flsmidth annual report 2013

13 February 2014 Annual Report 2013 1

Presentation of Annual Report 2013

Key highlights

2013 executed as planned and communicated Focus on managing the cyclical downturn and preparing for the upturn Eyes set on sustainable profitable growth

ROCE > 20%


Safety ambition: No injuries

2015 LTIFR target: < 3

Safety above all Lost Time Injury Frequency Rate (LTIFR) 3.9 in 2013

3

Safety

13 February 2014 Annual Report 2013

4.2 4.7

3.9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2011 2012 2013

LTIFR (annually)

-17% vs. 2012

Number of lost time injuries per million working hours

Mining capex

Downturn to continue throughout 2014 Flattish or slight decline in 2015 Slow growth in 2016

Cement capex

At a low level since 2009 Similar or slightly higher level of activity in 2014 Recovery to commence in 2015

Customer Services resilient and growing

Overall market trends unchanged

Guidance


Order intake reflecting business environment

Three large capital orders received in Material Handling and Cement

Large 5-year O&M contract received in Customer Services

Revenue as expected

Currency headwind -7% on order intake and revenue

Positive cash flow from operating activities, but not enough

EBITA impacted by planned costs and Buxton arbitration award

Efficiency Programme on track

Key financial highlights Q4 2013

5

Key highlights Q4 2013


Efficiency Programme update DKK 750m efficiency improvement by 2015

Efficiency Programme


DKK +498m EBITA improvement run-rate:

33% (SG&A* costs)

23% (SG&A costs and Gross profit)

37% (COGS**)

6% (COGS and SG&A costs)

No EBITA effect

Started

1% (product pruning)

*) SG&A: Sales, ceneral and administration costs

**) COGS: Costs of goods sold

Efficiency Programme on track

Efficiency Programme


Targeted full-year effect in 2015

2013 effect Estimated full-year effect (run-rate)

Headcount reductions -1,100 -898 -1,102

Location reductions >20 25 41

One-off costs DKK -500m (2013-2014 effect)

DKK -428m (+78m vs. Q3’13E)

DKK -428m (2013 full year effect)

EBITA improvement DKK+750m p.a. DKK ~0m DKK +498m

Order intake record high had Nigerian O&M contract been fully included

Revenue decreased 5% (adjusted for currency) comparing to a record high Q4’12

EBITA margin 8.7%, adjusted for special items

Financial performance in Q4 2013

Results Q4 2013

13 February 2014 8 Annual Report 2013

FLSmidth & Co. A/S (DKKm)

Q4 2013

Q4 2012

Change Change

FX adjusted

Order intake 5,616 6,104 -8% -1%

Revenue 7,420 8,395 -12% -5%

Gross margin 18.6% 23.5%

EBITA 222 893 -75%

EBITA margin 3.0% 10.6%

Net results -179 462

CFFO 77 1,532

Financial performance in 2013

Annual Report 2013

13 February 2014 9


Q2 2013 Q2 2012 Change

Order intake 5,626 7,246 -22%

Revenue 6,456 5,653 +14%

EBITA 287 576 -50%

EBITA margin 4.4% 10.2%

EBIT 195 323 -39%

EBIT margin 3.0% 5.7%

CFFO -51 333

Employees2) 14,817 12,717 +17%

Annual Report 2013


2013 2012 Change Guidance

2013

Order intake 20,911 27,727 -25%

Order backlog 22,312 29,451 -24%

Revenue 26,923 26,284 2% 26-28bn

Gross margin 19.3% 24.8%

EBITA 977 2,559 -62%

EBITA margin 3.6% 9.7% 3.5-4.5%

Net results -784 1,303

CFFO -157 1,720

CFFI -567 -3,398 -83% -0.8bn

Working capital 2,382 1,950 +22%

ROCE 6% 18% 7-8%

Employees 15,317 15,900 -4%

Order intake impacted by mining capex downturn

Revenue increased 2% organically

Gross margin impacted by special items

EBITA margin 8.2%, adjusted for special items

CFFO negatively impacted by one-off costs

CFFI strictly managed

ROCE 14% adjusted for special items

Service activities accounted for 49% of 2013 orders

Annual Report 2013

Annual Report 2013 10

Revenue 2013

13 February 2014

Order intake 2013

36%

64%

Capital business

49% 51%

Service business Capital business

Service business

2012: 37% 2012: 41%

39%

14% 5% 6%

2% 0%

34%

Order intake decreased 8% in Q4

Annual Report 2013


Q4 order intake by industry (quarterly)

