FLSmidth & Co. A/S (FLS) Earnings Call Transcript & Summary

Now it is 4:00 p.m. Welcome shareholders, ladies and gentlemen. I wish you a warm welcome to this AGM of FLSmidth and Company, A/S. My name is Tom Knutzen, I'm the Chair of this Board. I have one task today in addition to welcoming you, I'm also going to welcome everybody watching the online transmission, and I can welcome you in pursuant of section or Article 7 of the Association, and we have the right to point the Chair of this general meeting and I'm pleased to be able to once again because this is a long tradition, I point to Klaus Søgaard, and he's a partner of law firm of Gorrissen Federspiel, and he is assumed the task of being the Chair of this general meeting. So I'll pass the floor to Mr. Søgaard.

Thank you so much. First, I can sustain that this AGM has been lawfully convened I checked that beforehand. So this was my conclusion that I will draw shortly. Well, we start on time even at the second -- 4 p.m. There are some requirements pursuant to the articles and also the legislation, it must be held in Greater Copenhagen before the end of April and must be summoned before -- at a notice of 3 to 5 weeks. It was convened on the third of March and also by e-mail to those requested as well as notice to the stock exchange. So this means that this meeting is lawful. As regards to the voting procedures, there's one agenda item relating to an amendment to the articles of the association. We want to change a date that is not complicated, but it takes a majority of 2/3 both of the votes present and also the capital represented. All other proposals can be adopted by a simple majority. As regards to shareholders presence, 133 shareholders had taken out an admission card and 99 had recorded, 44 had come in just a few minutes before we started and 33 of them had the voting rights by proxy. So we have also had a number of shareholders have inserted proxies. So a little more than 52% altogether represented today and more than 75% of all the votes represented have voted in favor of the agenda items. So I think we will not end up in a situation that we will have to have detailed written votes, but this doesn't mean us from having a good discussion. The Chair of the Board will make a presentation of the annual report -- together with the annual report and also the Board's recommendations as to the individual items. And afterwards, you can ask questions and make comments and already have the names of 3 different people who want to make statements. So if anybody else wants to take the floor, then you can just advise me when you reach that point. I'll now pass the floor to Tom Knutzen.

