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FLSmidth 1st quarter interim report for 2013 was released on 17 May 2013. Best viewed on a full screen mode, this first quarterly report informs the reader about how well FLSmidth's business is doing financially, as well as FLSmidth's growth strategies and new financial targets projected for next quarter.
Citation preview
16/05/2013
1
Presentation of Interim Report Q1 2013
17 May 2013Interim Report Q1 2013 1
Forward-looking statements
Interim Report Q1 2013
FLSmidth & Co. A/S’ financial reports, whether in the form of annual reports or interim reports, filed with the Danish Business Authority and/or announced via the company’s website and/or NASDAQ OMX Copenhagen, as well as any presentations based on such financial reports, and any other written information released, or oral statements made, to the public based on this interim report or in the future on behalf of FLSmidth & Co. A/S, may contain forward-looking statements.
Words such as ‘believe’, ‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘target’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance identify forward-looking statements.Examples of such forward-looking statements include, but are not limited to:• statements of plans, objectives or goals for future operations, including those related to FLSmidth & Co. A/S markets, products, product research and product
development• statements containing projections of or targets for revenues, profit (or loss), capital expenditures, dividends, capital structure or other net financial items• statements regarding future economic performance, future actions and outcome of contingencies such as legal proceedings and statements regarding the underlying
assumptions or relating to such statements• statements regarding potential merger & acquisition activities. These forward-looking statements are based on current plans, estimates and projections. By their very
nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which may be outside FLSmidth & Co. A/S’s influence, and which could materially affect such forward-looking statements.
FLSmidth & Co. A/S cautions that a number of important factors, including those described in this presentation, could cause actual results to differ materially from those contemplated in any forward-looking statements.
17 May 2013Interim Report Q1 2013 2
p y g
Factors that may affect future results include, but are not limited to, global as well as local political and economic conditions, including interest rate and exchange rate fluctuations, delays or faults in project execution, fluctuations in raw material prices, delays in research and/or development of new products or service concepts,interruptions of supplies and production, unexpected breach or termination of contracts, market-driven price reductions for FLSmidth & Co. A/S’ products and/or services, introduction of competing products, reliance on information technology, FLSmidth & Co. A/S’ ability to successfully market current and new products, exposure to product liability and legal proceedings and investigations, changes in legislation or regulation and interpretation thereof, intellectual property protection, perceived or actual failure to adhere to ethical marketing practices, investments in and divestitures of domestic and foreign enterprises, unexpected growth in costsand expenses, failure to recruit and retain the right employees and failure to maintain a culture of compliance.Unless required by law FLSmidth & Co. A/S is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of this presentation.
16/05/2013
2
Th S h l 48 ld d G iti
New Group CEO since 1 May 2013
New CEO
Thomas Schulz, 48 years old and German citizen
MSc & PhD in Engineering with a dissertation in Mineral Mining and Quarrying
Former member of Sandvik’s Group Executive Management
Leadership style: Performance driven and ambitious team playerteam player
17 May 2013Interim Report Q1 2013 3
Great business model with a sustainable profitable
Reasons for joining FLSmidth
New CEO
pgrowth potential
International company with strong brand name andperformance
Exciting product offerings within both minerals and cement
Scandinavian business culture and heritage
Great match – FLSmidth is a reflection of what I have done the last 20 years
17 May 2013Interim Report Q1 2013 4
16/05/2013
3
Large pool of professional business people
First impressions of FLSmidth
New CEO
Large pool of professional business peopleValue-driven company with a strong engineering base
Customer intimacy supported by global footprint- not least in India
Strong business cultureObvious synergies between the cement and minerals businesses
A truly global company with the ambition to be the most professional and innovative service provider
Cost, profit and capital efficiency improvements are necessary
17 May 2013Interim Report Q1 2013 5
Shareholder value
Key focus areas
New CEO
Shareholder value
Internal efficiency
Customer intimacy
Safety performance and culture
Service-check of Group Strategy
M i l H dliMaterial Handling
17 May 2013Interim Report Q1 2013 6
16/05/2013
4
Current market trends
Interim Report Q1 2013
Increased market uncertainty experienced in the second half of 2012 continued into 2013of 2012 continued into 2013
Short-term outlook for mining capex has deteriorated
Most commodity prices have retreated from peak levels, including copper and gold, though still above investment thresholds
Short-term outlook for most bulk materials remains subdued,but market dynamics (import/export) create opportunities
17 May 2013Interim Report Q1 2013 7
Service activities still at healthy level
In Cement, good opportunities persist although with increasing competition
Medium to long term prospects remain encouraging
Key Highlights
Q1 is seasonally weak – 2013 is no exception
Market outlook has deteriorated in recent months- particularly for mining capital projects
Guidance for 2013 is unchanged– however skewed towards the lower end however skewed towards the lower end
Corrective actions will be developed and communicated in connection with the Q2 report
17 May 2013Interim Report Q1 2013 8
16/05/2013
5
Order intake down 22% owing to no large orders in Mineral Processing and
Financial developments in Q1 2013
Q1 Results 2013
FLSmidth & Co. A/S(DKKm) Q1 2013 Q1 2012 Change g g
Cement in Q1
Revenue up 17% attributable to all segments but Material Handling
EBITA down 38%, primarily due to execution of low margin orders in Material Handling and Cement backlog as well as one-off costs of DKK 68m in Q1’13.
