Nicolai Tangen: 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, 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: Pleasure to be here, Nicolai, and thank you for our warm introduction. Thanks for selling Holcim.

Nicolai Tangen: So, most people don't realize how embedded Holcim is in their daily lives. So, in short, what do you guys do?

Miljan Gutovic: 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, and 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: 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: 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 keyword in our industry today and for Holcim is innovation and sustainability.

Nicolai Tangen: What happened? Why why is this a sudden change?

Miljan Gutovic: 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 positioned today Holcim as a leader in innovative and sustainable building products.

Nicolai Tangen: Tell us about some of the innovations you have coming. What's the most exciting things?

Miljan Gutovic: So, we are really changing the way we formulate products, we produce products, and we use the products on construction site. I'll give you a few concrete examples, as we would say. Formulation, we are changing formulation constantly. Few years ago, we have launched a new generation of eco-friendly building products, cement and concrete. Today, after 5 plus years, these products represents more than 1/3 of our sales. So, what we are doing, we are replacing highly CO2 intensive raw materials, and you can say even expensive raw materials with more sustainable, more CO2-friendly, and cheaper versions.

Nicolai Tangen: Who are your biggest clients?

Miljan Gutovic: I mean, you name it. We work with construction companies, we work with hyperscalers, we work with governments. So, really it's a fragmented ecosystem. We are building houses, we are building tunnels, bridges, we are building data centers, logistics centers, all the way to the factories and high-rise buildings.

Nicolai Tangen: Recently you made a big structural move in that you separated your whole North American business. Why did you do that?

Miljan Gutovic: It was all about creating value, creating value for customers, for people, and our shareholders. We saw that strategies are diversifying between North America and Europe. So, we wanted to create a new chapter of growth for Holcim to unleash actually this new chapter. And that's why we decided to spin off the North American entity, and now we are focusing on the most attractive markets across our 40 countries where we operate.

Nicolai Tangen: It's interesting. We often see with spin-offs that the companies which are being spun off are so happy to get rid of their parent, you know, it's a bit like young kids moving out, get a lot of energy, do new crazy stuff.

Miljan Gutovic: Uh-huh.

Nicolai Tangen: Have you seen any any change in in Ambuja Cement, which is the name of the company you spun off?

Miljan Gutovic: No, it was a very healthy constructive process that lasted probably more than a year and a half. And at the end, we wanted this to happen as soon as possible because we were ready to take the next challenge, and the result was very satisfactory for us, for Holcim. We finished 2025 as the best performing stock on Swiss market index.

Nicolai Tangen: Do you now compete with them?

Miljan Gutovic: Not really. There are few overlaps, but this was a geographical separation. So, business in North America is negligible.

Nicolai Tangen: So, now Europe is your biggest market. What are you seeing in Europe in terms of business activity?

Miljan Gutovic: So, before becoming a CEO, Nikolai, I was actually head of Europe for 5 years. So, I know this region inside out. And I'm was happy to be part of these last 5 years when we went through some, I would say, challenging times. I took over in '21, then '22 came, energy crisis, relatively softer construction activity in the last few years. And despite of all of that, we continue to outperform. 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 a 10 million homes.

Nicolai Tangen: But, Milan, that's been the case for some time. And still building hasn't really taken off again.

Miljan Gutovic: So, what we are seeing, at least since second half of last year, number of permits is coming through. Especially in the last 2 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: If you could change one thing, I mean, what is it What is holding it back? Is it regulation, permitting, affordability, labor, rates? Just what is it?

Miljan Gutovic: 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: The increase that we are due to see in defense spending, how do you expect that to impact you?

Miljan Gutovic: 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: What about Ukraine, where at some stage will we need to see a a major reconstruction?

Miljan Gutovic: Let's hope we see it sooner than later, but firstly, to stop the suffering. If this war stops, the optimism, the 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: In the meantime, Latin America is a big market for you, and you made some acquisitions there. Why are you so excited about Latin America?

Miljan Gutovic: So, it's a region where we have the highest EBIT margins. It's a region where there are global mega trends that are actually shaping the future of construction industry. You see, population is growing, urbanization is increasing, people want to live better, governments are committed to spend on residential and infrastructure and we do have a excellent footprint in Latin America. We just concluded a big acquisition in Peru, which is amazing market that is booming. There are mining investment, there are agriculture investment and with our presence now in Peru, we are happy to capture this growth. But the biggest country for us is definitely Mexico. Mexico is a country where we are seeing accelerated growth when it comes to construction industry. The new government president Claudia has made it very clear she wants to see Mexico in top 10 economies by 2030. She is committed on infra spending. She wants to build 1.8 million homes in the next 5 years and it's already some of this has already started.

