Holcim AG (HOLN) Earnings Call Transcript

Dear shareholders, [Foreign Language]. Dear guests, on behalf of the Board of Directors and the Executive Committee, let me cordially welcome all of you to our Annual General Meeting at Zug, Switzerland. It is a special pleasure for me to be meeting with you again physically. We truly appreciate the exchange with you and personal contact with you, and we've been missing it very much. We do appreciate your personal presence here today. Let me introduce to you my colleagues sharing the stage with me today. They are going to support me in reporting on the year under review and responding to your questions and in handling the Annual General Meeting proceedings. Let me begin on my right-hand side with Steffen Kindler, our new Chief Financial Officer, welcome, Steffen. Next, let me welcome Jan Jenisch, our CEO, who is going to report on a successful 2022 financial year of Holcim and is going to present more details on our progress in implementing our 2025 strategy called accelerating green growth. On my left, we have Hanne Sørensen, the Vice Chairman and Lead Independent Director of the Board of Directors. And finally, Dragana Simijonovic, the Secretary of the Board of Directors. I'm also pleased to note that the members of the Board of Directors and of the Executive Committee are present here almost in full. Furthermore, we are honored to have a former top executive of Holcim here today, Max Amstutz, Max had a seminal influence on this company, like no one else for decades. Before we provide more details on the business, allow me to make a few technical and housekeeping remarks. If you wish to follow the proceedings in English, please choose channel 2, this channel. For French, choose Channel 3. And if you wish to follow everything in German, go to channel number 1. On this occasion, I would also like to welcome our interpreters who are often sitting in narrow booths behind the scenes, as they are actually at the moment. And they're doing a great job. [ I hope they do interpret this ]. Now thank you very much. To make sure we have efficient proceedings, we have set up a registration desk for all shareholders who wish to speak on some of the items. It is on the left-hand side of the stage from your vantage point. Please sign in there and indicate which item you wish to speak on. We will then call you when that item arises, and we'll ask you to submit your questions or make your comments. And a final note of remark, health and safety are a top priority for us. This also applies to the Annual General Meeting today. So please look around and make sure to know where the next emergency exit is. Emergency exits are marked in green. In the unlikely case that we need to evacuate the building, we would like to ask you to follow instructions from our staff. Before we're going to deal with the items of the Annual General Meeting today, our CEO, Jan Jenisch, and myself would like to provide insight in the 2022 milestones achieved and the objectives for the current year. Ladies and gentlemen, in the year 2022, Holcim achieved its best result ever. At the same time, transformation of the company into a leading global provider of innovation and sustainable construction solutions was driven further and driven very far. Thanks to the great commitment of our more than 60,000 employees, your company, Holcim, has reached a new dimension of strength. Our new segment, Solutions & Products, it continues to be new, has grown steadily and last year accounted for 19% of the group sales. Regionally speaking, we focused and further expanded our presence, particularly in core markets and North America. This fast-growing region now accounts for 1/3 of our business. Now with our changed business model, we have greatly improved on our environmental performance. At a 21% reduction in CO2 emissions as measured against sales, we are not only decarbonizing your portfolio, dear shareholders, we are, at the same time, further expanding our leading role in the field of sustainability. In doing so, employees around the world have lived up to our guiding principle and goal of creating progress for people and the planet. At the same time, our employees have delivered record results quarter-by-quarter. It is from the bottom of my heart that I congratulate everyone involved on this exceptional record performance. Now before I hand over to Jan Jenisch to give you a more in-depth overview of the 2022 business results, I would like to touch upon a few items that are of great significance to us at Holcim. One of our core themes is sustainability. Holcim is decarbonizing the construction industry at all stages of its life cycle. We start with deep carbonization of our own operations, which we are driving forward on the basis of scientific criteria. With our low-carbon building materials and smart design systems, we are reducing the carbon footprint of the construction sector in a second step. Now with our low-carbon materials, our customers are enabled to build more sustainably. With our innovative roofing and insulation solutions, we are improving the energy efficiency of existing buildings in a third step. This is where our customers continue to save CO2. In the fourth step, we are recycling construction and demolition materials to create new buildings from old ones so turning demolition materials into new buildings, as a matter of fact. To accelerate the shift to sustainable construction, we are working with specialists. For example, at the 27th UN Climate Change Conference and New York Climate Week, we exchanged ideas with key players on how to decarbonize the building sector yet more comprehensively. Furthermore, we have contributed to the innovation at the forefront. Our innovation partners range from researchers at the Massachusetts Institute of Technology or [indiscernible], Zurich and Luzon, 2 start-ups in the field of green mobility. One specific example that has always impressed me is the German start-up called Magment, with whom we are jointly developing magnetizable road surfaces that will allow vehicles to be charged wirelessly, while driving in the future. We're also working with our partners on next-generation solutions, in particular trailblazing new technologies for CO2 capture -- carbon capture use and storage. Now let's return to Holcim's transformation. A key aspect last year was the clear shift to our core markets, in particular, North America. At the same time, we divested our businesses in Brazil and India. It is not easy to say goodbye, take leave of employees with whom we worked very closely for decades. And yet, this was a significant step, and we are very grateful to our former employees in these markets for the many years of good cooperation. Last autumn, we closed another chapter. It was about a settlement between Lafarge S.A. and the U.S. Department of Justice in a case concerning Lafarge's activities in the last years prior to the merger with Holcim in Syria. Now we've thus drawn a line under an old issue that contradicted everything Holcim stands for as a company. We always align our actions with the highest standards of corporate governance, ethics and integrity. And we do not tolerate any violation whatsoever. More than 60,000 employees around the world stand up for these principles every day. Now we're determined to create value for all our stakeholders, including our employees, an important issue, which is close to my heart is continuous improvement of health and safety in our company. All employees are to have a workplace that is safe and from which to go home healthy every working day. Last year, we introduced quite a number of improvements, but there's more to be done to achieve our goal of preventing any kind of workplace accidents and work-related illnesses. Our employees' well-being is of highest priority to us, and you will certainly understand very well when I say that nothing in our business is worth jeopardizing that welfare. You've seen how much Holcim has changed in recent years. We are very pleased to be making such rapid progress in our ambition to become the global market leader in the fields of innovative and sustainable building solutions. Now with the remarkable record results and the successful and rapidly progressing transformation in the 2022 financial year, I am looking to the future with great confidence. I am proud of the outstanding performance and dedication of our employees around the world, and I'm certain that the best is yet to come. After 13 fulfilling years at Holcim, I have decided not to stand for reelection as a member of the Board of Directors this year. For this reason, the Board of Directors has proposed Jan Jenisch as the new Chairman of the Board. Should he be elected, Jan would be both my successor as Chairman of the Board and the Chief Executive Officer of Holcim for a limited period of time. The Board of Directors consider this dual mandate as a phase of transition in order not to jeopardize Holcim's transformation and rapid implementation of the Accelerating Green Growth 2025 Strategy (sic) [ Strategy 2025 - Accelerating Green Growth ]. We communicated in February that we were going to announce a successor for the position of the Chief Executive Officer within the next 12 months. So in this respect, the transition period is clearly limited. Now in order to continue to ensure effective external control, the Board of Directors on February 24, 2023, introduced additional corporate governance measures with immediate effect, i.e., creation of a function called Lead Independent Director, which will be entrusted to Hanne Sørensen, the Vice Chair of the Board of Directors of Holcim. In her capacity, Hanne Sørensen has wide-ranging powers, all of which are aimed at preventing possible conflicts -- possible conflicting situations that the CEO might face in his or her dual role. We are convinced that this will enable us to ensure good corporate governance for this transitional period. And to me, personally, it is of great importance that with Jan Jenisch, we are proposing an extremely capable person with integrity as my successor. I've had the privilege of working closely with Jan for several years now. Cooperation has always been very professional and characterized by mutual respect. In my opinion, this is the most important means for successful corporate management. And Jan is aware of this, so he will not disappoint you. He is a top performer. Let me now give you a brief overview of some of the items on the agenda of the Annual General Meeting today. Following the launch of our first climate report last year, we published our second climate report at the end of March 2023 and are submitting it to you for an advisory vote. In the second climate report, we provide detailed information on the company's climate protection measures. Based on the company's record financial results in the 2022 financial year and the strong outlook for the current year, the Board of Directors today is proposing to you a 14% increase in the dividend to CHF 2.50 per registered share, no less than 14%. In addition, you will be voting on the capital reduction through cancellation of shares repurchased under the share buyback program. The Board of Directors is convinced that with the increase in the dividend and the share buyback program, it is offering you, dear shareholders, an appealing investment opportunity with which you can participate in the company's success. An important item on the agenda today, of course, is election of the members of the Board of Directors. In addition to myself, Patrick Kron has decided no longer to stand for reelection. As early as now, I would like to take the opportunity on behalf of all colleagues on the Board of Directors to thank Patrick Kron for his longstanding service. Let me now hand over to Jan Jenisch. He is going to inform you on the 2022 business results on where we're standing and implementing the 2025 strategy (sic) [ Strategy 2025 ] and what the current business outlook looks like. Jan, over to you, please.

