FLSmidth Annual Report 2014 presentation

12 February 2015 Annual Report 2014 1

Annual Report 2014 presentation

We manage the cycle and prepare for the upturn

Short Term

Navigate through cyclical downturn

Mid Term

Sustainable profitable growth

Long Term

Full service provider

Strategic management focus

Focus on efficiency: Efficiency programme Business right-sizing Re-organisation

2

Strategy health check

FLSmidth

Customer Services

Minerals Cement Product

Companies

ROCE >20%

12 February 2015 12 February 2015 Annual Report 2014

Key highlights – Annual Report 2014

Revenue and improved EBITA as expected

Highest free cash flow in five years

Weak order intake reflecting market conditions

Additional efficiency and business right-sizing initiatives

New organisational structure to support growth

Order intake, EBITA % & ROCE expected to improve in 2015


Safety ambition: No injuries

2015 LTIFR target: <3 achieved in 2014

New 2015 LTIFR target: < 2.6

Strong safety performance in 2014 Lost Time Injury Frequency Rate (LTIFR) 2.7 in 2014

4

Safety

12 February 2015 Annual Report 2014

4.2 4.7

3.9

2.7

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 2014

LTIFR (annually)

-31% vs. 2013

Number of lost time injuries per million working hours

Mining capex

Expected to trough in 2015 Slow growth expected in 2016 Impacted by market uncertainty and declining commodity prices Customer focus on productivity enhancing investments

Cement capex

Moving out of the trough Increasing utilisation rates to underpin growth Customer focus on new capacity, productivity and environment

Customer Services resilient and growing

Customer focus on optimised inventories and productivity Fewer bigger, but more smaller orders

Market trends unchanged from Q3’14

Market update


38%

17% 4% 9%

5%

27%

Order intake declined in Q4’14 - reflecting cyclical downturn and market uncertainty

Annual Report 2014


2014 order intake by industry

Cement

Coal

Iron ore

Other

Copper Gold 0

2,000

4,000

6,000

8,000

10,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Order intake (quarterly)

-33% vs. Q4 2013 DKKm

Announced O&M orders Announced capital orders Unannounced orders

Lower order intake from projects and services (primarily O&M), but record high services revenue

Order intake decreased 13% in 2014 (currency adjusted)

Order intake expected to grow in 2015

Significant investments in people development

More than 600 managers and specialists participating in leadership development programmes in 2014

New divisional structure implemented

Cembrit sold for DKK 1.1bn on 12 January 2015

Expected positive impact on profit from discontinued

activities in Q1’15 DKK ~100m

Efficiency programme 2014-targets achieved

Additional efficiency and business right-sizing activities initiated

Operational highlights in Q4 2014

Operation highlights


FLSmidth

Customer Services Minerals Cement Product

Companies

New divisional structure 1 January 2015

Old efficiency programme targets achieved

Efficiency Programme


Efficiency programme Impact

Expected full-year EBITA improvement in 2015 DKK +750m p.a.

Estimated EBITA improvement in 2014 DKK~ +505m

Estimated EBITA improvement in Q4’14 DKK~ +150m

Estimated incremental EBITA improvement in 2015 DKK~ +245m

Total costs (booked in 2013-2014) DKK -500m

One-off costs booked in 2014 DKK -72m

Additional efficiency and business right-sizing initiatives - included in guidance for 2015

Additional efficiency initiatives


2015 additional initiatives Impact

Estimated EBITA improvement in 2015 DKK ~ +200m of which DKK 150m are related to Minerals

One-off costs in 2015 DKK ~ -100m of which DKK -90m are related to Minerals

Headcount reductions in H1’15 ~300 of which 250 are related to Minerals

Estimated full-year EBITA improvement in 2016 DKK ~ +300m of which DKK +250m are related to Minerals

Sustainable technology highlights

Technology highlights


Ground breaking new environmental technology • FLSmidth and Haldor Topsøe, a global

leader in catalysis, have launched a revolutionising new catalytic filter bag technology: EnviroTexTM • Enables customers to handle removal of critical

emission compounds in one integrated process

• Enables customers to meet stricter emission regulation at a fraction of today’s capex and opex