Nicolai Tangen: How different is it to do business in Latin America compared to Europe and the US?

Miljan Gutovic: It is different in Latin America nearly half of our customers are self-builders. These are people that buy cement in bags. They mix it on site to renovate their home, to increase the space of their house. So, what we did, we actually changed the route to the market. We operate close to 2,500 retail construction shops called Disensa, where we are servicing this a very powerful customer base and through our shops that most of them are franchises, we are able to supply up to 85% of their needs.

Nicolai Tangen: Let's move to a different 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: It is definitely changing the way we process, we produce. Um it is something that we have been doing now for several years and yes, this year we came out with the ambitious plan to hit 200 million Swiss francs in net benefits by 2028. So, just imagine Nikolai, we are running complex industrial operations. There are our factories, cement factory on average in size is 1,000 by 500 m. So, they are big industrial complexes. So, we need to operate 24/7. And the 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. 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 Holcim. And these AI platforms, they are giving us warning signals that something might go wrong in this section of the plant. So, what with this info, we are able to organize ourselves better, we are able to plan the shut downs and also to plan plan better plan the maintenance in our production facilities.

Nicolai Tangen: So, this is not laying off people.

Miljan Gutovic: Absolutely not. This is about enhancing operational efficiency. This is about exercising strict cost discipline. It's not about laying off people. In fact, it's actually about upskilling people.

Nicolai Tangen: You mentioned previously the your approach to decarbonization. What does it mean to be a leading partner for sustainable construction? Just what does it mean in practice, this decarbonization you talk about?

Miljan Gutovic: So, we put sustainability at the core of our strategy. And we 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. And we talk about reducing fresh water usage. So, when it comes to decarbonization, we 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.

Nicolai Tangen: Now, cement accounts for, I think it is 8% of the global CO2 emissions, even higher than aviation. Where do you think it could go to?

Miljan Gutovic: Well, we we were the first company now in 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 will change the way we operate today. I'll give you one concrete example. For instance, during last decade, we have been working on reducing fossil fuels in our operations replacing it with alternative fuels. So what we do Nicola 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 us sustainability is a driver of profitable growth. So we are doing it because first of all it's the right thing to do and for us it makes perfect business sense. I mentioned to you some of the products that we launched on these products we do have cost advantages because we are using our production know-how our formulation know-how. We are able to reduce the cost in these products as well as reducing CO2. That's why we keep bringing this statement back over and over again that at Holcim sustainability is actually driving profitable growth.

Nicolai Tangen: Okay. So greener products will not be more expensive.

Miljan Gutovic: We do get small price premium but in fact we do have cost advantage and we are using this to reinvest into the new initiatives to invest into the new formulations. Probably in four five times they will change formulation will change as we will will be developing next generation of alternative raw materials.

Nicolai Tangen: When you came out with your your plans and your visions I mean we have to admit that it was pretty fashionable to to bring out these kind of plans and subsequently we've had a political shift in the US. Has that changed the way you look at the way you look at these things.

Miljan Gutovic: Absolutely not. Still today sustainability is at the core of our strategy and sustainability and innovations are driving our growth and will continue to drive our growth in the years to come. I can give you example for Europe for instance. Last 5 years, one of the best performing regions in our portfolio was Europe. Despite all economical challenges, market conditions, in the last 5 years we have managed to increase our profit in Europe by 430 basis points. And one of the key drivers behind this was investments in sustainable offering, in decarbonization, and also in circular construction.

Nicolai Tangen: Can we talk a bit about culture? How would you define the corporate culture at Holcim?

Miljan Gutovic: So if you walk into the Holcim, you will see one slogan consistently everywhere. If you go into our office in Mexico City, in Zurich, or in Sydney, you will see Holcim spirit. So what we did is, you know, when you are going through a spin-off and I took over as a CEO, my first goal was that we align the teams on the ground. So we launched this thing called Holcim spirit, which is based on three P's: purpose, people, performance. We all have the same purpose: innovation and sustainability at the core of everything what we do. People, still the biggest asset of this company are people, 45,000 of our employees. And this is what I'm specially proud of. We launched for instance Holcim University. Last year we have 3,000 of our employees going through this Holcim University. We are constantly investing into people and we want to Holcim to be a place where we reward performance, we nurture talent and we where we encourage innovation.

Nicolai Tangen: What were the changes you put in place when you took over as a CEO?