Thank you, Beat, and a warm welcome also from my side to the Holcim Annual General Meeting. I'm extremely pleased that after the many years of COVID restrictions, now we can see each other again in person and the exchange of ideas, it's very important for us from the executive committee to have the opportunity to be in personal contact with you. So thank you very much for having come here. This is also the first topic that I would like to address, and before I get to the business aspects, I would like to briefly report on how successfully our members worldwide have worked in the context of the restrictive situations that came from COVID in all the many countries that they were active. You have to imagine that the crisis obviously started in March 2022. Back then, it was not clear how things would turn out in many countries. There were many tragic situations, many deaths. For us as a company, it also started with a big bang because in the very first month of the pandemic, in April 2020, we had a decline in our sales of 40%. 40%, that never happened in the history of Holcim. I'm sure that was the same in many other companies that also had such a steep decline. And in the first period of the stage of the pandemic, we've been very busy in making sure that our associates were safe. We introduced hygienic measures, and we wanted to put our company up to gear with the cost focus because, obviously, we didn't know how long that situation would last. It didn't last that long. July 2020, we already delivered at full speed. You certainly observed that, too. Since they were hardly any disruptions in construction, things continued briskly at construction sites. And it was our main focus to deliver our services to clients, whilst maintaining safety for our associates, and we passed that test with flying color. And I thank all our associates for the great commitment and the engagement that they showed during the pandemic. We then entered into a second stage of the pandemic in May 2021, which also happened in the context of inflation, which also led to an increase in costs, while sales also declined at that time. And we were all obviously affected by rising energy prices and raw material prices, and correspondingly also transport prices. We also took measures at the cost side to counteract that, and we had to adapt our prices in many of the markets we were active. So it was a very busy time. You can easily imagine from March 2020, we had a daily crisis Board meeting with the executive committee, but also with the leadership teams in the countries. And once the situation cleared up, those daily meetings turned into weekly meetings and later monthly meetings. This worked very well for us and gave us great confidence. Whatever happens in terms of crises around the world, we now know Holcim is resilient, is agile and can react when we act as a team as we did. The Chairman of the Board said it, we coped with all of that. And at the same time, we achieved record results in 2022, record results in all aspects. We never had CHF 29 billion in sales. Also the operational results, the cash flow results showed record results. And we're just proud of that, and it makes us confident when we look into the future. Also our gearing situation is very positive. We reduced our debt by CHF 4 billion. We've never been so little indebted at Holcim. We ended the fiscal year with a cash position of CHF 10 billion, which makes us confident and obviously also provides us with the necessary steam to actively shape the future. We have money for capital expenditure, for innovation, but also for the acquisition of companies where we've been quite active. The driving force behind our results is obviously the successful transformation. We opened up a new fourth segment for Holcim, we call it Solutions & Products, which is a perfect complement to our traditional business, cement, concrete and gravel, and we've built it up successfully. We're one of the -- we've become one of the leading providers in flat roofing systems in the United States. We're already #2, where we buy completely insulated systems, insulation membranes and all specifications for roofing systems. And we've built up a[ $4 billion ] business in the United States, which is an excellent addition to our traditional business. This has demanded a lot from us, for example, transactions. We completed indeed 23 transactions in 2022. Beat said it, we divested our business in India, Brazil and Russia. On the other hand, we acquired 19 new businesses that we've welcomed in the Holcim family, 6 in Solutions & Products, but also companies in our traditional business. The second transformation that went hand in hand with that is that of a larger geographical focus. We acquired companies in Europe and in the United States that are going to be our core markets, together with Latin America. More than 80% of our business is now done in Northern America, Latin America and in Europe. In the classical development markets in Asia and the Middle East and in Africa, we have a bit less than 20% market share. But in selected growth markets, we hold very solid Holcim positions. As part of that focused strategy in geography, we are generating 35% of our sales in Northern America, our largest region, the most attractive region for us for construction products. Apart from a geographic focus and apart from the buildout of our third segment, the fourth segment, its sustainability that is at the heart of our strategy and our Chairman said it before, last year, we took a very big step in decarbonizing. Our CO2 emissions were reduced by 21% in proportion to our sales, we have set new and ambitious goals to be compliant with the 1.5-degree road map. And in particular, we've achieved great progress when it came to introducing new low-emission products. Over the past 3 years, we worked with ECOPact, which is low emission cement and concrete, the ready-mix concrete. These are blockbuster products for us. ECOPact already makes up 16% of our total ready-mix sales in Q1. Very happy that this year, for the second time already, we've been able to put together a climate report for you that we are submitting to your vote today. It is obviously, informational material, but it also allows us to exchange ideas around decarbonization with many other stakeholders. Also this year, we're continuing to speed up our decarbonization road map for 2023. We set very ambitious goals. Year 2, we will further reduce CO2 emissions by more than 10% this year in percentage to sales. And we also have specific plans for decarbonization. Particularly, we're planning to make great [ straits ] when it comes to CO2 sequestration, with various projects ongoing in Europe and in the United States, where we are planning to sequester CO2 to further use it as raw material or to save it at all. Gas storage or oil storage tanks, we're leading in this new technology. The European Union is supporting us in our endeavors with EUR 338 million in funds for those investments that we're carrying out for 2 projects, 1 in Poland and 1 in Germany. And that makes us confident for our plans to be realized. We're the first company in our sector that is being praised for those efforts. ECOCycle is our latest innovation. It's going to be an important mainstay in Holcim future. ECOCycle is a recycling program where we recycle construction and demolition materials, concrete and tiles from old buildings that we are preparing as new raw materials that can be mixed into our products. Last year, 6.8 million tonnes demolition material were completely recycled. It's more than 1,000 truckloads on every single day of the work, 1,000 truckloads. So this is -- we're not talking about the future here. This is reality today, and this is ongoing at a fast speed. We have growth rates of almost 20% in these recycled construction and demolition materials. This is a program that we're introducing worldwide. We want to make sure that construction materials in all cities of all the world will be recycled Holcim. It's going to be a big player here. We were going on at a fast pace as we implement our strategy. I can promise you that also for 2023, in the first 4 months alone, we have already made 15 acquisitions to date. They strengthen us in the area of Solutions & Products, but also in the traditional materials in the traditional segments with ready-mixed, and you can count on our driving ahead the strategy. We'll be having another good year. Our sales in Northern America will make up 40% in our sales of the entire group 2023. We got off to a good start. Q1 is normally not an important quarter in construction, but we've achieved what we wanted. We achieved 8% organic growth and 12% organic growth in our operating results. This is an excellent result indeed, and we very much plan to have the momentum lasting us through the entire year. We also lifted the forecast for the entire [ year ]. We expect organic growth of more than 6% and operational results of above 10%. And you could also expect us to generate a cash flow of around CHF 3 billion. So we're pushing ahead at full steam. Dear shareholders from my side, thank you. Thank you for your support in our successful transformation. I thank you for your trust. I thank you for your support. And my thanks also go to the more than 60,000 employees around the world, who's hard work and dedication have made all this possible with their skills, their know-how, their competencies, their passion for Holcim. Thank you, and congratulations on these excellent results. I'm also looking forward to continuing with you as our shareholders and with our employees. We're sailing ahead into a successful future. Thank you very much.