Revenue declined as expected

Delayed start-up on one O&M contract

Negative impact on order intake, revenue and EBITA in Q4

Non-recurring impact on profit in Q4’14 DKK -90m

Other one-off costs DKK -66m

Strong cash flow from operations

Financial performance in Q4 2014

Results Q4 2014

12 February 2015 11 Annual Report 2014

Continuing business*) (DKKm)

Q4 2014

Q4 2013

Change

Order intake 3,775 5,616 -33%

Revenue 5,911 7,046 -16%

Gross % 21.7% 18.3%

EBITA 400 250 60%

EBITA % 6.8% 3.5%

EBITA % underlying 9.4% 8.9%

Net results 255 -143

CFFO 739 77 +860%

*) Cembrit re-classified as discontinued activities

2,000

1,472

2,376

1,496

2,234

1,332 1,445 1,147

Revenue decline expected due to finalisation of orders

Annual Report 2014


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Revenue (quarterly)

-16% vs. Q4 2013 DKKm

Revenue Q4’14 vs. Q4’13 - by division

Material Handling

Mineral Processing

Cement

Q4’14 Q4’13 Q4’14 Q4’13 Q4’14 Q4’13 Q4’14 Q4’13

Customer Services

Pattern of increasing revenue over the year re-established

24.0%

14.7%

21.6%

6.8%

22.7% 16.7% 20.3%

22.7%

Gross margin increased vs. Q4’13

Annual Report 2014


Gross margin

23.8%

0%

10%

20%

30%

40%

0

500

1,000

1,500

2,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Gross profit (quarterly)

DKKm

Decline in gross margin attributable to delayed O&M start-up

Gross margin Q4’14 vs. Q4’13 - by division

Customer Services

Material Handling

Mineral Processing

Cement

Q4’14 Q4’13 Q4’14 Q4’13 Q4’14 Q4’13 Q4’14 Q4’13

Q4 2014 underlying

SG&A costs stable at lower level than in 2013

Annual Report 2014


SG&A ratio*

11.4%

14.1% 13.5%

0%

3%

6%

9%

12%

15%

18%

0

200

400

600

800

1,000

1,200

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

SG&A costs (quarterly)

DKKm

*) SG&A ratio: SG&A costs (Sales, General and Administration) divided by revenue

SG&A ratio declined 1.1%-point sequentially

Adjusted for one-off costs, the SG&A ratio was 13.2% (Q4’13: 12.1%)

Higher share of service business leads to higher SG&A ratio

250 400

315

106

69 250

90

0

100

200

300

400

500

600

700

Underlying EBITA margin 9.4% in Q4’14

Annual Report 2014


EBITA margin

EBITA (quarterly)

+60% vs. Q4 2013 DKKm DKKm EBITA bridge Q4’14 vs. Q4’13

9.4%

0%

3%

6%

9%

12%

15%

0

200

400

600

800

1,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q4 2014 underlying

EBITA margin (reported) Q4’14 6.8%

EBITA margin (underlying) Q4’14 9.4%

One-off & non-recurring costs Q4’14 DKK -156m (one-offs DKK -66m + non-recurring DKK -90m)

Net working capital developments YoY

Working capital back to end 2013 level

Annual Report 2014


Net working capital (excl. Cembrit) DKKm

0

500

1,000

1,500

2,000

2,500

3,000

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

DKKm

(excl. Cembrit)

End Q4 2014 End 2013 Change Change in local currencies

Inventories 2,628 2,296 +332 +127

Trade Receivables

5,026 4,892 +134 +188

Trade Payables

-2,736 -3,170 +434 +592

WIP Assets net 66 1,353 -1,287 -1,289

Prepayments net -1,553 -2,545 +992 +1,036

NWC total 2,164 2,137 +27 -253

NWC 10.2% of revenue at the end of 2014 (target over the cycle: <10%)

