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FLSmidth releases financial results for 2010

World Cement,

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 DKK20 780 million (2009: DKK13 322 million).
  • The order backlog increased 12% to DKK23 708 million at the end of 2010 (end of 2009: DKK21 194 million).
  • Revenue decreased 13% in 2010 to DKK20 186 million (2009: DKK23 134 million).
  • Earnings before interest and tax, depreciation and amortisation and special non-recurring items (EBITDA) decreased 12% to DKK2387 million in 2010 (2009: DKK2725 million).
  • Earnings before interest and tax (EBIT) decreased 12% in 2010 to DKK1990 million (2009: DKK2261 million), corresponding to an EBIT ratio of 9.9% (2009: 9.8%).
  • Earnings before tax (EBT) decreased 11% in 2010 to DKK1872 million (2009: DKK2108 million).
  • Profit for the year decreased 23% in 2010 to DKK1278 million (2009: DKK1664 million).
  • Cash flow from operating activities amounted to DKK1335 million in 2010 (2009: DKK2470 million).
  • Cash flow from investing activities amounted to DKK -726 million in 2010 (2009: DKK -530 million).

Market trends

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 65 million tpa (2009: 45 million tpa), 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 65 million tpa, of which India is expected to account for approximately 20 million tpa. 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 DKK21 – 22 billion

(2010: DKK20 186 million) and an EBIT ratio of 9 – 10% (2010: 9.9%)

The prospects of the individual business areas in 2011 are as follows:

Revenue: Cement DKK 9 –10 billion; Minerals DKK 10 – 11 billion; Cembrit approximately DKK 1.4 billion.

EBIT ratio: Cement 9 – 10%; Minerals 10 – 11%; Cembrit approximately 4%.

  • The effect of purchase price allocations regarding GL&V Process is expected to be approximately DKK -90 million, which is included in the above expectations.
  • Investments (exclusive of acquisition and disposal of enterprises) are expected to be around DKK900 million in 2011 (2010: DKK 681 million) 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 DKK9 per share in dividend for 2010, corresponding to DKK479 million 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.

The full report is accessible here.

Latest acquisition news

Meanwhile, FLSmidth has also announced that its offer to acquire Australian company ESSA Austalia Limited has been declared unconditional following the acceptance of more than 90% of FLSmidth shareholders. FLSmidth will now proceed with the statutory process of compulsory acquisition of the remaining shares.

"The acquisition will strengthen FLSmidth's minerals offerings. ESSA's world leading sampling and sample preparation equipment will fit perfectly into our existing product portfolio and the acquisition will at the same time strengthen our local presence in Australia", commented CEO Jørgen Huno Rasmussen, FLSmidth & Co. A/S.

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