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Presentation of Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 1
Forward-looking statements
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 2
FLSmidth & Co. A/S’ financial rep...
Group strategy & long term financial targets reconfirmed
Launch of Efficiency Programme with annual EBITA improvement of D...
4
Customer
intimacy
Product
leadership
Operational
excellence
Values
8/23/2013
Group Strategy verified by Group CEO
“We wi...
Stronger focus on:
Organic growth and integration
Quality and safety
Research and development
People and business developm...
Start 23rd August 2013
Responsible CEO and Group Executive Management Team
Expected full year effect 2015
Annual EBITA imp...
Key elements of Efficiency Programme
Efficiency programme
23 August 2013Interim Report Q2 2013 7
Follow-up and external re...
Current market trends
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 8
Mining capex outlook deteriorated furt...
Order intake down 22%
- attributable to all segments but
Customer Services
Revenue up 14% attributable to all
segments but...
Order intake decreased 22% in Q2 2013
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 10
Order intake by indus...
Revenue increased 14% in Q2 2013
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 11
0
1,000
2,000
3,000
4,000
...
Gross margin development
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 12
Gross margin
24.8% 24.3%
18.3%
10%...
Reassessment of order backlog based on a more
prudent risk approach
Minimised risk of future negative surprises
One-off im...
EBITA margin down primarily due to Material Handling one-off of DKK -323m
Underlying EBITA (adjusted for MH one-off) is DK...
0%
2%
4%
6%
8%
10%
12%
0
500
1,000
1,500
2,000
2,500
3,000
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013...
Customer Services performed well on all parameters
order intake +21%, revenue +26%, EBITA +29%
Material Handling is the on...
Cembrit sales process stopped
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 17
Satisfactory sales price not ...
Ludowici acquisition impairment loss of DKK -800m
Deteriorating outlook for mining capex in general and for the
Australian...
Revenue EBITA EBIT
Material Handling one-off costs in Q2 DKK -323m DKK -323m
Expected costs related to efficiency programm...
Group Guidance 2013 Previous guidance
Revenue DKK 26-28bn DKK 27-30bn
EBITA margin 4-5% 8-10%
CFFI ~DKK -0.8bn DKK -1bn
RO...
Divisional Guidance 2013 updated
Guidance
23 August 2013Interim Report Q2 2013 21
Segments Guidance 2013
Revenue (previous...
Group strategy & long term financial targets reconfirmed
Launch of Efficiency Programme with annual EBITA improvement of D...
Questions &
Answers
Next update: Q3 Interim Report on 6 November 2013
Follow us on Twitter and LinkedIn
23 August 2013Inte...
Appendices
- backup slides
23 August 2013Interim Report Q2 2013 24
Customer Services
23 August 2013Interim Report Q2 2013 25
6% organic order intake growth and 11% organic revenue growth
Improved order intake in Q2 mainly due to acquisitions and h...
Customer Services
Customer Services
23 August 2013Interim Report Q2 2013 27
(DKKm)
Q2
2013
Q2
2012
Change
Full-year
2012
E...
Material Handling
23 August 2013Interim Report Q2 2013 28
Decreased order intake reflects continued challenging market conditions, increased rigorousness in the
proposal phase and ...
Material Handling
Material Handling
23 August 2013Interim Report Q2 2013 30
(DKKm)
Q2
2013
Q2
2012
Change
Full-year
2012
E...
Mineral Processing
23 August 2013Interim Report Q2 2013 31
Declining order intake and lower tender activity as the market for Mineral Processing remains soft
High revenue as a resul...
Mineral Processing
Mineral Processing
23 August 2013Interim Report Q2 2013 33
(DKKm)
Q2
2013
Q2
2012
Change
Full-year
2012...
Cement
23 August 2013Interim Report Q2 2013 34
0
500
1000
1500
2000
2500
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Stable level of unannoun...
Cement
Cement
23 August 2013Interim Report Q2 2013 36
(DKKm)
Q2
2013
Q2
2012
Change
Full-year
2012
Expected
2013
Order int...
