INTERIM REPORT Q3 2017

Transcription

1 FLSMIDTH MAIN continued 1 January - 30 September 2017 (Company announcement no. 13) WE DISCOVER POTENTIAL INTERIM REPORT Q ROCE 10.0% Up from 8.2% CFFO (DKKm) 414 Down from DKK 744 EBITA margin Order intake (DKKm) 8.2% 4,193 Up from 7.2% Up from DKK 4,133 FLSmidth & Co. A/S Vigerslev Allé 77 DK-2500 Valby CVR No Interim report Q3 2017

2 CONTENTS MANAGEMENT REVIEW FLSmidth at a glance 3 Main conclusion 3 Financial results in Q FLSmidth Q in numbers 5 Group financial highlights 6 Management s review 8 Divisional performance 14 Customer services 14 Product companies 15 Minerals 16 Cement 17 Statement by management 18 FINANCIAL STATEMENTS Financial statements 19 Quarterly key figures 19 Consolidated income statement 22 Consolidated statements of Comprehensive income 23 Consolidated Cash flow statement 24 Consolidated Balance sheet 25 Consolidated equity 26 At A Glance 28 NOTES Notes to Interim Report Breakdown of the group by segments Income statement classified by function Acquisition of enterprises and activities Other provisions Fair value hierarchy of financial instruments Work-in-progress for third parties Development in contingent liabilities Earnings per share (EPS) Disposal of enterprises activities Management estimates and assessments Accounting policy Definitions of terms 35 HOW TO NAVIGATE THE REPORT Back to contents Management review Financial statement 2 Interim report Q3 2017

3 FLSMIDTH AT A GLANCE MAIN CONCLUSION Order intake slightly up despite no large orders and currency headwind. Weaker revenue as expected. Higher EBITA-margin due to lower cost base. Reduction in net working capital and net debt. Mining equipment sentiment continued to improve, whereas the cement market remains very competitive. Guidance for 2017 maintained. GROWTH EFFICIENCY The order intake grew 4% organically driven by stronger demand in Minerals, partly offset by softer order intake in the other three divisions. Revenue decreased 10% organically, primarily due to low order intake in the two capital divisions in in the second half of PROFIT EFFICIENCY The EBITA margin increased to 8.2% in Q3 due to a higher gross margin and a lower cost base. Low revenue in the quarter resulted in a slightly lower EBITA. CAPITAL EFFICIENCY ROCE increased to 10.0% as a result of higher EBITA over the past 12 months and lower capital employed. Due to decreasing net working capital and a positive free cash flow, net interest bearing debt declined to DKK 2.2bn. The financial gearing (NIBD/EBITDA) decreased to 1.2, well within the long-term target. KEY PERFORMANCE INDICATORS 2017 (part of management s short- and long-term incentive programmes) Financial Q Q Order intake (DKKm) 4,193 4,133 ROCE 10.0% 8.2% Net working capital % (end) 12.0% 12.5% EBITA margin 8.2% 7.2% Non-financial YTD Safety (LTIFR)¹) Quality (DIFOT)²) 88% 84% 1) LTIFR = Lost time injury frequency rate 2) DIFOT = "Delivery in full on time" GUIDANCE FOR 2017 DKK Realised Q1-Q Guidance 2017 Revenue (DKKbn) EBITA margin 8.0% 7-9% ROCE 10.0% 8-10% LONG-TERM FINANCIAL TARGETS Long-term financial targets for FLSmidth subject to normalised market conditions: Annual growth in revenue EBITA margin 10-13% ROCE¹) >20% Financial gearing (NIBD/EBITDA) <2 Equity ratio >30% Pay-out ratio Above market average 30-50% of the profit for the year 1) ROCE: Return on Capital Employed calculated on a before-tax basis as EBITA divided by average Capital Employed including goodwill 3 Interim report Q FLSmidth at a glance

4 FLSMIDTH AT A GLANCE FINANCIAL RESULTS IN Q FLSmidth REVENUE SPLIT BETWEEN CEMENT AND MINERALS BUSINESS Revenue DKKm 4,101 EBITA margin 8.2% Order intake DKKm 4,193 56% EBITA margin 11.4% 44% EBITA margin 4.4% Cement business Minerals business Customer Services Product Companies Minerals Cement REVENUE SPLIT BETWEEN SERVICE AND CAPITAL BUSINESS Revenue DKKm 1,614 EBITA margin 14.1% Revenue DKKm 1,317 EBITA margin 10.8% Revenue DKKm 559 EBITA margin -4.9% Revenue DKKm 877 EBITA margin -0.2% 64% 36% Order intake DKKm 1,597 Order intake DKKm 1,224 Order intake DKKm 1,008 Order intake DKKm 585 Capital business Service business 4 Interim report Q3 2017

5 FLSMIDTH AT A GLANCE FLSMIDTH Q IN NUMBERS VS. Q ROCE REVENUE (DKKm) EBITA (DKKm) EBITA MARGIN CFFO (DKKm) ORDER INTAKE (DKKm) 10.0% 4, % 414 4,193 Up from 8.2% Down from 4,774 Down from 344 Up from 7.2% Down from 744 Up from 4,133 VS. Q ORDER BACKLOG (DKKm) NET INTEREST- BEARING DEBT (DKKm) NET WORKING CAPITAL (DKKm) 13,799 2,155 2,232 Down from 14,115 Down from 2,590 Down from 2,477 5 Interim report Q FLSmidth at a glance

