Presentation of FLS Industries: Jørgen Huno Rasmussen, CEO FLS Industries A/S

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

Carnegie
Carnegie Small Small Cap
Cap Seminar, Seminar1414
Stockholm September
September 20042004 FLS
FLSIndustries
IndustriesA/S
A/S
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
Cement Minerals
Technology
Concept
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
Back to Core Business
■ 1882 F.L.Smidth founded

Delivery of machinery to
production of cement
■ 1884 Aalborg Portland established
Production of cement
■ 20th Century Global cement group
■ End of 20th Century Conglomerate

Delivery of machinery and –plants to
production of cement, building materials,
aircraft maintenance, environment,
packaging, transportation, etc.
■ Beginning of 21st Century Focus on core competences
Global provider of machinery, equipment,
systems and services including complete
production lines and plants for the global
cement and minerals industries
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
Structural changes in recent years
BEFORE NOW
Decentralized Centralized
Conglomerate Focus on engineering and

solutions to cement and minerals
industries only
Family dominated Boards Professional Boards
Technology oriented organisation Project oriented organisation
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
FLS Industries Business Units
FLS Industries
Continuing Activities Other activities
F.L.Smidth Dansk Eternit Holding
F.L.Smidth Automation Densit
F.L.Smidth Materials Handling FLS miljø WIND UP
F.L.Smidth Airtech Aalborg Portland SOLD
FFE Minerals Unicon SOLD
Pfister
Ventomatic
MAAG Gear
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
FLS Industries
Continuing Activities
F.L.Smidth supplies complete
F.L.Smidth plants, equipment, single
machine units, spare parts,
F.L.Smidth Automation know-how, services and
maintenance to the cement
F.L.Smidth Materials Handling industry world-wide
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
FLS Industries
FFE Minerals is a worldwide
F.L.Smidth supplier of machinery, operating
and maintenance services to
F.L.Smidth Automation the metallic mining and mineral
industries as well as to the lime
F.L.Smidth Materials Handling and paper industries
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
FLS Industries
Pfister is one of the world’s
F.L.Smidth leading suppliers of dosing
equipment to the cement
F.L.Smidth Automation industry and related industries
F.L.Smidth Materials Handling
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
FLS Industries
Ventomatic is one of the world’s
F.L.Smidth leading suppliers of complete
packing lines to the cement
F.L.Smidth Automation industry and related industries
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
FLS Industries
MAAG Gear is an international
F.L.Smidth supplier of gears and gear units
to the cement industry and
F.L.Smidth Automation related industries
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
Geographical presence
Project Centre Production Sales Office
The World
excl. Europe
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
Geografical presence
Project Centre Production Sales Office
Europe
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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
 Key machinary to production of cement
Rawmills Burners Kilns Coolers Cement mills
F.L.Smidth no. 1 globally within all segments with a 40-60% market share
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
Cement Plant – Flow chart
F ilt e r F ilte r
C ru s h e r
A n a ly z e r
L im e s t o n e C la y Sand Iro n
1 2 3 4 R aw m eal
s ilo
S to ra g e
C o a l m ill
1
2
4 3
R a w m ill
C lin k e r
S ilo
S e p a ra to r
P a c k e rs
2 3
Cem ent C em ent
s ilo s ilo
Cem ent
s ilo
C e m e n t m ill
G e a r u n it S h ip u n lo a d in g
R o lle r p r e s s
S h ip lo a d in g
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
From tender to contract
Approximately 3 months. 3 – 9 months

Negotiations Contract
Quotation
Modifications award
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
Enquiry
Tender Proces design
Documents
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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
Contract Process design
Order list
1st year 2nd year 3rd year
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
Major contracts under implementation
Major contracts under implementation
Buxton
Padeswood
Rohoznik
Pennsuco Saveh White
AUCC Faraz
M´sila Conch
Civil & Marine Gabès Qena Bushehr Yunnan
Kirène Haiphong
Surma
Tam Diep
Cessa Obajana
Khyber
Ewekoro
Dudfield
Berrima
Golden Bay
21 January 2004
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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 fuels without 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 fuels

Car and truck tyres, wood waste, paper sludge,
municipal waste, etc.
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
Global cement consumption
Million tonnes Average growth 3.5% Growth

2000 8%
1800
6%
1600
1400 4%
1200 2%
1000
800 0%
600 -2%
400
-4%
200
0 -6%
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
New cement kiln capacity
Contracted cement kiln capacity on a yearly basis 1980-2003

Million tonnes
60
50
Average 1980 – 2003; 24m tonnes per year
40
30
20
10
0
1980
1985
1986
1991
1994
1997
2000
1981
1982
1983
1984
1987
1988
1989
1990
1992
1993
1995
1996
1998
1999
2001
2002
2003
Excl. China
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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.
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
Market for extraction of minerals
Gold, Copper, Platinum Prices