Thank you. Looking back at my first year as the Chair of FLSmidth, I dare say that it's been both a busy and eventful year. We're very proud, and I'm speaking on behalf of the Board and management of the efforts and dedication of our employees, which has led to FLSmidth delivering a solid result for 2022 in spite of us like so many others that navigate through a challenging macro environment as well as several changes to our business. Strategy is something which develops over time and in that connection. Well, then during the past year, particularly 2 things at the forefront to me. Firstly, it's completely clear to us that the future will bring an increased need for increased investments within mining generally as well as in the green transition within the mining and cement industries. Secondly, we must acknowledge that the implementation of our strategy has previously not been fully satisfactory, prompted by the change in our top management led by our new group CEO, Mikko Keto, who joined us on the 1st of January 2022. We had experienced a significant change in decisiveness and drive. Among others, this has resulted in FLSmidth in 2022, starting what I would call, extensive transformation journey, a transformation journey, which gives me and the board a strengthened view on where we can take FLSmidth in the long run and a strengthened faith in us once and for all being able to ensure a stronger implementation. Naturally, there will still be bumps in the road as this is the nature of our business, but the journey has begun, and it's an interesting journey, which I both believe in and support fully. As a part of this transformation journey we have in 2022, implemented new pure-play strategies for our mining and cement businesses. This is an important component in being able to trigger our full potential within both mining and cement, where the markets customers and possibilities differ widely. And in that way, the 2 businesses must also be handled differently. This has resulted in there being activities and services that we will, in the future, stop delivering and performing in that connection. We have had to say goodbye to a lot of good colleagues, both within mining and cement. It's always a serious matter to go through. But it has been a necessary step which we've had to take in order to create a stronger, more resistant and more profitable FLSmidth to the advantage of, yes, our employees, our customers and of course, also you and the company's shareholders. We're grateful for the support which we have so far received from our shareholders in connection with our transformation journey. And here, I would like to particularly welcome our new major shareholder, Altor Fund Manager. Altor brings solid experience with strategy development and creation value and comes with a wish of contributing actively to our journey with the participation of the Board. The support for our new pure-play strategies from both of our major shareholders, well, we see that as a lot of confidence for us being on the right track. In a moment, I'm going to touch upon some of the other core elements in our transformation journey as well as other highlights in 2022. But before then, I'd like to touch upon something which has affected and still affects all of us. When we were gathered at last year's AGM, the war in Europe had broken out briefly before then something most of us, I imagine, never had imagined would happen in our lifetime. We're deeply sorry for the tragic development in Ukraine, and our thoughts go to all the people no matter where who have been affected by this tragic development. As a result, we immediately decided to suspend all new business in Russia and Belarus. And during 2022, we have left Russia. Because of the costs related to the liquidation of this, our activities in Russia and Belarus have resulted in a net loss in 2022. And with this, I'd like to touch upon some of the highlights from the previous year. We've already seen positive effects from some of the implemented changes, which were made during 2022. During the course of all of the year, old FLSmidth mine business, that means exclusive thyssenkrupp's mine business, I'm going to call it mining technology, technology for now on to keep it simple. But that has shown a continued strong growth in both the incoming orders, revenue and profitability, which has particularly been driven by our service business. In the fall, we implemented one of our largest acquisitions in our history, namely the acquisition of mining technologies, [indiscernible] Group. With this acquisition, FLSmidth is now positioned even better than ever before to be able to offer the customers and the best complete technologies from service solutions, from mining to processing plants and as well support a more sustainable production. Additional to the acquisition, having strengthened our position as a leading supplier for the mining industry. There are also considerable cost synergies connected with the acquisition. June 22, we have seen and we've been able to increase the size of these synergies. And we've accelerated the time it takes to achieve them. Hence, we now expect that the cost synergies will annually come to approximately DKK 560 million, and will come fully into effect according to our plans in '24 and onwards. At the same time, very importantly, our cement business has shown a stable development and continued the positive trend with increased profitability and has now returned to a positive profitability. That has been driven also by a better service business as well as the simplification of the operating model of cement during the fourth quarter of '22. And of course, we are continuing to work on that. As mentioned in '22, we began a big transformation journey. This is due to our business environment changing and that connection, it's been important to FLSmidth to renew itself and develop in order to sustain and expand our competitive position as well as our long-term potential earnings. From a past, no matter its a glory, but from a past characterized by engineered services and large construction projects FLSmidth is today a major supplier of technology, products, service, which supports a more sustainable production within mining and cement industry. Our pure-play strategies within mining and cement play an important role in this. As previously mentioned, this also involves that there are activities and services that we will, in the future, stop performing and deliver. This is something we've chosen on the basis of the planned strategic evaluation of our compliant mine product portfolio. That means including the products that we have, but also the ones that we acquired during the acquisition of mining technologies. As a result of this, we have from the beginning of the fourth quarter of '22, divided our mining business into 2 segments: a continued strategic core business and a no longer strategic segment which we're also in good Danish call noncore activities. Half of the activities in these noncore activities coming from FLSmidth old mine business and the other part comes from mining technologies, that is what we've purchased. And over the coming 3 years, we intend to liquidate these or sell parts of them if possible. The activities we will no longer perform are in general characterized by offering limited service potential. They're actually unprofitable. They have a big implementation risk and generally, they don't contribute to our sustainability agenda. We expect the total loss on liquidation of the noncore activities to be approximately DKK 1.2 billion divided over the period from the fourth quarter of '22 until the end of '25. This new division is a part of ensuring a clear focus and a strong implementation in our strategic core activities in mining, which is the key to increasing our long-term earnings. Additional established pure-play strategies that established the noncore activity segment. Well, during '22, we've also made many other decisions that support our transformation journey. This, amongst other involves transparency, both internally and externally, and we've made considerable progress in order to lessen the risk in our business by implementing a so-called risk quotes, a stringent risk management surrounding our product portfolio. This is a possible ensuring that the possibilities we pursue and the contracts we accept. In general, comprise lesser risk. They reduced regarding complexity and scope and they are more profitable and in compliance with our long-term strategic priorities. Last but not least, of course, we are aware that the implementation of our transformation journey is deeply dependent on our employees and our culture. Hence, we have a large focus on ensuring that we have the right competencies as well as the right set of bad news at FLSmidth. With this transformation journey that we're on will bring us, well, we present that officially at our Capital Market Day on the 18th of January of '23. Here, for the first time, management presented the summary of our new pure-play strategies as well as our new long-term financial goals. Our previous midterm and long-term financial targets, well, they were withdrawn in connection with publication of the annual report for 2020 when there was insecurity regarding the corona pandemic and other structural changes. Our new long-term financial goals have a core focus on ensuring the quality of our profitability as well as reducing fluctuations in our profitability. The pure play strategy in mining is called CORE'26 and for the total year of '26, we expect that our mining business can deliver a EBITDA margin, that's before interest and taxes, et cetera, coming to 13% to 15%. In cement, we call the pure-play strategy, GREEN'26 and for the full year of '26. We expect that our cement business can deliver an EBITDA margin of approximately 8%. Sustainability or in present day terms, the ESG agenda is and will remain an integrated part of our culture and business model. This covers both our responsibility towards our employees, society, customers and for our planet. Minerals, are necessary in the green transition and the supply of critical minerals like copper, lithium, nickel and cobalt face large pressure in order to be able to meet their increasing demand. Similarly, cement is crucial to infrastructure and renewable energy projects. As cement is still one of the most carbon-intensive industries in the world. It is crucial that the environmental impact from the cement production is reduced. To solve these crucial challenges is what drives us at FLSmidth. It's both a possibility but also our responsibility. With our MissionZero technologies and solutions, we are uniquely positioned for significantly reducing our customers' environmental footprint and at the same time, improving their productivity and profitability. Hence, we have a target, and that's validated by what one consigns based targets that our own operating activities, what we call Scope 1 and 2 must be CO2 neutral no later than in 2030 and then our financial effect on the supply chain also call Scope 3 must be reduced by 56% compared to a starting point, which is 2019. June 2022, we've made good progress on the majority of our own science-based targets. This includes that we have increase the share of our total purchases from suppliers that also have science-based targets. We have also significantly reduced the CO2 emissions and the use of our sold products as a consequence of less sale products that impact the climate, particularly within cement. We have also in '22 seen a small increase in the CO2 emissions from own operating activities as a consequence of increased activity and a lesser use of green energy, something we have to look at. However, it's very important that we don't look at these numbers isolatedly, based on the absolute CO2 numbers from any given year, but then we look at them over a longer period of time as there will be fluctuations from year-by-year, particularly in the CO2 emissions from the use of our sold products. In '22, we've also seen progress in our ratings among some of the large ESG rating bureaus, which also gives us faith in us being on the right road regarding our sustainability effort. However, we do recognize that there are parts of our long-term ESG agenda where we haven't reached our target yet. And we have a way to go. Among others, this goes for diversity agenda where in 2022, we