Based on the new strategy the Group's four key undertakings are now preparing detailed plans of action which will include the following initiatives:
The earnings forecast for this year entails:
The downward adjustment of projected earnings is mainly due to:
Group Management
The Board of Directors has today appointed a
new Group Management that will take office on 1 August and will be in charge of day-to-day management of the FLS Group from that date. Peter Assam, 48, MSc (Engineering) and BCom, will become Group President and CEO, having until now served as President and CEO of Aalborg Portland Holding A/S. Birgitte Nielsen, 36, BCom, will be the new Group Chief Financial Officer. She was formerly Vice President, Corporate Control, at FLS Industries A/S.
Accordingly, the Group Management will comprise Peter Assam, Group President and CEO; Birgitte Nielsen, Group CFO; and Ole Trolle, Group Executive Vice President. The latter, as previously announced, is due to retire by the end of August. With the appointment of the new Group Management team, Jens Due Olsen will stand down as Group Chief Financial Officer at the end of July, as previously announced, to take up a new assignment outside the Group.
Bjarne Moltke Hansen, 38, BSc (Civil Engineering), has been selected to succeed Peter Assam as President & CEO of Aalborg Portland Holding A/S. Bjarne Moltke Hansen was formerly President & CEO of Dansk Eternit Holding A/S. In his place, Lars Østergaard, 35, MSc (Economics and Business Administration), who is currently Managing Director of Dansk Eternit A/S, has been appointed new President & CEO of Dansk Eternit Holding A/S.
Per Toelstang, 33, state authorised accountant, FLS Industries Corporate Development, has been appointed Vice President, Corporate Control, and Lars Hylling Christensen, 32, MSc and BCom, who is Head of Corporate Finance, has been made Vice President.
Earnings forecast for 2000
At the FLS Industries Annual General Meeting on 2 May, EBIT for 2000 was estimated to be on a par with that for 1999, i.e. DKK 475m. This projection mainly reflected a delayed intake of orders compared with the budget.
In the second quarter, FFE recorded a satisfactory flow of new orders and the processing of them and income recognition will be as so far assumed. The strategic measures
now adopted by the FLS Group will entail one-off restructuring costs at DKK 165m and reduce the earnings of FFE and FLS miljø.
Besides the allocation to restructuring costs, the FFE Group has set aside DKK 155m for possible losses on two American turnkey projects that were contracted in early 1999. A continuation of the disappointing trend in order intake by FLS miljø may lead to a DKK 85m deterioration of the year's financial result, and a provision for this amount has been made. The ongoing turnaround process at FLS Aerospace has also necessitated provisions amounting to DKK 200m.
For the reasons described above the FLS Group has lowered its projected EBIT for year 2000 to DKK -200m, EBT being estimated at close to DKK 1,350m (reflecting NKT's sale of GIGA).
New strategy
The Group will concentrate its energy on key engineering products and services within F.L.Smidth-Fuller Engineering and FLS miljø, continued development of the building material activities within APH, and profitable performance of the FLS Aerospace aircraft maintenance business. Activities that are not part of the strategic business operations will be collected in one unit reporting to the Group Management for the purpose of optimisation and possible disposal.
Closer integration of the Group companies will also enable them to achieve much greater economies of scale. A number of activities have been launched or are being initiated to ensure that ''best practice'' is shared among the companies in the Group. These activities include introducing swifter and more effective internal financial reporting systems, reducing the Group's financial costs, a stronger training effort, coordination of various overall joint Group purchases, etc. The strategy adopted combined with value based management will provide a platform for further development of the FLS Group to the benefit of all its stakeholders.
F.L.Smidth-Fuller Engineering with its nearly 4,000 employees will be organised in two global busin
ess units covering the cement and minerals industries, respectively. This new organisational setup will ensure efficient utilisation of expertise and experience across legal entities. In addition, a number of units will be physically integrated where considered expedient. The combined effect of these measures is estimated to materialise in the form of annual savings of not less than DKK 100m. Non-recurring costs for readjusting structure and organisation total some DKK 100m.
Having installed more than a third of the world's production capacity, amounting to 1,5 billion tonnes per year, FFE today holds a strong position in the cement machinery market. The new organisational setup will accelerate business growth into the fields of spare parts sales, ongoing maintenance services and, eventually, the actual operation of customer facilities. The market for FFE's present main product lines has a total value of about DKK 4,5 billion, compared with a total, more broadly defined market in excess of DKK 100 billion.
FFE Minerals builds on the experience gained from the cement industry. Like the cement organisation, it will strengthen its market position through acquisitions in the fields of specialist equipment, services and maintenance which will ensure the necessary local presence close to the customers. FFE will thus play an active part in the consolidation of the industries in which it is active. The total market amounts to at least DKK 40bn and FFE is strongly placed in selected product lines.
FFE will upgrade its competencies in turnkey and civil engineering services as they are the keys to the company's future success.
A few of the FFE activities will be separated from the organisation as they are no longer part of its future strategy.
In August, FFE will present an exhaustive plan for the new organisation.
FLS miljø's unsatisfactory earnings over a number of years necessitate a strong rationalisation effort. Steps will be taken to reduce FLS miljø's c