Cement

Coal

Iron ore

Fertilizers

Other

Copper Gold

0

2,000

4,000

6,000

8,000

10,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Order intake (quarterly)

-8% vs. Q4 2012 DKKm

Announced O&M orders Announced capital orders Unannounced orders

Order intake increased 5% adjusted for O&M contracts

Order intake would have been record high in Q4 had the principle for recognition of O&M order intake not been changed

Revenue increased sequentially in Q4

Annual Report 2013


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Revenue (quarterly)

-12% vs. Q4 2012 DKKm

Organic Revenue growth -5% in Q4’13

Service activities accounted for 34% of Q4’13 revenue

Pattern of seasonally increasing revenue over the calendar year broken in Q3’13 but reestablished in Q4’13

Revenue in Q4’12 (the comparison quarter) was record high

Gross margin impacted by special items

Annual Report 2013


Gross margin

26.3%

23.5%

18.6%

0%

10%

20%

30%

40%

0

500

1,000

1,500

2,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Gross profit (quarterly)

-30% vs. Q4 2013 DKKm

Decline in gross margin due to one-off costs related to the Efficiency Programme, the Buxton arbitration award and execution of lower margin order backlog in Cement

Gross margin Q4’13 vs. Q4’12 - by division

28.8%

2.2%

24.7% 27.3%

24.0%

14.7%

21.6%

6.8%

Customer Services

Material Handling

Mineral Processing

Cement

Q4’13 Q4’12 Q4’13 Q4’12 Q4’13 Q4’12 Q4’13 Q4’12

SG&A ratio impacted by Efficiency Programme in Q4

Annual Report 2013


SG&A ratio up 2.8%-points vs. Q4’12

SG&A ratio impacted by efficiency programme one-off costs in Q4’13

‘Underlying’ SG&A ratio (adjusted for EP) 12.9% in Q4’13

SG&A ratio*

12.6%

11.9% 14.7%

0%

3%

6%

9%

12%

15%

18%

0

200

400

600

800

1,000

1,200

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

SG&A costs* (quarterly)

9% vs. Q4 2012 DKKm

*) SG&A ratio: SG&A costs divided by revenue

222

643 160

261

0

200

400

600

800

EBITA Q4'13 Buxton Efficiency

programme one-off costs

EBITA Q4'13

adjusted

EBITA margin down to 3.0% primarily due Efficiency programme one-off costs. EBITA-margin 8.7% adjusted for special items

EBITA margin 3.0% in Q4

Annual Report 2013


EBITA margin

12.9% 10.6%

3.0%

0%

3%

6%

9%

12%

15%

0

200

400

600

800

1,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

EBITA (quarterly)

-63% vs. Q3 2012 DKKm DKKm

EBITA bridge reported vs. adjusted

8.7%

3.0%

EBITA margin

ROCE decreased 11%-points vs. Q4’ 12 due to declining EBITA margin and increased average capital employed as a result of acquisitions made in 2012 and higher average working capital

ROCE 14% adjusted for special items (EBITA impact)

Return on Capital Employed decreased to 6%

Annual Report 2013


ROCE* (quarterly) Average capital employed

DKKm

0%

5%

10%

15%

20%

25%

30%

0

3,000

6,000

9,000

12,000

15,000

18,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

ROCE

6% in Q4 2013

*) ROCE: Return on capital employed calculated on a before tax basis, including goodwill and based on last 12 months’ EBITA and average capital employed

ROCE target

Capital employed

(end of quarter)

capital employed

DKKm

0

3,000

6,000

9,000

12,000

15,000

18,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

2,285 2,382

691 242 353

122 361

-

1,000

2,000

3,000

4,000

Decline in advanced payments*) in 2013 DKK -2.2bn absorbed in net working capital in 2013

Annual Report 2013


Net working capital

DKKm End Q4 2013 vs. End Q3 2013

Change in net working capital in Q4

DKKm

0

500

1,000

1,500

2,000

2,500

3,000

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

*) Advance payments: Work-in-progress net + prepayments net

EBITA (DKK) EBIT (DKK) Cash-effect

Material Handling one-off costs Q2 -323m -323m Yes

Expected costs related to Efficiency Programme Q3-Q4

-428m -428m Yes

Inventory write-down Q3 -203m -203m No

Ludowici impairment loss Q3 -901m No

Buxton arbitration award Q4 -160m -160m Yes

Sale of assets Q3 +37m +37m Yes

Other costs of non-recurring nature Q1-Q2 -163m -163m Yes

Total full-year impact -1,240m -2,141m DKK -673m

Special items eroded earnings and cash flow in 2013

Special items


Capital structure affected by special items

Annual Report 2013


NIBD (quarterly) DKKm

-

1.0

2.0

3.0

4.0

5.0

0

1,000

2,000

3,000

4,000

5,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Gearing 3.6x EBITDA Gearing target (self-imposed)