Thank you very cordially, Jan. I would like to thank you, your colleagues on the Executive Committee, all of them assembled here and all employees of the Holcim Group. I am thanking again on behalf of the Board of Directors for these performances and results. Before we move on with the items on the agenda, I would, in particular, like to thank you personally, esteemed shareholders, for the trust you have placed in us and for your support. Thank you very much, indeed. It's been an honor and a pleasure to serve you and Holcim for 13 years, and I'm convinced this is the best Holcim company we've ever had. The company is excellently set up and is in the best of hands. You are entrusting your money to us, and we're aware of it. We are managing it very carefully, very cautiously. Thank you very much to all of you. Thank you. Ladies and gentlemen, this is now your opportunity to ask your questions on general matters. We'll be very pleased to answer these questions. We've had several persons who have signed up already. Mrs. Simijonovic will announce the persons to take the floor, and let me simply point out that only shareholders, of course, are allowed to speak. And for the purpose of the minutes, please state your name and place of residence. I would like to ask you to be brief. Should we have too many and too long statements, I would have to restrict speaking time. And statements on specific themes and items will then be dealt with as the various items on the agenda arise. And we will then call those who wish to speak on these items. Let me point out that the proceedings are audio and video recorded. Mrs. Simijonovic, please, who has signed up to take the floor.

Well, let me, first of all, call Mr. Vincent Kaufmann as the representative of the Ethos Foundation. Mr. Kaufmann, welcome.

