55 slides from Flsmidth & Co. A/s's roadshow presentation, December 2012
Slide 1: Investor Roadshow December 2012
Investor Roadshow December 2012 Investor Roadshow December 2012 1
Slide 2: Forward-looking statements
Interim Report Q3 2012 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 s
Slide 3: FLSmidth in brief
FLSmidth in brief FLSmidth in brief A leading supplier of equipment and services to the global minerals and cement industries Revenue EUR ~3bn in 2011, of which 69% was generated in developing countries Listed on NASDAQOMX Copenhagen, Denmark Among the 5-10 most traded shares in Copenhagen
Slide 4: A strong competitive position
FLSmidth in brief FLSmidth in brief A strong competitive position Unmatched scope of technology, equipment and expertise within cement, mineral processing and material handling Unique ability to meet the full range of customer requirements, from complete plants to spare parts and full O&M servic
Slide 5: Asset light business model
FLSmidth in brief Asset light business model Engineering house and technology provider Flexible cost structure (mostly engineering and project management) Most manufacturing is outsourced (~80-90%) Relatively low working capital due to prepayments from customers (typically 10-25% of total co
Slide 6: Strategic roadmap
FLSmidth in Brief Strategic roadmap August 2002: Launch of Focus Strategy: Focus on core competencies (non-core divested in 2005) √ Grow Minerals to same size as Cement (happened in 2010) √ Grow the Service business continuously (has grown from DKK ~1bn in 2001 to DKK ~7bn in 2011) √ Febru
Slide 7: Long history of strategic acquisitions
FLSmidth in brief Long history of strategic acquisitions - contributing to FLSmidth’s growth and success Key historical milestones … FLSmidth (Denmark) starts to supply equipment and services to the minerals industry Fuller Company is established in Catasauqua, PA, USA Traylor Engineering & Manufact
Slide 8: Group Structure (February 2012)
Group Structure Group Structure (February 2012) Old structure New structure FLSmidth FLSmidth Customer Material Mineral Cement* Minerals Cement Services Handling* Processing** Projects and Products Projects and Products *) Renamed Material Handling on 1 December 2012 (previously Bulk Materials) **)
Slide 9: Divisions renamed
Divisions renamed Divisions renamed Effective 1 December 2012 the two divisions previously known as Non- Ferrous and Bulk Materials have been renamed to reflect the underlying technology focus in each of the two divisions Non-Ferrous is now “Mineral Processing” Bulk Materials is now “Material
Slide 10: Continued strong growth in revenue and order intake
Continued strong growth in revenue and order intake Ludowici acquisition completed in Q3 Continued execution challenges in Material Handling Revenue guidance maintained at DKK 25-26bn (excl. Cembrit) EBITA margin guidance clarified at 10% Investor Roadshow December 2012 10
Slide 11: Financial developments in Q3 2012
Q3 Results 2012 Financial developments in Q3 2012 FLSmidth & Co. A/S Order intake up 11% on Q3’11, Q3 2012 Q3 2011 Change and also up 9% sequentially (DKKm) Order intake 7,956 7,176 +11% Revenue up 23% due to positive developments in all segments, Order backlog 31,166 27,492 +13% particularly in
Slide 12: Service accounts for ~40% of overall business
Interim Report Q3 2012 Service accounts for ~40% of overall business Order intake & Revenue Q1-Q3 2012 Order intake Q3 2012 – classified by Service and Capital business – classified by segment Cement Capital Business Service Business Customer Services 8% 39% 41% 31% Mineral 61% Processing 20% Materi
Slide 13: Distribution of order intake by industry
Interim Report Q3 2012 Distribution of order intake by industry Order intake Q1-Q3 2012 – classified by industry Other Announced orders in Q4 2012 14% Cement Fertilizers 28% Copper Kazakhstan DKK 380m (MP) 7% Cement Russia DKK 200m (C) Iron ore 3% O&M Copper Chile DKK 1.1bn (CS) Coal 6% Total DKK 1,
Slide 14: Order intake increased 11% in Q3 2012