Net results down 86% including discontinued activities of DKK 51m
(DKKm)
Order intake 5,027 6,421 -22%Order backlog 28,583 28,736Revenue 5,651 4,829 +17%Gross margin 21.9% 24.9%EBITA 254 408 -38%EBITA margin 4.5% 8.4%
discontinued activities of DKK -51m (Q1’12: DKK -11m, positively impacted by tax gain in Cembrit)
Employees up 19% primarily related to acquisitions and blue collar staff in connection with O&M contracts
17 May 2013 9
EBIT 166 341 -51%EBIT margin 2.9% 7.1%Net results1) 34 241 -86%CFFO -466 -117Employees2) 14,811 12,422 +19%
Interim Report Q1 2013
1) Including Cembrit2) Continuing activities
Service activities accounted for 51% of Q1 orders
Interim Report Q1 2013
Revenue Q1 2013 Order intake Q1 2013
41%41%59%59%
Capital Business
51%51%49%49%
Service BusinessCapital BusinessService Business
Interim Report Q1 2013 1017 May 2013
51%51%
16/05/2013
6
Order intake decreased 22% in Q1 2013
Interim Report Q1 2013
Order intake (quarterly)22% vs Q1 2012DKKm
Order backlog (quarterly)1% Q1 2012DKKm Book to bill ratio*
0
2,000
4,000
6,000
8,000
10,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
-22% vs. Q1 2012DKKm
0.80.911.11.21.31.41.51.6
05,000
10,00015,00020,00025,00030,00035,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
-1% vs. Q1 2012DKKm Book-to-bill ratio*
Announced O&M orders **Announced capital ordersUnannounced orders
Unannounced orders stable but order intake decreasing due to fewer large orders in Q1
Order intake in Customer Services remains healthy
Expected backlog conversion to revenue: 57% in 2013, 24% in 2014 and 19% in 2015 and beyond. O&M** contracts accounted for DKK 4.9bn (17%) of the order backlog at the end of Q1
17 May 2013Interim Report Q1 2013 11
*) Order backlog divided by Last-Twelve-Months Revenue
**) Operation & Maintenance
Revenue increased 17% in Q1 2013
Interim Report Q1 2013
Revenue (quarterly)+17% vs Q1 2012DKKm
Revenue growth Q1’13 vs. Q1’12
0
2,000
4,000
6,000
8,000
10,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
+17% vs. Q1 2012DKKm
Growth CustomerServices
MaterialHandling
Mineral Processing
Cement Group
Organic 12% 3% 14% 19% 11%
Acquisitions 23% 0% 5% 0% 8%
Currency -3% -3% -2% -1% -2%
Total 32% 0% 17% 18% 17%
Estimated organic revenue growth of 11% and acquisitive revenue growth of 8% in Q1 2013
Pattern of increasing quarterly revenue over the calendar year expected to be repeated in 2013
17 May 2013Interim Report Q1 2013 12
16/05/2013
7
Gross margin development in Q1 2013
Interim Report Q1 2013
Gross margin
Gross profit (quarterly)+3% Q1 2012DKKm
Gross margin Q1’13 vs. Q1’12- by segmentGross margin
24.6%24.9%
21.9%
10%
15%
20%
25%
30%
0
500
1,000
1,500
2,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
+3% vs. Q1 2012DKKm - by segment
28.7%
18.2% 21.8%26.8%27.0%
11.8%
21.5% 19.8%
CustomerServices
MaterialHandling
MineralProcessing
Cement
Q1’13Q1’12 Q1’13Q1’12 Q1’13Q1’12 Q1’13Q1’12
17 May 2013Interim Report Q1 2013 13
Decline in gross margin is primarily attributable to developments in Cement and Material Handling – as expected and guided – due to lower margins in the backlog for different reasons
Lower gross margin in Customer Services in Q1 is due to business mix
Services Handling Processing
EBITA decreased 38% in Q1 2013
Interim Report Q1 2013
EBITA i
EBITA (quarterly)38% Q1 2012DKKm DKKm
Change in EBITA vs. Q1’12 EBITA margin
9.1% 8.4%
4.5%
0%
3%
6%
9%
12%
15%
0
200
400
600
800
1,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
-38% vs. Q1 2012DKKm
408254
180 169
164
0100200300400500600700
EBITA Q1'12 Increase in revenue
Decrease in gross margin
Increase in SG&A costs
EBITA Q1'13
DKKm
