FLSmidth & Co. — Interim / Quarterly Report 2016

Nov 9, 2016

FLSmidth

1 January - 30 September 2016 (Company announcement No. 18-2016)

Interim Report

ROCE	EBITA margin	Order intake	CFFO
8%	7.2%	DKKm 4,133	DKKm 744
Down from 11%	Down from 7.8%	Down from DKKm 5,151	Up from DKKm 496

FLSmidth: 1 January - 30 September 2016 Interim Report

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FLSmidth at a glance

Main conclusions

Strong cash flow generation led to significant reduction in NIBD. Highest order intake from service activities since early 2014. However, capital orders remain weak. Sequential improvement in revenue as expected. Corrective actions are being implemented to adjust cost base to lower level of activity. Guidance for 2016 unchanged.

Guidance for 2016

Guidance for 2016

DKK	Realised 2015	Realised Q1-Q3 2016	Guidance 2016
Revenue	DKK 19.7bn	DKK 12.7bn	DKK 17-18bn
EBITA margin 2)	8.0%	6.8%	7-8%
ROCE	10%	8%	8-9%
Effective tax rate	32%	29%	29-31%
CFFI 3)	DKK -0.1bn	DKK -0.1bn	DKK -0.3bn

1) The full-year guidance is based on the assumption that execution of the order backlog will not be negatively impacted by further market-driven delays.
2) Expected to end up at the lower end.
3) Excluding acquisitions and divestments of enterprises and activities.

Long-term financial targets

Long-term financial goals for FLSmidth subject to normalised market conditions:

Annual growth in revenue	Above market average
EBITA margin	10-13%
ROCE *)	>20%
Tax rate	32-34%
Financial gearing	(NIBD/EBITDA) <2
Equity ratio	>30%
Pay-out ratio	30-50% of the profit for the year

*) ROCE: Return on Capital Employed calculated on a before-tax basis as EBITA divided by average Capital Employed including goodwill.

Divisional long-term financial targets:

	Growth (over the cycle)	EBITA% (as pct. of revenue)
Customer Services	5-10% >15%	15-20%
Product Companies	5-10% 12-15%	~15%
Minerals	5-6% 3-8%	Negative
Cement	3-5% 3-8%	Negative

FLSmidth: 1 January – 30 September 2016 Interim Report

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FLSmidth at a glance

Financial result Q3 2016

Revenue DKKm
4,774
EBITA margin
7.2%
Order intake DKKm
4,133

FLSmidth

Customer Services	Product Companies	Minerals	Cement
Revenue DKKm
1,670	Revenue DKKm
1,354	Revenue DKKm
727	Revenue DKKm
1,269
EBITA margin
11.4%	EBITA margin
11.9%	EBITA margin
-5.3%	EBITA margin
2.1%
Order intake DKKm
1,820	Order intake DKKm
1,317	Order intake DKKm
579	Order intake DKKm
663

Total service business

Customer Services	Product Companies
Customised cement and minerals equipment aftermarket	Revenue DKKm
727
Cement Operation & Maintenance	EBITA margin
-5.3%
Product Companies Products aftermarket	Order intake DKKm
579

Total capital business

Minerals	Projects / customised equipment
Projects / customised equipment	Revenue DKKm
1,269
Product Companies Products	EBITA margin
2.1%

46% of revenue
36% of order intake
Revenue growth 12% vs. Q3 2015
Order intake growth -48% vs. Q3 2015

FLSmidth: 1 January – 30 September 2016 Interim Report

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FLSmidth Q3 2016 in numbers

(vs. Q3 2015)

Return on Capital Employed	Revenue (DKKm)	EBITA (DKKm)
8%	4,774	344
Down from 11%	Up from 4,609	Down from 358
EBITA margin	CFFO (DKKm)	Order intake (DKKm)
7.2%	744	4,133
Down from 7.8%	Up from 496	Down from 5,151

(vs. Q2 2016)

Order backlog (DKKm)	Net interest-bearing debt (DKKm)	Net working capital (DKKm)
15,174	3,150	2,251
Down from 15,914	Down from 3,844	Down from 2,610

FLSmidth: 1 January – 30 September 2016 Interim Report

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Group financial highlights

DKKm	Q3 2016	Q3 2015	Q1-Q3 2016	Q1-Q3 2015	Year 2015
INCOME STATEMENT
Revenue	4,774	4,609	12,667	14,385	19,682
Gross profit	1,164	1,174	3,280	3,691	4,946
EBITDA	421	431	1,073	1,415	1,878
EBITA	344	358	863	1,198	1,582
EBIT	243	245	573	862	1,141
Earnings from financial items, net	14	(93)	(56)	(81)	(256)
EBT	257	152	517	781	885
Profit/(loss) for the period, continuing activities	187	105	366	539	603
Profit/(loss) for the period, discontinued activities	(17)	(189)	(26)	(137)	(178)
Profit/(loss) for the period	170	(84)	340	402	425
CASH FLOW
Cash flow from operating activities (CFFO)	744	496	839	390	538
Acquisition of tangible assets	(20)	(22)	(157)	(106)	(139)
Cash flow from investing activities (CFFI)	(43)	14	(150)	730	750
Free cash flow	701	510	689	1,120	1,288
Free cash flow adjusted for acquisitions and disposals of enterprises and activities	701	475	689	253	415
Net working capital			2,251	2,626	2,583
Net interest-bearing debt			(3,150)	(3,746)	(3,674)
ORDERS
Order intake, continuing activities	4,133	5,151	13,759	14,799	18,490
Order backlog, continuing activities			15,174	16,666	14,858
BALANCE SHEET
Total assets			23,899	24,732	24,362
Equity			8,151	7,832	7,982
Dividend to shareholders, paid			196	439	439
FINANCIAL RATIOS
Gross margin	24.4%	25.5%	25.9%	25.7%	25.1%
EBITDA margin	8.8%	9.4%	8.5%	9.8%	9.5%
EBITA margin	7.2%	7.8%	6.8%	8.3%	8.0%
EBIT margin	5.1%	5.3%	4.5%	6.0%	5.8%
EBT margin	5.4%	3.3%	4.1%	5.4%	4.5%
CFFO / Revenue	15.6%	10.8%	6.6%	2.7%	2.7%
Cash conversion	288.5%	193.9%	120.2%	29.4%	36.4%
Book-to-bill	86.6%	111.8%	108.6%	102.9%	93.9%
Order backlog / Revenue			84.5%	83.3%	75.5%
Return on equity			6%	7%	5%
Equity ratio			34%	32%	33%
ROCE (return on capital employed), average			8%	11%	10%
Net working capital ratio, end			12.5%	13.1%	12.3%
Financial gearing			2.1	1.8	2.0
Capital employed, average			15,155	15,324	15,162
Number of employees at 30 September, Group			12,469	13,145	12,969
SHARE RATIOS
CFPS (cash flow per share), (diluted)	15.2	10.1	17.2	8.0	11.0
EPS (earnings per share), (diluted)	3.4	(1.7)	6.9	8.1	8.6
FLSmidth & Co. A/S' share price			249.2	221.5	240.0
Number of shares (1,000), end of period			51,250	51,250	51,250
Market capitalisation	-	-	12,772	11,352	12,300

The financial ratios have been computed in accordance with the guidelines of the Danish Society of Financial Analysts from 2015.

Please refer to note 13 for definitions of terms.

FLSmidth: 1 January - 30 September 2016 Interim Report

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Management's Review

Group

Strong cash flow generation led to significant reduction in NIBD. Highest order intake from service activities since early 2014. Sequential improvement in revenue as expected. Corrective actions are being implemented to adjust cost base to lower level of activity. Guidance for 2016 unchanged.

Market trends

The MINExpo conference in September confirmed the general sentiment that the market for mining capex is at a trough, however moving around a volatile bottom. Consensus at MINExpo was that mining capex could see the start of a slow recovery in 2018 which is largely in line with the slight recovery in mining customers' capex spend that FLSmidth expects to see from the end of 2017. Although some mining equipment suppliers are more early cyclical than FLSmidth, MINExpo did confirm the relative attractiveness of FLSmidth's commodity exposure with a stronghold in gold and copper

processing. The momentum in gold activity is continuing. Copper activity is still modest, but supply-demand balance forecasts suggest a solid mid-term outlook, and in general, customers confirmed that copper investments should take place in order to accommodate an expected supply deficit towards the end of the decade.

