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FLSmidth Annual Report 2013

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FLSmidth annual report for 2013 was released on 13 February 2014. Best viewed on a full screen mode, this annual report informs the reader about how well FLSmidth's business is doing financially, as …

FLSmidth annual report for 2013 was released on 13 February 2014. Best viewed on a full screen mode, this annual report informs the reader about how well FLSmidth's business is doing financially, as well as FLSmidth's growth strategies and new financial targets projected for the next year.

Published in: Investor Relations

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  • 1. Presentation of Annual Report 2013 Annual Report 2013 13 February 2014 1
  • 2. Key highlights 2013 executed as planned and communicated Focus on managing the cyclical downturn and preparing for the upturn Eyes set on sustainable profitable growth ROCE > 20% Annual Report 2013 13 February 2014 2
  • 3. Safety Safety above all Lost Time Injury Frequency Rate (LTIFR) 3.9 in 2013 Number of lost time injuries per million working hours 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 LTIFR (annually) -17% vs. 2012   4.2 2011 4.7 2012 Safety ambition: No injuries 2015 LTIFR target: < 3 3.9 2013 Annual Report 2013 13 February 2014 3
  • 4. Guidance Overall market trends unchanged  Mining capex     Cement capex     Downturn to continue throughout 2014 Flattish or slight decline in 2015 Slow growth in 2016 At a low level since 2009 Similar or slightly higher level of activity in 2014 Recovery to commence in 2015 Customer Services resilient and growing Annual Report 2013 13 February 2014 4
  • 5. Key highlights Q4 2013 Key financial highlights Q4 2013  Order intake reflecting business environment  Three large capital orders received in Material Handling and Cement  Large 5-year O&M contract received in Customer Services  Revenue as expected  Currency headwind -7% on order intake and revenue  Positive cash flow from operating activities, but not enough  EBITA impacted by planned costs and Buxton arbitration award  Efficiency Programme on track Annual Report 2013 13 February 2014 5
  • 6. Efficiency Programme Efficiency Programme update DKK 750m efficiency improvement by 2015 DKK +498m EBITA improvement run-rate: 33% (SG&A* costs) 23% (SG&A costs and Gross profit) 37% (COGS**) 6% (COGS and SG&A costs) No EBITA effect Started 1% (product pruning) *) SG&A: Sales, ceneral and administration costs **) COGS: Costs of goods sold Annual Report 2013 13 February 2014 6
  • 7. Efficiency Programme Efficiency Programme on track Targeted full-year effect in 2015 2013 effect Estimated fullyear effect (run-rate) Headcount reductions -1,100 -898 -1,102 Location reductions >20 25 41 One-off costs DKK -500m DKK -428m DKK -428m EBITA improvement DKK+750m p.a. DKK ~0m DKK +498m (2013-2014 effect) (+78m vs. Q3’13E) (2013 full year effect) Annual Report 2013 13 February 2014 7
  • 8. Results Q4 2013 Financial performance in Q4 2013 Q4 2013 Q4 2012 Change Change FX adjusted Order intake 5,616 6,104 -8% -1% Revenue 7,420 8,395 -12% -5% Gross margin 18.6% 23.5% 222 893 EBITA margin 3.0% 10.6% Net results -179 462 77 1,532 FLSmidth & Co. A/S (DKKm) EBITA CFFO -75%  Order intake record high had Nigerian O&M contract been fully included  Revenue decreased 5% (adjusted for currency) comparing to a record high Q4’12  EBITA margin 8.7%, adjusted for special items Annual Report 2013 13 February 2014 8