Service activities accounted for 44% of Q2 orders
Order intake decreased mainly due to lower value of announced orders in ...
Announced orders in Q2 2013
Iron ore India DKK 200m (MH)
Cement Equatorial Guinea DKK 505m (C)
Cement India DKK 200m (C)
3...
Estimated organic revenue growth of 14% and acquisitive revenue growth of 7% in Q2 2013
Service activities accounted for 4...
Revenue and order intake by segment
32%
17%
28%
23%
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 40
Order i...
Service activities accounted for 44% of Q2 orders
Interim Report Q2 2013
Interim Report Q2 2013 41
Revenue Q2 2013
23 Augu...
SG&A ratio down vs. last year and sequentially
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 42
SG&A ratio d...
EBITA by segment
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 43
EBITA Q2 2013
– classified by segment
107%...
Negative CFFO due to taxes paid, financial payments and increased working capital
CFFI reflects that acquisitions are temp...
Capital structure developments
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 45
NIBD* (quarterly)
DKKm
-0.8
...
Number of employees
Interim Report Q2 2013
23 August 2013Interim Report Q2 2013 46
Number of employees Q2’13 vs. Q2’12
- b...
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FLSmidth Second Quarter Interim Report 2013 Presentation

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FLSmidth 2nd quarter interim report for 2013 was released on 23 August 2013. Best viewed on a full screen mode, this first quarterly 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 next quarter. The key highlights include: a) Group strategy & long term financial targets reconfirmed b) ƒLaunch of Efficiency Programme with annual EBITA improvement of DKK +750m c) Deteriorating outlook for mining capital projects – Pockets of recovery in Cement d) ƒCustomer Services performing well e) Group revenue +14% & order intake -22% ƒf) Group EBITA margin 4.4% - Underlying Group EBITA margin 9.4% g) ƒLudowici impairment loss (DKK -800m) & inventory write-down (DKK -200m) h) ƒFuture risks in Material Handling minimised (DKK -323m.

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Transcript of "FLSmidth Second Quarter Interim Report 2013 Presentation"

  1. 1. Presentation of Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 1
  2. 2. Forward-looking statements Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 2 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.
  3. 3. Group strategy & long term financial targets reconfirmed Launch of Efficiency Programme with annual EBITA improvement of DKK +750m Deteriorating outlook for mining capital projects – Pockets of recovery in Cement Customer Services performing well Group revenue +14% & order intake -22% Group EBITA margin 4.4% - Underlying Group EBITA margin 9.4% Ludowici impairment loss (DKK -800m) & inventory write-down (DKK -200m) Future risks in Material Handling minimised (DKK -323m) Key Highlights Q2 2013 3 Key Highlights Q2 2013
  4. 4. 4 Customer intimacy Product leadership Operational excellence Values 8/23/2013 Group Strategy verified by Group CEO “We will be our customers’ preferred full service provider of sustainable minerals and cement technologies” Focused full service provider Six key industries Full-service solutions Life cycle approach Full product flow sheets Long term financial targets reconfirmed Growth above market average EBITA margin of 10-13% ROCE > 20% Strategy health check
  5. 5. Stronger focus on: Organic growth and integration Quality and safety Research and development People and business development The strategy health check revealed a significant need and potential to improve efficiency throughout FLSmidth Strategy adjustments in a few areas 5 Strategy health check
