flsmidth 3rd quarter report 2012

Interim Report Q3 2012

13 November 2012Interim Report Q3 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 costsand 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.

Continued strong growth in revenue and order intake

Ludowici acquisition completed in Q3

Continued execution challenges inBulk Materials

Revenue guidance maintained at DKK 25-26bn (excl. Cembrit)EBITA margin guidance clarified at 10%


Order intake up 11% on Q3’11, and also up 9% sequentially

Revenue up 23% due to positive developments in all segments, particularly in Non-Ferrous and Customer Services

EBITA unchanged, reflecting a decrease in the EBITA margin

EBIT down 6%, adversely impacted by effects of purchase price allocations amounting to DKK -88m in Q3 (Q3’11: DKK -45m)

Excluding acquisitions, the number of employees increased 12%, most of which is related to O&M contracts

Financial developments in Q3 2012

Q3 Results 2012

13 November 2012 4

FLSmidth & Co. A/S(DKKm) Q3 2012 Q3 2011 Change

Order intake 7,956 7,176 +11%Order backlog 31,166 27,492 +13%Revenue 6,316 5,131 +23%Gross margin 25.6% 26.3%EBITA 628 628 0%EBITA margin 9.9% 12.2%EBIT 528 562 -6%EBIT margin 8.4% 11.0%Net results1) 377 403 -6%CFFO -28 563 n/aEmployees2) 14,740 11,628 +27%


1) Including Cembrit2) Excluding Cembrit

Segment developments

41%

20%

31%

8%



Order intake Q3 2012– classified by segment

Customer Services

Bulk Materials

Cement

30%

20%

36%

14%

Bulk MaterialsNon-Ferrous

Revenue Q3 2012 – classified by segment

Customer ServicesCement

Non-Ferrous

28%

28%14%

6%

3%

7%

14%


Announced orders in Q3 2012

O&M cement Egypt DKK >1.1bn (CS)Copper South America DKK 655m (NF)Aluminium Venezuela DKK 280m (CS)

Total DKK >2,035m

Distribution of order intake by industry


Order intake Q1-Q3 2012 – classified by industry

Cement

Copper

Gold

Coal

Iron ore

Fertilizers

Other

Unannounced orders record high DKK 5.9bn in Q3

Level of announced orders stable at around DKK 2.0bn in Q3

Order backlog increased 1% in Q3 and is 13% higher than one year ago

Order intake increased 11% in Q3 2012



0

2,000

4,000

6,000

8,000

10,000

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Order intake (quarterly)+11% vs. Q3 2011DKKm

0.80.911.11.21.31.41.51.6

05,000

10,00015,00020,00025,00030,00035,000

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Order backlog (quarterly)+13% vs. Q3 2011DKKm Book-to-bill ratio*

Announced O&M ordersAnnounced Capital ordersUnannounced orders

*) Order backlog divided by Trailing-Twelve-Months Revenue

Organic growth +16% (excl. currency impact and acquisitions)

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

EBITA margin challenged by execution problems in Bulk Materials and increasing SG&A ratio

Revenue increased 23% in Q3 2012



0

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8,000

Q3 2010

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Q4 2011

Q1 2012

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Q3 2012

Revenue (quarterly)+23% vs. Q3 2011DKKm EBITA margin

0%

3%

6%

9%

12%

15%

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Q3 2010

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EBITA (quarterly)= Q3 2011DKKm

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: Acquisitions (DKK ~108m in Q3 2012)

Currency effects (DKK ~75m in Q1-Q3 2012)

High tender activity leading to increasing proposal costs- adding to costs now and revenue later

Additionally, SG&A included costs of non-recurringnature amounting to DKK ~100m in Q3 2012:

Implementation of new strategy and organizationBusiness alignment related to roll out of global ERP business systemTransaction and integration costs in connection with acquisitions

Cost efficiency program initiated

SG&A ratio

0%

3%

6%

9%

12%

15%

18%

0

200

400

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1,200

Q3 2010

Q4 2010

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Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

SG&A (quarterly)+34% vs. Q3 2011DKKm

CFFO adversely impacted by increase in working capital of DKK 813m in Q3

CFFI amounted to DKK -2,421m in Q3 primarily related to the acquisition of Ludowici, Decanter, Inc. and Teutrine and MIE Enterprises.

Temporary slow down in acquisitions except for smaller bolt-on in coming quarters

Cash flow from operating and investing activities



CFFO (quarterly)DKKm

-600-400-200

0200400600

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

CFFI (quarterly)-186% vs. Q3 2011DKKm

-3,000-2,400-1,800-1,200

-6000

600

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Tight focus on working capital developments



Working capital* (quarterly)+447% vs. Q3 2011DKKm

Working capital increased 3.1 %-points of sales to 10.8% in Q3

Structural reasons for increase in working capital:Strategic initiatives in Customer Services

Change in business mix towards more Customer Services, more products and mining projects and less cement projects

Specific reasons for increase in working capital in Q3:

Acquired entities in Q3 2012 contributed with DKK 525m to Group working capital

Working capital program initiated, including:Monthly reporting, monitoring and follow-up on KPIs

Systematic NWC responsibility in the global organisation

Specific initiatives launched in relation to accounts receivables, account payables, inventories, etc.

