FLSmidth & Co. A/S · OMXCOP:FLS
FLSmidth & Co. A/S — Investor Day (January 2007)
18 slides from FLSmidth & Co. A/S's investor day presentation, Jan 26, 2007
Slide 1: Minerals Market Outlook
Minerals Market Outlook George Robles, President & CEO FLSmidth Capital Markets Day, 26 January 2007
Slide 2: Market Outlook (1)
Market outlook Market Outlook (1) • The mining industry is currently enjoying the largest boom in its history • The main driver has been a substantial increase in demand for commodities fuelled by rapid economic growth in China coupled with under investment in the mining industry for years • Current
Slide 3: Overall a Positive Investment Climate
Market outlook Overall a Positive Investment Climate Reasonable Strong Interest Corporate Rates Profits Favorable Investment Climate Past Favorable Underinvestment Commodity Prices Strong Cash Flows
Slide 4: Market Outlook (2)
Market outlook Market Outlook (2) • The major mining companies have been focusing on growth through acquisitions • All indications, and history, tell us that the focus will shift towards bringing forward additional production • Exploration spending is at an all time high, but there has been a declin
Slide 5: Global Demand for Raw Material Influences Price and Availability
Market outlook Global Demand for Raw Material Influences Price and Availability • Developing economies such as China are competing for available raw materials as they continue to build infrastructure • China achieved 12% of the world economy on purchasing power parity basis in 2004 (second to the Un
Slide 6: Urbanisation - a key long term driver for materials consumption
Market outlook Urbanisation - a key long term driver for materials consumption Urban population ratio vs. GDP per capita 90 Brazil 80 Urban population (%) Denmark Russia USA 70 Eurozone 60 South Africa Japan 50 40 China 30 India 20 10 0 0 10,000 20,000 30,000 40,000 50,000 GDP per capita (USD) Sourc
Slide 7: Percentage of population living in urban areas
Market outlook Percentage of population living in urban areas Source: United Nations; World Urbanization projects: the 2005 revision
Slide 8: Emergence of a global middle class
Market outlook Emergence of a global middle class •”By 2030, 1.2 billion people in developing countries (15 percent of the world population) will belong to the "global middle class," up from 400 million today. • This group will have a purchasing power of between $4,000 and $17,000 per capita, and wi
Slide 9: China and India — Some years ahead
Market outlook China and India — Some years ahead : GDP China Overtakes the G3: India Is Close Behind : (2003 US$bn) ? 50000 : 450007 ¢ M—— China : 40 000- —— india ? 35 000- —— Japan : 30000- —— Us : 25 000 ——— «Germany : 20000 ? 15 000- > 40 000 > 5000- ; 0 MINERALS
Slide 10: China - will continue to be the major driver of materials consumption
Market outlook China – will continue to be the major driver of materials consumption Source: CVRD
Slide 11: Urbanisation - the key long term driver for materials consumption
Market outlook Urbanisation - the key long term driver for materials consumption Source: CVRD
Slide 12: Supply is responding, but not quickly enough
Market outlook Supply is responding, but not quickly enough • Low metals prices in the 1990’s caused cutbacks in exploration expenditure and industry capex • Producers did not anticipate just how strong demand would be. Unwillingness to invest in what is almost entirely a China story • High prices p
Slide 13: Strong corporate profits and cash flow
Market outlook Strong corporate profits and cash flow • The mining companies are profiting from increased demand and higher metal prices • They have plenty of cash to spend on acquisitions, distribution to shareholders and new production • Focus is shifting from acquisitions to bringing forward new
Slide 14: Global exploration and Capex trends
Market outlook Global exploration and Capex trends • Investments in exploration have increased 3-fold since 2002 • Metal Industry Capex is cyclical and follows metal prices • Historically, Metal prices have peaked 2-3 years before Metal Industry Capex Global investments in Development in Metal Price
Slide 15: If stocks remain chronically tight, prices can remain high
Market outlook If stocks remain chronically tight, prices can remain high In the late 1980s, market inventories stayed at critically tight levels despite slowing economic growth – this is what supported prices then…and now.
Slide 16: Developments in Commodity Stocks and Prices
Market outlook Developments in Commodity Stocks and Prices Aluminium Copper 1,600,000 3,500 1,200,000 10,000 1,400,000 Stock 3,000 9,000 Stock Price 1,000,000 1,200,000 Price 8,000 2,500 7,000 1,000,000 800,000 2,000 6,000 800,000 600,000 5,000 1,500 600,000 4,000 400,000 1,000 3,000 400,000 2,000 5
Slide 17: Minerals Market Outlook: Overall a positive investment climate
Market outlook Minerals Market Outlook Overall a positive investment climate – Past underinvestment – Favorable commodity prices – Strong corporate profits and cash flow – Capex generally lags metal market peaks by 2-3 years – Growing middle-class creates demand
Slide 18: Thank You
Pee eee SUES COCO COCSSOSOSOCOSO OS OSSOCOOOOSOSCSOe OCCT CeCe Teer eee eer eee reser) THANK YOU