Interim / Quarterly Report • Aug 19, 2010
Interim / Quarterly Report
Open in ViewerOpens in native device viewer
1 . j a n u a r 2 0 1 0 - 3 1 . m a r t s 2 0 1 0 (Selskabsmeddelse nr. X-2010)
The Board of Directors and the Group Management of FLSmidth & Co. A/S have today (19 August 2010) reviewed and approved this interim report for the FLSmidth & Co. Group for the period 1 January - 30 June 2010.
| Revenue | EBIT ratio | |||
|---|---|---|---|---|
| Cement | DKK | 9.5-10bn | (previously DKK 9-10bn) | approx. 9% |
| Minerals | DKK | 9-9.5bn | (previously DKK 8-9bn) | approx. 9% |
| Cembrit | DKK approx. 1.2bn | (unchanged) | approx. 2% |
Please address any questions to this announcement to Mr Jørgen Huno Rasmussen, Group CEO, telephone +45 36 18 18 00. An investor meeting and a telephone conference regarding the interim report will be held today at 11.00 hours. For further details, please visit www.flsmidth.com.
| DKKm | Q2 2010 | Q2 2009 | Q1-Q2 2010 | Q1-Q2 2009 | Year 2009 |
|---|---|---|---|---|---|
| INCOME STATEMENT | |||||
| Revenue | 4,923 | 5,593 | 9,413 | 10,766 | 23,134 |
| Gross profit | 1,283 | 1,271 | 2,392 | 2,481 | 5,406 |
| Earnings before non-recurring items, depreciation, amortisation (EBITDA) | 585 | 627 | 1,047 | 1,205 | 2,725 |
| Earnings before interest and tax (EBIT) | 478 | 548 | 837 | 1,022 | 2,261 |
| Earnings before tax (EBT) | 368 | 616 | 710 | 988 | 2,108 |
| Profit/loss for the period, continuing activities | 255 | 424 | 497 | 915 | 1,705 |
| Profit/loss for the year, discontinued activities | 3 | 13 | (6) | (11) | (41) |
| Profit/loss for the period | 258 | 437 | 491 | 904 | 1,664 |
| CASH FLOW | |||||
| Cash flow from operating activities | 387 | 416 | 736 | 608 | 2,470 |
| Acquisition and disposal of enterprises and activities | - | (10) | 5 | (64) | (286) |
| Acquisition of tangible assets | (33) | (55) | (82) | (132) | (210) |
| Other investments, net | (37) | (26) | (86) | (23) | (34) |
| Cash flow from investing activities | (70) | (91) | (163) | (219) | (530) |
| Cash flow from operating and investing activities of continuing activities | 326 | 314 | 587 | 361 | 1,719 |
| Cash flow from operating and investing activities of discontinued activities | (9) | 11 | (14) | 28 | 221 |
| WORKING CAPITAL | 159 | 835 | 21 | ||
| NET INTEREST-BEARING RECEIVABLES / (DEBT) | 1,390 | (234) | 1,085 | ||
| ORDER INTAKE, CONTINUING ACTIVITIES (GROSS) | 7,521 | 2,500 | 12,716 | 5,611 | 13,322 |
| ORDER BACKLOG, CONTINUING ACTIVITIES | 26,621 | 25,963 | 21,194 | ||
| BALANCE SHEET | |||||
| Non-current assets | 8,977 | 8,581 | 8,473 | ||
| Current assets | 14,149 | 13,181 | 13,429 | ||
| Assets held for sale | - | 8 | - | ||
| Total assets | 23,126 | 21,770 | 21,902 | ||
| Consolidated equity | 7,541 | 6,004 | 6,627 | ||
| Long-term liabilities | 3,844 | 4,081 | 3,338 | ||
| Short-term liabilities | 11,741 | 11,685 | 11,937 | ||
| Total equity and liabilities | 23,126 | 21,770 | 21,902 | ||
| DIVIDEND TO THE SHAREHOLDERS | 372 | ||||
| FINANCIAL RATIOS | |||||
| Continuing activities | |||||
| Contribution ratio | 26.1% | 22.7% | 25.4% | 23.0% | 23.4% |
| EBITDA ratio | 11.9% | 11.2% | 11.1% | 11.2% | 11.8% |
| EBIT ratio | 9.7% | 9.8% | 8.9% | 9.5% | 9.8% |
| EBIT ratio before the effect of purchase price allocations regarding GL&V Process | 10.2% | 10.2% | 9.4% | 9.9% | 10.2% |
| EBT ratio | 7.5% | 11.0% | 7.5% | 9.2% | 9.1% |
| Return on equity | 14% | 33% | 29% | ||
| Equity ratio | 33% | 28% | 30% | ||
| Number of employees end of period, Group | 10,590 | 11,127 | 10,664 | ||
| Number of employees in Denmark | 1,591 | 1,807 | 1,650 | ||
| Share and dividend ratios, Group | |||||
| CFPS (cash flow per share), DKK (diluted) | 7.4 | 7.9 | 14.0 | 11.6 | 47.1 |
| EPS (earnings per share), DKK (diluted) | 4.9 | 8.3 | 9.3 | 17.3 | 31.9 |
| EPS (earnings per share), DKK (diluted) before the effect of purchase price allocations | |||||
| regarding GL&V Process | 5.2 | 8.7 | 9.9 | 17.9 | 33.1 |
| FLSmidth & Co. share price, DKK | 397 | 189 | 367 | ||
| Number of shares end of period (000s) | 53,200 | 53,200 | 53,200 | ||
| Average number of shares (000s) (diluted) | 52,402 | 52,385 | 52,757 | 52,385 | 52,429 |
| Market capitalisation, DKKm | 21,094 | 10,028 | 19,524 |
The financial ratios have been computed in accordance with the guidelines issued by the Danish Society of Financial Analysts.
Investments in the minerals 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 still expected to be around 50m tonnes per year (2009: 45m tonnes per year), based on local demand for new capacity in particular in India, Indonesia, South America and Africa.
The total order intake amounted to DKK 12,716m in the first half of 2010, representing an 127% increase on the same period last year (first half of 2009: DKK 5,611m). The significant increase is due to the low comparative basis in the first half of 2009 and to the fact that the demand for system solutions for the minerals industry has made a strong return in the second quarter of 2010 as well as to the growing interest in operation and maintenance contracts in Cement.