At present, greenfield activity is observed mainly in smaller industries such as lithium and fertilizers, the latter despite a depressed price level. Iron ore remains sluggish with only a few smaller brownfield opportunities. Also the coal market

Group (continuing activities)

DKKm	Q3 2016	Q3 2015	Change (%)	Q1-Q3 2016	Q1-Q3 2015	Change (%)
Order intake (Gross)	4,133	5,151	-20%	13,759	14,799	-7%
Hereof service order intake	2,647	2,279	16%	7,419	7,388	0%
Order backlog	15,174	16,666	-9%	15,174	16,666	-9%
Revenue	4,774	4,609	4%	12,667	14,385	-12%
Hereof service revenue	2,601	2,677	-3%	7,373	8,094	-9%
Gross profit	1,164	1,174	-1%	3,280	3,691	-11%
Gross profit margin	24.4%	25.5%		25.9%	25.7%
EBITDA	421	431	-2%	1,073	1,415	-24%
EBITDA margin	8.8%	9.4%		8.5%	9,8%
EBITA	344	358	-4%	863	1,198	-27%
EBITA margin	7.2%	7.8%		6.8%	8.3%
EBIT	243	245	-1%	573	862	-32%
EBIT margin	5.1%	5.3%		4.5%	6.0%
Number of employees	12,324	12,902	-4%	12,324	12,902	-4%

FLSmidth: 1 January – 30 September 2016 Interim Report

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Management's Review

remains subdued but could be supported going forward by the very significant price increases in Q3. The price of Australian thermal coal increased 37% in the quarter and the price of coking coal (used for steel production) doubled in just a quarter. The price increases witnessed in 2016 across commodities is an important step for mining companies to restore balance sheets and eventually step up capex spend.

The take-away from MINExpo in relation to mining related services was that aftermarket activities should see some support already by 2017. In general, customers have been

Order intake – by segment (Q3 2016)

Order intake – by industry (Q3 2016)

Revenue – by segment (Q3 2016)

postponing maintenance and reducing the frequency of what used to be clockwork maintenance. In some cases, this has increased the risk of equipment failure and unnecessary, expensive downtime. It is, however, difficult to assess when a sustainable change in customer behaviour to address pent-up maintenance demand will happen.

The market for new cement capacity continues to be subdued and characterised by significant pricing pressure. That said, the pipeline of potential projects is modestly encouraging, and current tendering activity gives reason to be cautiously optimistic on the mid-term outlook.

The market for cement related services was stable, however with a positive development in the third quarter.

Financial developments in Q3 2016

Growth efficiency

Revenue growth is expected to be negative in 2016 as a result of subdued investments in the cement and minerals industries. However, total service activities, accounting for more than half of both revenue and order intake, have been more resilient, and actually showed strong momentum in the third quarter due to continued high production rates, low inventory levels and pent-up demand for maintenance, particularly in the mining industry.

Developments in total service activities

Total service activities in FLSmidth embrace the entire Customer Services Division, Operation & Maintenance contracts (part of the Cement Division), and the whole service and aftermarket part of the Product Companies Division.

Order intake related to total service activities increased 16% to DKK 2,647m in Q3 (Q3 2015: DKK 2,279m), equivalent to 64% of the total order intake (Q3 2015: 44%). Revenue related to total service activities decreased 3% to DKK 2,601m in Q3 (Q3 2015: DKK 2,677m), equivalent to 54% of the total revenue (Q3 2015: 58%).

FLSmidth: 1 January – 30 September 2016 Interim Report

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Management's Review

Order intake and order backlog

The order intake decreased 20% to DKK 4,133m (Q3 2015: DKK 5,151m). Foreign exchange translation effects had a negative impact of 3%. Organic growth was -17%, which is mainly explained by the Minerals and Product Companies divisions, where no large orders were announced in the quarter as opposed to same quarter last year.

The level of small orders (orders below DKK 200m) of around DKK 4.1bn is in line with the average quarterly unannounced order intake over the past couple of years, and included the highest order intake related to total service activities since the beginning of 2014.

The order backlog for the Group decreased 5% in Q3 to DKK 15,174m (end of Q2 2016: DKK 15,914m). 29% of the backlog is expected to be converted to revenue in the remainder of 2016, 47% in 2017, and 24% in 2018 and beyond. In Minerals, one third of the order backlog is currently very slow moving upon customers' request and financial situation.

Revenue

Revenue increased 4% to DKK 4,774m in Q3 2016 (Q3 2015: DKK 4,609m). Foreign exchange translation effects had a 4% negative impact on revenue in Q3. Organic growth was 8%, primarily related to the Cement division where milestones on some large contracts were met as per schedule.

Order intake developments in Q3 2016

Order intake (vs. Q3 2015)	Customer Services	Product Companies	Minerals	Cement	FLSmidth Group
Organic growth	25%	-9%	-61%	0%	-17%
Currency	-6%	-2%	-2%	-2%	-3%
Total growth	19%	-11%	-63%	-2%	-20%

Quarterly revenue and EBITA margin

Revenue developments in Q3 2016

Revenue (vs. Q3 2015)	Customer Services	Product Companies	Minerals	Cement	FLSmidth Group
Organic growth	-2%	4%	-5%	63%	8%
Currency	-5%	-3%	-6%	-3%	-4%
Total growth	-7%	1%	-11%	60%	4%

Quarterly order intake

FLSmidth: 1 January – 30 September 2016 Interim Report

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Profit efficiency

The EBITA margin improved sequentially in Q3 due to higher revenue and operational leverage. However, gross margins are under continued downward pressure in the two project divisions due to low volumes and increasing pricing pressure in the past couple of years. Corrective actions are currently being implemented to reduce the cost base to a lower level of activity.

Implementation of profit improvement initiatives

As a consequence of continued low market activity, it was announced in August 2016, that corrective actions would be implemented to compensate for declining revenue and earnings. The corrective actions include further business right-sizing, more site closures, management delayering as well as supply chain optimisation and procurement savings. At the same time it was announced that investments would be made in value engineering, new sales offices in ‘white spots' and more sales people.

In total, it is anticipated that the corrective actions will result in an EBITA improvement of DKK 500m in 2017 and lead to one-off costs of DKK 350m, of which DKK -37m were booked in Q3 2016 and around DKK -75m are expected to be booked in Q4 2016. The EBITA improvement is expected to be largely offset by a lower level of activity and lower margin orders in the backlog. As part of the corrective actions, 600 employees were given notice in September and October 2016. This is on top of the approximately 300 employees that were given notice in Q2.

The gross profit in Q3 decreased to DKK 1,164m (Q3 2015: DKK 1,174m), corresponding to a gross margin of 24.4% (Q3 2015: 25.5%). The gross profit was negatively impacted by DKK -25m costs of non-recurring nature (Q3 2015: DKK -40m) related to the implementation of corrective actions. In general, gross margins in the two project divisions are trending downwards due to low volumes and pricing pressure. The gross margin in Customer Services was temporarily lower than usual in Q3 2016 due to business mix and low margin orders.

Q3 2016 saw total research and development expenses of DKK 53m (Q3 2015: DKK 46m), representing 1.1% of revenue (Q3 2015: 1.0%), of which DKK 18m was capitalised (Q3 2015: DKK 7m) and the balance reported as production costs. In addition, project-financed developments are taking place in cooperation with customers. An increasing share of the total research and development expenses are related to the Customer Services and Product Companies divisions.

Sales, distribution and administrative costs and other operating items amounted to DKK 743m in Q3 2016 (Q3 2015: DKK 743m), which represents a cost percentage of 15.2% of revenue (Q3 2015: 16.1%). SG&A costs were negatively impacted by costs of non-recurring nature amounting to DKK -12m (Q3 2015: DKK -6m), related to the implementation of corrective actions.

Earnings before interest, tax, depreciation and amortisation (EBITDA) decreased to DKK 421m (Q3 2015: DKK 431m), corresponding to an EBITDA margin of 8.8% (Q3 2015: 9.4%).

Earnings before interest, tax and amortisation (EBITA) decreased to DKK 344m (Q3 2015: DKK 358m), corresponding to an EBITA margin of 7.2% (Q3 2015: 7.8%). The EBITA margin adjusted for the above mentioned non-recurring costs in Q3 (gross profit DKK -25m, SG&A DKK -12m) was 8.0% (Q3 2015: 8.8%).

Amortisation of intangible assets amounted to DKK -101m (Q3 2015: DKK -113m). The effect of purchase price allocations amounted to DKK -60m (Q3 2015: DKK -71m) and other amortisations to DKK -41m (Q3 2015: DKK -42m).

Net financial items amounted to DKK 14m (Q3 2015: DKK -93m), of which foreign exchange and fair value adjustments amounted to DKK 31m (Q3 2015: DKK -65m). Net interest costs amounted to DKK -17m (Q3 2015: DKK -28m). As a result of the lower realised net financial items, Earnings before tax (EBT) increased to DKK 257m (Q3 2015: 152m)

The recent devaluation of the Egyptian pound is expected to cause a negative impact on financial items of around DKK -60m in Q4 2016, as a result of FLSmidth's foreign exchange exposure. The estimate is based on the USD/EGP exchange rate on 7 November 2016.

Tax for the period amounted to DKK -70m (Q3 2015: DKK -47m), corresponding to an effective tax rate of 27% (Q3 2015: 31%).

Profit from continuing activities amounted to DKK 187m (Q3 2015: DKK 105m).

