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FLSmidth Company Announcements

Annual Report for FLSmidth & Co. A/S 1 January - 31 December 2009

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Company Announcement to the Danish Financial Supervisory Authority No. 02-2010, 25 February 2010


The Board of Directors and Group Management of FLSmidth & Co. A/S has today reviewed and adopted the Annual Report for 2009. The Report is presented in accordance with International Financial Reporting Standards, which is approved by the EU, and additional Danish disclosure requirements for annual reports of listed companies.


The Annual Report is accessible at FLSmidth's website:  

The main conclusions of the Annual Report 2009:


Historically high EBIT ratio, profit and cash flow from operating activities in 2009


- In 2009, FLSmidth & Co. posted satisfactory developments in revenue, earnings and cash flow from operating activities


- Revenue decreased 9% to DKK 23,134m in 2009 (2008: DKK 25,285m)


- Earnings before interest and tax, depreciation and amortisation and special non-recurring items (EBITDA) decreased 6% to DKK 2,725m in 2009 (2008: DKK 2,911m)


- Earnings before interest and tax (EBIT) decreased 6% to DKK 2,261m in 2009 (2008: DKK 2,409m), corresponding to an EBIT ratio of 9.8% (2008: 9.5%)


- Earnings before tax (EBT) decreased 1% in 2009 to DKK 2,108m (2008: DKK 2,123m)


- Profit for the year increased 10% to DKK 1,664m in 2009 (2008: DKK 1,515m)


- Cash flow from operating activities increased 6% to DKK 2,470m in 2009 (2008: DKK 2,324m)


- Cash flow from investing activities amounted to DKK -530m in 2009 (2008: DKK -871m).


- The order intake decreased 56% to DKK 13,322m in 2009 (2008: DKK 30,176m)


- The order backlog decreased 30% to DKK 21,194m at the end of 2009 (end of 2008: DKK 30,460m)


The market situation

In the first half of 2009, there was a marked slowdown in the willingness to invest among customers. Planned projects were deferred, ongoing projects were put on hold and several plants stopped production. Inventories were reduced and maintenance was minimised. The customers were mainly focusing on liquidity and cost reduction. In the second half of 2009, the gloomy prospects waned and signs of slightly increased optimism and increased customer interest could be observed.


The demand for cement capacity depends on local conditions of supply and demand and this means that there is a local need for new cement capacity independent of the overall global business cycles. Minerals, on the other hand, is a global market with global pricing. The demand for new capacity for the extraction of minerals is therefore much more dependent on the overall global business cycles.


Cement: The global market for new contracted cement kiln capacity (exclusive of China) amounted to 45m tonnes per year in 2009 (2008: 123m tonnes per year), FLSmidth & Co.'s share of the market being 38% (2008: 32%).


Minerals: Investment in the minerals industry dropped markedly in 2009, overall investments were reduced to half of the historically high level in 2008.


Prospects for 2010

The level of investments both in the cement and minerals industries is expected to increase in 2010 compared to 2009, but is expected to  remain at a lower level than before the global financial crisis. All other things being equal, this will result in an increasing order intake in both Cement and Minerals in 2010 compared to 2009.


- In 2010, the global market for new contracted cement kiln capacity (exclusive of China) is expected to amount to 50m tonnes per year (2009: 45m tonnes per year).


- In 2010, FLSmidth & Co. expects a consolidated revenue of approximately DKK 19-20bn and an EBIT ratio of 8-9%.


- The prospects of the individual business areas in 2010 are as follows:



Cement DKK 9-10bn

Minerals DKK 8-9bn

Cembrit DKK approx. 1.2bn               


EBIT ratio

Cement approximately 9%

Minerals approximately 9%

Cembrit approximately 2%


- The effect of purchase price allocations regarding GL&V Process is expected to be approximately DKK -100m, which is included in the above expectations.


- Cash flow from operating activities for 2010 as a whole is expected to show a positive result, albeit with large fluctuations during the year.


- Investments (exclusive of acquisitions) are expected to be around approximately DKK 400m in 2010.


- The effective tax rate is expected to be approximately 30%


Long-term growth and earnings prospects

In 2009, the global financial crisis severely dampened the cement and minerals producers' willingness to invest. There are signs, however, indicating that particularly the minerals producers' propensity to invest is about to return, as higher minerals prices and economic key indicators are supporting plans for capacity expansion.


In the longer term, it is still expected that particularly urbanisation and industrialisation in developing countries will generate increasing demand for cement and minerals.


In the coming years, earnings from Minerals and Customer Services in both Cement and Minerals are expected to account for a larger share of the Group's total earnings, which will reduce the effect of cyclical market fluctuations in Cement. Against this background, the Group expects its EBIT ratio to be 10-12% in periods of high activity and 8-9% in periods of low activity, where it should be noted that FLSmidth is late cyclical by nature. Adjusted for purchase price allocations regarding GL&V Process, the Group's EBIT ratio was 10.6% in 2008 and 10.2% in 2009. The annual effect of purchase price allocations regarding GL&V ¬Process is in future expected to be approximately DKK -100m.


Moving forward, the annual investments (exclusive of acquisitions) are expected to be approximately DKK 300-400m.


The long-term average sustainable level for addition of new global cement kiln capacity (exclusive of China) is expected to be 60-75m tonnes per year.


Please address any questions to this announcement to Mr Jørgen Huno Rasmussen, Group CEO, telephone +45 36 18 18 00.


An Investor & Press meeting and telephone conference regarding the Annual Report will be held today at 15:00 hours CET at the company's headquarters. For further details, please visit  



FLSmidth & Co. A/S

Pernille Friis Andersen

Corporate Communications & Investor Relations