Q3-REPORT

1
Q3-REPORT

• Presented by Peter Assam, CEO 21 November,
  2001

2
FLS Three Business Areas

• The F.L.Smidth Group offers service, machines and
  entire production lines to the cement and
  minerals processing industries world wide.
• FLS miljø supplies biomass and desulphurisation
  equipment, high-tech boilers and air filters for
  power plants and process industry.
• FLS Building Materials products are based on
  cement with global production of white cement and
  densit and regional activities in grey cement,
  concrete and fibre cement.
• FLS Aerospace offers nose-to-tail aircraft
  maintenance with lease and repair of components.

3
Agenda

• Spring 2000 to Fall 2001
• improving earnings platform and transparency
• Business Areas
• mixed market conditions and outlook
• Group Figures
• operational earnings and CFFO improve in Q3
• 2001 and onwards
• Focus, rightsizing and cutting debt
  
• Down revision of EBIT 2001 Forecast
• Adjusting to collapse in demand and no/low growth
  scenario

4
Improving Earnings Platform and Transparency

• Focus and Transparency
• buy back of 50 of Aalborg Portland
• merger of Aalborg Portland Holding and FLS
  Industries
• sale of RMIG
• Sale of property, CPH
• Improved Earnings Platform
• Engineering
• integration of F.L.Smidth Co. and Fuller
  Company
• FLS miljøs new CEO continues rightsizing
• FLS miljø Bulk Handling to FFE Bulk Handling
• Waste to Energy closed
• acquisitions broaden F.L.Smidth Groups product
  range and strengthen turnkey skills
• reorganising FLS miljøs APC into one global
  business unit

5
Improving Earnings Platform and Transparency

• Focus and Transparency
• buy back of 50 of Aalborg Portland
• merger of Aalborg Portland Holding and FLS
  Industries
• sale of RMIG
• Sale of property, CPH
• Improved Earnings Platform
• Building Materials
• investing in new white cement capacity in Sinai
  and Malaysia
• new management to turn around US concrete
  operation
• Phillippine ready mix operation closed
• exit concrete products in US and Spain
• Unicons Norwegian acquisitions fortifie lead
  position in Scandinavia
• DEH reorganises from country set up to functions
  
• Unicon focusses on ready mix concrete

6
Improving Earnings Platform and Transparency

• Focus and Transparency
• buy back of 50 of Aalborg Portland
• merger of Aalborg Portland Holding and FLS
  Industries
• sale of RMIG
• Sale of property, CPH
• Improved Earnings Platform
• Aerospace
• new international management team
• Formula One programme reduces turntimes and cuts
  man hours per check
• less investments improve efficiency in Rotables
• falling overheads and pay roll
• Restructuring to post 11 September demand