  • 9. Annual Report 2013 Financial performance in 2013 Guidance 2013 FLSmidth & Co. A/S 2013 Order intake FLSmidth & Co. A/S (DKKm) Order backlog 20,911 Q2 2013 22,312 27,727 -25% Q2 2012 Change 29,451 -24% Order intake Revenue 5,626 26,923 7,246 26,284 Revenue Gross margin 6,456 19.3% 5,653 24.8% (DKKm) EBITA 287 977 2012 Change 4.4% 3.6% 2% -22% 26-28bn +14% 10.2% 9.7% EBIT Net results 195 -784 1,303 323 EBIT margin CFFO CFFO 3.0% -157 -51 -567 14,817 CFFI Employees2) Working capital ROCE Employees 2,382  Revenue increased 2% organically 2,559 576 -62% -50% EBITA margin 3.5-4.5% -39% 5.7% 1,720 333 -3,398 12,717 -83% +17%-0.8bn 1,950 +22% 6% 18% 15,317 15,900  Order intake impacted by mining capex downturn 7-8%  Gross margin impacted by special items  EBITA margin 8.2%, adjusted for special items  CFFO negatively impacted by one-off costs  CFFI strictly managed  ROCE 14% adjusted for special items -4% Annual Report 2013 13 February 2014 9
  • 10. Annual Report 2013 Service activities accounted for 49% of 2013 orders Order intake 2013 Revenue 2013 Capital business Service business Capital business 36% 51% 64% 2012: 37% Service business 49% 2012: 41% Annual Report 2013 13 February 2014 10
  • 11. Annual Report 2013 Order intake decreased 8% in Q4 Order intake DKKm 10,000 8,000 (quarterly) Q4 order intake by industry -8% vs. Q4 2012 Other Announced O&M orders Announced capital orders Unannounced orders Cement 34% 39% 6,000 4,000 Fertilizers Iron ore 2,000 0 (quarterly) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 0% 2% 6%5% Coal Gold 14% Copper  Order intake increased 5% adjusted for O&M contracts  Order intake would have been record high in Q4 had the principle for recognition of O&M order intake not been changed Annual Report 2013 13 February 2014 11
  • 12. Annual Report 2013 Revenue increased sequentially in Q4 Revenue DKKm (quarterly) -12% vs. Q4 2012 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0  Organic Revenue growth -5% in Q4’13  Service activities accounted for 34% of Q4’13 revenue Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  Pattern of seasonally increasing revenue over the calendar year broken in Q3’13 but reestablished in Q4’13  Revenue in Q4’12 (the comparison quarter) was record high Annual Report 2013 13 February 2014 12
  • 13. Annual Report 2013 Gross margin impacted by special items Gross profit DKKm -30% vs. Q4 2013 2,000 1,500 Gross margin Q4’13 vs. Q4’12 (quarterly) 26.3% Gross margin - by division 40% 18.6% 23.5% 30% 1,000 500 28.8% 20% 10% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 24.7% 24.0% 27.3% 21.6% 14.7% Q4’13 2.2% Q4’12 Q4’13 Customer Services Material Handling Q4’12 6.8% Q4’12 Q4’13 Mineral Processing Q4’12 Q4’13 Cement  Decline in gross margin due to one-off costs related to the Efficiency Programme, the Buxton arbitration award and execution of lower margin order backlog in Cement Annual Report 2013 13 February 2014 13
  • 14. Annual Report 2013 SG&A ratio impacted by Efficiency Programme in Q4 SG&A costs* DKKm (quarterly) 9% vs. Q4 2012 1,200 1,000 12.6% 11.9% SG&A ratio* 14.7% 18% 15% 800 12% 600 9% 400 6% 200 3% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  SG&A ratio up 2.8%-points vs. Q4’12  SG&A ratio impacted by efficiency programme oneoff costs in Q4’13  ‘Underlying’ SG&A ratio (adjusted for EP) 12.9% in Q4’13 *) SG&A ratio: SG&A costs divided by revenue Annual Report 2013 13 February 2014 14