Mr. Chairman, members of the Board of Directors, dear shareholders, Ethos today represents a number of pension schemes. I am talking about Item 1 as we are covering 3 different areas. First of all, the climate report; secondly, the compensation report; and thirdly, succession -- the successor to the Chairman of the Board. On the climate report, the Board of Directors has lived up to Ethos' demand and has drafted the climate report, which is submitted to an advisory vote to shareholders. We would like to thank the Board of Directors for that. We do note that Holcim this year hasn't achieved progress. In particular, the company has defined new goals for reducing emissions on a climate pathway of 1.5 degrees. In addition to that, it published estimates of investments in technologies of carbon capture, CCUS technology. And based on this progress, we do support the climate report this year, but we do expect from Holcim that efforts along those lines will continue and will further improve. First of all, Holcim ought to set reduction goals for CO2 emissions from joint ventures. In 2022, they accounted for more than 20 million tonnes of CO2. Secondly, the potential of carbon capture by CCUS technology is currently estimated at several tonnes several per year, but it's not clear at the moment. It is important to sequester CO2, but storage requires transformation and transport, which, again, creates a lot of emissions. So in the next report, Holcim ought to demonstrate the full data about all these emissions. Now on the compensation report, let me first focus on the positive aspect. The report is absolutely transparent. However, we're noting that compensation of the Executive Committee is rising continuously. For 2022, variable compensation of the CEO is exceeding more than -- is exceeding 4.5x the base salary. This seems to be too high for us. We do demand from the Board of Directors to revise the compensation system. [ The latitude ] for variable compensation is to be limited, in particular with regard to hiring a new CEO, whether female or male. Compensation for the Chairman is acceptable, on the other hand, and we do demand that the fee for the Chairman be left the current status, even if Mr. Jenisch is to become a nonexecutive Chairman. If and when he is to become a nonexecutive Chairman, Mr. Chairman, we have taken note of your decision to step down at this Annual General Meeting. You have made seminal contributions to the development of Holcim in recent years. Just to remind everyone, you took on the Chairmanship in 2016 in a difficult patch of time. At the time, when there were reproaches of funding terrorism by Lafarge in Syria, within next to no time, you have rebalanced corporate governance. The trust of the shareholders after the difficult merger of -- with Lafarge was really shattered, and decisions taken under your Chairmanship have restored that trust. And we do appreciate the quality of the dialogue you've had with Ethos over the years, in particular with regard to corporate governance and social responsibility. And we would like to thank you for it personally. However, we do regret that you stepping down, that means that there's going to be a dual mandate of the Chairman and the CEO, this bears the risk of concentration of powers. The tasks of the Chairman and the CEO are different. And to separate those capacities is the best way of balancing power in the company. The Board of Directors has assured us that this situation will be limited to 12 months. And the search for a successor, whether female or male, for Mr. Jenisch has already started, it's been said. In these circumstances, we do, by exception, support the transitory phase of a dual mandate, and we believe Mr. Jenisch, the CEO of the company has done an excellent job. So he is well equipped to take on the chairmanship. But the dual mandate has to be limited in time just to ensure an orderly transition in the interest of the company. Mr. Jenisch, we're looking forward to working with you as the new Chairman of the Board and continuing the excellent dialogue we've had. And I would like to thank you for your kind attention at this point.

Dear Mr. Kaufman, very cordial thank you for your kind words. We've not always agreed. We've not always speak of the same opinions, but our discussions have always been constructive, marked by mutual respect, never indecent. And I am very grateful for this to you personally. You represent your clients in a very professional manner to the best of your knowledge, and we do respect that. And we're also grateful for it. And I personally wish you all the best. Now regarding your questions on the dual mandate, I'll be pleased to answer, same goes for the question on compensation, where you suggested a revision of the policies. And the question on the environment will be answered by Jan Jenisch. As far as the dual mandate is concerned, you mentioned it, it's meant for a transitory phase limited in time. We announced that, and we will stick to it. I am familiar with the controversy about accumulation of powers and offices. We are aware of it. And very consciously, we decided to appoint Hanne Sørensen as Lead Independent Director. She will keep a good eye on the process and especially on potential conflicting situations. So rest assured that we are very well aware of what you're talking about. As far as compensation is concerned, you suggested that the compensation report and the entire compensation system ought to be looked into, and I'm convinced that the current management and the future Chairman of the Board will be pleased to do. In the past, we've done that every year very carefully. And Mrs. Sørensen is the Chairperson of the Compensation Committee, amongst other things, and she will again keep a cautious eye on the process on our compensation system to make sure that we remain firmly grounded. Jan, over to you as far as the climate questions are concerned.

Thank you, Beat. Thank you, Mr. Kaufman. Ethos, Ethos is a challenging partner in dialogue, but we do appreciate that very much. You helped us to improve. We had a lot of conversations, especially on the climate report in the past 2 years. I think it was very -- it's been very useful, and I would like to thank you for always being so constructive, given praise, and making new suggestions for improvement. And we will certainly take up your points. You mentioned carbon sequestration. Carbon capture is very interesting matter. We've got great project. I think we are the first company ever with a realizable concept for use when CO2 will be reused as a raw material. We'll be making details available. I'm looking forward to continued conversation with you and to getting better together with Ethos, especially in this field.

Next is Frank Van Pernis as the representative of Actares.

President, Chairman, ladies and gentlemen, members of the Board, dear shareholders. My name is Frank Van Pernis. I live in [ Basel ]. I am a member of Actares, which is an organization comprised of shareholders for more corporate responsibility. I speak on behalf of the shareholders, but also in my name, on behalf of the shareholders that asked Actares to represent them at the Holcim AGM. After a 3-year break, Actares is very happy to again be able to participate physically at Holcim AGM. Actares certainly will not want to miss the opportunity to thank Mr. Hess for the many years of successful dialogue with Actares and for his open ear to our issues, and we very much hope for this dialogue to be continued over the next few years, both with Mr. Jenisch and with his successor to the function of CEO. A double mandate, CEO and Chair of the Board, is not what Actares would wish to see because we feel that the Board would not have full use of its functions for oversight. In this case, however, we support this successorship model, which is a transitory one and is not expected to last longer than 1 year. With regard to the climate and the environment, Actares takes note of the fact that Holcim is following a double strategy, a 2-pronged strategy. The divestment of cement works in India, Brazil and [indiscernible] and Indonesia has reduced the cement share in the sales of the group. That, however, does not solve the global CO2 problem. And the share of the company's divested will obviously be turfed to the new owners of these companies. On the other hand, though, Holcim is developing new products, cement products that are carbon low, and it has also aligned its product segment to other areas, where there are activities that allow for higher gross margins and are less of a burden for the environment. Holcim is also developing recycling approaches of demolition materials, of concrete materials, which is a plus. Also all the carbon capture projects are deserving of our support because it keeps Holcim away from this partly illegitimate trade in CO2 certificates. This catalog of products is highly interesting for shareholders because, obviously, Holcim's efforts have a positive impact on the share price development and on Holcim's profits. And again, Actares considers compensation for the Group Executive Committee, and the Board as excessive. It would be desirable for these fees, commissions and tariffs to be reduced somewhat. Also in an effort to document that compensation is part of sustainability as well. Other companies in the same industry have taken a leading role here. Now let me move to my question. What is the time table ahead of us that make sure that the transitory period of 12 months for the double mandate will not become a lasting solution? Secondly, how do you see the market share of recycled concrete in Switzerland and worldwide? Because we -- when we look at such pictures, we certainly see that there is plenty of raw material available for the future. And with that, I thank you for your attention.