6 GROUP FINANCIAL HIGHLIGHTS GROUP FINANCIAL HIGHLIGHTS DKKm Q Q Q1-Q Q1-Q Year 2016 INCOME STATEMENT Revenue 4,101 4,774 13,057 12,667 18,192 Gross profit 1,065 1,164 3,363 3,280 4,581 EBITDA ,239 1,073 1,588 EBITA , ,289 EBIT Earnings from financial items, net (101) 14 (229) (56) (54) EBT Profit/loss for the year, continuing activities Profit/loss for the year, discontinued activities (72) (17) (106) (26) (68) Profit/loss for the period ORDERS Order intake (gross), continuing activities Order backlog, continuing activities EARNING RATIOS 4,193 4,133 14,334 13,759 18,303 13,799 15,174 13,887 Gross margin 26.0% 24.4% 25.8% 25.9% 25.2% EBITDA margin 9.7% 8.8% 9.5% 8.5% 8.7% EBITA margin 8.2% 7.2% 8.0% 6.8% 7.1% EBIT margin 5.7% 5.1% 5.7% 4.5% 4.8% EBT margin 3.2% 5.4% 3.9% 4.1% 4.5% DKKm Q Q Q1-Q Q1-Q Year 2016 CASH FLOW CFFO ,447 CFFI (69) (43) (169) (150) (194) Free cash flow ,253 Free cash flow adjusted for acquisitions and disposals of enterprises and activities ,253 Net working capital 2,232 2,251 2,099 Net interest-bearing debt (NIBD) BALANCE SHEET 2,155 3,150 2,525 Total assets 21,996 23,899 24,112 Equity 8,211 8,151 8,462 Dividend to shareholders, paid FINANCIAL RATIOS CFFO / Revenue 10.1% 15.6% 4.0% 6.6% 8.0% Cash conversion 148.7% 288.5% 47.5% 120.2% 142.2% Book-to-bill 102.2% 86.6% 109.8% 108.6% 100.6% Order backlog / Revenue 74.3% 84.5% 76.3% 6 Interim report Q Group financial highlights

7 GROUP FINANCIAL HIGHLIGHTS GROUP FINANCIAL HIGHLIGHTS - continued DKKm Q Q Q1-Q Q1-Q Year 2016 FINANCIAL RATIOS (CONTINUE) Return on equity 4.1% 6.0% 6.2% Equity ratio 37.3% 34.0% 35.1% ROCE (return on capital employed), average 10.0% 8.2% 8.5% Net working capital ratio, end 12.0% 12.5% 11.5% Financial gearing Capital employed, average 14,720 15,155 15,157 Number of employees end of period, Group 11,570 12,469 12,187 SHARE RATIOS CFPS (cash flow per share), (diluted) EPS (earnings per share), (diluted) BVPS (Book value per share) FLSmidth & Co. A/S share price Number of shares (1,000), 31 December 51,250 51,250 51,250 Market capitalisation 21,335 12,772 15,016 The financial ratios have been computed in accordance with the guidelilnes of the Danish Society of Financial Analysts from Please refer to note 12 for definitions of terms. 7 Interim report Q3 2017

8 MANAGEMENT S REVIEW MANAGEMENT S REVIEW ACQUISITION CLOSED In July, FLSmidth reached an agreement to acquire part of Sandvik Mining Systems, subject to certain conditions. The acquisition closed on 1 November, except for transfer of assets in South Africa. With the acquisition FLSmidth will be able to increase the productivity of the complete "pit to plant" operation by integrating upstream mining with downstream processing. GROUP (Continuing activities) Over 200 employees with strong experience, competencies and customer insights have been transferred from Sandvik to FLSmidth. In addition, FLSmidth has taken over a backlog of roughly DKK 300m. The majority of the new business will be integrated into FLSmidth's Minerals Division while the remaining will be integrated into FLSmidth's Customer Services Division. (DKKm) Q Q Change (%) Q1-Q Q1-Q Change (%) Order intake (gross) 4,193 4,133 1% 14,334 13,759 4% - Hereof service order intake 2,501 2,647-6% 8,023 7,419 8% Order backlog 13,799 15,174-9% 13,799 15,174-9% Total revenue 4,101 4,774-14% 13,057 12,667 3% - Hereof service revenue 2,614 2,601 0% 7,902 7,373 7% Gross profit 1,065 1,164-9% 3,363 3,280 3% Gross profit margin 26.0% 24.4% 25.8% 25.9% SG&A cost (667) (743) -10% (2,124) (2,207) -4% SG&A ratio 16.3% 15.6% 16.3% 17.4% SG&A ratio adjusted for one-off cost 16.2% 15.3% 16.0% 17.3% EBITDA % 1,239 1,073 15% EBITDA margin 9.7% 8.8% 9.5% 8.5% EBITA % 1, % EBITA margin 8.2% 7.2% 8.0% 6.8% EBITA margin adjusted for one-off cost 8.3% 8.0% 8.8% 7.2% EBIT % % EBIT margin 5.7% 5.1% 5.7% 4.5% Number of employees 11,439 12,324-7% 11,439 12,324-7% MARKET TRENDS Global growth is expected to rise this year and next year (IMF, World Economic Outlook, October 2017), underpinning both of FLSmidth's key industries, mining and cement. Commodity prices have broadly stabilised at a higher level, and in some cases strengthened further in the third quarter, with the copper price breaking 7,000 USD/MT for the first time in three years. This has affected the interest for copper processing equipment with copper now being miners' most favoured commodity, followed by gold. In general, sentiment in the mining industry improved in Q3, with an increasing level of customer inquiries for mining equipment. An upturn in larger orders is not expected until 2018, though. Pricing in the minerals business is stable. After a strong momentum in the past four quarters, the mining aftermarket saw a more stable development in Q3, where order activity was softer as customers are shifting focus towards larger OPEX spend which has slowed down the decisionmaking process. Global tendering activity for new cement capacity remains at a low level, keeping prices under pressure. Select opportunities are present in a number of emerging markets. With few tenders for large cement projects, FLSmidth is increasingly focusing on equipment sales, upgrades and service contracts. The cement aftermarket is supported by the improving global economy and showed a steady development in the third quarter. 8 Interim report Q Management s review

