, Nomura Global Economics, Company data, Datastream, IMF, Nomura research
15

Emerging markets  margin concerns in near term



 




 



 


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Source: Nomura research

16

Food inflation to affect prospects in EM in the near term

Variable impact of food price inflation on companies

Food share vs GDP per capita (USD) in 2008

50

Share of food in household spending (%)

80
Nigeria

70

48
46

Morocco

60

Indonesia
50

Vulnerability to food price

inflation increases

44

Algeria

42

Egypt
India

40

40

China
Mexico

30

Russia
Poland

38

Czech

36

Saudi
Arabia

20
Brazil

34
32

10

30

Lafarg e

1000

6000

11000

16000

Ho lcim

Italcemen ti

Buzzi

21000

Nominal GDP per capita - US$ at market exch rates

Source: FAO, Seale, USDC, World Bank and Nomura Global Economics

Note: y axis represents a weighted average (of capacity) of a food

vulnerability index of countries in which companies have installed capacity
Source: Company data, Nomura strategy, Nomura research

Headwinds from higher energy prices in 2011E

Energy costs (electricity + fuel) as % of sales

We estimate that for a

18%

10% increase in energy

16%

prices, a c2-3% price

8%

EBITDA margin to stay

6%

stable

4%

in

the

cement

business

Global Coal Spot

Prices SA Rds Bay

1Q10

32.9%

26.6%

2Q10

15.5%

3Q10

3.9%

39.5%

4Q10E

-0.6%

44.7%

FY10E
2011

11.5%

41.8%

1Q11E

19.9%

24.4%

2Q11E

19.3%

10.7%

3Q11E

23.9%

18.2%

4Q11E

17.6%

2.3%

2010

10%

else being equal) for the

WTI Crude Futr

% change

14%
12%

increase is required (all

Energy price impact (y-o-y)

2%
0%
Italcementi

Buzzi

Lafarge

Source: Company data, Nomura research

Holcim

57.3%

FY11E
20.3%
13.3%
Estimates of WTI crude for 2011 are of Nomura Global Oil and
Gas Team and all other are by extrapolating the current prices

17

Source: Bloomberg, Nomura estimates

Agenda
1. Overview of 2010
2. 2011 Outlook

3. Long term prospects

18

Robust long-term prospects of EM markets

Drivers of emerging market construction demand

Increasing population, urbanisation and economic

9%
7.7%

8%

growth will drive construction material demand in

7.1%

7%

emerging markets. A strong footprint in Asia and

6.7%

6.1%

6%

4.8%

5%

5.7%

5.2%

5.0%

4%

Africa/Middle East will be a critical growth driver

for transnational European companies, in our
view.

3%
2%

2.0%
1.0%

0.9%

1%
0%

-0.3%

-1%

Population

European majors like Holcim, Lafarge, Heidelberg

Cement and Italcementi have built a solid platform

GDP

Construction

Africa & Middle East

Asia Pacific - Emerging markets

Eastern Europe

South & Central America

Source: Company data, UN for population growth 2010E-20E and Global Construction
Perspectives and Oxford Economics for GDP 2009E-20E and construction 2009E-20E

in different emerging markets (CRH has also

made initial forays in India and China, apart from

Global cement consumption (million tons)

its presence in eastern Europe, while Buzzi's

2990
2740 2800

emerging market exposure is concentrated in

2500

2300

eastern Europe) and can play the role of a

2100

consolidator in some of these markets.

1350
1250 1300
1140 1200

1495
1420 1470

1570 1620

1700

1800

Emerging
markets
90%

1900

Emerging
markets
55%
Developed
markets
45%
#!!*

#!!)

#!!(

#!!'

#!!&

#!!%

#!!$

#!!#

#!!"

#!!!

