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FLSmidth Company Announcements

Annual Report for FLSmidth & Co. A/S 1 January - 31 December 2015

11.02.2016

Company Announcement to the Danish Financial Supervisory Authority No. 06-2016, 11 February 2016


The Board of Directors and the Executive Board have today considered and approved the Annual Report for the financial year 1 January - 31 December 2015.

The consolidated financial statements are presented in accordance with International Financial Reporting Standards as adopted by the EU. The parent financial statements are presented in accordance with the Danish Financial Statements Act. Further, the Annual Report is prepared in accordance with Danish disclosure requirements for listed companies.

The Annual Report is accessible at FLSmidth's website:

http://www.flsmidth.com/reports


Group CEO Thomas Schulz, FLSmidth & Co. A/S says; "With the Annual Report published today, we showed that we are managing the cyclical downturn well. Despite a very challenging market situation our performance is solid, and our products and services provide a stable and profitable business. The financial result is in line with our guidance, our order intake is up, and we have a positive free cash flow. We will continue to invest in our people and to streamline our footprint to ensure that FLSmidth has an organisation that is geared for the future."

The main conclusions for the Annual Report are:
Challenging market conditions impacted the financial performance in 2015. Reported revenue and earnings were in line with the latest Group guidance. Order intake increased 7%, supported by currency developments. Highest free cash flow in six years owing to the divestment of Cembrit. Reduction in net debt of DKK 0.9bn brings the capital structure on target. The guidance for 2016 reflects high market volatility and low visibility.

Financial result for 2015
The order intake increased 7% to DKK 18,490m (2014: DKK 17,267m).

The order backlog decreased 16% to DKK 14,858m (2014: DKK 17,726m).

Revenue decreased 4% to DKK 19,682m (2014: DKK 20,499m).

The gross profit decreased 3% to DKK 4,946m (2014: DKK 5,125m), corresponding to a gross profit margin of 25.1% (2014: 25.0%).

Earnings before amortisation and impairment of intangible assets (EBITA) decreased 13% to DKK 1,582m (2014: DKK 1,823m), corresponding to an EBITA margin of 8.0% (2014: 8.9%).

The EBITA margin adjusted for one-off costs was 9.7% (2014: 9.7%).

Earnings before interest and tax (EBIT) decreased 19% to DKK 1,141m (2014: DKK 1,416m), corresponding to an EBIT margin of 5.8% (2014: 6.9%).

Profit for the year decreased 48% to DKK 425m (2014: DKK 813m), of which DKK -178m were related to discontinued activities (2014: DKK -68m).

Cash flow from operating activities amounted to DKK 538m (2014: DKK 1,298m) of which DKK 991m were related to continuing activities (2014: DKK 1,178m).

Free cash flow amounted to DKK 1,288m (2014: DKK 700m).

Net interest-bearing debt amounted to DKK -3,674m (end of 2014: DKK -4,593m).

Net working capital amounted to DKK 2,583m (end of 2014: DKK 2,276m).

Return on Capital Employed (ROCE) decreased to 10% (2014: 12%).

Developments in total service activities in 2015
Order intake related to total service activities was unchanged in 2015, accounting for 52% of Group order intake (2014: 56%).

Revenue related to total service activities increased 7% in 2015, accounting for 55% of Group revenue (2014: 50%).

Financial result in Q4 2015
Weak order intake in line with same quarter last year, reflecting customers' focus on cash preservation at yearend. Earnings reflect high volatility and uncertainty related to oil exporting countries and were impacted by one-off costs of DKK -89m in Q4 2015 related to market developments. Marginal improvement in net working capital and a positive free cash flow led to a further reduction in net interest bearing debt.

The order intake decreased 1% to DKK 3,691m (Q4 2014: DKK 3,734m).

Revenue decreased 6% to DKK 5,297m (Q4 2014: DKK 5,627m).

The gross profit decreased 1% to DKK 1,255m (Q4 2014: DKK 1,265m), corresponding to a gross profit margin of 23.7% (Q4 2014: 22.5%).

Earnings before amortisation and impairment of intangible assets (EBITA) decreased 8% to DKK 384m (Q4 2014: DKK 419m), corresponding to an EBITA margin of 7.2% (Q4 2014: 7.4%).

The EBITA margin adjusted for one-off costs was 8.9% (Q4 2014: 10.1%).

Earnings before interest and tax (EBIT) increased 2% to DKK 279m (Q4 2014: DKK 274m), corresponding to an EBIT margin of 5.3% (Q4 2014: 4.9%).

Cash flow from operating activities amounted to DKK 148m (Q4 2014: DKK 739m), of which DKK 333m were related to continuing activities.

Dividend
The Board of Directors proposes to the Annual General Meeting that a dividend of DKK 4 per share (2014: DKK 9) be distributed, corresponding to a total cash distribution of DKK 205m, a pay-out ratio of 49% and a dividend yield of 1.7% (2014: 3.3%).

Guidance for 2016

DKK Guidance 2016 Realised 2015
Revenue*) 17-20bn 19.7bn
EBITA margin 7-9% 8%
ROCE 8-10% 10%
Tax rate 29-31% 32%
CFFI**) -0.4bn -0.1bn

*) At prevailing currency rates
**) Excluding acquisitions and divestments of enterprises and activities

Long-term financial targets
Unchanged

              --------------------------------------------------


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 Annual Report will be held today at 14:00 hours CET at the company's headquarters.

For further details please visit:
http://www.flsmidth.com/en-US/News+and+Press/News/2016/Invitation+to+investor+meeting

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