9 MANAGEMENT S REVIEW FINANCIAL DEVELOPMENTS IN Q GROWTH EFFICIENCY The order intake grew 4% organically driven by stronger demand in Minerals. Revenue decreased 10% organically, primarily due to low order intake in the two capital divisions in the second half of 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 decreased 6% to DKK 2,501m in Q3 (Q3 2016: DKK 2,647m), equivalent to 60% of the total order intake (Q3 2016: 64%). Revenue related to total service activities increased 1% to DKK 2,614m in Q3 (Q3 2016: DKK 2,601m), equivalent to 64% of the total revenue (Q3 2016: 54%). The decline in order intake was primarily related to large refurbishment and service jobs that did not repeat themselves in the quarter and is not a reflection of changed aftermarket conditions. Order intake and order backlog The order intake was marked by lack of large orders but nevertheless increased 1% to DKK 4,193m (Q3 2016: DKK 4,133m). Foreign exchange translation effects had a negative impact of 3%. Organic growth was 4%, owing to increased demand in Minerals, partly offset by softer order intake in the other three divisions. Order intake developments in Q Order intake (vs.q3 2016) Customer Product Services Companies Minerals Cement FLSmidth Group Organic -9% -5% 75% -3% 4% Currency -3% -2% -1% -9% -3% Total growth -12% -7% 74% -12% 1% The order backlog for the Group decreased to DKK 13,799m (end of Q2 2017: DKK 14,115m). 27% of the backlog is expected to be converted to revenue in the remainder of 2017, 54% in 2018, and 19% in 2019 and beyond. The order backlog was negatively impacted by foreign exchange adjustments of DKK 0.3bn in Q3. Revenue Revenue decreased 14% to DKK 4,101m in Q (Q3 2016: DKK 4,774m). Foreign exchange translation effects had a 4% negative impact on revenue in Q3. Organic growth was -10% due to lower revenue in the two capital divisions, Cement and Minerals. Revenue developments in Q Revenue (vs.q3 2016) Customer Product Services Companies Minerals Cement FLSmidth Group Organic 0% -1% -21% -22% -10% Currency -3% -2% -2% -9% -4% Total growth -3% -3% -23% -31% -14% ORDER INTAKE BY INDUSTRY (QTD) ORDER INTAKE BY DIVISION (QTD) REVENUE BY DIVISION (QTD) 26% 13% 21% 1% 4% 5% 35% 23% 36% 13% 35% 6% 23% 28% 31% Cement Gold Iron ore Other Copper Coal Fertiliser minerals Customer Services Minerals Product Companies Cement Customer Services Minerals Product Companies Cement 9 Interim report Q3 2017

10 MANAGEMENT S REVIEW PROFIT EFFICIENCY The EBITA margin increased to 8.2% in Q3 due to a higher gross margin and a lower cost base. Low revenue in the quarter resulted in a slightly lower EBITA. The gross profit in Q3 decreased 9% to DKK 1,065m (Q3 2016: DKK 1,164m), corresponding to a gross margin of 26.0% (Q3 2016: 24.4%). Production costs were adversely impacted by DKK -25m one-off costs in the comparison quarter. The gross margin increased in Customer Services and Minerals, while it decreased in Cement and Product Companies, the latter adversely impacted by business mix. Q saw total research and development expenses of DKK 56m (Q3 2016: DKK 53m), representing 1.4% of revenue (Q3 2016: 1.1%), of which DKK 15m was capitalised (Q3 2016: DKK 18m) and the balance reported as production costs. In addition, project-financed developments are taking place in cooperation with customers. Sales, general and administrative costs and other operating items amounted to DKK 667m in Q (Q3 2016: DKK 743m), which represents a cost percentage of 16.3% of revenue (Q3 2016: 15.6%). SG&A included one-off costs of DKK -3m (Q3 2016: DKK -12m). EBITA in Q3 decreased 2% to DKK 336m (Q3 2016: DKK 344m), which was a modest decline considering the 14% decrease in revenue. As a result of an improved cost structure, the EBITA margin increased to 8.2% (Q3 2016: 7.2%). Amortisation of intangible assets amounted to DKK -102m (Q3 2016: DKK -101m). The effect of purchase price allocations amounted to DKK -55m (Q3 2016: DKK -60m) and other amortisations to DKK -47m (Q3 2016: DKK -41m). Consequently, earnings before interest and tax (EBIT) decreased to DKK 234m (Q3 2016: 243m). Net financial items amounted to DKK -101m (Q3 2016: DKK 14m), of which foreign exchange adjustments amounted to DKK -44m (Q3 2016: DKK 31m) and net interest amounted to DKK -26m (Q3 2016: DKK -17m). The residual of DKK -31m was related to fair value adjustments of financial assets (shares in listed cement companies). Foreign exchange adjustments were related to volatility on hedges without hedge accounting. Tax for the period amounted to DKK -38m (Q3 2016: DKK -70m), corresponding to an effective tax rate of 29% (Q3 2016: 27%). Profit from continuing activities decreased to DKK 95m (Q3 2016: DKK 187m), primarily explained by adverse impact from financial items in the quarter. Impact from one-off costs in Q DKKm Q Q One-off costs impacting production costs 0-25 One-off costs impacting SG&A costs Total one-off costs Corrective actions (net) Total one-off costs One-off costs by division Customer Services 0-7 Product Companies Minerals 0 3 Cement 0-17 Gross margin reported 26.0% 24.4% Gross margin adjusted for one-off costs 26.0% 24.9% SG&A ratio 16.3% 15.6% SG&A ratio adjusted for one-off costs 16.2% 15.3% EBITA margin reported 8.2% 7.2% EBITA margin adjusted for one-off costs 8.3% 8.0% DKKm 6,000 5,000 4,000 3,000 2,000 1,000 0 Q Q4 ORDER INTAKE Q Orders above DKK200m Q2 Q3 Q4 Q Q2 Orders below DKK 200m Q3 DKKm 6,000 5,000 4,000 3,000 2,000 1,000 0 Q REVENUE AND EBITA MARGIN Q4 Q Revenue Q2 Q3 Q4 Q EBITA margin Q2 EBITA % 12% 10% 8% 6% 4% 2% 0% Q3 10 Interim report Q3 2017

