Flsmidth & Co. A/s · OMXCOP:FLS

Flsmidth & Co. A/s — Investor Day (June 2017)

136 slides from Flsmidth & Co. A/s's investor day presentation, Jun 21, 2017

  1. Slide 1: Growth through productivity

    21 June 2017 Thomas Schulz, Group CEO Growth through productivity Capital Market Day 2017

  2. Slide 2: Growth through productivity

     Markets are entering cyclical recovery  Productivity is the driver for the next cycle(s)  FLSmidth has managed the cycle and is prepared for sustainable profitable growth Growth  We are Productivity Provider #1 – a core through competence rooted in our business model productivity  Key producti

  3. Slide 3: Capital Market Day 2017 Agenda

    Capital Market Day 2017 Agenda 10.30-11.00 Arrival 11.00-11.30 Key note from CEO – Growth through productivity Thomas Schulz 11.30-11.50 Key note from CFO – Internal productivity Lars Vestergaard 11.50-12.00 Short break 12.00-12.20 Growth through digitalisation Per Mejnert Kristensen 12.20-13.00 Gro

  4. Slide 4: About FLSmidth

    About FLSmidth Danish Company We are founded in 1882 ~12,000 employees Cement We are a market-leading supplier to the global We operate in OUR VISION cement and mining industries We drive success through sustainable productivity enhancement +100 countries Mining 4 21 June 2017 Capital Market Day 201

  5. Slide 5: Our license to operate is built on our focus on safety

    Our “license to operate” is built on our continued focus on safety GROUP LTIFR 5 4 Winning teams of FLSmidth’s President's Safety Award 3 4.7 4.7 2 4.2 3.9 2.7 1 1.8 1.5 1.2 0 2010 2011 2012 2013 2014 2015 2016 Q1 2017 5 21 June 2017 Capital Market Day 2017

  6. Slide 6: Our business stands on a robust strategic foundation

    Our business stands on a robust strategic foundation Products Cement Mining Projects Services Cement and mining are attractive We leverage the advantages Our unique business model markets to be in of targeting both industries positions us for growth Favorable long-term demand drivers Scale benefits

  7. Slide 7: We are Productivity Provider #1

    We are Productivity Provider #1 Products A unique combination of projects, products Customer benefits Increasing output and services and quality Projects Services Reducing total cost of ownership Increasing productivity FLSmidth key competencies Process and product Guaranteed Proactive and Minimising

  8. Slide 8: Our offering to the cement and mining industries

    Our offering to the cement and mining industries Cement Cement Material Crushing Grinding Pyro processing Clinker cooling handling and Handling packing FLSmidth ThyssenKrupp KHD Sinoma Mining Minerals Beneficiation Refining Exploration Development Extraction material Comminution & Recovery & Smeltin

  9. Slide 9: The next industry cycle(s) will be productivity-driven

    The next industry cycle(s) will be productivity-driven Products Projects Services Products Projects Services Capacity cycle Productivity cycle Customer Increase production capacity Optimize production and reduce cost of existing assets requests Project Mostly greenfield Mostly brownfield types Holis

  10. Slide 10: We have positioned ourselves to capture growth through productivity

    We have positioned ourselves to capture growth through productivity 2012 2013 2014 2015 2016 2017+ Managing the cycle – both in downturn and upturn Preparing for the upturn Growth through Productivity Group strategy Group strategy Reorganization Portfolio New long-term Strategy and structure revised

  11. Slide 11: Our long-term financial targets reflect cyclicality in our markets

    Our long-term financial targets reflect cyclicality in our markets Structural market growth Group long-term financial targets Annual revenue growth Above market average Cement EBITA margin 10-13% 3-4% ROCE* >20% Equity ratio >30% Financial gearing (NIBD/EBITDA) <2 Mining Pay-out ratio 30-50% 4-5% *)

  12. Slide 12: Key growth levers strengthen our position as Productivity Provider #1

    Key growth levers strengthen our position as Productivity Provider #1 Cyclical recovery + Key productivity-based growth levers Digitalization as the foundation Cement investments for productivity are already moving out of Innovation to address the trough with a ‚cautiously Products complexity of ope

  13. Slide 13: Thank you

    Thank you flsmidth.com/linkedin flsmidth.com/twitter flsmidth.com/facebook flsmidth.com/instagram flsmidth.com/youtube 13 21 June 2017 Capital Market Day 2017

  14. Slide 14: Slide 14

  15. Slide 15: Internal productivity

    21 June 2017 Lars Vestergaard, Group EVP and CFO Internal productivity Capital Market Day 2017

  16. Slide 16: CFO Key note Agenda

    CFO Key note Agenda ▪ Internal productivity ▪ How we manage the company and drive internal productivity ▪ The CFO Agenda ▪ How we invest and allocate capital ▪ How we measure success and use financial KPIs 2 21 June 2017 Capital Market Day 2017

  17. Slide 17: How we manage the company

    How we Strategic priorities historically manage the company 2002  Expansion into minerals and service  Intensive M&A activity Completing our  Investments in global service footprint offering in  Off-shoring to India and China mineral How we work to Increasing footprint and scale processing impro