EBITA margin down on Q1’12 for all segments despite revenue growth
Margin decline due to decrease in gross margin and increase in SG&A costs
17 May 2013Interim Report Q1 2013 14
16/05/2013
8
Cash flow from operating and investing activities
Interim Report Q1 2013
CFFO (quarterly)DKKm
CFFI (quarterly)+48% vs Q1 2012DKKm298% vs Q1 2012DKKm
-800-400
0400800
12001600
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
+48% vs. Q1 2012DKKm
-3,000-2,400-1,800-1,200
-6000
600
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
-298% vs. Q1 2012
Negative CFFO due to lower operational profit and increased working capital
CFFI reflects that acquisitions are temporarily on hold in 2013, and includes DKK +92m related tosale of non-core activities in Ludowici, Australia
17 May 2013Interim Report Q1 2013 15
Net Working capital developments in Q1
Interim Report Q1 2013
Average Net Working CapitalWorking capital ratio 7.7%DKKm NWC* /Revenue LTM**End Q1 2013 vs. End Q4 2012
Change in Net Working capitalDKKm
0%
2%
4%
6%
8%
10%
12%
0
500
1,000
1,500
2,000
2,500
3,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
1,629 2,335
158 1,672
603 1,145
583
-
1,000
2,000
3,000
4,000
5,000 Ambition to cap NWC/Revenue at 10%
2011 2011 2011 2011 2012 2012 2012 2012 2013
17 May 2013Interim Report Q1 2013 16*) NWC: Average Net Working Capital excl. Cembrit
**) LTM: Last Twelve Months
Increase in net working capital due to increase in Work In Progress (WIP) as progress billing was impacted by Easter Holidays and contract conditions
Trade Payables decreased in Q1 following very high activity level and receipt of invoices in Q4, however off-set by a decrease in Trade Receivables due to increased cash collections
16/05/2013
9
Increased capital efficiency is top priority
Interim Report Q1 2013
ROCE* (quarterly)Average capital employed ROCE17% in Q1 2013 EBITA %
Declining ROCE explained by lowerEBITA% and TOCEp p y
DKKm
0%5%10%15%20%25%30%
03,0006,0009,000
12,00015,00018,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
ROCE17% in Q1 2013ROCE target
0%2%4%6%8%
10%12%14%
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
2008
20102011
2012
Q1’13 LTM**
2009
EBITA %
Turnover /Capital Employed (TOCE)
EBITA% and TOCE (Turnover/Capital Employed)
Average capital employed has increased notably due to acquisitions.. (DKK +3.5bn from Q1’12 to Q1’13)
..and therefore return on capital employed has fallen (From 23% in Q1’12 to 17% in Q1’13)
ROCE expectations: ~15% in 2013, increasing in 2014 and exceeding target of >20% in 2015
17 May 2013Interim Report Q1 2013 17
*) ROCE: Return on Capital Employed calculated on a before tax basis, including goodwill and based on last 12 months’ EBITA and average Capital Employed
**) LTM: Last Twelwe Months
Capital structure
Interim Report Q1 2013
NIBD* (quarterly)DKKm
Equity (quarterly)DKKm Equity ratioGearing Gearing 1 5x EBITDA +5% Q1 2012DKKm
0%
10%
20%
30%
40%
50%
0
2,000
4,000
6,000
8,000
10,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
DKKm Equity ratio
-0.8-0.400.40.81.21.622.4
-2,000-1,000
01,0002,0003,0004,0005,0006,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Gearing (NIBD/ LTM** EBITDA)
Gearing 1.5x EBITDA +5% vs. Q1 2012Equity ratio target (self-imposed)Gearing target (self-imposed)
Net debt and gearing increased in Q1 mainly due to weaker CFFO
The equity ratio was unchanged at 30%
Committed credit facilities amounted to DKK 8.3bn (excl. mortgage) at the end of Q1 2013
17 May 2013Interim Report Q1 2013 18
*) NIBD excluding Cembrit
**) LTM: Last-Twelve-Months
16/05/2013
10
Share buyback program to be initiated
Interim Report Q1 2013
