Company Announcement to the Danish Financial Supervisory Authority No. 05-2011, 17 February 2011
The Board of Directors and Executive Management of FLSmidth & Co. A/S have today reviewed and approved the annual report for January to December 2010. The Annual Report is presented in accordance with International Financial Reporting Standards as adopted by the EU, and the parent financial statements are presented in accordance with the Danish Financial Statements Act. Further, the Annual Report is prepared in accordance with additional Danish disclosure requirements for listed companies
The annual report is accessible at FLSmidth's website:
The main conclusions of the Annual Report are:
- In 2010, FLSmidth & Co. delivered satisfactory results, -corresponding to the expectations most recently announced, due to a solid order backlog and strong order execution.
- The order intake increased 56% in 2010 to DKK 20,780m (2009: DKK 13,322m)
- The order backlog increased 12% to DKK 23,708m at the end of 2010 (end of 2009: DKK 21,194m)
- Revenue decreased 13% in 2010 to DKK 20,186m (2009: DKK 23,134m)
- Earnings before interest and tax, depreciation and amortisation and special non-recurring items (EBITDA) decreased 12% to DKK 2,387m in 2010 (2009: DKK 2,725m)
- Earnings before interest and tax (EBIT) decreased 12% in 2010 to DKK 1,990m (2009: DKK 2,261m), corresponding to an EBIT ratio of 9.9% (2009: 9.8%)
- Earnings before tax (EBT) decreased 11% in 2010 to DKK 1,872m (2009: DKK 2,108m)
- Profit for the year decreased 23% in 2010 to DKK 1,278m (2009: DKK 1,664m)
- Cash flow from operating activities amounted to DKK 1,335m in 2010 (2009: DKK 2,470m)
- Cash flow from investing activities amounted to DKK -726m in 2010 (2009: DKK -530m)
In 2010, optimism and customer interest gradually returned after a marked slowdown in customers' investment plans in 2009.
In Cement, India was the prime market and accounted for 35% of global new contracted cement kiln capacity (exclusive of China) in 2010. In addition, activity has primarily been in the developing countries in Asia, Africa and South America which are currently experiencing high economic growth. In 2010, the global market for new contracted cement kiln capacity (exclusive of China) amounted to 65m tonnes per year (2009: 45m tonnes per year), FLSmidth & Co.'s share of the market being 36% (2009: 38%).
The demand for cement capacity depends on local economic growth and local conditions of supply and demand which means that demand for new cement capacity may exist locally irrespective of the overall global business cycles.
Mineral processing, on the other hand, is a global market with global pricing. The demand for new capacity for the extraction of minerals is therefore to a much larger extent than cement dependent on the overall global business cycles. Mineral prices rose to new record highs in 2010, which had a positive effect on the mining companies' plans for future investments. Accordingly, mineral processing investments increased considerably in 2010 compared to 2009.
Outlook for 2011
In 2011, the global market for new contracted cement kiln capacity (exclusive of China) is expected to remain at approximately 65m tonnes per year, of which India is expected to account for approximately 20m tonnes per year. This will result in an increasing order intake regarding major cement projects in 2011 compared to 2010.
Based on the current market prospects, 2011 is expected to see rising investments in the minerals industry, and this is expected to result in an increasing intake of both small and large orders plus customer services orders.
However, the order flow is not necessarily expected to be evenly distributed across the year, which means that the quarterly order intake will vary. Particularly materials handling activities are expected to see positive development and become a growth market for FLSmidth.
In 2011, FLSmidth & Co. expects consolidated revenue of DKK 21-22bn
(2010: DKK 20,186m) and an EBIT ratio of 9-10% (2010: 9.9%)
The prospects of the individual business areas in 2011 are as follows:
Cement DKK 9-10bn
Minerals DKK 10-11bn
Cembrit approx. DKK 1.4bn
Cembrit approx. 4%
- The effect of purchase price allocations regarding GL&V Process is expected to be approximately DKK -90m, which is included in the above expectations.
- Investments (exclusive of acquisition and disposal of enterprises) are expected to be around DKK 900m in 2011 (2010: DKK 681m) as a result of investments in additional Service Super Centres and -continued expansion of the activities in China and India.
- The effective tax rate is expected to be approximately 30%.
Based on the positive developments in cash flow and capital structure in 2010, the Board of Directors proposes that the Annual General Meeting approves distribution of DKK 9 per share in dividend for 2010, corresponding to DKK 479m and 37% of the profit for the year (2009: 22%).
It is FLSmidth's new dividend policy in future to pay out 30-50% of the year's profit in dividend depending on the capital structure and investment opportunities.
Please address any questions to this announcement to Mr Jørgen Huno Rasmussen, Group CEO, telephone +45 36 18 18 00.
An Investor & Press meeting and telephone conference regarding the Annual Report will be held today at 11:00 hours CET at the company's headquarters. For further details, please visit www.flsmidth.com
FLSmidth & Co. A/S
Corporate Communications & Investor Relations
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Source: FLSmidth via Thomson Reuters ONE