Buzzi Unicem — Interim / Quarterly Report 2017

Oct 3, 2017

Building & Infrastructure Conference

London – 3 October ²⁰¹⁷

Executive summary H1 2017

Volumes

• – Cement up 0.8% in Q2 and +2.3% YTD; Q2 with weak results in the United States (-2.1%), stable volumes in Italy and positive trend in Central (+3.2%) and Eastern (+2.6%) Europe; ready-mix concrete up 3.7%
• – Italy: stable results in Q2 with domestic suffering and positive export; YTD cement up 4.6%, mainly thanks to export and clinker sales; ready-mix up 16.0% favored by positive change of scope in the Milan area
• United States: weak Q2 result (cement -2.1%); YTD cement down 0.9%; upswing in oil-well cement shipments; ready mix concrete still suffering (-1.1%), but up 7.5% in Q2
• – Central Europe: favorable trend in Q2 (cement +3.2%) and sound YTD (cement +5.4%), with Germany up 6.1% and Luxembourg 2.5%; ready-mix concrete +0.4%, with Germany down 0.6% and Lux/Ned up 4.6%
• – Eastern Europe: positive Q2 (+2.6%) and YTD (+2.3%), thanks to the progress in the Czech Republic (+11.9%) and Ukraine (+5.1%), which more than offset the marginal weakness in Russia (-0.6%); Poland stable (+0.1%)
• Prices
• – Sound increase in the USA and Ukraine; favorable variance in Poland, to a minor extent in Luxembourg; stable or minor variances in other markets
• Foreign Exchange
• Positive impact on sales (€m 34.4) due to stronger dollar and ruble
• Results
• –Net sales at €m 1,353.8 versus €m 1,261.3 in H1 2016
• –EBITDA at €m 241.1 (recurring €m 245.6) versus €m 222.5 (recurring €m 219.3) in H1 2016
• –Guidance confirmed for the financial year 2017

Volumes

Price trends by country

In local currency; FY14 = 100

FX changes

	1 1 H 7	1 1 6 H	∆	2 0 1 6	t c u r r e n
E U R 1 =	a g v	a g v	%	a g v
U S D	1. 0 8	1. 1 2	2 9 +	1. 1 1	1. 1 8
R U B	6 2 8 1	7 8 3 0	1 9 8 +	7 4 1 5	6 8 8 8
U A H	2 8 9 7	2 8 4 2	2 0 -	2 8 2 9	3 0 3 7
C Z K	2 6 7 8	2 7 0 4	0 9 +	2 7 0 3	2 6 1 0
P L N	4 2 7	4 3 7	2 3 +	4 3 6	4 2 6
M X N	2 1. 0 4	2 0 1 7	4 3 -	2 0 6 7	2 1. 0 8

Net sales by country

	H 1 2 0 1 7	H 1 2 0 1 6	∆	∆	F o r e x	S c o p e	l- f- l ∆
E U R m			b a s	%	b a s	b a s	%
I t l a y	2 0 0 2	1 8 7 7	1 2 6	6 7 +	-	-	6. 7 +
U i d S t t t n e a e s	5 6 0 4	5 3 0 2	3 0 2	5 7 +	1 6. 5	-	2. 6 +
G e r m a n y	2 8 2 5	2 7 1. 2	1 1. 4	4 2 +	-	-	4. 2 +
/ L N t h l d u x e e r a n s	9 0 7	8 7 8	2 9	3 2 +	-	-	3. 2 +
C / S h R l k i z e c e p o v a a	6 5 6	6 0 6	5 0	8 3 +	0. 5	-	7. 5 +
P l d o a n	4 6 5	4 3 6	2 0	4 6 +	1. 0	-	2. 2 +
U k i r a n e	4 2 6	3 1. 6	1 1. 0	3 4 8 +	( 0. 8 )	-	3 7. 5 +
R i u s s a	8 0 7	6 2 7	1 9 8	2 9 4 +	1 7. 2	-	3. 8 +
E l i i t i m n a o n s	( 2 0. 9 )	( 1 8. 6 )	( 2. 3 )
T l t o a	1, 3 5 3 8	1, 2 6 1. 3	9 2 5	7 3 +	3 4. 4	-	4. 6 +
M i ( 1 0 0 % ) e c o x	3 5 8 5	3 0 1. 5	5 7 0	1 8 9 +	( ) 1 5. 5	-	2 4. 0 +