The order backlog totalled DKK 26,621m at the end of the first half of 2010 (end of 2009: DKK 21,194m). The order backlog has increased by 26% since the turn of the year, of which 6% is due to changed foreign exchange rates.
The second quarter of 2010 saw positive developments in orders which have been put on hold as a result of the financial crisis. Orders on hold have thus to date decreased approximately DKK 1bn to approximately DKK 1.5bn (end of the first quarter of 2010: approximately DKK 2.5bn) which is primarily due to the fact that customers' financing arrangements have in some cases fallen into place.
Particularly the order intake in Customer Services developed positively in the first half of 2010 and accounted for 42% of the total order intake in Cement and Minerals. This is mainly due to the signing of four operation and maintenance contracts (O&M) in Cement in the first half of 2010. The growing interest in signing O&M contracts is highly attributable to the documented results achieved from contracts signed in previous years. In the second quarter, for the first time, a contract for the provision of equipment for a full-scale cement plant and an operation and maintenance contract were concurrently signed with the same customer. The customer is the Tunisian-owned Carthage Cement.
In the first half of 2010, revenue amounted to DKK 9,413m, representing a 13% decrease on the same period last year (first half of 2009: DKK 10,766m). The lower revenue is, as expected, a consequence of the lower order backlog at the beginning of the year plus deferred revenue.
Revenue in Cement declined 20% on the same period the year before, whilst declining 6% in Minerals and increasing 13% in Cembrit. Overall, the foreign exchange effect of translating into DKK has had a 4% positive impact on revenue compared to the first half of 2009.
The gross profit amounted to DKK 2,392m in the first half of 2010 (first half of 2009: DKK 2,481m), representing a contribution ratio of 25.4% (first half of 2009: 23.0%). The higher contribution ratio compared to last year mainly reflects improved order processing and completion of projects and changes in product mix.
The first half of 2010 saw total investments in research and development of DKK 110m (first half of 2009: DKK 197m), representing 1.2% of the revenue (first half of 2009: 1.8%). In addition, project financed development is taking place in cooperation with customers. The decrease compared to the previous year is due to deferment of research and development costs.
Sales, distribution and administrative costs, etc. in the first half of 2010 amounted to DKK 1,345m (first half of 2009: DKK 1,276m) representing 14.3% of the revenue (first half of 2009: 11.9%). Adjusted for exchange rates and acquisitions, sales, distribution and administrative costs are on a par with last year. Higher sales and order activity have resulted in higher sales and distribution costs right now, but will not generate revenue and earnings until at a later stage since delivery times extend up to 2 years.
In the second quarter Excel Foundry & Machine, Inc. and FLSmidth-Excel, LLC reached a settlement in a dispute over IP rights with Metso Minerals Inc. The companies deny any wrongdoing, but have decided to reach a settlement at a value of USD 25m. The major part of the settlement was charged to the 2009 financial statements under sales, distribution and administrative costs in Minerals and the balance of the settlement amount and the costs of the settlement were charged to the second quarter of 2010.
Earnings before special non-recurring items, depreciation and amortisation (EBITDA) amounted to DKK 1,047m (first half of 2009: DKK 1,205m), corresponding to an EBITDA ratio of 11.1% (first half of 2009: 11.2%).
Total depreciation, amortisation and write-downs amounted to DKK 210m in the first half of 2010 (first half of 2009: DKK 186m).
Earnings before interest and tax (EBIT) amounted to DKK 837m in the first half of 2010 (first half of 2009: DKK 1,022m) which represents an EBIT ratio of 8.9% (first half of 2009: 9.5%). The lower EBIT ratio is notably attributable to lower revenue and hence lower operational gearing. In the second quarter alone, the EBIT ratio was 9.7% which is on a par with last year (second quarter of 2009: 9.8%).
The total effect of purchase price allocations regarding GL&V Process (including depreciation, amortisation, write-downs and special non-recurring items) amounted to DKK -44m in the first half of 2010 (first half of 2009: DKK -49m). Adjusted for these purchase price allocations, the EBIT ratio was 9.4% in the first half of 2010 (first half of 2009: 9.9%).
Net financial costs amounted to DKK 127m in the first half of 2010 (first half of 2009: DKK 34m). The increase compared to the previous year is mainly due to unrealised foreign exchange rate adjustments.
Earnings before tax (EBT) amounted to DKK 710m (first half of 2009: DKK 988m), corresponding to an EBT ratio of 7.5% (first half of 2009: 9.2%).
Tax for the period amounted to DKK 213m (first half of 2009: DKK 73m, including income recognition of a DKK 230m tax asset due to the successful outcome of a tax dispute). The effective tax rate in the first half was 30% (first half of 2009: 30% exclusive of recognised tax asset).
The profit for the period amounted to DKK 491m (first half of 2009: DKK 904m), corresponding to earnings per share (diluted) of DKK 9.3 (first half of 2009: DKK 17.3).
The balance sheet total amounted to DKK 23,126m at the end of the first half of 2010 (end of 2009: DKK 21,902m). The consolidated equity at the end of the first half of 2010 amounted to DKK 7,541m (end of 2009: DKK 6,627m) corresponding to an equity ratio of 33% (end of 2009: 30%). In the first half of 2010, the return on equity (on an annual basis) amounted to 14% (first half of 2009: 33%).
The working capital amounted to DKK 159m at the end of the first half of 2010, representing a DKK 138m increase since the turn of the year (end of 2009: DKK 21m). The increase is primarily attributable to changed foreign exchange rates.
Cash flow from operating activities amounted to DKK 736m in the first half of 2010 (first half of 2009: DKK 608m). Cash flow is as previously mentioned negatively impacted by a USD 25m settlement amount and an increase in the working capital. Cash flow from investing activities amounted to DKK -163m (first half of 2009: DKK -219m).
For the year as a whole, total investments exclusive of acquisitions are now expected to amount to DKK 600m as against the previous projection of DKK 400m due to investments in regional service centres and spare parts inventories and expansion of the production facilities in India and China.