Profit/loss from discontinued activities amounted to DKK -17m (Q3 2015: DKK -189m) and was related to the bulk material handling activities. In connection with the interim report for the third quarter of 2015, it was announced that the Group's activities within bulk material handling would be put up for sale. The status is that the actual sales process has started.

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Management's Review

Profit for the period increased to DKK 170m (Q3 2015: DKK -84m), equivalent to DKK 3.4 per share (diluted) (Q3 2015: DKK -1.7).

Capital efficiency

Capital employed and ROCE

Average Capital employed decreased to DKK 15.2bn in Q3 2016 (Q2 2016: DKK 15.7bn), and 12-months trailing EBITA increased to DKK 1,247m (Q2 2016: DKK 1,261m). As a consequence, ROCE was unchanged at 8% (Q2 2016: 8%).

Total Capital employed decreased to DKK 14.9bn at the end of Q3 2016 and consists primarily of intangible assets amounting to DKK 10.1bn, which is mostly related to goodwill recognised at cost price as well as patents and rights, and customer relations. Tangible assets amounted to DKK 2.5bn and net working capital to DKK 2.3bn at the end of Q3.

Cash flow developments and working capital

Cash flow from operating activities amounted to DKK 744m in Q3 2016 (Q3 2015: DKK 496m). The increase in operating cash flow is related to an improvement in EBITDA from discontinued activities, a positive contribution from net working capital, as well as lower payments related to taxes and financial items.

Net working capital decreased to DKK 2,251m at the end of Q3 2016 (end of Q2 2016: DKK 2,610m), representing 12.5% of 12-months trailing revenue (end of Q2 2016: 14.2% of revenue). The decrease in net working capital in Q3 is primarily explained by an increase in accounts payable.

Year to date, the improvement in net working capital is predominantly explained by a significant reduction in accounts receivable.

Cash flow from investing activities amounted to DKK -43m (Q3 2015: DKK 14m).

Free cash flow (cash flow from operating and investing activities) in Q3 amounted to DKK 701m (Q3 2015: DKK 510m).

Balance sheet and capital structure

The balance sheet total amounted to DKK 23,899m at the end of Q3 2016 (end 2015: DKK 24,362m).

Equity at the end of Q3 2016 increased to DKK 8,151m (end of 2015: DKK 7,982m). The equity ratio amounted to 34% (end of 2015: 33%), which is above the long-term target of minimum 30%.

Net interest-bearing debt by the end of Q3 2016 decreased to DKK 3,150m (end of 2015: DKK 3,674m). As a result, the Group's financial gearing (calculated as NIBD divided by 12-months trailing EBITDA) was 2.1 at the end of Q3 2016 (end of 2015: 2.0) just above the NIBD long term target of maximum 2x EBITDA. At the end of Q3 2016, the Group's capital resources consisted of committed credit facilities of DKK 8.5bn (including mortgage) with a weighted average time to maturity of 3.5 years.

Quarterly net working capital

Cash flow from operating activities

FLSmidth: 1 January - 30 September 2016 Interim Report

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Management's Review

Treasury shares

FLSmidth's treasury shares amounted to 2,328,740 shares at the end of Q3 2016 (end of 2015: 2,327,928 shares), representing 4.5% of the total share capital (end of 2015: 4.5%). The holding of treasury shares is used to hedge FLSmidth's long-term incentive plans.

Long term incentive plans (LTIP)

Share option plans (being phased out)

At the end of Q3 2016, there were a total of 2,855,876 unexercised share options under FLSmidth's incentive plan and their fair value was DKK 82m. The fair value is calculated by means of a Black & Scholes model based on a current share price of 249.2, a volatility of 31.97% and future annual dividend of DKK 9 per share. The effect of the plan on the income statement for Q3 2016 was DKK -9m (Q3 2015: DKK -11m).

Performance shares (replacing Share option programme)

At the end of Q3 2016, FLSmidth had granted a maximum of 179,215 performance share units to 140 key employees. Full vesting after three years will depend on achievement of stretched financial targets related to the EBITA margin and the net working capital ratio. The effect of the plan on the income statement for Q3 2016 was DKK -4m (Q3 2015: DKK 0m).

Employees

The number of employees amounted to 12,469 at the end of Q3 2016 (including discontinued activities, employing 145 people) (Q3 2015: 13,145). In September and October, further reductions in workforce have been implemented to adjust the cost base to lower level of activity and lower margin orders in the backlog.

Guidance for 2016

It is still expected that revenue will be DKK 17-18bn and that the EBITA margin will be 7-8%, however the EBITA margin is expected to end up at the lower end. The return on capital employed is expected to be 8-9%. The effective tax rate is expected to be 29-31% (2015: 32%) and cash flow from investments is expected to be around DKK -0.3bn excluding acquisitions and divestments.

The full year guidance is based on the assumption that execution of the order backlog will not be negatively impacted by further market-driven delays.

Events occurring after the balance sheet date

As announced on 5 October 2016, Lundbeckfonden has informed FLSmidth that on 25 September 2015 it transferred its shares to Lundbeckfond Invest A/S, which is Lundbeckfonden's 100% owned subsidiary. At the time of the transfer they held a total of 5,142,655 shares in FLSmidth & Co. A/S, corresponding to 10.03% of the total nominal share capital.

As announced on 2 November, FLSmidth has signed a large EPC cement contract worth more than USD 200m in Iraq. The contract is among others, subject to receipt of down payment, and until it becomes effective, it will not be part of the order intake.

Financial Calendar 2017

9 February 2017	Annual Report 2016
30 March 2017	Annual General Meeting
9 May 2017	1st Quarter Interim Report 2017
9 August 2017	Half-year Interim Report 2017
9 November 2017	1st-3rd Quarter Interim Report 2017

FLSmidth: 1 January – 30 September 2016 Interim Report

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Management's Review

Forward-looking statement

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 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' 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 report, could cause actual results to differ materially from those contemplated in any forward-looking statements.

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 costs and 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 interim report.

Page 12 of 35

FLSmidth: 1 January – 30 September 2016 Interim Report

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Divisional Update

Customer Services

The Customer Services Division provides a full suite of parts, services and maintenance solutions to the global cement and minerals industries.

Market developments in Q3 2016

The market for Customer Services was stable in the third quarter, however with a positive development in terms of increased discretionary spending, which has been subdued for several quarters. The positive development was in both cement and minerals and across geographies and product segments.

Financial performance in Q3 2016

Order intake in Q3 2016 was DKK 1,820m, representing an increase of 19% (Q3 2015: DKK 1,526m) and a sequential increase of 14%. Adjusted for currency effects, the order intake increased 25%. The stronger order intake is partly a result of FLSmidth's sustained efforts on developing smarter wear parts such as mill-liners with increased wear life. It also reflects a pent-up maintenance need as customers have pushed their equipment hard and postponed maintenance more than usual. It is, however, difficult to judge if customer behaviour has significantly changed based on a single quarter.

As a result of the strong order intake in the quarter, revenue increased 9% sequentially. However, revenue decreased 7% to DKK 1,670m compared to the same quarter last year

(Q3 2015: DKK 1,793m) and declined 2% adjusted for currency effects as a result of a softer order intake in the past couple of quarters.

EBITA decreased 18% to DKK 191m (Q3 2015: DKK233m) due to business mix and execution of low margin orders. As a result, the EBITA margin decreased to 11.4% (Q3 2015: 13.0%). In the coming quarters, the EBITA margin is expected to trend back towards the level seen in the first half of 2016.

Quarterly revenue and EBITA margin

Customer Services

DKKm	Q3 2016	Q3 2015	Change (%)	Q1-Q3 2016	Q1-Q3 2015	Change (%)
Order intake (Gross)	1,820	1,526	19%	4,983	5,055	-1%
Order backlog	2,483	2,725	-9%	2,483	2,725	-9%
Revenue	1,670	1,793	-7%	4,769	5,374	-11%
Gross profit	467	522	-11%	1,421	1,542	-8%
Gross profit margin	28.0%	29.1%		29.8%	28.7%
EBITDA	223	260	-14%	678	751	-10%
EBITDA margin	13.4%	14.5%		14.2%	14.0%
EBITA	191	233	-18%	593	672	-12%
EBITA margin	11.4%	13.0%		12.4%	12.5%
EBIT	150	192	-22%	480	550	-13%
EBIT margin	9.0%	10.7%		10.1%	10.2%
Number of employees	4,608	4,797	-4%	4,608	4,797	-4%

FLSmidth: 1 January - 30 September 2016 Interim Report

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Divisional Update

Product Companies

The Product Companies Division hosts a diverse portfolio of relatively standardised market leading product brands, applied in cement, minerals and adjacent industries.

Market developments in Q3 2016

The market for Product Companies was largely unchanged in Q3. While the minerals focused product companies held up well in the previous quarter, the cement focused product companies saw a sequentially stronger order activity in Q3. Overall, capital orders remain under pressure, whereas the service activities are more resilient.