In February, it was announced that the Board y,of Directors plan for an extraordinary cash distribution of DKK 521m in the form of a share buyback program under ‘Safe Harbour’ rules
The Board of Directors will be initiating the program within the next 7 days
17 May 2013Interim Report Q1 2013 19
Customer Services
17 May 2013Interim Report Q1 2013 20
16/05/2013
11
Stable order intake but weaker EBITA margin
Customer Services
Revenue (quarterly)DKKm EBITA margin+32% Q1 2012
Order intake (quarterly)+6% vs Q1 2012DKKm DKKm EBITA margin+32% vs. Q1 2012
0%
4%
8%
12%
16%
20%
0
500
1,000
1,500
2,000
2,500
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
0
1,000
2,000
3,000
4,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
+6% vs. Q1 2012DKKm
Announced O&M ordersAnnounced capital ordersUnannounced orders
Record high level of unannounced orders in Q1 reflects continued good market conditions
Revenue benefitting from good order intake in previous quarters and current quarter
Margin adversely impacted by business mix and costs of one-off nature
17 May 2013Interim Report Q1 2013 21
Customer Services
Customer Services
(DKKm) Q1 Q1 Change Full-year Expected(DKKm) Q2013
Q2012 Change y
2012p
2013
Order intake 1,964 1,846 +6% 9,202Order backlog 8,236 6,679 +23% 8,159Revenue 1,809 1,368 +32% 7,073 DKK 8-10bn
EBITDA 195 193 +1% 1,012EBITA 169 180 -6% 930EBITA margin 9.3% 13.2% 13.1% 13-15%
17 May 2013Interim Report Q1 2013 22
EBIT 144 174 -17% 7871)
EBIT margin 8.0% 12.7% 11.1%1)
1) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m
16/05/2013
12
Material Handling
17 May 2013Interim Report Q1 2013 23
Margin improvement continuously challenging
Material Handling
Revenue (quarterly)DKKm EBITA marginh d Q1 2012
Order intake (quarterly)+71% vs Q1 2012DKKm DKKm EBITA marginunchanged vs. Q1 2012
0
500
1,000
1,500
2,000
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
+71% vs. Q1 2012DKKm
-15%-10%-5%0%5%10%15%
-1,800-1,200
-6000
6001,2001,800
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Announced ordersUnannounced orders
Satisfactory order intake despite challenging market conditions and increased rigorousness in the proposal phase
EBITA margin adversely impacted by extra costs related to prolonged stay on customers’ sites
10 out of 25 risky contracts identified and mentioned in 2012 are now close to being finalised
17 May 2013Interim Report Q1 2013 24
16/05/2013
13
Material Handling
Material Handling
(DKKm) Q1 Q1 Change Full-year Expected Order Backlog information(DKKm) Q
2013Q
2012 Change y2012
p2013
Order intake 1,616 943 +71% 4,565Order backlog 5,126 5,023 2% 4,773Revenue 1,055 1,060 0% 4,997 DKK 4-6bn
EBITDA -65 28 -140EBITA -79 16 -186EBITA margin -7.5% 1.5% -3.7% >0%
15 projects out of a total portfolio of 217 projects in the Material Handling Business Unit are currently regarded as risky (end 2012: 25 projects)
These projects accounted for DKK 800 16% f th
17 May 2013Interim Report Q1 2013 25
EBIT -98 4 -247EBIT margin -9.3% 0.4% -4.9%
DKK 800m or 16% of the backlog at the end of Q1
Mineral Processing
17 May 2013Interim Report Q1 2013 26
16/05/2013
14
Few large orders due to deteriorating outlook
Mineral Processing
Revenue (quarterly)DKKm EBITA margin+17% Q1 2012
Order intake (quarterly)45% vs Q1 2012DKKm DKKm EBITA margin+17% vs. Q1 2012
0%3%6%9%12%15%18%21%
0500
1,0001,5002,0002,5003,0003,500
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
0500
1,0001,5002,0002,5003,0003,500
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
-45% vs. Q1 2012DKKm
Announced ordersUnannounced orders
After a period of high order activity, tender activity has come down
High revenue as a consequence of strong order intake in previous quarters