Interim Report Q3 2012 Order intake increased 11% in Q3 2012 Order intake (quarterly) DKKm +11% vs. Q3 2011 10,000 Announced O&M orders Announced orders in Q3 2012 8,000 Announced Capital orders Unannounced orders 6,000 O&M cement Egypt DKK >1.1bn (CS) 4,000 Copper South America DKK 655m (MP) 2,000
Slide 15: Order backlog provides high visibility into 2013
Interim Report Q3 2012 Order backlog provides high visibility into 2013 Order backlog (quarterly) Expected conversion of Q3’12 backlog DKKm +15% vs. Q3 2011 Book-to-bill ratio* to revenue: 35,000 1.60 30,000 1.50 Q4 2012: 25% 25,000 1.40 20,000 1.30 15,000 1.20 2013: 46% 10,000 1.10 5,000 1.00
Slide 16: Revenue increased 23% in Q3 2012
Interim Report Q3 2012 Revenue increased 23% in Q3 2012 Revenue (quarterly) EBITA (quarterly) DKKm +23% vs. Q3 2011 DKKm = Q3 2011 EBITA margin 8,000 1,000 15% 6,000 800 12% 600 9% 4,000 400 6% 2,000 200 3% 0 0 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2010 2011 2011 2011 2011 20
Slide 17: Tight focus on SG&A developments
Interim Report Q3 2012 Tight focus on SG&A developments SG&A ratio up 1.2 %-points compared to Q3’11 Increase in SG&A vs. last year partly due to: SG&A (quarterly) DKKm Acquisitions (DKK ~108m in Q3 2012) +34% vs. Q3 2011 SG&A ratio 1,200 18% Currency effects (DKK ~75m in Q1-Q3 2012) 1,000 1
Slide 18: Cash flow from operating and investing activities
Interim Report Q3 2012 Cash flow from operating and investing activities CFFO (quarterly) CFFI (quarterly) DKKm DKKm -186% vs. Q3 2011 600 600 400 0 200 -600 0 -1,200 -200 -1,800 -400 -2,400 -600 -3,000 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2010 2011 2011 2011 2011 2012 2012 201
Slide 19: Tight focus on working capital developments
Interim Report Q3 2012 Tight focus on working capital developments Working capital increased 3.1 %-points of sales to Working capital* (quarterly) 10.8% in Q3 DKKm +447% vs. Q3 2011 WC /TTM* Sales Structural reasons for increase in working capital: 3,500 14% Strategic initiatives in Customer S
Slide 20: Capital structure
Interim Report Q3 2012 Capital structure NIBD* (quarterly) Equity (quarterly) DKKm Gearing 1.4x EBITDA Gearing (NIBD/ TTM* EBITDA) DKKm +14% vs. Q3 2011 Equity ratio 4,000 1.6 10,000 50% 3,000 1.2 8,000 40% 2,000 0.8 6,000 30% 1,000 0.4 4,000 20% 0 0 -1,000 -0.4 2,000 10% -2,000 -0.8 0 0% Q3 Q4 Q1 Q
Slide 21: Cembrit sales process
Interim Report Q3 2012 Cembrit sales process Not part of FLSmidth’s long term strategy, and a sales process is on-going Cembrit is reported as discontinued activities A number of potential acquirers have expressed a preliminary interest in Cembrit A sales process is expected to be completed
Slide 22: Acquisition of Ludowici
Interim Report Q3 2012 Acquisition of Ludowici Acquisition of Ludowici finalised on 3 July 2012 Integration process is ongoing and progressing well Ludowici to be included across Mineral Processing and Customer Services Substantial sales synergies expected to be achieved over the next couple
Slide 23: Ludowici integration ahead of plan
Interim Report Q3 2012 Ludowici integration ahead of plan Cross functional integration teams for each business area are established and working effectively Employee integration in Australia, India China, South Africa, Chile, USA and Peru on schedule and expected to be substantially complete by Q
Slide 24: Market trends
Interim Report Q3 2012 Market trends Continued good underlying demand and order intake Only minor changes in project pipeline or ongoing dialogue with customers In the short term, mining companies are likely to remain focused on cash flows and reducing capex programs In the short term, coal
Slide 25: Mining Capex outlook
Mining Capex outlook Mining Capex outlook What are our expectations for the next couple of quarters? Coal and iron ore weakest commodities in the short term due to slowing growth in China and declining demand for coal in the USA Copper and gold are holding up due to different structural supply
Slide 26: Mining Capex outlook