  18. Slide 18: Optimised global organisation and footprint

    Optimised global organisation and footprint Global centres of excellence and service centres close to customers Global Headquarters & Group Functions, Denmark Shared Service Center, India Global Project & 4 Technology Centres (Denmark, India, USA) Local sales and service 72 offices Service Super Cen

  19. Slide 19: Synergies extracted across the global organisation

    Synergies extracted across the global organisation A continuous optimisation process  Industry specific critical competencies  Product specialists  Process experts CEMENT MINERALS  Sales people  Shared sources of competitive advantage: Scale benefits Know-how Shared services  Shared global  P

  20. Slide 20: New cost and governance structure

    New cost and governance structure SG&A managed tightly throughout the organisation Customer Product Minerals Cement Business Results Services Companies (managed by Business Units /Divisions) Country Organisations  Order intake and Revenue Group Functions  Direct business unit costs Shared Costs 

  21. Slide 21: Procurement benefits

    Procurement benefits From local to global procurement – leveraging local competencies Global alignment Category management  Consolidated global spend  Production costs ~75% of revenue of which  Focus on long term strategic partnerships with preferred global suppliers 70-80% is outsourced  Networ

  22. Slide 22: How we measure success

    Growth How we measure Profit Capital A balancing act Cash is king succes ROCE FCF Important Financial KPIs Strong Operational balance sheet leverage At any point in time In the upturn 8 21 June 2017 Capital Market Day 2017

  23. Slide 23: A strong balance sheet ensures maximum flexibility

    A strong balance sheet ensures maximum flexibility Gradual improvement since efficiency programme in 2013 DKKm NIBD AND NIBD/EBITDA DKKm EQUITY AND EQUITY RATIO 6,000 6.00 12,000 40% 5,000 5.00 35% 10,000 4,000 4.00 30% 8,000 3,000 3.00 25% 2,000 2.00 6,000 20% 1,000 1.00 15% 4,000 0 0.00 10% 2,000

  24. Slide 24: How we allocate capital

    How we Investments and capital allocation allocate capital Priorities We maximise room to  To be well-capitalised (NIBD < 2x EBITDA) invest in growth and  To pay stable dividends (30-50% pay-out ratio) shareholder return  Invest in organic growth  Mergers and acquisitions  Share buy-back or spe

  25. Slide 25: Return on Capital Employed (ROCE)

    Return on Capital Employed (ROCE) We target a gradual and continuous increase towards 20% ROCE end Q1 2017*) Cement ROCE >> 20% Cement EBITA 5.7% 9.4% Minerals ROCE < 20% Minerals EBITA 10.2% EBITA LTM Capital employed DKK 1,415m DKK 14,993m Growth (ORDER INTAKE & REVENUE) Growth and operating lever

  26. Slide 26: Tightly managed fixed cost base to generate operational leverage

    Tightly managed fixed cost base to generate operational leverage DKKm FIXED COSTS AS % OF REVENUE 6,000 Writedown 25% 5,000 20% 4,000 15% 3,000 2,000 10% What if we are able to increase revenue by DKK 1bn 1,000 5% without adding more fixed costs? (assuming a Gross Margin ≈25%) 0 0% Revenue ∆ DKK +1b

  27. Slide 27: High cash conversion and FCF to drive shareholder return

    High cash conversion and FCF to drive shareholder return CFFO trends CASH CONVERSION DKKm  Net working capital to trend downwards (target 3500 200% <10% of revenue) 3000 150%  Taxes rate trending downwards due to 2500 100% optimised global tax structure 2000 50% 1500 0% CFFI trends 1000 -50%  We

  28. Slide 28: In pursuit of superior shareholder return

    In pursuit of superior shareholder return DKK FREE CASHFLOW PER SHARE Internal productivity 50 40  Optimised global organisation 30 20 10  Optimised cost and governance structure 0 -10  Global procurement benefits -20 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 FCF (excl. Acquisitions and d

  29. Slide 29: Growth through digitalisation

    21 June 2017 Per Mejnert Kristensen, Group EVP, Cement Division Growth through digitalisation Capital Market Day 2017

  30. Slide 30: Digitalisation is one of the key levers for growth through productivity

    Digitalisation is one of the key levers in FLSmidth for driving growth through productivity …combined with many levers Unique business model… for enhancing productivity  Process and product knowledge to optimise operations  Guaranteed equipment uptime and Products performance  Minimised environme

  31. Slide 31: FLSmidth has been on the digitalisation journey for decades

    FLSmidth has been on the digitalisation journey for decades FLSmidth possesses the key competencies needed to deliver on digitalisation Plant/operations  FLSmidth is the subject matter expert in optimisation both machine control, process optimization and plant optimization Mac- hine  For several d

  32. Slide 32: What Digitalisation means in FLSmidth

    What Digitalisation means in FLSmidth Cement example ILLUSTRATIVE On site Remotely Feedback Condition monitoring Predictive mainte- Digitali- nance Plant Inter- Machine Control sation Services Examples Control face Platform Power & Fuel optimisa- Spare tion parts Process optimization systems Feedbac