0%

2%

4%

6%

8%

10%

12%

14%

0

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3,500

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

WC /TTM* Sales

*) Working capital excluding Cembrit

*) TTM : Trailing-Twelve-Months excluding Cembrit

Net debt increased in Q3 primarily due to acquisition of Ludowici

Equity ratio declined to 29% due to increased balance sheet total, primarily attributable to acquisitions and in particular Ludowici. An equity ratio below 30% is expected to be of temporary nature

Capital structure



NIBD* (quarterly)DKKm

0%

10%

20%

30%

40%

50%

0

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10,000

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Equity (quarterly)DKKm Equity ratio

-0.8-0.400.40.81.21.6

-2,000-1,000

01,0002,0003,0004,000

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Gearing (NIBD/ TTM* EBITDA)

Gearing 1.4x EBITDA +14% vs. Q3 2011

*) NIBD excluding Cembrit

*) TTM: Trailing-Twelve-Months excl. Cembrit

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 within 12 months from the announcement in August 2012, however FLSmidth cautions that there is no assurance that the process will in fact lead to a sale

Acquisition of Ludowici



Acquisition of Ludowici finalised on 3 July 2012

Integration process is ongoing and progressing well

Ludowici to be included across Non-Ferrous and Customer ServicesSubstantial sales synergies expected to be achieved over the next couple of years, including

Additional FLSmidth equipment into coal plants

FLSmidth pull through of Ludowici products

Ludowici pull through of FLSmidth products

Added sales from Customer Services

Ludowici to substitute 3rd party screens and wear parts sold by FLSmidth in systems and islands in all focus industries

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 Q1 2013

Integration of Ludowici manufacturing activities into FLSmidth Super Centers in Chile, Peru, Australia and Tucson ahead of schedule

Supply chain and procurement integration implementation underway and starting to yield results

Successful re-branding and IT migration of FLSmidth Ludowici globally

Ludowici technologies included in larger FLSmidth projects such as the recently announced copper concentrator in Kazakhstan

Divisions to be renamed



Effective 1 December 2012 the two divisions, Non-Ferrous and Bulk Materials, will be renamed to reflect the underlying technology focus in each of the two divisions

Non-Ferrous will be renamed “Mineral Processing”

Bulk Materials will be renamed “Material Handling”

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 and iron ore seem to be the weakest commodities, whereas copper and gold are expected to hold up

Long term prospects remain encouraging

In Cement, proposal activity remain high in many parts of the World. The US cement market is beginning to see a recovery

Customer Services


Customer Services

Customer Services


(DKKm) Q3 2012

Q3 2011 Change Q1-Q3

2012Q1-Q3

2011 Change Full-year2011

Expected trendin 2012

Order intake 3,345 1,270 +163% 6,760 3,983 +70% 5,271 Strongly increasingOder backlog 7,909 6,290 +26% 7,909 6,290 +26% 6,082

Revenue 1,968 1,404 +40% 4,944 3,708 +33% 5,259 Strongly increasingEBITDA 258 253 +2% 695 622 +12% 882

EBITA 226 240 -6% 637 583 +9% 838

EBITA margin 11.5% 17.1% 12.9% 15.7% 15.9% Slightly decreasing1)

EBIT 199 238 -16% 5282) 577 -9% 832

EBIT margin 10.1 17.0% 10.7%2) 15.6% 15.8%

1) Previous expectation: Stable2) Including one-off write-down of capitalized R&D costs in Q2 of approximately DKK 60m

Very strong order intake in Q3 reflects continued good market conditions and a new seven year O&M contract exceeding DKK 1.1bn

Clear pattern of increasing quarterly revenue over the calendar year

Margin adversely impacted by one-off costs related to acquisitions

Strong growth in order intake and revenue

Customer Services


Revenue (quarterly)DKKm EBITA margin+40% vs. Q3 2011

0%

4%

8%

12%

16%

20%

0

500

1,000

1,500

2,000

2,500

03 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

0

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4,000

03 2010

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Q1 2012

Q2 2012

Q3 2012


Bulk Materials (to be renamed Material Handling)


Bulk Materials Division

Bulk Materials


(DKKm) Q3 2012


2012Q1-Q3



Order intake 1,675 1,357 +23% 3,890 4,259 -9% 5,482 IncreasingOder backlog 5,514 5,416 +2% 5,514 5,416 +2% 5,136

Revenue 1,340 1,248 +7% 3,671 3,234 +14% 5,005 IncreasingEBITDA -29 105 n/a 27 114 -76% 276

