FLSmidth 1st Quarter Report Presentation 2012

Interim Report Q1 2012

15 May 2012 Interim Report Q1 2012 1

Forward-looking statements



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.

Strong growth in order intake in Q1 Full-year Group expectations unchanged Working capital to be given increased attention Varying segment performance and seasonality


Order intake up 29% on Q1’11, and also up 10% sequentially

Revenue up 17% due to increasing order intake last year, particularly in Non-Ferrous and Customer Services

Margins on the weak side, albeit typical for Q1

Net results up 39% due to positive effect from fair value of currency hedge agreements

Cash flow from operating activities negative due to increase in working capital

Financial developments in Q1 2012

Q1 Results 2012

15 May 2012 4

FLSmidth & Co. A/S (DKK m)

Q1 2012 Q1 2011 Change

Order intake 6,421 4,964 +29%

Order backlog 28,736 24,033 +20%

Revenue 5,145 4,385 +17%

Gross margin 25.4% 25.2%

EBITA 402 363 +11%

EBITA margin 7.8% 8.3%

EBIT 334 305 +10%

EBIT margin 6.5% 7.0%

Net Results 241 173 +39%

CFFO (117) (101) -16%

Employees 13,500 11,817 +14%


New Group Structure

Reporting in new Group Structure


Segment developments

28%

14% 37%

21%



Order intake Q1 2012 – classified by segment

Customer Services

Bulk Materials

Cement

26%

20% 32%

16%

6%

Bulk Materials Non-Ferrous

Revenue Q1 2012 – classified by segment

Customer Services

Cement

Cembrit

Non-Ferrous

37%

22%

13%

3%

1%

24%

Distribution of order intake in Q1 2012


Order intake 2012 – classified by industry


Cement

Copper Gold

Coal

Iron ore

Other

Announced orders in Q1 2012 Copper Latin America DKK 500m Gold North America DKK 467m Cement Mongolia DKK 640m Copper CIS Region DKK 213m Cement Brazil DKK 470m Total DKK 2,290m

Level of unannounced orders still around DKK ~4bn per quarter

Announced orders amounted to DKK 2.3bn in Q1

Order backlog increased 6% in Q1 and is 20% higher than one year ago.

Order intake increased 29% in Q1 2012



-

2,000

4,000

6,000

8,000

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Order intake (quarterly)

+29% vs. Q1 2011 DKKm

0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60

0

5,000

10,000

15,000

20,000

25,000

30,000

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Order backlog (quarterly)

+20% vs. Q1 2011 DKKm Book-to-bill ratio

Announced O&M orders Announced Capital orders Unannounced orders

Organic growth +13% (excl. currency and acquisitions)

Pattern of increasing quarterly revenue over the year likely to be repeated in 2012

Q1 margin typically weak, however also adversely impacted by increase in SG&A

Revenue increased 17% in Q1 2012



0

2,000

4,000

6,000

8,000

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Revenue (quarterly)

+17% vs. Q1 2011 DKKm EBITA margin

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0

200

400

600

800

1000

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

EBITA (quarterly)

+11% vs. Q1 2011 DKKm

Increasing SG&A ratio



SG&A ratio typically higher in Q1 due to relatively low top-line and consequently under-absorption of costs

Specific reasons for increase in SG&A in Q1 2012

Increase in proposal costs; adding to costs now, but only revenue later

Acquisitions incl. one-offs

Under-absorption of costs

SG&A ratio

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

0

200

400

600

800

1,000

1,200

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

SG&A (quarterly)

+24% vs. Q1 2011 DKKm

CFFO adversely affected by increase in working capital in Q1 2012

CFFI amounted to DKK -209m in Q1 related to acquisition of tangible assets in connection with ongoing strategic activities (Supercentres, extension of workshop facilities in China and India)

Cash flow from operating and investing activities



CFFO (quarterly)

-16% vs. Q1 2011 DKKm

-400

-200

0

200

400

600

800

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

CFFI (quarterly)