  33. Slide 33: Already offering key technologies at the foundation of digitalisation

    Already offering key technologies at the foundation of digitalisation Example: Advanced Process Control systems  FLSmidth’s advanced process control solution used to stabilize and optimize key cement processes  Production increase of 3-5% in kiln applications and 3-6% in mill applications  Fuel s

  34. Slide 34: Enhanced productivity through automated material flow control

    Enhanced productivity through automated material flow control Example: FLSmidth BlendExpert Automation technology  Applications supporting production optimization from quarry to cement  Steady quality, lower fuel consumption and eliminated need for manual sampling/analysis  Latest generation soft

  35. Slide 35: FLSmidth's Operation & Maintenance (O&M) offering

    FLSmidth’s Operation & Maintenance (O&M) offering is a strong vehicle for Digitalisation  FLSmidth has ongoing O&M operations in 10 production lines across 5 countries  We enjoy the possibility to develop our Digitalisation offering in plants with O&M contracts  Data-driven productivity improveme

  36. Slide 36: Data-driven productivity improvements are already part of our offering

    Data-driven productivity improvements are already part of FLSmidth’s offering Able to pull the right data from …FLSmidth’s platforms can deliver easy access to key operational any business application… data and enable automated or remote action Business Performance Business Intelligence Management a

  37. Slide 37: FLSmidth Performance Management Platform

    FLSmidth Performance Management Platform enables automated and remote action Preventive and Integrated Full management 01 Corrective actions 02 process between sites, 03 overview from all plants specialists, systems Knowledge sharing Actions Down time Action 1 Action 2 Action 3 Production & Quality

  38. Slide 38: Numerous potential technology applications for the future plant

    FLSmidth is working on numerous potential technology applications for the future plant Plant of the future HoloLens Drones Artificial Intelligence, AI  Providing technicians with live  Automated stock pile  Predictive maintenance without video based support measurement manual supervision  Augmen

  39. Slide 39: Summary

    Summary  Digitalisation is a key enabler of productivity enhancement, which will grow FLSmidth’s business  FLSmidth is fully engaged on the digitalisation journey for a long time and possesses the necessary competencies to deliver it  We are already offering key automation technologies that form

  40. Slide 40: FLSmidth Online Support Centre

    FLSmidth Online Support Centre Click to play the video 12 21 June 2017 Capital Market Day 2017

  41. Slide 41: Thank you

    Thank you flsmidth.com/linkedin flsmidth.com/twitter flsmidth.com/facebook flsmidth.com/instagram flsmidth.com/youtube 13 21 June 2017 Capital Market Day 2017

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  43. Slide 43: Growth through innovation

    21 June 2017 Manfred Schaffer, Group EVP, Minerals Division Growth through innovation Capital Market Day 2017

  44. Slide 44: Innovation: key element of productivity enhancements

    Innovation Rapid Oxidative Leaching ” We believe that Key element of productivity Game-changer for copper even a small enhancements and precious metal processing discovery can lead to a great deal more” Dry Stack Tailings Summary Future minerals processing with no tailings ponds/dams & take-away and

  45. Slide 45: The need to improve productivity in mining and minerals processing

    The need to improve productivity in mining and minerals processing RETURN ON CAPITAL BASED ON  With the mining industry’s focus on maximising volume during % 30 MINING COMPANIES the boom phase of the cycle, inefficiencies became 40 embedded in operations 30  When the cycle turned, the industry shi

  46. Slide 46: Innovation in FLSmidth

    Innovation in FLSmidth IN-HOUSE INNOVATION INNOVATION THROUGH PARTNERSHIP  FLSmidth global technology centers  In-house focus on core business and partnering up if non-  Local product development core technologies are needed  Sophisticated laboratories and testing facilities in the USA,  Partne

  47. Slide 47: Innovation – where to play

    Innovation – where to play  FLSmidth is constantly pursuing innovation Innovation ambition levels in the existing products, processes and TRANSFORMATIONAL markets Where to play (Markets + customers) NEW Developing breakthroughs and inventing things for  But FLSmidth also looks for ways how our mar

  48. Slide 48: A glimpse at recent product developments

    A glimpse at recent product developments Optimising existing core products for higher efficiency, quality and performance World’s largest / most efficient cement mill The SmartCyclone® Superior dip tube material for preheater millMAX-e™ high efficiency slurry pump The FerroCer® Impact wear liner FLS

  49. Slide 49: Transformational innovations

    Transformational innovations Dry Stack Tailings  An end to tailings dams  A step change in water management Rapid Oxidative Leaching (ROL)  A transformational solution to overcome the challenges of declining grades and impurities in ore bodies  Winner in the global top 100 R&D awards 7 21 June 2

  50. Slide 50: Dry stack Tailings

    Dry stack Tailings Saving costs and improving safety 8 21 June 2017 Capital Market Day 2017

  51. Slide 51: Tailings facilities: risks and shortfalls

    Tailings facilities Risks and shortfalls TAILINGS DAM FAILURES Number of failures 60 50 40 30  On average 20 failures per decade over the last 30 20 years – no improvement 10  21 “very serious” failures of tailings ponds/dams in the past three decades 0  Better technology will mitigate the risks,