Index 01-jan-2003 = 100
(as qouted on the London Metal Exchange)
 FFE Minerals - a niche
player in the market for 220
extraction of minerals which 210
is five to nine times as large 200
as the cement market 190
180
170
Index (01-jan-2003 = 100)

 Growing demand for 160
minerals in Asia, in 150
particular China 140
130
120
 Increasing raw material 110
prices and investments 100
among producers 90 Index Gold

Index Copper
80
Index Platinum
70
01-nov-03
01-apr-04
01-jan-03
01-feb-03
01-mar-03
01-apr-03
01-maj-03
01-jun-03
01-jul-03
01-aug-03
01-sep-03
01-okt-03
01-dec-03
01-jan-04
01-feb-04
01-mar-04
01-maj-04
01-jun-04
01-aug-04
01-jul-04
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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.
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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 Minerals FFE Minerals FFE Minerals

No. 1-2 No. 1-2 New business No. 1-2
segment
FFE Minerals – a niche player Consolidation in the industry

Merger of Nordberg & Svedala to form Metso
Heritage brand names Minerals
Staff with good minerals industry experience Acquisition of Nordberg grinding business and
Presence in local markets Luigi Metallurgie by Outokumpu
Technical edge for large scale equipment Acquisition of Alstrom Machinery by Andritz
Merger of Dorr-Oliver & Eimco
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
Same technology to two different industries
CEMENT MINERALS
Grinding Automation
Ex. ATOX mills
Materials Handling
Air pollution control
Preheating
Ex. Burners
Calcination
Ex. Gas suspension calciners
Maintenance Cooling
Training Ex. SF Cross Bar
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
How to reach the 5% EBT-target
Focus areas: A more detailed strategic

plan for the improvement of
Sales policies profitability to be concluded
Risk control by the end of 2004
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
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S
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
Carnegie
Stockholm September
FLSIndustries
IndustriesA/S
A/S

Presentation of FLS Industries: Jørgen Huno Rasmussen, CEO FLS Industries A/S

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2004

Presentation of FLS Industries

Jørgen Huno Rasmussen, CEO FLS Industries A/S

Carnegie Small Cap Seminar, Stockholm 14 September 2004

■ Expected turnover 2004: DKK 14bn (EUR 1.9bn)

■ 1882 F.L.Smidth founded

■ 20th Century Global cement group

■ End of 20th Century Conglomerate

Conglomerate Focus on engineering and

Technology oriented organisation Project oriented organisation

F.L.Smidth Dansk Eternit Holding

F.L.Smidth Automation Densit

F.L.Smidth Materials Handling FLS miljø WIND UP

F.L.Smidth Airtech Aalborg Portland SOLD

FFE Minerals Unicon SOLD

F.L.Smidth Materials Handling

F.L.Smidth Materials Handling

F.L.Smidth Materials Handling

Project Centre Production Sales Office

Project Centre Production Sales Office

 Design and production of complete cement production lines and plants

F.L.Smidth no. 1 globally

 Key machinary to production of cement

Rawmills Burners Kilns Coolers Cement mills

Approximately 3 months. 3 – 9 months

Financial, legal and commercial conditions

Performance warranties & conditions

Cost price estimates

Flow sheet, Proposal drawings

Shipping docs. and dispatch

Inspection and expedition

Major contracts under implementation

R&D focus areas

Reduced production costs (Energy consumption, productivity, etc.)

Top priority: Reduced use of fossil fuels

Recent invention; HOTDISC

Types of alternative fuels

Million tonnes Average growth 3.5% Growth

Contracted cement kiln capacity on a yearly basis 1980-2003

 Demand for new capacity supported by steady growth in global cement

 Replacement and modernisation of old cement plants

Gold, Copper, Platinum Prices

extraction of minerals which 210

is five to nine times as large 200

as the cement market 190

Index (01-jan-2003 = 100)

minerals in Asia, in 150

particular China 140

prices and investments 100

among producers 90 Index Gold

Products & Services

 Provider of processes and systems which include primary

 Provider of total pyrometallurgical solutions from R&D

 Provider of total service, maintenance, asset

COLD BUSINESS SEGMENT HOT BUSINESS SEGMENT

MATERIALS HANDLING PROCESSING PYRO

FFE Minerals FFE Minerals FFE Minerals

FFE Minerals – a niche player Consolidation in the industry

FFE Minerals will grow through:

 Continued focus on growth in spare parts and services segment

Focus areas: A more detailed strategic

 with a unique global market