Financial performance in Q3 2016

Order intake in Q3 2016 decreased 11% to DKK 1,317m (Q3 2015: DKK 1,479m). Adjusted for currency effects, the order intake decreased 9%. The decline is explained by a large announced order of DKK 266m in the comparison quarter. Adjusted for this large order in the comparison quarter, the order intake was around DKK 100m higher in Q3 2016, driven by a strong order intake in the cement focused product companies and automation orders. Overall, the order intake was close to the average of the past four quarters and increased 13% sequentially.

Revenue increased 1% to DKK 1,354m (Q3 2015: DKK 1,336m) and increased 7% sequentially. Adjusted for currency effects, revenue increased 4%. After a slow start to the year, revenue is again trending in line with order intake.

EBITA was stable at DKK 161m in Q3 2016 (Q3 2015: DKK 161m) and the EBITA margin decreased slightly to 11.9% (Q3 2015: 12.0%).

Quarterly revenue and EBITA margin

Product Companies

DKKm	Q3 2016	Q3 2015	Change (%)	Q1-Q3 2016	Q1-Q3 2015	Change (%)
Order intake (Gross)	1,317	1,479	-11%	3,888	4,490	-13%
Order backlog	2,681	2,864	-6%	2,681	2,864	-6%
Revenue	1,354	1,336	1%	3,700	4,238	-13%
Gross profit	406	386	5%	1,106	1,246	-11%
Gross profit margin	30.0%	28.9%		29.9%	29.4%
EBITDA	183	186	-2%	477	644	-26%
EBITDA margin	13.5%	13.9%		12.9%	15.2%
EBITA	161	161	0%	409	572	-28%
EBITA margin	11.9%	12.0%		11.1%	13.5%
EBIT	146	143	2%	335	523	-36%
EBIT margin	10.7%	10.7%		9.1%	12.3%
Number of employees	3,263	3,295	-1%	3,263	3,295	-1%

FLSmidth: 1 January - 30 September 2016 Interim Report

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Divisional Update

Minerals

The Minerals Division is a leading provider of mineral processing and handling technology and solutions to the global minerals industries.

Market developments in Q3 2016

The market for new mining equipment remains subdued and was unchanged in the third quarter. The pipeline for potential large orders remains weak, although smaller opportunities exist. In some cases, customers are preparing for the future by carrying out the early engineering on projects, however this typically accounts for less than 10% of the total contract value, and it is uncertain when such projects will proceed. Exploration and greenfield activity is currently limited to gold and other smaller industries such as lithium and fertilizers. The most active regions continue to be South America, South East Asia, North America and Australia.

Financial performance in Q3 2016

Order intake in Q3 2016 decreased 63% to DKK 579m (Q3 2015: DKK 1,574m) primarily due to lack of large orders. The comparison quarter included a large DKK 600m announced order. Adjusted for currency, the order intake decreased 61%.

Revenue decreased 11% to DKK 727m (Q3 2015: DKK 816m) and decreased 5% adjusted for currency. Conversion of the backlog remains impacted by slow progress on a number of projects as a result of customers' focus on short-term cash flow and in some cases restricted financing.

A few larger shipments are planned for the remainder of the year which is expected to support higher revenue in the fourth quarter.

EBITA amounted to DKK -37m (Q3 2015: DKK -60m), and the EBITA margin was -5.3% (Q3 2015: -7.4%). EBITA in the comparison quarter was impacted by one-off costs of DKK -46m. The negative EBITA is a result of low operating leverage and intensified pricing pressure which negates the positive effects of solid project execution and the extensive business right-sizing which was ongoing last year and is continuing.

Quarterly revenue and EBITA margin

Minerals

DKKm	Q3 2016	Q3 2015	Change (%)	Q1-Q3 2016	Q1-Q3 2015	Change (%)
Order intake (Gross)	579	1,574	-63%	1,994	3,482	-43%
Order backlog	4,244	5,138	-17%	4,244	5,138	-17%
Revenue	727	816	-11%	2,105	2,450	-14%
Gross profit	125	135	-7%	343	405	-15%
Gross profit margin	17.1%	16.6%		16.3%	16.5%
EBITDA	(19)	(46)	n/a	(121)	(183)	n/a
EBITDA margin	-2.8%	-5.6%		-5.8%	-7.5%
EBITA	(37)	(60)	n/a	(164)	(226)	n/a
EBITA margin	-5.3%	-7.4%		-7.8%	-9.2%
EBIT	(75)	(102)	n/a	(245)	(354)	n/a
EBIT margin	-10.4%	-12.5%		-11.6%	-14.4%
Number of employees	1,519	1,929	-21%	1,519	1,929	-21%

FLSmidth: 1 January - 30 September 2016 Interim Report

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Divisional Update

Cement

The Cement Division is the market leader of premium technology, process solutions and Operation & Maintenance services to the global cement industry.

Market developments in Q3 2016

The market for new cement capacity remains slow and largely unchanged in Q3. Although few orders are currently available, the tendering activity and pipeline of potential orders justifies a cautiously optimistic mid-term outlook. This does, however, not change the tough competition and resulting pricing pressure in the market. The most active regions for new cement equipment remain North Africa, the Middle East, Asia, the USA, and parts of Latin America.

Financial performance in Q3 2016

Order intake in Q3 2016 decreased 3% to DKK 663m (Q3 2015: DKK 680m) and was unchanged adjusted for currency. The year-to-date order intake for 2016 is DKK 0.7bn above the full-year order intake in 2015. The Q3 order intake included the announcement of a large Operation & Maintenance contract in Egypt. The contract is a five-year continuation of an existing contract signed back in 2010. The new contract will be active from January 2017 and the value of the expected revenue over the next 12 months was booked in the Q3 order intake which is according to the principle for recognition of large O&M orders.

Revenue increased 60% to DKK 1,269m (Q3 2015: DKK 792m) and increased 39% sequentially. The higher revenue was a result of reaching some larger project milestones in Q3.

EBITA amounted to DKK 27m which is significantly above last year (Q3 2015: DKK 2m), corresponding to an EBITA margin of 2.1% (Q3 2015: 0.3%). The EBITA margin was positively impacted by higher operating leverage in the quarter and positive contribution from the Operation & Maintenance business. Going forward, however, the EBITA margin is expected to be under increasing pressure as a result of lower margin orders in the backlog.

Quarterly revenue and EBITA margin

Cement

DKKm	Q3 2016	Q3 2015	Change (%)	Q1-Q3 2016	Q1-Q3 2015	Change (%)
Order intake (Gross)	663	680	-2%	3,550	2,407	47%
Order backlog	6,382	6,529	-2%	6,382	6,529	-2%
Revenue	1,269	792	60%	2,747	2,926	-6%
Gross profit	166	119	39%	410	477	-14%
Gross profit margin	13.1%	15.1%		14.9%	16.3%
EBITDA	31	8	288%	32	147	-78%
EBITDA margin	2.3%	1.0%		1.2%	5.0%
EBITA	27	2	1250%	21	128	-84%
EBITA margin	2.1%	0.3%		0.8%	4.4%
EBIT	20	(10)	n/a	(1)	91	-100%
EBIT margin	1.6%	-1.3%		0.0%	3.1%
Number of employees	2,927	2,881	2%	2,927	2,881	2%

FLSmidth: 1 January - 30 September 2016 Interim Report

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Statement by Management

The Board of Directors and Executive Management have today considered and approved the interim report of FLSmidth & Co. A/S for the period 1 January - 30 September 2016.

The interim report is prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU and Danish disclosure requirements for interim reports of listed companies. The interim report has not been audited or reviewed by the Group's independent auditors.

In our opinion, the interim report gives a true and fair view of the Group's financial position at 30 September 2016 as well as of its financial performance and its cash flow for the period 1 January - 30 September 2016.

We believe that the management commentary contains a fair review of the development of the Group's business and financial affairs, the result for the period and the financial position of the Group, together with a description of the principal risks and uncertainties that the Group faces.

