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FLSmidth first half results

World Cement,

The Board of Directors and the Group Management of FLSmidth & Co. A/S August 2010) reviewed and approved the interim report for the FLSmidth & Co. Group for the period 1 January - 30 June 2010.

Main conclusions

Sharp increase in order intake in the first half of 2010 and upward adjustment of expectations for 2010.

  • The order intake increased 127% to DKK 12.716 billion (first half of 2009: DKK 5.611billion).
  • The order backlog increased 26% to DKK 26.621 billion since the turn of the year (end of 2009: DKK 21.194 billion).
  • The revenue decreased 13% to DKK 9.413 billion (first half of 2009: DKK 10.766 billion).
  • Earnings before interest, tax, depreciation and amortization (EBITDA) decreased 13% to DKK 1.047 billion (first half of 2009 DKK 1.205 billion) corresponding to an EBITDA ratio of 11.1% (first half of 2009: 11.2%).
  • Earnings before interest and tax (EBIT) decreased 18% to DKK 837 million (first half of 2009: DKK 1.022 billion) corresponding to an EBIT ratio of 8.9% (first half of 2009: 9.5%).
  • Earnings before tax (EBT) decreased 28% to DKK 710 million (first half of 2009: DKK 988 million).
  • The profit for the period decreased 46% to DKK 491million (first half of 2009: DKK 904 million).
  • Cash flow from operating activities increased 21% to DKK 736 million (first half of 2009: DKK 608 million).
  • Net interest-bearing receivables by the end of the first half of 2010 amounted to DKK 1.390 billion (end of 2009: DKK 1.085 billion).

Prospects for 2010

  • The expectations for the cement market in 2010 remain unchanged at 50 million tpa new contracted cement kiln capacity worldwide (exclusive of China).
  • FLSmidth & Co. upgrades its expectations for consolidated revenue in 2010 to DKK 20 – 21 billion (previous expectation DKK 19 – 20 billion) and maintains the expectation for the EBIT ratio at approximately 8-9%
  • Cement revenue in 2010 is estimated to be DKK 9.5 – 10 billion; minerals revenue DKK 9-9.5 billion and Cembrit approximately DKK 1.2 billion.

Market situation

Investments in the mineral industry made a strong comeback in the second quarter of 2010, where a number of contracts within gold, copper, coal, and phosphate became effective.

So far, the propensity to invest has not been significantly affected by higher mine taxes in Australia, unrest in the eurozone or increasing concern over the growth in China. The list of potential sales opportunities in minerals remains long, and the company is engaged in substantive negotiations with a number of customers. It is expected that the minerals industry’s investments will develop positively over the coming years, albeit with quarterly fluctuations in the order intake.

In 2010, the global market for new contracted cement kiln capacity (exclusive of China) is expected to be around 50 million tpa ( 2009: 45 million tpa), based on local demand for new capacity in particular in India, Indonesia, South America and Africa.

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