pag

EBITDA by country

	H 1 2 0 1 7	H 1 2 0 1 6	∆	∆	F o r e x	S c o p e	l- f- l ∆
E U R m			b a s	%	b a s	b a s	%
I l t a y	( 1 3 4 )	( 9 3 )	( 4 1 )	4 4 6 -	-	-	4 4. 6 -
U S A	1 6 1. 4	1 4 2 7	1 8 8	1 3 1 +	4. 8	-	9. 8 +
G e r m a n y	3 2 7	2 9 7	3 0	1 0 0 +	-	-	1 0. 0 +
/ L N t h l d u x e e r a n s	6 2	1 3 5	( 2 ) 7	3 6 5 -	-	-	3. 6 -5
C / S h R l k i z e c e p o v a a	1 3 4	1 2 8	0 6	3 4 +	0. 1	-	3. 8 +
P l d o a n	9 2	1 1. 7	( 2 5 )	2 1. 4 -	0. 2	-	2 3. 2 -
U k i r a n e	8 8	4 6	4 1	8 9 5 +	( 0. 2 )	-	9 3. 2 +
R i u s s a	2 2 9	1 6 8	6 1	3 6 0 +	4. 5	-	9. 1 +
T t l o a i r e c r r n g u	2 4 1. 1 2 4 5. 6	2 2 2 5 2 1 9. 3	1 8 6 2 6. 3	8 4 + 1 2. 0 +	9. 4 9. 5	- -	4. 1 + 7. 7 +
M i ( 1 0 0 % ) e c o x	1 3 0 7	1 4 6 6	2 6 4	1 8 0 +	( 7. 5 )	-	2 3. 1 +

EBITDA variance analysis

Energy costs impact

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Consolidated Income Statement

	H 1 2 0 1 7	H 1 2 0 1 6	∆	∆
E U R m			b a s	%
N t S l e a e s	1, 3 5 3 8	1, 2 6 1. 3	9 2 5	7 3 +
O f t i h l p e r a n g c a s o w ( E B I T D A )	2 4 1. 1	2 2 2 5	1 8 6	8 4 +
f h i h, i o w c n o n r e c u r r n g	( ) 4. 5	3. 2
% f l ( i ) o s a e s r e c u r r n g	1 8. 1 %	1 7. 4 %
D i i d i i t t t e p r e c a o n a n a m o r z a o n	( 1 0 8 6 )	( 9 3 5 )	( 1 5 1 )
O i f i t t p e r a n g p r o ( E B I T )	1 3 2 5	1 2 9 0	3 6	2 8 +
% f l o s a e s	9. 8 %	1 0. 2 %
E i i t q e a r n n g s u y	4 9 7	3 6 6	1 3 1
N t f i t e n a n c e c o s s	( 1 2 2 )	( 3 6 4 )	2 4 2
f f P i t b t r o e o r e a x	1 0 1 7	1 2 9 2	4 0 9	3 1. 7 +
I t n c o m e a x e x p e n s e	( ) 5 0 8	( ) 3 7 7	( ) 1 3 1
f N t i t e p r o	1 1 9 3	9 1. 5	2 7 8	3 0 4 +
M i i t i n o r e s	( 1. ) 7	( 1. 1 )	( 0 ) 5
C f l i d t d t i t o n s o a e n e p r o	1 1 7 6	9 0 3	2 7 3	3 0 3 +
C f h l ( 1 ) a s o w	2 2 9 7	1 8 0 5	4 2 9	2 3 2 +