  52. Slide 52: Tailings accidents

    Tailings Tailings incidents (1900-2016) accidents Tailings accidents are primarily caused by:  Unusual weather (climate change)  Management  Foundation  Slope instability  Overtopping  Seepage No. of mines Type of tailing incident  Etc… 1-5 6 - 10 11 - 25 26 - 50 51 - 336 Groundwater Active I

  53. Slide 53: Water scarcity, access rights and costs

    Water scarcity, access rights and costs As water scarcity deepens, political instability Average size concentrator with a capacity 100,000 grows (The Guardian-March 2017): tpd and a Water Ratio of 0.5-0.7 (Cyclone – High In Bolivia, Peru and Ecuador disputes over water Rate Thickener) requires 50-70

  54. Slide 54: Many drivers toward filtered tailings

    Many drivers toward filtered tailings Land: Minimizing tailings management facility footprint – saving money  Footprint is < 50% of a conventional TMF Water reclamation => reduce dependency on external water supply and saving money  Water can cost > USD 5/m3 (seawater desalination) Reduction in cl

  55. Slide 55: Typical flotation tailings flow sheet

    Typical flotation tailings flow sheet TAILINGS (120,000 tpd) 30% solids Thickener Filtration Conveyor 36,000 tpd solids 55% solids 82% solids 84,000 tpd water 66,000 tpd solids 98,400 tpd solids 54,000 tpd water 20,400 tpd water Water Water Water back to mill back to mill back to mill 30,000 tpd 33,

  56. Slide 56: Competitiveness and addressable market potential

    Competitiveness and addressable market potential TAILINGS FACILITIES CAPEX FLSmidth’s filtered tailings solution will significantly reduce the CAPEX costs for the filter plant (size and filter media) and the transportation costs (mingling with overburden) and is cost competitive with conventional so

  57. Slide 57: FLSmidth is the one source for tailings solutions

    FLSmidth is the one source for tailings solutions Only OEM with complete equipment offering  Thickeners - conventional to paste  Filters - vacuum to high pressure filters  Pumps, Hydro-cyclones  Material handling - discharge and mobile stacking conveyors  Flowsheet / processing competence  R&D

  58. Slide 58: Dry Stack Tailings: synchronizing market demand and solution development

    Dry Stack Tailings Synchronizing market demand and solution development Market interest for Early adaptors Market acceptance Market demand large scale DST acceptance for large for large scale DST for large scale DST scale DST concepts technology solutions 2014–2015 2016–2017 2018-2020 2020- Developm

  59. Slide 59: FLSmidth Colossal automatic filter press demonstration plant

    FLSmidth Colossal™ automatic filter press demonstration plant In final stages of process commissioning and trial operation FLSmidth’s goals  Prove technology at scale  Prove large scale reliability  Obtain operational and performance data  Understand any material handling and stacking issues ass

  60. Slide 60: Partnership with Goldcorp for EcoTails solutions

    Partnership with Goldcorp for EcoTails solutions The EcoTails concept developed in a partnership between Goldcorp and FLSmidth provides a fully integrated tailing solution by co-mingling waste rock and dry tailings Slide from David Garofalo, CEO GoldCorp, Keynote Mineral Exloration Roundup January 2

  61. Slide 61: Dry Stack Tailings addresses main stakeholder concerns

    Dry Stack Tailings Addresses main stakeholder concerns Water usage / Management Waste water management Operational risks Land reclamation  Recirculation of >90% of the process water  Elimination of the risks of catastrophic tailings flow when a dam (TSF) fails  Safe stacking of tailings cakes eve

  62. Slide 62: Rapid Oxidative Leaching

    Rapid Oxidative Leaching – a game-changer for copper and precious metal processing 20 21 June 2017 Capital Market Day 2017

  63. Slide 63: Customer challenge: declining ore grades

    Customer challenge Declining ore grades COPPER GRADE  Existing ore bodies trending with lower Copper grade % grades 1.2  more complex ores to process  higher costs are diluting miners‘ revenue 1 and the economic value of reserves 0.8  Customers have to process lower 0.6 grades/more complex/dirty

  64. Slide 64: Customer challenge: increasing impurities in concentrates

    Customer challenge Increasing impurities in concentrates ARSENIC GRADE IN COPPER  Arsenic level in concentrates sent to CONCENTRATE smelters have increased from <0.15% to > Arsenic grade percentage 0.24 0.22% As 0.22  Smelters’ ability to take in materials with high arsenic levels is nearly at max

  65. Slide 65: Customer challenge: oxide to sulfide ore transition

    Customer challenge Economic stress in the transition from oxide to sulfide ore SX-EW PRODUCTION - CHILE AND PERU  Grade of oxide ore bodies dropping, with Cathode Production (mtpa) existing stockpiles depleted from years of 2.50 operation 2.25  Declining utilisation of fixed assets 2.00 (Sx-EW) in

