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FLSmidth launches next phase of the strategy

23.08.2005
Press Release, 23 August 2005

Over the last few years the main objective of the FLSmidth Group strategy has been to establish a focused business concentrating on equipment and services for the cement and minerals industries. This objective has largely been achieved, and all efforts can now be concentrated on optimising the core business in order to fulfil another main plank of the strategy - to attain a level of earnings before tax (EBT) commensurate with 5% of the turnover in 2007.
A number of initiatives have already been launched to enhance the FLSmidth Group's competitive strength and consolidate its position as the customers' preferred partner. These initiatives include more research and development, standardisation through advanced IT tools and increasing design, procurement and production in low-cost countries. The Group is ahead of its plans to reach the EBT target by 2007, and the activities launched will proceed unabatedly.
 
The next phase of the strategy is now being initiated with the aim of making the implementation of major cement projects more reliable, swifter and more economical, whilst maintaining the positive development of the Cement and Minerals aftermarkets. This phase includes a major streamlining of the organisation by setting up four new regional Project Divisions to replace the global structure for sales, procurement, project management and processing of cement projects. Two regional Project Divisions will be based in Copenhagen, one will be based in Bethlehem, USA, and one in Chennai, India. These will be smaller units, each with its  own integrated sales, procurement and project management organisation.
 
The Technical Division comprising the existing Engineering activities and Research and Development will remain key functions with global responsibility for technology, design and development of the Group's main machines. The underlying aim is to maintain a consistently high technological standard in all projects worldwide. Centralised sharing of experience will also ensure that FLSmidth at all times offers its customers the most up-to-date, energy-efficient and environmentally sound solutions.
 
The stronger focus on the market for replacement parts and services will be further intensified through expansion of the product range and development of services that meet the customers' demands for higher productivity, greater availability and lower energy consumption. Consequently, it remains a key objective to ensure that Services continues to generate a growing proportion of the Group's overall sales.
 
During the coming months, the Group's global presence, with national subsidiaries and offices in various markets, will be analysed to ensure optimum staffing levels at the offices located in growth markets. The aim is to achieve higher flexibility, focusing on the changing global growth markets, and to constantly prioritise resources in markets that offer the greatest potential. 
    
The present product companies and product divisions (FFE Minerals, Pfister, Ventomatic, MAAG Gear, FLSmidth Automation, FLSmidth Airtech and FLSmidth Customer Services) will continue to operate globally and will not be directly affected by the changes mentioned above - apart from FLSmidth Materials Handling which will be incorporated in Technical Division as a technological unit.
 
The German company MVT Materials Handling GmbH and the Dutch-based company Kovako Materials Handling B.V., which have both until now been part of the FLSmidth Materials Handling Group, will at the same time change affiliation.  MVT Materials Handling's products are mainly oriented towards the minerals industry, and the company will in future be part of the FFE Minerals Group, which will provide considerable scope for synergy. Kovako Materials Handling will be affiliated to USA-based Pneumatic Transport which markets Kovako's products in North America and provides a number of related products whilst sharing the same customer base.
 
Measures taken to enhance the integration of the Group's activities will continue in all units.
 
As mentioned in the Stock Exchange announcement No. 23-2005, Mr Christian Jepsen, Executive Vice President in FLSmidth A/S, will join the Corporate Management of the parent company FLSmidth & Co. A/S in connection with the changes effective 1 October 2005. Mr Christian Jepsen, 46, holds an MSc degree in Economics and Business Administration and has been with FLSmidth since 1990. He is President of the Group's USA company which is responsible for the cement activities in North, Central and South America.  
 
The Corporate Management will in future consist of four members: Jørgen Huno Rasmussen, CEO; Poul Erik Tofte, CFO; Bjarne Moltke Hansen and Christian Jepsen, both Executive Vice Presidents.
 
Moveover, Mr Søren Iversen, Executive Vice President has decided to gradually step down from the beginning of next year and will leave the Management Board of FLSmidth A/S effective 1 February 2006.
 
As from this date, the Group Management structure will be simplified in that the Management Boards of the holding company FLSmidth & Co. A/S and the operating company FLSmidth A/S will be identical, thus reducing the Group Management team from the present five to four persons.
 
Having focused the Group through the first phase of the strategic plan, FLSmidth is now fine-tuning its organisation. The keyword is 'ownership' on the part of all employees - in relation to the customers' needs, the quality of the products and the financial performance of the business. These objectives are better achieved in the new smaller units with clear responsibility and overall control of the entire business process, thereby minimising the risk of misunderstandings, errors and delays. In each region, customers will experience a higher level of continuity from tender to commissioning, and as the company itself they will benefit from maximum reliability in project implementation.
 
 
Please address any questions regarding this announcement to Group Chief Executive Officer Jørgen Huno Rasmussen, FLSmidth & Co. A/S at +45 36 18 18 00.
 
FLSmidth & Co. A/S
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