The Report is presented in accordance with International Financial Reporting Standards, which are appoved by the EU, and additional Danish disclosure requirements for annual reports of listed companies.
The full report is accessible via the Internet at:
http://www.flsmidth.com/flsmidth/english/investor/reports/default.asp The main conclusions are as follows:
Financial performance
The turnover amounted to DKK 10,502m as against DKK 10,829m in 2004.
Earnings before interest and tax (EBIT) rose to DKK 353m from DKK -194m in 2004
Earnings before tax (EBT) rose to DKK 480m from DKK -206m in 2004
Cash flow from operating activities rose to DKK 1,698m from DKK -297m in 2004
Order intake rose by 57% in 2005 to DKK 13.3bn, up from DKK 8.5bn in 2004.
The order backlog amounted to DKK 10.8bn at 31 December 2005 (2004: DKK 6.5bn).
The market situation
All business areas saw a high level of market activity in 2005, a situation that is expected to continue in 2006
Cement: The global market for new contracted cement kiln capacity (exclusive of China) amounted to 75m tonnes per year in 2005 (2004: 53m), FLSmidth & Co.'s share of the market amounting to 33% (2004: 34%)
Minerals: The level of investment in the minerals industry was particularly high in 2005 due to a sustained large global demand for minerals.
Prospects for 2006 (continuing activities)
In 2006, FLSmidth & Co. expects to attain a consolidated turnover of some DKK 11bn, earnings before interest and tax (EBIT) at approximately DKK 525m and earnings before tax (EBT) at approximately DKK 550m. This corresponds to an EBT margin of 5%, which means that this aim will be achieved one year before originally anticipated.
Cash flows from operating activities in 2006 are expected to amount to approximately DKK 100m, and depreciation and investments in tangible fixed assets are expected to total approximately DKK 200m. 2006 is expected to see a tax percentage on earnings before tax of approximately 30% and a paid tax percentage of approximately 20%. Research and development costs are expected to increase some 50% in 2006.
For the individual business areas, the prospects for 2006 are as follows:
Cement: Turnover approx. DKK 7.5bn - EBIT-margin approx. 4.5 %
Minerals: Turnover approx. DKK 2.4bn - EBIT- margin approx. 5.5 %
Dansk Eternit Holding: Turnover in excess of DKK 1.1bn - EBIT-margin approx. 6.0 %
The prospects of the Cement business for 2006 are based on an unchanged market share and a total market for new cement kiln capacity of approximately 50m tonnes per year (exclusive of China).
Goals for 2007
2007 is expected to see an increase in both turnover and EBT margin compared to 2006.
Long-term financial objectives
The cement and minerals industries are cyclical markets in which turnover and earnings vary from year to year. In periods of low activity the aim is to attain an EBT margin of minimum 5%, and in periods of high activity an EBT margin of 6-7%.
FLSmidth & Co. A/S
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