"***

"**)

"**(

"**'

"**&

"**%

"**$

"**#

Developed
markets 10%
"**"

Source: Company data

19

Longer-term cement consumption growth rates by region

Note (1): China cement consumption per capita kept at 2009 level, but growing with population.
Note (2): Western Europe = FR, DE, IT, GR, ES, UK / Eastern Europe = BU, CZ, HU, RO, RU, / North America = CA, USA / South America = AG, BR, CL, CO /
Asia Pacific (developed) = AU, JP / Asia Pacific (developing) = ID, PH, KR, TH, VN / Africa-Middle East = EG, MA, NG, SA, ZA, AE

20

Source: Construction Perspectives and Oxford Economics, United Nations World Population Prospects, Company Reports

Implications of differential regional growth rates: A case

study of Holcim

The faster pace of growth in emerging markets means that international cement companies
are likely to direct the majority of their capital (either in the form of capital
expenditure/acquisitions) to these markets. It will also mean these   dependence on
some of these markets will increase significantly in the next 10 years

On our estimates, Holcim will be required to add c60MT (assuming that utilisation rates stay
below 100%) in 2011-20, 80% of which will be added in Asia (of which c56% will need to
be added in India), but no further additions in North America

On our estimates, Holcim in 2020 may have c52% of its consolidated capacity in Asia, out of
which 33% will be in India alone. Holcim, potentially, will have higher capacity in India
alone (close to 90MT) than Europe and North America (close to 78MT) put together in
2020

If international majors $ keep pace with growth in emerging markets they risk losing market
share in these regions. They also may face increased competition globally from a likely
transformation of domestic operators to an international one (something similar to what Cemex
achieved in the 1990s)

21

Holcim 's consolidated capacity [m t]

Scenario analysis for

2011E

Europe

Analysis
assumes
growth
at
annualised CAGR estimates till 2020
while in reality the growth may be
more volatile

Also, for simplicity it does not model

in the lead time for the construction
of a cement plant of 2-3 years, and
includes only consolidated capacity
(fully or proportionate). Therefore it
excludes China, Egypt and Nigeria

Does not assume any structural
capacity closures in Europe or in the
US (because of NESHAP, which
may entail replacement/or more
capex to replace old capacity)

2019E 2020E

53

53

53

53

53

53

53

54

57

20.6

20.6

20.6

20.6

20.6

20.6

20.6

20.6

20.6

20.6

Latin Am erica

35.1

35.1

35.1

35.1

35.1

35.1

35.1

35.1

36.1

38.1

11.2

11.2

11.2

11.2

12.2

13.2

14.2

15.2

16.2

16.2

Africa Middle East

Holcim

2012E 2013E 2014E 2015E 2016E 2017E 2018E

53

North Am erica

Asia Pacific

96

96

96

98

103

111

119

127

136

145

India ACC

30.7

30.7

30.7

31.7

33.7

36.7

39.7

42.7

45.7

48.7

India Am buja
Rest of Asia (excludes China w hich is not
consolidated)

26.9

26.9

26.9

27.9

29.9

31.9

34.9

36.9

39.9

42.9

38.4

39.4

50.4

53.4

38.4

38.4

38.4

42.4

44.4

47.4

Total consolidated capacity

216

216

216

218

224

233

242

251

263

277

Asia (ex China) as % of group capacity

44%

44%

44%

45%

46%

48%

49%

51%

52%

52%

India as a % of group capacity

Holcim 's cem ent sold across regions based
on construction grow th CAGR

27%

27%

27%

27%

28%

29%

31%

32%

33%

33%

2011E

2012E 2013E 2014E 2015E 2016E 2017E 2018E

2019E 2020E

Europe

34

35

36

37

38

39

40

40

41

42

North Am erica

12

13

13

13

14

14

15

15

16

16

Latin Am erica

26

27

28

30

31

32

33

34

36

Africa Middle East

10

10

11

11

12

13

13

14

15

16

Asia Pacific

37

77

82

88

94

101

108

116

124

133

143

India ACC

25

26

29

31

33

36

39

42

45

48

India Am buja
Rest of Asia (excludes China w hich is not
consolidated)