  66. Slide 66: Existing (competing) hydromet technologies

    Existing (competing) hydromet technologies Autoclaves Specific milling energy input (kWht-1)  Works at high temperatures and high pressures Y=1002x-1.028  Heavy, complicated process machine due to R2=0.989 extreme process conditions - High CAPEX and high OPEX Ultra-fine grinding  High energy inpu

  67. Slide 67: FLSmidth Rapid Oxidative Leaching (ROL) technology

    FLSmidth Rapid Oxidative Leaching (ROL) technology A Mechano-chemical approach mitigating passivation making it feasible to produce cathode copper on site: 1 2 3 4 Can process low grade Leaches 97-99% No need for ultrafine Operates at atmospheric concentrates without copper in 6-8 hours grinding =>

  68. Slide 68: The uniqueness of ROL process

    The uniqueness of ROL process ”Technology family“ patented and additional patents pending The challenge: During oxidative leach of chalcopyrite, a passivation layer is formed, which obstructs chemical reactions at the particle surface, inhibiting leach The requirements: Overcome surface passivation

  69. Slide 69: ROL market potential in copper

    ROL market potential in copper SHARE OF WORLD COPPER PRODUCTION  ROL focuses on chalcopyrite concentrates which CONTAINING ARSENIC make up ~75% of the world copper supply  1.5 million tpa copper from oxide to sulfide ore 22% transition over next 10 years (*) corresponding to 7% of world copper pro

  70. Slide 70: Staged market penetration of ROL technology

    Staged market penetration of ROL technology Existing SX-EW Mines moving to Mines retrofitting New mine plants (oxide) more complex concentrator development sulfide ores, operation to (two process continue SX-EW enable handling streams) ROL Plant increase of low grade / complex ores Leach & SX- Smelt

  71. Slide 71: Next steps in ROL commercialisation in copper

    Next steps in ROL commercialisation in copper - 2015 2016 2017 2018- Research Lab testing Pilot plant Demo plant Full-scale Full-scale brownfield project greenfield project Breaking the code pilot testing of ROL First big hurtle in FLSmidth is currently Short term target: Proven results and on vario

  72. Slide 72: Opportunity: Refractory gold

    Opportunity: Refractory gold  ROL can represent a new low temperature, low pressure approach for the pretreatment of refractory gold ores and concentrates  Potential to replace existing pre-treatment technologies (i.e. roasters, autoclaves, bioleaching).  In early testing, the mechano-chemical pr

  73. Slide 73: Rapid Oxidative Leaching: the take-away

    Rapid Oxidative Leaching The take-away “Game-changer for copper and precious metal processing” For illustrative purpose only 31 21 June 2017 Capital Market Day 2017

  74. Slide 74: Summary and take-aways

    Summary and take-aways  Environmentally and commercially attractive innovations  Addresses declining economics of many mines  Contribute to our vision of sustainable productivity enhancement  Market Potential Dry Stack Tailings  Estimated addressable market of USD 200-300m per year (USD 100-200

  75. Slide 75: Thank you

    Thank you flsmidth.com/linkedin flsmidth.com/twitter flsmidth.com/facebook flsmidth.com/instagram flsmidth.com/youtube 33 21 June 2017 Capital Market Day 2017

  76. Slide 76: Backup slides

    Backup slides 34 21 June 2017 Capital Market Day 2017

  77. Slide 77: Translating the ROL technology highlights into customer benefits

    Translating the ROL technology highlights into customer benefits 1 Ability to process  Many new ore deposits have high arsenic levels arsenic bearing  Most smelters will not accept concentrates with >0.5% arsenic (ability for high AS is nearly at concentrates on site maximum)  Options of blending

  78. Slide 78: Existing heap leach with declining grade

    Existing Heal Leach with declining grade: Maintaining Cathode production in existing Sx-Ew operations ROM Low to Mid Oxide Ore Grade Copper Concentrate FLSmidth® Precious Rapid Residue Brownsfield Metals Oxidative Disposal expansion Recovery Leach Oxide Copper Heap SX EW Cathodes Leach Residue Dispo

  79. Slide 79: Transition from oxide to sulfide ore

    Transition from oxide to Sulfide Ore Continue Sx-Ew Operation ROM Sulfide Ore ROM Sulfide Tailings Greenfield Oxide Ore concentrator Disposal expansion Copper Smelter Cathodes FLSmidth® Precious Rapid Residue Brownsfield Metals Oxidative Disposal expansion Recovery Leach Oxide Copper Heap SX EW Cath

  80. Slide 80: Existing concentrator lower grade or complex ores

    Existing Concentrator Lower Grade or Complex Ores Concentrator operation for maximum revenue ROM Sulfide Ore Sulfide Tailings concentrator Disposal High-Grade Copper Concentrate Flotation Plant Optimization Copper Low to Mid-Grade Smelter Cathodes Copper Concentrate FLSmidth® Precious Rapid Residue

  81. Slide 81: New project – lower grade or complex ores

    New Project – Lower Grade or Complex Ores Concentrator operation for maximum revenue ROM Sulfide Ore Sulfide Tailings concentrator Disposal High-Grade “clean” Copper Concentrate Copper Low to Mid-Grade “dirty” Smelter Cathodes Copper Concentrate FLSmidth® Precious Rapid Residue Metals Oxidative Disp