7
F.L.Smidth Group
Q3 2000 Q3 2001 5,299 942 (24) (661) (735)
Net turnover 5,381 Q3 2001 5,299 942 (24) (661) (735)
Gross profit 702 Q3 2001 5,299 942 (24) (661) (735)
EBIT (301) Q3 2001 5,299 942 (24) (661) (735)
Cash flows from operating activities (133) Q3 2001 5,299 942 (24) (661) (735)
Cash flows from operating and investing activities (137) Q3 2001 5,299 942 (24) (661) (735)
DKKm Turnover 4,256 699 147 22 114 61 5,299 Order Intake Order backlog 5,148 511 435 7 135 353 6,590
Cement Turnover 4,256 699 147 22 114 61 5,299 4,764 Order backlog 5,148 511 435 7 135 353 6,590
Mining Turnover 4,256 699 147 22 114 61 5,299 584 Order backlog 5,148 511 435 7 135 353 6,590
Pyro processing Turnover 4,256 699 147 22 114 61 5,299 454 Order backlog 5,148 511 435 7 135 353 6,590
Chemical and petrochemical Turnover 4,256 699 147 22 114 61 5,299 14 Order backlog 5,148 511 435 7 135 353 6,590
Power generation Turnover 4,256 699 147 22 114 61 5,299 163 Order backlog 5,148 511 435 7 135 353 6,590
Other Turnover 4,256 699 147 22 114 61 5,299 183 Order backlog 5,148 511 435 7 135 353 6,590
Total sales prices Turnover 4,256 699 147 22 114 61 5,299 6,145 Order backlog 5,148 511 435 7 135 353 6,590
8
F.L.Smidth Group
Q3 2000 Q3 2001 5,299 942 (24) (661) (735)
Net turnover 5,381 Q3 2001 5,299 942 (24) (661) (735)
Gross profit 702 Q3 2001 5,299 942 (24) (661) (735)
EBIT (301) Q3 2001 5,299 942 (24) (661) (735)
Cash flows from operating activities (133) Q3 2001 5,299 942 (24) (661) (735)
Cash flows from operating and investing activities (137) Q3 2001 5,299 942 (24) (661) (735)
DKKm Turnover 4,256 699 147 22 114 61 5,299 Order Intake Order backlog 5,148 511 435 7 135 353 6,590
Cement Turnover 4,256 699 147 22 114 61 5,299 4,764 Order backlog 5,148 511 435 7 135 353 6,590
Mining Turnover 4,256 699 147 22 114 61 5,299 584 Order backlog 5,148 511 435 7 135 353 6,590
Pyro processing Turnover 4,256 699 147 22 114 61 5,299 454 Order backlog 5,148 511 435 7 135 353 6,590
Chemical and petrochemical Turnover 4,256 699 147 22 114 61 5,299 14 Order backlog 5,148 511 435 7 135 353 6,590
Power generation Turnover 4,256 699 147 22 114 61 5,299 163 Order backlog 5,148 511 435 7 135 353 6,590
Other Turnover 4,256 699 147 22 114 61 5,299 183 Order backlog 5,148 511 435 7 135 353 6,590
Total sales prices Turnover 4,256 699 147 22 114 61 5,299 6,145 Order backlog 5,148 511 435 7 135 353 6,590
9
FLS miljø
Q3 2000 Q3 2001
Net turnover 1,134 1,180
Gross profit 128 107
EBIT (157) (99)
Cash flows from operating activities (104) 150
Cash flows from operating and investing activities (127) 134
DKKm Turnover Order Intake Order backlog
Biomass power generation 83 9 435
Fossil power generation 399 751 1,343
APC 698 667 591
Total sales prices 1,180 1,427 2,369
10
FLS miljø
Q3 2000 Q3 2001
Net turnover 1,134 1,180
Gross profit 128 107
EBIT (157) (99)
Cash flows from operating activities (104) 150
Cash flows from operating and investing activities (127) 134
DKKm Turnover Order Intake Order backlog
Biomass power generation 83 9 435
Fossil power generation 399 751 1,343
APC 698 667 591
Total sales prices 1,180 1,427 2,369
11
FLS Building Materials
DKKm APH Q3 2000 FLS Building Materials
Q3 2001
Net turnover 4,136 4,322
Gross profit 1,823 1,825
EBITDA 738 660
EBIT 353 240
EBT 1,864 202
CFFO 551 380
CFFI (1,864) (305)
12
FLS Building Materials
DKKm Aalborg Portland Aalborg Portland Unicon Group Unicon Group Dansk Eternit Holding Dansk Eternit Holding Densit Densit
Q3 2000 Q3 2001 Q3 2000 Q3 2001 Q3 2000 Q3 2001 Q3 2000 Q3 2001
Net turnover 1,267 1,212 2,069 2,358 870 725 86 103
Gross profit 681 634 857 966 237 162 45 50
EBITDA 331 340 303 289 110 23 6 10
EBIT 225 240 97 46 52 (45) 4 8
13
FLS Aerospace
Q3 2000 Q3 2001
Net turnover 2,403 2,478
Gross profit 65 541
EBIT (427) 164
Cash flows from operating activities (264) 1
Cash flows from operating and investing activities (577) (149)
14
Reasons for Q1-Q3-Figures - Earnings and Cash
Flow

• F.L.Smidth Group Deficit from Weak US-Market and
  Higher Execution Costs
• time lag between slow demand from US-market and
  reaction hereto
• Q2
• order intake, back log and target intact despite
  US slow down
• largest order in European market
• acquisitions broaden product range and strengthen
  turnkey skills
• FFE Minerals high performance reflects
  restructuring
• after-market sales maintain growth target
• Q3
• satisfactory order intake despite weak markets

