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2004

2004. Presentation of FLS Industries. Jørgen Huno Rasmussen, CEO FLS Industries A/S Carnegie Small Cap Seminar, Stockholm 14 September 2004. FLS Industries A/S. Mission Provider of machinery, equipment, systems and services including complete production lines and plants

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2004

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  1. 2004 Presentation of FLS Industries Jørgen Huno Rasmussen, CEO FLS Industries A/S Carnegie Small Cap Seminar, Stockholm 14 September 2004

  2. FLS Industries A/S Mission Provider of machinery, equipment, systems and services including complete production lines and plants for the global cement and minerals industries Minerals Cement TechnologyConcept

  3. Facts and Figures about FLS Industries 2004 • Expected turnover 2004: DKK 14bn (EUR 1.9bn) • Expected EBIT 2004: DKK 3-400m (EUR 40-55m) • Employees: 7,300 • Equity: DKK 2.8bn (EUR 400m) • Market Cap: DKK 4.0bn (EUR 550m) • Balance sheet: Positive net financial assets at year end

  4. Back to Core Business • 1882 F.L.Smidth foundedDelivery of machinery to production of cement • 1884 Aalborg Portland establishedProduction of cement • 20th Century Global cement group • End of 20th Century ConglomerateDelivery of machinery and –plants to production of cement, building materials, aircraft maintenance, environment, packaging, transportation, etc. • Beginning of 21st Century Focus on core competencesGlobal provider of machinery, equipment, systems and services including complete production lines and plants for the global cement and minerals industries

  5. Structural changes in recent years

  6. FLS Industries Business Units FLS Industries Other activities Continuing Activities Dansk Eternit Holding F.L.Smidth Densit F.L.Smidth Automation WIND UP FLS miljø F.L.Smidth Materials Handling F.L.Smidth Airtech Aalborg Portland SOLD FFE Minerals Unicon SOLD Pfister Ventomatic MAAG Gear

  7. FLS Industries Business Units FLS Industries Continuing Activities F.L.Smidth supplies complete plants, equipment, single machine units, spare parts, know-how, services and maintenance to the cement industry world-wide F.L.Smidth F.L.Smidth Automation F.L.Smidth Materials Handling F.L.Smidth Airtech FFE Minerals Pfister Ventomatic MAAG Gear

  8. FLS Industries Business Units FLS Industries Continuing Activities FFE Minerals is a worldwide supplier of machinery, operating and maintenance services to the metallic mining and mineral industries as well as to the lime and paper industries F.L.Smidth F.L.Smidth Automation F.L.Smidth Materials Handling F.L.Smidth Airtech FFE Minerals Pfister Ventomatic MAAG Gear

  9. FLS Industries Business Units FLS Industries Continuing Activities Pfister is one of the world’s leading suppliers of dosing equipment to the cement industry and related industries F.L.Smidth F.L.Smidth Automation F.L.Smidth Materials Handling F.L.Smidth Airtech FFE Minerals Pfister Ventomatic MAAG Gear

  10. FLS Industries Business Units FLS Industries Continuing Activities Ventomatic is one of the world’s leading suppliers of complete packing lines to the cement industry and related industries F.L.Smidth F.L.Smidth Automation F.L.Smidth Materials Handling F.L.Smidth Airtech FFE Minerals Pfister Ventomatic MAAG Gear

  11. FLS Industries Business Units FLS Industries Continuing Activities MAAG Gear is an international supplier of gears and gear units to the cement industry and related industries F.L.Smidth F.L.Smidth Automation F.L.Smidth Materials Handling F.L.Smidth Airtech FFE Minerals Pfister Ventomatic MAAG Gear

  12. Project Centre Production Sales Office Geographical presence The World excl. Europe

  13. Production Project Centre Sales Office Geografical presence Europe

  14. Key machinary to production of cement Rawmills Burners Kilns Coolers Cement mills F.L.Smidth no. 1globally within all segments with a 40-60% market share F.L.Smidth – Competences and competitive position • Design and production of complete cement production lines and plants F.L.Smidth no. 1 globally With a 50-60% market share

  15. Cement Plant – Flow chart

  16. From tender to contract Approximately 3 months. 3 – 9 months Negotiations Contract Quotation award Modifications Contract draft Financial, legal and commercial conditions Performance warranties & conditions Logistic information Technical specifications Sales price Cost price estimates Equipment list Flow sheet, Proposal drawings EnquiryTender Documents Proces design

