Cement

Group Executive Vice President Per Mejnert Kristensen

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The Cement Division in FLSmidthKey figures

Products and solutions

Customers

Competitive landscape

Market drivers and outlook

Strategy and perspective

Agenda

Cement

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The Cement Division in FLSmidth

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Leading supplier of completecement plants, productionlines, single machinery and know-how to the global cement industry

2,725 employees

Project divisions based in Denmark, USA and India

Global technology center locatedin Copenhagen, Denmark

The Cement Division in brief

The Cement Division

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The new Cement division at a glance: Organizational Structure

Per Mejnert Kristensen

CementDivision

Americas China India CS CementGlobal

TechnologyCenter

EMEA & APAC PfisterVentomatic

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The Cement Division

Old Cement DivisionCement projectsCement product companies

FLSmidth VentomaticFLSmidth PfisterFLSmidth AirtechFLSmidth AutomationFLSmidth MAAG Gear

Cement Customer Services

Order intake 2011: DKK 8.3bnRevenue 2011: DKK 8.2bnEmployees end 2011: 6,619

Difference between ”old” and ”new” Cement division

New Cement DivisionCement projectsCement product companies

FLSmidth VentomaticFLSmidth Pfister

Order intake 2011: DKK 4.4bnRevenue 2011: DKK 4.4bnEmployees end 2011: 2,725

The Cement Division

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Segmented key figuresCement

Key figures

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*) Definition of EBITA: Earnings before amortisation and write-down of intangible assets

Cement(DKK m)

Full-year2009

Full-year2010

Full-year2011

Expected trendin 2012

Order intake 3,809 3,721 4,439 Slightly increasingRevenue 9,472 5,803 4,354 Slightly increasingEBITDA 1,027 710 531EBITA* 954 659 494EBITA-ratio 10.1% 11.4% 11.3% DecreasingEBIT 904 639 475EBIT-ratio 9.5% 11.0% 10.9%

Products and solutions to the cement industry

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Unmatched track recordMore than 2000 cement kilns sold in total

More than 150 production lines sold within the last 10 years

Supply of all types of projects ranging from upgrades to completeEPC projects

Only supplier with complete range of products & servicesAll main machines and many auxiliary products proprietary

Service capabilities ranging from sale of parts to complete operation and maintenance contracts

Leading supplier of complete cement plants

The Cement Division

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The Cement Division

Cement processing solutions

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Alternative energy solutionsRising energy costs and strict regulations calls for better alternative optionsCustomer requirement assessment and recommendationsRapid return on long- and short-term investment

Emissions solutionsSustainability is key concern and environmental regulations are a growing concern for cement processingFLSmidth research is unveiling next-generation solutionsBroadest range of products with a focus on NOx and SO2 abatement solutions, SO2 technology THC/VOC controls and mercury reduction

Matching the strictest emissions standards

The Cement Division

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Customers

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The Cement Division

3 overall categories

Global cement producers (e.g. Lafarge, Holcim, Heidelberg, Cemex, Italcementi)

Regional cement producers (e.g. Votorantim, CRH, Titan, Cementir, Vicat, Buzzi, ASEC)

Local cement producers (relatively small producers only operating in one country)

Customers

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The Cement Division

Central vs. de-central decision process

Focus on best-in-class technology vs. adequate technology

Focus on environmental issues

Focus on low initial investment costs vs. total cost of ownership

Focus on partnership vs. pure buyer/seller relationship

Large differences in customer preferences and behaviours

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The Cement Division

Siam City, Thailand2 x 10,000 tpd lines

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AUCC, LibyaLine 1 and 2

The Cement Division

>150 mills sold in China

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Conch, China2 x 10,000 tpd lines & 1 x 12,000 tpd line

The Cement Division

Halong Cement, VietnamInauguration 2010

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Hoang Tach, VietnamInauguration 2010

MAP

18

CementOngoing major projects sold in 2009-2012

The Cement division

Competitive landscape

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The Cement Division

The market for cement technology has traditionally been dominated by a number of European companies, several of these being more than 100 years old

