35 slides from Flsmidth & Co. A/s's investor day presentation, Apr 17, 2012
Slide 1: Welcome to FLSmidth Capital Market Day 2012
Welcome to FLSmidth Capital Market Day 2012 FLSmidth Capital Market Day 2012 17/04/2012 1
Slide 2: Today's programme
Today’s programme Programme of today 15:00-15:30 Presentation of the Group strategy and structure - considerations and ambitions /Jørgen Huno Rasmussen 15:30-16:00 Presentation of Customer Services strategy /Bjarne Moltke Hansen 16:00-16:30 Presentation of Bulk Materials strategy /Christian Je
Slide 3: Group Strategy & Structure
Group Strategy & Structure By Group CEO Jørgen Huno Rasmussen FLSmidth Capital Market Day 2012 17/04/2012 3
Slide 4: FLSmidth today
Setting the scene FLSmidth today A leading supplier of equipment and services to the global minerals and cement industries A strong competitive position Unmatched scope of technology, equipment and expertise within cement and minerals processing and material handling Unique ability to meet t
Slide 5: FLSmidth today
Setting the scene FLSmidth today Proven ability to help customers increase capacity, reduce operating costs and lower environmental impact Local presence in more than 50 countries In-country resources and substantial presence in China and India, the world’s two fastest-growing markets Revenu
Slide 6: Asset light business model
Setting the scene Asset light business model Engineering house and technology provider Flexible cost structure (mostly engineering and project management) Most manufacturing is outsourced (~80-90%) Low working capital due to prepayments from customers (typically 10-25% of total contract amou
Slide 7: Long history of strategic acquisitions
Setting the scene 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: The strategic route to the present
The strategic route to the present FLSmidth Capital Market Day 2012 17/04/2012 8
Slide 9: New millenium - A global supplier to the Cement industry
Setting the scene New millenium - A global supplier to the Cement industry In 2005, Cement accounted for Million tonnes 68% of revenue and 43% of Group EBIT Whereas Minerals accounted for only 20% of revenue Dependant on the cyclicality of the cement industry FLSmidth Capital Market Day 2012 1
Slide 10: Strategic targets set out in the Annual Report 2007
Setting the scene Strategic targets set out in the Annual Report 2007 In 2007, Cement accounted for 61% and Minerals for 32% of revenue FLSmidth Capital Market Day 2012 17/04/2012 10
Slide 11: 10 August 2007 changed our world!
Setting the scene 10 August 2007 changed our world! FLSmidth Capital Market Day 2012 17/04/2012 11
Slide 12: Giving FLSmidth full process flowsheet
Setting the scene Giving FLSmidth full process flowsheet Acquisition of Dorr-Oliver Eimco and Krebs Engineers (GL&V) strenghtened Minerals offerings From minerals extraction to end product Material Research Development Extracting Comminution Separation Refining handling Strategy to bring Miner
Slide 13: 2011 – our 2007 strategic target obtained!
Setting the scene 2011 – our 2007 strategic target obtained! Minerals for the first time ever bigger than Cement FLSmidth Capital Market Day 2012 17/04/2012 13
Slide 14: Ready for the next level – New Group Strategy
Ready for the next level – New Group Strategy FLSmidth Capital Market Day 2012 17/04/2012 14
Slide 15: New Vision and New Group Strategy
“We will be our customers’ preferred full-service provider of sustainable minerals and cement technologies” New Vision and New Group Strategy FLSmidth Capital Market Day 2012 17/04/2012 15
Slide 16: Focused full-service provider
New Group Strategy ”Focused full-service provider” We will focus on 6 key industries: Full-service provider Coal Iron ore We will build state-of-the-art machinery and then bundle this Fertilizer with services to supply the Copper solutions our customers need the most Gold Cement We do no
Slide 17: Focused full-service provider
New Group Strategy ”Focused full-service provider” Life cycle approach Full flow-sheet We will focus on a product portfolio that We will offer customers in our six key reflects our customers' life cycle industries full flow sheet solutions that reflect our core competences Maximize sales to each cus
Slide 18: Three key strategic themes
New Group Strategy Three key strategic themes We build our strategy around three themes: Customer intimacy Product leadership Customer intimacy Operational excellence Our approach will be balanced and interlinked We will align our solutions with our customers’ needs Operational excellenc
Slide 19: New financial targets