  6. 6. Start 23rd August 2013 Responsible CEO and Group Executive Management Team Expected full year effect 2015 Annual EBITA improvement ~DKK +750m One-off restructuring costs ~DKK -500m Reduction of workforce ~1,100 Reduction of locations >20 Efficiency Programme Efficiency programme 23 August 2013Interim Report Q2 2013 6
  7. 7. Key elements of Efficiency Programme Efficiency programme 23 August 2013Interim Report Q2 2013 7 Follow-up and external reporting: Sales, distribution & administration costs (“SG&A”) Gross margin in Material Handling Gross margin Sourcing from cost competitive countries Net Working Capital Gross profit Investments in R&D
  8. 8. Current market trends Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 8 Mining capex outlook deteriorated further in Q2 - expected to hit the bottom in 2014 - commodity prices under pressure - mining operating expenditures still at healthy level Cement demand is slowly picking up - pockets of demand for new cement capacity - demand for cement services is slightly increasing Few large orders available, but still active negotiations Some pricing pressure is evident No cancellations of orders in the backlog
  9. 9. Order intake down 22% - attributable to all segments but Customer Services Revenue up 14% attributable to all segments but Material Handling EBITA down 50%, primarily due to Material Handling one-off costs CFFO slightly negative due to tax and financial payments Structural headcount reduction of 454 in Q2 were offset by manning up on new O&M contracts Financial developments in Q2 2013 Interim report Q2 2013 23 August 2013 9 FLSmidth & Co. A/S (DKKm) Q2 2013 Q2 2012 Change Order intake 5,626 7,246 -22% Revenue 6,456 5,653 +14% EBITA 287 576 -50% EBITA margin 4.4% 10.2% EBIT 195 323 -39% EBIT margin 3.0% 5.7% CFFO -51 333 Employees2) 14,817 12,717 +17% Interim Report Q2 2013 1) Excluding Cembrit FLSmidth & Co. A/S (DKKm) Q2 2013 Q2 2012 Change Order intake 5,626 7,246 -22% Order backlog 26,983 30,803 -12% Revenue 6,456 5,653 +14% Gross margin 18.3% 24.3% EBITA 287 576 -50% EBITA margin 4.4% 10.2% EBIT 195 321 -39% EBIT margin 3.0% 5.7% Net results 143 223 -36% CFFO -51 333 Employees1) 14,802 12,717 +16%
  10. 10. Order intake decreased 22% in Q2 2013 Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 10 Order intake by industry (quarterly) Cement Coal Iron ore Fertilizers Other Copper Gold 36% 14%7% 9% 4% 2% 28% 0 2,000 4,000 6,000 8,000 10,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Order intake (quarterly) -22% vs. Q2 2012DKKm Announced O&M orders Announced capital orders Unannounced orders
  11. 11. Revenue increased 14% in Q2 2013 Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 11 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Revenue (quarterly) +14% vs. Q2 2012DKKm Organic revenue growth of 10% Service activities accounted for 40% of Q2 revenue Pattern of seasonally increasing quarterly revenue over the calendar year expected to be repeated in 2013
  12. 12. Gross margin development Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 12 Gross margin 24.8% 24.3% 18.3% 10% 15% 20% 25% 30% 0 500 1,000 1,500 2,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Gross profit (quarterly) -14% vs. Q2 2012DKKm Decline in gross margin due to Material Handling one-off costs and execution of low margin order backlog in Cement Gross margin Q2’13 vs. Q2’12 - by segment 26.9% 15.7% 21.1% 31.5% 28.2% -17.9% 22.0% 18.2% Customer Services Material Handling Mineral Processing Cement Q2’13Q2’12 Q2’13Q2’12 Q2’13Q2’12 Q2’13Q2’12
  13. 13. Reassessment of order backlog based on a more prudent risk approach Minimised risk of future negative surprises One-off impact in Q2 DKK -323m related to legacy order backlog No new problematic projects have appeared Material Handling one-offs in Q2 Interim report Q2 2013 23 August 2013Interim Report Q2 2013 13