0%

10%

20%

30%

40%

50%

0

2,000

4,000

6,000

8,000

10,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Equity (quarterly)

DKKm Equity ratio Equity ratio 25%

Equity ratio target (self-imposed)

Gearing temporarily impacted by one-off costs booked in 2013 and currently outside target of maximum 2 times EBITDA

Gearing expected to be back on target by the end of 2014

NIBD / EBITDA

More stringent approach to capitalisation of internal costs related to R&D development projects, including the ERP/business system

More stringent assessment of ageing inventory items

Cash flow from investments to develop more in line with depreciation and amortisation (excl. effect of purchase price allocations)

New O&M contracts included in order intake and order backlog with 12 months rolling revenue only

More prudent business practices

20

Business practice


Proposed dividend of DKK 2 per share

Dividend


Dividend policy implies no dividend for 2013

Capital structure outside targeted range implies no dividend for 2013

However...

Capital structure and profits expected to normalise in 2014

Proposed dividend DKK 2 per share equivalent to DKK 106m

Long term financial targets unchanged

Targets


Financial targets

Annual revenue growth Above market average

EBITA margin 10-13%

ROCE* > 20%

Tax rate 32-34%

Equity ratio >30%

Financial gearing** <2

Pay-out ratio 30-50%

*) ROCE: Return on capital employed calculated on a before tax basis as EBITA divided by average Capital Employed including goodwill **) Financial gearing: NIBD / EBITDA

Group Guidance 2014 2013

Revenue DKK 21-24bn DKK 26.9bn

EBITA margin 7-9% 3.6%

CFFI* ~DKK -0.4bn DKK -0.6bn

ROCE 11-13% 6%

Group guidance 2014

Guidance


Divisional guidance 2014

Guidance


Segments Guidance 2014

Revenue (DKK) (2013) EBITA margin (2013)

Customer Services 7.5-8.5bn (7.6bn) 13-15% (9.1%)

Material Handling 3.5-4.5bn (4.6bn) 0-2% (-11.2%)

Mineral Processing 5.5-6.5bn (9.3bn) 6-8% (8.2%)

Cement 3.5-4.5bn (5.2bn) 5-7% (2.4%)

Cembrit 1.4bn (1.4bn) 0-2% (-4.4%)

Key take-aways

2013 executed as planned and communicated Focus on managing the cyclical downturn and preparing for the upturn Eyes set on sustainable profitable growth

ROCE > 20%


Forward-looking statements

Annual Report 2013


FLSmidth & Co. A/S’ financial reports, whether in the form of annual reports or interim reports, filed with the Danish Business Authority and/or announced via the company’s website and/or NASDAQ OMX Copenhagen, as well as any presentations based on such financial reports, and any other written information released, or oral statements made, to the public based on this interim report or in the future on behalf of FLSmidth & Co. A/S, may contain forward-looking statements. Words such as ‘believe’, ‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘target’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance identify forward-looking statements. Examples of such forward-looking statements include, but are not limited to: • statements of plans, objectives or goals for future operations, including those related to FLSmidth & Co. A/S markets, products, product research and product

development • statements containing projections of or targets for revenues, profit (or loss), capital expenditures, dividends, capital structure or other net financial items • statements regarding future economic performance, future actions and outcome of contingencies such as legal proceedings and statements regarding the underlying

assumptions or relating to such statements • statements regarding potential merger & acquisition activities. These forward-looking statements are based on current plans, estimates and projections. By their very

nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which may be outside FLSmidth & Co. A/S’s influence, and which could materially affect such forward-looking statements.