(1) Net Profit + amortization & depreciation

Consolidated Cash Flow Statement

E U R m	H 1 1 7	H 1 1 6	2 0 1 6
C f h t d t i a s g e n e r a e r o m o p e r a o n s	1 8 6 5	1 3 6 5	4 6 7 5
% f l o s a e s	% 1 3. 8	% 1 0. 8	% 1 7. 5
I t t i d n e r e s p a	( 1 5 5 )	( 1 4 7 )	( 6 1. 5 )
I i d t n c o m e a x p a	( 3 7 1 )	( 3 8 8 )	( 1 0 1. 8 )
N t h b t i t i i t i e c a s y o p e r a n g a c v e s	1 3 3 9	8 3 0	3 0 4 1
% f l o s a e s	9. 9 %	6. 6 %	1 1. 4 %
) C i l d i 1 t t a p a e x p e n u r e s	( 9 0 4 )	( 1 2 7 0 )	( 2 3 6 0 )
E i i t t t q n e s m e n s u y v	( 2 ) 7 5	-	( 0 4 )
D i i d d i d v e n s p a	( ) 2 1. 8	( ) 1 6 2	( ) 1 6 3
D i i d d f i t e n s r o m a s s o c a e s v	3 2 5	2 8 7	6 0 7
D i l f f i d t d i t t s p o s a o x e a s s e s a n n v e s m e n s	5 5	1 3 0	2 1. 5
T l i d i f f d d i i t t r a n s a o n e r e n c e s a n e r v a v e s	( 9 6 )	4 8	( 5 9 9 )
A d i t t b l c c r u e n e r e s p a y a e	6 9	( ) 2 0 8	( ) 3 8
I i d t t n e r e s r e c e e v	4 1	3 1	1 4 6
O h t e r	( 1. 3 )	( 2 ) 5	( 2 ) 7
C h i t d b t a n g e n n e e	3 2 3	( ) 3 4 8	8 8 2
N f i i l i i ( d f i d ) t t e n a n c a p o s o n e n o p e r o	( 9 0 9 2 )	( 1, 0 6 4 6 )	( 9 4 1. 6 )

1) of which expansion projects 11.9 (51.6 in H1 16; 76.8 in 2016)

Net Financial Position

	1 J 7 u n	D 1 6 e c	∆	1 6 J u n
E U R m			b a s
C h d h f i i l t t a s a n o e r n a n c a a s s e s	6 3 0 5	6 0 9 6	2 4 5	8 6 3 6
S h d b t- t t o r e r m e	( 6 4 2 )	( 7 5 8 )	1 1. 5	( 4 7 8 5 )
N h h t t- t e s o r e r m c a s	0 8 5 7	3 3 8 5	3 6 9	3 8 1 5
L t f i i l t o n g e r m n a n c a a s s e s -	1 2 5	1 3 2	( 0 7 )	1 2 5
L d b t t o n g e r m e -	( 1, 4 9 2 4 )	( 1, 4 8 8 6 )	( 3 8 )	( 1, 4 6 2 1 )
N d b t t e e	( 9 0 9 2 )	( 9 4 1. 6 )	3 2 3	( 1, 0 6 4 6 )

Gross debt breakdown (€m 1,556.7)

pag ¹¹ Building & Infrastructure Conference | October 3 , 2017

Debt maturity profile

• Total nominal value of debt and borrowings stood at €m 1,455 at June 2017
• As at June 2017 available €m 324m of undrawn committed facilities (€m 300m for Buzzi Unicem, €m24 for Dyckerhoff)

Expected trading in 2017

	V l ∆ o m e u	P i ∆ r c e
I l t a y
U i d S f A i t t t n e a e s o m e r c a
G e r m a n y
L b u x e m o u r g
C h R b l i z e c e p u c
P l d o a n
U k i r a n e
R i u s s a
M i e c o x

Recent strategic move: Zillo acquisition 1/4

• RATIONALE 4- Expected integration synergies 3- Positive impact on Buzzi Unicem's profitability 2- Strengthening presence and domestic market share 1- Active role in the consolidation process of the domestic industry 5-

• • Consolidation in the sector offer

• Leading industrial group, founded in 1882 and focused on the cement and readymix concrete industry in the North-East of Italy

• 2 full-cycle cement plants (market share estimated at 5%) and about 40 batching plants
• About 1.1 m ton cement sales in 2016

Recent strategic move: Zillo acquisition 2/4

• On June 16, 2017 Buzzi Unicem has signed a mandatory agreement to buy 100% of the share capital of Cementizillo
• The agreement provides for the purchase of 2 full-cycle cement plants (Fanna (PN) and Monselice (PD)) and about 40 batching plants in the North-East of Italy
• The agreed amount for the share purchase of Cementizillo foresees a fixed portion, equal to €m 60 plus 450,000 Buzzi Unicem ordinary shares, already in treasury, and a variable portion that may range from a minimum of € 0 to a maximum of €m 21, depending on the trend of the average cement price achieved by Buzzi Unicem in Italy in the years from 2017 to 2020
• Payment: €m22.6, on June 16, 2017 for the minority stake (48%); payment of the 52% made for €m 19 at the closing date (July 3, 2017) together with the transfer of the 450,000 Buzzi Unicem ordinary shares; next installments will be €m 3.4 120 days after the closing date, €m 7.5 one year after the closing date and another €m 7.5 three years after the closing date

Recent strategic move: Zillo acquisition 3/4

• In 2016, Zillo's cement and clinker sales came in at approximately 1.1 m tons and ready-mix concrete volumes amounted to about 440,000 cubic meters
• Consolidated 2016 net sales of Zillo stood at €m 90 and EBITDA at €m 10 (of whitch €m 5 non-recurring). Ebit was negative for €m 4 and the company closed the year with a loss of €m 6. At 31 December 2016 net debt amounted to €m 46.