-1,500

-1,000

-500

0

500

1,000

1,500

Net work-in-progress

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Inventories

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Trade Payables

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Trade Receivables

2014 saw underlying improvement in NWC

Annual Report 2014


Change in NWC had a DKK 168m positive impact on cash flow from operating activities in 2014

Development in Trade Receivables not satisfactory

DKKm DKKm DKKm

DKKm

All charts include Cembrit. Q4’14 balance sheet items adjusted accordingly

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Net prepayments DKKm

Financial performance in 2014

Annual Report 2014


Continuing activities (DKKm) 2014 2013 Change

Revenue 21,129 25,482 -17%

Gross margin 23.9% 19.0%

EBITA 1,627 1,042 +56%

EBITA margin 7.7% 4.1%

EBITA margin underlying 8.6% 8.7%

Financial costs net -118 -256 -46%

Tax -333 -202 +65%

Profit, discontinued activities 44 -56

Profit for the year, Group 813 -784

ROCE 11% 7%

Employees 13,723 14,248 -4%

Revenue decreased as expected 15% in local currencies due to finalisation of orders

Underlying EBITA margin 8.6% (2013: 8.7%) excl. one-off costs of DKK 196m

Tax rate 30.2% (2013: 35% estimated)

Headcount decreased 10% excluding O&M

Cash flow statement in 2014

Annual Report 2014


Continuing activities 2014 2013

EBITDA adjusted 2,058 1,338

Change in provisions (431) 203

Change in NWC 168 (893)

Financial payments (86) (123)

Taxes paid (411) (682)

CFFO 1,298 -157

CFFI excl. acquisitions & disposals -414 -594

Acquisitions & disposals -184 27

CFFI -598 -567

Free cash flow 700 -724

Significant improvement in free cash flow attributable to:

Higher EBITDA

Positive impact from NWC and financial payments

Lower cash tax rate

Reduced operational investments

…despite:

Cash outflow from provisions

Deferred payments on acquisitions

Free cash flow highest in five years

Annual Report 2014


CFFO (annual) DKKm

Free cash flow(annual) DKKm

654 415

830

-751

884

-2000

-1500

-1000

-500

0

500

1000

1500

2010 2011 2012 2013 2014

FCF FCF excl. acquisitions and disposals

1335 1148

1720

-157

1298

-500

0

500

1000

1500

2000

2010 2011 2012 2013 2014

Capital structure - equity ratio and gearing normalised during 2014

Annual Report 2014


NIBD (quarterly) DKKm

-

1.0

2.0

3.0

4.0

5.0

6.0

0

1,000

2,000

3,000

4,000

5,000

6,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Gearing 2.3x EBITDA Gearing target (self-imposed)

0%

10%

20%

30%

40%

50%

0

2,000

4,000

6,000

8,000

10,000

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Equity (quarterly)

DKKm Equity ratio Equity ratio 29%

Equity ratio target (self-imposed)

Gearing expected to meet target (NIBD/EBITDA < 2 times) in early 2015

NIBD / EBITDA

ROCE increased as a result of higher EBITA

(last 12 months)

Guidance for 2015: ROCE 12-14%

Reaching the 20% ROCE target requires an increase in EBITA to around DKK 3bn through a combination of top-line growth and margin expansion

Return on capital employed increased to 11%

Annual Report 2014


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

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

ROCE

11% in Q4 2014

*) 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

0%

1%

2%

3%

4%

5%

6%

0

2

4

6

8

10

12

2010 2011 2012 2013 2014

Proposed dividend of DKK 9 per share

Dividend


The proposed dividend is equivalent to

Total distribution of DKK 461m

A dividend yield of 3.3%

A pay-out ratio of 55%

Dividend policy: Pay-out ratio of 30-50%

AGM 26 March 2015 at 16.00 CET

Dividend DKK per share Dividend

yield

Long-term financial targets unchanged

Long-term financial targets


Group long-term financial targets

Annual revenue growth Above market average

EBITA margin 10-13%

ROCE* > 20%

Tax rate 32-34%

Equity ratio >30%

Financial gearing (NIBD/EBITDA) <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

Fit for cycle navigation in new divisional structure - attractive growth potential in healthy, but cyclical industries

