Restructuring for Growth and Profit 1

Click to edit Master title style

• Click to edit Master text styles– Second level

• Third level– Fourth level

» Fifth level

1

DEN NYE STRATEGIAnnual report 2001

FLS INDUSTRIES A/S

Presented by Peter Assam, CEO Birgitte Nielsen, CFO

7 March 2002

Restructuring for Growth and Profit 2

Agenda

2001 - highlights focusing and improving earnings platform mixed market conditions operational earnings and cash flow improved pruning of balance sheet

2002 and onwards focus, rightsizing and cutting debt

Restructuring for Growth and Profit 3

Focusing and improving earnings platform

Focusing merger of Aalborg Portland Holding and FLS Industries sale of RMIG sale of property

Improved Earnings Platform procurement project

Engineering Bulk Handling activities transferred to new unit reorganising all APC into one global business unit integration of F.L.Smidth & Co. and Fuller Co acquisitions strengthens FLSmidth Group’s product

range and turnkey skills FLS miljø continues rightsizing ”Waste to Energy” sold

Restructuring for Growth and Profit 4

Focusing and Transparency merger of Aalborg Portland Holding and FLS Industries sale of RMIG sale of property

Improved Earnings Platform procurement project

Building Materials concrete products in US and Spain exited investments in white cement strengthens platform new management to turn around US concrete

operation Unicon focuses on ready mix concrete Unicon’s Norwegian acquisitions fortify lead position in

Scandinavia DEH reorganises from country set up to functions

Focusing and improving earnings platform

Restructuring for Growth and Profit 5

Focusing and Transparency merger of Aalborg Portland Holding and FLS Industries sale of RMIG sale of property

Improved Earnings Platform procurement project

Aerospace rightsizing to post 11 September demand “right first time” introduced in CPH international management team Formula One program reduces turn times and cuts

man hours per check improved efficiency in Rotables utilisation decreased overheads and pay roll

Focusing and improving earnings platform

Restructuring for Growth and Profit 6

F.L.Smidth Group

* Sales price

Order backlog*

5,364

672

577

6,613

Order Intake*

6,023

1.452

802

8,277

Turnover

5,776

1,414

792

7,982

DKKm

Cement

Minerals

Others

Total

After market up 11 %

(272)EBIT

(38)Cash flows from operating activities

(107)

1,10515%

7,389

2000 2001

7,982

1,47618%

194

(384)

(539)

Gross profit

Cash flows from operating and investing activities

Net turnover

Margin upSG&A down

Better order execution

Restructuring for Growth and Profit 7

F.L.Smidth Group order intake

Good balance between basic - and large orders

Highest order intake ever 0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

DKKm

Large orders Basic orders

Restructuring for Growth and Profit 8

Annual contracted cement kiln capacity

Highest order intake ever -despite lowest new capacity in 15 years

0

10

20

30

40

50

60

70

Million tonnes

Average contracted 1980 – 2001 25 MPTY

Restructuring for Growth and Profit 9

FLS miljø

DKKm Turnover Order Intake* Order backlog*

Biomass 88 15 424

Fossil 565 794 1,240

APC 979 915 573

Total

*sales prices

1,632 1,724 2,237

2000 2001

Net turnover 1,533 1,632

Gross profit 179 107

EBIT (193) (183)

Cash flows from operating activities

(228) 164

Cash flows from operating and investing activities

(260) 139

Margin slippage on projects

Order intake remains sluggish in biomass and fossil

Restructuring for Growth and Profit 10

FLS Building Materials

DKKm APH FLS Building Materials

2000 2001

Net turnover 5,621 5,679

Gross profit 2,377 2,396

EBIT 465 295

Cash flows from operating activities

673 619

Cash flows from operating and investing activities

(1,313) 293

Markets suffer from economic downturn – but still good cash flow

Danish fibre cement sales hurt by image problem

Restructuring for Growth and Profit 11

FLS Building Materials

DKKm Aalborg Portland

Aalborg Portland

Unicon Group

Unicon Group

Dansk Eternit

Holding

Dansk Eternit

Holding

Densit Densit

2000 2001 2000 2001 2000 2001 2000 2001

Net turnover

1,676 1,612 2,931 3,086 1,117 956 117 135

Gross profit

890 837 1,197 1,284 283 197 60 66

EBITDA 436 437 403 394 111 8 9 12

EBIT 297 306 151 113 45 (79) 7 9

White strategy goes as planned

Unicon continues focusing

DEHs new products received well

Densit offshore break through

Restructuring for Growth and Profit 12

FLS Aerospace

DKKm Q4 2000 Q4 2001

Net turnover 3,282 3,049

Gross profit 3019%

536 18%

EBIT (377) (116)