Copenhagen, 9 November 2016

Group Executive Management

Thomas Schulz
Group Chief Executive Officer

Lars Vestergaard
Group Executive Vice President and CFO

Board of Directors

Vagn Ove Sørensen
Chairman

Torkil Bentzen
Vice chairman

Marius Jacques Kloppers

Sten Jakobsson

Tom Knutzen

Caroline Grégoire Sainte Marie

Richard Robinson Smith

Mette Dobel

Søren Quistgaard Larsen

Jens Peter Koch

FLSmidth: 1 January – 30 September 2016 Interim Report

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Consolidated financial statements

Consolidated income statement

DKKm	Q3 2016	Q3 2015	Q1-Q3 2016	Q1-Q3 2015
Notes
Revenue	4,774	4,609	12,667	14,385
Production costs	(3,610)	(3,435)	(9,387)	(10,694)
Gross profit	1,164	1,174	3,280	3,691
Sales and distribution costs	(362)	(364)	(1,063)	(1,081)
Administrative costs	(393)	(380)	(1,167)	(1,226)
Other operating items	12	1	23	31
EBITDA	421	431	1,073	1,415
Special non-recurring items	(9)	(1)	(9)	1
Depreciation of tangible assets	(68)	(72)	(201)	(218)
EBITA	344	358	863	1,198
Amortisation of intangible assets	(101)	(113)	(290)	(336)
EBIT	243	245	573	862
Financial income	222	406	894	1,460
Financial costs	(208)	(499)	(950)	(1,541)
EBT	257	152	517	781
Tax for the period	(70)	(47)	(151)	(242)
Profit/(loss) for the period, continuing activities	187	105	366	539
Profit/(loss) for the period, discontinued activities	(17)	(189)	(26)	(137)
Profit/(loss) for the period	170	(84)	340	402
To be distributed as follows:
FLSmidth & Co, A/S' shareholders' share of profit/(loss) for the period	168	(83)	338	399
Minority shareholders' share of profit/(loss) for the period	2	(1)	2	3
	170	(84)	340	402
Earnings per share (EPS):
Continuing and discontinued activities	3.4	(1.7)	6.9	8.2
Continuing and discontinued activities, diluted	3.4	(1.7)	6.9	8.1
Continuing activities	3.8	2.2	7.4	11.0
Continuing activities, diluted	3.8	2.2	7.4	10.9

FLSmidth: 1 January - 30 September 2016 Interim Report

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Consolidated financial statements

Consolidated statement of comprehensive income

DKKm	Q3 2016	Q3 2015	Q1-Q3 2016	Q1-Q3 2015
Notes
Profit/(loss) for the period	170	(84)	340	402
Other comprehensive income for the period
Items that will not be reclassified to profit or loss
Actuarial gains/(losses) on defined benefit plans	-	-	-	(1)
Tax on items that will not be reclassified to profit or loss	-	-	-	-
Items that are or may be reclassified subsequently to profit or loss
Foreign exchange adjustments regarding enterprises abroad	59	(272)	(31)	(4)
Foreign exchange adjustments of loans classified as equity in enterprises abroad	-	-	-	166
Foreign exchange adjustment regarding liquidation of company	-	(27)	-	-
Value adjustments of hedging instruments:
Value adjustment for the period	31	(104)	130	(145)
Value adjustments transferred to work-in-progress	(6)	-	(93)	-
Value adjustments transferred to financial income and costs	-	114	-	82
Tax on items that are or may be reclassified subsequently to profit or loss	(7)	(1)	(11)	(26)
Other comprehensive income for the period after tax	77	(290)	(5)	72
Comprehensive income for the period	247	(374)	335	474
Comprehensive income for the period attributable to: FLSmidth & Co. A/S' shareholders' share of comprehensive income for the period	243	(370)	331	472
Minority shareholders' share of comprehensive income for the period	4	(4)	4	2
	247	(374)	335	474

FLSmidth: 1 January – 30 September 2016 Interim Report

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Consolidated financial statements

Consolidated cash flow statement

DKKm	Q3 2016	Q3 2015	Q1-Q3 2016	Q1-Q3 2015
Notes
EBITDA, continuing activities	421	431	1,073	1,415
EBITDA, discontinued activities	(5)	(67)	(19)	(142)
EBITDA	416	364	1,054	1,273
Adjustment for gain/(losses) on sale of tangible and intangible assets and special non-recurring items etc,	(6)	8	15	24
Adjusted EBITDA	410	372	1,069	1,297
Change in provisions	(43)	26	(199)	130
Change in net working capital	375	284	291	(659)
Cash flow from operating activities before financial items and tax	742	682	1,161	768
Financial items received and paid	33	(53)	(7)	(74)
Taxes paid	(31)	(133)	(315)	(304)
Cash flow from operating activities	744	496	839	390
Acquisition of enterprises and activities	-	-	-	-
Acquisition of intangible assets	(33)	(18)	(47)	(60)
Acquisition of tangible assets	(20)	(22)	(157)	(106)
Acquisition of financial assets	0	-	(1)	(2)
Disposal of enterprises and activities	-	35	-	867
Disposal of tangible assets	10	18	55	30
Disposal of financial assets	-	1	-	1
Cash flow from investing activities	(43)	14	(150)	730
Dividend paid	0	(8)	(196)	(447)
Acquisition of treasury shares	(1)	-	(1)	(6)
Disposal of treasury shares	-	1	-	23
Change in net interest-bearing debt	(544)	(392)	(198)	(374)
Cash flow from financing activities	(545)	(399)	(395)	(804)
Change in cash and cash equivalents	156	111	294	316
Beginning of period	1,272	1,275	1,157	1,021
Foreign exchange adjustment	1	(74)	(22)	(25)
Cash and cash equivalents at 30 September	1,429	1,312	1,429	1,312

The cash flow statement cannot be inferred from the published financial information only,

FLSmidth: 1 January - 30 September 2016 Interim Report

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Consolidated financial statements

Consolidated balance sheet

Assets

DKKm	End of Q3 2016	End of 2015
Notes
Goodwill	4,367	4,362
Patents and rights	1,256	1,335
Customer relations	1,009	1,102
Other intangible assets	52	53
Completed development projects	229	281
Intangible assets under development	326	345
Intangible assets	7,239	7,478
Land and buildings	1,758	1,723
Plant and machinery	582	678
Operating equipment, fixtures and fittings	136	169
Tangible assets in course of construction	37	52
Tangible assets	2,513	2,622
Other securities and investments	125	125
Pension assets	0	0
Deferred tax assets	1,038	1,096
Financial assets	1,163	1,221
Total non-current assets	10,915	11,321
Inventories	2,354	2,445
Trade receivables	4,084	4,884
Work-in-progress for third parties	2,660	2,526
Prepayments to subcontractors	679	347
Other receivables	1,354	1,076
Receivables	8,777	8,833
Cash and cash equivalents	1,367	1,123
Assets classified as held for sale	486	640
Total current assets	12,984	13,041
TOTAL ASSETS	23,899	24,362

FLSmidth: 1 January - 30 September 2016 Interim Report

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Consolidated financial statements

Consolidated balance sheet

Equity and liabilities

DKKm	End of Q3 2016	End of 2015
Notes
Share capital	1,025	1,025
Foreign exchange adjustments	(83)	(50)
Value adjustments of hedging transactions	(69)	(106)
Retained earnings	7,241	6,873
Proposed dividend	0	205
FLSmidth & Co, A/S' shareholders' share of equity	8,114	7,947
Minority shareholders' share of equity	37	35
Total equity	8,151	7,982
Deferred tax liabilities	463	380
Pension liabilities	276	278
Other provisions	457	509
Bank loans and mortgage debt	4,498	4,791
Prepayments from customers	150	120
Other liabilities	125	150
Long-term liabilities	5,969	6,228
Pension liabilities	7	5
Other provisions	934	1,047
Bank loans	13	87
Prepayments from customers	1,602	1,147
Work-in-progress for third parties	2,150	2,453
Trade payables	2,665	2,546
Current tax liabilities	313	411
Other liabilities	1,698	1,915
Short-term liabilities	9,382	9,611
Liabilities classified as held for sale	397	541
Total liabilities	15,748	16,380
TOTAL EQUITY AND LIABILITIES	23,899	24,362

FLSmidth: 1 January - 30 September 2016 Interim Report

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Consolidated financial statements

Consolidated equity

DKKm	Share capital	Foreign exchange adjustments	Value adjustments of hedging transactions	Retained earnings	Proposed dividend	FLSmidth & Co. A/S' shareholders' share of equity	Minority shareholders' share of equity	Total
Equity at 1 January 2016	1,025	(50)	(106)	6,873	205	7,947	35	7,982
Comprehensive income for the period
Profit/(loss) for the period				338		338	2	340
Other comprehensive income
Foreign exchange adjustments regarding enterprises abroad		(33)				(33)	2	(31)
Value adjustments of hedging instruments:
Value adjustments for the period			130			130		130
Value adjustments transferred to work-in-progress			(93)			(93)		(93)
Tax on other comprehensive income				(11)		(11)		(11)
Other comprehensive income total	0	(33)	37	(11)	0	(7)	2	(5)
Comprehensive income for the period	0	(33)	37	327	0	331	4	335
Dividend distributed					(196)	(196)	(2)	(198)
Dividend treasury shares				9	(9)	0		0
Share-based payment, share options				33		33		33
Acquisition of treasury shares				(1)		(1)		(1)
Equity at 30 September 2016	1,025	(83)	(69)	7,241	0	8,114	37	8,151
The period's movements in holding of treasury shares (1,000)	Q3 2016	Q3 2015
---	---	---
Treasury shares at 1 January	2,328 shares	2,413 shares
Acquisition of treasury shares	2 shares	18 shares
Share options settled	0 shares	(103) shares
Treasury shares at 30 September	2,330 shares	2,328 shares

Representing 4.5% in Q3 2016 (Q3 2015: 4.5%) of the share capital

FLSmidth: 1 January – 30 September 2016 Interim Report

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Consolidated financial statements