Long-term financial targets


Divisional long-term financial targets

Growth (over the cycle)

EBITA% (over the cycle)

Net working capital (as pct. of revenue)

Customer Services 5-10% >15% 15-20%

Product Companies 5-10% 12-15% ~15%

Minerals 5-6% 3-8% Negative

Cement 3-5% 3-8% Negative

Guidance


Group Guidance 2015 2014 Guidance 2014

Revenue1) DKK 19-21bn DKK 21.1bn DKK 19.5-22.52)

EBITA margin 9-10% 7.7% 7-9%

ROCE 12-14% 11% 11-13%

Tax rate 31-33% 30.2% 33-35%

CFFI (excl. acquisitions) ~DKK -0.4bn DKK -0.4bn DKK -0.4bn

Group guidance 2015

1) At prevailing currency exchange rates 2) Technically adjusted to reflect sale of Cembrit (previous guidance DKK 21-24bn)

Key highlights – Annual Report 2014

Revenue and improved EBITA as expected

Highest free cash flow in five years

Weak order intake reflecting market conditions

Additional efficiency and business right-sizing initiatives

New organisational structure to support growth

Order intake, EBITA % & ROCE expected to improve in 2015



QUESTIONS

We manage the cycle and prepare for the upturn

Forward-looking statements

Annual Report 2014


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.

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Customer Services

Customer Services


(DKKm) Q4

2014 Q4

2013 Change 2014 2013 Change

Expected 2014

Order intake 1,639 2,032 -19% 7,386 8,005 -8%

Order backlog 7,130 8,046 -11% 7,130 8,046 -11%

Revenue 2,234 2,000 +12% 8,039 7,565 +6% DKK 7.5-8.5bn

EBITDA 272 200 +36% 1,162 768 +51%

EBITA 242 195 +24% 1,058 691 +53%

EBITA margin 10.8% 9.8% 13.2% 9.1% 13-15%

EBIT 195 151 +29% 916 411) +2,134%

EBIT margin 8.7% 7.6% 11.4% 0.5%1)

1) Including Ludowici impairment loss of DKK -539

Decrease in order intake mainly related to operation and maintenance. However, all other activities also saw a minor decline vs. Q4’13

Strong revenue and significant margin improvement

Customer Services


0

500

1,000

1,500

2,000

2,500

3,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014


-19% vs. Q4 2013 DKKm


Revenue (quarterly)

DKKm EBITA margin +12% vs. Q4 2013

0%

4%

8%

12%

16%

20%

0

500

1,000

1,500

2,000

2,500

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Material Handling

Material Handling


(DKKm) Q4

2014 Q4


Expected 2014

Order intake 702 1,655 -58% 3,676 4,937 -26%

Order backlog 3,861 4,465 -14% 3,861 4,465 -14%

Revenue 1,332 1,472 -9% 4,379 4,552 -4% DKK 3.5-4.5bn

EBITDA 46 -15 134 -455

EBITA 26 -29 63 -511

EBITA margin 2.0% -2.0% 1.4% -11.2% 0-2%

EBIT 22 -67 0 -598

EBIT margin 1.7% -4.6% 0.0% -13.1%

-50%-40%-30%-20%-10%0%10%20%30%40%50%

-2,500-2,000-1,500-1,000

-5000

5001,0001,5002,0002,500

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

No large announced orders in Q4’14. Slight increase in unannounced orders

Third consecutive quarter with positive EBITA margin

Stable unannounced orders

Material Handling


0

500

1,000

1,500

2,000

2,500

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014


-58% vs. Q4 2013 DKKm

Announced orders Unannounced orders

Revenue (quarterly)

DKKm EBITA margin -9% vs. Q4 2013

No new problematic projects identified

9 projects out of a total portfolio of 175 projects in

the Material Handling Business Unit are currently

regarded as risky (end of Q3 2014: 12 projects)

These projects accounted for DKK 208m or 5%

of the backlog at the end of Q4 (end of Q3 2014: DKK

251m or 6%)

