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FLSmidth Company Announcements

Annual Report 1 January to 31 December 2007 for FLSmidth & Co. A/S

Company Announcement to the Danish Financial Supervisory Authority No. 8-2008, 28 February 2008

The Board of Directors of FLSmidth & Co. A/S has today reviewed and adopted the Annual Report and accounts for January - December 2007. The Report is presented in accordance with International Reporting Standards, which is approved by the EU, and additional Danish disclosure requirements for annual reports of listed companies.
The full report is accessible via the Internet at:    

The main conclusions 2007 are as follows:
Financial performance
- In 2007, FLSmidth & Co. saw satisfactory development of its order intake, turnover, earnings and cash flow from operating activities with a historically high order backlog at the end of 2007
- The turnover increased 62% in 2007 to DKK 19,967m (2006: DKK 12,311m)
- Earnings before special non-recurring items, depreciation and amortisation (EBITDA) grew 117% in 2007 to DKK 2,100m (2006: DKK 966m)
- Earnings before interest and tax (EBIT) rose 135% in 2007 to DKK 1,824m (2006: DKK 775m), corresponding to an EBIT ratio of 9.1% (2006: 6.3%)
- Earnings before tax (EBT) rose 103% in 2007 to DKK 1,877m (2006: DKK 924m)
- Cash flow from operating activities rose 16% in 2007 to DKK 1,493m (2006: DKK 1,288m)
- The order intake increased 30% in 2007 to DKK 24,061m (2006: DKK 18,534m)
- The order backlog rose 39% to DKK 25,312m at the end of 2007 (end of 2006: DKK 18,264m)
The market situation
In 2007, the level of activity and the order intake were historically high in all business segments.
- Cement: In 2007, the global market for new contracted cement kiln capacity exclusive of China amounted to 125m tonnes per year (2006: 140m tonnes per year), FLSmidth & Co.'s share of the market remaining unchanged at 29%
- Minerals: 2007 saw a growing amount of investment in the minerals industry, a development that is likely to continue in 2008. The upward trend reflects insufficient investments in the preceding years combined with a growing demand for minerals in China and other developing countries
Prospects for 2008
- Sustained favourable business cycles and a continued high level of activity are expected for 2008
- In 2008, FLSmidth & Co. expects a consolidated turnover of approx. DKK 26bn, earnings before special non-recurring items, depreciation and amortisation (EBITDA) of DKK 2.9-3.0bn, earnings before interest and tax (EBIT) of DKK 2.4-2.5bn and earnings before tax (EBT) of DKK 2.3-2.4bn
- Effect of purchase price allocations regarding GL&V Process amounts to some DKK -270m, which is included in the expectations mentioned above
- Cash flow from operating activities in 2008 is expected to amount to around DKK 1,200m, and investments (exclusive of acquisitions) are expected to total approximately DKK 700m
- The effective tax percentage for 2008 is expected to be in the range of 30%. The tax percentage payable, however, is expected to be slightly lower
- For the individual business segments, the prospects for 2008 are as follows:
Turnover approx., DKK 13.5bn, EBIT ratio approx. 9-10%
Turnover approx., DKK 11.5bn, EBIT ratio approx. 11-12%*
Turnover approx., DKK 1.5bn, EBIT ratio approx. 9%
*(exclusive of effect of purchase price allocations at approx. DKK -270m)
- The prospects for 2008 in Cement assume an unchanged market share and a total market for new contracted cement kiln capacity of approximately 100-125m tonnes per year (exclusive of China), which is tantamount to an unchanged high level of demand.
Long-term growth and earnings prospects
2009 is expected to see a continuation of the favourable business cycle and high level of activity, and the turnover is expected to rise compared to the prospects for 2008 in all three business segments. The effect of purchase price allocations regarding GL&V Process in 2009 and onwards is expected to be around DKK -100m per year in the form of amortisation of intangible assets.
In the longer term, earnings from Minerals and the aftermarket (spare parts and services) will account for a larger part of the Group's total earnings, which will cushion the effect of any cyclical market fluctuations in Cement. Against this background, the Group expects its EBIT ratio to be 10-12% in periods of high activity and slightly below that level in periods of low activity.
In the longer term, investments exclusive of acquisitions are expected to total approximately DKK 400m per year.
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.
For further information about FLSmidth, please visit
Yours faithfully

Pernille Friis Andersen
Corporate Communications & Investor Relations