  • 15. Annual Report 2013 EBITA margin 3.0% in Q4 EBITA DKKm -63% vs. Q3 2012 1,000 800 12.9% EBITA bridge reported vs. adjusted (quarterly) EBITA margin 15% 10.6% 12% 600 9% 400 200 3.0% 6% 3% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 DKKm EBITA margin 800 8.7% 600 400 200 0 261 3.0% 643 160 222 EBITA Q4'13 Buxton Efficiency EBITA Q4'13 programme adjusted one-off costs  EBITA margin down to 3.0% primarily due Efficiency programme one-off costs. EBITA-margin 8.7% adjusted for special items Annual Report 2013 13 February 2014 15
  • 16. Annual Report 2013 Return on Capital Employed decreased to 6% Average capital employed DKKm 18,000 ROCE* (quarterly) 6% in Q4 2013 ROCE target ROCE capital employed DKKm 30% 25% 15,000 12,000 20% 12,000 9,000 15% 9,000 6,000 10% 6,000 3,000 5% 3,000 0% (end of quarter) 18,000 15,000 Capital employed 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  ROCE decreased 11%-points vs. Q4’ 12 due to declining EBITA margin and increased average capital employed as a result of acquisitions made in 2012 and higher average working capital  ROCE 14% adjusted for special items (EBITA impact) *) ROCE: Return on capital employed calculated on a before tax basis, including goodwill and based on last 12 months’ EBITA and average capital employed Annual Report 2013 13 February 2014 16
  • 17. Annual Report 2013 Decline in advanced payments*) in 2013 DKK -2.2bn absorbed in net working capital in 2013 Net working capital DKKm Change in net working capital in Q4 DKKm End Q4 2013 vs. End Q3 2013 4,000 3,000 2,500 691 3,000 2,000 1,500 242 353 122 361 2,000 1,000 500 1,000 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 2,382 2,285 - *) Advance payments: Work-in-progress net + prepayments net Annual Report 2013 13 February 2014 17
  • 18. Special items Special items eroded earnings and cash flow in 2013 EBITA (DKK) EBIT (DKK) Cash-effect Material Handling one-off costs Q2 -323m -323m Yes Expected costs related to Efficiency Programme Q3-Q4 -428m -428m Yes Inventory write-down Q3 -203m -203m No -901m No Ludowici impairment loss Q3 Buxton arbitration award Q4 -160m -160m Yes Sale of assets Q3 +37m +37m Yes Other costs of non-recurring nature Q1-Q2 -163m -163m Yes -1,240m -2,141m Total full-year impact Annual Report 2013 DKK -673m 13 February 2014 18
  • 19. Annual Report 2013 Capital structure affected by special items Equity DKKm NIBD (quarterly) Equity ratio 25% Equity ratio Equity ratio target (self-imposed) DKKm (quarterly) Gearing 3.6x EBITDA NIBD / EBITDA Gearing target (self-imposed) 50% 5,000 8,000 40% 4,000 4.0 6,000 30% 3,000 3.0 4,000 20% 2,000 2.0 2,000 10% 1,000 1.0 10,000 0 0% 5.0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  Gearing temporarily impacted by one-off costs booked in 2013 and currently outside target of maximum 2 times EBITDA  Gearing expected to be back on target by the end of 2014 Annual Report 2013 13 February 2014 19
  • 20. Business practice More prudent business practices  More stringent approach to capitalisation of internal costs related to R&D development projects, including the ERP/business system  More stringent assessment of ageing inventory items  Cash flow from investments to develop more in line with depreciation and amortisation (excl. effect of purchase price allocations)  New O&M contracts included in order intake and order backlog with 12 months rolling revenue only Annual Report 2013 13 February 2014 20