unfortunately did not see any progress compared to last year regarding the share of female managers. In spite of progress compared to last year, we also didn't reach our targets for safety, measured on the total registered injury rate in '22. The levels are not poor but we'd like to do better. So there's still a need for additional improvements in order to reach our long-term targets, both in the long run, but also up until 2030. Let me turn towards the mining market. In spite of global macroeconomic and geopolitical unrest, the long-term demand for mineral remains strong, driven by financial growth, including a growing middle class and the green transition. In '22, the industry was challenged by volatile commodity prices, logistic limitations, inflation, which are still there, the threat of global recession, et cetera. Conversely, possibilities arose from the increasing need for a green energy transition. The order intake in mining grew 20% organic and 34% reported organic, respectively, to a total of DKK 17.8 billion in '22, driven, among others, 37% in the growth of the service business. Mining had 7 large product orders coming to DKK 2.8 billion, up against 4 large orders in '21 coming to a value of DKK 950 million. Service orders and product orders came to 59% and 41%, respectively, of the total new orders in mining. If you look at the revenue in mining, the organic grew 14% and 29% reported and came to DKK 15.1 billion in '22, the service and product revenue increased by 32% and 23%, respectively. The adjusted mining EBITDA increased to DKK 1.6 billion, which corresponds to an adjusted EBITDA margin of 10.6%. The adjustment includes the costs of DKK 250 million for the integration mining technologies and a loss of DKK 200 million related to the liquidation of activities in Russia. When you include these costs, the EBITDA margin for mining in 2022 came to 7.6%. Like in most other industries, the industry has had to navigate through the macroeconomic insecurities and geopolitical unrest in 2022. In the short term, the cement industry is expected to a lager degree be affected by the macroeconomic fluctuations than the mining industry, the high energy prices, the inflation pressure has also contributed to an increased focus on productivity and sustainability, among the cement producers. In the long term, we see good possibilities, particularly driven by the necessary green translation of the cement production. The order intake in cement increased by 5% organic and 11% reported to DKK 6.6 billion in '22 as a consequence of better market conditions compared to the previous year. In '22, we included one large product order at a value of more than DKK 400 million, up against 2 large product orders in '21 at a joint value of DKK 400 million. Service and product orders came to constitute 57% and 43%, respectively, of the total new orders in cement in '22. The revenue increased by 2% organic and 7% reported at DKK 6.3 billion, primarily driven by a 12% growth in the service business and the product revenue increased by 1%. But also importantly, cement EBITDA increased to DKK 204 million positive compared to the year before, corresponding to an EBITDA margin at 3.3%. That is a significant improvement compared to '21, where cement was unprofitable and that reflects an improved service business and a simplification of cement operating model during the course of the fourth quarter. Let me just look at noncore activities and how they develop in 2022. The part of the business that we wish to liquidate. In the last quarter of '22, noncore activities had a revenue of DKK 503 million and a loss of DKK 407 million, out of which DKK 270 million are related to individual shutdown costs. This was in line with our expectations and what we had told the share market. By the end of '22, noncore activities had a remaining order backlog of DKK 2.9 billion, up against beginning order backlog of DKK 3.6 billion as noncore activities segment was established back by the end of the third quarter of '22. And we add all of that together and look at the consolidated financial performance in '22, then the results in both mining, cement is primarily driven by our service business where we delivered an improved result compared to the year before. The new orders received increased 16% organic and 28% reported. As a consequence of better market conditions compared to '21 and the new orders received in service alone and let me put a line under that increase by 30%. The product order or new orders received within products increased by 26%. Book-to-bill for the year was 130%. In spite of the shutting down of the Russian activities in '22, revenue increased organic by 11% and 24% reported, which is mainly driven by the service business in mining in '22. Service made up 59% of the revenue and product 41%. The gross result increased by 21%, and the adjusted EBITDA margin for '22 came to 6.4%. When you include the previously mentioned DKK 452 million those for integration costs for the acquisition and -- as well as the liquidation in Russia, the reported EBITDA margin comes to 4.3%. In spite of the significant cost to liquidate our activities in Russia and the cost related to integration mine technologies, we delivered a positive financial flow on the operation coming to almost DKK 968 million. We have a constant focus, as I say -- when I say we, it's management particularly, we have a constant focus on financial flow in order to ensure a healthy balance in our net working capital and net debt. Our financial gearing increased from being minus 0.6x to 0.6x as a consequence of the acquisition mine technologies, which is expected. The financial gearing is still lower than the group's target, which is a max of 2 times the net interest-bearing debt compared to the EBITDA. The Board suggests that a dividend of DKK 3 per share is paid out which comes to a total dividend amount of DKK 173 million and a dividend yield of 1.2%. And this corresponds to a payout ratio of 49%, which is completely aligned with our targets, which is a payout of between 30% to 50% of the net profit. Let me look forward. We expect that the market growth within the mining industry in '23 will remain practically stable compared to the market in '22. Hence, we expect revenue in mining coming to between DKK 16 billion and DKK 17 billion where mining technologies are expected to contribute with less than DKK 3 billion to the revenue in '23. We expect to adjust the mining EBITDA in the interval of 9% to 10%, which includes an expected diluting effect on the mining technologies at approximately 2% for '23. But that number does not include the integration costs of DKK 550 million for all of '23. In cement, in the long term, we expect that the cement industry will still be marked by old capacity. And that the potential recession, and that means how much building would be set into motion will expectedly have a negative effect on market demand. We expect a revenue of DKK 6 billion to DKK 6.5 billion in '23. That means a flat development up against '22 and EBITDA margin which is slightly better in the interval between 4% to 5%. That progress reflects an increase in cement's profitability, which reflects the positive effect of the strategic initiatives that I mentioned from '22. The expectation to noncore activities in '23 reflect our work liquidating the remaining order backlog as well as a general nonprofitable nature of the activities in the segment. Hence, we expect a revenue of between DKK 0.8 billion and DKK 1 billion and an operational loss of between DKK 250 million to DKK 350 million in '23. As a consequence of all this, we expect a revenue of DKK 23 billion to DKK 24.5 billion and an adjusted EBITDA margin of 6% to 7% for the whole group in '23. If we include the integration costs in mining coming to DKK 550, we expect 4% to 5% in the EBITDA margin. That's what we communicated when we sent out our annual report just recently. And for good order, as always, I must add that profit forecast are always connected with insecurity as a consequence of global supply conditions, potential recession and geopolitical unrest that has also been said. As recommended by the committee on corporate governance and with reference to the publicized report, I'd like to go over and make some remarks to the remuneration of the Board and management. Let me tell you that compared to '22, there have been no deviations regarding the general guidelines for remuneration which have been approved by the annual meeting. The connected remuneration for the group executive management, which consists of the CEO and the CFO was DKK 25.8 million in '22 up against DKK 39 million in '21. In '29, it was high because of the severance package agreed with the former CEO and low incentive payments. Payout are based on -- the target is based on reaching or us reaching the financial KPIs and individual targets in '22. The Board did not receive any payout for the long-term incentive program for the performance periods of 2019 until '21. And the Board received a total remuneration of DKK 6.6 million in '22, against DKK 6.5 million in '21. The Board proposes that the fees for the Board of Directors for '23 remains unchanged. In connection of the annual report for '22 and like in previous years, the Board has decided to award restricted shares to a limited number of persons, including management and key employees in the long-term incentive program, the targets for '23, which cover the period from '23 to '25 would be the same as for the program for '22, which covers the vesting period from '22 to '24. So vesting and grounding will be subject to fulfillment on the targets for EBITDA margin, the total return for shareholders as well as the KPI related to sustainability. Furthermore, the Board annually does a self-assessment in order to assess the individual members' contribution, commitment and competencies and also our ability to cooperate. As Chair, I'm responsible for carrying out the assessment. I believe that we have a transparent process. And after a good and open discussion. We've identified some matters that we can most likely better, and we have determined our priorities for the coming years board work. But let me also add that the general conclusions of the Board Assessment in '22 was satisfactory without the big issues or matters. I'm reaching the end. In 2022, we, at FLSmidth celebrated our 140 year anniversary. Even though many things have changed since 1882, our passion to discover and innovate. Our commitment to all our customers and most importantly, the dedication talent of our employees have been the core of everything we have achieved since day 1. FLSmidth is on an interesting journey. We recognize the current macroeconomic insecurities and geopolitical unrest that we do believe but these challenges are manageable and are compensated for significantly by our fundamental long-term growth possibilities driven by, I've said it many times, green transition, financial growth and specific industry challenges within both the mining and cement industries. In the past year, it's been crucial to us to renew ourselves and at the same time, give a clear strategic direction and thereby build a foundation for increased trust. Focus is now on implementation. And we have already come a long way in '22. In '23, we look forward to even more progress when we continue driving our transformation journey and implementing our pure-play strategies. I'm certain that we have the right team, the right strategies they're in place. And together, we will deliver even larger results onwards. In closing, of course, I'd like to thank both the Board and -- management Executive Committee and the Board for an open and good cooperation over the past year. I'd also like to thank our shareholders for the support and also take the opportunity to say welcome to new major investors that we have got in the past year. Welcome to FLSmidth. I'd also like to send a special thanks to our outgoing Board member Rob Smith, who is not running for reelection. Since 2016, Rob, has provided a dedicated and valuable effort for the company, among others, as the Chair of our Technology Committee. However, the largest thank you goes to all of our employees who are yet again shown a large ability to adapt in an uncertain business environment. We look forward to continuing the journey with you over the course of '23. I thank you for your attention.