Cash flow from operating and investing activities totalled DKK 573m in the first half of 2010, including DKK 587m from continuing activities and DKK -14m from discontinued activities (first half of 2009: DKK 389m including DKK 361m from continuing activities and DKK 28m from discontinued activities).
The total order intake in Cement amounted to DKK 6,180m in the first half of 2010, up 133% on the same period last year (first half of 2009: DKK 2,655m).
The order intake in Customer Services amounted to DKK 3,751m in the first half of 2010, which is 207% higher than in the same period last year (first half of 2009: DKK 1,220m). This development primarily reflects the awarding of three five-year operation and maintenance contracts in Angola, Tunisia and Egypt. In addition, a major upgrading contract in Uruguay was received in the second quarter.
The order backlog has increased 19% since the turn of the year and amounted to DKK 15,006m at the end of the first half of 2010 (end of 2009: DKK 12,568m).
Total revenue in Cement amounted to DKK 4,800m in the first half of 2010, which is 20% lower than the same period last year (first half of 2009: DKK 6,031m), reflecting as expected a lower order backlog at the beginning of the year and deferred revenue.
The revenue in Customer Services amounted to DKK 1,419m in the first half of 2010, representing a 6% decrease on the same period last year (first half of 2009: DKK 1,516m).
The EBIT result in the first half of 2010 amounted to DKK 502m (first half of 2009: DKK 679m). The first half of 2010 saw an EBIT ratio of 10.5% (first half of 2009: 11.3%), which is primarily due to lower revenue and hence lower operational gearing. In the second quarter alone, the EBIT ratio was 11.2% which is on a par with last year (second quarter of 2009: 11.3%).
Overall, the foreign exchange effect of translating into DKK has had a 1% positive impact on revenue in Cement compared to the first half of 2009.
The total order intake in Minerals in the first half of 2010 was DKK 6,579m (first half of 2009: DKK 3,017m), which represents an 118% increase compared to the same period last year.
In Customer Services, the order intake in the first half of 2010 amounted to DKK 1,622m, representing an 51% increase on the same period last year (first half of 2009: DKK 1,077m).
The order backlog amounted to DKK 11,688m at the end of the first half of 2010, corresponding to an 34% increase since the turn of the year (end of 2009: DKK 8,712m). During the first half of 2010, major Minerals orders were received in North and South America, the Middle East, India and Russia. The orders mainly include process solutions for the extraction and handling of gold, copper, phosphate and coal.
The total revenue in Minerals amounted to DKK 4,019m in the first half of 2010, representing a 6% decrease on the same period last year (first half 2009 DKK 4,298m). The decline in revenue compared to the same period last year reflects, as expected, the lower order backlog at the beginning of the year.
The revenue in Customer Services amounted to DKK 1,437m in the first half of 2010, representing an 15% increase on the same period last year (first half 2009: DKK 1,251m), which fulfils our objective and illustrates the general increase in activity in the minerals industry.
The EBIT result amounted to DKK 345m in the first half of 2010 (first half 2009: DKK 358m), corresponding to an EBIT ratio of 8.6% (first half of 2009: 8.3%). The EBIT ratio increased due to improved order processing and changes in product mix, which has resulted in a higher contribution ratio. Meanwhile, sales, distribution and administrative costs increased due to the developments in foreign exchange rates, higher sales activity and charging of the balance of the settlement of IP dispute amount mentioned previously.
Net of purchase price allocations, the EBIT ratio increased to 9.7% from 9.5% in the same period the year before. In the second quarter alone, the EBIT ratio exclusive of purchase price allocations was 10.1% (second quarter of 2009: 9.0%).
Overall, the foreign exchange effect of translating into DKK has had a 8% positive impact on revenue in Minerals compared to the first half of 2009.
In the first half of 2010, Cembrit achieved a revenue of DKK 630m which is 13% higher than last year (first half of 2009: DKK 560m.). In the second quarter, sales and demand saw positive market trends. The EBIT result amounted to DKK 7m in the first half of 2010 (first half of 2009: DKK -11m) corresponding to an EBIT ratio of 1.1% (first half of 2009: -2.0%). In the second quarter alone, the EBIT ratio was 6.1% (second quarter of 2009: 2.2%).
Overall, the foreign exchange effect of translating into DKK has had a 3% positive impact on revenue in Cembrit compared to the first half of 2009.
| Revenue | EBIT ratio | |
|---|---|---|
| Cement | DKK 9.5-10bn (previously DKK 9-10bn) | approx. 9% |
| Minerals | DKK 9-9.5bn (previously DKK 8-9bn) | approx. 9% |
| Cembrit | DKK approx. 1.2bn (unchanged) | approx 2% |
In the long term, it is still expected that particularly urbanisation and industrialisation in developing countries will generate increasing demand for cement and minerals.
Earnings from Minerals and Customer Services in both Cement and Minerals are expected in the coming years to account for a larger share of the Group's total earnings, which will reduce the effect of cyclical market fluctuations in Cement. Against this background, the Group expects its consolidated EBIT ratio to be 10-12% in periods of high activity and 8-9% in periods of low activity. Adjusted for purchase price allocations regarding GL&V Process the consolidated EBIT ratio was 10.6% in 2008, 10.2% in 2009 and 9.4% in the first half of 2010. The effect of purchase price allocations regarding GL&V Process is expected, in future, to be approximately DKK -100m per year. Moving forward, the annual investments (exclusive of acquisitions) are expected to be DKK 300-400m. The long-term sustainable level for addition of new global cement kiln capacity (exclusive of China) is expected to be 60-75m tonnes per year on average.
It is the FLSmidth Group's aim at all times to have a suitable capital structure in relation to the underlying operating results so that it is always possible to have the necessary and sufficient credit and guarantee facilities to support the commercial operations. The aim is to have an equity ratio of at least 30%. At the end of the first half of 2010, the equity ratio amounted to 33% (end of 2009: 30%).
At the end of the first half of 2010, the Group had net interestbearing receivables of DKK 1,390m (end of 2009: DKK 1,085m). The Group wishes to maintain capital resources to finance future growth and to strengthen the market position through the acquisition of, notably, complementary technologies and services.