FLSmidth & Co. A/S cautions that a number of important factors, including those described in this presentation, could cause actual results to differ materially from those contemplated in any forward-looking statements. Factors that may affect future results include, but are not limited to, global as well as local political and economic conditions, including interest rate and exchange rate fluctuations, delays or faults in project execution, fluctuations in raw material prices, delays in research and/or development of new products or service concepts, interruptions of supplies and production, unexpected breach or termination of contracts, market-driven price reductions for FLSmidth & Co. A/S’ products and/or services, introduction of competing products, reliance on information technology, FLSmidth & Co. A/S’ ability to successfully market current and new products, exposure to product liability and legal proceedings and investigations, changes in legislation or regulation and interpretation thereof, intellectual property protection, perceived or actual failure to adhere to ethical marketing practices, investments in and divestitures of domestic and foreign enterprises, unexpected growth in costs and expenses, failure to recruit and retain the right employees and failure to maintain a culture of compliance. Unless required by law FLSmidth & Co. A/S is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of this presentation.

Questions & Answers Next update: Annual General Meeting on 27 March 2014 Follow us on Twitter and LinkedIn


Appendices - backup slides


Customer Services –unannounced orders increased order intake -17%, revenue -6%, EBITA -34%

Material Handling – positive EBITA margin adjusted for special items order intake 146%, revenue 11%, EBITA DKK -29m

Mineral Processing – impacted by mining capex downturn order intake -58%, revenue -29%, EBITA -67%

Cement – EBITA impacted by Buxton arbitration award order intake 87%, revenue 0%, EBITA -44m

Divisional developments in Q4’13 vs. Q4’12

Annual Report 2013


Customer Services


Order intake increased adjusting for changed principle for recognition of O&M contracts

Revenue growth of 2% adjusted for currency

Order intake increased excluding O&M

Customer Services


0

1,000

2,000

3,000

4,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013


-17% vs. Q4 2012 DKKm

Announced O&M orders Announced capital orders Unannounced orders

Revenue (quarterly)

DKKm EBITA margin -6% vs. Q4 2012

0%

4%

8%

12%

16%

20%

0

500

1,000

1,500

2,000

2,500

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Customer Services

Customer Services


(DKKm) Q4

2013 Q4

2012 Change

2013

2012

Change

Expected 2014

Order intake 2,032 2,442 -17% 8,005 9,202 -13%

Order backlog 8,046 8,159 -1% 8,046 8,159 -1%

Revenue 2,000 2,129 -6% 7,565 7,073 7% DKK 7.5-8.5bn

EBITDA 200 317 -37% 768 1,012 -24%

EBITA 195 293 -34% 691 930 -26%

EBITA margin 9.8% 13.8% 9.1% 13.1% 13-15%

EBIT 151 259 -42% 411) 7872)

EBIT margin 7.6% 12.2% 0.5%1) 11.1%2)

1) Including Ludowici impairment loss of DKK -539 2) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m

Material Handling


Strong order intake due to large order in Qatar

EBITA margin adjusted for special items +2.9% in Q4

Strong order intake in challenging market

Material Handling


0

500

1,000

1,500

2,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013


146% vs. Q4 2012 DKKm

111111

Announced orders Unannounced orders

Revenue (quarterly)

DKKm EBITA margin 11% vs. Q4 2012

-40% -30% -20% -10% 0% 10% 20% 30% 40%

-2,400 -1,800 -1,200

-600 0

600 1,200 1,800 2,400

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Material Handling

Material Handling


(DKKm) Q4

2013 Q4

2012 Change

2013

2012

Change

Expected 2014

Order intake 1,655 675 146% 4,937 4,565 8%

Order backlog 4,465 4,773 -6% 4,465 4,773 -6%

Revenue 1,472 1,326 11% 4,552 4,997 -9% DKK 3.5-4.5bn

EBITDA -15 -167 -455 -140

EBITA -29 -177 -511 -186

EBITA margin -2.0% -13.3% -11.2% -3.7% 0 -2%

EBIT -67 -203 -598 -247

EBIT margin -4.6% -15.3% -13.1% -4.9%

No new problematic projects identified

14 projects out of a total portfolio of 182 projects

in the Material Handling Business Unit are

currently regarded as risky (end of Q3 2013: 15 projects)

These projects accounted for DKK 481m or 11%

of the backlog at the end of Q4

The one-off costs of DKK 323m realised in Q2 cover future losses related to the legacy projects

Status on legacy projects in Material Handling

Interim report Q3 2013


Mineral Processing


Drop in unannounced orders vs. Q1-Q3’13 expected to be temporary

Revenue declined due to decreasing contribution from orders received in 2011-2012