Emergence of Chinese competitors on the international market started 6-7 years ago. The largest of the Chinese cement equipment and plant suppliers is Sinoma, which consists of all the largest cement design institutes and plant installation companies in China

Historical development

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The key players on the international market:

FLSmidth, Denmark

Polysius, Germany

KHD, Germany (now partly owned by CATIC, China)

Sinoma, China

FCB, France

CNBM, China

Competitive landscape

The Cement Division

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The Cement Division

In addition to the major project and kiln suppliers, a number of specialized equipment suppliers are present in the market. The largest and most significant of these are:

Loesche, Germany (vertical mills)

Pfeiffer, Germany (vertical mills)

Claudius Peters, Germany (coolers, silos, pneumatic conveying)

IKN, Germany (clinker coolers)

Koeppern, Germany (roller presses)

Aumund, Germany (conveying equipment)

Specialized equipment suppliers

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Market drivers and outlook

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Key factors:

Economic growth

GDP per capita

Population growth

Investments in infrastructure

High energy prices

Increasing level of environmentalprotection legislation

Cement consumption growth drivers

Market drivers and outlook

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Market drivers and outlook

Cement is a relatively homogeneous product with price and quality being important sales parameters Expensive to transport – especially by land. Therefore it is not profitable to transport cement by land over distances greater than a few hundred kilometres Cement production to a large extent is a local or a regional business. Only around 5 -10% of the world’s cement production is traded internationallyFreight rates play an important role for the profitability of international cement trade. The investment climate among cement producers depends on local and regional supply and demandEstimated total industry CAPEX p.a. (excl. China): DKK ~60bn

Structural demand for cement

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Market drivers and outlook

Global cement consumption

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Million tonnes

World (excl. China)

China

Annual growth since 1984(CAGR)World: 5.0 %World excl. China: 2.4 %China: 11 %

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Italy

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Hungary Hong Kong

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Georgia

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FranceEstonia

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Brazil

Belgium Australia

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Emergingmarkets

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Cement consumption per capita (2006-2009 avg., in kg)

Real GDP per capita (2006-9 avg., in 2005 kUS $)Note: United Arab Emirates and Norway excluded as outliers

Market drivers and outlook

Cement plants are needed where GDP grows...

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020406080

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mty

Global contracted new kiln capacity (excl. China)

Market drivers and outlook

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Global contracted new kiln capacity in 2011: 46 mty (2010: 65 mty)

2012 estimate: 50-60 mty

FLSmidth Capital Markets Day

Strategy and perspective

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Strategy and perspective

Continued strong EBIT-margin for projects and products

Continued strong market share in growing, but highly competitive market

Worldwide EPC capabilities in place

Expand our position as the supplier of best possible technology and trustworthy partner

"Our customers preferred full service provider" in Cement in co-operation with Customer Services and O&M

Strategic goals

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Customer focusConsistent high qualityTurnkey (EPC) capabilitiesStrong technological platformSupport and benefit from cross-functional strategic initiatives, suchas:

Global strategic sourcingShared best in class engineringcapabilitiesFull service provider incl. O&M

Five main strategic levers

Strategy and perspective

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Increase EBIT

Value Proposition - Customer IntimacyBusiness certainty for reliable solutions leading to consistent and profitable operations.

Through close cooperation with customers we design customized, complete and sustainable solutions leveraging global experience and local presence.

Attract new local customers

Increase number of products and services

per customer

Customer focus Highest quality Turnkey capabilities Strong technological platform

Grow revenue Reduce costs

Ensure loyalty from profitable customers

A sustainable businessStrategy and perspective

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Value proposition

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When we build it, it works

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Strong brand representing quality and reliability

Global reach with local presence

Ability to execute large projects successfully

Complete product portfolio

Strong focus on environmentally friendly solutionsMost advanced alternative fuels solutionsMost efficient waste heat recovery systemsBest in class emission control systems

…and our focused global sourcing strategy and engineeringoff-shoring strategy has significantly improved our pricecompetitiveness…

Competitive advantages

Value proposition

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Questions

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