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DEN NYE STRATEGI. Click to edit Master title style. Annual report 2001. FLS INDUSTRIES A/S. Click to edit Master text styles Second level Third level Fourth level Fifth level. Presented by Peter Assam, CEO Birgitte Nielsen, CFO 7 March 2002. 1. Agenda.

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  1. DEN NYE STRATEGI Click to edit Master title style Annual report 2001 FLS INDUSTRIES A/S • Click to edit Master text styles • Second level • Third level • Fourth level • Fifth level Presented by Peter Assam, CEO Birgitte Nielsen, CFO 7 March 2002 1 Restructuring for Growth and Profit

  2. Agenda • 2001 - highlights • focusing and improving earnings platform • mixed market conditions • operational earnings and cash flow improved • pruning of balance sheet • 2002 and onwards • focus, rightsizing and cutting debt Restructuring for Growth and Profit

  3. Focusing and improving earnings platform • Focusing • merger of Aalborg Portland Holding and FLS Industries • sale of RMIG • sale of property • Improved Earnings Platform • procurement project • Engineering • Bulk Handling activities transferred to new unit • reorganising all APC into one global business unit • integration of F.L.Smidth & Co. and Fuller Co • acquisitions strengthens FLSmidth Group’s product range and turnkey skills • FLS miljø continues rightsizing • ”Waste to Energy” sold Restructuring for Growth and Profit

  4. Focusing and improving earnings platform • Focusing and Transparency • merger of Aalborg Portland Holding and FLS Industries • sale of RMIG • sale of property • Improved Earnings Platform • procurement project • Building Materials • concrete products in US and Spain exited • investments in white cement strengthens platform • new management to turn around US concrete operation • Unicon focuses on ready mix concrete • Unicon’s Norwegian acquisitions fortify lead position in Scandinavia • DEH reorganises from country set up to functions Restructuring for Growth and Profit

  5. Focusing and improving earnings platform • Focusing and Transparency • merger of Aalborg Portland Holding and FLS Industries • sale of RMIG • sale of property • Improved Earnings Platform • procurement project • Aerospace • rightsizing to post 11 September demand • “right first time” introduced in CPH • international management team • Formula One program reduces turn times and cuts man hours per check • improved efficiency in Rotables utilisation • decreased overheads and pay roll Restructuring for Growth and Profit

  6. After market up 11 % DKKm Cement Minerals Others Total Turnover 5,776 1,414 792 7,982 Order Intake* 6,023 1.452 802 8,277 Order backlog* 5,364 672 577 6,613 * Sales price F.L.Smidth Group 2000 2001 7,982 1,47618% 194 (384) (539) Net turnover 7,389 Gross profit 1,10515% Better order execution EBIT (272) Cash flows from operating activities (38) Cash flows from operating and investing activities (107) Margin upSG&A down Restructuring for Growth and Profit

  7. F.L.Smidth Group order intake Good balance between basic - and large orders Highest order intake ever Restructuring for Growth and Profit

  8. Annual contracted cement kiln capacity Average contracted 1980 – 2001 25 MPTY Highest order intake ever -despite lowest new capacity in 15 years Restructuring for Growth and Profit

  9. FLS miljø Margin slippage on projects Order intake remains sluggish in biomass and fossil Restructuring for Growth and Profit

  10. FLS Building Materials Markets suffer from economic downturn – but still good cash flow Danish fibre cement sales hurt by image problem Restructuring for Growth and Profit

  11. FLS Building Materials White strategy goes as planned Unicon continues focusing DEHs new products received well Densit offshore break through Restructuring for Growth and Profit

  12. FLS Aerospace Gross profits margin doubled Cash flow strongly improved Strong position in low cost segment Restructuring for Growth and Profit

  13. FLS Group Profit and Loss Account Improved gross profits and cash flow Significant reduction of debt Restructuring for Growth and Profit

  14. 2002 and Onwards • Optimise across F.L.Smidth Group • speed up after-market sales - spares and services • improve turnkey and civil engineering skills • focus on cement and minerals segments • FLS miljø Grows Three Segments • marketing technologies via international partnerships or new owners • use core know-how in new businesses on ad hoc basis • Harvest Synergies between Engineering Companies • Grow Key Product Areas in FLS Building Materials • expand global production capacity in white cement • consolidate industry and specialise fibre cement plants - expand product range • transfer “best practice” in Unicon’s One Company program - turnaround US concrete operation • leverage Densit’s off-shore orders • Optimise Strategic Value of FLS Aerospace • Divest Non-Core Assets, Prune Balance Sheet and Cut Debt Restructuring for Growth and Profit

  15. Forecast 2002 • FLS forecast • Sales DKK19bn • EBIT Improved compared to 2001 • EBT Improved compared to 2001 - given the present difficult market outlook - excluding sale of assets Restructuring for Growth and Profit Restructuring for Growth and Profit

  16. Q1-Q4-Events • Q1: • F.L.Smidth Group Deficit from Weak US-Market and Higher Execution Costs • time lag between slow demand from US-market and reaction hereto • Q2: • order intake, back log and target intact despite US slow down • largest order in European market • acquisitions broaden product range and strengthen turnkey skills • FFE Minerals’ high performance reflects restructuring • after-market sales maintains growth target • Q3: • satisfactory order intake despite weak markets • Q4: • satisfactory order intake - Vietnam order signed • financial effects from merger materialising Restructuring for Growth and Profit

  17. Q1-Q4-Events • Q1: • FLS miljø’s Order Backlog End 2000 Was Poor • order intake Q1 was below expectations • cost base matches order potential in next months • Q2: • order intake and outlook improves in US and Europe • business tracks new management’s plan • Q3: • slowing order intake • order execution off track on UK project • Q4: • order intake remains sluggish in biomass and fossil • Margin slippage on projects Restructuring for Growth and Profit

  18. Q1-Q4-Events • Q1: • FLS Building Materials Usually Posts Deficit in Q1 • Dansk Eternit suffers from DEF 1994’s receivership • Sales reflect normalised weather conditions • Q2: • Dansk Eternit’s sales slip further in Denmark • US slowdown dampens Unicon’s profit in turnaround • Cement export offsets lower demand in Denmark • International price pressure on white cement • Down revision of earnings forecast • Q3: • US and Polish stand still fuels down revision • Q4 • DEHs new products received well • Unicon starts divesting concrete products • Markets suffer from economic downcycle Restructuring for Growth and Profit

  19. Q1-Q4-Events • Q1: • FLS Aerospace Improves Performance in High Season • Q2: • Third consecutive quarter with EBIT in black • Strong USD hikes costs in Component Management • Higher productivity and renegotiated contracts increase earnings expectations • Q3: • Continuous improvement until 11 September • Q4: • Restructuring to volumes drop of 20 % y/y • PMO contract of DKK 3.1 bn with easyJet Restructuring for Growth and Profit

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