In Good Company with Nicolai Tangen - HIGHLIGHTS: Miljan Gutovic - CEO of Holcim

Starting point is 00:00:00 Hi everybody, tune in to this short version of the podcast, which we do every Friday for the long version. Tune in on Wednesdays. Hi everyone, I'm Nicola Tangian, the CEO of the Norwegian Sobun Wealthun. And today I'm joined by Milian Gutevich, the CEO of Holzim, Holzim, one of the largest building material companies in the world. Cement, aggregates, concrete, the stuff that the world is literally built from. So if you walked into a building today, drove on a road, crossed the bridge, Hey, Holtsim has probably been involved.

Starting point is 00:00:33 And we own nearly 2% of the company. Milian, warm welcome. Pleasure to be here, Nicola. And thank you for a warm introduction. Thanks for selling Holtsim. So, most people don't realize how embedded Holzim is in their daily lives. So, in short, what do you guys do? So basically, we are producing and supplying to our customers,

Starting point is 00:00:57 building materials and building solutions. that are used across built environment in buildings, in industry, in infrastructure. So the word is construction. And when you think about construction, you're probably thinking about concrete. And concrete is indeed one of the most essential materials. To put it in perspective, and maybe you will find this fascinating, think after water, concrete is the second most consumed material on Earth. We use approximately 30 billion tons of concrete every single year.

Starting point is 00:01:43 So we can say it's actually a bedrock of modern civilization. But it's also, I mean, it's not like it's a very glorious sector, right? So, but it's a sector which is transforming fast just now. So what is happening? Indeed. Beautiful times for the whole construction industry. And now I'll be talking to you as a civil engineer with PhD in material science. So this industry has been very conservative for many years, for many decades.

Starting point is 00:02:17 Recently, we have gone through massive transformation. The key word in our industry, industry today and for Holtsim is innovation and sustainability. This is a... What happened? Why is this a certain change? The pressure to build better, to build smarter, to build more efficient is coming from our customers, from all the different stakeholders.

Starting point is 00:02:46 And that's why we have positioned today, Holzim, as a leader in innovative and sustainable building process. building products. Europe is your biggest market. What are you seeing in Europe in terms of business activity? I would like to say that I am optimistic about Europe. Change is coming. What we are seeing in Europe, for example,

Starting point is 00:03:10 there is a massive shortage of housing. We are missing close to 10 million homes. But, but that's been the case for some time and still building hasn't really taken off again. So what we are seeing at least since second half of last year, number of permits is coming through, especially in the last two months, we have seen a very healthy permitting approvals

Starting point is 00:03:42 across all our key markets. This makes me confident that we will see recovery in short term. If you could change one thing. I mean, what is it holding it back? Is it regulation permitting, affordability, labor rates? Just what is it? So it's a combination of few factors, but permitting would be on top of my list. So I'm very happy to see that EU introduced this affordable housing plan,

Starting point is 00:04:14 which will boost supply and investment. And also EU and also local governments are working. to simplify the rules to make permitting quicker and faster. The increase that we are due to see in defense spending, how do you expect that to impact you? So we will be part of this because you need to have the infrastructure. You need to have rail and road network in place. So the infrastructure spending will definitely be boosted by defense spending. What about Ukraine where at some stage we need to see a major reconstruction?

Starting point is 00:05:02 Let's hope we see it sooner than later, but firstly to stop the suffering, if this war stops the optimism about the future will significantly change. And then there is a topic of reconstruction of Ukraine where we can can participate as Holzim from different countries around Ukraine, Poland, Romania, Moldova, even Hungary. Let's move topic a bit. You recently came out with a statement about AI and quantified the savings that you expect to get from the implementation here. How do you think about AI in Holzim? It is definitely changing the way we process, we produce.

Starting point is 00:05:52 It is something that we have been doing now for several years. And yes, this year we came out with an ambitious plan to hit 200 million Swiss ranks in net benefits by 28. So just imagine, Nicola, we are running complex industrial operations. Our factories, cement factory, on average, in size is 1,000 by 500 meters. So they are big industrial complexes. So we need to operate 24-7. And in such a situation, you wish you can have a crystal ball to be able to predict the future when this section of the plant will stop.

Starting point is 00:06:40 With AI, what we are doing internally, we are generating huge amounts of data. This data is sent to AI platforms where we have specialized, algorithms which we developed just for Holtsim. And these AI platforms, they are giving us warning signals that something might go wrong in this section of the plan. So what with this info, we are able to organize ourselves better. We are able to plan the shutdowns and also to better plan the maintenance in our production facilities. So this is not laying off people? Absolutely not. This is about enhancing operational efficiency.

Starting point is 00:07:29 This is about exercising strict cost discipline. It's not about laying off people. You mentioned previously your approach to decarbonization. Now, what does it mean to be a leading partner for a sustainable construction? What does it mean in practice these decarbonization you talk about? So we put sustainability at the core of our strategy. And when we talk about sustainability, we talk about decarbonization, reducing our CO2 footprint. We talk about circularity, which means recycling of old construction and demolition materials into the new ones.

Starting point is 00:08:16 And we talk about reducing fresh water. usage. So when it comes to decarbonization, we are leveraging all the levers possible to reduce the CO2 footprint. We are, I mentioned, we are reformulating our products, we are changing our energy mix, and also we are working on the next generation projects related to carbon capture. So where do you think? So now you are, now cement accounts for, I think it is 80. of the global CO2 emissions even higher than aviation. Where do you think it could go to? Well, we made the first company now the industry that committed to net zero by 2050. So it is a long journey, but it's a journey that will bring many innovations and it will change the way we operate

Starting point is 00:09:14 today. I'll give you one concrete example. For instance, during last decade, we have been working on reducing fossil fuels in operations, replacing it with alternative fuels. So what we do, Nikola, is basically we get paid to take the waste materials, we process this waste into energy source, and we use it instead of the traditional fossil fuels. By doing this, we are reducing cost, but we are reducing CO2 as well. So, for the For us, sustainability is a driver of profitable growth. So we are doing it because first of all, it's a right thing to do, and for us it makes perfect business sense.

In Good Company with Nicolai Tangen - HIGHLIGHTS: Miljan Gutovic - CEO of Holcim

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.