New Group Strategy New financial targets Financial targets Annual revenue growth Above market average EBITA ratio 10-13% Equity ratio >30% Financial gearing (NIBD/EBITDA) <2 Pay-out ratio 30-50% CFFI (excl. acquisitions) DKK -700m to -900m FLSmidth Capital Market Day 2012 17/04/2012 19
Slide 20: New Group structure
New Group structure FLSmidth Capital Market Day 2012 17/04/2012 20
Slide 21: Cement and minerals – commercially different
New Group Structure Cement and minerals – commercially different What they have in common apart from basic technology is volatility FLSmidth Capital Market Day 2012 17/04/2012 21
Slide 22: The organisation should reflect that of the customers
New Group Structure The organisation should reflect that of the customers Large global cement players have organised their businesses with regional geographical Business Units "Pure-play" setup – focus on cement and selected downstream products – no other commodities/minerals Central coordinat
Slide 23: Four high-level options considered
New Group Structure Four high-level options considered Alligned with design principles derived from structure, strategy and industries FLSmidth Capital Market Day 2012 17/04/2012 23
Slide 24: Design principles – high-level options: Technology
New Group Structure Design principels – high-level options Technology favour ”Technology” setup FLSmidth Capital Market Day 2012 17/04/2012 24
Slide 25: New Group Structure
New Group Structure New Group Structure Old structure New structure FLSmidth FLSmidth Customer Bulk Cement* Minerals Non-Ferrous Cement Services Materials* Projects and Products Projects and Products *) Some product companies previously belonging to Cement are moved to Bulk Materials since a conside
Slide 26: Industry focused Divisions to realise growth and strategic goals
New Group Structure Industry focused Divisions to realise growth and strategic goals Divisions are integrated organisations with dedicated management teams and clear accountability/responsibility for their business 1 Executive Vice President for each Division, enlarged and more operational Group
Slide 27: Matching core technologies with key industries
New Group Structure Matching core technologies with key industries Creates focus on Customer Service which has a different business logic than the three project sales divisions Customer Service Further strengthen link between global customer service activities across FLSmidth’s local footprint B
Slide 28: Working across Divisions to serve the industry
New Group Structure Working across Divisions to serve the industry Key Industry Directors (KIDs) Provide industry knowledge and market intelligence Drive industry strategy, goals and priorities Including global sales targets, budgets and updates Define industry needs for R&D and/or M&A Ass
Slide 29: New Group Structure
New Group Structure New Group Structure FLSmidth Bulk Materials, Non-Ferrous and Cement still include a total of DKK 1.9bn service revenue in product companies. Total service revenue Customer amounted to DKK 7.2bn in 2011 Bulk Materials Non-Ferrous Cement Services representing 33% of Group revenue M
Slide 30: Group Executive Management enlarged
New Group Structure Group Executive Management enlarged Jørgen Huno Rasmussen* CEO Ben Guren* CFO Bulk Materials Customer Services Non-Ferrous Cement Christian Jepsen* Executive Vice President Peter Flanagan Bjarne Moltke Hansen*1 Per Mejnert Kristensen Executive Vice President Executive Vice Presid
Slide 31: Outlook & Guidance unchanged
Outlook & Guidance unchanged FLSmidth Capital Market Day 2012 17/04/2012 31
Slide 32: Positive macro-economic development – growth in emerging markets and developing countries
Outlook Positive macro-economic development – growth in emerging markets and developing countries Real GDP growth (Annual percent change) FLSmidth Capital Market Day 2012 17/04/2012 32
Slide 33: … which will drive demand for commodities and thereby support capital goods prospects
Outlook … which will drive demand for commodities and thereby support capital goods prospects Key structural trends: Emerging market consumption growth driving demand for new products and ultimately the expansion of the manufacturing base in emerging markets The need for significant infrastruc
Slide 34: Enhanced footprint within Coal & Australia
Outlook Enhanced footprint within Coal & Australia FLSmidth has made an offer of AUD 11$ per share to acquire Australian company Ludowici, equivalent to DKK 2.3bn Will allow us to complete our product portfolio within coal handling and processing Coal KID will coordinate between Divisions (tec
Slide 35: Questions?
Questions? FLSmidth Capital Market Day 2012 17/04/2012 35