  • 21. Dividend Proposed dividend of DKK 2 per share  Dividend policy implies no dividend for 2013  Capital structure outside targeted range implies no dividend for 2013 However...  Capital structure and profits expected to normalise in 2014  Proposed dividend DKK 2 per share equivalent to DKK 106m Annual Report 2013 13 February 2014 21
  • 22. Targets Long term financial targets unchanged Financial targets Annual revenue growth Above market average EBITA margin 10-13% ROCE* > 20% Tax rate 32-34% Equity ratio >30% Financial gearing** <2 Pay-out ratio 30-50% *) ROCE: Return on capital employed calculated on a before tax basis as EBITA divided by average Capital Employed including goodwill **) Financial gearing: NIBD / EBITDA Annual Report 2013 13 February 2014 22
  • 23. Guidance Group guidance 2014 Group Revenue Guidance 2014 2013 DKK 21-24bn DKK 26.9bn 7-9% 3.6% CFFI* ~DKK -0.4bn DKK -0.6bn ROCE 11-13% 6% EBITA margin Annual Report 2013 13 February 2014 23
  • 24. Guidance Divisional guidance 2014 Segments Guidance 2014 Revenue (DKK) (2013) EBITA margin (2013) Customer Services 7.5-8.5bn (7.6bn) 13-15% (9.1%) Material Handling 3.5-4.5bn (4.6bn) 0-2% (-11.2%) Mineral Processing 5.5-6.5bn (9.3bn) 6-8% (8.2%) Cement 3.5-4.5bn (5.2bn) 5-7% (2.4%) Cembrit 1.4bn (1.4bn) 0-2% (-4.4%) Annual Report 2013 13 February 2014 24
  • 25. Key take-aways 2013 executed as planned and communicated Focus on managing the cyclical downturn and preparing for the upturn Eyes set on sustainable profitable growth ROCE > 20% Annual Report 2013 13 February 2014 25
  • 26. Annual Report 2013 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 costs and 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. Annual Report 2013 13 February 2014 26
  • 27. Questions & Answers Next update: Annual General Meeting on 27 March 2014 Follow us on Twitter and LinkedIn Annual Report 2013 13 February 2014 27
  • 28. Appendices - backup slides Annual Report 2013 13 February 2014 28
  • 29. Annual Report 2013 Divisional developments in Q4’13 vs. Q4’12  Customer Services –unannounced orders increased  Material Handling – positive EBITA margin adjusted for special items  Mineral Processing – impacted by mining capex downturn  Cement – EBITA impacted by Buxton arbitration award order intake -17%, revenue -6%, EBITA -34% order intake 146%, revenue 11%, EBITA DKK -29m order intake -58%, revenue -29%, EBITA -67% order intake 87%, revenue 0%, EBITA -44m Annual Report 2013 13 February 2014 29
  • 30. Customer Services Annual Report 2013 13 February 2014 30
  • 31. Customer Services Order intake increased excluding O&M Order intake DKKm 4,000 3,000 Revenue (quarterly) -17% vs. Q4 2012 DKKm Announced O&M orders Announced capital orders Unannounced orders 2,500 (quarterly) -6% vs. Q4 2012 EBITA margin 20% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 8% 500 0 12% 1,000 1,000 16% 1,500 2,000 2,000 4% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  Order intake increased adjusting for changed principle for recognition of O&M contracts  Revenue growth of 2% adjusted for currency Annual Report 2013 13 February 2014 31
