CEMENTING A STRONGER FUTURE March 27, 2013 Financial Year 2012 - PowerPoint PPT Presentation

Investor and analyst webcast presentation Jouni Salo, CEO, Yizhen Zhu, COO Asia Pacific CEMENTING A STRONGER FUTURE March 27, 2013 Financial Year 2012 Results - KHD Humboldt Wedag International AG

Financial Performance Q4 2012 - Strongest quarter of the year Q4 Key Figures  Traditionally strong quarter in € million  Announced order from India, Holcim Jamul Q4 2012 for € 69 million Order Intake 128  New project from Italcementi  Grinding project in Africa Revenues 70 EBIT 3 EBIT Margin 4.3% Order 491 backlog Full Year Results 2012 Page 1 / 19

At a glance 2012 in brief: Challenging environment Business Financials Industry  Significant growth in  Solid liquidity  Strong competition and margin pressure order intake and backlog  Stable equity  Continued project delays  Slight decline in revenue  New bonding line of and postponements  EBIT and EBIT margin € 130 million within guidance corridor Full Year Results 2012 Page 2 / 19

Agenda Business Performance Financial Performance Achievements Outlook 2013 Full Year Results 2012 Page 3 / 19

Business Performance Slow but continuous growth in cement consumption 2012 Global Cement Consumption 2012 in % RU +11% US +9% TR -3% CN +8% IN +6% NG +10% BR +6% ID +13% China (59%) India (6%) USA (2%) Brasil (2%) World + 5% Russia (2%) Rest of the World (29%) Sources: BNP Paribas, CW Group Report, KHD Full Year Results 2012 Page 4 / 19

Business Performance Key markets still uncertain India Americas  Slower growth with very few capacity  Slow start in US, with utilization picking expansion projects in 2012 up in second half but far below pre- crisis levels  Rising raw material and energy costs  Some growth in South America Turkey  Sharp decline in construction and Asia Pacific infrastructure spending  New projects in Southeast Asia  Stronger competition Russia Mining Markets  Double digit growth in cement  Sharp decrease in iron ore demand, consumption, however utilization rates especially in China remained low  Major customers critically reviewing all  Investments planned in infrastructure CAPEX projects Full Year Results 2012 Page 5 / 19

Agenda Business Performance Financial Performance Achievements Outlook 2013 Full Year Results 2012 Page 6 / 19

Financial Performance Significant growth in order intake and backlog  AVIC partnership - proof of concept with new Order backlog and order intake orders in Malaysia (YTL Group/ € 100 million), in € million Venezuela (Invecem), Turkey (SÖNMEZ) + 82.9 % + 67.2 % 600  Additional orders in Russia (EUROCEMENT / € 80 491,0 500 million), India (Holcim Jamul / € 69 million) and 410,9 400 Italy (Italcementi) 293,7 300  Service business order intake equaled 12% of 224,7 total order intake 200 100  Lower demand for HPGR technology in the mining industry resulting in order intake of € 18 million 0 Order Intake Order Backlog 2011 2012 Full Year Results 2012 Page 7 / 19

Financial Performance Delays in project execution continue to impact revenue 300 Revenue  Unsatisfactory order intake from previous years in € million led to lower revenues 234.6 250  High order backlog does not immediately 213.5 translate into revenue 200 - 9.0 %  Financing conditions remained difficult for some 150 of the customers and regions  Biggest revenue contribution from India, followed 100 by Turkey and Russia 50 0 2011 2012 Full Year Results 2012 Page 8 / 19

Financial Performance Earnings before interest and taxes and margin in within guidance  Postponed revenues cause EBIT reduction of EBIT and EBIT margin in € million and % € 8.7 million 20 10%  Gross profit declined from € 52.5 million to € 43.8 17.6 18 million 16 8% 7.5%  Gross profit margin remained on satisfactory 14 level of 20.5% 12 6% 10  Sales expenses of € 13.6 million as well as R&D 8 4% 6.4 3.0% costs of € 3.6 million on similar level as in 6 previous year 4 2%  Administrative expenses of € 18.5 million remain 2 virtually unchanged 0 0% 2011 2012 Full Year Results 2012 Page 9 / 19