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  83. Slide 83: Growth through life cycle management

    21 June 2017 Brian Day, Group EVP, Customer Services Division Growth through life cycle management Capital Market Day 2017

  84. Slide 84: Life cycle management: lowest total cost of ownership

    Life cycle management Delivering the lowest total cost of ownership (TCO) CAPEX OPEX Total cost of • Flow sheet optimisation • Maintenance/outages ownership • Building and construction • Parts and services • Key products • Retrofits and upgrades ~25% ~75% 2 21 June 2017 Capital Market Day 2017

  85. Slide 85: Product line management setup across divisions

    Our product line management setup ensures full product life cycle perspective across divisions/BUs Product Line Management  Strong technical support and training  New product development  Targeted growth and support opportunities Strongest  Services offering  Value Engineering to customers Proc

  86. Slide 86: Growth through life cycle management: strategic ambition

    Growth through life cycle management Strategic ambition Productivity provider #1  Best in class in maximizing customers’ return on assets  Strongest business partner for life cycle services  Support installed base  Product line management  Value adding spare & wear parts  Upgrades and retrofit

  87. Slide 87: OPEX (aftermarket) business opportunities in cement and mining

    OPEX (aftermarket) related business opportunities in the cement and mining industries Upgrades/ Spare parts Wear parts Maintenance Services Rebuilds Share of total service activities today ~55% ~5% ~10% ~20% ~10% Examples  Mill shells  Mill liners  Support to plant  Mechanical  Improved of prod

  88. Slide 88: Grow wear parts to >10% of Customer Services

    Grow wear parts to >10% of Customer Services 2015 2016 2017 2019  PLM for wear  3 metallurgists  Wear parts >5% of total CS #1 in Productivity parts hired  New customers and geographies Wear parts >10%  KPIs define  7 R&D projects  3 multiple year install and liner of total CS  Business plan

  89. Slide 89: Wear parts and consumable products

    Wear parts and consumable products Crushing Grinding Flotation Centrifugation Primary and Mill liners, trommel Rotors, stators and Wedge wire baskets, Available secondary liners frames, screen media, hood sectors wet end wear part tables and roller segments market (based on installed base only) > US

  90. Slide 90: Crushing and Milling: enhancing productivity through customised offering

    Crushing and Milling Enhancing productivity through customised offering Spider Cap Discharge End Head  Bundled offering Liners and Grates Spider Arm Shield Pulp Lifters Top Shell  Process optimization Liners Discharge  Upstream and downstream Feed End Cone Head Liners  Supply chain flexibility 

  91. Slide 91: Wear parts potential in milling

    Wear parts potential in milling Wear parts 70% of Lifetime opex aftermarket (growth opportunity) 75% Spare parts Lifetime spend on Ball Historic Mills for a typical FLSmidth focus copper concentrator 25% Capex > DKK 300m Ball Mill 9 21 June 2017 Capital Market Day 2017 9

  92. Slide 92: Different types of wear and applicable technologies

    Different types of wear and applicable technologies Abrasive Erosive High Impact Sliding High tempera- wear wear pressure wear wear wear ture wear Products impacted Mills Pumps Crushers Crushers/mills Chutes/screens Coolers/kilns (examples)  Hard-facing  Hard-facing  Manganese  Manganese  Polym

  93. Slide 93: Wear part product development: FerroCer impact panels

    Wear part product development: FerroCer® impact panels Delivering enhanced predictable productivity Previous liner wear life: 2-3 weeks FerroCer® wear life: >10 times longer Click to play the video 11 21 June 2017 Capital Market Day 2017

  94. Slide 94: 21 June 2017 Capital Market Day 2017

    12 21 June 2017 Capital Market Day 2017

  95. Slide 95: Life cycle management

    Life cycle management Partnering with customers as a trusted advisor Improved productivity Asset Mapping Parts  Higher availability and throughput  Predictive maintenance and planning  Better parts and resource forecasting  Lower total costs of ownership Enhanced sustainability  Safety  Water

  96. Slide 96: Growth through key products

    21 June 2017 Capital Market Day 2017 Growth through key products

  97. Slide 97: Market-leading products with unique growth potential

    Market-leading products with unique growth potential Growth levers: • Geographical expansion • Adjacent industries • Extended service offerings FLSmidth FLSmidth FLSmidth Feeders Pumps and Gears cyclones FLSmidth FLSmidth FLSmidth FLSmidth FLSmidth FLSmidth Sizers Air pollution Automation Pneumatic

  98. Slide 98: Products in focus today

    Products in focus today Two strong business areas with interesting growth opportunities REVENUE BY APPLICATION Varying in size and profitability Strong market position in niches (most are #1 or #2) Cyclones Air Pollution Process Control Sizing & Packaging Dosing Gears & Pumps Control & Sampling Feed

  99. Slide 99: Thank you

    Thank you flsmidth.com/linkedin flsmidth.com/twitter flsmidth.com/facebook flsmidth.com/instagram flsmidth.com/youtube 17 21 June 2017 Capital Market Day 2017

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  101. Slide 101: Pumps and Cyclones