  • 32. Customer Services Customer Services Q4 2013 Q4 2012 Change 2013 2012 Change Order intake 2,032 2,442 -17% 8,005 9,202 -13% Order backlog 8,046 8,159 -1% 8,046 8,159 -1% Revenue 2,000 2,129 -6% 7,565 7,073 7% EBITDA 200 317 -37% 768 1,012 -24% EBITA 195 293 -34% 691 930 -26% 9.8% 13.8% 9.1% 13.1% 151 259 411) 7872) 7.6% 12.2% 0.5%1) 11.1%2) (DKKm) EBITA margin EBIT EBIT margin -42% Expected 2014 DKK 7.5-8.5bn 13-15% 1) Including Ludowici impairment loss of DKK -539 2) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m Annual Report 2013 13 February 2014 32
  • 33. Material Handling Annual Report 2013 13 February 2014 33
  • 34. Material Handling Strong order intake in challenging market Order intake DKKm 2,000 1,500 Revenue (quarterly) 146% vs. Q4 2012 Announced orders Unannounced orders 1,000 500 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 DKKm 2,400 1,800 1,200 600 0 -600 -1,200 -1,800 -2,400 11 11 11 (quarterly) 11% vs. Q4 2012 EBITA margin 40% 30% 20% 10% 0% -10% -20% -30% -40% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  Strong order intake due to large order in Qatar  EBITA margin adjusted for special items +2.9% in Q4 Annual Report 2013 13 February 2014 34
  • 35. Material Handling Material Handling Q4 2013 Q4 2012 Change 2013 2012 Change Order intake 1,655 675 146% 4,937 4,565 8% Order backlog 4,465 4,773 -6% 4,465 4,773 -6% Revenue 1,472 1,326 11% 4,552 4,997 -9% EBITDA -15 -167 -455 -140 EBITA -29 -177 -511 -186 -2.0% -13.3% -11.2% -3.7% -67 -203 -598 -247 -4.6% -15.3% -13.1% -4.9% (DKKm) EBITA margin EBIT EBIT margin Expected 2014 DKK 3.5-4.5bn 0 -2% Annual Report 2013 13 February 2014 35
  • 36. Interim report Q3 2013 Status on legacy projects in Material Handling  No new problematic projects identified  14 projects out of a total portfolio of 182 projects in the Material Handling Business Unit are currently regarded as risky (end of Q3 2013: 15 projects)  These projects accounted for DKK 481m or 11% of the backlog at the end of Q4  The one-off costs of DKK 323m realised in Q2 cover future losses related to the legacy projects Annual Report 2013 13 February 2014 36
  • 37. Mineral Processing Annual Report 2013 13 February 2014 37
  • 38. Mineral Processing Declining order intake due to mining capex downturn Order intake DKKm 3,000 2,500 Revenue (quarterly) -58% vs. Q4 2012 DKKm Announced orders Unannounced orders 2,000 1,500 1,000 500 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 (quarterly) -29% vs. Q4 2012 3,500 3,000 2,500 2,000 1,500 1,000 500 0 EBITA margin 21% 18% 15% 12% 9% 6% 3% 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  Drop in unannounced orders vs. Q1-Q3’13 expected to be temporary  Revenue declined due to decreasing contribution from orders received in 2011-2012  EBITA margin impacted by special items Annual Report 2013 13 February 2014 38
  • 39. Mineral Processing Mineral Processing Q4 2013 Q4 2012 Change 2013 2012 Change Order intake 1,025 2,467 -58% 5,559 10,318 -46% Order backlog 4,993 9,589 -48% 4,993 9,589 -48% Revenue 2,376 3,358 -29% 9,256 9,512 -3% EBITDA 174 483 -64% 850 1,079 -21% EBITA 153 457 -67% 757 1,000 -24% 6.4% 13.6% 8.2% 10.5% 88 426 2111) 7732) 3.7% 12.7% 2.3%1) 8.1%2) (DKKm) EBITA margin EBIT EBIT margin -79% Expected 2014 DKK 5.5-6.5bn 6-8% -73% 1) Including Ludowici impairment loss of DKK -362 2) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m Annual Report 2013 13 February 2014 39
  • 40. Cement Annual Report 2013 13 February 2014 40