Financial Performance Group net results and dividend proposal  Group net profit at € 7.0 million Earnings per share in €  EPS 14 cents per share 0.35 0.28  Proposal to distribute € 3.0 million of the 0.30 Company’s € 4.8 million net retained profits as 0.25 a dividend to shareholders 0.20  Dividend proposal corresponds to 6 cents per 0.14 share 0.15  The Company’s remaining net retained profits 0.10 of € 1.8 million to be carried forward 0.05 0.00 2011 2012 Full Year Results 2012 Page 10 / 19

Financial Performance Balance Sheet: Continued high levels of equity and liquidity 450 450  Increase in current assets of € 20 million corresponds to € 17 million 400 400 116 136 increase in current liabilities 145 350 162 350 300 300  Operating cash flow amounted to 53 250 250 40 negative € 11.3 million 200 200  Stable equity that corresponds to 300 283 150 150 equity ratio of 53.6 % 234 234 100 100 50 50 15 17 0 0 2011 2012 2011 2012 Non-current assets Equity Cash and cash equivalents Non-current liabilities Other current assets Current liabilities Full Year Results 2012 Page 11 / 19

Financial Performance Balance Sheet: Cash Management  Dividend  € 6 million distributed in 2012  € 3 million distribution proposed for upcoming AGM  Dividend policy to be launched at AGM  Acquisitions  Hot list narrowed down to 10 possible targets  Mainly for services, new environmental technologies and increased competitiveness  Possible share buyback – to be decided after AGM Full Year Results 2012 Page 12 / 19

Agenda Business Performance Financial Performance Achievements Outlook 2013 Full Year Results 2012 Page 13 / 19

Achievements Achievements  Increased market share and won new orders under difficult market conditions  KHD and AVIC partnership is well-accepted in the market  KHD wins order to build one of the most eco- friendly cement plants in Europe in the Lake Garda region (Italcementi order from Nov 2012)  KHD’s Combustion Chamber wins award for ‘Most innovative technology for alternative fuels use’ at the 6th Global CemFuels Conference (Feb 2012)  Launched first roller press service facility in India Full Year Results 2012 Page 14 / 19

Agenda Business Performance Financial Performance Strategic Achievements in 2012 Outlook Full Year Results 2012 Page 15 / 19

Outlook Outlook – Markets 2013 India Americas  Timing of market comeback still  Some markets in South America questionable gaining strength  70% utilization predicted for 2013  Modernization projects in the US due to environmental legislation Turkey  Brazil development uncertain  Slowdown in Europe will affect growth Asia Pacific in Turkey  Pace of growth slowing down  Utilization 60% - 70% predicted  Consolidation and environmental requirements continue to shape Russia Chinese cement industry  New projects expected, including modernization projects Mining Markets  Access to financing still a factor for  Continued cost reductions from major many customers mining companies will limit the number of new projects Sources: BNP Paribas, CW Group Report, KHD Full Year Results 2012 Page 16 / 19

Outlook Group strategic initiatives 2013 and onwards  Strong focus on project execution and profitability  Expansion of service business  Simplified legal and operational structure  Continued development of KHD competiveness by strengthening our resources and capabilities in low-cost regions  Reduce SG&A costs in 2013 Full Year Results 2012 Page 17 / 19

Outlook Group financial outlook 2013  Solid order intake – driven by Russian market  Significantly higher revenues based on strong order backlog Lower gross profit margin caused by projects won under fierce  competition and due to pass-through revenues  Slight increase in EBIT margin resulting from revenue growth and cost reductions Full Year Results 2012 Page 18 / 19