11 MANAGEMENT S REVIEW Profit/loss from discontinued activities amounted to DKK -72m (Q3 2016: DKK -17m) and were negatively impacted by provisions in Q3 related to an ongoing settlement dispute with a customer on a legacy project. Discontinued activities are predominantly related to the bulk material handling activities that were announced for sale in connection with the third quarter interim report in The sales process and dialogue with potential acquirers is still ongoing. Profit for the period decreased to DKK 23m (Q3 2016: DKK 170m), equivalent to DKK 0.5 per share (diluted) (Q3 2016: DKK 3.4). CAPITAL EFFICIENCY Capital employed and ROCE Average Capital employed decreased to DKK 14.7bn in Q (Q3 2016: DKK 15.2bn), and 12-months trailing EBITA increased to DKK 1,476m (Q3 2016: DKK 1,247m). As a consequence, ROCE increased to 10.0% (Q3 2016: 8.2%). Capital employed amounted to DKK 14.5bn at the end of Q and consists primarily of intangible assets amounting to DKK 10.0bn, which is mostly historical goodwill as well as patents and rights, and customer relations. Tangible assets amounted to DKK 2.3bn and net working capital to DKK 2.2bn at the end of Q3. Cash flow from investing activities amounted to DKK -69m (Q3 2016: DKK -43m). The free cash flow (cash flow from operating and investing activities) in Q3 amounted to DKK 345m (Q3 2016: DKK 701m). Balance sheet and capital structure The balance sheet total contracted to DKK 21,996m at the end of Q (end 2016: DKK 24,112m), mainly due to currency translation effects. Equity at the end of Q decreased to DKK 8,211m (end of 2016: DKK 8,462m). The equity ratio amounted to 37.3% (end of 2016: 35.1%), which is above the long-term target of minimum 30%. Net interest-bearing debt by the end of Q decreased to DKK 2,155m (end of Q2 2017: DKK 2,590m). As a result, the Group s financial gearing was 1.2 (end of Q2 2017: 1.5), well within the NIBD long term target of maximum 2x EBITDA. At the end of Q3 2017, the Group s capital resources consisted of committed credit facilities of DKK 7.5bn (including mortgage) with a weighted average time to maturity of 3.7 years. TREASURY SHARES FLSmidth s treasury shares amounted to 1,879,059 shares at the end of Q (end of 2016: 2,276,278 shares), representing 3.7% of the total share capital (end of 2016: 4.4%). 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 2017, there was a total of 1,771,622 unexercised share options under FLSmidth s incentive plan and their fair value was DKK 257m. The fair value is calculated by means of a Black & Scholes model based on a current share price of DKK, a volatility of 28.07% and future annual dividend of DKK 6 per share. The effect of the plan on the income statement for Q was DKK -5m (Q3 2016: DKK - 9m). Cash flow and working capital Despite solid cash generation in Q3, cash flow from operating activities decreased to DKK 414m in Q (Q3 2016: DKK 744m), due to a lower reduction in net working capital than Q3 last year, as well as higher financial payments and higher taxes paid. Net working capital decreased to DKK 2,232m at the end of Q (end of Q2 2017: DKK 2,477m), representing 12.0% of 12- months trailing revenue (Q2 2017: 12.9% of revenue). The reduction in net working capital was predominantly explained by phasing of projects. Trade receivables declined, mostly as a result of collection on minerals projects, whereas the decline in trade payables largely related to progress on cement projects. DKKm (100) (200) CASH FLOW FROM OPERATING ACTIVITIES Q Q4 Q Q2 Q3 Q4 Q CFFO Q2 Q3 DKKm 3,000 2,500 2,000 1,500 1, Q Q4 NET WORKING CAPITAL Q Q2 Q3 Q4 Q Net working capital Q2 Q3 11 Interim report Q3 2017

12 MANAGEMENT S REVIEW Performance shares (replacing share option programme) At the end of Q3 2017, FLSmidth had granted a maximum of 302,813 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 Q was DKK -6m (Q3 2016: DKK -4m). EMPLOYEES The number of employees amounted to 11,570 at the end of Q (Q3 2016: 12,469), including discontinued activities, employing 131 people. The decline is mainly a function of the reductions in workforce that were implemented in late 2016 to adjust the cost base to the anticipated lower level of activity in GUIDANCE FOR 2017 Based on the results delivered in the first three quarters of 2017 and the expected developments in the remainder of 2017, it is still expected that revenue will be DKK 17-19bn and that the EBITA margin will be 7-9%. The return on capital employed is expected to be 8-10%. The EBITA margin guidance includes expected one-off costs of DKK 100m related to the corrective actions programme launched in 2016 (reduced from previously DKK -150m) as well as other one-off costs of DKK -62m (recognised in Q2). One-off costs recognised in Q1-Q3 amounted to DKK -97m. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE On 17 May 2017, FLSmidth announced that it had signed a contract for a large cement plant in North Africa. On 1 November, FLSmidth announced that this order valued at more than EUR 100m has become effective. The order will be part of the order intake in Q FINANCIAL CALENDAR Feb Annual Report Apr Annual General Meeting 2 May st Quarter Interim Report Aug Half-year Interim Report Nov st-3rd Quarter Interim Report 2018 FORWARD-LOOKING STATEMENTS 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 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 report or 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 forwardlooking 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 forwardlooking statement after the distribution of this report. 12 Interim report Q3 2017

13 MANAGEMENT S REVIEW FINANCIAL DEVELOPMENTS IN Q1-Q GROWTH EFFICIENCY Developments in total service activities Order intake related to total service activities increased 8% to DKK 8,023m in Q1-Q3 (Q1-Q3 2016: DKK 7,419m), equivalent to 56% of the total order intake (Q1-Q3 2016: 54%). Revenue related to total service activities increased 7% to DKK 7,902m in Q1-Q3 (Q1-Q3 2016: DKK 7,373m), equivalent to 61% of the total revenue (Q1-Q3 2016: 58%). The increase in total service activities compared to the same period last year is mainly a result of improved sentiment in the mining aftermarket. Order intake and revenue In Q1-Q3 2017, order intake increased 4% to DKK 14,334m (Q1- Q3 2016: DKK 13,759m) and revenue increased 3% to DKK 13,057m (Q1-Q3 2016: DKK 12,667m). Order intake developments in Q1-Q Order intake (vs.q1-q3 2016) Customer Product Services Companies Minerals Cement FLSmidth Group Organic 3% 11% 13% -2% 4% Currency 2% 2% 1% -4% 0% Total growth 5% 13% 14% -6% 4% The revenue growth was attributable to all divisions but Minerals. Q1-Q3 saw a stronger growth in total service activities compared to last year. Revenue developments in Q1-Q Revenue (vs.q1-q3 2016) Customer Product Services Companies Minerals Cement FLSmidth Group Organic 4% 7% -16% 13% 4% Currency 2% 2% 1% -9% -1% Total growth 6% 9% -15% 4% 3% PROFIT EFFICIENCY EBITA increased 22% to DKK 1,050m (Q1-Q3 2016: DKK 863m), driven by higher revenue and earnings in Customer Services and Product Companies, partly offset by volume pressure in Minerals and low gross margin in Cement. EBITA was negatively impacted by one-off costs of DKK -97m in Q1-Q3 (Q1- Q3 2016: DKK -53m) of which DKK -62m related to the demobilisation of an O&M contract in Q2. The EBITA margin was 8.0% (Q1-Q3 2016: 6.8%). In Q1-Q3 2017, the net profit from continuing activities was unchanged at DKK 365m (Q1-Q3 2016: DKK 366m). Despite the increase in EBITA, cash flow from operating activities decreased to DKK 519m in Q1-Q3 (Q1-Q3 2016: DKK 839m), due to negative contribution from changes in net working capital (Q1-Q3 2016: positive contribution). ORDER INTAKE BY INDUSTRY (YTD) ORDER INTAKE BY DIVISION (YTD) REVENUE BY DIVISION (YTD) 24% 22% 22% 3% 41% 34% 38% 3% 5% 15% 13% 7% 17% 29% 26% Cement Copper Gold Coal Iron ore Fertiliser minerals Other Customer Services Minerals Product Companies Cement Customer Services Minerals Product Companies Cement 13 Interim report Q3 2017