-19% vs. Q1 2011 DKKm

-1,000

-800

-600

-400

-200

0

200

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Program to manage working capital launched in Q2



Working capital (quarterly)

+94% vs. Q1 2011 DKKm

Working capital increased 19% in Q1 to DKK 1,926m

Structural reasons for increase in working capital:

Strategic initiatives in Customer Services

Change in business mix towards more mining and less cement

Specific reasons for increase in inventory in Q1 2012

Introduction of division stocking programmes in the USA

Build up of stock for the summer season in Cembrit

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

WC /TTM* Sales

TTM : Trailing-Twelve-Months

Net debt increasing due to negative CFFO in Q1 and relatively high level of investments

Equity ratio of 36% comfortably above minimum targeted level of 30%

Dividend of DKK 9 per share paid on 10 April 2012 (equivalent to DKK 471m)

Capital structure

Interim Report 2012


NIBD (quarterly) DKKm

0% 5% 10% 15% 20% 25% 30% 35% 40%

0

2,000

4,000

6,000

8,000

10,000

12,000

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Equity (quarterly)

DKKm Equity ratio

(0.8) (0.6) (0.4) (0.2) - 0.2 0.4 0.6 0.8

(2,000) (1,500) (1,000)

(500) -

500 1,000 1,500 2,000

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Gearing (NIBD/ TTM* EBITDA)

Gearing 0.14x EBITDA +14% vs. Q1 2011

TTM: Trailing-Twelve-Months

Customer Services


Customer Services

Customer Services


Customer Services (DKK m)

Q1 2012 Q1 2011 Change Full-year

2011 Expected trend

in 2012

Order intake 1,846 1,355 +36% 5,271 Increasing

Oder backlog 6,679 6,304 +6% 6,082

Revenue 1,368 1,051 +30% 5,259 Increasing

EBITDA 193 142 +36% 882

EBITA 180 128 +41% 838

EBITA margin 13.2% 12.2% 15.9% Stable

EBIT 174 126 +38% 832

EBIT margin 12.7% 12.0% 15.8%

Strong increase in order intake in Q1 reflection of continued high capacity utilisation as well as receipt of several small rebuild and retrofit projects

Clear pattern of increasing quarterly revenue over the calendar year

O&M contracts progressing well and Supercenter build-out in line with plans

Strong growth in order intake and revenue

Customer Services


Revenue (quarterly)

DKKm EBITA margin +30% vs. Q1 2011

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

0

500

1,000

1,500

2,000

2,500

Q1

2010

Q2

2010

03

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

0

500

1,000

1,500

2,000

2,500

Q1

2010

Q2

2010

03

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012


+36% vs. Q1 2011 DKKm

Bulk Materials


Bulk Materials Division

Bulk Materials


Bulk Materials (DKK m)


2011 Expected trend

in 2012

Order intake 943 1,641 (43%) 5,482 Increasing

Order backlog 5,023 5,123 (2%)

Revenue 1,060 917 +16% 5,005 Increasing

EBITDA 28 12 +133% 276

EBITA 16 6 +167% 225

EBITA margin 1.5% 0.7% 4.5% Stable *)

EBIT 4 (12) 146

EBIT margin 0.4% (1.3%) 2.9%

*) previous expectation: Strongly increasing

Quarterly order intake inherently volatile, whereas quarterly revenue follows pattern of increasing revenue over the calendar year

List of potential projects remains strong, particularly for conveying and port facilities

Focus on operational excellence to improve sub-optimal efficiency in project execution

Slow start in terms of order intake and revenue

Bulk Materials


Revenue (quarterly)


0

500

1,000

1,500

2,000

Q1

2010

Q2

2010

03

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012


-43% vs. Q1 2011 DKKm

-4.0%

0.0%

4.0%

8.0%

12.0%

16.0%

-500

0

500

1000

1500

2000

Q1

2010

Q2

2010

03

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Non-Ferrous


Non-Ferrous

Non-Ferrous


Non-Ferrous (DKK m)