Consolidated equity

DKKm	Share capital	Foreign exchange adjustments	Value adjustments of hedging transactions	Retained earnings	Proposed dividend	FLSmidth & Co. A/S' shareholders' share of equity	Minority shareholders' share of equity	Total
Equity at 1 January 2015	1,025	(332)	(63)	6,629	461	7,720	41	7,761
Comprehensive income for the period
Profit/(loss) for the period				399		399	3	402
Other comprehensive income
Actuarial gains/losses on defined benefit plans				(1)		(1)		(1)
Foreign exchange adjustments regarding enterprises abroad		(3)				(3)	(1)	(4)
Foreign exchange adjustments of loans classified as equity in enterprises abroad		166				166		166
Foreign exchange adjustments, liquidation of company						0		0
Value adjustments for the period			(145)			0		0
Value adjustments transferred to financial income and cost			82			82		82
Tax on other comprehensive income				(26)		(26)		(26)
Other comprehensive income total	0	163	(63)	(27)	0	73	(1)	72
Comprehensive income for the period	0	163	(63)	372	0	472	2	474
Dividend distributed					(439)	(439)	(8)	(447)
Dividend treasury shares				22	(22)	0		0
Share-based payment, share options				27		27		27
Disposal of treasury shares				23		23		23
Acquisition of treasury shares				(6)		(6)		(6)
Equity at 30 September 2015	1,025	(169)	(126)	7,067	0	7,797	35	7,832

FLSmidth: 1 January – 30 September 2016 Interim Report

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Notes to the interim report

At a glance

EBITA bridge

Book-to-bill

Free cash flow

Capital employed and ROCE (end of period)

Net interest-bearing debt

Net interest-bearing target

FLSmidth: 1 January – 30 September 2016 Interim Report

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Notes to the interim report

List of notes and notes to the interim report

1. Income statement classified by function
2. Earnings per share
3. Breakdown of the Group by segments
4. Disposal of enterprises and activities
5. Other provisions
6. ROCE

7. Fair value hierarchy of financial instruments

8. Work-in-progress for third parties

9. Development in contingent liabilities
10. Quarterly key figures
11. Management estimates and assessments
12. Accounting policy
13. Terminology for the Interim Report

1. Income statement classified by function

The Group presents the Income Statement continuing business based on a classification of the costs by function in order to show the earnings before special non-recurring items, depreciation and amortisation (EBITDA). Depreciation, amortisation and impairment of tangible and intangible assets are therefore separated from the individual functions, presented on separate lines.

The income statement classified by function including allocation of depreciation, amortisation and write-downs appears from the following:

DKKm	Q3 2016	Q3 2015	Q1-Q3 2016	Q1-Q3 2015
Revenue	4,774	4,609	12,667	14,385
Production costs, including depreciation and amortisation	(3,695)	(3,504)	(9,601)	(10,896)
Gross profit	1,079	1,105	3,066	3,489
Sales and distribution costs, including depreciation and amortisation	(370)	(364)	(1,085)	(1,081)
Administrative costs, including depreciation and amortisation	(469)	(495)	(1,422)	(1,578)
Other operating items	12	-	23	31
Special non-recurring items	(9)	(1)	(9)	1
EBIT	243	245	573	862
Depreciation and amortisation consists of:
Amortisation of intangible assets	(101)	(113)	(290)	(336)
Depreciation of tangible assets	(68)	(72)	(201)	(218)
	(169)	(185)	(491)	(554)
Depreciation and amortisation are divided into:
Production costs	(85)	(69)	(214)	(202)
Sales and distribution costs	(8)	-	(22)	-
Administrative costs	(76)	(116)	(255)	(352)
	(169)	(185)	(491)	(554)

2. Earnings per share

DKKm	Q3 2016	Q3 2015	Q1-Q3 2016	Q1-Q3 2015
Earnings
FLSmidth & Co. A/S' shareholders' share of profit/(loss) for the period	168	(83)	338	399
FLSmidth & Co. A/S' profit/(loss) from discontinued activities	(17)	(189)	(26)	(137)
Average number of shares (1,000)
Number of shares issued	51,250	51,250	51,250	51,250
Adjustment for treasury shares	(2,330)	(2,330)	(2,329)	(2,339)
Potential increase of shares in circulation, share options in-the-money	-	106	-	106
	48,920	49,026	48,921	49,017
Earnings per share
Continuing and discontinued activities per share	3.4	-1.7	6.9	8.2
Continuing and discontinued activities, diluted, per share	3.4	-1.7	6.9	8.1
Continuing activities per share	3.8	2.2	7.4	11.0
Continuing activities, diluted, per share	3.8	2.2	7.4	10.9

Non-diluted earnings per share in respect of discontinued activities amount to DKK -0.5 (2015: DKK -1.8) and diluted earnings per share in respect of discontinued activities amount to DKK -0.5 (2015: DKK -1.8)

Page 26 of 35

FLSmidth: 1 January – 30 September 2016 Interim Report

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Notes to the interim report

3. Breakdown of the Group by segments for 2016

Q1-Q3 2016

DKKm	Customer Services	Product Companies	Minerals	Cement	Other companies etc.1)	Continuing activities	Discontinued activities2)	FLSmidth Group
INCOME STATEMENT
External revenue	4,696	3,130	2,095	2,746	-	12,667	546	13,213
Internal revenue	73	570	10	1	(654)	-	-	-
Revenue	4,769	3,700	2,105	2,747	(654)	12,667	546	13,213
Production costs	(3,348)	(2,594)	(1,762)	(2,337)	654	(9,387)	(518)	(9,905)
Gross profit	1,421	1,106	343	410	-	3,280	28	3,308
Sales, distr. and admin. costs and other operating items	(743)	(629)	(464)	(378)	7	(2,207)	(47)	(2,254)
EBITDA	678	477	(121)	32	7	1,073	(19)	1,054
Special non-recurring items	(4)	-	(5)	-	-	(9)	-	(9)
Depreciation of tangible assets	(81)	(68)	(38)	(11)	(3)	(201)	-	(201)
EBITA	593	409	(164)	21	4	863	(19)	844
Amortisation of intangible assets	(113)	(74)	(81)	(22)	-	(290)	-	(290)
EBIT	480	335	(245)	(1)	4	573	(19)	554
ORDER INTAKE (GROSS)	4,983	3,888	1,994	3,550	(656)	13,759	1,310	15,069
ORDER BACKLOG	2,483	2,681	4,244	6,382	(616)	15,174	1,637	16,811
FINANCIAL RATIOS
Gross margin	29.8%	29.9%	16.3%	14.9%	N/A	25.9%	N/A	25.0%
EBITDA margin	14.2%	12.9%	-5.8%	1.2%	N/A	8.5%	N/A	8.0%
EBITA margin	12.4%	11.1%	-7.8%	0.8%	N/A	6.8%	N/A	6.4%
EBIT margin	10.1%	9.1%	-11.6%	0.0%	N/A	4.5%	N/A	4.2%
Number of employees at 30 September	4,608	3,263	1,519	2,927	7	12,324	145	12,469

Reconciliation of the profit/(loss) for the period before tax

	Q3 2016	Q3 2016
Segment earnings before tax of reportable segments	573	(19)
Financial income	894	4
Financial costs	(950)	(1)
EBT	517	(16)

1) Other companies etc. consist of companies with no activity, real estate companies, eliminations and the parent company.
2) Discontinued activities mainly consist of bulk material handling.

Page 27 of 35

FLSmidth: 1 January – 30 September 2016 Interim Report

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Notes to the interim report

3. Breakdown of the Group by segments for 2015

Q1-Q3 2015

DKKm	Customer Services	Product Companies	Minerals	Cement	Other companies etc.1)	Continuing activities	Discontinued activities	FLSmidth Group
INCOME STATEMENT
External revenue	5,332	3,684	2,443	2,926	-	14,385	844	15,229
Internal revenue	42	554	7	-	(603)	-	-	-
Revenue	5,374	4,238	2,450	2,926	(603)	14,385	844	15,229
Production costs	(3,832)	(2,992)	(2,045)	(2,449)	624	(10,694)	(862)	(11,556)
Gross profit	1,542	1,246	405	477	21	3,691	(18)	3,673
Sales, distr. and admin. costs and other operating items	(791)	(602)	(588)	(330)	35	(2,276)	(124)	(2,400)
EBITDA	751	644	(183)	147	56	1,415	(142)	1,273
Special non-recurring items	-	-	(1)	-	2	1	114	115
Depreciation of tangible assets	(79)	(72)	(42)	(19)	(6)	(218)	(5)	(223)
EBITA	672	572	(226)	128	52	1,198	(33)	1,165
Amortisation of intangible assets	(122)	(49)	(128)	(37)	-	(336)	(81)	(417)
EBIT	550	523	(354)	91	52	862	(114)	748
ORDER INTAKE (GROSS)	5,055	4,490	3,482	2,407	(635)	14,799	383	15,182
ORDER BACKLOG	2,725	2,864	5,138	6,529	(590)	16,666	1,032	17,698
FINANCIAL RATIOS
Gross margin	28.7%	29.4%	16.5%	16.3%	N/A	25.7%	N/A	24.1%
EBITDA margin	14.0%	15.2%	-7.5%	5.0%	N/A	9.8%	N/A	8.4%
EBITA margin	12.5%	13.5%	-9.2%	4.4%	N/A	8.3%	N/A	7.7%
EBIT margin	10.2%	12.3%	-14.4%	3.1%	N/A	6.0%	N/A	4.9%
Number of employees at 30 September	4,797	3,295	1,929	2,881	-	12,902	243	13,145

Reconciliation of the profit/(loss) for the period before tax

	Q3 2015	Q3 2015
Segment earnings before tax of reportable segments	862	(114)
Financial income	1,460	23
Financial costs	(1,541)	(20)
EBT	781	(111)

1) Other companies etc. consist of companies with no activity, real estate companies, eliminations and the parent company.