14 DIVISIONAL PERFORMANCE CUSTOMER SERVICES MARKET DEVELOPMENTS The market for Customer Services was overall unchanged in Q3. In mining, customers are, however, shifting focus towards larger OPEX spend which slows down decision-making. Demand for parts is steady. The aftermarket in Australia continues at a low level, while sentiment in South America and parts of Europe is positive. Investment insecurity is hampering activity in South Africa. Customers focus remains primarily on copper and gold, and the overall market driver is technical support to improve plant productivity and reduce costs. The cement aftermarket saw a steady development in Q3 with good demand for rebuilds and retrofits. FINANCIAL PERFORMANCE IN Q Order intake in Q amounted to DKK 1,597m and decreased 12% compared to a strong quarter last year (Q3 2016: DKK 1,820m). The order intake was negatively impacted by foreign exchange effects and decreased 9% adjusted for currency. The difference to Q is mainly explained by lower order intake in North America, which last year saw some larger mining related orders, including first time spares, that did not repeat themselves in Q Revenue decreased 3% to DKK 1,614m in Q (Q3 2016: DKK 1,670m) but was unchanged adjusted for currency effects. Gross profit, before allocation of shared cost increased 3% to DKK 514m (Q3 2016: DKK 500m), and the corresponding gross margin went up to 31.8% (Q3 2016: 29.9%). EBITA increased 19% to DKK 228m (Q3 2016: DKK 191m) and the EBITA margin increased to 14.1%, well above last year (Q3 2016: 11.4%) but lower than the first half of 2017, due to lower revenue, hence lower operating leverage. CUSTOMER SERVICE REVENUE AND EBITA MARGIN (DKKm) Q Q Change (%) Q1-Q Q1-Q Change (%) DKKm EBITA % Order intake (Gross) 1,597 1,820-12% 5,208 4,983 5% Order backlog 2,320 2,483-7% 2,320 2,483-7% Revenue 1,614 1,670-3% 5,047 4,769 6% Gross profit before allocation of shared cost % 1,622 1,513 7% Gross profit margin before allocation of shared cost 31.8% 29.9% 32.1% 31.7% EBITA before allocation of shared cost % 1,141 1,021 12% EBITA margin before allocation of shared cost 22.0% 20.1% 22.6% 21.4% EBITA % % EBITA margin 14.1% 11.4% 14.7% 12.4% EBIT % % EBIT margin 11.3% 9.0% 12.0% 10.1% Number of employees 3,800 4,067-7% 3,800 4,067-7% 2,100 1,800 1,500 1, Q Q4 Q Revenue Q2 Q3 Q4 Q Q2 EBITA margin Q3 21% 18% 15% 12% 9% 6% 3% 0% 14 Interim report Q Divisional performance

15 DIVISIONAL PERFORMANCE PRODUCT COMPANIES MARKET DEVELOPMENTS The lower order activity level in Q3 was a result of the lumpiness of larger orders and not a reflection of a weaker market for Product Companies. The aftermarket and the market for smaller capital orders saw a steady development in the quarter. The minerals business is still driven mainly by parts and services, with some incremental capital orders in the horizon. Cement related activities showed a steady development, and adjacent industries such as power and steel, continue to offer business opportunities. FINANCIAL PERFORMANCE IN Q Following a strong first half-year, the order intake in Q decreased 7% to DKK 1,224m (Q3 2016: DKK 1,317m). Adjusted for currency effects, the order intake decreased 5%. The significantly lower level of order intake versus the first half of 2017 was a result of fewer larger orders. As noted in the Q2 Interim Report, the pipeline for larger orders in the second half of 2017 was, and still is, less encouraging than for the first half of the year. Revenue decreased 3% to DKK 1,317m (Q3 2016: DKK 1,354m) and decreased 1% adjusted for currency. Gross profit, before allocation of shared costs decreased 5% to DKK 395m (Q3 2016: DKK 417m), and the corresponding gross margin decreased to 30.0% (Q3 2016: 30.8%), reflecting business mix, as a larger share of large lower margin business were executed in Q3. EBITA in Q decreased 11% to DKK 143m (Q3 2016: DKK 161m), and the EBITA margin decreased to 10.8% (Q3 2016: 11.9%) as a result of the lower revenue, slightly lower gross margin, and generally a more unfavourable business mix. PRODUCT COMPANIES REVENUE AND EBITA MARGIN (DKKm) Q Q Change (%) Q1-Q Q1-Q Change (%) Order intake (Gross) 1,224 1,317-7% 4,375 3,888 13% Order backlog 2,968 2,681 11% 2,968 2,681 11% Revenue 1,317 1,354-3% 4,049 3,700 9% Gross profit before allocation of shared cost % 1,232 1,168 5% Gross profit margin before allocation of shared cost 30.0% 30.8% 30.4% 31.6% EBITA before allocation of shared cost % % EBITA margin before allocation of shared cost 20.1% 19.3% 20.3% 20.0% EBITA % % EBITA margin 10.8% 11.9% 11.8% 11.1% EBIT % % EBIT margin 8.9% 10.7% 9.8% 9.1% Number of employees 2,713 2,811-3% 2,713 2,811-3% DKKm 1,800 1,500 1, Q Q4 Q Revenue Q2 Q3 Q4 Q Q2 EBITA margin EBITA % Q3 18% 15% 12% 9% 6% 3% 0% 15 Interim report Q3 2017