  • 41. Cement Strong order intake due to large orders Order intake DKKm 2,500 2,000 Revenue (quarterly) 87% vs. Q4 2012 DKKm 2500 Announced orders Unannounced orders (quarterly) 0% vs. Q4 2012 EBITA margin 25% 1,000 20% 1500 15% 1000 1,500 2000 10% 500 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013 5% 0 500 0% -500 -5% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  Increased order intake due to large orders  EBITA impacted by efficiency programme one-off costs and Buxton arbitration award  EBITA margin adjusted for special items 10.2% in Q4 Annual Report 2013 13 February 2014 41
  • 42. Cement Cement Q4 2013 Q4 2012 Change Order intake 1,150 615 Order backlog 5,389 Revenue (DKKm) Expected 2014 Change 2013 2012 87% 3,417 4,599 -26% 7,585 -29% 5,389 7,585 -29% 1,496 1,498 0% 5,201 4,214 23% EBITDA -35 317 161 788 -80% EBITA -44 307 124 752 -84% -2.9% 20.5% 2.4% 17.8% -58 304 95 6691) 1.8% 15.9%1) EBITA margin EBIT EBIT margin -3.9% 20.3% DKK 3.5-4.5bn 5-7% -86% 1) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m Annual Report 2013 13 February 2014 42
  • 43. Annual Report 2013 Order intake growth by segment Order intake growth Q4’13 vs. Q4’12 Growth Organic Acquisitions Currency Total Customer Services Material Handling Mineral Processing Cement Announced orders in Q4’13 Group -10% 157% -52% 92% -1% 0% 0% 0% 0% 0% -7% -11% -6% -5% -17% 146% -58% 87% Industry Country/ Region Cement (O&M) Value DKK Booked by (Division) Nigeria Undisclosed Customer Services Building materials Qatar 1,000 Material Handling -7% Cement Qatar 515 Cement -8% Cement Indonesia 300 Cement Total 1,815  Organic order intake growth of -1% in Q4 2013  Service activities accounted for 45% of Q4 orders  ‘Dangote’ – the largest order ever - was received in Q4 2013 *) Operation & Maintenance Annual Report 2013 13 February 2014 43
  • 44. Annual Report 2013 Revenue growth by segment Order backlog Revenue growth Q4’13 vs. Q4’12 DKKm Growth Customer Services Material Handling Mineral Processing Cement Group Organic 2% 22% -22% 3% -5% Acquisitions 0% 0% 0% 0% 0% -8% -11% -7% -3% -7% -6% 11% -29% 0% -12% Currency Total 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 (quarterly) -24% vs. Q4 2012 Book-to-bill ratio* 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  Organic revenue growth of -5% in Q4 2013  Service activities accounted for 34% of Q4 revenue  Expected backlog conversion to revenue: 65% in 2014, 20% in 2015 and 15% in 2016 and beyond. O&M* contracts accounted for DKK 5.1bn (23%) of the order backlog at the end of Q4 *) Order backlog divided by last-twelve-months revenue Annual Report 2013 13 February 2014 44
  • 45. Special items EBITA margins adjusted for special items Special items Q4’13 Growth Customer Services Material Handling Mineral Processing Cement Cembrit Group Reported EBITA% 9.8% -2.0% 6.4% -2.9% -7.0% 3.0% Total EBITA impact -97m -72m -15m -196m -41m -421m 14.6% 2.9% 7.1% 10.2% 4.0% 8.7% Underlying EBITA% Special items 2013 Growth Customer Services Material Handling Mineral Processing Cement Cembrit Group Reported EBITA % 9.1% -11.2% 8.2% 2.4% -4.4% 3.6% Total EBITA impact -316m -512m -88m -265m -59m -1,240m Underlying EBITA % 13.3% 0.0% 9.1% 7.5% -0.3% 8.2% Annual Report 2013 13 February 2014 45
  • 46. Annual Report 2013 Emerging markets 66% of revenue in 2013 Revenue 2013 Revenue 2013 – classified by country category – classified by geography Europe BRIC countries (Brazil, Russia, India, China) High-income countries (Cf. World Bank’s definition) 20% Asia 34% Australia 46% Developing countries 16% 25% 18% North America 7% 14% 20% Africa South America (Exclusive of BRIC) Annual Report 2013 13 February 2014 46