On 22 April 2010, ordinary dividend of DKK 5 per share was distributed, representing a total amount of DKK 266m. In addition, an extraordinary dividend of DKK 2 per share was distributed in August 2009. It is FLSmidth's dividend policy to continue to pay out DKK 7 per share every year.
FLSmidth & Co. A/S's holding of treasury shares at the end of the first half of 2010 totalled 564,692 shares representing 1.1% of the share capital (end of 2009: 628,602 shares) .
The Board of Directors has today decided to allocate 170,700 share options to the management and key staff (58 persons) of which the management will receive 29,700 options. The exercise price is 400 and the exercise period will be 2013-2015. Based on a volatility of 36.76% for the previous year, the Black-Scholes value amounts to DKK 22m and will affect the year's profit by DKK 2m. For further details, see the guidelines adopted at the General Meeting on 17 April 2008.
At the end of the first half of 2010, there were a total of 581,204 unexercised share options under the Group's incentive plan and the fair value of these was DKK 89m. The fair value is calculated by means of a Black-Scholes model based on a current share price of 396.5, and a volatility of 37.44%. The effect of the incentive plan on earnings amounted to DKK 10m in the first half of 2010 (first half of 2009: DKK 10m). Please see the Annual Report for 2009 for further information.
18 November 2010: 1st - 3rd quarter Interim Report
As announced on 13 July 2010, FLSmidth has signed a contract worth DKK 265m with Brazilian Votorantim Cimentos for the supply of five pyro lines for five different cement plants in Brazil.
We have today reviewed and adopted the Interim Report of FLSmidth & Co. A/S for the period 1 January to 30 June 2010.
The Interim Report is presented in accordance with IAS 34, presentation of Interim Reports, as approved by the EU, and additional Danish disclosure requirements for interim reports submitted by listed companies. The Interim Report has not been audited nor reviewed by the Group auditor.
We consider the accounting policies appropriate for the Interim Report to give a true and fair view of the Group's assets and
liabilities and financial standing as at 30 June 2010 and of the financial results of the Group's activities and cash flow in the period from 1 January to 30 June 2010.
We also consider the Management's review to give a true and fair view of the developments of the Group's activities and financial affairs, the financial result for the period under review and the Group's financial position as a whole, as well as a true and fair description of the major risks and uncertainties facing the Group.
Copenhagen, 19 August 2010
| Group | Jørgen Huno Rasmussen | Poul Erik Tofte | Bjarne Moltke Hansen | Christian Jepsen |
|---|---|---|---|---|
| Management | Group CEO | Group Executive | Group Executive | Group Executive |
| Vice President (CFO) | Vice President | Vice President | ||
| Board of Directors | Jørgen Worning Chairman |
Jens S. Stephensen Vice Chairman |
Jens Palle Andersen | Torkil Bentzen |
| Mette Dobel | Martin Ivert | Frank Lund | Jesper Ovesen | |
| Vagn Ove Sørensen |
| DKKm | Q2 2010 | Q2 2009 | Q1-Q2 2010 | Q1-Q2 2009 | |
|---|---|---|---|---|---|
| Notes | |||||
| Revenue | 4,923 | 5,593 | 9,413 | 10,766 | |
| Production costs | (3,640) | (4,322) | (7,021) | (8,285) | |
| Gross profit | 1,283 | 1,271 | 2,392 | 2,481 | |
| Sales and distribution costs Administrative costs |
(336) (393) |
(317) (357) |
(642) (747) |
(605) (709) |
|
| Other operating income/(costs) | 31 | 30 | 44 | 38 | |
| Earnings before special non-recurring items, depreciation | |||||
| and amortisation (EBITDA) | 585 | 627 | 1,047 | 1,205 | |
| Special non-recurring items | - | 3 | - | 3 | |
| Depreciation and write-down of tangible assets | (62) | (49) | (119) | (107) | |
| Amortisation and write-down of intangible assets | (45) | (33) | (91) | (79) | |
| Earnings before interest and tax (EBIT) | 478 | 548 | 837 | 1,022 | |
| Financial income | 460 | 463 | 822 | 1,042 | |
| Financial costs | (570) | (395) | (949) | (1,076) | |
| Earnings before tax of continuing activities (EBT) | 368 | 616 | 710 | 988 | |
| Tax for the period of continuing activities | (113) | (192) | (213) | (73) | |
| Profit/loss for the period, continuing activities | 255 | 424 | 497 | 915 | |
| Profit/loss for the period, discontinued activities | 3 | 13 | (6) | (11) | |
| Profit/loss for the period | 258 | 437 | 491 | 904 | |
| To be distributed as follows: | |||||
| Minority shareholders' share of profit/loss for the period | - | - | - | - | |
| FLSmidth & Co. A/S shareholders' share of profit/loss for the period | 258 | 437 | 491 | 904 | |
| 258 | 437 | 491 | 904 | ||
| 2 | Earnings per share (EPS): | ||||
| Continuing and discontinued activities | 4.9 | 8.3 | 9.3 | 17.3 | |
| Continuing and discontinued activities, diluted | 4.9 | 8.3 | 9.3 | 17.3 | |
| Continuing activities | 4.8 | 8.1 | 9.4 | 17.5 | |
| Continuing activities, diluted | 4.8 | 8.1 | 9.4 | 17.5 | |
1 Income statement classified by function
| DKKm | Q2 2010 | Q2 2009 | Q1-Q2 2010 | Q1-Q2 2009 |
|---|---|---|---|---|
| Notes | ||||
| Profit/loss for the period | 258 | 437 | 491 | 904 |
| Other comprehensive income | ||||
| Foreign exchange adjustment regarding enterprises abroad | 273 | 22 | 573 | 54 |
| Foreign exchange adjustment of loans classified as equity in | ||||
| enterprises abroad | 96 | 154 | ||
| Value adjustment of hedging instruments: | ||||
| Value adjustment for the period | (34) | (1) | (24) | (6) |
| Value adjustment transferred to revenue | (2) | 2 | (3) | 3 |
| Value adjustment transferred to variable costs | (1) | (1) | (2) | (1) |
| Value adjustment transferred to financial income/costs | 13 | 3 | - | 1 |
| Value adjustment transferred to balance sheet items | - | - | 5 | - |
| Other adjustments of value in use | 7 | 2 | 4 | 3 |
| Tax on other comprehensive income | (23) | (1) | (39) | 1 |
| Other comprehensive income after tax | 329 | 26 | 668 | 55 |
| Comprehensive income for the period | 587 | 463 | 1,159 | 959 |