Now you have the chance to make -- to ask questions and comments. So as I mentioned before, there are 3 people who have already asked for the floor. I'll ask those 3 people to come forward and then you can make these comments. And then the Chair of the Board can ask the questions first, and then he can comment on these together. And the first one is Leif Gundtoft, the Chairman of Staff Association and then presentative of LD, Mr. [indiscernible].

So thank you for giving me the floor. Dear colleagues, dear shareholders, dear Board and dear Chair, my name is Leif Gundtoft and it's my privilege and I'm speaking on behalf of the Staff Association. One year ago, very few of us had expected that we will still have a war in Ukraine. The horrifying images that we see from there that makes -- and it also makes very difficult for us to imagine this is tremendous impact that this conflict has to our world. And this has also had a huge impact on people that we can collaborate with and whom we allowed to collaborate with. So we had to tell goodbye to a number of good colleagues in Russia and other countries. So I'm happy that you should not talk about corona at this AGM, and we can start getting used to an everyday life, where we can meet with customers even though that we still have many meetings on teams. Travels and meeting with customers all over the world contributes to emphasizing the fact that FLS is a global enterprise and employees, we are proud to be working for FLS. Last September, CKS Mining became part of FLSmidth. After very few honeymoon -- a short honeymoon, we decided to establish a division called non-collectivities, which intended not to be part of the future journey of FLS. This might be a rude awakening for our German colleagues and also for us and our former colleagues at FLS. The management of cement activities has decided on a pure-play model, so both segments will now report results as independent business units. So this gives segments a more autonomy relative to the size of the organization and composition. So this change means that you'll give all products to services and also the spare and working parts, and this will value based on the capital projects that fit into the future focus of the company. This means that we have significant changes to the structure of cement both in Denmark and globally. So unfortunately, we'll have to tell goodbye to a number of dedicated colleagues who have worked for FLS for more than 25 years. And I want to thank good and loyal colleagues for -- that worked for many years. Changes might be difficult and frustrating but I find that we are in a good -- on the right way and we look forward to seeing a stronger and best FLS cement. And I find that we can always see some green strategy solutions. We are already working on this in the long term or we already have in the market. They will become an essential part of solution to the greenhouse gas issues that we have at world level. When our colleagues at mining will have a doubt at the organization. I'm sure that they will also have an efficient and profitable business area but also ensure that this journey will be difficult for many. We have seen a year with inflation it reminds me of the time when I was child, it was long time ago. But despite this situation, we're still doing well on the economy side, even though that it was predicted that the recession is waiting just around the corner. We still see a job -- an active job market. A lot happens around the world, and we also in terms of employment and pay conditions. And for the management of FLS, it's necessary to make an extra effort to attract and retain good employees. As employees, we're having a dialogue with management about this. And we look into many of these parameters that contribute to making FLS to a good and attractive working place. It's essential for our self perception and motivation. But we can now see that we are contributing actively in many and interesting activities, which may contribute to making our solutions for our customers greener and more environmental friendly, both within cement and mining which are also our GREEN'26. I don't know what to say in Danish or English and also core CORE'26 programs. FLS is a Danish company. We are proud and strong additions. In addition to the technical innovation and the sanction that has characterized FLS for many years, we also have decency as a very significant element of our self perception and values. We are expected to behave both as employees as a company as a part of this world and as surrounding us. We do this by working together by respecting differences and be abreast of changes both socially, financially and technical-wise. And we happen to see that FLS works actively in these areas. It's still difficult to predict as to which way the world intends to go in future. But the new courageous initiative, FLS has shown that the company can adapt to changes with optimism, creativity and conviction. It bears witness to a strong culture as the mainstay and my dedicated and clever colleagues support to the challenges that we're facing. We can be very proud about that. So on behalf of the employees, I wish FLSmidth is strong, sustainable and not least, a prosperous year. Thank you so much.