Recent strategic move: Zillo acquisition 4/4

Appendix

Buzzi Unicem at a Glance

• International multi-regional, "heavy-side" group, focused on cement, ready-mix and aggregates
• Dedicated management with a long-term vision of the business
• Highly efficient, low cost producer with strong and stable cash flows
• Successful geographic diversification with leading positions in attractive markets
• Italy (# 2 cement producer), US (# 4 cement producer), Germany (# 2 cement producer), joint venture in Mexico (# 4 cement producer)
• Significant positions in Luxembourg, The Netherlands, Poland, Czech Republic, Slovakia, Russia and Ukraine, as well as entry point in Slovenia and Algeria
• High quality and environmentally friendly assets
• Leading product and service offering
• Conservative financial profile and balanced growth strategy

"Value creation through lasting, experienced know-how and operating efficiency"

Ownership structure

Cement plants location and capacity

2016 Consumption vs. Peak

Historical series of cement consumption by country

Historical EBITDA development by country

EU Rm			20 09	20 10	20 11	20 12	20 13	20 14	20 15	20 16
	Ita ly	EB ITD A	92 .7	32 .5	10 .3	-5. 9	-18 .1	-18 .7	-37 .2	-22 .2
		in ma rg	13. 1%	5.3 %	1.8 %	-1. 2%	-4. 2%	-4. 8%	-9. 8%	-5. 9%
	Ge rm an y	EB ITD A	116 .3	76 .3	90 .3	72 .2	108 .1	88 .6	72 .1	76 .8
		in ma rg	.0% 22	9% 13.	14. 2%	12. 0%	0% 18.	14. 7%	12. 6%	13. 4%
	Lu x/	EB ITD A	18 .6	17 .0	35 .0	8.3	11 .5	15 .9	19 .7	25 .8
	Ne the rla nd s	in ma rg	% 9.5	8.3 %	7% 15.	4.3 %	6.3 %	9.7 %	7% 11.	14. 7%
	Cz Re / ec	EB ITD A	44 .2	32 .8	35 .2	25 .4	19 .2	27 .0	32 .6	34 .3
	h p Slo kia va	in ma rg	25 .2%	20 .5%	20 .5%	17. 0%	14. 6%	20 .2%	24 .0%	25 .2%
	Po lan d	EB ITD A	31 .2	33 .4	36 .9	21 .8	27 .1	18 .2	22 .7	23 .4
		in ma rg	25 .7%	25 .8%	26 .6%	20 .0%	26 .8%	20 .4%	20 .4%	24 .6%
		EB ITD A	-4. 5	-10 .5	6.9	15 .8	12 .3	11 .0	4.0	12 .8
	Uk rai ne	in ma rg	0% -6.	-12 .8%	% 6.2	11. 8%	0% 10.	12. 5%	5.7 %	16. 1%
		EB ITD A	42 .1	39 .7	65 .7	96 .1	92 .6	73 .4	48 .4	43 .2
	Ru ia ss	in ma rg	42 .6%	32 .0%	37 .4%	41 .0%	37 .2%	35 .0%	29 .0%	28 .0%
		EB ITD A	13 1.3	88 .7	71 .4	123 .9	15 1.0	20 7.3	31 1.7	35 6.5
	US A	in ma rg	21 .4%	14. 8%	12. 8%	18. 2%	20 .7%	24 .2%	28 .1%	31 .9%
		EB ITD A	69 .9	.2 77	82 .6	97 .5	77 .5	Ad tio of op
	Me xic o	in ma rg	38 .7%	36 .2%	34 .7%	36 .2%	33 .2%	n IFR S 1 1
Co	oli da ted	EB ITD A	54 1.7	38 7.0	43 4.3	45 5.1	48 1.2	42 2.7	47 3.2	55 0.6
ns		in ma rg	20 .3%	14 .6%	15 .6%	16 .2%	17 .5%	16 .9%	17 .8%	20 .6%