  14. 14. EBITA margin down primarily due to Material Handling one-off of DKK -323m Underlying EBITA (adjusted for MH one-off) is DKK 610m, equivalent to an EBITA-margin of 9.4% SG&A cost-ratio declined to 12.6% of Revenue vs. 13.2% in Q2’12 EBITA decreased 50% in Q2 2013 Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 14 EBITA margin 9.5% 10.2% 4.4% 0% 3% 6% 9% 12% 15% 0 200 400 600 800 1,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 EBITA (quarterly) -50% vs. Q2 2012DKKm 576 287 147 67 323 65 0 100 200 300 400 500 600 700 800 900 EBITA Q2'12 Increase in revenue Decrease in gross margin Material Handling one-off Increase in SG&A costs EBITA Q2'13 DKKm EBITA bridge Q2’13 vs. Q2’12
  15. 15. 0% 2% 4% 6% 8% 10% 12% 0 500 1,000 1,500 2,000 2,500 3,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 2,335 2,212 502 256 156 565 160 2,000 2,200 2,400 2,600 2,800 3,000 3,200 Net working capital declined DKK 123m in Q2 Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 15 Average Net Working Capital Working capital ratio 7.3%DKKm NWC* /Revenue LTM** *) NWC: Average Net Working Capital excl. Cembrit **) LTM: Last Twelve Months End Q2 2013 vs. End Q1 2013 Change in Net Working capital DKKm
  16. 16. Customer Services performed well on all parameters order intake +21%, revenue +26%, EBITA +29% Material Handling is the only negative surprise order intake -19%, revenue -26%, EBITA DKK -369m Mineral Processing is lacking large orders, but delivered solid results order intake -40%, revenue +20%, EBITA +34% Cement earnings were significantly below last year as expected order intake -30%, revenue +37%, EBITA -37% Divisional developments in Q2 Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 16
  17. 17. Cembrit sales process stopped Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 17 Satisfactory sales price not reached Sales process stopped Stand alone business Reported as continuing activities from Q3 2013 2013 effect: Revenue DKK +1.4bn, EBITA-margin 0%
  18. 18. Ludowici acquisition impairment loss of DKK -800m Deteriorating outlook for mining capex in general and for the Australian coal industry in particular Impairment tests reveal indications of write-down Inventory write-down of DKK -200m Thorough inventory review More stringent assessment of ageing inventory items Expected impairment loss and write-down in Q3 Special items 23 August 2013Interim Report Q2 2013 18
  19. 19. Revenue EBITA EBIT Material Handling one-off costs in Q2 DKK -323m DKK -323m Expected costs related to efficiency programme in Q3-Q4 DKK -350m DKK -350m Expected inventory write-down in Q3 DKK -200m DKK -200m Expected Ludowici impairment loss in Q3 DKK -800m Inclusion of Cembrit full-year results from Q3 DKK +1.4bn DKK -0m DKK -0m Total full-year impact DKK +1.4bn DKK -873m DKK -1,673m Special items impacting Q2 and full-year estimates Special items 23 August 2013Interim Report Q2 2013 19
  20. 20. Group Guidance 2013 Previous guidance Revenue DKK 26-28bn DKK 27-30bn EBITA margin 4-5% 8-10% CFFI ~DKK -0.8bn DKK -1bn ROCE 7-8% 15% Group guidance 2013 updated Guidance 23 August 2013Interim Report Q2 2013 20
  21. 21. Divisional Guidance 2013 updated Guidance 23 August 2013Interim Report Q2 2013 21 Segments Guidance 2013 Revenue (previously) EBITA margin (previously) Customer Services DKK 8-9bn (DKK 8-10bn) 13-14% (13-15%) Material Handling DKK 4-5bn (DKK 4-6bn) -8% to -9% (>0%) Mineral Processing DKK 9-11bn (DKK 10-12bn) 8-9% (8-10%) Cement DKK 5-6bn (DKK 5-7bn) 6-7% (6-8%) Cembrit is expected to generate a revenue of DKK ~1.4bn and an EBITA margin of ~0% in 2013 Eliminations in the form of intercompany trade is expected to amount to around DKK -1bn One-off costs related to efficiency program (DKK-350m) and inventory write-down (DKK-200m) have not been allocated to divisions