Thank you, Leif Gundtoft. And as I mentioned, I would let the first 3 speakers come to the stage before I will let the Chair replies to this from the AkademikerPension. [indiscernible].

Thank you for the Chair of the Board for his presentation. My name is [ Tal Sperl ], I'm speaking on behalf of LD and the AkademikerPension. So once another year has passed with -- and in the situation for uncertainty the war in Ukraine continues, and it was not as short as we expected. On the contrary, we have seen huge tragedy, inflation and historical pressure on values or value chains. Many companies have cut links to Russia, most of the companies are also in Russia still. It's a difficult time to work and it's difficult to separate business from politics. Together with this geopolitical uncertainty, you have started a transforming journey. The strategic focus has to be sharpened. Well, also you have to see a successful integration with TK Mining. We have many balls playing at the same time and the risk elements are abundant. We will see the results in the performance over the next quarters and years. And we hope that it will be better than historical numbers. You had a good start. And as you know, that's always halfway through but still less a long way to go, and we look forward to following further developments and also initiatives that we have taken throughout the organization. I'm also here to motivate the that proposal made by LD and AkademikerPension. This proposal intends to support FLS in expanding the communication relating to respect human rights and labor rights. We also suggest that FLS makes more details public about the challenges that FLS meet in the market when do they encounter human rights challenges, we've had a good dialogue with the Board of Directors of this proposal, and the Board of Directors has decided to support our proposal. We are thankful because we also see this as a sign that the Board takes this seriously and also wants to propose to help OR support this in public. So there's no doubt that the FSD is one of the best in the sector. But we still know that the reporting on human rights is not exactly where it should be, but that also applies to most other major companies. As long-term investors, we want to support the long-term business success of FLS with this proposal. And in this situation, I want to mention that we trust that FLS also works internally with human rights and also those that might impact the business. So our proposal is only a way to strengthen public communication about these subjects. And we're sure that this will profit the company in the long term. Focus on human rights issues will only become more relevant in the future increasing geopolitical issues because of the nation in Ukraine -- Russia puts great pressure on our global value chains. And also, we focus on human right issue all over the world. This cannot prevent us from -- prevent the company from being affected by this, especially when they work in sectors like mining, which is a high-risk area of human rights violations. But it is also essential to the green transition. Environmental legislation is also coming from the EU. So it's diligence initiative to strengthen this area already now. So this is also where we see that when FLS takes a lead when they make available their documentation of their efforts public because by showing their way to best practice in the -- to the market, they will take a competitive lead, we believe. This will also benefit investors and also the world around us and invest and also the company. So we will suggest that the other shareholders will support our proposal as also the Board of Directors has done. And we look forward to seeing how this stronger communication will develop and finally have an issue about the remuneration report because we often talk about this at AGMs. For AkademikerPension and LD, it's essential that report on remuneration is sufficient so that we can assess the connection between results and payments. Otherwise, reporting is not as sufficient as we could expect -- could want. Unfortunately, many companies do not have sufficient transparency and we would also suggest that's FLS make that remuneration report works transparent, especially in KPIs and peers. And we -- versus against the remuneration reports in more than half of our companies so FLS is not alone. But otherwise, we suggest our support what FLS is doing. Thank you.

