Flsmidth & Co. A/s · OMXCOP:FLS
Flsmidth & Co. A/s — Investor Day (January 2005)
31 slides from Flsmidth & Co. A/s's investor day presentation, Jan 18, 2005
Slide 1: Welcome to Capital Market Day
Welcome to Capital Market Day Valby, 18th January 2005 Introduction: Jørgen Huno Rasmussen, CEO
Slide 2: Program Capital Market Day 18 January 2005
Program Capital Market Day 18 January 2005 10.30 Welcome, markets and group status Jørgen Huno Rasmussen 11.00 How a cement plant gets off the grounds Peter Krüger 11.30 Break 11.40 FLSmidth Automation Poul Skjøth 12.00 Site tour in Valby From head office - through the laboratory – to FLSmidth Autom
Slide 3: Back to Core Business
Back to Core Business ■ 1882 F.L.Smidth founded Delivery of machinery to production of cement ■ 1889 Aalborg Portland established Production of cement ■ 20th Century Global cement group ■ End of 20th Century FLS Conglomerate Delivery of machinery and plants to production of cement, building material
Slide 4: FLSmidth - Status
FLSmidth - Status • Focus: ”Engineering equipment” Divestment of Building Materials √ • Vision: The preferred partner and leading supplier of solutions and services to the √ global Cement- & Minerals Industries • Business Idea: Common technology sold in 2 Industries √ • Core Activities: Development,
Slide 5: FLSmidth - Status
FLSmidth - Status • Target: EBT 5 % of turnover • Market: Stable at high level possibilities √ • Competition: Increasing additional challenge ! • Means: Strategic plans and actions: Developed centrally and locally in 2004 √
Slide 6: FLSmidth must now deliver!
FLSmidth must now deliver! - it has demonstrated the ability before 1) Historical Earnings before tax (EBT) 2) Cement ownership & FLSmidth 800 600 400 DKKm FLSmidth 200 Cement Ownership 0 -200 -400 1998 1999 2002 2003 1997 2000 2001 1994 1995 1996 1) Based on Annual Reports 1994-2003 2) Cement Owner
Slide 7: EBT margin (%) FLSmidth Group
EBT margin (%) FLSmidth Group % 8 6 5% 4 2 0 -2 -4 -6 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Target MÅL
Slide 8: In- and external survey 2003: Positive values
In- and external survey 2003 POSITIVE VALUES A proud company that believes in itself and its quality products – and with a unique company spirit Keeps its word A friendly and relaxed attitude An international culture that enables the company to work in the most demanding foreign cultures S
Slide 9: In- and external survey 2003: Strengths
In- and external survey 2003 STRENGTHS A strong heritage/experience and (brand) recognition Acknowledged as the biggest player on the world market International presence and resources Professional, knowledgeable and experienced staff High customer exposure throughout the organization due t
Slide 10: In- and external survey 2003: Weaknesses
In- and external survey 2003 WEAKNESSES Weak and unclear financial structure. √ Aalborg Portland and Unicon sold Inefficient, inflexible organization. √ New Turnkey Turnkey capabilities. Management Storing, sharing, and utilizing organisation experiences. KAM function is perceived as weak.
Slide 11: Organisational changes
Organisational changes Actions 2004: New Board in FLSmidth A/S New centralised management structure Elimination of holding company Centralised staff functions New Turnkey unit and more project-orientation Merger of Materials Handling into FLSmidth Redefined internal divisions (Customer
Slide 12: Improvement-potential of parameters
Improvement-potential of parameters in relation to NPV of investment in a cement plant 10% Higher NPV Parameter: Runfactor Plant price Energy consumption Alternative fuels Production year 1 and 2 0 2 4 6 8 10 12 % Necessary change to improve NPV 10% over 20 years NB: Based on realistic but uncertain
Slide 13: Efficiency more important than price
Efficiency more important than price in relation to NPV of investment in a cement plant Positive Impact: 10% Runfactor + 10% Investment (10%) 100 110 120 130 140 150 160 170 Consequentiel change in NPV of plant over 20 years (index) NB: Based on realistic but uncertain assumptions
Slide 14: How do we reach our target?