| Comprehensive income attributable to: | ||||
| Minority shareholders' share of comprehensive income for the period | (3) | 1 | (4) | 1 |
| FLSmidth & Co. A/S shareholders' share of comprehensive income | ||||
| for the period | 590 | 462 | 1,163 | 958 |
| 587 | 463 | 1,159 | 959 |
| DKKm | Q1-Q2 2010 | Q1-Q2 2009 |
|---|---|---|
| Notes | ||
| Earnings before special non-recurring items, depr. and amort. (EBITDA), continuing activities | 1,047 | 1,205 |
| Earnings before speciel non-recurring items, depr. and amort. (EBITDA), discontinued activities | 3 | (18) |
| Earnings before special non-recurring items, depreciation and amortisation (EBITDA) | 1,050 | 1,187 |
| Adjustment for profits/losses on sale of tangible assets and foreign exchange adjustments, etc. | 48 | 10 |
| Adjusted earnings before special non-recurring items, depr. and amort. (EBITDA) | 1,098 | 1,197 |
| Change in provisions | (216) | 53 |
| Change in working capital | 102 | (571) |
| Cash flow from operating activities before financial items and tax | 984 | 679 |
| Financial payments received and made | (20) | 26 |
| Corporation taxes paid | (228) | (97) |
| Cash flow from operating activities | 736 | 608 |
| Acquisition and disposal of enterprises and activities | 5 | (64) |
| Acquisition of intangible assets | (58) | (85) |
| Acquisition of tangible assets | (82) | (132) |
| Acquisition of financial assets | (29) | - |
| Disposal of financial assets | - | 46 |
| Disposal of intangible and tangible assets | 1 | 16 |
| Cash flow from investing activities | (163) | (219) |
| Dividend | (262) | - |
| Acquisition of treasury shares | (2) | - |
| Disposal of treasury shares | 11 | - |
| Change in other interest-bearing net receivables/(debt) | (534) | (131) |
| Cash flow from financing activities | (787) | (131) |
| Changes in cash and cash equivalents | (214) | 258 |
| Cash and cash equivalents at 1 January | 2,389 | 784 |
| Foreign exchange adjustment, cash and cash equivalents | 262 | 91 |
| Cash and cash equivalents at 30 June | 2,437 | 1,133 |
The cash flow statement cannot be derived from the published financial information only.
| DKKm | End of Q2 2010 |
End of 2009 |
|---|---|---|
| Goodwill | 3,665 | 3,369 |
| Patents and rights acquired | 1,032 | 1,016 |
| Customer relations | 1,039 | 954 |
| Other intangible assets | 177 | 188 |
| Completed development projects | 16 | 13 |
| Intangible assets under development | 193 | 149 |
| Intangible assets | 6,122 | 5,689 |
| Land and buildings | 1,046 | 971 |
| Plant and machinery | 716 | 691 |
| Operating equipment, fixtures and fittings | 212 | 222 |
| Tangible assets in course of construction | 71 | 68 |
| Tangible assets | 2,045 | 1,952 |
| Investments in associates | 6 | 3 |
| Other securities and investments | 56 | 29 |
| Other financial assets | 6 | 9 |
| Deferred tax assets | 742 | 791 |
| Financial assets | 810 | 832 |
| Total non-current assets | 8,977 | 8,473 |
| Inventories | 1,918 | 1,760 |
| Trade receivables | 4,204 | 4,270 |
| Work-in-progress for third parties | 3,676 | 3,617 |
| Prepayments to subsuppliers | 420 | 369 |
| Other receivables | 1,187 | 840 |
| Prepayments | 42 | 118 |
| Receivables | 9,529 | 9,214 |
| Securities | 265 | 66 |
| Cash and cash equivalents | 2,437 | 2,389 |
| Total current assets | 14,149 | 13,429 |
| TOTAL ASSETS | 23,126 | 21,902 |
| Notes Share capital 1,064 Foreign exchange adjustments regarding translation of investments 283 Foreign exchange adjustments regarding hedging transactions (28) Retained earnings 6,207 Proposed dividend - FLSmidth & Co. A/S shareholders' share of equity 7,526 Minority interests' share of equity 15 Total equity 7,541 Deferred tax liabilities 804 Pension liabilities 239 Other provisions 803 Mortgage debt 355 Bank loans 812 Finance lease commitments 10 Prepayments from customers 637 Other liabilities 184 Long-term liabilities 3,844 Mortgage debt 10 Bank loans 35 Finance lease commitments 2 Prepayments from customers 2,615 Work-in-progress for third parties 4,231 Trade payables 2,198 Corporation tax payable 166 Other liabilities 1,381 Other provisions 1,055 Deferred income 48 Short-term liabilities 11,741 Total liabilities 15,585 |
DKKm | End of Q2 2010 |
End of 2009 |
|---|---|---|---|
| 1,064 | |||
| (290) | |||
| (4) | |||
| 5,568 | |||
| 266 | |||
| 6,604 | |||
| 23 | |||
| 6,627 | |||
| 682 | |||
| 246 | |||
| 739 | |||
| 358 | |||
| 813 | |||
| 8 | |||
| 306 | |||
| 186 | |||
| 3,338 | |||
| 17 | |||
| 7 | |||
| 3 | |||
| 3,087 | |||
| 3,666 | |||
| 2,421 | |||
| 211 | |||
| 1,288 | |||
| 1,199 | |||
| 38 | |||
| 11,937 | |||
| 15,275 | |||
| TOTAL EQUITY AND LIABILITIES | 23,126 | 21,902 |
| DKKm | Share capital |
Foreign exchange adjustments re translation of investments |
Foreign exchange adjustments re hedging transactions |
Retained earnings etc. |
Proposed dividend |
FLSmidth & Co. A/S shareholders' share |
Minority shareholders' share |
Total |
|---|---|---|---|---|---|---|---|---|
| Equity at 1 January 2009 | 1,064 | (271) | 1 | 4,219 | - | 5,013 | 22 | 5,035 |
| Comprehensive income for the period | 53 | (3) | 908 | 958 | 1 | 959 | ||
| Share-based payment, share options | 10 | 10 | 10 | |||||
| Proposed dividend | (106) | 106 | - | - | ||||
| Equity at 30 June 2009 | 1,064 | (218) | (2) | 5,031 | 106 | 5,981 | 23 | 6,004 |
| Equity at 1 January 2010 | 1,064 | (290) | (4) | 5,568 | 266 | 6,604 | 23 | 6,627 |
| Comprehensive income for the period | 573 | (24) | 614 | 1,163 | (4) | 1,159 | ||
| Dividend paid | (262) | (262) | (262) | |||||
| Dividend, treasury shares | 4 | (4) | - | - | ||||
| Share-based payment, share options | 10 | 10 | 10 | |||||
| Disposal of treasury shares | 11 | 11 | 11 | |||||
| Additions and disposals of minority interests | - | (4) | (4) | |||||
| Equity at 30 June 2010 | 1,064 | 283 | (28) | 6,207 | - | 7,526 | 15 | 7,541 |
| Movements on share capital: | No. of shares |
|---|---|
| Share capital at 1 January 2010 | 53,200,000 |
| Share capital at 30 June 2010 | 53,200,000 |
Each share has a nominal value of DKK 20 and entitles the holder to 20 votes.