    20 June 2017 Pat Turner, President FLSmidth Krebs Pumps and Cyclones Capital Market Day 2017

  102. Slide 102: Pumps and Cyclones in a nutshell

    Pumps and Cyclones in a nutshell  World leader in cyclones, strong player in slurry pumps  Critical equipment for productivity in minerals and other industrial processes  A large and profitable market, driven by service and aftermarket parts business  Growth opportunities in  adjacent markets w

  103. Slide 103: Pumps and Cyclones are critical equipment for mineral processing

    Pumps and Cyclones are critical equipment for mineral processing, coal, fertilizer, and other industry flowsheets Cyclones classify Floatation solids by size Crusher Mill Pump Cyclone Pumps transport slurry to the cyclones and other processes 3 20 June 2017 Capital Market Day 2017

  104. Slide 104: Pumps move high volumes of dense slurries

    Pumps move high volumes of dense slurries with coarse solids – the “heart(s)” of a plant  Pumps range in suction diameter (= pipe diameter) from 50 to 850 mm  A pump costs between DKK 35,000 and 2.5m  Our largest pump will fill a 50-meter Olympic swimming pool in 15 minutes, a garden hose would t

  105. Slide 105: Cyclones classify solids and help determine process efficiency

    Cyclones classify solids and help determine overall process efficiency and recovery  Directly affects recovery rates in mineral processing plants by keeping coarse solids out of flotation / leach recovery step  Cyclone sizes range from 12 to 2,200 mm and are bundled in manifolds with 4 to 20 cyclo

  106. Slide 106: Pumps and Cyclones are a large, profitable, growing market segment

    Pumps and Cyclones are a large, profitable, and growing market segment  Lower grades and dropping commodity prices has driven a focus on improving productivity  Pumps and Cyclones are purchased as part of each capital project but are easily High Pressure Pump Train replaced in existing operations

  107. Slide 107: Market leader in Cyclones

    Main competitors:  Weir Minerals  GIW  Metso 5 super centers, 35 service centers Market leader in Cyclones TOTAL REVENUE BY REGION TOTAL REVENUE BY INDUSTRY Strong Even cyclone worldwide adjacency distribution revenue North America South America Copper Gold Southern Africa EMENA Energy Minerals I

  108. Slide 108: Growth through Productivity: SmartCyclone

    Growth through Productivity: SmartCycloneTM  Leader in wireless smart condition monitoring  Proprietary SmartCyclone sensors measure acoustics to indicate proper cyclone operation and provide real time wear indication  Combined with FLSmidth automation software, SmartCyclone facilitates correctiv

  109. Slide 109: Growth opportunities for Cyclones in adjacent markets

    Further growth opportunities for Cyclones exist in adjacent markets Strong capital opportunities  Chemical Refineries  Upstream Oil & Gas  Power plants – FGD Process  Pulp & Paper Automotive Desanding Water Water Treatment  Automotive  Water treatment  Soil remediation  Plastic recycling Pro

  110. Slide 110: Growth through Productivity: constant pump innovation

    Growth through Productivity: constant pump innovation Self Purging Bearings Safe & Easy easy maintenance & suction side clearance adjustment FLSmidth provides: eliminates bearing failures due while pump is in operation to over greasing  Long predictable wear life Predictable life means matching the

  111. Slide 111: FLSmidth is well positioned to grow pump market share

    FLSmidth is well positioned to grow pump market share Biggest opportunities in high tonnage plants Copper  Leverage near-term market growth in Gold Copper and Gold  Increase market coverage together with Iron Ore FLSmidth organization Coal Opportunities where pumps are a major part of the process:

  112. Slide 112: Pumps and Cyclones in a nutshell

    Pumps and Cyclones in a nutshell  World leader in cyclones, strong player in slurry pumps  Critical equipment for productivity in minerals and other industrial processes  A large and profitable market, driven by service and aftermarket parts business  Growth opportunities in  adjacent markets w

  113. Slide 113: Thank you

    Thank you flsmidth.com/linkedin flsmidth.com/twitter flsmidth.com/facebook flsmidth.com/instagram flsmidth.com/youtube 13 20 June 2017 Capital Market Day 2017

  114. Slide 114: Slide 114

  115. Slide 115: Cement packaging

    21 June 2017 Francesco Ferrandico, President FLSmidth Ventomatic Cement packaging Capital Market Day 2017

  116. Slide 116: FLSmidth Ventomatic in a nutshell

    FLSmidth Ventomatic in a nutshell  World leader in Cement packaging – strong reputation in fully automatic packing and dispatching lines  Innovative product range composed of equipment developed in the last 5 years  Growth opportunities through  Increasing productivity in our core market – more

  117. Slide 117: Cement bags are a common way of distribution in the industry

    Cement bags are a common way of distribution in the industry  Bags are a common way of distribution Bulk in developing countries, where up to 45% shipping Cement Silo of cement (up to 60% in India) is shipped in grinding bags Packing  Packing plants are part of full cement Packing in the Cement pr

  118. Slide 118: Cement packing of the past

    Cement packing of the past dangerous, hazardous and labor-intense 4 21 June 2017 Capital Market Day