And I'll now pass the floor to [ Jonas Dramsgaard ] from ATP and then the Chair of the Board will have a floor. And then afterwards, I'll ask whether anybody else wants the floor.

Being a Sweden, understanding Danish very well, but not speaking that they will. So I agreed with Jannick and his team that's slow in English. Thank you for the floor, and my name is [ Jonas Dramsgaard ] representing ATP. And thank you to the Chairman for the reports and presentation of the results for 2022. So 2022 has been an eventful year for FLS. Closing of the TK Mining deal, presentation of the new strategy at the recent Capital Markets Day. And although to be fair, it kickstarted during the last year. All this in a context of huge macroeconomic uncertainty and the war in Ukraine. We fully support the new strategy and its pure-play approach in our view, representing a trustworthy and logic path towards profitable growth with simplification and derisking of operations as key principles. When fully implemented, it is nothing else than a transformation of the way you run the business. Last year, I think it was Claus, who was standing here and emphasized that it was really important with being transparent post to the closing of the TK mining deal. And we understand that there is a lot of work to be done. Integration of this new acquisition and on top of that, a completely new corporate strategy. But we are confident that you are on the right track, not least with the progress already achieved and the transparency concerning your route forward, you delivered at the Capital Markets Day in January. And we also noticed the upgraded cost synergies and the more speedy realization of these. With the risk of repeating what Claus said last year, we cannot stress enough the importance of your continued work with your MissionZero strategy. And we welcome the focus you have on the commitment to science-based targets throughout your supply chain. Both mining and cement, as we all know, are CO2 intensive industries, which is why it is important to continuously work towards reducing emissions. Gender diversity is a challenge for FLS, and we know it has been a focus area for the past couple of years. And we are pleased to see the progress made on the share of women employees in the total workforce. However, when looking at the share of women managers in FLS, things appears to be moving slower. And the target for 2022 was not met and looking from the outside, achieving the 2030 target of 25% women managers seems a little bit more difficult to achieve. So on that note, the question for the management, are you still confident that you will be able to achieve your 2030 target for women managers? And would you be able to elaborate on potential new initiatives or processes that will enable you to achieve this. So with these words, I would like to wish FLS and the employees all the best with the work ahead in 2023. Thank you for the attention.

I'll now pass the floor to the Chair of the Board, so he can comment on those 3 submissions.

First, Leif Gundtoft with whom we have a good collaboration on the Board because you also have an employee representative on the board. I want to thank you for your messages. We have to say goodbye to people who have served the company for many years, and they did deserve respects. I also want to thank you for a good and constructive dialogue also when we see changes because we see changes in all aspects of life. And I find that employees and colleagues of FLS and also you as representatives of your colleagues. When you make a constructive contribution to this process, especially we have this underlying tone of willingness to change and also decent ways of doing it. So I just want to thank you for this contribution, and let us continue the journey that we had done. Thanks you Gundtoft. To [indiscernible] from LD and AkademikerPension. It is so that we support the proposal they've made, but I wanted to add something even though that the proposal is essential because it is very fruitful to have this constructive dialogue, namely a discussion as to where is the world heading mainly what you're going to focus on, and also it is so that ESG agenda is extremely wide. And when you look at how it has developed over the past 5, 10, 15 years, I believe it is difficult to have a look at what you would -- we should have been working at today when we look ahead in those days. So as a company, you need inspiration, you need a dialogue, and I want to thank your contribution to suggest that we're going to strengthen our public communication about human rights. I know all of us focus on this on our daily work, but we could be more transparent in this work on this as our reporting on ESG develops. And also -- I also noted your request for more information about KPIs and bonus for our future work. And finally, to [ Jonas Dramsgaard ] from ATP, you're representing a major vote in this world of owners and investors. And I'm happy that you support this transformation and this journey that we're having and taking by FLS. So I will not repeat what you said already, to thank you for saying so. And also once emphasize, once more that we are so committed to complete this transformation journey that we have started. And I have trust in the fact that the current management will be able to lead us to the end. Then subject about gender diversity. I think it will hardly be saying too much by saying that we discussed this at all board meetings. This is not an excuse, but it is not so that it is deliberate that we've -- where we are now. It doesn't mean that we are not ambitious. And today, it is not so that we have a wish to change our ambition about reaching a target of 25% women managers in 2030. We only have a little more than 15% today. So that was also the case one year ago, so we haven't improved. Management has started a number of initiatives, I want to mention 4 -- or 3, we start the program that we call it aspiring leaders program. That's a program for those who want to aspire for being managers, and we focus on individual contributions and those who want to be managers and want to focus especially on promoting even more women to become attracted by taking a management role in the future. At a global level, we have started adversity equity and inclusion program is also a council said -- and this council is going to have a more focus on ownership and diversity, and this council comprises employees across the organization to discuss how do we do this? It's a collective task. It doesn't come just from top to down. We also had to include employees so that we can inspire especially women to go for management positions. And also, we are looking for more relevant candidates and about 30% of those will recruit from managerial positions. So we hope that also over time, this will also lead us in the right direction. I cannot guarantee anything, but what I can promise is that the efforts and the will to do something with this agenda, we have that. Thank you so much.

