Company Announcement to the Danish Financial Supervisory Authority No.
08-2012, 21 February 2012
The Board of Directors and the Executive Management have today considered and
approved the annual report of FLSmidth & Co. A/S for the financial year 1
January - 31 December 2011.
The consolidated financial statements are presented in accordance with
International Financial Reporting Standards as adopted by the EU. The parent
financial statements are presented in accordance with the Danish Financial
Statements Act. Further, the annual report is prepared in accordance with Danish
disclosure requirements for listed companies.
The annual report is accessible at FLSmidth's website:
http://www.flsmidth.com/reports
Financial results in Q4 2011:
High activity and record high EBIT result
The order intake increased 32% to DKK 5,856m (Q4 2010: DKK 4,428m)
Revenue increased 32% to DKK 7,286m (Q4 2010: DKK 5,520m)
Earnings before interest, tax, depreciation and amortisation (EBITDA)
increased 57% to DKK 995m (Q4 2010: DKK 633m), corresponding to an EBITDA ratio
of 13.7% (Q4 2010: 11.5%)
Earnings before amortisation and write-down of intangible assets (EBITA)
increased 62% to DKK 938m (Q4 2010: DKK 579m), corresponding to an EBITA ratio
of 12.9% (Q4 2010: 10.5%)
Earnings before interest and tax (EBIT) increased 62% to DKK 870m (Q4 2010: DKK
536m), corresponding to an EBIT margin of 11.9% (Q4 2010: 9.7%)
Earnings before tax (EBT) increased 64% to DKK 842m (Q4 2010: DKK 512m)
The profit for the period increased 72% to DKK 567m (Q4 2010: DKK 329m)
Financial results for 2011
Record year for Minerals, solid result in Cement despite difficult market
The order intake increased 16% to DKK 24,044m (2010: DKK 20,780m)
The order backlog has increased 14% to DKK 27,136m (end of 2010: DKK 23,708m)
Revenue increased 9% to DKK 21,998m (2010: DKK 20,186m)
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased
11% to DKK 2,647m (2010: DKK 2,387m) corresponding to an EBITDA ratio of 12.0%
(2010: 11.8%)
Earnings before amortisation and write-down of intangible assets (EBITA)
increased 10% to DKK 2,405m (2010: DKK 2,177m), corresponding to an EBITA ratio
of 10.9% (2010: 10.8%)
Earnings before interest and tax (EBIT) increased 9% to DKK 2,171m (2010: DKK
1,990m) corresponding to an EBIT ratio of 9.9% (2010: 9.9%)
Earnings before tax (EBT) increased 11% to DKK 2,070m (2010: DKK 1,872m)
Profit for the year increased 12% to DKK 1,437m (2010: DKK 1,278m)
Cash flow from operating activities amounted to DKK 1,148m (2010: DKK 1,335m)
Net interest-bearing debt by the end of 2011 amounted to DKK 98m (end of 2010:
Net interest-bearing receivables DKK 1,254m)
Market trends
The market conditions for minerals equipment and services were favourable in
2011 despite great global macroeconomic uncertainty during the year. This
reflects the fact that the minerals market continues to grow due to societal
changes in the developing countries where the growing middle class is boosting
demand for infrastructure and consumer goods based on minerals and metals.
Meanwhile, the supply of minerals is limited by the lack of investments by the
mining industry in previous of years and the declining quality of existing ore
bodies and accessibility of unexploited ore deposits. This means that mineral
prices have generally remained at a relatively high level despite fluctuations
during the year and that capacity utilisation in existing mines is very high.
In FLSmidth's prioritised industries, 2011 saw particularly high activity in
copper, gold and coal.
Demand for equipment and services in the cement industry was relatively weak in
2011 due to the hard-pressed economies in the Western World, unrest in North
Africa and a temporary growth pause in India. On the other hand, a positive
trend was seen in demand from particularly Russia, Central Africa and South
America. The global market for new contracted cement kiln capacity exclusive of
China amounted to 46m tonnes per year in 2011 (2010: 65m tonnes per year),
FLSmidth's share of the market representing 31% (2010: 36%).
Strategy
Market leader in six growth industries
FLSmidth is launching a new global growth strategy that will unfold the Group's
potential over the coming years.