EBITA -42 91 n/a -9 88 n/a 225

EBITA margin -3.1% 7.3% -0.2% 2.7% 4.5% DecreasingEBIT -60 67 n/a -44 33 n/a 146

EBIT margin -4.5% 5.4% -1.2% 1.0% 2.9%

Weak short term outlook for Bulk Materials, but large growth potential

Prudent tender approach

Primary focus on improved operational excellence

Good order intake but execution challenges

Bulk Materials



0

500

1,000

1,500

2,000

03 2010

Q4 2010

Q1 2011

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Q1 2012

Q2 2012

Q3 2012


-4%

0%

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8%

12%

16%

-500

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03 2010

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Q2 2012

Q3 2012

Tight focus on execution challenges in Bulk Materials

Bulk Materials


Bulk Materials 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 and value-adding material handling solutions.

The organisation has lagged adequate project execution skills and know-how to handle a sharply increasing business volume

As a consequence, Bulk Materials has faced challenges related to project execution...

..stemming from underestimated risks in connection with orders received in previous years...

..combined with lack of timely handling and mitigation hereof

A number of initiatives have been put in place, including:

Transfer of project management know-how and best practices from other divisions

New division head and member of Group Executive Management, Carsten Lund took office on 1 July 2012 and has relocated to Wadgassen in Germany, where the Material Handling Technology Centre is based

Strengthened divisional Management Group

Non-Ferrous (to be renamed Mineral Processing)


Non-Ferrous

Non-Ferrous


(DKKm) Q3 2012


2012Q1-Q3



Order intake 2,598 3,222 -19% 7,849 7,223 9% 9,731 Strongly increasingOder backlog 9,929 8,482 17% 9,929 8,482 17% 8,779

Revenue 2,375 1,838 29% 6,154 4,264 44% 6,766 Strongly increasingEBITDA 240 246 -2% 596 501 19% 859

EBITA 215 238 10% 543 470 16% 815

EBITA margin 9.1% 13.0% 8.8% 11.0% 12.0% Slightly decreasingEBIT 164 204 -20% 3471) 377 -8% 689

EBIT margin 6.9% 11.1% 5.6%1) 8.8% 10.2%

1) Including one-off write-down of capitalized R&D costs in Q2 of approximately DKK 60m

Stable quarterly order intake

Exploration efforts are shifting to areas with more favourable investment climates such as Africa, Mexico, Canada and the CIS countries

Margin slightly under pressure due to one-off costs related to acquisitions as well as run-off of good margin orders taken in pre-crisis years

Continued strong order intake and revenue growth

Non-Ferrous



0%3%6%9%12%15%18%

0500

1,0001,5002,0002,5003,000

03 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

0500

1,0001,5002,0002,5003,0003,500

03 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Order intake (quarterly)-19% vs. Q3 2011DKKm

Cement


Cement

Cement


(DKKm) Q3 2012


2012Q1-Q3



Order intake 667 1,507 -56% 3,984 3,324 +20% 4,439 Slightly increasingOder 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 increasingEBITDA 214 52 314% 471 308 53% 541

EBITA 208 38 461% 445 264 69% 494

EBITA margin 23.0% 4.5% 16.4% 8.7% 11.3% Slightly increasingEBIT 206 33 541% 3651) 253 44% 475

EBIT margin 22.8% 3.9% 13.4%1)

8.4% 10.9%

1) Including one-off write-down of capitalized R&D costs in Q2 of approximately DKK 60m

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Extraordinary high EBITA margin due to projects being executed better than expected and not least finalisation of projects resulting in reversal of contingencies

Proposal activity remains high in many parts of the world, but decision-making is dragging out

The US cement market is beginning to see a recovery

Weak order intake but solid order execution

Cement



0%

5%

10%

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25%

0

500

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1500

2000

2500

03 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Order intake (quarterly)-56% vs. Q3 2011DKKm

Future Outlook


Long term financial targets (unchanged)

Future Outlook


Financial targets

Annual revenue growth Above market averageEBITA margin 10-13%Equity ratio >30%Financial gearing (NIBD/EBITDA) <2Pay-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 Employed in connection with the Annual Report for 2012

Group Guidance 2012 Actual2011

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

Group guidance 2012 clarified

Future Outlook


1) Continuing activities - excluding Cembrit, and including Ludowici as of 3 July 20122) Previous EBITA-margin expectation of ≥10% clarified at 10% in Q3 3) EBIT-margin expectation reduced in Q2 due to write-down of capitalized R&D costs of DKK

188m. Previous EBIT-margin expectation of 8-9% clarified at 8% in Q3.

Key take-awaysContinued strong order intake, especially in Customer Services

Continued execution challenges in Bulk Materials

Non-Ferrous and Bulk Materials divisions to be renamed

Full-year group guidance clarified


Questions &Answers

Next update: Annual Report 2012 on 12 February 2013

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