HIGHLIGHTS: Miljan Gutovic - CEO of Holcim

**Nicolai Tangen** (0:01)
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 Nicolai Tangen, the CEO of the Norwegian Sovereign Wealth Fund. And today I'm joined by Miljan Gutovic, the CEO of Holcim. Holcim, one of the largest building materials 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 a bridge, hey, Holcim has probably been involved. And we own nearly 2% of the company. Miljan, warm welcome.

**Miljan Gutovic** (0:37)
Pleasure to be here, Nicolai. And thank you for our warm introduction. Thanks for selling Holcim.

**Nicolai Tangen** (0:45)
So most people don't realize how embedded Holcim is in their daily life. So in short, what do you guys do?

**Miljan Gutovic** (0:52)
So basically we are producing and supplying to our customers 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, maybe you will find this fascinating. After water, concrete is the second most consumed material on earth.
We use approximately 30 billion tons of concrete every single year. So we can say it's actually a bedrock of modern civilization.

**Nicolai Tangen** (1:49)
But it's also, 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?

**Miljan Gutovic** (2:00)
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.
Recently, we have gone through massive transformation. The key word in our industry today and for Holcim is innovation and sustainability.

**Nicolai Tangen** (2:30)
Why is this?
What happened? Why is this a sudden change?

**Miljan Gutovic** (2:35)
The pressure to build better, to build smarter, to build more efficient is coming from our customers, from all the different stakeholders. And that's why we have position today, Holcim, as a leader in innovative and sustainable building products.

**Nicolai Tangen** (2:56)
Europe is your biggest market. What are you seeing in Europe in terms of business activity?

**Miljan Gutovic** (3:02)
I would like to say that I am optimistic about Europe. Change is coming. What we are seeing in Europe, for example, there is a massive shortage of housing.
We are missing close to 10 million homes.

**Nicolai Tangen** (3:20)
But Miljan, that's been the case for some time and still building hasn't really taken off again.

**Miljan Gutovic** (3:27)
So what we are seeing, at least since the 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 across all our key markets. This makes me confident that we will see recovery in short term.

**Nicolai Tangen** (3:53)
If you could change one thing, I mean, what is holding it back? Is it regulation, permitting, affordability, labor, rates? Just what is it?

**Miljan Gutovic** (4:02)
So it's 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, 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.

**Nicolai Tangen** (4:29)
The increase that we are due to see in defense spending, how do you expect that to impact you?

**Miljan Gutovic** (4:36)
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.

**Nicolai Tangen** (4:56)
What about Ukraine, where at some stage will we need to see a major reconstruction?

**Miljan Gutovic** (5:02)
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 participate as Holcim from different countries around Ukraine, Poland, Romania, Moldova, even Hungary.

**Nicolai Tangen** (5:33)
Let's move the 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 Holcim?

**Miljan Gutovic** (5:47)
It is definitely changing the way we process, we produce.