16 DIVISIONAL PERFORMANCE MINERALS MARKET DEVELOPMENTS Sentiment in the mining industry improved further in Q3 with an increasing level of customer inquiries for mining equipment. An upturn in larger orders is not expected until 2018, though. The increased market activity involves opportunities in Australia, North and South America, and especially Asia. Sub-Saharan Africa is affected by political instability and resulting downsizing activities across mining companies. The most active commodities were copper, gold, iron ore, coal and alumina. FINANCIAL PERFORMANCE IN Q The improved sentiment in the mining industry began to materialise in the third quarter, and order intake in Q picked up and increased 74% to DKK 1,008m (Q3 2016: DKK 579m), reflecting a generally improved sentiment in the mining industry. Following an extended period of low order activity, revenue decreased 23% to DKK 559m (Q3 2016: DKK 727m). About one third of the Minerals Division s backlog remains very slow moving based on customer request, but there are signs that some of this backlog could start moving in Gross profit, before allocation of shared cost amounted to DKK 102m (Q3 2016: DKK 128m), and the corresponding gross margin improved slightly to 18.3% (Q3 2016: 17.7%). A continued low level of revenue keeps earnings under pressure and EBITA amounted to DKK -27m. This was, however, an improvement on last year (Q3 2016: DKK -37m), despite the revenue decline and due to strong focus on reducing SG&A costs. The EBITA margin was -4.9% (Q3 2016: - 5.3%). MINERALS REVENUE AND EBITA MARGIN (DKKm) Q Q Change (%) Q1-Q Q1-Q Change (%) Order intake (Gross) 1, % 2,277 1,994 14% Order backlog 4,013 4,244-5% 4,013 4,244-5% Revenue % 1,780 2,105-15% Gross profit before allocation of shared cost % % Gross profit margin before allocation of shared cost 18.3% 17.7% 17.9% 16.7% EBITA before allocation of shared cost % % EBITA margin before allocation of shared cost 6.2% 5.8% 5.7% 3.8% EBITA (27) (37) N/A (92) (164) N/A EBITA margin -4.9% -5.3% -5.2% -7.8% EBIT (50) (75) N/A (162) (245) N/A EBIT margin -9.0% -10.4% -9.1% -11.6% Number of employees 1,034 1,207-14% 1,034 1,207-14% DKKm 1, Q Q4 Q Revenue Q2 Q3 Q4 Q Q2 EBITA margin EBITA % Q3 5% 0% -5% -10% -15% 16 Interim report Q3 2017

17 DIVISIONAL PERFORMANCE CEMENT MARKET DEVELOPMENTS The overall market activity in Q3 was similar to previous quarters. Plant utilisation rates remain low from a global perspective, curtailing appetite for investments in new capacity. There are still select opportunities in Asia, Africa and parts of Latin America, although some of the recently most active markets are starting to become sufficiently supplied with new capacity. Investment appetite is slowly increasing in India. With few tenders for large cement projects, FLSmidth is increasingly focusing on equipment sales, upgrades and O&M. FINANCIAL PERFORMANCE IN Q The order intake in Q decreased 12% to DKK 585m (Q3 2016: DKK 663m). Although marked by lack of large orders, the Q3 order intake included the partial booking of a milestone order. FLSmidth was awarded its first O&M contract in Kuwait which at the same time represented the first contract ever to operate and maintain a standalone cement grinding plant. The plant is supplied by FLSmidth and is currently being built. Mobilisation for the five year contract has started. Revenue decreased 31% to DKK 877m compared to a strong quarter last year (Q3 2016: DKK 1,269m). Due to timing of projects, revenue was exceptionally high in the second half of 2016, which is reflected in the relatively lower level of revenue in the second half of Gross profit, before allocation of shared costs amounted to DKK 103m (Q3 2016: DKK 169m), and the corresponding gross margin was 11.7% (Q3 2016: 13.3%), reflecting execution of lower margin orders in the backlog compared to last year. As a result of the lower revenue and gross margin, EBITA decreased to DKK -3m (Q3 2016: DKK 27m) and the corresponding EBITA margin was -0.2% (Q3 2016: 2.1%). CEMENT REVENUE AND EBITA MARGIN (DKKm) Q Q Change (%) Q1-Q Q1-Q Change (%) DKKm EBITA % Order intake (Gross) % 3,327 3,550-6% Order backlog 5,274 6,382-17% 5,274 6,382-17% Revenue 877 1,269-31% 2,868 2,747 4% Gross profit before allocation of shared cost % % Gross profit margin before allocation of shared cost 11.8% 13.3% 10.6% 15.1% EBITA before allocation of shared cost % % EBITA margin before allocation of shared cost 6.5% 7.3% 3.8% 8.0% EBITA (3) % (89) % EBITA margin -0.2% 2.1% -3.1% 0.8% EBIT (11) % (112) (1) N/A EBIT margin -1.1% 1.6% -3.9% 0.0% Number of employees 2,459 2,632-7% 2,459 2,632-7% 1,800 1,500 1, Q Q4 Q Revenue Q2 Q3 Q4 Q Q2 EBITA margin Q3 9% 6% 3% 0% -3% -6% -9% 17 Interim report Q3 2017

18 STATEMENT BY MANAGEMENT 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 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 2017 as well as of its financial performance and its cash flow for the period 1 January - 30 September 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. EXECUTIVE MANAGEMENT Thomas Schulz Group CEO Lars Vestergaard Group Executive Vice President and CFO BOARD OF DIRECTORS Vagn Sørensen Chairman Tom Knutzen Vice Chairman Marius Jacques Kloppers Caroline Grégoire Sainte Marie Richard Robinson Smith Anne Louise Eberhard Mette Dobel Søren Quistgaard Larsen Claus Østergaard 18 Interim report Q Statement by management