EBITA margin impacted by special items

Declining order intake due to mining capex downturn

Mineral Processing


Revenue (quarterly)

DKKm EBITA margin -29% vs. Q4 2012

0%

3%

6%

9%

12%

15%

18%

21%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

0

500

1,000

1,500

2,000

2,500

3,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013


-58% vs. Q4 2012 DKKm


Mineral Processing

Mineral Processing


(DKKm) Q4

2013 Q4

2012 Change

2013

2012

Change

Expected 2014

Order intake 1,025 2,467 -58% 5,559 10,318 -46%

Order backlog 4,993 9,589 -48% 4,993 9,589 -48%

Revenue 2,376 3,358 -29% 9,256 9,512 -3% DKK 5.5-6.5bn

EBITDA 174 483 -64% 850 1,079 -21%

EBITA 153 457 -67% 757 1,000 -24%

EBITA margin 6.4% 13.6% 8.2% 10.5% 6-8%

EBIT 88 426 -79% 2111) 7732) -73%

EBIT margin 3.7% 12.7% 2.3%1) 8.1%2)

1) Including Ludowici impairment loss of DKK -362 2) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m

Cement


0

500

1,000

1,500

2,000

2,500

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Increased order intake due to large orders

EBITA impacted by efficiency programme one-off costs and Buxton arbitration award

EBITA margin adjusted for special items 10.2% in Q4

Strong order intake due to large orders

Cement


Revenue (quarterly)

DKKm EBITA margin 0% vs. Q4 2012

-5%

0%

5%

10%

15%

20%

25%

-500

0

500

1000

1500

2000

2500

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013


87% vs. Q4 2012 DKKm


Cement

Cement


(DKKm) Q4

2013 Q4

2012 Change

2013

2012

Change Expected

2014

Order intake 1,150 615 87% 3,417 4,599 -26%

Order backlog 5,389 7,585 -29% 5,389 7,585 -29%

Revenue 1,496 1,498 0% 5,201 4,214 23% DKK 3.5-4.5bn

EBITDA -35 317 161 788 -80%

EBITA -44 307 124 752 -84%

EBITA margin -2.9% 20.5% 2.4% 17.8% 5-7%

EBIT -58 304 95 6691) -86%

EBIT margin -3.9% 20.3% 1.8% 15.9%1)

1) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m

Organic order intake growth of -1% in Q4 2013

Service activities accounted for 45% of Q4 orders

‘Dangote’ – the largest order ever - was received in Q4 2013

Order intake growth by segment

Annual Report 2013


*) Operation & Maintenance

Growth Customer Services

Material Handling

Mineral Processing

Cement Group

Organic -10% 157% -52% 92% -1%

Acquisitions 0% 0% 0% 0% 0%

Currency -7% -11% -6% -5% -7%

Total -17% 146% -58% 87% -8%

Order intake growth Q4’13 vs. Q4’12

Industry Country/ Region

Value DKK

Booked by (Division)

Cement (O&M) Nigeria Undisclosed Customer Services

Building materials Qatar 1,000 Material Handling

Cement Qatar 515 Cement

Cement Indonesia 300 Cement

Total 1,815

Announced orders in Q4’13

Organic revenue growth of -5% in Q4 2013

Service activities accounted for 34% of Q4 revenue

Expected backlog conversion to revenue: 65% in 2014, 20% in 2015 and 15% in 2016 and beyond. O&M* contracts accounted for DKK 5.1bn (23%) of the order backlog at the end of Q4

Revenue growth by segment

Annual Report 2013



Material Handling

Mineral Processing

Cement Group

Organic 2% 22% -22% 3% -5%

Acquisitions 0% 0% 0% 0% 0%

Currency -8% -11% -7% -3% -7%

Total -6% 11% -29% 0% -12%

Revenue growth Q4’13 vs. Q4’12

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Order backlog (quarterly)

-24% vs. Q4 2012 DKKm Book-to-bill ratio*

*) Order backlog divided by last-twelve-months revenue

EBITA margins adjusted for special items

Special items



Material Handling

Mineral Processing

Cement Cembrit Group

Reported EBITA% 9.8% -2.0% 6.4% -2.9% -7.0% 3.0%

Total EBITA impact -97m -72m -15m -196m -41m -421m

Underlying EBITA% 14.6% 2.9% 7.1% 10.2% 4.0% 8.7%

Special items Q4’13


Material Handling

Mineral Processing

Cement Cembrit Group

Reported EBITA % 9.1% -11.2% 8.2% 2.4% -4.4% 3.6%

Total EBITA impact -316m -512m -88m -265m -59m -1,240m

Underlying EBITA % 13.3% 0.0% 9.1% 7.5% -0.3% 8.2%

Special items 2013

Emerging markets 66% of revenue in 2013

16%

18%

20% 14%

7%

25%

Asia

Africa

Australia

Annual Report 2013


Revenue 2013 – classified by geography

20%

46%

34%

BRIC countries (Brazil, Russia, India, China)