| Treasury shares: | No. of shares |
|---|---|
| Treasury shares at 1 January 2010 | 628,602 |
| Settled share options | (68,000) |
| Acquired | 4,090 |
| Treasury shares at 30 June 2010 | 564,692 |
Representing 1.06% of the share capital.
Income statement classified by function
It is Group policy to prepare the income statement based on an adapted classification of the costs by function in order to show the Earnings before nonrecurring items, depreciation, amortisation and write-downs (EBITDA). Depreciation, amortisation and write-downs of tangible and intangible assets are therefore separated from the individual functions and presented on separate lines.
The income statement classified by function including allocation of depreciation, amortisation and write-downs appears from the following:
| DKKm | Q2 2010 | Q2 2009 | Q1-Q2 2010 | Q1-Q2 2009 |
|---|---|---|---|---|
| Revenue | 4,923 | 5,593 | 9,413 | 10,766 |
| Production costs | (3,689) | (4,361) | (7,117) | (8,371) |
| Gross profit | 1,234 | 1,232 | 2,296 | 2,395 |
| Sales and distribution costs | (340) | (320) | (648) | (611) |
| Administrative costs | (447) | (397) | (855) | (803) |
| Other operating income / (costs) | 31 | 30 | 44 | 38 |
| Special non-recurring items | - | 3 | - | 3 |
| Earnings before interest and tax (EBIT) | 478 | 548 | 837 | 1,022 |
| Financial income | 460 | 463 | 822 | 1,042 |
| Financial costs | (570) | (395) | (949) | (1,076) |
| Earnings before tax (EBT) | 368 | 616 | 710 | 988 |
| Tax for the period | (113) | (192) | (213) | (73) |
| Profit/loss for the period, continuing activities | 255 | 424 | 497 | 915 |
| Profit/loss for the period, discontinued activities | 3 | 13 | (6) | (11) |
| Profit/loss for the period | 258 | 437 | 491 | 904 |
| DKKm | Q2 2010 | Q2 2009 | Q1-Q2 2010 | Q1-Q2 2009 |
|---|---|---|---|---|
| Earnings | ||||
| FLSmidth & Co. A/S shareholders' share of profit/loss for the period | 258 | 437 | 491 | 904 |
| FLSmidth & Co. Group profit/loss from discontinued activities | 3 | 13 | (6) | (11) |
| Number of shares, average | ||||
| Number of shares issued | 53,200,000 | 53,200,000 | 53,200,000 | 53,200,000 |
| Adjustment for treasury shares | (587,638) | (814,845) | (601,292) | (814,752) |
| Potential increase of shares in circulation, in-the-money options | 144,255 | - | 129,728 | - |
| 52,756,617 | 52,385,155 | 52,728,436 | 52,385,248 | |
| Earnings per share | ||||
| • Continuing and discontinued activities per share DKK | 4.9 | 8.3 | 9.3 | 17.3 |
| • Continuing and discontinued activities, diluted, per share DKK | 4.9 | 8.3 | 9.3 | 17.3 |
| • Continuing and discontinued activities, diluted, before the effect of purchase price allocations regarding GL&V Process, per share DKK |
5.2 | 8.7 | 9.9 | 17.9 |
| • Continuing activities per share DKK | 4.8 | 8.1 | 9.4 | 17.5 |
| • Continuing activities, diluted, per share DKK | 4.8 | 8.1 | 9.4 | 17.5 |
Non-diluted earnings per share regarding discontinued activities amount to DKK 0.1. The effect of purchase price allocations regarding GL&V Process before tax amounts to DKK 44m in the first half of 2010. After tax, this amounts to DKK 31m and the effect on EPS per share is consequently DKK 0.6.
Contingent liabilities at 30 June 2010 amounted to DKK 7.4bn (31 December 2009 DKK 7.0bn), which includes performance bonds and payment guarantees at DKK 7.0bn (31 December 2009 DKK 6.8bn). See note 30 in the 2009 Annual Report for a general description of the nature of the Group's contingent liabilities.