Page 28 of 35

FLSmidth: 1 January – 30 September 2016 Interim Report

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Notes to the interim report

4. Disposal of enterprises and activities

Accounting policy

On disposal of enterprises and activities the difference between the selling price and the carrying amount of the net assets at the date of disposal, including remaining goodwill less expected costs of disposals, is recognised in the income statement among special non-recurring items. If the activities prior to the sale were classified as discontinued activities, the difference is recognised as profit/(loss) for the period, discontinued activities.

If the final consideration is dependent on future events (contingent consideration), it is stated at fair value at the time of sale, and classified as financial assets and adjusted directly in the income statement.

Enterprises and activities sold are included in the consolidated financial statements until the date of disposal.

DKKm	Q1-Q3 2016	Q1-Q3 2015	End of 2015
Intangible assets	-	57	66
Tangible assets	-	641	640
Inventories	-	283	290
Trade receivables	-	-	184
Other assets	-	351	167
Cash and cash equivalents	2	82	82
Liabilities	-	(1,035)	(1,035)
Carrying amount of net assets disposed	2	379	394
Net interest-bearing debt	-	455	455
Enterprise value	2	834	849
Selling price	2	1,071	1,078
Enterprise value	(2)	(834)	(849)
Transaction costs	-	(122)	(115)
Profit/loss on disposal of enterprises and activities	-	115	114
Cash received	2	998	999
Deferred payment	-	73	71
Total selling price	2	1,071	1,070
Transaction costs	-	(122)	(115)
Cash and cash equivalents disposed of, see above	(2)	(82)	(82)
Net cash effect	-	867	873

As announced on 12 January 2015, FLSmidth has signed an agreement with a company in the Solix Group AB to sell all shares in Cembrit Holding A/S. The price of the shares has end of January 2015 been adjusted to DKK 1,037m, as a consequence of purchase price adjustments. The sale of Cembrit was closed on 30 January 2015.

5. Other provisions

DKKm	Q1-Q3 2016	Q1-Q3 2015	End of 2015
Provisions at 1 January	1,556	1,598	1,598
Transfer to assets held for sale	-	(78)	(77)
Exchange rate and other adjustments	(8)	16	35
Disposal of Group enterprises	-	-	9
Provision for the period	365	664	886
Used during the period	(191)	(245)	(413)
Reversals	(278)	(339)	(477)
Discounting of provisions	-	-	1
Reclassification to/from other liabilities	(53)	(15)	(6)
Provisions at 30 September	1,391	1,601	1,556
The maturity of provisions is specified as follows:
Short-term liabilities	934	1,049	1,047
Long-term liabilities	457	552	509
	1,391	1,601	1,556

FLSmidth: 1 January – 30 September 2016 Interim Report

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Notes to the interim report

6. ROCE

DKKm	Q3 2016	Q3 2015^{1)}	End of 2015^{1)}
Intangible assets, cost	10,130	10,147	10,087
Tangible assets, carrying amount	2,513	2,629	2,622
Net working capital	2,251	2,626	2,583
Total capital employed	14,894	15,402	15,292
Total capital employed, average	15,147	15,123	15,162
EBITA, 12 months	1,247	1,617	1,582
ROCE	8%	11%	10%
ROCE, average	8%	11%	10%

1) Capital employed, 2015 figures are adjusted for capital employed related to Cembrit and bulk material handling.

7. Fair value hierarchy of financial instruments

The carrying amount of financial instruments for each category is specified in the table below:

DKKm	Q3 2016	Q3 2015	End of 2015
Financial assets available for sale	117	92	116
Financial assets measured at fair value through the income statement	108	126	128
Financial liabilities measured at fair value through the income statement	117	232	274

The fair value of financial assets and financial liabilities measured at amortised cost is approximately equal to the carrying amount.

Financial assets and liabilities measured at fair value are measured at quoted prices in an active marked for similar assets or liabilities or other valuation methods, where all significant inputs are based on observable marked data (level 2). Of financial assets available for sale DKK 93 (2015: DKKm 67) are measured at quoted prices in an active marked for the same type of instruments (level 1). The remaining financial assets available for sale are measured using valuation methods where all significant inputs are based on observable market data (level 2).

There have been no significant transfers between level 1 and level 2 in Q3 2016 or Q3 2015.

8. Work-in-progress for third parties

DKKm	Q3 2016	Q3 2015	End of 2015
Costs incurred	36,950	41,181	38,056
Profit recognised as income, net	6,421	6,876	6,441
Work-in-progress for third parties	43,371	48,057	44,497
Invoicing on account to customers	(42,861)	(47,881)	(44,424)
	510	176	73
Of which work-in-progress for third parties is stated under assets	2,660	2,939	2,526
and under liabilities	(2,150)	(2,763)	(2,453)
	510	176	73

Work-in-progress for third parties consists of all open projects per end of the period.

9. Development in contingent liabilities

Contingent liabilities at 30 September 2016 amount to 4,5bn (30 September 2015 5.6bn), which include performance bonds and payment guarantees at DKK 4,2bn (30 September 2015 5.1bn). See note 22 in the 2015 Annual Report for a general description of the nature of the Group's contingent liabilities.

FLSmidth: 1 January – 30 September 2016 Interim Report

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Notes to the interim report

1. Quarterly key figures

DKKm	2014		2015				2016
	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
INCOME STATEMENT
Revenue	4,976	5,627	4,683	5,093	4,609	5,297	3,758	4,135	4,774
Gross profit	1,286	1,265	1,190	1,327	1,174	1,255	1,038	1,078	1,164
Sales, distr. and admin. costs and other operating items	(721)	(772)	(718)	(815)	(743)	(792)	(726)	(738)	(743)
EBITDA	565	493	472	512	431	463	312	340	421
Special non-recurring items	(4)	2	0	2	(1)	(6)	0	0	(9)
Depreciation of tangible assets	(68)	(76)	(72)	(74)	(72)	(73)	(66)	(67)	(68)
EBITA	493	419	400	440	358	384	246	273	344
Amortisation of intangible assets	(87)	(145)	(104)	(119)	(113)	(105)	(93)	(96)	(101)
EBIT	406	274	296	321	245	279	153	177	243
Financial income/costs, net	(92)	67	(18)	30	(93)	(175)	(38)	(32)	14
EBT	314	341	278	351	152	104	115	145	257
Tax for the period	(81)	(155)	(82)	(113)	(47)	(40)	(36)	(45)	(70)
Profit/(loss) on continuing activities for the period	233	186	196	238	105	64	79	100	187
Profit/loss on discontinued activities for the period	(18)	60	76	(24)	(189)	(41)	(6)	(3)	(17)
Profit/(loss) for the period	215	246	272	214	(84)	23	73	97	170
Effect of purchase price allocations	(76)	(76)	(71)	(71)	(71)	(71)	(60)	(60)	(60)
Gross margin	25.9%	22.5%	25.4%	26.1%	25.5%	23.7%	27.6%	26.1%	24.4%
EBITDA margin	11.4%	8.8%	10.1%	10.1%	9.4%	8.7%	8.3%	8.2%	8.8%
EBITA margin	9.9%	7.4%	8.5%	8.6%	7.8%	7.2%	6.5%	6.6%	7.2%
EBIT margin	8.2%	4.9%	6.3%	6.3%	5.3%	5.3%	4.1%	4.3%	5.1%
CASH FLOW
Cash flow from operating activities	887	739	(45)	(61)	496	148	(60)	155	744
Cash flow from investing activities	(152)	(217)	760	(44)	14	20	(12)	(95)	(43)
Order intake, continuing activities	4,423	3,734	4,440	5,208	5,151	3,691	5,281	4,345	4,133
Order backlog, continuing activities	19,874	17,726	17,562	16,932	16,666	14,858	15,792	15,914	15,174
SEGMENT REPORTING
Customer Services
Revenue	1,793	1,938	1,768	1,813	1,793	1,920	1,568	1,531	1,670
Gross profit	512	437	456	564	522	567	476	478	467
EBITDA	283	222	199	292	260	305	223	232	223
EBITA	260	197	173	266	233	279	197	205	191
EBIT	229	150	135	223	192	240	161	169	150
Gross margin	28.6%	22.5%	25.8%	31.1%	29.1%	29.6%	30.4%	31.2%	28.0%
EBITDA margin	15.8%	11.5%	11.3%	16.1%	14.5%	15.9%	14.2%	15.2%	13.4%
EBITA margin	14.5%	10.2%	9.8%	14.7%	13.0%	14.5%	12.6%	13.4%	11.4%
EBIT margin	12.8%	7.7%	7.6%	12.3%	10.7%	12.5%	10.3%	11.0%	9.0%
Order intake	1,711	1,580	1,796	1,733	1,526	1,655	1,566	1,597	1,820
Order backlog	4,187	3,575	2,783	3,003	2,725	2,469	2,399	2,405	2,483
Product Companies
Revenue	1,347	1,451	1,371	1,531	1,336	1,473	1,078	1,268	1,354
Gross profit	389	378	422	438	386	406	329	371	406
EBITDA	220	160	223	235	186	205	132	162	183
EBITA	190	138	200	211	161	184	109	139	161
EBIT	170	119	182	198	143	166	86	103	146
Gross margin	28.8%	26.1%	30.8%	28.6%	28.9%	27.5%	30.5%	29.2%	30.0%
EBITDA margin	16.4%	11.0%	16.3%	15.3%	13.9%	13.9%	12.2%	12.8%	13.5%
EBITA margin	14.1%	9.5%	14.6%	13.8%	12.0%	12.5%	10.1%	11.0%	11.9%
EBIT margin	12.7%	8.2%	13.3%	12.9%	10.7%	11.3%	7.9%	8.1%	10.7%
Order intake	1,156	1,194	1,580	1,431	1,479	1,252	1,406	1,165	1,317
Order backlog	2,962	2,667	3,291	2,887	2,864	2,536	2,823	2,729	2,681