22

23

25

27

29

31

34

36

39

31

33

35

37

39

41

44

46

49

52

159

168

176

186

195

206

217

228

241

254

48%

49%

50%

51%

52%

53%

54%

54%

55%

56%

Total cem ent sold

Asia (ex China) as % of group cem ent
volum es sold
India as a % of group cem ent volum es sold
Cem ent Volum e sold by Holcim based on
construction grow th CAGR

29%

30%

30%

65%

67%

68%

North Am erica

60%

62%

64%

Latin Am erica

75%

78%

81%

Africa Middle East

85%

90%

95%

Asia Pacific

31%

32%

33%

33%

34%

2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

Europe (assum ing 1/3rd Eastern Europe)

35%

42

36%

2019E 2020E

70%

71%

73%

75%

76%

77%

74%

65%

67%

69%

71%

73%

75%

78%

84%

87%

91%

94%

98%

99.0%

97.5%

100%

97%

95%

93%

92%

92%

97%
99%

80%

86%

92%

96%

98%

98%

98%

98%

98%

India ACC

80%

86%

93%

97%

98%

97%

97%

97%

98%

India Am buja
Rest of Asia (excludes China w hich is not
consolidated)

80%

86%

93%

97%

97%

98%

97%

99%

98%

99%

80%

85%

90%

96%

99%

97%

99%

98%

98%

98%

99%

Cem ent Consum ption CAGR assum ption through 2020 (based on Oxford Construction Econom ics)
Europe

2.3%

North Am erica

2.9%

Latin Am erica

3.9%

Africa Middle East

5.7%

Asia Pacific

Source: Company data, Oxford Construction Economics, Nomura estimates.

India ACC

7.8%

India Am buja
Rest of Asia (excludes China w hich is not
consolidated)

7.8%

22
6.1%

Scope for further consolidation

International cement operators have the
opportunity to further consolidate/expand
their footprint in markets like China, Russia,
India, Indonesia, Brazil, South Africa and
Nigeria

Otherwise they risk the transformation of
some of the domestic operators like Anhui
Conch, China National Building Material
(China), Eurocement (Russia), Grasim
(India),
Semen
Gresik(Indonesia),
Votorantim (Brazil), Pretoria Cement
Company (South Africa), Dangote Cement
(Nigeria) into international contenders.

It has happened before when CEMEX

transformed itself from a domestic Mexican
operator in the 1990s to an international
company

Capacity controlled by international operators by

region
Africa

Latin America

Western Europe

North America

Eastern Europe

Asia ex China

Middle East

Asia including China

0%

20%

40%

60%

80%

100%

Source: Company reports, CEMBUREAU, Nomura estimates

*International operators include Buzzi Unicem, Cemex, Cimpor, CRH, Heidelberg Cement, Holcim, Italcementi, Lafarge Titan and Votorantim.

23

Thank You

24

Appendix

25

Price volume trends (y/y) for Cement in 2010

Cemex

Holcim

Holcim

Volum e
Mexico
U.S.
Spain
UK
France
Germany
Poland
Colombia
Egypt
Philippines
Total

3Q10
2%
0%
-21%
9%
N/A
7%
-1%
-1%
1%
2%
-1%

4Q10
0%
3%
-12%
-3%
N/A
-5%
14%
0%
0%
-11%
-2%

2010
-4%
0%
-22%
1%
N/A
-2%
-1%
5%
2%
8%
-3%

Prices (USD)
Mexico
U.S.
Spain
UK
France
Germany
Poland
Colombia
Egypt
Philippines
Total

3Q10
4%
-7%
-16%
-7%
N/A
-12%
-8%
6%
0%
12%
-2%

4Q10
9%
-8%
-16%
-6%
N/A
-11%
-6%
2%
-3%
8%
0%

2010
8%
-8%
-12%
-6%
N/A
-8%
-4%
7%
3%
8%
0%

Prices (LC)
Mexico
U.S.
Spain
UK
France
Germany
Poland
Colombia
Egypt
Philippines
Total