The one-off costs of DKK 323m realised in Q2 2013 still expected to cover completion of the legacy projects

Status on legacy projects in Material Handling

Material Handling


Mineral Processing

Mineral Processing


(DKKm) Q4

2014 Q4


Expected 2014

Order intake 877 1,025 -14% 4,048 5,559 -27%

Order backlog 3,710 4,993 -26% 3,710 4,993 -26%

Revenue 1,445 2,376 -39% 5,396 9,256 -42% DKK 5.5-6.5bn

EBITDA 92 174 -47% 361 850 -58%

EBITA 69 153 -55% 273 757 -64%

EBITA margin 4.8% 6.4% 5.1% 8.2% 6-8%

EBIT -10 88 102 2111) -52%

EBIT margin -0.7% 3.7% 1.9% 2.3%1)

1) Including Ludowici impairment loss of DKK -362

Did not meet divisional guidance for 2014

Unannounced orders down from Q4’13 but stable vs. Q3’14

EBITA margin impacted by declining revenue

Weak order intake and earnings

Mineral Processing


Revenue (quarterly)


0%

3%

6%

9%

12%

15%

18%

21%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

0

500

1,000

1,500

2,000

2,500

3,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014


-14% vs. Q4 2013 DKKm


Cement

Cement


(DKKm) Q4

2014 Q4


Expected 2014

Order intake 723 1,150 -37% 3,445 3,417 +1%

Order backlog 4,873 5,389 -10% 4,873 5,389 -10%

Revenue 1,147 1,496 -23% 4,135 5,201 -20% DKK 3.5-4.5bn

EBITDA 66 -35 280 161 +74%

EBITA 56 -44 244 124 +97%

EBITA margin 4.9% -2.9% 5.9% 2.4% 5-7%

EBIT 43 -58 213 95 +124%

EBIT margin 3.7% -3.9% 5.2% 1.8%

0

500

1,000

1,500

2,000

2,500

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Decline in both announced and unannounced order intake

Revenue and EBITA margin as expected

Soft order intake despite two announced orders

Cement


Revenue (quarterly)


-5%

0%

5%

10%

15%

20%

25%

-500

-

500

1,000

1,500

2,000

2,500

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014


-37% vs. Q4 2013 DKKm


Minerals EBITA improvement programme initiated

Minerals EBITA improvement


Efficiency programme Impact

Estimated EBITA improvement in 2015 DKK ~ +150m

Estimated full-year EBITA improvement in 2016 DKK ~ +250m

Expected one-off costs in H1’15 DKK ~ -90m

Headcount reductions ~250

The programme aims at reaching minimum 3% EBITA margin in 2016

The programme will mostly be business right-sizing and some efficiency improvements

Headcount reductions expected to take place in the first half of 2015

Annual Report 2014


Industry Country/ Region

Value DKK

Booked by (Division)

Cement USA Not disclosed Cement

Cement Colombia Not disclosed Cement

Announced orders in Q4’14

Order intake Q4 2014

60%

40%

Service business Capital business

Q4 2013: 45%

Order intake growth by segment

Annual Report 2014


Growth Customer Services

Material Handling

Mineral Processing

Cement Group

Growth (currency adj.)

-23% -59% -19% -40% -37%

Currency effect

4% 1% 5% 3% 4%

Total -19% -58% -14% -37% -33%

Order intake growth Q4’14 vs. Q4’13

Order intake growth by segment


Material Handling

Mineral Processing

Cement Group


-6% -24% -25% 2% -13%

Currency effect

-2% -2% -2% -1% -2%

Total -8% -26% -27% 1% -15%

Order intake growth 2014 vs. 2013

Order backlog and backlog conversion to revenue

Annual Report 2014


0.90

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Order backlog (quarterly)

-15% vs. Q4 2013 DKKm Book-to-bill ratio*

*Order backlog divided by last 12 months revenue (excl. Cembrit)

Expected backlog conversion to revenue:

71% in 2015

18% in 2016

11% in 2017 and beyond

O&M contracts accounted for DKK 4.4bn (23%) of the order backlog at the end of Q4