FLSmidth will differentiate itself as the preferred full-service provider of
products and solutions based on the best technology in the market.
Over the coming years, the Group will gradually develop its organisational
structure in relation to six focus industries: coal, iron ore, fertilizer
minerals, copper, gold and cement.
The operational themes of the strategy focus on
1) getting closer to the customer
2) considering service and innovation as an integral part of all products and
3) services and excel in processes and projects.
In step with increased focus and differentiation and the normalisation of
markets, the goal is to generate above market average yearly growth in revenue
in both products, projects and services. This growth target entails acquisition
of businesses and activities, organic growth and higher market share as well as
increased revenue in connection with EPC (Engineering, Procurement,
Construction) contracts.
The aim is, in addition to higher revenue, to achieve an operating margin before
amortisation and write-down of intangible assets (EBITA) of 10-13%.
FLSmidth is a learning organisation and our people are our most valuable
resource. There will be stronger emphasis on developing, attracting and
retaining the right people who can support value creation in the Group.
New Group structure
As a consequence of the new Group Strategy, FLSmidth will in future be
structured in four divisions with Customer Services being separated from Cement
and Minerals to form a separate division, and Minerals being divided up into
Bulk Materials (notably coal, iron ore and fertilizers) and Non-Ferrous (non-
ferrous metals such as copper and gold).
FLSmidth is also the owner of Cembrit Holding A/S, which is Europe's leading
dedicated provider of fibre cement products.
New financial targets
Annual growth in revenue above market average
EBITA ratio 10-13%
Tax rate 30-32%
Equity ratio >30%
Financial gearing (NIBD/EBITDA) <2
Pay-out ratio 30-50% of the profit for the year
Cash flow from investing activities (exclusive of acquisitions) DKK -700m to
-900m
Outlook for 2012
In 2012, FLSmidth & Co. A/S expects consolidated revenue of DKK 24-26bn
exclusive of acquisitions (2011: DKK 22bn), an EBITA ratio of minimum 10% (2011:
10.9%) and an EBIT ratio of 9-10% (2011: 9.9%).
Cash flow from investing activities (exclusive of acquisitions) is expected to
be around DKK -900m in 2012 (2011: DKK -733m) due to the investment in eight
supercenters and the expansion of own manufacturing in India and China.
The effective tax rate is expected to be 30-32% in 2012 (2011: 31%) and payable
tax slightly lower.
The effect of purchase price allocations (exclusive of acquisitions) is expected
to be around DKK 220m in 2012 (2011: DKK 178m).
Each of the four new divisions and Cembrit are expected to see the following
developments in 2012:
Expected revenue* trend in 2012:
Customer Services: increasing (2011: DKK 5.3bn)
Bulk Materials: increasing (2011: DKK 5.0bn)
Non-Ferrous: increasing (2011: DKK 6.8bn)
Cement slightly: increasing (2011: DKK 4.4bn)
Cembrit slightly: increasing (2011: DKK 1.5bn)
Expected EBITA ratio trend in 2012:
Customer Services: stable (2011: ~16%)
Bulk Materials: strongly increasing (2011: ~5%)
Non-Ferrous: slightly decreasing (2011: ~12%)
Cement: decreasing (2011: ~11%)
Cembrit: increasing (2011: ~4%)
Expected order intake* trend in 2012:
Customer Services: increasing (2011: DKK 5.3bn)
Bulk Materials: increasing (2011: DKK 5.5bn)
Non-Ferrous: stable (2011: DKK 9.7bn)
Cement: slightly increasing (2011: DKK 4.4bn)
*) Elimination in the form of intercompany trade is expected to amount to
approximately DKK 1bn in both 2011 and 2012.
The new structure entails reclassification of revenue and order intake regarding
product companies and Customer Services
Restated segment information for the last 12 quarters will be published within
one month from the publication of the Annual Report 2011.
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Please address any questions to this announcement to Mr Jørgen Huno Rasmussen,
Group CEO, telephone +45 36 18 18 00.
An Investor & Press meeting and telephone conference regarding the annual report
2011 will be held today at 11:00 hours CET at the company's headquarters.
For further details please visit;
http://www.flsmidth.com/en-US/News+and+Press/News/2012/Investor+Meeting+Q4
FLSmidth & Co. A/S
Corporate Communications & Investor Relations
[HUG#1587732]