Thank you, Mr. Frank Van Pernis. I would also like to thank you for the excellent cooperation. Dialogue with you has always been very constructive, which we appreciated very much, and I'm perfectly convinced that we will keep up that dialogue. We have already spoken on the double mandate. It is indeed limited in time, and we do have very capable people on the bench within our company. The Board wanted to make sure that this very touchy, critical situation, as we are implementing our new strategy, still bears the signature of Jan Jenisch. We want to make sure that Jan is here to drive ahead this critical strategic transformation. We now also have a new CFO. And in this very critical period, we wanted to make sure that we have an interim solution. So we were indeed -- we are indeed in a position to say we're limiting this double mandate to a duration of 1 year. And the other questions that you raised will be answered by Jan.

Thank you very much for your comments. And as for your questions, for recycled concrete, market share is limited. Currently, we are leading here. We're pushing this ahead. As I said, we have 1,000 truckloads every day. This recycled concrete is then reused as raw materials for cement, but also to replace gravel for concrete products. Currently, more than 50% or around 50% of concrete products can be switched to recycled materials. In order to do that, however, a lot of efforts have to be undertaken, but we're well on track. You raised an important point, namely the fact that there are large volumina (sic) [ volume ] in demolition materials. Demolition materials are the largest share of waste categories worldwide. We have thus a large intake of such materials. It's now up to us to make the necessary investments for those recycling centers in Switzerland and elsewhere, that can take in these materials and process that. In the future I'm sure, we'll be able to report on the current respective state of affairs on recycling. We called it ECOCycle to signal also that Holcim is very much underway to ECOCycle demolished materials. We are in the circle construction market.

Other speakers? Yes, [ Dominik Andreas Suizeg ] has asked to speak.

Dear ladies and gentlemen, I'm [ Dominik Suizeg ]. I live in Zug. Holcim has CO2 emissions that are factor II of CO2 emissions in Switzerland. Hence, I'm happy to hear from Holcim that climate protection is at the heart of Holcim's efforts. Climate protection has top priority for me, too. Hence, I'm applying for a position in the Board. I have trained as a laboratory assistant in Physics at the [indiscernible], and I'm a member of the young green party in the Canton of Zug. As a member of the Board, I very much would vouch for the sustainability strategy at Holcim to make sure that the strategic priorities will be implemented. I'm young and can therefore take new solutions into the Board, and I can drive ahead all the necessary changes. In the interest of our company and in the interest of the planet on which we all live, I suggest to vote me into the Board in next year's AGM. Thank you very much.

Thank you, [ Mr. Suizeg ]. We're happy to accept your CV and your application, and we're happy to check whether you fulfill the requirements that we put to our candidates for a function on the Board. We have an entire catalog of criteria that need to be fulfilled and that we defined. But every shareholder, obviously, and more than that, every person of [indiscernible] is entitled to make such a motion. I understood you, [ Mr. Suizeg ], that you're not asking for a vote today. But of course, you will be receiving an answer from us on your motion. I seem to have understood you correctly. And with that, I ask Dragana whether there are other speakers.

Dr. Petra Kalman.

Mr. Chairman, dear shareholders, I'm Petra Kalman, and I'm representing the Hungarian owners of [ Hau Chaba ], the cement works. I would like to inform you that the works we acquired in 1994 and which was expropriated illegally by Holcim and used for decades to its own interest, more than 300 court actions have ruled that it is now our sole property. And we are going to do everything to reinstate the plant. But Holcim strategy consists of oppression and setting up obstacles. Between us and Holcim, it is now a matter of finding a settlement. The settlement is subject to court proceedings. In Hungary, it's the case of a century with a value of more than EUR 500 million at stake and decades of legal action. In the year 2010, we were very close to a settlement. Professor Dr. Peter Noble, representing Holcim and the owner and my father came to an agreement, but the Board of Directors of Holcim did not accept the proposed settlement as the legal representatives of Holcim convinced those finding a decision to be able to negotiate a better outcome in Hungary. And in agreement with this, the representative of Holcim wrote on the 26th of June 2016 to the representative of the Hungarian owners that, and I quote, "We have come to the conviction that there won't be any direct negotiations with you. We would assume that the government will respond to our comprehensive proposal for a solution." At the end of 2020, there were new negotiations between Professor Dr. Noble and the Hungarian owners. But on February 9, 2021, they were terminated without success. The Hungarian owners are of the same opinion. Currently, Holcim has to incur the cost required to bring the plant to a technical and operational status as it applied at the end of appropriation. That's the upper third of the European standard, like the 3 other plants in Hungary. Now in summary, the legal action for damages have been going on for 28 years and can go on for more years -- for years to come. A settlement is not excluded. Its foundation is clear, and I thank you for your kind attention.