3Q10
0%
-7%
-8%
-3%
N/A
-4%
-3%
-3%
3%
5%
-2%

4Q10
4%
-8%
-8%
-2%
N/A
-3%
-2%
-4%
2%
0%
-1%

2010
0%
-8%
-7%
-4%
N/A
-1%
-4%
-6%
5%
2%
-2%

Prices
Europe
Belgium
France
Germany
Sw itzerland
Italy
Hungary
Czech Republic
Slovakia
Croatia
Romania
Bulgaria
Serbia
Russia
Azerbaijan
Spain
North Am erica
Canada
USA
Latin Am erica
Mexico
Costa Rica
Nicaragua
Colombia
Ecuador
Brazil
Argentina
Africa Middle Eas
Morocco
Indian Ocean
Asia Pacific
India
Sri Lanka
Bangladesh
Vietnam
Malaysia
Indonesia
Australia
New Zealand

1H10
-4.4%
-4.0%
-2.0%
-3.1%
-20.9%
-7.8%
-6.1%
-11.8%
-10.9%
-10.7%
-23.3%
8.7%
-6.5%
-11.6%
-6.8%
-3.7%
-1.1%
-5.7%
0.4%
-0.9%
6.9%
-0.3%
-14.4%
3.0%
-4.1%
12.2%
-2.0%
-9.8%
1.1%
1.5%
-10.6%
0.2%
-5.9%
0.4%
0.6%
7.0%
-0.3%

9M10
-4.4%
-3.5%
-1.0%
-1.6%
-2.1%
-23.5%
-8.0%
-6.5%
-7.5%
-9.3%
-11.0%
-22.6%
10.6%
-7.8%
-6.6%
-6.0%
-4.3%
0.2%
-6.4%
1.0%
0.5%
10.8%
-0.1%
-9.8%
2.1%
-2.2%
12.3%
-1.4%
-0.3%
-4.4%
-1.6%
-3.8%
-8.7%
0.5%
-5.4%
3.2%
1.4%
7.1%
1.2%

2010
-4.4%
-3.5%
1.2%
-1.1%
-23.6%
-8.4%
-7.0%
-3.9%
-9.5%
-10.9%
-21.4%
11.8%
-6.5%
-4.7%
-5.5%
-5.0%
1.1%
-6.9%
1.6%
0.7%
9.7%
0.2%
-9.3%
1.8%
-0.6%
13.0%
-1.0%
0.0%
-1.8%
-3.9%
-7.2%
0.9%
-4.6%
3.4%
3.2%
1.9%

Volum es
Europe
Belgium
France
Germany
Sw itzerland
Italy
Hungary
Czech Republic
Slovakia
Croatia
Romania
Bulgaria
Serbia
Russia
Azerbaijan
Spain
North Am erica
Canada
USA
Latin Am erica
Mexico
Costa Rica
Nicaragua
Colombia
Ecuador
Brazil
Argentina
Africa Middle Eas
Morocco
Indian Ocean
Asia Pacific
India
Sri Lanka
Bangladesh
Vietnam
Malaysia
Indonesia
Australia
New Zealand

1H10
-8.5%
-6.4%
7.7%
-0.1%
-4.4%
-16.7%
4.0%
1.2%
-36.2%
-30.0%
-48.5%
-14.2%
-18.5%
4.9%
-8.1%
0.0%
21.9%
-3.9%
-0.9%
-7.3%
-12.5%
5.0%
13.5%
-6.8%
20.9%
9.7%
11.1%
-0.5%
3.8%
3.2%
34.3%
13.3%
5.2%
6.3%
19.7%
-5.1%
-9.6%

9M10
-4.8%
-4.5%
6.9%
-4.2%
1.1%
-1.2%
-13.4%
0.8%
45.7%
-31.1%
-18.8%
-33.5%
-7.3%
-11.0%
1.5%
-1.2%
1.2%
11.9%
-1.8%
-1.8%
-9.3%
-20.6%
3.9%
8.1%
-4.5%
20.3%
8.4%
7.6%
1.6%
-1.4%
3.2%
2.9%
30.9%
15.7%
3.1%
3.3%
11.3%
-5.0%
-6.7%