  22. 22. Group strategy & long term financial targets reconfirmed Launch of Efficiency Programme with annual EBITA improvement of DKK +750m Deteriorating outlook for mining capital projects – Pockets of recovery in Cement Customer Services performing well Group revenue +14% & order intake -22% Group EBITA margin 4.4% - underlying Group EBITA margin 9.4% Ludowici impairment (DKK -800m) & inventory write-down (DKK -200m) Future risks in Material Handling minimised (DKK -323m) Key Highlights Q2 2013 22 Key Highlights Q2 2013
  23. 23. Questions & Answers Next update: Q3 Interim Report on 6 November 2013 Follow us on Twitter and LinkedIn 23 August 2013Interim Report Q2 2013 23
  24. 24. Appendices - backup slides 23 August 2013Interim Report Q2 2013 24
  25. 25. Customer Services 23 August 2013Interim Report Q2 2013 25
  26. 26. 6% organic order intake growth and 11% organic revenue growth Improved order intake in Q2 mainly due to acquisitions and high utilisation rates in the mining industry Margin recovered in Q2 after adverse business mix impacts and costs of one-off nature in Q1 2013 Increased order intake and EBITA margin Customer Services 23 August 2013Interim Report Q2 2013 26 Revenue (quarterly) DKKm EBITA margin+26% vs. Q2 2012 0% 4% 8% 12% 16% 20% 0 500 1,000 1,500 2,000 2,500 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 0 1,000 2,000 3,000 4,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Order intake (quarterly) +21% vs. Q2 2012DKKm Announced O&M orders Announced capital orders Unannounced orders
  27. 27. Customer Services Customer Services 23 August 2013Interim Report Q2 2013 27 (DKKm) Q2 2013 Q2 2012 Change Full-year 2012 Expected 2013 Order intake 1,900 1,569 +21% 9,202 Order backlog 7,979 6,708 +19% 8,159 Revenue 2,020 1,608 +26% 7,073 DKK 8-9bn EBITDA 320 244 +31% 1,012 EBITA 298 231 +29% 930 EBITA margin 14.8% 14.4% 13.1% 13-14% EBIT 277 1551) +79% 7871) EBIT margin 13.7% 9.6%1) 11.1%1) 1) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m
  28. 28. Material Handling 23 August 2013Interim Report Q2 2013 28
  29. 29. Decreased order intake reflects continued challenging market conditions, increased rigorousness in the proposal phase and a prudent tender approach EBITA margin adversely impacted by DKK -323m due to changed risk assessment of order backlog in Q2 The number of ‘risky projects’ in the backlog is unchanged vs. Q1’13 Margin improvement remains challenging Material Handling 23 August 2013Interim Report Q2 2013 29 Revenue (quarterly) DKKm EBITA margin-26% vs. Q2 2012 0 500 1,000 1,500 2,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Order intake (quarterly) -19% vs. Q2 2012DKKm -40% -30% -20% -10% 0% 10% 20% 30% -2,400 -1,800 -1,200 -600 0 600 1,200 1,800 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 11 11 11 Announced orders Unannounced orders
  30. 30. Material Handling Material Handling 23 August 2013Interim Report Q2 2013 30 (DKKm) Q2 2013 Q2 2012 Change Full-year 2012 Expected 2013 Order intake 1,028 1,272 -19% 4,565 Order backlog 4,976 5,230 -5% 4,773 Revenue 944 1,271 -26% 4,997 DKK 4-5bn EBITDA -356 28 -140 EBITA -369 17 -186 EBITA margin -39.1% 1.3% -3.7% -9% to -8% EBIT -387 12 -247 EBIT margin -41.0% 0.9% -4.9% Order Backlog information 15 projects out of a total portfolio of 189 projects in the Material Handling Business Unit are currently regarded as risky (end of Q1 2013: 15 projects) Minimised risk of future negative surprises after reassessment of backlog These projects accounted for DKK 705m or 15% of the backlog at the end of Q2
  31. 31. Mineral Processing 23 August 2013Interim Report Q2 2013 31