Thank you, Mrs. Kalman. You have spoken at the Annual General Meeting many times, repeating the same reproaches. Well, as a matter of fact, we believe that the way you demonstrate the situation is misleading and wrong in many respects. And the things that your side is accountable for are [ emitted ] elegantly. We respect different opinions. But somehow, we should also see that everything ties in with reality. This applies, in particular, to the financial demands of your father. I repeatedly, and repeating it today, we've repeatedly, and I've repeatedly, offered to him, to sit with him, to talk with him. It won't be myself in the future, but we will certainly be ready to negotiate about a settlement. But at some point, what your demanding has to be within reality, to some extent. Our money and our possibilities are subject to the approval of shareholders, many of which are represented today. And you cannot expect that we would not deal cautiously with our shareholders' interests. And we cannot accept demands that we believe are highly illusory. But as I said, I promise that we will remain ready to enter into negotiations. And I do personally recognize, and I've said it many times, and I admire your attitude as you're representing the opinion of your father. We're respecting this, and we are going to keep doing that in future. Dragana no one else has signed up to speak, so let me continue. And yes, please? There's someone wishing to take the floor after all.

Ladies and gentlemen, dear members of the Board of Directors, dear shareholders, my name is [ Max Andaly ]. I live at Hagenwil, near Ammerswil, a small village -- place in a small village in the [ Canton of Zug ]. I think it is very important for me to thank Board of Directors. Mr. Hess and Jan Jenisch have navigated the company through very unsteady waters and have led it to quite waters at full steam. And this, of course, cannot be taken for granted. I have got the feeling they have taken care of the employees, which is a very important thing. After all, what's the use of a Board of Directors or an executive committee without great employees. And we do have to appreciate that. We do have to appreciate that they have used their force for such purposes. I am grateful that Jan Jenisch is making himself available to take on the dual mandate. It cannot be taken for granted either. And it cannot be taken for granted either that such people can use their force and have the energy of taking on responsibility for the entire company, for all the employees and our shareholders. Everyone has to work together after all, of course, and then the company will be successful. So a huge thank you to Jan Jenisch to use this energy to take on the dual mandate. And to all the detractors, all the critics, let me say that this cannot be taken for granted. It's not obvious for someone to take on a dual mandate that takes a lot of energy, a lot of force to manage the company. That's the important theme that, in future, employees, shareholders and everyone work together properly and can enjoy the future. Thank you very much.

Well, I would like to thank you very cordially for these friendly words. You will not be disappointed. I'm convinced of it. So unless there's anyone else requesting the floor, looking around for a second, whether anyone is making the effort of taking the floor, it doesn't seem to be the case. So let's continue with the Annual General Meeting, and I would, first of all, like to welcome the independent proxy, Mrs. Sabine Burkhalter Kaimakliotis. Well, we cannot see you. Over there you are, thank you very much. Many shareholders, as in previous years, have commissioned her to represent them. I would also like to welcome Jacques Pierres and Daniel Zaugg of Ernst & Young AG, the representatives of the auditors. Now you can see them on the screen. Furthermore, let me welcome the notary public present here today to -- for the amendments to the articles. It is Mrs. [ Martina King ] of MME Lawyers based here at Zug. And everyone else involved in managing the AGM, let me take this opportunity to say that in order to professionally organize such a meeting, a lot of work is required to be performed in the background. I was here yesterday. Those people worked overnight to put this thing together. And I think I would like to thank everyone who contributed to this behind the scenes, and they all deserve a big hand. Thank you. Pursuant to our articles of incorporation, I shall chair the meeting. I have appointed Dragana Simijonovic to keep the minutes. Let me make the following formal notes. The Annual General Meeting today has been duly convened, according to the law and the articles within a period of 20 days. The invitation was published on April 6, 2023, in the Swiss Commercial Gazette and was also available at our website. The shareholders in the share register of Holcim Limited were personally invited to the Annual General Meeting. And I herewith note that the annual report, including the management report, the consolidated annual financial statements and the annual financial statements of Holcim Ltd and the compensation report and the auditor's reports have been available for inspection 20 days prior to the annual meeting at the company's headquarters in Zug. The invitation includes all the items on the agenda. We have not received any requests to add to the items, pursuant to Article 11 Paragraph 3 of the articles. On behalf of the independent proxy, let me point out to you that the independent proxy has informed the Board of Directors, in agreement with Article 689c, Paragraph 5 of the Swiss Code of Obligations on the 2nd of May, the day before yesterday, informed in the general and brief manner on the instructions she has received. As in previous years, we are using an electronic voting systems. At check-in, you've received a voting device. Before we're going to deal with the items on the agenda, let me briefly explain the use of the system to you. Please follow the screen. With the green button at the top, you are voting yes. With the red button at the bottom, you are voting no. And the [ amber ] button at center is for abstention, if you wish to abstain from voting. In an electronic vote, the buttons will be highlighted a few seconds before the vote. This ought to be the case currently in your device. If this is not the case, please press the top bottom for 2 seconds. Should the button still not be highlighted after those 2 seconds, please raise your hands. Well, it seems to be working everywhere. Anyone who's having problems, so please raise your hand. Someone will come to you and fix the problem, replace the device or help you. Let's quickly make sure that everyone has a well-functioning device. I can see that someone coming to you to solve the problem, and let me continue. Now the same thing applies, of course, if there are problems with your device throughout the meeting, you can raise your hand, and someone will take care of it. As soon as there's a countdown on the screen, please cast your vote. The results will be established and shown on the screen afterwards. Well, in the meantime, we've established the attendance figures. As you can see, we have a total of 322,168,000 -- [ 343, 531,733 ] represented, and we have 21,363,115 votes represented by shareholders. I have appointed the persons being shown on the screen as tellers, as vote counters, who will be used -- if there's a problem with electronic voting, they will also be available to you, as I mentioned before, should you have any questions or problems using your voting device. I would like to ask the tellers to briefly rise so that everyone can see where they are. Tellers, please. Rise, please. So that everyone can see where they can obtain assistance from, should it be necessary. Thank you very much. And finally, let me point out that with the exception of items 4.1 and 4.4, resolutions taken at the Annual General Meeting today are taken at an absolute majority, i.e., more than half of the votes represented. For items 4.1, 4.4, we need at least 2/3 of the votes represented and the absolute majority of the par values represented to have the motion agreed. I have pointed out what those required values are -- the figures are. Let me begin with the vote now. The first item is the management report, the consolidated financial statements and the annual financial statements 2022 of Holcim Limited headquartered in Zug. The integrated annual report 2022 was sent to you at your request. It was also available on our website from February 24, 2023, and it was available for inspection that our company's headquarters. Jan Jenisch today commented additionally on the course of business and has described the outlook. The auditors, Ernst & Young AG, have audited the consolidated and annual financial statements. The report on the consolidated financial statements can be found from Page 273, and the report on the annual financial statements from Page 287 of the integrated annual report. Representatives of Ernst & Young Ltd told us before the start of this meeting that they had no additions to make. The Board of Directors proposes that the management report, the consolidated financial statements and the annual financial statements of Holcim Limited 2022 be approved. Are there any requests to speak on this? I'm looking around and I see no one at the speaker's desk. Hence, we're going to vote. Those who agree with the Board of Directors' proposal, press the yes button. And as soon as you see it highlighted, it will -- have been accepted. Those who are against, press the no button. And those who abstain, press the abstention button. And the countdown is running now. [Voting]