19 FINANCIAL STATEMENTS QUARTERLY KEY FIGURES DKKm INCOME STATEMENT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Revenue 4,683 5,093 4,609 5,297 3,758 4,135 4,774 5,525 4,371 4,585 4,101 Gross profit 1,190 1,327 1,174 1,255 1,038 1,078 1,164 1,301 1,134 1,164 1,065 Sales, general and admin.costs and other operating items (718) (815) (743) (792) (726) (738) (743) (786) (698) (759) (667) EBITDA Special non-recurring items 0 2 (1) (6) 0 0 (9) (21) 0 0 (4) Depreciation of tangible assets (72) (74) (72) (73) (66) (67) (68) (68) (64) (63) (58) EBITA Amortisation of intangible assets (104) (119) (113) (105) (93) (96) (101) (118) (100) (105) (102) EBIT Financial income/cost, net (18) 30 (93) (175) (38) (32) 14 2 (34) (94) (101) EBT Tax for the period (82) (113) (47) (40) (36) (45) (70) (86) (60) (51) (38) Profit/loss on continuing activities for the period Profit/loss on discontinued activities for the period 76 (24) (189) (41) (6) (3) (17) (42) (17) (17) (72) Profit/loss for the period (84) Effect of purchase price allocation (71) (71) (71) (71) (60) (60) (60) (60) (55) (55) (55) Gross margin 25.4% 26.1% 25.5% 23.7% 27.6% 26.1% 24.4% 23.5% 25.9% 25.4% 26.0% EBITDA margin 10.1% 10.1% 9.4% 8.7% 8.3% 8.2% 8.8% 9.3% 10.0% 8.8% 9.7% EBITA margin 8.5% 8.6% 7.8% 7.2% 6.5% 6.6% 7.2% 7.7% 8.5% 7.5% 8.2% EBIT margin 6.3% 6.3% 5.3% 5.3% 4.1% 4.3% 5.1% 5.6% 6.2% 5.2% 5.7% Cash flow Cash flow from operating activities (45) (61) (60) (44) 414 Cash flow from investing activities 760 (44) (12) (95) (43) (44) (35) (65) (69) Order intake, continuing activities (gross) 4,440 5,208 5,151 3,691 5,281 4,345 4,133 4,544 5,561 4,580 4,193 Order backlog, continuing activities 17,562 16,932 16,666 14,858 15,792 15,914 15,174 13,887 14,998 14,115 13, Interim report Q Financial statements

20 FINANCIAL STATEMENTS DKKm Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 SEGMENT REPORTING Customer Services Revenue 1,768 1,813 1,793 1,920 1,568 1,531 1,670 1,786 1,724 1,709 1,614 Gross profit before allocation of shared costs EBITA before allocation of shared costs EBITA EBIT Gross margin before allocation of shared costs 26.7% 32.1% 30.1% 31.8% 32.3% 33.1% 29.9% 31.2% 32.1% 32.5% 31.8% EBITA margin before allocation of shared costs 17.5% 22.4% 19.9% 23.1% 21.9% 22.4% 20.1% 19.8% 22.7% 23.1% 22.0% EBITA margin 9.8% 14.7% 13.0% 14.5% 12.6% 13.4% 11.4% 12.5% 14.6% 15.4% 14.1% EBIT margin 7.6% 12.3% 10.7% 12.5% 10.3% 11.0% 9.0% 9.4% 12.1% 12.6% 11.3% Order intake (gross) 1,796 1,733 1,526 1,655 1,566 1,597 1,820 1,616 1,861 1,750 1,597 Order backlog 2,783 3,003 2,725 2,469 2,399 2,405 2,483 2,388 2,506 2,421 2,320 Product Companies Revenue 1,371 1,531 1,336 1,473 1,078 1,268 1,354 1,315 1,275 1,457 1,317 Gross profit before allocation of shared costs EBITA before allocation of shared costs EBITA EBIT Gross margin before allocation of shared costs 32.1% 30.1% 30.5% 30.6% 33.0% 31.1% 30.8% 33.4% 31.8% 29.6% 30.0% EBITA margin before allocation of shared costs 22.8% 21.6% 20.8% 21.9% 21.2% 19.9% 19.3% 21.8% 21.3% 19.4% 20.1% EBITA margin 14.6% 13.8% 12.0% 12.5% 10.1% 11.0% 11.9% 11.5% 12.3% 12.2% 10.8% EBIT margin 13.3% 12.9% 10.7% 11.3% 7.9% 8.1% 10.7% 9.5% 10.4% 10.3% 8.9% Order intake (gross) 1,580 1,431 1,479 1,252 1,406 1,165 1,317 1,438 1,597 1,554 1,224 Order backlog 3,291 2,887 2,864 2,536 2,823 2,729 2,681 2,807 3,124 3,128 2, Interim report Q3 2017

21 FINANCIAL STATEMENTS DKKm Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 SEGMENT REPORTING (CONTINUED) Minerals Revenue , , Gross profit before allocation of shared costs EBITA before allocation of shared costs 62 (19) (9) EBITA (39) (127) (60) (32) (35) (92) (37) 29 (37) (28) (27) EBIT (78) (174) (102) (70) (62) (108) (75) 2 (62) (50) (50) Gross margin before allocation of shared costs 18.4% 17.7% 18.2% 16.4% 18.9% 13.5% 17.6% 16.6% 17.3% 18.0% 18.3% EBITA margin before allocation of shared costs 7.5% -2.3% 5.4% 5.2% 6.9% -1.3% 5.8% 10.5% 4.7% 6.1% 6.2% EBITA margin -4.7% -15.6% -7.4% -2.8% -5.0% -13.4% -5.3% 2.7% -6.3% -4.4% -4.9% EBIT margin -9.5% -21.4% -12.5% -6.3% -8.8% -15.8% -10.4% 0.2% -10.5% -7.9% -9.0% Order intake (gross) 851 1,057 1, ,008 Order backlog 4,746 4,806 5,138 4,614 4,229 4,478 4,244 3,988 4,108 3,728 4,013 Cement Revenue 951 1, ,269 1, , Gross profit before allocation of shared costs EBITA before allocation of shared costs EBITA (29) (21) (18) (68) (3) EBIT (10) (39) (28) 7 20 (2) (26) (75) (11) Gross margin before allocation of shared costs 19.0% 17.7% 17.1% 10.7% 18.5% 15.5% 13.3% 11.4% 10.7% 9.6% 11.8% EBITA margin before allocation of shared costs 13.9% 13.9% 10.5% 2.8% 7.9% 8.8% 7.2% 5.0% 5.2% 0.2% 6.5% EBITA margin 4.9% 6.7% 0.3% -3.0% -3.7% 1.5% 2.1% 0.4% -1.9% -6.7% -0.2% EBIT margin 4.0% 5.3% -1.3% -3.9% -5.0% 0.7% 1.6% -0.2% -2.7% -7.4% -1.1% Order intake (gross) 438 1, , ,026 1,719 1, Order backlog 7,331 6,883 6,529 5,852 7,016 6,962 6,382 5,349 6,085 5,672 5, Interim report Q3 2017