  32. 32. Declining order intake and lower tender activity as the market for Mineral Processing remains soft High revenue as a result of strong order intake from mid-2011 and throughout 2012 EBITA margin improved due to reduced SG&A costs and gain from disposal of assets Soft market – but solid execution Mineral Processing 23 August 2013Interim Report Q2 2013 32 Revenue (quarterly) DKKm EBITA margin+20% vs. Q2 2012 0% 3% 6% 9% 12% 15% 18% 21% 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Order intake (quarterly) -40% vs. Q2 2012DKKm Announced orders Unannounced orders
  33. 33. Mineral Processing Mineral Processing 23 August 2013Interim Report Q2 2013 33 (DKKm) Q2 2013 Q2 2012 Change Full-year 2012 Expected 2013 Order intake 1,679 2,808 -40% 10,318 Order backlog 7,891 10,362 -24% 9,589 Revenue 2,477 2,057 +20% 9,512 DKK 9-11bn EBITDA 292 209 +40% 1,079 EBITA 259 193 +34% 1,000 EBITA margin 10.5% 9.4% 10.5% 8-9% EBIT 212 891) +138% 7731) EBIT margin 8.6% 4.3%1) 8.1%1) 1) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m
  34. 34. Cement 23 August 2013Interim Report Q2 2013 34
  35. 35. 0 500 1000 1500 2000 2500 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Stable level of unannounced orders – value of announced orders lower vs. Q2’12 As expected, margin has declined as backlog is exhausted of pre-crisis orders with higher profitability Demand in China down to about 10% of peak market, increasing competition in and outside China Two large orders, but market remains subdued Cement 23 August 2013Interim Report Q2 2013 35 Revenue (quarterly) DKKm EBITA margin+37% vs. Q2 2012 0% 5% 10% 15% 20% 25% 0 500 1000 1500 2000 2500 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Order intake (quarterly) -30% vs. Q2 2012DKKm Announced orders Unannounced orders
  36. 36. Cement Cement 23 August 2013Interim Report Q2 2013 36 (DKKm) Q2 2013 Q2 2012 Change Full-year 2012 Expected 2013 Order intake 1.335 1,902 -30% 4,599 Order backlog 6,847 9,240 -26% 7,585 Revenue 1,304 952 +37% 4,214 DKK 5-6bn EBITDA 101 155 -35% 788 EBITA 91 144 -37% 752 EBITA margin 7.0% 15.1% 17.8% 6-7% EBIT 85 741) +15% 6691) EBIT margin 6.5% 7.8%1) 15.9%1) 1) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m
  37. 37. Service activities accounted for 44% of Q2 orders Order intake decreased mainly due to lower value of announced orders in Q2 Expected backlog conversion to revenue: 43% in 2013, 35% in 2014 and 22% in 2015 and beyond. O&M** contracts accounted for DKK 4.7bn (17%) of the order backlog at the end of Q2 Order intake decreased 22% in Q2 2013 Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 37 0 2,000 4,000 6,000 8,000 10,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Order intake (quarterly) -22% vs. Q2 2012DKKm 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Order backlog (quarterly) -12% vs. Q2 2012DKKm Book-to-bill ratio* Announced O&M orders ** Announced capital orders Unannounced orders *) Order backlog divided by Last-Twelve-Months Revenue **) Operation & Maintenance
  38. 38. Announced orders in Q2 2013 Iron ore India DKK 200m (MH) Cement Equatorial Guinea DKK 505m (C) Cement India DKK 200m (C) 36% 14%7% 9% 4% 2% 28% 23 August 2013Interim Report Q2 2013 38 Distribution of order intake by industry and segment Interim Report Q2 2013 Order intake Q2 2013 Cement Copper Gold Coal Iron ore Fertilizers Other Growth Customer Services Material Handling Mineral Processing Cement Group Organic 6% -16% -43% -29% -26% Acquisitions 18% 0% 5% 0% 6% Currency -3% -3% -2% -1% -2% Total 21% -19% -40% -30% -22% Order intake growth Q2’13 vs. Q2’12