Miljan Gutovic: Uh so one of the changes this Holcim spirit where we started investing heavily in upskilling of our next generation of leaders. And and the last P which is equally important Nikolai is performance. One of the key strengths of this company is our deeply embedded performance culture. And this goes the way we are organized. We are fully decentralized business. And the reason why our business is local for local. We source everything locally, we produce everything locally and we sell to local customers. So our corporate structure is very slim. It all goes down to the country and countries are driving performance of the Holcim. And that's why we are the company with industry leading EBIT margins. We have the most advanced decarbonization roadmap in our industry. This all goes back to our deeply embedded performance culture and our fully decentralized business model.

Nicolai Tangen: How do you look at the trade-off between decentralization and having one culture and one system?

Miljan Gutovic: Look, at the end of the day we do have a slim corporate corporate organization. I see them as mentors to coach the local teams, to provide constructive criticism or to share best demonstrated practices. I personally one of the things that I like most about my job is that to spend time on the ground. I travel a lot, nearly every week. And I do enjoy spending time in our factories, on construction site, and this is where me, a part of the corporate team, I am learning from the countries. And then we these learnings, we are that copying across the rest of our food.

Nicolai Tangen: What would people say about you as a leader?

Miljan Gutovic: Huh. Look, they will probably say that I keep repeating three things over and over again. I have a very three very simple rules. Um, first rule is control the controllable. Very simple. Uh, I don't want to spend have endless meetings talking about geopolitical situation. Uh, predicting the future, impossible. Our goal is to focus on the things that we can't control, on our strategy, on our initiatives. So, all my meetings are about internal discussions, what we can do better, exercising strict cost discipline, and improving operational efficiency. The second big statement that I keep repeating, and I strongly believe that this is the case, is that complacency is our biggest enemy. I am I see my job to eliminate complacency from the organization. Because, you know, when the company is doing well, I mean, look at our performance last several years. Look at the performance of some of our key geographies. People have a tendency to to become complacent.

Nicolai Tangen: How do you prevent that from happening?

Miljan Gutovic: Well, from constructive criticism to benchmarking, many are different ways. The third pillar, the third point that I should mention is this benchmarking. I I like football, I like tennis, I like sports in general. I like to benchmark internally and externally. And we do provide a lot of benchmarking to the country to encourage them to do even better. Why this country is doing better than you? Find a way to improve. Copy and replicate best demonstrated practices. Today these three rules are probably the ones I repeated thousand times and I will keep repeating them in the years to come.

Nicolai Tangen: I think you were born in Sarajevo and grew up in a place which wasn't always the most peaceful peaceful place. How do you think that has impacted you as a person and as a leader?

Miljan Gutovic: Yes, growing up there it wasn't It was not an easy period in my life, but then moving to Australia where I finished school, uni, got married, had my kids there then moving to Dubai and now last 7 years in Switzerland, working from Australia to Europe, different locations. I think it did really shape me. I learned a lot about the new cultures. I learned about different ways of conducting business. And I believe this is helping me today and this will help me in the future as long as I continue to evolve and I continue to learn. It's exciting now I'm spending more and more time in Latin America, fascinating region where I personally can learn a lot on personal level, to develop myself on personal level, but as well on professional level.

Nicolai Tangen: What do you think is the key to cultural understanding?

Miljan Gutovic: Look, there are I think what today what we are facing is uh world is changing on daily basis. Uh we need to change as well. We cannot be stuck in the same time forever. We need to evolve as the world is evolving. And what I see today when I talk to the young generation of my colleagues uh um these people they are very smart. They they have access to information in a second, but at the same time I feel often they are excellent at identifying the problems, but not very often they are able to bring the solution to the problem. Uh very often uh people are scared or reluctant to make a decision because they believe that decision might be wrong. And this is something that we need to change. We need to encourage decision-making process. We need to encourage the next generation to bring a problem together with a solution. And this is a culture change that will take a while.

Nicolai Tangen: I think it's quite interesting. Most companies the more I speak to CEOs, the more you I realize that most companies are struggling with the same things. You know, people generally are uh quite short-term thinking, don't particularly want to share a lot of information because it takes time and effort. They don't particularly want to take risk. And the job as a CEO is basically to extend people's thinking in terms of time, get them to share information, better feedback systems. It's the same in so many places. So, um Very interesting. What is your biggest mistake?

Miljan Gutovic: Oh, look, I have made many mistakes, but uh it's not about the mistakes. I believe it's about learning.

Nicolai Tangen: But I mean, tell us Tell us about something which went really pear-shaped.