22 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT Notes DKKm Q Q Q1-Q Q1-Q Revenue 4,101 4,774 13,057 12,667 Production costs (3,036) (3,610) (9,694) (9,387) Gross profit 1,065 1,164 3,363 3,280 Sales costs (348) (362) (1,083) (1,063) Administrative costs (317) (393) (1,074) (1,167) Other operating items (2) EBITDA ,239 1,073 Special non-recurring items (4) (9) (4) (9) Depreciations of tangible assets (58) (68) (185) (201) EBITA , Amortisations of intangible assets (102) (101) (307) (290) EBIT Financial income Financial costs (325) (208) (1,140) (950) EBT Tax for the period (38) (70) (149) (151) Profit/loss for the period, continuing activities Profit/loss for the period, discontinued activities (72) (17) (106) (26) Profit/loss for the period To be distributed as follwos: FLSmidth & Co. A/S shareholders' share of profit/loss for the period Minority shareholders' share of profit/loss for the period (3) 2 (3) Earnings per share (EPS): Continuing and discontinued activities per share Continuing and discontinued activities, diluted, per share Continuing activities per share Continuing activities, diluted, per share Interim report Q Consolidated financial statements

23 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Notes DKKm Q Q Q1-Q Q1-Q Profit/loss for the period Other comprehensive income for the period Items that will not be reclassified to profit or loss: Actuarial gains/losses on defined benefit plans (2) 0 (1) 0 Tax hereof Items that are or may be reclassified subsequently to profit or loss: Foreign exchange adjustments regarding enterprises abroad (128) 59 (387) (31) Value adjustments of hedging instruments: Value adjustments for the period (4) Value adjustments transferred to work-in-progress 0 (6) 0 (93) Value adjustments transferred to financial income and costs (1) Tax on other comprehensive income (1) (7) (11) (11) Other comprehensive income for the period after tax (136) 77 (320) (5) Comprehensive income for the period (113) 247 (61) 335 Comprehensive income for the year attributable to: FLSmidth & Co. A/S shareholders' share of comprehensive income for the period (112) 243 (55) 331 Minority shareholders' share of comprehensive income for the period (1) 4 (6) 4 (113) 247 (61) Interim report Q3 2017

24 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED CASH FLOW STATEMENT DKKm Q Q Q1-Q Q1-Q EBITDA, continuing activities ,239 1,073 EBITDA, discontinued activities (94) (5) (124) (19) EBITDA ,115 1,054 Adjustment for gain/(losses) on sale of tangible and intangible assets and special non-recurring items etc. 9 (6) Adjusted EBITDA ,128 1,069 Change in provisions 30 (43) (54) (199) Change in net working capital (315) 291 Cash flow from operating activities before financial items and tax ,161 Financial items received and paid (21) 33 (23) (7) Taxes paid (74) (31) (217) (315) CFFO Acquisitions of enterprises and activities Acquisitions of intangible assets (27) (33) (95) (47) Acquisitions of tangible assets (46) (20) (115) (157) Acquisitions of financial assets (1) Disposal of enterprises and activities (3) 0 (3) 0 Disposal of tangible assets CFFI (69) (43) (169) (150) Dividend paid 1 0 (297) (196) Addition of minority shares Acquisition of treasury shares 0 (1) (161) (1) Disposal of treasury shares Change in net interest-bearing debt (414) (544) (335) (198) CFFF (351) (545) (553) (395) Change in cash and cash equivalents (6) 156 (203) 294 Beginning of period 1,265 1,272 1,513 1,157 Foreign exchange adjustment, cash and cash equivalents (47) 1 (98) (22) Cash and cash equivalents at 30 September 1,212 1,429 1,212 1,429 Cash and cash equivalents included in assets held for sale Cash and cash equivalents 1,159 1,423 1,159 1,423 Cash and cash equivalents at 30 September 1,212 1,429 1,212 1,429 The cash flow statement cannot be inferred from the published financial information only 24 Interim report Q3 2017

25 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET Notes DKKm ASSETS End of Q End of 2016 Goodwill 4,250 4,493 Patents and rights 1,130 1,226 Customer relations 842 1,007 Other intangible assets Completed development projects Intangible assets under development Intangible assets 6,772 7,315 Land and buildings 1,633 1,823 Plant and machinery Operating equipment, fixtures and fittings Tangible assets in course of construction Tangible assets 2,282 2,551 Other securities and investments Deferred tax assets 1,108 1,117 Financial assets 1,224 1,287 Total non-current assets 10,278 11,153 Inventories 2,426 2,355 Trade receivables 3,805 4,533 6 Work-in-progress for third parties 2,309 2,426 Prepayments to subcontractors Other receivables 1,326 1,191 Receivables 7,679 8,694 Cash and cash equivalents 1,159 1,448 Assets classified as held for sale Notes DKKm EQUITY AND LIABILITIES End of Q End of 2016 Share capital 1,025 1,025 Foreign exchange adjustments (272) 112 Value adjustments of hedging transactions (33) (112) Retained earnings 7,456 7,089 Proposed dividend FLSmidth & Co. A/S shareholders' share of equity 8,176 8,421 Minority shareholders' share of equity Total equity 8,211 8,462 Deferred tax liabilities Pension liabilities Other provisions Bank loans and mortgage debt 3,084 3,930 Prepayments from customers Other liabilities Long-term liabilities 4,406 5,184 Pension liabilities Other provisions 900 1,101 Bank loans Prepayments from customers 1,349 1,424 6 Work-in progress for third parties 1,777 2,093 Trade payables 2,437 3,037 Current tax liabilities Other liabilities 1,511 1,828 Short-term liabilities 8,627 9,863 Liabilities directly associated with assets classified as held for sale Total liabilities 13,785 15,650 Total current assets 11,718 12,959 Total equity and liabilities 21,996 24,112 Total assets 21,996 24, Interim report Q3 2017