2011 Expected trend

in 2012

Order intake 2,445 1,680 +46% 9,731 Stable

Order backlog 9,482 6,032 +57%

Revenue 1,722 1,163 +48% 6,766 Increasing

EBITDA 147 132 +11% 859

EBITA 135 120 +13% 815

EBITA margin 7.8% 10.3% 12.0% Slightly decreasing

EBIT 94 87 +8% 689

EBIT margin 5.4% 7.5% 10.2%

Particularly strong demand for copper and gold solutions

Margin slightly under pressure since order backlog is emptied for good margin orders taken in 2007 and 2008 at more favourable terms and conditions than today

Strong order intake and revenue growth

Non-Ferrous


Revenue (quarterly)


0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

0

500

1,000

1,500

2,000

2,500

3,000

Q1

2010

Q2

2010

03

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Q1

2010

Q2

2010

03

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012


+46% vs. Q1 2011 DKKm

Cement


Cement

Cement


Cement (DKK m)

Q1 2012 Q1

2011 Change

Full-year 2011

Expected trend in 2012

Order intake 1,415 527 +169% 4,439 Slightly increasing

Order backlog 8,208 7,246 +13%

Revenue 859 1,149 (25%) 4,354 Slightly increasing

EBITDA 102 136 (25%) 541

EBITA 93 121 (23%) 494

EBITA margin 10.8% 10.5% 11.3% Decreasing

EBIT 85 117 (27%) 475

EBIT margin 9.9% 10.2% 10.9%

0

500

1000

1500

2000

Q1

2010

Q2

2010

03

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

In general, proposal activity is high and the list of potential projects is encouraging

However, the Indian market remains subdued

High proposal activity

Cement


Revenue (quarterly)

DKKm EBIT margin -25% vs. Q1 2011

0.0%

5.0%

10.0%

15.0%

20.0%

0

500

1,000

1,500

2,000

Q1

2010

Q2

2010

03

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012


+169% vs. Q1 2011 DKKm

Cembrit - Europe’s largest dedicated provider of fibre-cement products


The European markets are still impacted by macro economic uncertainty, and activity in the new build segment remains subdued.

Improved results in Q1

Cembrit


Revenue (quarterly)


-10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

-500 -400 -300 -200 -100

0 100 200 300 400 500

Q1

2010

Q2

2010

03

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

DKKm Q1 2012 Q1 2011 change

Revenue 316 290 9%

EBITA (6) (8) +25%

EBITA margin (1.9%) (2.8%)

EBIT (7) (9) +22%

EBIT margin (2.2%) (3.1%)

Future Outlook


VISION “We will be our customers’ preferred full-service provider of sustainable minerals and cement technologies”


Financial targets (unchanged)

Future Outlook


Financial targets

Annual revenue growth Above market average

EBITA margin 10-13%

Equity ratio >30%

Financial gearing (NIBD/EBITDA) <2

Pay-out ratio 30-50%

CFFI (excl. acquisitions) DKK -700m to -900m

The Board will be considering and adopting new financial targets for return on capital – no later than in connection with the Annual Report for 2012

Group Guidance 2012 Actual 2011

Revenue DKK 24-26bn DKK 22bn

EBITA ratio >10% 10.9%

EBIT ratio 9-10% 9.9%

Tax rate 30-32% 31%

CFFI (excl. acquisitions) DKK -900m DKK -733m

Group guidance 2012 (unchanged)

Future Outlook


Key take-aways Order intake validates strong underlying demand Group expectations unchanged despite slow start Increased focus on working capital and SG&A ROCE targets to be discussed and adopted


Questions & Answers Visit FLSmidth at MineExpo in Las Vegas and at our offices in Salt Lake City, USA on 26-27 September 2012 Follow us on Twitter: @flsmidth


Investor Relations

FLSmidth 1st Quarter Report Presentation 2012