FLSmidth: 1 January - 30 September 2016 Interim Report

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Notes to the interim report

1. Quarterly key figures

DKKm	2014		2015				2016
	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Minerals
Revenue	1,088	1,407	822	812	816	1,126	698	680	727
Gross profit	232	228	140	130	135	179	130	88	125
EBITDA	4	35	(25)	(112)	(46)	(10)	(23)	(79)	(19)
EBITA	(9)	17	(39)	(127)	(60)	(32)	(35)	(92)	(37)
EBIT	(40)	(50)	(78)	(174)	(102)	(70)	(62)	(108)	(75)
Gross margin	21.3%	16.2%	17.0%	16.0%	16.6%	15.9%	18.6%	13.0%	17.1%
EBITDA margin	0.4%	2.5%	-3.0%	-13.8%	-5.6%	-0.9%	-3.3%	-11.6%	-2.8%
EBITA margin	-0.7%	1.2%	-4.7%	-15.6%	-7.4%	-2.8%	-5.0%	-13.4%	-5.3%
EBIT margin	-3.7%	-3.6%	-9.5%	-21.4%	-12.5%	-6.3%	-8.8%	-15.8%	-10.4%
Order intake	962	604	851	1,057	1,574	630	443	972	579
Order backlog	5,120	4,298	4,746	4,806	5,138	4,614	4,229	4,478	4,244
Cement
Revenue	972	1,098	951	1,183	792	985	562	916	1,269
Gross profit	154	221	166	192	119	124	103	141	166
EBITDA	61	71	54	85	8	(15)	(17)	18	31
EBITA	56	64	47	79	2	(29)	(21)	15	27
EBIT	51	52	38	63	(10)	(39)	(28)	7	20
Gross margin	15.9%	20.1%	17.5%	16.2%	15.1%	12.5%	18.3%	15.4%	13.1%
EBITDA margin	6.3%	6.5%	5.7%	7.2%	1.0%	-1.6%	-3.1%	2.0%	2.3%
EBITA margin	5.8%	5.8%	4.9%	6.7%	0.3%	-3.0%	-3.7%	1.5%	2.1%
EBIT margin	5.3%	4.7%	4.0%	5.3%	-1.3%	-3.9%	-5.0%	0.7%	1.6%
Order intake	810	547	438	1,289	680	396	2,082	805	663
Order backlog	8,274	7,768	7,331	6,883	6,529	5,852	7,016	6,962	6,382

Calculations of margins are based on non-rounded figures.
Bulk material handling and Cembrit are classified as discontinued activities.

FLSmidth: 1 January - 30 September 2016 Interim Report

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Notes to the interim report

11. Management estimates and assessments

When preparing the interim report in accordance with the Group's accounting policies, it is necessary that 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 its 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 over time. Reference is made to note 48, Significant accounting estimates and assessments by Management, page 143 and to specific notes in the 2015 Annual Report for further details.

12. Accounting policy

The interim report of the Group for the first three quarters of 2016 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.

Apart from the below mentioned changes, the accounting policies are unchanged from those adopted in the 2015 Annual Report. Reference is made to note 49, Accounting policy, in page 143 and to specific notes in the 2015 Annual Report for further details.

The assets and related liabilities of the discontinued activity, bulk material handling, are presented in the separate lines "Assets classified as held for sale" and "Liabilities directly associated with assets classified as held for sale" in the balance sheet.

FLSmidth: 1 January – 30 September 2016 Interim Report

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Page 34 of 35
FLSmidth: 1 January – 30 September 2016 Interim Report

13. Terminology for the Interim Report

EBITDA

Earnings before special non-recurring items, interest, tax, depreciation and amortisation.

EBITA

Ordinary earnings of operations before special non-recurring items, interest, tax and amortisation.

EBIT

Earnings before interest and tax.

EBT

Earnings before tax.

CFFO

Cash flow from operating activities.

CFFI

Cash flow from investing activities.

Free cash flow

CFFO + CFFI.

Free cash flow adjusted for acquisition and disposals of enterprises

CFFO + CFFI ± acquisition and disposals of enterprises.

Net working capital

Cash up directly related to the daily operation: Inventories + Trade receivables + work-in-progress for third parties, net + prepayments, net + financial instruments, net + other receivables – other liabilities – trade payables.

Net interest-bearing debt

Interest-bearing debt less interest-bearing assets and bank balances.

Order intake

Orders are included as order intake when an order becomes effective, meaning when the contract becomes binding for both parties dependent on the specific conditions of the contract.

Order backlog

The value of future contracts end of period. On O&M contracts, the order backlog includes the next 12 months' expected revenue.

Gross margin

Gross profit as a percentage of revenue.

EBITDA margin

EBITDA as a percentage of revenue.

EBITA margin

EBITA as a percentage of revenue.

EBIT margin

EBIT as a percentage of revenue.

EBT margin

EBT as a percentage of revenue.

Cash conversion

Free cash flow adjusted for acquisitions and disposals as a percentage of EBIT.

Book-to-bill

Order intake as a percentage of revenue.

Order backlog / Revenue

Order backlog as a percentage of last 12 months' revenue.

Return on equity

Profit/(loss) for the period as a percentage of equity (average).

Equity ratio

Equity as a percentage of total asset.

ROCE (return on capital employed)

EBITA as a percentage of capital employed.

Net working capital ratio

Net working capital as a percentage of last 12 months' revenue.

Financial gearing

Net interest-bearing debt (NIBD) divided by last 12 months' EBITDA.

Capital employed, end of period

Intangible assets (cost) + Tangible assets (carrying amount) + Net working capital.

Capital employed, average

(Capital employed, end of period + capital employed end of period last year)/2.

CFPS (cash flow per share), (diluted)

CFFO as a percentage of average number of shares (diluted).

EPS (earning per share)

Net profit/(loss) divided by the average number of shares outstanding.

EPS (earnings per share), (diluted)

Net profit/(loss) divided by the average number of shares outstanding, including the dilutive effect of share options "in the money".

Net asset value per share

Net asset value per total number of shares outstanding.

Number of shares outstanding

The total number of shares, excluding the holding of treasury shares.

Pay-out ratio

The total dividends for the year as a percentage of profit/(loss) excluding minority.

Market capitalisation

The share price multiplied by the number of shares outstanding end of period.

Effective tax rate

Income taxes as a percentage of profit/(loss) before income taxes.

Other comprehensive income

All items recognised in equity other that those related to transactions with owners of the company.

Capital expenditure (CAPEX)

Investment in tangible assets.

Operational expenditure (OPEX)

External costs, personal cost and other income and costs.

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Page 35 of 35
FLSmidth: 1 January – 30 September 2016 Interim Report

FLSmidth & Co. A/S
Vigerslev Allé 77
DK-2500 Valby
Denmark
Tel. +45 36 18 18 00
Fax. +45 36 44 11 46
corppr@flsmidth.com
www.flsmidth.com
CVR No. 58180912

FLSmidth