EBITA margin lower than Q1’12 due to costs of one-off nature
17 May 2013Interim Report Q1 2013 27
Mineral Processing
Mineral Processing
(DKKm) Q1 Q1 Change Full-year Expected(DKKm) Q2013
Q2012 Change y
2012p
2013
Order intake 1,345 2,445 -45% 10,318Order backlog 9,057 9,482 -4% 9,589Revenue 2,010 1,722 +17% 9,512 DKK 10-12bn
EBITDA 151 147 +3% 1,079EBITA 130 135 -4% 1,000EBITA margin 6.5% 7.8% 10.5% 8-10%
17 May 2013Interim Report Q1 2013 28
EBIT 88 94 -6% 7731)
EBIT margin 4.4% 5.5% 8.1%1)
1) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m
16/05/2013
15
Cement
17 May 2013Interim Report Q1 2013 29
Continued weak order intake, but pipeline encouraging
Cement
Revenue (quarterly)DKKm EBITA margin+18% Q1 2012
Order intake (quarterly)78% vs Q1 2012DKKm
0
500
1,000
1,500
2,000
2,500
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
DKKm EBITA margin+18% vs. Q1 2012
0%
5%
10%
15%
20%
25%
0
500
1000
1500
2000
2500
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
-78% vs. Q1 2012DKKm
Announced ordersUnannounced orders
Order intake at a low point due to lack of large orders in Q1
Trough margins in Q1 as backlog is exhausted of pre-crisis orders with higher profitability
Tender activity remains high in many parts of the world but competition has increased due to excess capacity among equipment suppliers
17 May 2013Interim Report Q1 2013 30
16/05/2013
16
Cement
Cement
(DKKm) Q1 Q1 Change Full-year Expected(DKKm) Q2013
Q2012 Change y
2012p
2013
Order intake 308 1,415 -78% 4,599Order backlog 6,808 8,208 -17% 7,585Revenue 1,016 859 +18% 4,214 DKK 5-7bn
EBITDA 48 102 -52% 788EBITA 39 93 -58% 752EBITA margin 3.8% 10.8% 17.8% 6-8%
17 May 2013Interim Report Q1 2013 31
EBIT 37 85 -56% 6691)
EBIT margin 3.6% 9.9% 15.9%1)
1) Including one-off write-down of capitalized R&D costs in Q2’12 of approximately DKK 60m
Cembrit sales process
Interim Report Q1 2013
Not part of FLSmidth’s long term strategy, and a sales process is on-going
Reported as discontinued activities
FLSmidth is currently in active dialogue with more than one potential acquirer
FLSmidth cautions that there is no assurance that the process will in fact lead to a sale
17 May 2013Interim Report Q1 2013 32
Cembrit will not be sold if the price is not satisfactory
16/05/2013
17
Business Outlook
17 May 2013Interim Report Q1 2013 33
Group Guidance 2013 Actual 2012
R DKK 27 30b DKK 25b
Guidance 2013
Future Outlook
• Guidance is unchanged,but skewed towards Revenue DKK 27-30bn DKK 25bn
EBITA margin* 8-10% 10.1%
Tax rate (previously 32-34%) ~36% 34%
CFFI (incl. acquisitions, excl. disposals) ~DKK -1bn DKK -3.6bn
Segments Guidance 2013
R 2012 EBITA i 2012
*) EBITA margin: Includes an expected DKK 200m costs of one-off nature
but skewed towards the lower end of the revenue and EBITA margin ranges
• Effect of purchase price allocations expected to be approx. DKK -320m in 2013 (2012: DKK -292m)
17 May 2013Interim Report Q1 2013 34
Revenue 2012 EBITA margin 2012
Customer Services DKK 8-10bn (DKK 7.1bn) 13-15% (13.1%)
Material Handling DKK 4-6bn (DKK 5.0bn) >0% (-3.7%)
Mineral Processing DKK 10-12bn (DKK 9.5bn) 8-10% (10.5%)
Cement DKK 5-7bn (DKK 4.2bn) 6-8% (17.8%)
• Costs of non-recurring nature expected to be approx. DKK 200m in 2013 (2012: DKK 225m)
• ROCE is expected to be approx. 15% in 2013, increase in 2014 and to exceed 20% in 2015
16/05/2013
18
Efficiency program to be intensified – details to be presented in August 2013
Interim Report Q1 2013
Cost efficiencyCapital efficiencyProfitable Sales
17 May 2013Interim Report Q1 2013 35
SG&A costs* – clearly underperforming in Q1’13
Interim Report Q1 2013