15
Reasons for Q1-Q3-Figures - Earnings and Cash
Flow

• FLS miljøs Order Backlog End 2000 Was Poor
• order intake Q1 was below expectations
• cost base matches order potential in next months
• Q2
• order intake and outlook improves in US and
  Europe
• business tracks new managements plan
• Q3
• slowing order intake
• order execution off track on UK project

16
Reasons for Q1-Q3-Figures - Earnings and Cash
Flow

• FLS Building Materials Usually Posts Deficit in
  Q1
• Dansk Eternit suffers from DEF 1994s
  receivership
• Sales reflect normalised weather conditions
• Q2
• Dansk Eternits sales slip further in Denmark
• US slowdown dampens Unicons profit in turnaround
• Cement export offsets lower demand in Denmark
• International price pressure on white cement
• Down revision of earnings forecast
• Q3
• US and Polish stand still fuels down revision

17
Reasons for Q1-Q3-Figures - Earnings and Cash
Flow

• FLS Aerospace Improves Performance in High Season
• Q2
• Third consecutive quarter with EBIT in black
• Strong USD hikes costs in Component Management
• Higher productivity and renegotiated contracts
  increase earnings expectations
• Q3
• Continuous improvement untill 11 September

18
FLS Group Profit and Loss Account
DKKm Q1 2000 H1 2000 Q3 2000 Year 2000 Q1 2001 H1 2001 Q3 2001
Net turnover 4,295 9,169 13,980 19,205 4,195 9,014 13,812
Gross profit 1,020 1,893 3,056 4,471 1,090 2,287 3,546
EBIT (80) (420) (569) (458) (76) 6 197
Net result 1,528 1,117 808 843 (125) (143) 25
CFFO (731) (621) (243) (26) (522) 662 815
CFFI 308 (288) (2,291) (2,500) 131 (10) (274)

19
2001 and onwards

• Optimise across F.L.Smidth Group
• speed up after-market sales - spares and service
• improve turnkey and civil engineering skills
• focus on cement and minerals segments
• FLS miljø Grows Three Segments
• marketing technologies via international
  partnerships
• use core knowhow in new businesses on ad hoc
  basis
• Harvest Synergies between Engineering Companies
• Grow Key Product Areas in FLS Building Materials
• expand global production capacity in white cement
• consolidate industry and specialise fibre cement
  plants - expand product range
• transfer best practise in Unicons One Company
  programme
• - turnaround US concrete operation
• leverage Densits off-shore orders
• Optimise Strategic Value of FLS Aerospace
• Divest Non-Core Assets, Prune Balance Sheet and
  Cut Debt

20
2001 and onwards

• Optimise across F.L.Smidth Group
• speed up after-market sales - spares and service
• improve turnkey and civil engineering skills
• focus on cement and minerals segments
• FLS miljø Grows Three Segments
• marketing technologies via international
  partnerships
• use core knowhow in new businesses on ad hoc
  basis
• Harvest Synergies between Engineering Companies
• Grow Key Product Areas in FLS Building Materials
• expand global production capacity in white cement
• consolidate industry and specialise fibre cement
  plants - expand product range
• transfer best practise in Unicons One Company
  programme
• - turnaround US concrete operation
• leverage Densits off-shore orders
• Optimise Strategic Value of FLS Aerospace
• Divest Non-Core Assets, Prune Balance Sheet and
  Cut Debt

21
Down Revision of EBIT 2001 Forecast

• Forecast is lowered to DKK 200mill
• FLS Aerospaces earnings fall DKK 400mill from
  lower revenue and restructuring to subdued volume
• FLS Building Materials suffers from US slump and
  Polish stand still
• FLS miljø increases deficit due to higher
  execution costs and slowing order intake
• F.L.Smidth Groups order back log and intake is
  intact with order execution now on track
• Unspecified DKK 100mill mirrows significant
  uncertainty and risks on wide range of items
• Board recommends a dividend of DKK 0 for 2001