FLS Industries expects earnings before interest and tax including sale of property in Valby at approx. DKK 0.2bn, down from DKK 0.8bn. Pre-tax profit is estimated at DKK 0 (DKK 0.6bn) on a turnover of DKK 20bn.
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Due to the fall in global growth and the uncertain market prospects FLS Industries lowers its estimated earnings before interest and tax (EBIT) and profit before tax by DKK 600m. This reduction includes DKK 400m deriving from FLS Aerospace, who is experiencing a sharp decline in demand after 11 September. The majority of the down revision is non-recurring costs.
FLS Building Materials has reduced its EBIT forecast by DKK 50m to DKK 300m, reflecting lower sales in the USA and Poland during the autumn and the declining sales of fibre cement products in Denmark.
The additional costs resulting from the completion of an FLS miljø contract in the UK and a continuing sluggish flow of orders will increase the company's deficit by more than DKK 40m.
F.L.Smidth Group maintains its projection of 2001 EBIT close to DKK 200m. The year's order intake at DKK 5.7bn is satisfactory given the current market situation.
The Group continues its focus strategy pruning the balance sheet to reduce debt. The Board of directors will recommend a dividend for 2001 of DKK 0 per share at the AGM in April 2002.
The Danish Supreme Court will deliver judgment in the fibre cement roofing (Eternit) case on Tuesday 6 November 2001. The earnings estimate for 2001 is exclusive of any consequences that might result from losing the Supreme Court case.
FLS Aerospace responds to reduced demand
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Over the past eighteen months the entire FLS Aerospace business has undergone a turnaround process to ensure profitable operations. Productivity has been increased through rationalisation of working practices and tight cost control. The company's management has renegotiated several contracts and new customers have been added. As a result of the turnaround the company posted a profit for the first half, and the third quarter has also generated positive EBIT.
The events during September and October have had a severe impact on the aviation industry, particularly the airlines including a number of FLS Aerospace customers. The effect has varied for different market segments, with intercontinental routes and particularly the transatlantic airlines reducing capacity. Meanwhile, low cost carriers are enjoying high load factors in Europe and are expanding their business. EasyJet has recently extended and broadened the scope of its relationship with FLS Aerospace.
The general reduction in the maintenance requirements of airlines globally, particularly in Aircraft Overhaul, will impact the earnings of FLS Aerospace for the remainder of 2001 and in 2002. FLS Aerospace must, therefore, restructure its organisation to offset this impact.
This strategic restructuring to adapt to the changed market climate will affect all sectors of FLS Aerospace's business. Capacity will be reduced to compensate for the forecast fall in revenues.
The changed market conditions and the consequent restructuring of all FLS Aerospace will reduce EBIT in 2001 by approx. DKK 400m of which the majority is non-recurring.
The restructuring, which will be announced in the near term, is to ensure that FLS Aerospace continues to be successful within the current market situation.
The development in the US and Poland cause decline in FLS Building Materials
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The slowdown in the US economy has accelerated since September and there is little prospect of improvement in the short term, ongoing building projects being completed while planned construction is abandoned or postponed.
The restructuring of Unicon's ready-mix concrete activities is progressing according to plan, but the improvements made cannot compensate for the current loss of turnover.
Dansk Eternit Holding sales in Denmark are improving after the considerable reduction last winter. This year's turnover in Denmark is expected to reach DKK 300m as against more than DKK 500m in 2000, which included the additional sales generated by the winter storms in 1999. Although the market has responded favourably to a new line of products DEH expects a large deficit.
Aalborg Portland is maintaining a stable level of earnings despite the current pressure on prices and market slowdown. The company has started up production of white cement in Sinai, Egypt, both for local consumption and for export to the Mediterranean region.
Densit continues to grow earnings.
FLS miljø suffers additional project implementation costs and slow order flow
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The higher deficit at FLS miljø is due to the additional costs of completing a project in the UK. The situation is made worse by the continuation of a sluggish order intake, reflecting primarily the current political and economic situation and not so much the openings appearing in the US utility market and implementation of the Kyoto Agreement in Europe.
FLS miljø continues its efforts to reduce capacity costs, the full effect of which is likely to be seen in 2002.
F.L.Smidth Group maintains its estimate for the whole year
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Despite a weaker demand in the USA, the year as a whole has seen a satisfactory flow of new cement and mineral processing business. Earnings before interest and tax (EBIT) are expected to reach the projected level of some DKK 200m based on the planned processing of orders. The total order intake of DKK 5.7bn is comprised of 43 per cent major projects and 57 per cent basic orders. After-market sales of spare parts, services, etc. reached DKK 1.6bn for the first nine months of the year.
FLS Industries A/S
Ib Christensen
Chairman
Peter Assam
CEO
This message to the Stock Exchange is an English translation of the original message in Danish. Whereas all possible care has been taken to ensure a true and faithful translation into English, differences between the English and Danish versions may exist in which cases the original Danish version shall prevail.