Miljan Gutovic: I I think uh very often I was too slow to make the change on personnel level. I was sometimes too flexible when it comes when it came to some organizational changes, and the list goes on and on. But, when it comes to this discussion, I always go back to and I love this quote. I I maybe I won't repeat it exactly what he said, but Thomas Edison, he kept saying "I have not failed. I have just found something like 10,000 ways that won't work." So, it's not about mistakes, and I keep telling my people, "It's about learning. It It's about developing. Make a mistake, and it's better to make a decision today even if it's half good because in 3 months' time world will change so fast that this decision will be relevant."

Nicolai Tangen: You said that you had been too slow in making personnel changes. Have you seen many cases where you had a problem with people, and then it's actually improved?

Miljan Gutovic: Uh it happened It happened sometimes people do need to be woken up. Uh sometimes people I've seen, for instance, in the high-performing teams when after a while, because they've been praised so many times, they do become complacent. And I go back to my second principle, I really believe that complacency can be one of the biggest enemies in the company.

Nicolai Tangen: So, how how So, so somebody has been praised a lot of times, and they go into some kind of uh you know, hibernation or whatever, right? How do you wake them up?

Miljan Gutovic: Uh it could be inspirational speech

Nicolai Tangen: [laughter]

Miljan Gutovic: to motivate them, but at the end of the day, it's dealing with the facts. It's dealing with uh something some benchmarking. It's uh presenting the uh comparisons, and there's so many different ways. There is no one single point. But, that's the part of the job. It is my job to ensure that teams are performing.

Nicolai Tangen: Mhm.

Miljan Gutovic: And very often, even best-performing teams, they need to be waken up.

Nicolai Tangen: You have a PhD. Does that mean that you are micromanaging?

Miljan Gutovic: Uh look, I am would not say that I'm micromanaging, but I do like to know what's going on in my business deep down. I like to be I like to be able to talk to my plant manager in Egypt on the same level, to ask him about certain KPIs that usually our CEO would not know. So, I would not call it micromanaging, I would call it more curiosity and uh comparing performance of different organizations.

Nicolai Tangen: What's the kind of leader you do not want to be?

Miljan Gutovic: Uh um oof. I am I don't want to be a micromanager.

Nicolai Tangen: [laughter]

Miljan Gutovic: Since you mentioned it, I would uh I like to empower my people. I like to give them a free hands. I like to have open and frank constructive discussions and at the end of the day it's all about teamwork.

Nicolai Tangen: Mhm.

Miljan Gutovic: They do not work for me. They work with me and we are all in the same boat.

Nicolai Tangen: Um on a on a personal note, what how do you relax?

Miljan Gutovic: Um different ways. I like spending time with the family and friends. Occasionally I I like watching sports. I like to play tennis, to do cycling, reading books. So different different but family is on top of the list and and friends.

Nicolai Tangen: What do you read?

Miljan Gutovic: I've read many I really went it all over the place. In my high school I I had obsession with ancient Greece. Then during especially Sparta. Then during university I was obsessed with War and Peace and Russian literature. Then later on I last few years I am reading a lot of biographies. From Einstein to Nikola Tesla all the way to the Musk and different different people.

Nicolai Tangen: What kind of music do you play?

Miljan Gutovic: I last few years Chopin, Bach. I like to relax. Kids make sometimes fun of me when they we are driving in the car.

Nicolai Tangen: Because you have a very old person music taste.

Miljan Gutovic: [laughter] No no no they Or maybe.

Nicolai Tangen: It's not good for you know when you do this thing on Spotify and you get what's your what's your music age? You are like up at 100 years or something.

Miljan Gutovic: I would say I'm a 27 I'm a 27. You are at

Nicolai Tangen: [laughter] So who do you like these days, Nikolai?

Nicolai Tangen: Uh I'm lucky to tell you. I'm I'm more into mute music, you know.

Miljan Gutovic: Uh no Taylor Swift or

Nicolai Tangen: No, no, [laughter] no, no. Uh lastly, what is your advice to young people?

Miljan Gutovic: Um be bold. Don't be scared to make mistakes. Uh be open-minded. Um I I believe young people when they they they need to spend more time on networking when they enter organization. I'm not a big fan of this working-from-home policy. I like to see them in the office talking to older generation of workers so they can learn. They can absorb their expertise. So, it's all about uh open thinking, evolving, learning, and also being brave to make a mistake. Be curious to ask the question.

Nicolai Tangen: Well, now, this has been great talking to you. Uh big thanks, and uh please continue to construct, uh make apartments, make roads, make buildings, so you know, we we love it. Big thank you.

Miljan Gutovic: Will do, Nikolai. Thanks for having me. All the very best.

Nicolai Tangen: Thank you.