March 2, 2018/LafargeHolcim

• 4.7% growth in Net Sales on like-for-like basis
• Recurring EBITDA up 6.1% on like-for-like basis
• EPS 11.9% up on prior year excluding impairment and divestments
• Free Cash Flow up by 1.5%
• Reassessment of fair value of asset portfolio leads to CHF 3,829 million impairment
• Strategy 2022 – ‘Building for Growth’ under way to drive top and bottom line growth

Jan Jenisch, Group Chief Executive Officer said: “In 2017 we made good progress across all key metrics. The growth in sales and the over-proportional increase in EBITDA represent a good performance and give us a very good basis to build on. The fact that four of our five regions reported growing EBITDA is testimony to our global strength.

“Our new Strategy 2022 – ‘Building for Growth’ will allow us to more vigorously capture market opportunities, capitalizing on the best assets in a growing building materials market. We have already started to create a leaner more agile organization, moving considerably closer to our customers through the empowerment of the country management.

“The strategy is underpinned by a new set of targets that centers on growth, improving profitability, increasing cash generation and producing more attractive and sustainable returns for shareholders. Our vision is to be a global blue chip company in the attractive and growing building materials market.”

GROUP PERFORMANCE

Net Sales grew 4.7 percent on a like-for-like basis for the full year, largely driven by higher cement volumes. Accounting for the effect of divestments (-6.5 percent) and FX (-1.1 percent), reported Net Sales decreased 2.9 percent to CHF 26,129 million.

Recurring EBITDA reached CHF 5,990 million for the full year. This figure includes the reclassification of the Group’s profit share in the Chinese joint venture Huaxin – CHF 126 million for 2017 – pursuant to our IFRS 11 assessment, following the ongoing streamlining of our China operations. Like-for-like Recurring EBITDA, which is not impacted by the reclassification of Huaxin profits, grew by 6.1 percent over the full year, in line with guidance from last October.

A detailed review of the asset portfolio, and specifically the country risk, led to an impairment of CHF 3,829 million. The impairment mainly affected goodwill and assets revalued in the context of business combinations. This resulted in a Net loss Group share of CHF 1,675 million compared to a profit of CHF 1,791 million in 2016. Before impairment and divestments, Net income Group share stood at CHF 1,417 million compared to CHF 1,273 million in 2016, an increase of 11.3 percent.

Earnings Per Share before impairment and divestments was CHF 2.35 for the full year, up on the CHF 2.10 figure for 2016. Free Cash Flow grew by 1.5 percent for the full year.

Net debt stood at CHF 14,346 million as of December 31, 2017, a reduction of around CHF 400 million compared to the previous year.

STRATEGY 2022 – BUILDING FOR GROWTH

LafargeHolcim today launched its new Strategy 2022 – ‘Building for Growth’, aiming to drive profitable growth and simplify the business to deliver resilient returns and attractive value to stakeholders.

The new strategy will shift gears towards growth of the top and bottom line over the next five years. Over this period, the Group commits to the following targets1:

• Annual Net Sales growth of 3 to 5 percent
• Annual Recurring EBITDA growth of at least 5 percent
• Improvement in Free Cash Flow to over 40 percent of Recurring EBITDA
• Improvement in ROIC to more than 8 percent

The strategy is based on the four value drivers of Growth, Simplification & Performance, Financial Strength and Vision & People.

The building materials market is a CHF 2,500 billion fragmented global market which is forecast to grow 2 to 3 percent per annum, faster than GDP. Through the value driver Growth, the Group will aim to capitalize on this underlying growth, seeking to deliver above-market performance. LafargeHolcim will utilize its strong asset base to invest in markets where greater opportunities exist while being more selective in other markets. The Group will execute more aggressive strategies for Aggregates and Ready-mix Concrete alongside its existing strong Cement business. The Group will build a fourth business segment, Solutions & Products, to take advantage of products and applications that are closer to the customer. This segment, which currently includes precast, concrete products, asphalt, mortars and contracting and services, already generates annual Net Sales of CHF 2.1 billion. The agile, country-based growth strategies will target value-enhancing bolt-on acquisitions to leverage scale and margins.

The value driver Simplification & Performance will create a cost disciplined operating model and a corporate-light structure. There will be a greater focus on countries, with local markets empowered and fully profit and loss accountable. The 35 biggest markets will report directly to Group management and local profit and loss leaders will be assigned for all four business segments. The two Corporate business functions Performance & Cost and Growth & Innovation have been merged and the Group management is reduced to nine members. The simplification will allow LafargeHolcim to improve its cost efficiency considerably. This is expected to create an SG&A cost saving of CHF 400 million per annum with the related program expected to be completed by Q1 2019. As part of this program, the Corporate offices in Singapore and Miami will be closed by mid-year.

A strong performance culture will be created with simplified KPIs and new incentives that are fully aligned to the Group’s goals. Profit and loss responsibility and accountability is implemented for countries and all four business segments. In Aggregates and Ready-mix Concrete, the Group intends to close the performance gap to the best-in-class performers.

Financial Strength will ensure disciplined value creation through maintaining an investment grade credit rating. Growth will be funded through divestment of selected assets during the course of 2019 worth at least CHF 2 billion. Capex investment will be kept below CHF 2 billion per annum and excess free cash flow will be used to pay an attractive dividend.

The value driver Vision & People further develops the values of trust and integrity, the commitment to Health & Safety and the desire to be at the forefront of sustainable construction solutions and innovation. The Group wants to foster an entrepreneurial leadership style and a focus on the long-term success of LafargeHolcim.

OUTLOOK 2018

For 2018, LafargeHolcim targets Net Sales growth of 3 to 5 percent and an over-proportional increase in Recurring EBITDA of at least 5 percent on a like-for-like basis. While there is a focus on selected growth initiatives, Capex spending will remain below CHF 2 billion.

The Board of Directors will submit a proposal for shareholder approval at the AGM on May 8, 2018, for a dividend of CHF 2 per share, stable compared to the prior year. The share buyback program is discontinued with CHF 581 million completed.

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