And we have somebody put up their hand down here. Please come up here and start by stating your name.

My name is Lars H. Nielsen. Since 2011, I've written critically about increased top wages on Twitter. The Danish Parliament has changed the tax level for top management in Denmark. The question is, has the Board discussed the -- of increasing wages, which have reached DKK 7.7 million, the CEO of FLSmidth, Mikko Keto, wage is DKK 16.7 million and you're not allowed to deduct taxes of more than DKK 7.7 million. How much has increased after that law was implemented. How much does it cost in extra costs for payment? And on the Danish Parliament home page, you can see distal and you can see that it's been approved. Does FLSmidth have more employees with a salary of over DKK 7.7 million. And if so, what is the total salary cost for the company? Parliament has set a moral law -- more room for how large wages or salary should be in order to not create polarization and inequality in Danish society. FLSmidth, or to take the consequence of this law by building in these numbers in the annual report. And we should like to see the calculations of the tax level for top salaries. And could you please take this down for the minutes. Thank you.

Yes, we'll take down the main contents of what was said and the response to the minutes. I'd like for the Chair to respond to these very concrete questions.

To Lars Nielsen, first, I'd like to thank you for your statement and I can't do the calculations in my head because I don't have a concrete number and I don't -- I'm not able to do calculations in my head, but the company tax in Denmark is 22% in the concrete example. There was a compensation for DKK 16.7 million from Mikko Keto. So there is a limit of DKK 9.9 million. So I think that -- it comes to last year, DKK 1.8 million, give or take. I don't know if we should say what has been said, with a smile. Luckily, we only have one CEO in this business, and there is a certain hierarchy. We've become very transparent regarding compensation in general compared to previously. And of course, there will be certain people in top management who are at the salary level, when I look at our CFO and additional members. So he's not the only one, but a rough estimate would well. It can't be over DKK 6 million, DKK 8 million, DKK 10 million in total. Please take that as an indicative level that would be my attempt giving you a concrete answer. The other thing is that on the board, we have a compensation committee who works with compensation in general. What should the structure be between a base wage and short-term in sentiments and long term. So regarding the taxation level on salaries in Denmark, well, we compete in a global industry. The cement business is global. Mining is global, cement is global, and it's important to us that we have the correct management right competencies. And therefore, I can also say that we have top management consisting of a long line of nationalities, and they have moved to Denmark, they work yet and if the consequence there is -- that because of tax regulations in Denmark and they differ in -- for each country, must pay more compared to early in order to have the right competencies. Well, then we, as a board and do handle the shareholders' interests. Well, we have to take that not without a critical attitude towards it, but we also have to make critical decisions. So that's part one. Second part of my response, we are aware this and we know that the Board is working on this or we prioritize making the correct decisions for the company, and that goes for all stakeholders on their behalf and also the shareholders. Would anybody else like to take the floor? That's not the case. Then I'd like to summarize where we are on the agenda. The first item was the Board of Directors report. There's no vote on that and when nobody wishes to take the floor, then it has been accepted. The second item was the presentation of the annual report. I haven't noted any other speakers in that regard. So I will consider that approved. The next item, Item #3, approval of the Board of Directors' fees. There are 2 items there. The first one is the final approval of fees for '22, that is last year. And last year, it was preliminarily approved based on -- a base fee of DKK 450,000 as described. And we propose that it is finally adopted this year. If there are no remarks, it will be approved. And as the Chair said, the board suggests that this is unaltered for '23. So that is probably also dramatical and can be considered as being approved. The fourth item is distribution profits or covering and losses. And this proposal is a dividend of DKK 3 per share. And I take it that everybody is interested in that. So let's consider that as approved. The fifth item is presentation of the remuneration report for an advisory note, the low demands that there must be a separate remuneration report, and there must be an advisory vote. So if it is not adopted well then next year, the Board has to explain how it's taken suggested into consideration, but it has already been adopted on the basis of the votes received. So I also consider that has been approved. The sixth item is election of members of the Board of Directors. And here, it appears from the articles of association that there must be at least 5 members and currently, there are 6. And as we already heard, Rob Smith is not seeking the election for the Board of Directors, but there's a proposal reelection of Tom Knutzen, Mads Nipper, Anne Louise Eberhard, Gillian Dawn Winckler and Thrasyvoulos Moraitis. And there's a proposal of election of Daniel Reimann, who is present, could you please stand up and show your face. And currently, there are no other candidates and that would also be difficult based on the votes cast. I'd like to congratulate you on reelection and being elected additional to that. I can inform you that there are also employee elected members of the Board, and it's Mr. [indiscernible] and Leif Gundtoft, who are members of the Board. The next item is Item #7, election of company auditor, and we propose reelection of Ernst & Young and as stated, that is the proposal from the Audit Committee, and they have not been affected by third parties in this proposal. There are rarely other candidates regarding this item, so I can also conclude that you've been reelected, good luck in coming year. And then we have Item #8, 8.1 amendment of the articles. One can give authorization to issue shares, and that's in the interest of everyone in most cases, and it can be extended for 1 year. It only runs out on the 29th of March or 28. So the proposal is that we change 2 years in the authorization given that it's not controversial. So I think I can conclude that it has been adopted with 2/3 majority. And almost all -- largely in companies, would like to ask operation to purchase their own shares up to -- you can never at any given time, own more than 10%, no matter what you may have to begin with. And it cannot deviate from the exchange rate on the stock exchange by more than 10%. Are there any questions? You're standing at Kjeld Beyer. So I also take that we have notified you on this, and then we have Item #9, which is a shareholder proposal from AkademikerPension and LD Funde, which has already been motivated by AkademikerPension and commenced on by the Chair. The shareholder proposals that this should be communication with the Board of Directors regarding human rights and labor rights in accordance with the United Nations guiding principles on business and human rights and the content of the proposal have been described in the notice to convene. Are there any questions for that? No. Then I also consider that as being approved. That brings us to any other business. Item #10 here. You can -- been given the chance to speak, but you can't decide anything.