Cash flows from operating activities

(414) (43)

Cash flows from operating and investing activities

(755) (245)

DKKm Turnover

Low cost

Charter

Cargo

2nd Tier

Flag Carriers

Others

793

1,159

213

518

213

152

Gross profits margin doubled

Cash flow strongly improved

Strong position in low cost segment

Restructuring for Growth and Profit 13

FLS Group Profit and Loss Account

DKKm

H1

2000

Year 2000

H1 2001Year

2001

Net turnover 9,169 19,205 9,014 18,930

Gross profit 1,893 4,471 2,287 4,670

23% 25%

EBIT (420) (458) 6 195

Net result 1,117 843 (143) 19

CFFO (621) (26) 662 1,321

CFFI (288) (2,500) (107) (247)

WC 1,612 1,266 1,759 1,652

NIBD 3,883 5,661 5,743 4,990

Improved gross profits and cash flow

Significant reduction of debt

Restructuring for Growth and Profit 14

2002 and Onwards

Optimise across F.L.Smidth Group speed up after-market sales - spares and services improve turnkey and civil engineering skills focus on cement and minerals segments

FLS miljø Grows Three Segments marketing technologies via international partnerships

or new owners use core know-how in new businesses on ad hoc basis

Harvest Synergies between Engineering Companies

Grow Key Product Areas in FLS Building Materials expand global production capacity in white cement consolidate industry and specialise fibre cement plants

- expand product range transfer “best practice” in Unicon’s One Company

program - turnaround US concrete operation

leverage Densit’s off-shore orders

Optimise Strategic Value of FLS Aerospace

Divest Non-Core Assets, Prune Balance Sheet and Cut Debt

Restructuring for Growth and Profit 15

FLS forecast

Sales DKK19bn EBIT Improved compared to 2001 EBT Improved compared to 2001

- given the present difficult market outlook

- excluding sale of assets

Forecast 2002

Restructuring for Growth and Profit

Restructuring for Growth and Profit 16

Q1:

F.L.Smidth Group Deficit from Weak US-Market and Higher Execution Costs

time lag between slow demand from US-market and reaction hereto

Q2: order intake, back log and target intact despite US slow

down largest order in European market acquisitions broaden product range and strengthen

turnkey skills FFE Minerals’ high performance reflects restructuring after-market sales maintains growth target

Q3: satisfactory order intake despite weak markets

Q4: satisfactory order intake - Vietnam order signed financial effects from merger materialising

Q1-Q4-Events

Restructuring for Growth and Profit 17

Q1:

FLS miljø’s Order Backlog End 2000 Was Poor order intake Q1 was below expectations cost base matches order potential in next months

Q2: order intake and outlook improves in US and Europe business tracks new management’s plan

Q3: slowing order intake order execution off track on UK project

Q4:

order intake remains sluggish in biomass and fossil

Margin slippage on projects

Q1-Q4-Events

Restructuring for Growth and Profit 18

Q1:

FLS Building Materials Usually Posts Deficit in Q1 Dansk Eternit suffers from DEF 1994’s receivership Sales reflect normalised weather conditions

Q2: Dansk Eternit’s sales slip further in Denmark US slowdown dampens Unicon’s profit in turnaround Cement export offsets lower demand in Denmark International price pressure on white cement Down revision of earnings forecast

Q3: US and Polish stand still fuels down revision

Q4

DEHs new products received well

Unicon starts divesting concrete products

Markets suffer from economic downcycle

Q1-Q4-Events

Restructuring for Growth and Profit 19

Q1:

FLS Aerospace Improves Performance in High Season

Q2: Third consecutive quarter with EBIT in black Strong USD hikes costs in Component Management Higher productivity and renegotiated contracts

increase earnings expectations

Q3: Continuous improvement until 11 September

Q4:

Restructuring to volumes drop of 20 % y/y

PMO contract of DKK 3.1 bn with easyJet

Q1-Q4-Events