Mining Capex outlook Mining Capex outlook Have we seen any changes in order activity or customer behaviour? 80-90% of CAPEX We have noticed public announcements of associated with changed capex budgets, but have seen no greenfield plants significant changes in relation to our proposal hotlist so
Slide 27: Mining Capex outlook
Mining Capex outlook Mining Capex outlook What if Mining Capex drops significantly in 2013? Mining capex is not just mining capex! The good projects will still be developed and investments will still be made in maintaining and optimising existing operations. Especially, copper and gold projects
Slide 28: Future Outlook
Future Outlook Investor Roadshow December 2012 28
Slide 29: Long term financial targets (unchanged)
Future Outlook Long term financial targets (unchanged) 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 ne
Slide 30: Group guidance 2012 clarified
Future Outlook Group guidance 2012 clarified Actual Group Guidance 2012 2011 Revenue DKK 25-26bn1) DKK 22bn EBITA ratio 10%2) 10.9% EBIT ratio 8%3) 9.9% Tax rate 30-32% 31% CFFI (excl. acquisitions and their subsequent Capex needs) DKK -900m DKK -733m 1) Continuing activities - excluding Cembrit, an
Slide 31: Key take-aways
Key take-aways Continued strong order intake, especially in Customer Services Continued execution challenges in Material Handling Mineral Processing and Material Handling divisions renamed Full-year group guidance clarified Investor Roadshow December 2012 31
Slide 32: Back-up slides
Back-up slides Segment information Investor Roadshow December 2012 32
Slide 33: Customer Services
Customer Services Investor Roadshow December 2012 33
Slide 34: Customer Services
Customer Services Customer Services Q3 Q3 Q1-Q3 Q1-Q3 Full-year Expected trend (DKKm) Change Change 2012 2011 2012 2011 2011 in 2012 Order intake 3,345 1,270 +163% 6,760 3,983 +70% 5,271 Strongly increasing Oder backlog 7,909 6,290 +26% 7,909 6,290 +26% 6,082 Revenue 1,968 1,404 +40% 4,944 3,708 +33
Slide 35: Strong growth in order intake and revenue
Customer Services Strong growth in order intake and revenue Order intake (quarterly) Revenue (quarterly) DKKm +163% vs. Q3 2011 DKKm +40% vs. Q3 2011 EBITA margin 4,000 2,500 20% 3,000 2,000 16% 1,500 12% 2,000 1,000 8% 1,000 500 4% 0 0 0% 03 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 03 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2
Slide 36: 8 Service Supercenters in the pipeline
Customer Services 8 Service Supercenters in the pipeline Chile, Peru and Australia in operation in 2012 Investor Roadshow December 2012 36
Slide 37: Material Handling (previously Bulk Materials)
Material Handling (previously Bulk Materials) Investor Roadshow December 2012 37
Slide 38: Material Handling Division
Material Handling Material Handling Division Q3 Q3 Q1-Q3 Q1-Q3 Full-year Expected trend (DKKm) Change Change 2012 2011 2012 2011 2011 in 2012 Order intake 1,675 1,357 +23% 3,890 4,259 -9% 5,482 Increasing Oder backlog 5,514 5,416 +2% 5,514 5,416 +2% 5,136 Revenue 1,340 1,248 +7% 3,671 3,234 +14% 5,0
Slide 39: Good order intake but execution challenges
Material Handling Good order intake but execution challenges Order intake (quarterly) Revenue (quarterly) DKKm +23% vs. Q3 2011 DKKm +7% vs. Q3 2011 EBITA margin 2,000 2,000 16% 1,500 1,500 12% 1,000 8% 1,000 500 4% 500 0 0% 0 -500 -4% 03 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 03 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2010
Slide 40: Tight focus on execution challenges in Material Handling
Material Handling Tight focus on execution challenges in Material Handling Material Handling is the youngest and less mature business area, originating from a handful acquired specialised product companies. These companies work together in a global organisation to provide customers with innovative
Slide 41: Mineral Processing (previously Non-Ferrous)
Mineral Processing (previously Non-Ferrous) Investor Roadshow December 2012 41
Slide 42: Mineral Processing
Mineral Processing Mineral Processing Q3 Q3 Q1-Q3 Q1-Q3 Full-year Expected trend (DKKm) Change Change 2012 2011 2012 2011 2011 in 2012 Order intake 2,598 3,222 -19% 7,849 7,223 9% 9,731 Strongly increasing Oder backlog 9,929 8,482 17% 9,929 8,482 17% 8,779 Revenue 2,375 1,838 29% 6,154 4,264 44% 6,7
