Presentation of FLS Industries

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2004
Presentation of FLS Industries
Jørgen Huno Rasmussen, CEO FLS Industries
A/S Carnegie Small Cap Seminar, Stockholm
14 September 2004
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FLS Industries A/S
Mission Provider of machinery, equipment, systems
and services including complete production lines
and plants for the global cement and minerals
industries
Cement
Minerals
TechnologyConcept
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Facts and Figures about FLS Industries 2004

• Expected turnover 2004 DKK 14bn (EUR 1.9bn)
• Expected EBIT 2004 DKK 3-400m (EUR 40-55m)
• Employees 7,300
• Equity DKK 2.8bn (EUR 400m)
• Market Cap DKK 4.0bn (EUR 550m)
• Balance sheet Positive net financial assets at
  year end

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Back to Core Business

• 1882 F.L.Smidth founded Deliver
  y of machinery to production of cement
• 1884 Aalborg Portland
  established Production of cement
• 20th Century Global cement group
• End of 20th Century Conglomerate Delivery
  of machinery and plants to production of
  cement, building materials, aircraft
  maintenance, environment, packaging,
  transportation, etc.
• Beginning of 21st Century Focus on core
  competences Global provider of machinery,
  equipment, systems and services including
  complete production lines and plants for the
  global cement and minerals industries

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Structural changes in recent years
BEFORE NOW
Decentralized Centralized
Conglomerate Focus on engineering and solutions to cement and minerals industries only
Family dominated Boards Professional Boards
Technology oriented organisation Project oriented organisation
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FLS Industries Business Units
FLS Industries
Other activities
Continuing Activities
Dansk Eternit Holding
F.L.Smidth
Densit
F.L.Smidth Automation
FLS miljø
WIND UP
F.L.Smidth Materials Handling
F.L.Smidth Airtech
Aalborg Portland
SOLD
FFE Minerals
Unicon
SOLD
Pfister
Ventomatic
MAAG Gear
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FLS Industries Business Units
FLS Industries
Continuing Activities
F.L.Smidth supplies complete plants, equipment,
single machine units, spare parts, know-how,
services and maintenance to the cement industry
world-wide
F.L.Smidth
F.L.Smidth Automation
F.L.Smidth Materials Handling
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
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FLS Industries Business Units
FLS Industries
Continuing Activities
FFE Minerals is a worldwide supplier of
machinery, operating and maintenance services to
the metallic mining and mineral industries as
well as to the lime and paper industries
F.L.Smidth
F.L.Smidth Automation
F.L.Smidth Materials Handling
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
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FLS Industries Business Units
FLS Industries
Continuing Activities
Pfister is one of the worlds leading suppliers
of dosing equipment to the cement industry and
related industries
F.L.Smidth
F.L.Smidth Automation
F.L.Smidth Materials Handling
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
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FLS Industries Business Units
FLS Industries
Continuing Activities
Ventomatic is one of the worlds leading
suppliers of complete packing lines to the cement
industry and related industries
F.L.Smidth
F.L.Smidth Automation
F.L.Smidth Materials Handling
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
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FLS Industries Business Units
FLS Industries
Continuing Activities
MAAG Gear is an international supplier of gears
and gear units to the cement industry and related
industries
F.L.Smidth
F.L.Smidth Automation
F.L.Smidth Materials Handling
F.L.Smidth Airtech
FFE Minerals
Pfister
Ventomatic
MAAG Gear
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Geographical presence
The World excl. Europe
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Geografical presence
Europe
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F.L.Smidth Competences and competitive position

• Design and production of complete cement
  production lines and plants

F.L.Smidth no. 1 globally With a 50-60 market
share
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Cement Plant Flow chart
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From tender to contract
Approximately 3 months.
3 9 months
Negotiations
Contract
Quotation
award
Modifications
Contract draft
Financial, legal and commercial conditions
Performance warranties conditions
Logistic information
Technical specifications
Sales price
Cost price estimates
Equipment list
Flow sheet, Proposal drawings
EnquiryTender Documents
Proces design
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From contract to completion
Project management
Planning / Logistics
Accounting / Invoicing
Commissioning
Supervision of erection
Shipping docs. and dispatch
Inspection and expedition
Procurement
Manufacturing/Documentation
General Arrangement
Drawings/specifications
Process design
Contract
Order list
1st year
2nd year
3rd year
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Major contracts under implementation
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Research and Development

• RD focus areas
• Environmental protection (CO2, NOx and other
  emissions, etc.)
• Reduced production costs (Energy consumption,
  productivity, etc.)
• Top priority Reduced use of fossil fuels

• Recent invention HOTDISC
• Handling of alternative fuels without a prior
  reduction in size
• Integral part of the kiln system gt both
  combustion gasses and residual products are
  used in the production process
• Types of alternative fuels Car and truck
  tyres, wood waste, paper sludge, municipal
  waste, etc.