I will close the vote, and we're waiting for the results. You will all see some [ facades of houses ] show up before the results will be made available. I note that total votes represented, 343,570,621, you have approved those reports with the majority of 99.07%. Thank you very much. With that, we move on to the next item on the agenda, 1.2, a consultative vote on the compensation report. We will shortly come to the vote on it. But before we do so, let me first explain our compensation strategy and the compensation programs of the Board of Directors and the Executive Committee of Holcim. In order to strengthen the independence of the members of the Board of Directors and the performance of their supervisory duties, vis-a-vis management, they receive only a fixed compensation. They are not entitled to any performance-related compensation. And in -- and if they are insured under the pension plan, they must bear the cost in full themselves. But again, the Board does not receive any performance-related compensation. Compensation of the Board of Directors consists of an annual Board fee as Chairman, Vice Chairman or as a member as well as fees for membership and the committees of the Board of Directors. The annual fixed compensation is paid 50% in cash and 50% in shares. The shares are subject to a lock-in period of 5 years. So for a period of 5 years, those shares must not be sold. Committee remuneration is paid in cash. The compensation model of the Board of Directors has remained unchanged compared to the previous year. The compensation model for the Executive Committee consists of 3 main elements: fixed compensation, an annual bonus and a long-term incentive. So these 3 pillars. The fixed compensation consists of the salary for the function as well as fringe benefits such as participation in pension plans. The annual bonus rewards, the annual financial results of the group in the regions. It takes into account both absolute results and the company's performance compared with the market, benchmarking approach. The annual bonus also includes health, safety and environmental targets at group and regional level to take account of the important aspect of a safe workplace for our employees. Annual bonus is subject to a cap and is paid half in cash and half in shares. The shares are subject to a 3-year vesting period. The long-term incentive plan, the third pillar, rewards the company's long-term performance and strengthens alignment with shareholder interest. It consists of shares and options. The shares are subject to a 3-year performance period, the options to a 5-year performance period. Final number of shares and options depends on the company's performance during the performance period, and it is also subject to a cap. So it may very well be that after a 3-year performance period, the final result may be 0. Variable compensation is subject to for future and clawback clauses. So under certain conditions, variable compensation can thus be forfeited or even reclaimed the specific situations. Furthermore, members of the Executive Committee are expected to build up and hold a minimum portion of Holcim shares over time in alignment with shareholder interests. Board of Directors is convinced that the compensation model is balanced and well aligned with the interests of our shareholders. And obviously, we are regularly testing these models or having them tested by external experts. The compensation report explains the compensation systems and their programs for the Board of Directors and the Group Executive Committee. The report also provides information on the compensation awarded to the Group Executive Committee and the Board of Directors for fiscal 2022. Compensation to the Board of Directors for the period from the Annual General Meeting 2021 to the AGM 2022 was with an actual amount of CHF 4.8 million, within the approved maximum total amount of CHF 5.2 million. The current compensation period is not yet completed, and a final assessment will be published in the annual report 2023. The compensation to the Executive Committee for the financial year 2022 in the amount of totaling CHF 34.8 million is within the approved maximum total amount of CHF 42.5 million, an amount approved by you, so it's clearly below this maximum amount. Details of this and the entire compensation report can be found in the annual report on Pages 132 to 157. Ladies and gentlemen, if you have any questions on the compensation systems, if you wish to speak on this compensation system, the Group Executive Committee and the Board of Directors, if you have any questions on this, please speak now. Is there anyone wishing to take the floor? I do not see any raised hands and I see no one at the speakers' desk. In that case, we will proceed with the vote. Under agenda item 1.2, the Board of Directors proposes that the compensation report 2022 be approved on a consultative basis. Consultative means that your decision may not be binding. Your opinion, however, will be taken very seriously. We are voting now. Time is running now. [Voting]

I close the vote. Let's wait for the result. And again, we have the same drawing. I take note of the fact that you have approved the compensation report with 87.58%, and I thank you for that. Thank you very much. We move on with agenda item 2, discharge of the members of the Board of Directors and the Executive Committee. The Board of Directors proposes that discharge be granted to the members of the Board of Directors and the executive committee for their activities in the financial year 2022. Are there any requests to speak? This does not seem to be the case. I expressly point out that persons who participated in the management of the company have no voting rights for the resolution on the discharge of the Board of Directors and the Executive Board. The number of shares represented is already reduced accordingly in this system. Members of the Board and members of the Executive Board, hence, must not vote. You, dear shareholders, however, may. Please vote now. Time is running. [Voting]

Time is up. I close the vote. And again, we're waiting for the results. You have approved the Board's proposal with 95.23%. You have granted discharge to members of the Board of Directors and the Executive Board, and I thank on behalf of 2 entities for your trust. Moving on to item 3, appropriation of available earnings and distribution out of capital contribution reserves. Board of Directors, again, this year proposes a payout from capital contribution reserves which requires 2 steps according to the law. In the first step, the Board of Directors proposes to carry forward the available earnings of CHF 17,632,000,000 to new accounts. Anyone wishing to take the floor on this item? As there's no one requesting the floor, thank you very much, we are going to have the vote. The countdown is on. [Voting]