How do we reach our target? - By means of executing strategic initiatives: • Research & product-development • Sales policies • Risk control • Contract administration • Project orientation • Standardisation • IT-development • Sourcing from low-cost countries • Increased engineering in India • Increas
Slide 15: Yearly contracted cement kiln capacity excl. China
Yearly contracted cement kiln capacity excl. China Contracted cement kiln capacity on a yearly basis 1980-2006 Million tonnes 60 50 Average 1980 – 2003; 24m tonnes per year 40 30 20 10 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 200
Slide 16: Market development - Minerals
Market development - Minerals Gold, Copper, Platinum Prices Index 01-jan-2003 = 100 Q FFE Minerals - a niche player in the (as qouted on the London Metal Exchange) market for extraction of minerals which is five to nine times as large 220 as the cement market 210 200 190 Q Growing demand for mineral
Slide 17: International cement kiln market split
International cement kiln market split Sold 2004 excl. China Iran 28% Rest ME 21% Pakistan India 19% 6% Rest World Africa 17% 9%
Slide 18: International cement kiln market shares
International cement kiln market shares Orders new capacity excl. China 2003 2004 9% 10% 8% 4% 34% 13% 21% 55% 21% 7% 18% FLSmidth Chinese Polysius KHD FCB & others Others FLSmidth-orders: 2003: 55.700 tpd 2004: 54.100 tpd
Slide 19: New challenge in international markets: The Chinese competitor appeared in 2004
New challenge in international markets: The Chinese competitor appeared in 2004 • FLSmidth was prepared and acted early: – Acquainted through decades in China – Avoided joint ventures and protected core-technology – Mobilized for increased competition in Spring 2004 – Procurement of equipment / mach
Slide 20: More strategic actions
More strategic actions: • Accelerate improvements of technology through increased R&d-investments • Protect and develop all long-term core-technologies in our two western centres DK and USA Ensuring that FLSmidth always stays technologically ahead of the competition including the Chinese • Develop b
Slide 21: Group Business Units
Group Business Units FLS Industries => FLSmidth & Co. Continuing Activities Other activities FLSmidth Dansk Eternit Holding RESTRUCT. Customer Services Division Densit FLSmidth Automation FLS miljø WINDING UP FLSmidth Materials Handling Aalborg Portland SOLD FLSmidth Airtech RESTRUCT. SOLGT Pfister
Slide 22: Future Business Units: Customer Services Division
Future Business Units FLS Industries => FLSmidth & Co. Continuing Activities Customer Services FLSmidth Division (CSD) is a global supplier of spare parts, Customer Services Division customer services and FLSmidth Automation inspections. CSD is also FLSmidth Materials Handling focusing on small proj
Slide 23: Target: Increased aftermarket proportion of cement-activities
Target: Increased aftermarket proportion of cement-activities Counter-tendencies within Global Cement Producers Requires constantly strengthened competitiveness through cost-control New concepts to be developed, e.g. inspired from minerals Kiln inspection Service
Slide 24: Future Business Units: FLSmidth Automation
Future Business Units FLS Industries => FLSmidth & Co. Continuing Activities FLSmidth Automation FLSmidth Supplies systems for measuring, controlling and Customer Services Division regulating complex industrial FLSmidth Automation process installations in FLSmidth Materials Handling cement plants an
Slide 25: AUTOMATION: Development in EBIT
AUTOMATION: Development in EBIT 20 6 4 10 2 0 0 2002 2003 Q1-Q3 2004 -10 -2 -20 -4 -6 -30 -8 -40 -10 -50 -12 EBIT MKR EBIT %
Slide 26: Future Business Units: FLSmidth Airtech
Future Business Units FLS Industries => FLSmidth & Co. Continuing Activities FLSmidth Airtech supplies FLSmidth bag filters, electrostatic precipitators, scrubbers, Customer Services Division conditioning towers, systems FLSmidth Automation and services to reduce the FLSmidth Materials Handling emis
Slide 27: Airtech Market/Product strategy
Airtech Market/Product strategy Focus strategy in FLSmidth Airtech / OEM Market Presence Pulp & Iron & Other Biomass Utility Products Cement paper steel Copper minerals Waste boilers boilers Glass Chemical Others ESP FF GCT HEX GSA WAS Scope of supply Engineering & key parts Full equipment supply Pr
Slide 28: Future Business Units: MAAG Gear
Future Business Units FLS Industries => FLSmidth & Co. Continuing Activities MAAG Gear is an FLSmidth international supplier of gears and gear units to the Customer Services Division cement industry and related FLSmidth Automation industries FLSmidth Materials Handling FLSmidth Airtech Pfister Vento
Slide 29: MAAG Gear in a turnaround
MAAG Gear in a turnaround: • Improvements: – The polish plant was incorporated in 2001 – Zurich plant was moved to Winterthur in 2003 – Sales have been increasing last year • But results are still very unsatisfying • New CEO in November 2004 with the tasks: – Strengthen commercial focus – Improve co
Slide 30: Future Business Units: FFE Minerals
Future Business Units FLS Industries => FLSmidth & Co. Continuing Activities FFE Minerals is a world- FLSmidth wide supplier of machinery, operating and maintenance Customer Services Division services to the metallic FLSmidth Automation mining and mineral FLSmidth Materials Handling industries as we
Slide 31: Why invest in FLSmidth & Co.? A focused company
Why invest in FLSmidth & Co. ? A focused company Qwith a unique global market position Qsupported by growth in global cement and minerals markets Qaiming for a 5% EBT ratio