My name is Kjeld Beyer. And as you say, I normally say [indiscernible] this website. What I want to say today is that initially, you said we don't need to have any votes because we have already proxies. That seems very unintegrated to me because that means that you gets this income from the other shareholders that might not have that many shares. It might be sure that they wanted to vote against some of these proposals, but this is a strike from the beginning because you told already that it doesn't matter. And this is what we see in societies today that nobody listens to us. Now you complaining about all the things that you have to close down due to the Russians. But have we ever been asked whether we want to go to war, it is something that the Prime Minister does because she sends weapons to the war, but we cannot have nurses for our hospitals. There's something wrong with our democracy for the time being. And I also believe that people don't realize that we experienced so much in censorship Denmark. We've heard a lot about the pandemic of -- the COVID pandemic and football, but we don't hear much about the Russian leader because he has tried to remove -- sorry, Ukraine has had censorship in 2014, and the war in Ukraine is because Russians living in Ukraine have asked Russia for help. So we are on the wagon for World Economic Forum. Many people don't know what is World Economic Forum, but this forum has huge impact on what happens at world level. Also MPs from Denmark, they also go there and get medicated by this forum. It is a very bad development and the World Economic Forum support the war in Ukraine because they have interest in that country. I think you should know it. And the last thing I want to mention is that we see a lot of human trafficking and crime at open sea, but that also relates both to the UN, WHO and Red Cross. We've been told, you should know that things are happening that we don't like and these cannot -- this is outside the scope of democracy. Thank you for allowing me to take the floor.

I will pass the floor to the Chair or technically from my position as the Chair of this meeting. I will mention that this year about that, we have submitted those beforehand that is seen by most people as an expression of democratic development because those shareholders who cannot be present, they can vote beforehand. Just by telling the Board that they can just vote on their behalf, but they can say, yes or no whether they vote in favor of an item. You see actually that most listed companies, they have so many proxies that they can -- most proposals we adopted, but that does not prevent you from attending the AGM so that you can make yourself input. I actually find that the company is very transparent by telling what has been adopted beforehand. So we don't need to have to take a vote in case it has already been decided beforehand. I'll pass the floor to the Chair who can comment.

Well, thank you, Kjeld Beyer. I want to focus on one issue, namely that my job as the Chair of the Board of FLS and representative of the shareholders. I need to focus on the agenda pursued by FLS and not the major political agendas. So I don't focus on many of the elements that you mentioned. But one thing I want to mention. As regards to democracy, to me, it is essential at FLS that we have an AGM. You can also follow this externally. And you can also be allowed to take the floor so that you can express all your views as to what the company is doing. I've also told the other people who have taken the floor that we appreciate the dialogue because that we believe that dialogue would contribute to a valuable impact for the company. So thank you, Kjeld Beyer, for your contribution as well.

So this is any other business -- any other, who wants to take the floor? It's the last chance. If that's not the case, I will say formally, thank you for this year and pass the floor to the Chair of the Board. So that he can end this year's AGM.

Thank you so much. I want to thank the AGM participants and for the submission you have made and for working -- doing here in the proper order and also to the Chair of this meeting for leading us through. So maybe we could see again -- meet again next year in the same room. So thank you for this event. Thank you for today. And use time after the AGM to talk to each other, and I look forward to complete the transformation phase that we've started both on the Board and also with our employees. So thank you for today, and have a safe journey home. [Statements in English on this transcript were spoken by an interpreter present on the live call.]