  17. From contract to completion Project management Planning / Logistics Accounting / Invoicing Commissioning Supervision of erection Shipping docs. and dispatch Inspection and expedition Procurement Manufacturing/Documentation General Arrangement Drawings/specifications Process design Contract Order list 1st year 2nd year 3rd year

  18. Major contracts under implementation

  19. Research and Development R&D focus areas • Environmental protection (CO2, NOx and other emissions, etc.) • Reduced production costs (Energy consumption, productivity, etc.) • Top priority: Reduced use of fossil fuels Recent invention; HOTDISC • Handling of alternative fuelswithout a prior reduction in size • Integral part of the kiln system => both combustion gasses and residual products are used in the production process • Types of alternative fuelsCar and truck tyres, wood waste, paper sludge, municipal waste, etc.

  20. Global cement consumption Average growth 3.5%

  21. New cement kiln capacity Average 1980 – 2003; 24m tonnes per year Excl. China

  22. Demand for new cement kiln capacity • New cement kiln capacity contracted in 2003; ~ 25m tonnes on a yearly basis (on a par with the average of the past 25 years) • Demand for new capacity supported by steady growth in global cement consumption • Annual growth in global cement consumption 3% Annual growth in world population; 70m citizens Average cement consumption per capita (p.t. 275 kg) – increasing over time • Replacement and modernisation of old cement plants • Estimated installed capacity worldwide; 1.8bn tonnes per year • If lifetime of cement plant 100 years => 1% of capacity (18m tonnes) replaced p.a.

  23. Market for extraction of minerals • FFE Minerals - a niche player in the market for extraction of minerals which is five to nine times as large as the cement market • Growing demand for minerals in Asia, in particular China • Increasing raw material prices and investments among producers

  24. FFE Minerals – Product Range Products & Services • Provider of processes and systems which include primary crushing plants, milling systems, and wet or dry classification systems for all minerals, including iron, gold, copper, nickel, lead, zinc and coal. • Provider of total pyrometallurgical solutions from R&D through to erection and commissioning for alumina and bauxite, lime, pulp and paper and the metalliferous industries. • Provider of total service, maintenance, asset management and operational services to the minerals and metalliferous industries.

  25. Minerals Product Spectrum & Competitive position COLD BUSINESS SEGMENT HOT BUSINESS SEGMENT MATERIALS HANDLING PROCESSING PYRO crushers conveyors feeders mills cyclones floatation pumps dewatering rotary fluid bed suspension FFE MineralsNo. 1-2 FFE MineralsNo. 1-2 New business segment FFE MineralsNo. 1-2 FFE Minerals – a niche playerHeritage brand namesStaff with good minerals industry experiencePresence in local marketsTechnical edge for large scale equipment Consolidation in the industry Merger of Nordberg & Svedala to form Metso MineralsAcquisition of Nordberg grinding business and Luigi Metallurgie by Outokumpu Acquisition of Alstrom Machinery by AndritzMerger of Dorr-Oliver & Eimco

  26. FFE Minerals – Future Growth FFE Minerals will grow through: • Continued focus on growth in spare parts and services segment • Integration of new technology and increased product portfolio • Leveraging the materials handling capabilities of F.L.Smidth into the minerals processing market • Strategic alliances with peer partners to strengthen FFE Minerals’ position • Acquisition of bolt-on technologies • Research and development

  27. Same technology to two different industries CEMENT MINERALS Automation Grinding Ex. ATOX mills Materials Handling Air pollution control Preheating Ex. Burners Calcination Ex. Gas suspension calciners Maintenance Cooling Training Ex. SF Cross Bar

  28. Current Market Developments Cement • Positive trends in demand for new kiln capacity continue; 30m tpy new kiln capacity contracted in 2004 so far • Temporary slowdown in Chinese market • Increased level of activity in Vietnam, India, Pakistan, Middle East and USA Minerals • Positive trend in demand for new capacity continues, although at a slower pace than anticipated • High energy and steel prices as well as possible royalty on mined ore has temporarily postponed investment decisions • Geographically, India remains a very active market

  29. How to reach the 5% EBT-target A more detailed strategic plan for the improvement of profitability to be concluded by the end of 2004 Focus areas: • Sales policies • Risk control • Contract administration • Project orientation • Standardisation • Sourcing from India & China • Integrated geographical presence • Aftermarket services • Research & product-development • IT-development • Synergies in Cement / Minerals • Expansion within Minerals

  30. Why invest in FLS Industries ? A focused company • with a unique global market position • supported by steady growth in global cement consumption • aiming for a 5% EBT ratio

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