  • 47. Annual Report 2013 Segment developments in 2013 EBITA 2013 Revenue 2013 – classified by segment – classified by segment Cement Cembrit 5% 19% Customer Services 77% 71% 27% 13% -7% -52% Mineral Processing 33% 16% Material Handling Customer Material Mineral Cement Cembrit Services Handling Processing Annual Report 2013 13 February 2014 47
  • 48. Annual Report 2013 Highest revenue but lowest order intake in Mineral Processing in 2013 Order intake Q4 2013 Revenue Q4 2013 – classified by segment – classified by segment Cembrit Cement 19% 5% Cement Customer Services Customer Services 20% 26% 35% Mineral Processing 17% Mineral Processing 31% 19% Material Handling 28% Material Handling Annual Report 2013 13 February 2014 48
  • 49. Annual Report 2013 Service activities accounted for 45% of Q4 orders Revenue Q4 2013 Capital business Service business Order intake Q4 2013 Capital business 34% 66% Service business 45% 55% Annual Report 2013 13 February 2014 49
  • 50. Annual Report 2013 EBITA by segment EBITA margin Q4 2013 EBITA Q4 2013 – classified by segment – classified by segment 195 9.8% 153 -29 Customer Services Material Mineral Handling Processing 6.4% -44 Cement -2.0% Customer Services -2.9% Material Mineral Handling Processing Annual Report 2013 Cement 13 February 2014 50
  • 51. Annual Report 2013 Free cash flow of DKK -24m in Q4 2013 CFFO DKKm CFFI (quarterly) DKK 77m in Q4 2013 DKKm (quarterly) DKK -101m in Q4 2013 1600 600 1200 0 800 -600 400 -1,200 0 -1,800 -400 -2,400 -800 -3,000 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2012 2012 2012 2013 2013 2013 2013  Cash flow from operating activities (CFFO) impacted by Efficiency Programme one-off costs and Buxton in Q4’13  Cash flow from investments (CFFI) reflects that acquisitions are temporarily on hold and that other investments are managed closely Annual Report 2013 13 February 2014 51
  • 52. Annual Report 2013 Number of employees decreasing  Number of employees decreased by 583 in 2013 (from 15,900 to 15,317) Number of employees Q4’13 vs. Q4’12 - by segment  Decline explained by Efficiency Programme and business right-sizing  Increase of several hundred staff related to O&M contracts 6,003 5,847 3,435 3,306 Q4’13 Q4312 Q4’13 Customer Services Material Handling Q4’12 2,833 2,840 Q4’12 Q4313 Mineral Processing Annual Report 2013 2,554 2,251 Q4’12 Q4’13 Cement 13 February 2014 52
  • 53. Guidance Guidance developments in 2013 February 2013 May 2013 August 2013 Revenue DKK 27-30bn Low end of range DKK 26-28bn EBITA margin 8-10% Low end of range 4-5% ROCE 15% 7-8% CFFI DKK -1bn December 2013 DKK -0.8bn Reasons for changed guidance: Market developments Market developments, special items and Cembrit Annual Report 2013 3.5-4.5% Buxton arbitration award 13 February 2014 53
  • 54. Guidance Divisional guidance developments in 2013 Guidance 12 February 2013 Revenue Guidance 7 November 2013 EBITA margin Revenue EBITA margin Customer Services DKK 8-10bn 13-15% DKK 7-8bn 10-11% Material Handling > 0% DKK 4-5bn -11% to -12% Mineral Processing DKK 10-12bn 8-10% DKK 9-10bn 8-9% Cement DKK 5-7bn 6-8% DKK 5-6bn 5-6%1) Cembrit Discontinued DKK 1.4bn -4% DKK 4-6bn Guidance changed to reflect market developments and allocation of special items to divisions 1) EBITA margin not adjusted for Buxton DKK 160m arbitration award Annual Report 2013 13 February 2014 54