Market share of GCP and competitors for 2014-18

100%

■ Sales on credit are realized if and only if:

– Client provides bank guarantee - Sales in loan will not exceed

90%

80%

22% 15% 15% 15% 12%

26%

80% of guaranteed amount

– Client has existing credit lines aroused from past sales; Clients need to be 3 months old

■ If clients pay beforehand, 0.5% discount to sales price is applied

■ Clients are allowed to pay for ordered cement during 15 days

■ Delays that are more than 15 days, but less than 45 days will be

70%

60%

50%

40%

30%

20%

10%

0%

23% 36% 36% 34%

46% 31% 31% 29%

18% 18% 23%

9%

22%

39%

topped by 1.2% of sales price

■ Delays that are more than 45 days, but less than 90 days, will be topped by 3.6% of sales price

Competitors’ marketing strategy:

■ Holcim-Azerbaijan, thanks to its globally recognized brand name, enjoys higher class of cement purchasers. Customer are loyal to high quality of Holcim. Prices are set as 5% mark-up to second expensive price in the market

■ Norm-Cement, despite its recent establishment, strong marketing campaigns allowed increase in market share. Norm tends setting average market price to its products. This strategy allowed it to double its market share to 10% at expense of Holcim’s market share. Company’s pricing strategy largely benefits clients, as all transportation costs are borne by the Norm

■ Georgian cement producers, will compete with Gazakh Cement either in western regions of Azerbaijan. The competition can be in eastern regions of Georgia, as well. Their advantage includes sales of cement without necessary due-diligence activities and documents

2014 2015 2016 2017 2018

Gazakh Cement Plant Holcim-Azerbaijan Norm Cement Import/ others

Source: KPMG analysis

Project description

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