Portfolio Optimization

 

We will actively manage our portfolio by applying a systematic set of criteria to evaluate all our markets and businesses in terms of their potential to contribute to our overall strategy.

Summary

  • We have set up a framework to be more active in entering, supporting, or exiting markets and businesses, considering each move from a strategic point of view.
  • Our evaluations combine macroeconomic analyses, industry projections, and objective evaluations of our current position and potential in a given market, rounded out with the experience and opinions of our senior management.
  • Our goal is to develop a portfolio of businesses which optimally balances growth potential, reliable cash generation, and divestment opportunities.

One of the most important decisions a large company can make is where to focus its resources. Understanding which markets are poised for growth and which have reached their potential, evaluating market risk as well as opportunities, and realistically assessing a company’s ability to exploit these opportunities, are all key components of sustainable success. As in personal investing, a strong business portfolio is one which is well diversified, with a healthy risk-return profile and a good balance between mature and emerging markets.

One of our top priorities for the new company is to employ a disciplined, active approach to managing our portfolio of businesses. Thanks to this, we are developing a far clearer understanding of where our true potential lies, where risks may be hidden, and of how we can build a well-balanced set of businesses that gives us the best risk-return profile, and is aligned with our stated strategic objectives.

A methodical approach

Our analysis and decision-making is based on several layers:

First, we look at the macroeconomic situation in a country as a whole. This includes its size and growth prospects, the structure of its population and economic activity, and any risk factors, including currency, regulatory and/or political risk.

Next, we look at the building materials industry in the country: how it has evolved, its current state (nascent or fully developed), the competitive landscape, supply and demand developments, growth prognoses, and other structural and competitive conditions.

Finally, we take an objective look at our current prospects in the market.

This process allows us to make well-founded portfolio decisions. It also gives us a much better picture than we have had in the past about where it makes sense to invest, where it makes sense to maintain a strong position in an otherwise mature market, and where divestment is likely to be the best option for the company as a whole.

This work is bearing fruit. We have already announced that we will divest CHF 3.5 billion in assets in 2016.