2010
-3.3%
-4.0%
4.3%
1.5%
-0.9%
-14.0%
-2.8%
-1.1%
-27.6%
-14.5%
-27.7%
-5.7%
-5.1%
1.7%
-0.5%
3.7%
7.9%
2.2%
-0.4%
-7.0%
-24.4%
4.5%
10.9%
-3.5%
19.2%
7.6%
4.5%
0.2%
3.6%
3.5%
28.3%
15.3%
2.4%
4.1%
-2.0%
-5.3%

26

Source: Company data

2011 Outlook as suggested by companies

Cemex
Volum es

Gray
Ready - Aggreg
Cem ent
m ix
ates

Mexico
3%
3%
3%
US
5%
6%
2%*
Spain
-10%
-13%
-9%
UK
2%
2%
1%
France
N/A
2%
1%
Germany
5%
6%
2%
Poland
6%
12%
0%
Colombia
5%
17%
50%
Philippines
6%
N/A
N/A
*on like for like basis for the ongoing operations

Source: Company data

Lafarge

Lafarge
Region

Volum es

Price

Western Europe

-5 to -2%

=/+

1 to 4%

North America
Middle East and Africa*

4 to 7%

+
=/+

CEE

3 to 6%

Latin America

7 to 10%

Asia

5 to 8%

Overall

3 to 6%

+
(*) Relative to year-end pricing; dow n at average pricing

Country/Region
Volum e Grow th (%)
North Am erica
1 to 4
United States
1 to 4
Canada
3 to 6
Western Europe
-5 to -2
France
1 to 4
United Kingdom
-1 to 2
Spain
-15 to -12
Greece
-10 to -7
Central and Eastern Europe
3 to 6
Poland
7 to 10
Romania
-7 to -4
Russia (1)
8 to 11
Serbia
0 to 3
Latin Am erica
7 to 10
Brazil
8 to 11
Honduras
4 to 7
Ecuador
4 to 7
Middle East and Africa
4 to 7
Algeria
5 to 8
Egypt
3 to 6
Iraq
10 to 13
Jordan
0 to 3
Kenya
3 to 6
Morocco
1 to 4
Nigeria
8 to 11
South Africa
0 to 3
Syria
3 to 6
Asia
5 to 8
(1)
6 to 9
China
India (1)
7 to 10
Indonesia
6 to 9
Malaysia
3 to 6
Philippines
5 to 8
South Korea
-6 to -3
Overall
3 to 6
(1) Market grow th forecast at national level except for
China, India and Russia for w hich only relevant markets

27

Any Authors named on this report are Research Analysts unless otherwise indicated
Analyst Certification
I, Ankur Agarwal, hereby certify (1) that the views expressed in this Research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in
this Research report, (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no
part of my compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc., Nomura International plc or any other Nomura Group
company.
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Distribution of ratings (Global)

Nomura Global Equity Research has 1937 companies under coverage.
48% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 41% of companies with this rating are investment banking clients of the
Nomura Group*.
38% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 50% of companies with this rating are investment banking clients of
the Nomura Group*.
12% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 13% of companies with this rating are investment banking clients of
the Nomura Group*.
As at 31 December 2010.

*The Nomura Group as defined in the Disclaimer section at the end of this report.
Explanation of Nomura's equity research rating system in Europe, Middle East and Africa, US and Latin America for ratings published from 27 October 2008
The rating system is a relative system indicating expected performance against a specific benchmark identified for each individual stock. Analysts may also indicate absolute upside to
price target defined as (fair value - current price)/current price, subject to limited management discretion. In most cases, the fair value will equal the analyst's assessment of the current
intrinsic fair value of the stock using an appropriate valuation methodology such as discounted cash flow or multiple analysis, etc.