Revenue growth by segment

Annual Report 2014



Material Handling

Mineral Processing

Cement Group


9% -10% -41% -25% -18%

Currency effect

3% 1% 2% 2% +2%

Total 12% -9% -39% -23% -16%

Revenue growth Q4’14 vs. Q4’13


Material Handling

Mineral Processing

Cement Group


9% -1% -40% -19% -15%

Currency effect

-3% -3% -2% -1% -2%

Total 6% -4% -42% -20% -17%

Revenue growth 2014 vs. 2013

Emerging markets 66% of revenue in 2014

12%

21%

16% 18%

8%

25%

Asia

Africa

Australia

Annual Report 2014


Revenue 2014 – classified by geography

16%

50%

34%

BRIC countries (Brazil, Russia, India, China)

Revenue 2014 – classified by country category

Developing countries (Exclusive of BRIC)

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

South America

North America

Europe

Revenue and order intake by segment

42%

18%

22%

18%

Annual Report 2014


Order intake Q4 2014 – classified by segment

Customer Services

Material Handling

Cement

36%

22%

23%

19%

Material Handling

Mineral Processing

Revenue Q4 2014 – classified by segment

Customer Services Cement

Mineral Processing

Currency effects on net working capital (Q/Q)

Net working capital


DKKm End Q4 2014 (excl. Cembrit)

End Q3 2014

Cembrit (end Q3 2014)

End Q3 2014 (excl. Cembrit)

Change Currency effect

Change in local currencies

Inventories 2,628 2,930 288 2,642 -14 +36 -50

Trade Receivables

5,026 5,164 318 4,846 +180 +54 +126

Trade Payables

2,736 2,478 144 2,334 +402 +31 +371

WIP net 66 -34 0 -34 +100 -16 +116

Prepayments net 1,553 1,760 -2 1,758 -205 0 -205

NWC total 2,164 2,761 321 2,440 -276 +36 -312

Currency effect Q4’14 vs. Q3’14

Currency effects on net working capital (YoY)

Net working capital


DKKm End 2014 (excl. Cembrit)

End 2013 Cembrit (end 2013)

End 2013 (excl. Cembrit

Change Currency effect

Change in local currencies

Inventories 2,628 2,575 279 2,296 +332 +205 +127

Trade Receivables

5,026 5,099 207 4,892 +134 +322 -188

Trade Payables

2,736 3,283 113 3,170 -434 +158 -592

WIP net 66 1,353 0 1,353 -1,287 +2 -1,289

Prepayments net 1,553 2,545 0 2,545 -992 +44 -1,036

NWC total 2,164 2,382 245 2,137 +27 +280 -253

Currency effect 2014 vs. 2013

Significant free cash flow in Q4 and for the full year

Acquisitions are currently on hold and other investments are managed closely

Strong cash flow from operations in Q4 2014

Annual Report 2014


CFFO (quarterly) DKKm

CFFI (quarterly)

DKK -217m in Q4 2014 DKKm DKK 739m in Q4 2014

(101)

(217) (300)(200)(100)

0100200300

77

739

(1,000)(500)

0500

1,0001,5002,000

Number of employees decreasing

Annual Report 2014


Number of employees Q4’14 vs. Q4’13 - by segment

5,847

3,306 2,840

2,251

6,527

2,948

2,221 2,020

Customer Services

Material Handling

Mineral Processing

Cement

Q4’14 Q4’13

Total number of employees Q4’14: 14,765

Number of employees decreased by 552 vs. Q4’13 and decreased by 96 vs. Q3’14

Decline explained by efficiency programme and business right-sizing

Increase in Customer Services primarily related to blue-collar workers on O&M contracts

Q4’14 Q4’13 Q4’14 Q4’13 Q4’14 Q4’13

New Customer Services Division (restated)