Revenue 2013 – classified by country category

Developing countries (Exclusive of BRIC)

High-income countries (Cf. World Bank’s definition)

South America

North America

Europe

27%

16% 33%

19%

5%

Material Handling

Mineral Processing

Segment developments in 2013

Annual Report 2013


EBITA 2013 – classified by segment

Revenue 2013 – classified by segment

Customer Services Cement

71%

-52%

77%

13%

-7%

Customer Services

Material Handling

Mineral Processing

Cement

Cembrit

Cembrit

Highest revenue but lowest order intake in Mineral Processing in 2013

35%

28%

17%

20%

Annual Report 2013


Order intake Q4 2013 – classified by segment

Customer Services

Material Handling

Cement

26%

19% 31%

19%

5%

Material Handling

Mineral Processing

Revenue Q4 2013 – classified by segment

Customer Services Cement

Mineral Processing

Cembrit

Service activities accounted for 45% of Q4 orders

Annual Report 2013

Annual Report 2013 49

Revenue Q4 2013

13 February 2014

Order intake Q4 2013

34%

66%

Capital business

45%

55%

Service business Capital business

Service business

EBITA by segment

Annual Report 2013


EBITA Q4 2013 – classified by segment

195

-29

153

-44

Customer Services

Material Handling

Mineral Processing

Cement

EBITA margin Q4 2013 – classified by segment

9.8%

-2.0%

6.4%

-2.9%

Customer Services

Material Handling

Mineral Processing

Cement

Cash flow from operating activities (CFFO) impacted by Efficiency Programme one-off costs and Buxton in Q4’13

Cash flow from investments (CFFI) reflects that acquisitions are temporarily on hold and that other investments are managed closely

Free cash flow of DKK -24m in Q4 2013

Annual Report 2013


CFFO (quarterly) DKKm

-800

-400

0

400

800

1200

1600

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

CFFI (quarterly)

DKK -101m in Q4 2013 DKKm

-3,000

-2,400

-1,800

-1,200

-600

0

600

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

DKK 77m in Q4 2013

Number of employees decreasing

Annual Report 2013


Number of employees Q4’13 vs. Q4’12 - by segment

6,003

3,435 2,833 2,554

5,847

3,306 2,840

2,251

Customer Services

Material Handling

Mineral Processing

Cement

Q4’13 Q4’12

Number of employees decreased by 583 in 2013 (from 15,900 to 15,317)

Decline explained by Efficiency Programme and business right-sizing

Increase of several hundred staff related to O&M contracts

Q4’13 Q4312 Q4313 Q4’12 Q4’13 Q4’12

Guidance developments in 2013

Guidance


February 2013 May 2013 August 2013 December 2013

Revenue DKK 27-30bn Low end of range DKK 26-28bn

EBITA margin 8-10% Low end of range 4-5% 3.5-4.5%

ROCE 15% 7-8%

CFFI DKK -1bn DKK -0.8bn

Market developments

Market developments, special items and Cembrit

Buxton arbitration

award

Reasons for changed guidance:

Divisional guidance developments in 2013

Guidance


Guidance 12 February 2013 Guidance 7 November 2013

Revenue EBITA margin Revenue EBITA margin

Customer Services DKK 8-10bn 13-15% DKK 7-8bn 10-11%

Material Handling DKK 4-6bn > 0% DKK 4-5bn -11% to -12%

Mineral Processing DKK 10-12bn 8-10% DKK 9-10bn 8-9%

Cement DKK 5-7bn 6-8% DKK 5-6bn 5-6%1)

Cembrit Discontinued DKK 1.4bn -4%

1) EBITA margin not adjusted for Buxton DKK 160m arbitration award

Guidance changed to reflect market developments and allocation of special items to divisions

flsmidth annual report 2013

Investor Relations

trackannual report

growingannual report

presentation of annual

sga costs

year effectannual report

special itemsannual

order intake revenue5

key highlights q4