  119. Slide 119: Packing plants have evolved into fully automated operations

    Packing plants have evolved into complex, fully automated operations  Packing plants consist of 2 – 8 packing lines (depending on level of automation)  Packing lines cost DKK 3m – 11m and produce on average 2.800 50kg bags/hour or >15 million bags p.a. Compact packing plant  Full automation reduc

  120. Slide 120: FLSmidth Ventomatic key product types for automated packing plants

    FLSmidth Ventomatic provides the key product types and integrates them for fully automated packing plants Electronic rotary and Empty bag Palletizing Loaders for closed Loaders for open top inline packers applicators systems trucks/containers trucks Equipment for filling bulk Advanced machine for Re

  121. Slide 121: Ventomatic is the leading brand in cement packing

    SALES BY CUSTOMER GROUP Competitor 1 Competitor 2 FLSmidth Others Core markets FLSmidth Others with strong positioning FLSmidth Ventomatic is the leading brand in Cement packing Significant share Main growth levers of business with Productivity in Cement Chinese Design Institutes Improve geographica

  122. Slide 122: Ventomatic is well-positioned to grow in the Cement market

    Ventomatic is well-positioned to grow in the Cement market Market trends and productivity requirements Increase output of existing lines High capacity and flexibility Improve health and safety Reduce manpower Full automation Reduce power consumption Innovative logistic solutions Reduce truck waiting

  123. Slide 123: Growth through Productivity: CARICATECH automatic truck loader

    Growth through Productivity: CARICATECHTM automatic truck loader  Innovative development for loading all type of bags on all kind of trucks  Bag layers are picked up by a fork with a special roller way (no vacuum system required) while maintaining the traditional loading from the top  Addresses t

  124. Slide 124: Targeting adjacent industries with significant growth potential

    We are targeting several adjacent industries with significant growth potential Building Materials Petrochemical Fertilizers  Familiar packing process, different types  Different packing process  Different packing process of powders and mix  Request for higher capacity and  Open for innovative s

  125. Slide 125: We leverage our strengths to succeed in adjacent markets

    We leverage our strengths to succeed in adjacent markets Packing Bag application Palletizing Loading Cement + + + + Building Materials + + + + Palletizing and loading are strongholds of Fertilizer Different process requires + + FLSmidth Ventomatic – existing technology can development of product ran

  126. Slide 126: FLSmidth Ventomatic in a nutshell

    FLSmidth Ventomatic in a nutshell  World leader in Cement packaging – strong reputation in fully automatic packing and dispatching lines  Innovative product range composed of equipment developed in the last 5 years  Growth opportunities through  Increasing productivity in our core market – more

  127. Slide 127: Thank you

    Thank you flsmidth.com/linkedin flsmidth.com/twitter flsmidth.com/facebook flsmidth.com/instagram flsmidth.com/youtube 13 21 June 2017 Capital Market Day

  128. Slide 128: Slide 128

  129. Slide 129: Growth through Productivity

    21 June 2017 Thomas Schulz, Group CEO Growth through Productivity Capital Market Day 2017

  130. Slide 130: Growth through Productivity

     Markets are entering cyclical recovery  Productivity is the driver for the next cycle(s)  FLSmidth has managed the cycle and is prepared for sustainable profitable growth Growth  We are Productivity Provider #1 – a core through competence rooted in our business model Productivity  Key producti

  131. Slide 131: Summary of today's presentations

    Key productivity-based growth levers Summary of today’s presentations Dry stack tailings addressable market of USD 200-300m p.a. An enabler to be Productivity Provider #1 ROL estimated long-term potential >USD 1bn p.a. Additional 3-6% growth by Addressable market for extending geographical wear part

  132. Slide 132: Growth and EBITA margin levers

    Growth and EBITA margin levers related to topics presented today Structural growth Self-initiated growth opportunities in our industries through key levers presented today ROCE >20% Cement Cement requires1 +2-3%  Digitalization as the foundation for productivity 3-4% EBITA > DKK 3bn  Innovation to

  133. Slide 133: Roadmap to long term targets

    Roadmap to long term targets Revenue and EBITA 40.000 16% 35.000 14% 30.000 EBITA target range 10-13% EBITA margin improvement 25.000 10% Self-initiated growth opportunities 20.000 Structural growth 15.000 6% 10.000 4% 5.000 2% 0% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 2008 2009 2010 2011 2012 2013 2014 2015

  134. Slide 134: Our long-term financial targets reflect our growth ambitions

    Our long-term financial targets are reflecting our growth ambitions Group long-term financial targets Annual revenue growth Above market average  on track to deliver EBITA margin 10-13%  on track to deliver ROCE* >20%  dependant on growth Equity ratio >30%  already there Financial gearing (NIBD/

  135. Slide 135: Thank you

    Thank you flsmidth.com/linkedin flsmidth.com/twitter flsmidth.com/facebook flsmidth.com/instagram flsmidth.com/youtube 7 21 June 2017 Capital Market Day 2017

  136. Slide 136: Slide 136

FLSmidth — Investor Day (June 2017) on 6ix