Time is up. Waiting for the results patiently. At 99.79% of the votes, you have approved a motion. Thank you very much, indeed. Moving on to item 3.2. The Board of Directors proposes to pay out from capital contribution reserves a dividend of CHF 2.50 per registered share. The total amount of payout of a maximum of CHF 1.472 billion results from the total number of shares in circulation. As you know, there's no payout on shares of full shares held by the company, no payout on treasury shares held by the company and subsidiaries. And the amount of payout is reduced, accordingly. Of course, anyone wishing to take the floor? This is not the case, so let's move on to the vote. The countdown is on. [Voting]

The vote is closed. Bear with me until the results are available. You have approved the Board's motion very generously and to a high majority of 99.8% of the vote. The payout is planned to be made on May 12, 2023. Moving on to item 4. It's going to be slightly complicated. It's a matter of amendment of articles of incorporation. The Board of Directors proposes that the articles of incorporation of Holcim Ltd be revised and approved, accordingly. The articles have been adjusted to current standards and to the revised Swiss corporate law as it entered into force at the beginning of this year on January 1. There is a brochure that was published on our website giving an extensive overview of the proposed amendments of the Articles of Association. Let me address one subject matter, which is certainly very significant to you, dear shareholders. The revised articles enable us theoretically to conduct purely virtual Annual General Meetings in the future. But personal exchange with you, dear shareholders, as I mentioned at the outset, personal exchange with you at a physical Annual General Meeting is, however, very important for us. So rest assured that we will only make use of the possibility of the purely virtual Annual General Meeting should there be an extraordinary situation, as we've unfortunately had it in the past 3 years due to the COVID pandemic. Anyone wishing to take the floor on this particular item? No one requesting the floor. I can't spot anyone requesting the floor. So the vote on this item #4 will be conducted individually, but in one go. So please bear in mind that the countdown on the item will be shown on the screen, and the voting results will then be announced collectively at the end of the individual votes. So the vote is open now on item 4.1 through 4.5, successively. This covers the proposed amendments of the articles of incorporation. We're first going to vote on item 4.1, amendment of the article on purpose. We've tried to compile and merge some matters, so that we don't have to have a vote on each and every particular amendment. Our Secretary of the Board of Directors has tried -- did a great job to group the subject matter. So the floor is -- the vote is now open on item 4.1 to 4.5. 4.1 first. Please cast your vote. [Voting]

Thank you. Moving on to the vote on item 4.2, which is about shares and the capital structure as the fundamental subject matter, please cast your vote. [Voting]

Time is up. The vote is closed. Moving on to item 4.3, which is about the Annual General Meeting and the auditors, our subject matters. The vote is on now. [Voting]

Thank you. Moving straight on to item 4.4, which is about the amendments regarding restricted transferability of shares and resolutions taken at AGMs. Everything nicely outlined in our brochure that was available on the website. The vote is on now on item 4.4. [Voting]

Thank you. And finally, final sub-item under amendments of articles, the articles of incorporation, this is about the amendments regarding the Board of Directors and compensation. The vote is on. [Voting]

Time is up. Bear with me until the results of all the votes are available. It might take a little while longer as we've had several rounds of voting. Now I can see that with regard to all the votes, you have approved the Board's motions at high majorities, 99%, 99%, 82%, 97% and 98% of the vote. Thank you very cordially for the trust you are placing in us. Moving on. Before we are proceeding with elections, I would like to say farewell to the valuable member of the Board of Directors. As I mentioned before, Patrick Kron will not stand for reelection. Patrick Kron has been a member of the Board of Directors since 2017. I would like to take this opportunity to thank Patrick very cordially for his valuable support. With his comprehensive management experience, he has contributed greatly to the Board of Directors. As the Chairman of the Audit Committee, he has also seminally contributed to securing the sound financial basis of the company. On behalf of the entire Board of Directors, I would like to thank Patrick for his great commitment and wish him all the best for his future. Thank you. Unfortunately, Patrick was not able to attend the AGM today because he has another appointment to attend to, but I will tell him about the [ handy goal ]. Let's move on with item #5, elections of the members of the Board of Directors and the election of the Chairman of the Board, the election of the members of the Nomination, Compensation and Governance Committee. Pursuant to the former Minder law, the members of this committee have to be reelected separately. And in addition, it will be about selecting the statutory auditors and the independent proxy. Dear shareholders, as already mentioned, and as you will have seen from our release in the press, I won't be available for reelection on the Board. It's been a very great honor for me to serve on Holcim's Board in the past 13 years. Looking at the current strength of the company today, I am proud of the successful transformation, the record results and primarily of the passion demonstrated by the more than 60,000 employees around the world. Holcim is on the best possible way to becoming a globally leading supplier of innovative and sustainable building solutions. The Board of Directors has appointed Jan Jenisch as my successor. Jan, provided that he is going to be elected -- reelected will succeed me as the Chairperson and will continue as the CEO of Holcim for a limited period of time, as we have mentioned before. The Board of Directors are firmly convinced that Jan, given his extensive leadership skills and his comprehensive experience is just the right candidate to take on the function of the Chairman of the Board, and to ensure quick and continued transformation of the company. Let me emphasize once more that the Board of Directors consider this dual mandate as a transitory solution designed to ensure the success of Holcim's current transformation and quick implementation of its 2025 strategy. The dual mandate is limited in time, and a successor for the CEO, let me repeat, will be announced within the next 12 months. In order to ensure independent control, as I have also already mentioned, the Board of Directors has created the position of Lead Independent Director and appointed Hanne Sørensen, the current Deputy Chairwoman of the Board of Holcim. She will take on the function of the independent Lead Director. The data relating to the reelection of all the candidates today were outlined on the website. So I will renounce on presenting each and every individual candidate. I would like to ask you to speak on all the candidates to be elected or reelected under item 5, if there's anyone requesting the floor to speak on the candidates in general or individual candidates. Yes, please? Mr. [ Rudolf Meyer ] has signed up to speak.