Annual Report 2011 Holcim Ltd

Value-Driven
Corporate Management
36
Because low demand means that the European cement
industry currently emits less CO2 than producers are
entitled to, non-required CO2 emission certificates
can be sold. The lower emissions not only reflect the
current economic situation, but also the industry’s
efforts to increase plant efficiency and reduce the
clinker factor.
The CHF 100 million in payments received by Holcim
each year were channeled in 2011 into an internal
energy fund created in 2010. The fund should help
ensure the realization of innovative projects in the field
of heat recovery, the recycling of alternative fuels and
raw materials, as well as wind power and hydroelectricity.
The objective is to further reduce consumption
of fossil fuels and increase energy efficiency. Several
projects are being implemented (see also pages 55).
Together they will yield savings of around 200,000
tonnes of CO2.
Definition of segment-specific operating EBITDA margin
targets
Holcim has defined specific operating EBITDA
margin targets for each segment. These targets still
apply, but the situation in various markets and the
corresponding decline in volumes means that, despite
reductions in costs and increases in efficiency, they
will only be achievable once consumption picks
up again.
Operating EBITDA margin Target 2011 2010
Cement 33% 24.3% 27.1%
Aggregates 27% 20.7% 21.2%
Other construction
materials and services 8% 2.5% 2.8%
The higher expenditure on raw materials, transport
and energy squeezed the cement margin in 2011.
However, efficiency gains and the commissioning
of new plants with favorable cost structures went
some way toward cancelling out the negative effects.
On balance, the operating EBITDA margin in the
cement segment was 24.3 percent, down on the
previous year’s figure of 27.1 percent.
In the case of aggregates, the operating EBITDA
margin reached 20.7 percent (2010: 21.2). In 2011,
Latin America was above the target band of 27
percent.
The operating EBITDA margin of the other construction
materials and services segment declined to 2.5
percent (2010: 2.8). The target remains 8 percent.
Constant measurement and improvement of operating
performance
Operating performance is compared objectively and
improved in all areas of activities throughout the Group.
Progress has to be measurable if it is to be achieved.
Many years ago Holcim began to systematically
record changes in the performance of Group companies
in the cement segment both in absolute terms
and in comparison with all other Group companies,
for example by measuring the availability of kiln
systems or capacity utilization. A composite index
is compiled on the basis of these and other data.
2011 saw the introduction of a Group-wide system
of measurement and comparison for aggregates and
ready-mix concrete as well. The system is based on
a set of indicators covering sales, production, distribution
and product quality. Clear rules and definitions
make it possible both to conduct transparent reporting
at factory level and to monitor trends and produce
significant comparisons.