Slide 43: Continued strong order intake and revenue growth
Mineral Processing Continued strong order intake and revenue growth Order intake (quarterly) Revenue (quarterly) DKKm -19% vs. Q3 2011 DKKm +29% vs. Q3 2011 EBITA margin 3,500 3,000 18% 3,000 2,500 15% 2,500 2,000 12% 2,000 1,500 9% 1,500 1,000 1,000 6% 500 500 3% 0 0 0% 03 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 0
Slide 44: Extended the scope and "One Source" offerings
Mineral Processing Extended the scope and ”One Source” offerings Products no longer the end but the means: Islands – plant engineering, third party auxiliary Single Machines products Systems EPS – “Bundled Islands” w/ Material Handling Systems EPC – “Bundled Islands” w/ Material Handling, Unco
Slide 45: Concentrator Technology Group
Concentrator Technology Group Sulfide and other ores of – Copper · Gold · Iron Ore · Platinum · Lead/Zinc · Molybdenum · Nickel Concentrator Product Groups Extended Crushing Milling Flotation Thickening Filtration Screening Scope Supply Concentrator Flowsheets for Extended Scope Supply 1. Concentrat
Slide 46: Hydromet Technology Group
Hydromet Technology Group Oxide and other Ores of – Copper · Gold · Coal · Phosphate · Potash · Alumina · Silver · Nickel Hydromet Product Groups Ludowici Gravity Downstream Solvent Electrowinning Centrifuges and Decanter Extended Scope Concentration and Gold Products Extraction (SX) (EW) Reflux Cla
Slide 47: Pyromet Technology Group
Pyromet Technology Group Oxide Ores & Thermal Treatment – Ferronickel · Alumina · Phosphate · Coke · Lime Pyromet Product Groups Rotary Kilns Rotary Dryers Preheaters Rotary Coolers Gas Suspension Extended Scope Calciners Supply Pyromet Flowsheets for Extended Scope Supply 1. Ferronickel 2. Petroleu
Slide 48: FLSmidth Concentrator, Hydromet and Pyromet Products
FLSmidth Concentrator Products Ore Flowsheet Value Characterization Development, Plant Design, Crushing Milling Chain Mineralogy, Extended Scope Flotation Thickening Filtration Screening Process Dev. Supply FLSmidth FLSmidth Hydromet and Coal Prep Products Ore Flowsheet Development, Gravity Value Ch
Slide 49: Competitive landscape
Mining Equipment competition Competitive landscape Investor Roadshow December 2012 49
Slide 50: Cement
Cement Investor Roadshow December 2012 50
Slide 51: Cement
Cement Cement Q3 Q3 Q1-Q3 Q1-Q3 Full-year Expected trend (DKKm) Change Change 2012 2011 2012 2011 2011 in 2012 Order intake 667 1,507 -56% 3,984 3,324 +20% 4,439 Slightly increasing Oder backlog 8,579 7,858 9% 8,579 7,858 9% 7,749 Revenue 905 844 7% 2,716 3,020 -10% 4,354 Slightly increasing EBITDA
Slide 52: Weak order intake but solid order execution
Cement Weak order intake but solid order execution Order intake (quarterly) Revenue (quarterly) DKKm -56% vs. Q3 2011 DKKm +7% vs. Q3 2011 EBITA margin 2500 2500 25% 2000 2000 20% 1500 1500 15% 1000 1000 10% 500 500 5% 0 0 0% 03 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 03 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2010 2011 2011
Slide 53: Cement plants are needed where GDP grows...
Market drivers and outlook Cement plants are needed where GDP grows... 1,500 Cement consumption per capita (2006-2009 avg., in kg) Emerging Maturing Mature markets markets markets Saudi Arabia China Greece 1,000 South Korea Spain Singapore Italy Croatia Tunisia Malaysia Vietnam Turkey Switzerland Ir
Slide 54: Global contracted new kiln capacity (excl. China)
Cement Capex Global contracted new kiln capacity (excl. China) mty Global contracted new 160 kiln capacity in 2011: Asia (excl. China & India) 140 India 46 mty (2010: 65 mty) Russia 120 Europe 2012 estimate: North America 50-60 mty 100 Latin America 80 MiddleEast Africa 60 40 20 0 1990 1991 1992 199
Slide 55: Competitive landscape
Cement Solutions competition Competitive landscape The key players on the international market: FLSmidth, Denmark Polysius, Germany KHD, Germany (now partly owned by CATIC, China) Sinoma, China FCB, France CNBM, China Investor Roadshow December 2012 55