FLS Industries has today signed an agreement with Cementir S.p.A., the Italian cement group, to sell all its shares in Aalborg Portland A/S and Unicon A/S, its two wholly-owned subsidiaries, which produce and market cement and ready-mixed concrete, respectively. The process of selling the two companies was announced and initiated at the beginning of March 2004.
As a result of the sale of shares, which is being effected more quickly than expected, Cementir will take over all Aalborg Portland's and Unicon's subsidiaries and participating interests in partly-owned companies. Cementir's strategy is to maintain and expand Unicon's strong position in Northern Europe and to continue Aalborg Portland's global white strategy in addition to strengthening its role in the production and sales of grey cement both domestically and for export.
Cementir is part of Caltagirone, a family-controlled industrial group whose interests, in addition to cement and concrete, include contracting, media, real estate and financial investments. Cementir S.p.A. is an independent listed company in the Caltagirone Group and is headquartered in Rome. Its production capacity in Italy and Turkey is over 7 million tonnes of cement and 2.4m cubic metres of concrete per year. In addition to its presence in the Italian and Turkish markets, the company exports cement to the entire Mediterranean region and its total turnover in 2003 amounted to approximately EUR 300m.
The total selling price of the shares in the two companies has been agreed at an amount commensurate with DKK 4.4bn free from debt (enterprise value).
The final transfer of shares, which is subject to approval by the authorities concerned, is expected to take place later this year.
Good prospects of divesting the remaining parts of the Building Materials business
The sale of Aalborg Portland and Unicon, which represent a significant portion of the FLS Group's building material interests, marks an important step towards implementation of the focusing strategy that was adopted in 2002 immediately after the present Board of Directors came into office. The strategy entails that the FLS Group will in future focus its activities on the development and production of machinery, equipment, systems and services plus complete production lines and plants for the global cement and minerals industries. The aim is to achieve a profitability which is equivalent to 5% of turnover.
In addition to Aalborg Portland and Unicon, which in 2003 had a turnover of DKK 2.8bn and contributed DKK 428m to the consolidated earnings before tax, the building materials sector mainly consists of Dansk Eternit Holding and Densit plus participating interests in a number of other companies.
The Group is confident regarding the prospects of divesting the remaining building material activities on satisfactory terms, once these companies are also ready for sale.
Financial consequences of the sale
Together with the other company acquisitions and disposals this year to date, the sale of Aalborg Portland and Unicon is expected to improve the FLS Group's earnings before tax (EBT) by approximately DKK 0.5bn and increase the shareholders' equity by DKK 0.3bn.
The actual effect on earnings depends on the date when the shares are transferred, because the FLS Group's projections for the year's financial result are based on the two building materials companies being owned throughout the entire period.
FLS Industries' Interim Report 1 January to 30 June will be released on Thursday 26 August 2004.
Yours faithfully
Jørgen Worning
Chairman of the Board of Directors
Bjarne Moltke Hansen
Group Executive Vice President