Customer Services


(DKKm) Q4

2014 Q4


Order intake 1618 2,016 -20% 7,239 7,838 -8%

Order backlog 6,881 7,699 -11% 6,881 7,699 -11%

Revenue 2,156 1,910 +13% 7,804 7,201 +8%

EBITDA 257 194 +32% 1,141 742 +54%

EBITA 227 188 +21% 1,038 664 +56%

EBITA margin 10.5% 9.8% 13.3% 9.2%

EBIT 180 145 +24% 896 15 +5,873%

EBIT margin 8.3% 7.6% 11.5% 0.2%

Decrease in order intake related mainly to O&M

Margin decline in Q4’14 vs. Q3’14 attributable to delayed start-up in O&M, DKK -90m impact in Q4’14

New Customer Services Division (restated)

Customer Services


0

500

1,000

1,500

2,000

2,500

3,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014


-20% vs. Q4 2013 DKKm


Revenue (quarterly)

DKKm EBITA margin +13% vs. Q4 2013

0%

4%

8%

12%

16%

20%

0

500

1,000

1,500

2,000

2,500

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

New Product Companies Division (restated)

Product Companies


(DKKm) Q4

2014 Q4


Order intake 1,178 1,191 -1% 5,201 5,411 -4%

Order backlog 2,705 2,981 -9% 2,705 2,981 -9%

Revenue 1,463 1,608 -9% 5,538 5,957 -7%

EBITDA 158 174 -9% 767 700 +10%

EBITA 134 151 -11% 664 610 +9%

EBITA margin 9.2% 9.4% 12.0% 10.2%

EBIT 116 129 -10% 589 529) +11%

EBIT margin 7.9% 8.0% 10.6% 8.9%

Stable order intake vs. Q4’13 and sequentially

Margin variability in 2014 mainly related to other income and lower SG&A in Q2’14 and Q3’14

New Product Companies Division (restated)

Product Companies


Revenue (quarterly)


0%

5%

10%

15%

20%

0

500

1,000

1,500

2,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

0

500

1,000

1,500

2,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014


-1% vs. Q4 2013 DKKm

New Minerals Division (restated)

Minerals


(DKKm) Q4

2014 Q4


Order intake 626 1,783 -65% 3,585 6,231 -42%

Order backlog 5,570 7,349 -24% 5,570 7,349 -24%

Revenue 1,683 2,594 -35% 5,529 9,186 -40%

EBITDA 24 42 -43% -88 -105 n/a

EBITA 2 27 -93% -159 -178 n/a

EBITA margin 0.1% 1.0% -2.9% -1.9%

EBIT -65 -56 n/a -323 -7361) n/a

EBIT margin -3.9% -2.2% -5.8% -8.0%1)

1) Including Ludowici impairment loss of DKK -362 in 2013

Unannounced orders slightly down reflection mining CAPEX downcycle

Minerals efficiency programme initiated to reach EBITA margin target of minimum 3% in 2016

New Minerals Division (restated)

Minerals


Revenue (quarterly)


0

500

1,000

1,500

2,000

2,500

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014


-65% vs. Q4 2013 DKKm


-15%

-10%

-5%

0%

5%

10%

-12,000

-8,000

-4,000

0

4,000

8,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

New Cement Division (restated)

Cement


(DKKm) Q4

2014 Q4


Order intake 547 954 -43% 2,630 2,586 +2%

Order backlog 4,546 4,990 -9% 4,546 4,990 -9%

Revenue 894 1,272 -30% 3,250 4,397 -26%

EBITDA 37 -86 n/a 115 -14 n/a

EBITA 31 -91 n/a 95 -35 n/a

EBITA margin 3.5% -7.2% 2.9% -0.8%

EBIT 19 -103 n/a 69 -57 n/a

EBIT margin 2.1% -8.1% 2.1% -1.3%

Unannounced orders down from Q4’13 but stable vs. Q4’14

Revenue and margin reflecting low point of cycle

New Cement Division (restated)

Cement


Revenue (quarterly)


-10%

-5%

0%

5%

10%

15%

20%

-1,000

-500

0

500

1,000

1,500

2,000

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

0

200

400

600

800

1,000

1,200

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014


-43% vs. Q4 2013 DKKm


FLSmidth Annual Report 2014 presentation

Investor Relations

Transcript of FLSmidth Annual Report 2014 presentation