28

STOCKS
A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months.
A rating of 'Neutral', indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months.
A rating of 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months.
A rating of 'Suspended', indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances
including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the company.
Benchmarks are as follows: United States/Europe: Please see valuation methodologies for explanations of relevant benchmarks for stocks (accessible through the left hand side of the
Nomura Disclosure web page: http://www.nomura.com/research);Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation
methodology.
SECTORS

A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months.
A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months.
A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next 12 months.
Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia.
Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published from 30 October 2008 and in Japan from 6 January 2009
STOCKS
Stock recommendations are based on absolute valuation upside (downside), which is defined as (Price Target - Current Price) / Current Price, subject to limited management discretion. In
most cases, the Price Target will equal the analyst's 12-month intrinsic valuation of the stock, based on an appropriate valuation methodology such as discounted cash flow, multiple
analysis, etc.
A 'Buy' recommendation indicates that potential upside is 15% or more.
A 'Neutral' recommendation indicates that potential upside is less than 15% or downside is less than 5%.
A 'Reduce' recommendation indicates that potential downside is 5% or more.
A rating of 'Suspended' indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances
including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company.
Securities and/or companies that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage of the Nomura entity identified in the top banner. Investors
should not expect continuing or additional information from Nomura relating to such securities and/or companies.
SECTORS
A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation.
A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation.
A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.

29

Explanation of Nomura's equity research rating system in Japan published prior to 6 January 2009 (and ratings in Europe, Middle East and Africa, US and Latin America
published prior to 27 October 2008)
STOCKS

A rating of '1' or 'Strong buy', indicates that the analyst expects the stock to outperform the Benchmark by 15% or more over the next six months.
A rating of '2' or 'Buy', indicates that the analyst expects the stock to outperform the Benchmark by 5% or more but less than 15% over the next six months.
A rating of '3' or 'Neutral', indicates that the analyst expects the stock to either outperform or underperform the Benchmark by less than 5% over the next six months.
A rating of '4' or 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark by 5% or more but less than 15% over the next six months.
A rating of '5' or 'Sell', indicates that the analyst expects the stock to underperform the Benchmark by 15% or more over the next six months.
Stocks labeled 'Not rated' or shown as 'No rating' are not in Nomura's regular research coverage. Nomura might not publish additional research reports concerning this company, and it
undertakes no obligation to update the analysis, estimates, projections, conclusions or other information contained herein.

SECTORS
A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next six months.
A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next six months.
A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next six months.
Benchmarks are as follows: Japan: TOPIX; United States: S&P 500, MSCI World Technology Hardware & Equipment; Europe, by sector - Hardware/Semiconductors: FTSE W Europe IT
Hardware; Telecoms: FTSE W Europe Business Services; Business Services: FTSE W Europe; Auto & Components: FTSE W Europe Auto & Parts; Communications equipment: FTSE W
Europe IT Hardware; Ecology Focus: Bloomberg World Energy Alternate Sources; Global Emerging Markets: MSCI Emerging Markets ex-Asia.

Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published prior to 30 October 2008
STOCKS
Stock recommendations are based on absolute valuation upside (downside), which is defined as (Fair Value - Current Price)/Current Price, subject to limited management discretion. In
most cases, the Fair Value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as Discounted Cash Flow or
Multiple analysis etc. However, if the analyst doesn't think the market will revalue the stock over the specified time horizon due to a lack of events or catalysts, then the fair value may differ
from the intrinsic fair value. In most cases, therefore, our recommendation is an assessment of the difference between current market price and our estimate of current intrinsic fair value.
Recommendations are set with a 6-12 month horizon unless specified otherwise. Accordingly, within this horizon, price volatility may cause the actual upside or downside based on the
prevailing market price to differ from the upside or downside implied by the recommendation.
A 'Strong buy' recommendation indicates that upside is more than 20%.
A 'Buy' recommendation indicates that upside is between 10% and 20%.
A 'Neutral' recommendation indicates that upside or downside is less than 10%.
A 'Reduce' recommendation indicates that downside is between 10% and 20%.
A 'Sell' recommendation indicates that downside is more than 20%.
SECTORS
A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation.
A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation.

A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.
30

Price targets
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32