  39. 39. Estimated organic revenue growth of 14% and acquisitive revenue growth of 7% in Q2 2013 Service activities accounted for 40% of Q2 revenue Pattern of increasing quarterly revenue over the calendar year expected to be repeated in 2013, however challenged by softening market conditions Revenue increased 14% in Q2 2013 Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 39 0 2,000 4,000 6,000 8,000 10,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Revenue (quarterly) +14% vs. Q2 2012DKKm Growth Customer Services Material Handling Mineral Processing Cement Group Organic 11% -22% 18% 38% 10% Acquisitions 18% 0% 5% 0% 7% Currency -3% -4% -3% -1% -3% Total 26% -26% 20% 37% 14% Revenue growth Q2’13 vs. Q2’12
  40. 40. Revenue and order intake by segment 32% 17% 28% 23% Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 40 Order intake Q2 2013 – classified by segment Customer Services Material Handling Cement 30% 14%37% 19% Material HandlingMineral Processing Revenue Q2 2013 – classified by segment Customer Services Cement Mineral Processing
  41. 41. Service activities accounted for 44% of Q2 orders Interim Report Q2 2013 Interim Report Q2 2013 41 Revenue Q2 2013 23 August 2013 Order intake Q2 2013 40% 60% Capital Business 44% 56% Service BusinessCapital BusinessService Business
  42. 42. SG&A ratio down vs. last year and sequentially Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 42 SG&A ratio declining as a cost efficiency measures start to work SG&A ratio* 14.3% 13.2% 12.6% 0% 3% 6% 9% 12% 15% 18% 0 200 400 600 800 1,000 1,200 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 SG&A costs* (quarterly) +9% vs. Q2 2012DKKm *) SG&A ratio: SG&A costs divided by Revenue
  43. 43. EBITA by segment Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 43 EBITA Q2 2013 – classified by segment 107% -132% 93% 33% Customer Services Material Handling Mineral Processing Cement EBITA margin Q2 2013 – classified by segment 14.8% -39.1% 10.5% 7.0% Customer Services Material Handling Mineral Processing Cement
  44. 44. Negative CFFO due to taxes paid, financial payments and increased working capital CFFI reflects that acquisitions are temporarily on hold in 2013, and includes DKK +92m related to sale of non-core activities in Ludowici, Australia Cash flow from operating and investing activities Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 44 CFFO (quarterly) DKKm -800 -400 0 400 800 1200 1600 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 CFFI (quarterly) +57% vs. Q2 2012DKKm -3,000 -2,400 -1,800 -1,200 -600 0 600 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 -51m in Q2 2013
  45. 45. Capital structure developments Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 45 NIBD* (quarterly) DKKm -0.8 -0.4 0 0.4 0.8 1.2 1.6 2 2.4 -2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Gearing 2.0x EBITDA Gearing target (self-imposed) 0% 10% 20% 30% 40% 50% 0 2,000 4,000 6,000 8,000 10,000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Equity (quarterly) DKKm Equity ratio-6% vs. Q2 2012 Equity ratio target (self-imposed) The equity ratio declined to 27% in Q2, mainly as a result of: Dividend of DKK -479m paid out in Q2 Execution of share buyback programme DKK -435m in Q2 Material Handling one-off costs reducing net profit by more than DKK 200m (after tax) Foreign exchange adjustments related to enterprises abroad DKK -349m
  46. 46. Number of employees Interim Report Q2 2013 23 August 2013Interim Report Q2 2013 46 Number of employees Q2’13 vs. Q2’12 - by segment 4326 3352 2417 2621 5859 3585 3021 2335 Customer Services Material Handling Mineral Processing Cement Q2’13Q2’12 Number of employees at the same level as Q1’13 (from 14,811 to 14,802), but increased 16% vs. Q2’12 Increase vs. Q2’12 is primarily related to acquisitions and blue collar workers in connection with O&M contracts Structural head count reductions of 454 in Q2’13 were offset by manning up on new O&M contracts Developments in divisional numbers are impacted by allocation of group staff Q2’13Q2’12 Q2’13Q2’12 Q2’13Q2’12
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