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FLSmidth Company Announcements

Interim Report for FLSmidth & Co. A/S 1 January - 30 June 2013

23.08.2013

Company Announcement to the Danish Financial Supervisory Authority No. 20-2013, 23 August 2013

The Board of Directors and the Group Management of FLSmidth & Co. A/S have today reviewed and approved the Interim Report for 1 January to 30 June 2013.

The Interim Report has been presented in accordance with IAS 34 and additional Danish information requirements regarding interim reporting of listed companies.

No review or auditing of the interim report has taken place.

The Interim Report is accessible at FLSmidth's website:
http://www.flsmidth.com/reports

The main conclusions of the Interim Report are:
Outlook for mining capital expenditures deteriorated further in Q2.

Solid performance by all segments but Material Handling.

Special items impacting both Q2 results and full year guidance.

Efficiency programme to significantly improve future profits and returns.


Financial results in Q2 2013:
The order intake decreased 22% to DKK 5,626m (Q2 2012: DKK 7,246m)

Revenue increased 14% to DKK 6,456m (Q2 2012: DKK 5,653m)

Earnings before amortisation and impairment of intangible assets (EBITA) decreased 50% to DKK 287m (Q2 2012: DKK 576m), corresponding to an EBITA margin of 4.4% (Q2 2012: 10.2%) 
                                                  
Earnings before amortisation and impairment of intangible assets (EBITA) adjusted for special items increased 6% to DKK 610m (Q2 2012: DKK 576m), corresponding to an EBITA margin of 9.4% (Q2 2012: 10.2%)

Earnings before interest and tax (EBIT) decreased 39% to DKK 195m (Q2 2012: DKK 321m) corresponding to an EBIT margin of 3.0% (Q2 2012: 5.7%)

The profit decreased 36% to DKK 143m (Q2 2012: DKK 223m)

Cash flow from operating activities amounted to DKK -51m (Q2 2012: DKK 333m)


Financial results in Q1-Q2 2013:
The order intake decreased 22% to DKK 10,653m (Q1-Q2 2012: DKK 13,667m)

The order backlog decreased 8% to DKK 26,983m (end of 2012: DKK 29,451m)

Revenue increased 16% to DKK 12,107m (Q1-Q2 2012: DKK 10,482m)

Earnings before amortisation and impairment of intangible assets (EBITA) decreased 45% to DKK 541m (Q1-Q2 2012: DKK 984m), corresponding to an EBITA margin of 4.5% (Q1-Q2 2012: 9.4%)

Earnings before amortisation and impairment of intangible assets (EBITA) adjusted for special items decreased 12% to DKK 864m (Q1-Q2 2012: DKK 984m), corresponding to an EBITA margin of 7.1% (Q1-Q2 2012: 9.4%)

Earnings before interest and tax (EBIT) decreased 45% to DKK 361m (Q1-Q2 2012: DKK 662m) corresponding to an EBIT margin of 3.0% (Q1-Q2 2012: 6.3%)

The profit decreased 62% to DKK 177m (Q1-Q2 2012: DKK 464m)

Cash flow from operating activities amounted to DKK -517m (Q1-Q2 2012: DKK 216m)

Net interest-bearing debt (excl. Cembrit) amounted to DKK -4,708m (end of 2012: DKK -3,183m)

Working capital (excl. Cembrit) amounted to DKK 2,212m (end of 2012: DKK 1,629m)

Outlook for 2013
The guidance for 2013 has been updated to include special items impacting the second quarter results and the full-year results.
 
FLSmidth & Co. (now including Cembrit) expects consolidated revenue of DKK 26-28bn (previous expectation DKK 27-30bn) and an EBITA margin of 4-5% including special items (previous expectation 8-10%).

The margin guidance still includes one-off costs of DKK -200m related to restructuring, integration and ERP/business system implementation (as announced in the Annual Report 2012), of which DKK 163m has already been booked in the first half of 2013.

The guidance for 2013 has been updated to include the following special items:
The launch of an efficiency programme is expected to create a sustainable EBITA improvement of DKK 750m with full-year effect in 2015.

The implementation will result in one-off restructuring costs of around DKK -500m, DKK -350m of which is expected to be booked in 2013, and the remaining DKK -150m in 2014 and 2015.

The second quarter result includes one-off costs of DKK -323m related to a reassessment of the order backlog in Material Handling. The reassessment is based on a more prudent evaluation of time to complete certain risky legacy contracts, which minimises the risk of further negative surprises.

Cembrit will be reported as continuing business from the third quarter as a consequence of the decision to stop the sales process. The guidance for 2013 has been updated to include Cembrit's expected full year revenue of DKK 1.4bn and EBITA margin of 0%.

A thorough inventory review and a more stringent assessment of ageing inventory items are expected to result in a write-down of DKK 200m in the third quarter.

As a consequence of a deteriorating outlook for mining investments in general and for the Australian coal industry in particular, impairment tests have revealed indications of impairment amounting to some DKK 800m in connection with the assets acquired in relation to the Ludowici Group. The impairment loss will impact the EBIT results in Customer Services and Mineral Processing, divided approximately 60/40 between the two divisions.

As a consequence of the special items it is not possible to guide on a specific tax rate for 2013. The underlying tax rate is still 36% as previously guided.

Cash flow from investing activities (including acquisitions but excluding disposals) is expected to amount to the level of DKK -0.8bn (previous guidance DKK -1bn) (2012: DKK -3.6bn).

Return on capital employed (ROCE) is now expected to be 7-8% in 2013 (previous guidance: 15%) (2012: 19%).


Please address any questions to this announcement to Mr Thomas Schulz, Group CEO, telephone +45 36 18 18 00.

An investor & press meeting and telephone conference regarding the Interim Report will be held today at 11:00 hours CET at the company's headquarters.

For further details please visit www.flsmidth.com.

http://www.flsmidth.com/en-US/News+and+Press/News/2013/Invitation+to+Investor+Meeting+Q2+2013

FLSmidth & Co. A/S
Corporate Communications & Investor Relations