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FLS Industries A/S Annual Report 2003

04.03.2004
Message to the Copenhagen Stock Exchange, No. 08 - 2004, 4 March 2004
FLS Industries A/S Annual Report 2003
The Board of Directors of FLS Industries A/S has today reviewed the 2003 Annual Report.

To read the Annual Report visit:

http://www.flsindustries.com/investor/fls_reports.htm


The main conclusions are as follows:

FLS Group overall
The total earnings before interest and tax (EBIT) of the FLS Group in 2003 amounted to DKK -2,990m (2002: DKK -647m), and earnings before tax (EBT) amounted to DKK -2,550m (2002: DKK 1,347m), which is lower than expected and clearly unsatisfactory.

The FLS Group's net interest-bearing debt was reduced during the year from DKK 2,953m to DKK 2,445m.

Operational main activities
As expected F.L.Smidth Group posted a net turnover of DKK 8.3bn (2002: DKK 7.7bn) and earnings before tax (EBT) at DKK 5m (2002: DKK 49m) which is not satisfactory.

FLS Building Materials posted a net turnover of DKK 3.7bn (2002: DKK 4.9bn) and earnings before interest and tax (EBIT) at DKK 318m (2002: DKK 318m) as expected.

In 2003, the total amount of orders received by the F.L.Smidth Group was DKK 8.8bn (DKK 8.8bn in 2002) and the order backlog at the end of the year amounted to a record high of DKK 7.9bn (DKK 7.6bn in 2002).

Together, F.L.Smidth Group and FLS Building Materials recorded a positive cash flow from operating activities at DKK 591m (DKK 800m in 2002).

Other activities
FLS miljø's earnings before interest and tax (EBIT) for the year 2003 were DKK -933m (DKK -608m in 2002) due to higher costs of processing desulphurisation projects in the UK.

FLS Aerospace's earnings before interest and tax (EBIT) were DKK -2,267m (DKK -202m in 2002), which is due primarily to the write-down of assets in connection with the sales agreement with SR Technics in early February 2004. No further losses are expected to accrue from FLS Aerospace in 2004.

Other Group activities, including the parent company, produced earnings before interest and tax (EBIT) of DKK -64m (DKK -209m in 2002).

During the year activities and associated undertakings were sold for a total amount of DKK 1.2bn.

Next phase of the strategy
It has been decided to further focus the Group's future activities on the development and production of machinery, equipment, systems and services including complete production lines and plants for the global cement and minerals industries. Market share particularly in the minerals industry and the aftermarket is expected to grow.

On this basis, steps will be taken to sell Aalborg Portland and Unicon. Aalborg Portland is a global market leader in white cement and the largest supplier of grey cement in Denmark. Unicon is Scandinavia's largest producer of ready-mixed concrete. Together the two companies are a vertically integrated business unit with a strong market position in Scandinavia.

The above decisions represent a consistent implementation of the announced strategy to create profitability through greater focusing. The divestments will also form a strong basis for further development of the future core business, enabling a satisfactory level of profit that matches the Group's global market position.

Prospects for 2004 for the FLS Group
In 2004, the FLS Group expects a consolidated net turnover in excess of DKK 12bn and earnings before interest, tax and amortisation (EBITA) at the level of DKK 400-500m. The latter should be viewed against a total EBITA result for F.L.Smidth Group, FLS Building Materials and FLS Industries A/S at DKK 346m in 2003. Further, the FLS Group expects earnings before interest and tax (EBIT) at the level of DKK 300-400m and earnings before tax (EBT) at the level of DKK 250-350m.

The results and timing of divestments may have a significant effect on the prospects and are not included in the above figures.

FLS Industries A/S
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