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Global cement consumption
Average growth 3.5
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New cement kiln capacity
Average 1980 2003 24m tonnes per year
Excl. China
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Demand for new cement kiln capacity

• New cement kiln capacity contracted in 2003
  25m tonnes on a yearly basis (on a par with
  the average of the past 25 years)
• Demand for new capacity supported by steady
  growth in global cement consumption
• Annual growth in global cement consumption 3
• Annual growth in world population 70m citizens
• Average cement consumption per capita (p.t. 275
  kg) increasing over time
• Replacement and modernisation of old cement
  plants
• Estimated installed capacity worldwide 1.8bn
  tonnes per year
• If lifetime of cement plant 100 years gt 1 of
  capacity (18m tonnes) replaced p.a.

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Market for extraction of minerals

• FFE Minerals - a niche player in the market for
  extraction of minerals which is five to nine
  times as large as the cement market
• Growing demand for minerals in Asia, in
  particular China
• Increasing raw material prices and investments
  among producers

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FFE Minerals Product Range

• Products Services
• Provider of processes and systems which include
  primary crushing plants, milling systems, and wet
  or dry classification systems for all minerals,
  including iron, gold, copper, nickel, lead, zinc
  and coal.
• Provider of total pyrometallurgical solutions
  from RD through to erection and commissioning
  for alumina and bauxite, lime, pulp and paper and
  the metalliferous industries.
• Provider of total service, maintenance, asset
  management and operational services to the
  minerals and metalliferous industries.

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Minerals Product Spectrum Competitive position
COLD BUSINESS SEGMENT
HOT BUSINESS SEGMENT
MATERIALS HANDLING
PROCESSING
PYRO
crushers
conveyors
feeders
mills
cyclones
floatation
pumps
dewatering
rotary
fluid bed
suspension
FFE MineralsNo. 1-2
FFE MineralsNo. 1-2
FFE MineralsNo. 1-2
New business segment
FFE Minerals a niche playerHeritage brand
namesStaff with good minerals industry
experiencePresence in local marketsTechnical
edge for large scale equipment
Consolidation in the industry
Merger of Nordberg Svedala to form Metso
MineralsAcquisition of Nordberg grinding
business and Luigi Metallurgie by Outokumpu
Acquisition of Alstrom Machinery by
AndritzMerger of Dorr-Oliver Eimco
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FFE Minerals Future Growth

• FFE Minerals will grow through
• Continued focus on growth in spare parts and
  services segment
• Integration of new technology and increased
  product portfolio
• Leveraging the materials handling capabilities of
  F.L.Smidth into the minerals processing market
• Strategic alliances with peer partners to
  strengthen FFE Minerals position
• Acquisition of bolt-on technologies
• Research and development

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Same technology to two different industries
CEMENT MINERALS
Grinding
Automation
Ex. ATOX mills
Materials Handling
Air pollution control
Preheating
Ex. Burners
Calcination
Ex. Gas suspension calciners
Maintenance
Cooling
Training
Ex. SF Cross Bar
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Current Market Developments

• Cement
• Positive trends in demand for new kiln capacity
  continue 30m tpy new kiln capacity contracted
  in 2004 so far
• Temporary slowdown in Chinese market
• Increased level of activity in Vietnam, India,
  Pakistan, Middle East and USA

• Minerals
• Positive trend in demand for new capacity
  continues, although at a slower pace than
  anticipated
• High energy and steel prices as well as possible
  royalty on mined ore has temporarily postponed
  investment decisions
• Geographically, India remains a very active market

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How to reach the 5 EBT-target
A more detailed strategic plan for the
improvement of profitability to be concluded by
the end of 2004

• Focus areas
• Sales policies
• Risk control
• Contract administration
• Project orientation
• Standardisation
• Sourcing from India China
• Integrated geographical presence
• Aftermarket services
• Research product-development
• IT-development
• Synergies in Cement / Minerals
• Expansion within Minerals

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Why invest in FLS Industries ?

• A focused company
• with a unique global market position
• supported by steady growth in global cement
  consumption
• aiming for a 5 EBT ratio