| DKKm | Q1-Q2 2010 | ||||||
|---|---|---|---|---|---|---|---|
| Cement | Minerals | Cembrit | Other companies etc. 1 |
Continuing activities total |
|||
| INCOME STATEMENT | |||||||
| Revenue | 4,800 | 4,019 | 630 | (36) | 9,413 | ||
| Production costs | (3,572) | (2,990) | (419) | (40) | (7,021) | ||
| Gross profit | 1,228 | 1,029 | 211 | (76) | 2,392 | ||
| Sales, admin. and distr. costs and other operating items | (661) | (577) | (168) | 61 | (1,345) | ||
| Earnings before special non-recurring items, depreciation and amortisation (EBITDA) | 567 | 452 | 43 | (15) | 1.047 | ||
| Special non-recurring items | - | (1) | 1 | - | - | ||
| Depreciation, amortisation and write-downs of tangible and intangible assets | (65) | (106) | (37) | (2) | (210) | ||
| Earnings before interest and tax (EBIT) | 502 | 345 | 7 | (17) | 837 | ||
| Earnings before interest and tax (EBIT) before the effect of purchase price allocations | |||||||
| regarding GL&V Process | 502 | 389 | 7 | (17) | 881 | ||
| Order intake (gross) | 6,180 | 6,579 | N/A | (43) | 12,716 | ||
| Order backlog | 15,006 | 11,688 | N/A | (73) | 26,621 | ||
| FINANCIAL RATIOS | |||||||
| Contribution ratio | 25.6% | 25.6% | 33.5% | N/A | 25.4% | ||
| EBITDA ratio | 11.8% | 11.2% | 6.8% | N/A | 11.1% | ||
| EBIT ratio | 10.5% | 8.6% | 1.1% | N/A | 8.9% | ||
| EBIT ratio before the effect of purchase price allocations regarding GL&V Process | 10.5% | 9.7% | 1.1% | N/A | 9.4% | ||
| Number of employees at 30 June | 5,525 | 4,017 | 1,043 | 3 | 10,588 |
| DKKm | Q1-Q2 2009 | ||||||
|---|---|---|---|---|---|---|---|
| Cement | Minerals | Cembrit | Other companies etc. 1 |
Continuing activities total |
|||
| INCOME STATEMENT | |||||||
| Revenue | 6,031 | 4,298 | 560 | (123) | 10,766 | ||
| Production costs | (4,591) | (3,351) | (385) | 42 | (8,285) | ||
| Gross profit | 1,440 | 947 | 175 | (81) | 2,481 | ||
| Sales, admin. and distr. costs and other operating items | (708) | (487) | (159) | 78 | (1,276) | ||
| Earnings before special non-recurring items, depreciation and amortisation (EBITDA) | 732 | 460 | 16 | (3) | 1,205 | ||
| Special non-recurring items | - | (3) | 6 | - | 3 | ||
| Depreciation, amortisation and write-downs of tangible and intangible assets | (53) | (99) | (33) | (1) | (186) | ||
| Earnings before interest and tax (EBIT) | 679 | 358 | (11) | (4) | 1,022 | ||
| Earnings before interest and tax (EBIT) before the effect of purchase price allocations | |||||||
| regarding GL&V Process | 679 | 407 | (11) | (4) | 1,071 | ||
| Order intake (gross) | 2,655 | 3,017 | N/A | (61) | 5,611 | ||
| Order backlog | 14,919 | 11,139 | N/A | (95) | 25,963 | ||
| FINANCIAL RATIOS | |||||||
| Contribution ratio | 23.9% | 22.0% | 31.3% | N/A | 23.0% | ||
| EBITDA ratio | 12.1% | 10.7% | 2.9% | N/A | 11.2% | ||
| EBIT ratio | 11.3% | 8.3% | (2.0%) | N/A | 9.5% | ||
| EBIT ratio before the effect of purchase price allocations regarding GL&V Process | 11.3% | 9.5% | (2.0%) | N/A | 9.9% | ||
| Number of employees at 30 June | 5,991 | 4,017 | 1,116 | 3 | 11,127 |
DKKm
| Q1-Q2 2010 | Q1-Q2 2009 | |
|---|---|---|
| Reconciliation of the profit/loss for the period before tax, continuing activities | ||
| Segment earnings before tax of reportable segments | 837 | 1,022 |
| Financial income | 822 | 1,042 |
| Financial costs | (949) | (1,076) |
| Earnings for the period before tax (EBT) of continuing activities | 710 | 988 |
1) Other companies, etc. consist of companies with no activities, real estate companies, eliminations and the parent company
| DKKm | 2008 | 2009 | 2010 | |||||
|---|---|---|---|---|---|---|---|---|
| Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |
| INCOME STATEMENT Revenue |
6,486 | 7,574 | 5,173 | 5,593 | 5,833 | 6,535 | 4,490 | 4,923 |
| Gross profit | 1,302 | 1,805 | 1,210 | 1,271 | 1,205 | 1,720 | 1,109 | 1,283 |
| Earnings before special non-recurring items, depreciation and | ||||||||
| amortisation (EBITDA) | 703 | 911 | 578 | 627 | 603 | 917 | 462 | 585 |
| Earnings before interest and tax (EBIT) | 583 | 849 | 474 | 548 | 475 | 764 | 359 | 478 |
| Earnings before interest and tax (EBIT) before the effect of purchase | ||||||||
| price allocations regarding GL&V Process Earnings before tax (EBT) |
639 456 |
873 667 |
498 372 |
573 616 |
499 495 |
788 625 |
381 342 |
500 368 |
| Tax for the period | (134) | (232) | 119 | (192) | (137) | (193) | (100) | (113) |
| Profit/loss for the period, continuing activities | 322 | 435 | 491 | 424 | 358 | 432 | 242 | 255 |
| Profit/loss for the period, discontinued activities | 4 | 52 | (24) | 13 | (6) | (24) | (9) | 3 |
| Profit/loss for the period | 326 | 487 | 467 | 437 | 352 | 408 | 233 | 258 |
| Contribution ratio | 20.1% | 23.8% | 23.4% | 22.7% | 20.7% | 26.3% | 24.7% | 26.1% |
| EBITDA ratio | 10.8% | 12.0% | 11.2% | 11.2% | 10.3% | 14.0% | 10.3% | 11.9% |
| EBIT ratio | 9.0% | 11.2% | 9,2% | 9.8% | 8.1% | 11.7% | 8.0% | 9.7% |
| EBIT ratio before the effect of purchase price allocations regarding | ||||||||
| GL&V Process | 9.9% | 11.5% | 9,6% | 10.2% | 8.6% | 12.1% | 8.5% | 10.2% |
| CASH FLOW | ||||||||
| Cash flow from operating activities | 1,281 | (287) | 192 | 416 | 939 | 923 | 349 | 387 |
| Cash flow from investing activities | (217) | (254) | (128) | (91) | (211) | (100) | (93) | (70) |
| Order intake, continuing activities (gross) | 8,504 | 4,394 | 3,111 | 2,500 | 3,620 | 4,091 | 5,195 | 7,521 |