SG&A ratio** seasonally high in Q1, but SG&A costs (quarterly)clearly too high in Q1’13
SG&A costs up DKK 164m vs. Q1’12:Acquisitions accounted for DKK 89m of the increase
Costs of non-recurring nature included in SG&A amounted to DKK ~68m in Q1 (Q1’12:DKK ~50m)
SG&A ratio
14.3%15.4% 16.1%
6%
9%
12%
15%
18%
400
600
800
1,000
1,200+22% vs. Q1 2012DKKm
17 May 2013Interim Report Q1 2013 36
• ERP/business system DKK 19m• M&A integration costs DKK 23m• Restructuring costs DKK 26m
0%
3%
0
200
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
*) SG&A costs: Sales, General & Administration costs**) SG&A ratio: SG&A costs divided by Revenue
16/05/2013
19
Key take-awaysQ1 i ll k 2013 i tiQ1 is seasonally weak – 2013 is no exception
Market outlook has deteriorated in recent months- particularly for mining capital projects
Guidance for 2013 is unchangedg– however skewed towards the lower end
Corrective actions will be developed and communicated in connection with the Q2 report
17 May 2013Interim Report Q1 2013 37
Questions &AAnswers
Next update: Q2 Interim Report on 23 August 2013
Follow us on Twitter and LinkedIn
17 May 2013Interim Report Q1 2013 38
16/05/2013
20
Long term financial targets
Future Outlook
Financial targets
Annual revenue growth Above market averageEBITA margin 10-13%ROCE* > 20%Tax rate 32-34%Equity ratio >30%Financial gearing (NIBD/EBITDA) <2
17 May 2013Interim Report Q1 2013 39
Financial gearing (NIBD/EBITDA) <2Pay-out ratio 30-50%
*) ROCE: Return on Capital Employed calculated on a before tax basis and including goodwill
Working capital program
Interim Report Q1 2013
Primary focus areas:Primary focus areas:
Establishing measurement and reporting of working capital on a business unit level
Definition of KPI’s and targets included in bonus schemes for 2013
Just-in-time inventory management
Cash collection of overdue debtors
17 May 2013Interim Report Q1 2013 40
Optimisation of supplier credit terms
Initiatives related to project cash flow management
16/05/2013
21
Revenue and order intake by segment
Interim Report Q1 2013
Order intake Q1 2013Revenue Q1 2013
37%37%26%26%
6%6%
Order intake Q1 2013– classified by segment
Customer Services
Cement
31%31%17%17%
Revenue Q1 2013 – classified by segment
Customer ServicesCement
31%31%
17 May 2013Interim Report Q1 2013 41
Material Handling
18%18%34%34%
Material HandlingMineral Processing
Mineral Processing
EBITA by segment
Interim Report Q1 2013
EBITA Q1 2013 EBITA margin Q1 2013EBITA Q1 2013– classified by segment
65%50%
15%
EBITA margin Q1 2013– classified by segment
9.3%6.5%
3.8%
17 May 2013Interim Report Q1 2013 42
-30%
CustomerServices
MaterialHandling
MineralProcessing
Cement
-7.5%
CustomerServices
MaterialHandling
MineralProcessing
Cement
16/05/2013
22
Distribution of order intake by industry
Interim Report Q1 2013
Order intake Q1 2013
27%
10%
4%
18%
Announced orders in Q1 2013
Coal Mozambique DKK 658m (MH)
Q
Cement
Iron ore
Fertilizers
Other
17%
9%15%
17 May 2013Interim Report Q1 2013 43
Copper
Gold
Coal
Number of employees
Interim Report Q1 2013
Number of employees Q1’13 vs. Q1’12- by segmentNumber of employees decreased slightly - by segment
4,540
3,132 2,275 2,474
5,907
3,676 2,934 2,292
Q1’13Q1’12
Number of employees decreased slightly in Q1’13 (from 14,827 to 14,811), but increased 19% vs. Q1’12 Increase vs. Q1’12 is primarily related to acquisitions and blue collar workers in connection with O&M contractsDevelopments in divisional number of employees are impacted by allocation of Q1’13Q1’12 Q1’13Q1’12 Q1’13Q1’12
17 May 2013Interim Report Q1 2013 44
CustomerServices
MaterialHandling
MineralProcessing
Cement
employees are impacted by allocation of group staff