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2002

2002. Annual Report 2002. Agenda. Main conclusions Annual Accounts Core activities F.L.Smidth Group FLS Building Materials Non-strategic activities FLS Aerospace FLS miljø Other Prospects for 2003 Conclusion Questions. Ma in conclusions. FLS Group

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2002

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  1. 2002 Annual Report 2002

  2. Agenda • Main conclusions • Annual Accounts • Core activities • F.L.Smidth Group • FLS Building Materials • Non-strategic activities • FLS Aerospace • FLS miljø • Other • Prospects for 2003 • Conclusion • Questions

  3. Main conclusions FLS Group • Turnover DKK 16,444m (DKK 18,930m in 2001). • Earnings before interest and tax (EBIT) DKK –647m (DKK 195m in 2001) – on a par with expectations. • Earnings before tax (EBT) DKK –1,347m (DKK –12m in 2001) – on a par with expectations. • Net interest-bearing debt DKK 2,953m (DKK 4,990m in 2001). • Cash flows from operating activities DKK 714m (DKK 345m in 2001 adjusted for NKT dividend).

  4. Financial highlights for Group Financial highlights for the activities of the Group

  5. Focusing Disposal of non-strategic activities

  6. Cash flows Cash flows *Adjusted for NKT Holding dividend in 2001

  7. Balance sheet Balance sheet

  8. Main conclusions • Order intake higher than anticipated • Net turnover lower than last year and lower than anticipated • EBIT and EBT on a par with 3rd quarter estimate • Highly improved cash flows from operating activities • Order backlog increased DKK 1.1bn to DKK 7.6bn • Significant orders in Algeria, South Africa, China, Libya, USA and UK • Sales of services and spare parts fell in 2002 • Market for new kiln capacity still under pressure Annual Accounts 2002 F.L.Smidth Group

  9. Financial highlights F.L.Smidth Group Annual Accounts 2002 F.L.Smidth Gruppen

  10. Global cement consumption F.L.Smidth Group Annual Accounts 2002 F.L.Smidth Group

  11. Yearly contracted cement kiln capacity F.L.Smidth Group *exclusive of China Annual Accounts 2002 F.L.Smidth Group

  12. Order intake 1991-2002 F.L.Smidth Group Annual Accounts 2002 F.L.Smidth Group

  13. Order backlog in sales prices F.L.Smidth Group Annual Accounts 2002 F.L.Smidth Group

  14. Geographical distribution of orders F.L.Smidth Group Annual accounts 2002 F.L.Smidth Group

  15. Prospects F.L.Smidth Group • Total order backlog DKK 7,619m • Majority to be processed in 2003-2004 • Same level of activity in 2003 as in 2002 • Earnings before tax (EBT) expected to be slightly above 2002 • At the end of the year projects in progress were, as a whole, in accordance with the latest plans and budgets Annual Accounts 2002 F.L.Smidth Group

  16. Main conclusions • EBIT DKK 318m, better than 2001 (DKK 294m) as expected • EBIT from core activities DKK 334m (DKK 324m) • Market share generally maintained • Investments kept at a low level • Undertakings and activities sold at DKK 1.0bn • Net cash flow DKK 1.3bn (DKK 0.3bn) • NIBD reduced to DKK 1.4bn (DKK 2.7bn) • ROCE 8.0% (5.4%) and ROCE in core activities 9.6% (7.6%) Annual Accounts 2002 FLS Building Materials

  17. Financial highlights FLS Building Materials – core activities Annual Accounts 2002 FLS Building Materials

  18. Focusing FLS Building Materials • 2002 was a busy year focusing on divestments: • Aalborg Portland: Ships • Unicon: Paving stone activities in Poland, DK and US All US activities (RMC and Pumping) • DEH: Højslev Teglværk and office building • Divestment targets achieved in 2002 • In 2003 the last non-core activities will be sold Annual Accounts 2002 FLS Building Materials

  19. Market FLS Building Materials Aalborg Portland: • White cement plants in Egypt and Malaysia on stream • Conversion of grey kiln in Aalborg to white cement production • Market share in grey cement maintained Unicon: • Strategy to focus on ready-mix concrete implemented • Focus on ready-mix concrete in Northern Europe • Keener competition Dansk Eternit Holding: • Focus on fibre cement • Increases sales in Danmark Densit: • Recession in industrial flooring Annual Accounts 2002 FLS Building Materials

  20. Prospects for 2003 FLS Building Materials • No support from market in Scandinavia • Improved earnings from global sales of white cement • Cost reductions and higher efficiency • EBIT in 2003 on a par with 2002 Annual Accounts 2002 FLS Building Materials

  21. Main conclusions FLS Aerospace • Restructuring and capacity adjustments announced in 2001 are implemented • From 2.3m to 1.6m man-hours • Write-downs on stocks and buildings at about DKK 100m • Higher pensions commitments during 2002 • Order backlog exceeds DKK 9bn • Long-term contracts account for 60% of capacity in 2003 • Positive cash flow from operating activities • 4th quarter earnings lower than anticipated – primarily due to sluggish order intake in Component Management Annual Accounts 2002 Non-strategic business areas

  22. Financial highlights FLS Aerospace Annual Accounts 2002 Non-strategic business areas

  23. Prospects FLS Aerospace • Prospects for the aviation industry subject to great uncertainty – but key customers likely to continue to grow • Due to cost reductions FLS Aerospace expects to significantly improve earnings in 2003. • FLS Industries is studying opportunities for partnership / buyers of the company • FLS Industries expects a settlement by end of 2003 Annual Accounts 2002 Non-strategic business areas

  24. Main conclusions FLS miljø • Restructuring and divestment of biomass and boiler activities implemented • Air Pollution Control sold to F.L.Smidth Group at 1 July 2002 • Focus on processing orders in hand • - primarily desulphurisation plants • Year’s net result mainly reflects difficult UK desulphurisation contract landed in 1999 • Total additional project processing costs at DKK 500m • Legal action against British steel and erection contractor under preparation • Caught up with large part of the delay • Critical erection phase expected finished in 2nd quarter 2003 Annual Accounts 2002 Non-strategic business areas

  25. Financial highlights FLS miljø Annual Accounts 2002 Non-strategic business areas

  26. Prospects FLS miljø • Continued focus on order processing and handling of related risks • Biomass – operating and maintenance contracts to be sold • FLS miljø projects negative earnings before interest and tax (EBIT) in 2003 • There still remain projects that entail risks during the completion phase Annual Accounts 2002 Non-strategic business areas

  27. Main conclusions and prospects Other activities • FLS Industries has adjusted its activities and capacity in 4th quarter • Pedershaab faced a sluggish market in 2002 • Capacity adjustments introduced in 4th quarter • Pedershaab to be sold in 2003 • Dansk Træemballage sold at 1 October to the company’s management • Sale of Secil shares expected to take place as expected – by the end of March at the latest • A number of properties, sites and investments are to be sold by the end of 2003 Annual Accounts 2002 Non-strategic business areas

  28. Prospects for 2003 2003 expected to be a challenging year due to difficult market conditions FLS Group expects • A turnover slightly above DKK 15bn • Earnings before interest and tax (EBIT) between DKK 300m and DKK 400m • Earnings before tax (EBT) between DKK 250m and DKK 350m before disposals that may have a significant effect, either positive or negative, on the financial results.

  29. Conclusion • F.L.Smidth strongly placed as world’s number one in equipment for cement production, etc. • Strongly placed in cement-related building materials in Northern Europe • Improvement of core undertaking earnings • Disposal of non-core undertakings • Focus on improving cash flow from operating activities

  30. 2002 Questions

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