| Order backlog, continuing activities | 33,731 | 30,460 | 28,945 | 25,963 | 23,307 | 21,194 | 22,883 | 26,621 |
| SEGMENT INFORMATION | ||||||||
| Cement | ||||||||
| Revenue | 3,435 | 3,973 | 2,959 | 3,072 | 3,423 | 3,605 | 2,426 | 2,374 |
| EBITDA | 362 | 563 | 367 | 365 | 360 | 635 | 269 | 298 |
| EBIT | 327 | 550 | 331 | 348 | 308 | 561 | 237 | 265 |
| Contribution ratio | 19.3% | 24.2% | 22.7% | 25.0% | 19.3% | 28.0% | 25.2% | 25.9% |
| EBITDA ratio EBIT ratio |
10.5% 9.5% |
14.2% 13.8% |
12.4% 11.2% |
11.9% 11.3% |
10.5% 9.0% |
17.6% 15.6% |
11.1% 9.8% |
12.6% 11.2% |
| Order intake (gross) | 4,591 | 1,961 | 1,406 | 1,249 | 2,260 | 2,248 | 2,834 | 3,346 |
| Order backlog | 20,864 | 18,565 | 16,991 | 14,919 | 13,774 | 12,568 | 13,762 | 15,006 |
| Minerals | ||||||||
| Revenue | 2,754 | 3,414 | 2,009 | 2,289 | 2,081 | 2,658 | 1,836 | 2,183 |
| EBITDA | 325 | 473 | 229 | 231 | 245 | 317 | 200 | 252 |
| EBIT | 256 | 417 | 176 | 182 | 187 | 253 | 147 | 198 |
| EBIT before the effect of purchase price allocations regarding | ||||||||
| GL&V Process | 312 | 441 | 200 | 207 | 211 | 277 | 169 | 220 |
| Contribution ratio EBITDA ratio |
20.1% 11.8% |
23.1% 13.9% |
23.3% 11.4% |
20.9% 10.1% |
23.0% 11.8% |
26.7% 11.9% |
24.9% 10.9% |
26.2% 11.5% |
| EBIT ratio | 9.3% | 12.2% | 8.8% | 8.0% | 9.0% | 9,5% | 8.0% | 9.1% |
| EBIT ratio before the effect of purchase price allocations regarding | ||||||||
| GL&V Process | 11.3% | 12.9% | 10.0% | 9.0% | 10.1% | 10,4% | 9.2% | 10.1% |
| Order intake (gross) Order backlog |
3,960 13,588 |
2,544 12,606 |
1,736 12,106 |
1,281 11,139 |
1,370 9,615 |
1,907 8,712 |
2,382 9,234 |
4,197 11,688 |
| Cembrit | ||||||||
| Revenue | 370 | 297 | 247 | 313 | 354 | 329 | 250 | 380 |
| EBITDA | 16 | (35) | (4) | 20 | 33 | (15) | 1 | 42 |
| EBIT | - | (20) | (18) | 7 | 16 | (30) | (16) | 23 |
| Contribution ratio | 28.6% | 18.5% | 29.1% | 32.9% | 31.9% | 22.8% | 32.0% | 34.5% |
| EBITDA ratio | 4.3% | (11.8%) | (1.6%) | 6.4% | 9.3% | (4.6%) | 0.4% | 11.1% |
| EBIT ratio | 0.0% | (6.7%) | (7.3%) | 2.2% | 4.5% | (9.1%) | (6.4%) | 6.1% |
The Interim Report of the Group for the first half of 2010 is presented in accordance with IAS 34 "Presentation of financial statements" as approved by the EU and additional Danish disclosure requirements regarding interim reporting by listed companies as fixed by NASDAQ OMX Copenhagen ("OMX"). Apart from the below amendments, the accounting policies are unchanged from those adopted in the 2009 Annual Report. Reference is made to note 37 page 88 in the 2009 Annual Report for further details.
With effect from 1 January 2010, the Group has adopted the changes to IFRS 2 "Share-based payment", the changes to IFRS 3 "Business combinations", the changes to IAS 27 "Consolidated and separate financial statements" and parts of "Improvements to IFRSs April 2009". Apart from the adoption of IFRS 3 "Business combinations" the adoption of the new and changed standards and interpretations has not affected recognition and measurement.
The changed IFRS 3 "Business combinations" means that costs of purchase and changes to contingent purchase considerations on acquisitions must be recognised direct in the income statement. Hitherto, it has been Group accounting policy to include costs of purchase in the cost of the business acquired, whereas contingent considerations were included in the cost of the business combination if the adjustment was likely to take place and it could be measured reliably. Subsequent adjustments to the contingent consideration were made in the cost of the business combination. In agreement with the provisions for coming into force the changed standard has been adopted with forward effect for business combinations where the date of acquisition is 1 January 2010 or later. In the first half of 2010, the Group has not made any business combinations, and the change has therefore had no impact on the financial statements for the first half of 2010.
When preparing the Interim Report in accordance with the Group's accounting policies, it is necessary that the Management makes estimates and lays down assumptions that affect the recognised assets and liabilities, including the disclosures made regarding contingent assets and liabilities.
Management bases their estimates on historical experience and other assumptions considered relevant at the time in question. These estimates and assumptions form the basis of the recognised carrying amounts of assets and liabilities and the derived effects on the income statement. The actual results may deviate.
Reference is made to note 1 page 67 in the 2009 Annual Report for further details regarding the items for which estimates and assessments by Management are primarily applicable when presenting the consolidated financial statements.
FLSmidth & Co. A/S
Vigerslev Allé 77 DK-2500 Valby Denmark Tel.: +45 36 18 18 00 Fax: +45 36 44 11 46 [email protected]
This Interim Report by FLSmidth & Co. A/S is an English translation of the original report in Danish which was adopted by the Board of Directors of FLSmidth & Co. A/S. Whereas all possible care has been taken to ensure a true and faithful transla tion into English, differences between the English and Danish version may occur in which case the original Danish version shall prevail.
CVR No. 58180912 www.flsmidth.com
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.