KHD...KHD Global Market Presence > 80> 80 >185 > 140> 140 > 110> 110 > 25> 25 North and South...

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KHDHUMBOLDT WEDAG INTERNATIONAL AG

Annual General Meeting June 16, 2011Report of the Board of ManagementJouni Salo, CEOManfred Weinandy, CFOYizhen Zhu, COO Asia Pacific

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This document contains statements which are, or may be deemed to be, "forward-looking statements" which are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects" or "does not expect", "is expected", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results, performance or achievements of the Company to differ materially from the expectations of the Company include, among other things, general business and economic conditions globally, commodity price volatility, industry trends, competition, changes in government and other regulation, including in relation to the environment, health and safety and taxation, labor relations and work stoppages, changes in political and economic stability, the failure to meet certain conditions of the offer and/or the failure to obtain the required approvals or clearances from regulatory and other agencies and bodies on a timely basis or at all, the inability to successfully integrate the operations and programs of businesses and/or companies acquired with those of the Company, incurring and/or experiencing unanticipated costs and/or delays or difficulties relating to integration of acquired businesses, disruptions in business operations due to reorganization activities and interest rate and currency fluctuations. Such forward-looking statements should therefore be construed in light of such factors. Other than in accordance with its legal or regulatory obligations, the Company is not under any obligation and the Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additional information about these and other assumptions, risks anduncertainties are set out in our financial statements for the year ended December 31, 2010.

Disclaimer for Forward-Looking Information

Overview Highlights 2010 Financials Share Outlook 2011 AGM agenda

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Agenda


I. Overview and management team

II. Highlights 2010

III. Financials

IV. Share

V. Outlook 2011

VI. AGM agenda

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MISSION


• We are one KHD team committed to global excellence as a customer focused equipment supplier and service company providing competitive and environmentally friendly technologies to the cement and mining industries.

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KHD HUMBOLDT WEDAG INTERNATIONAL AG

Order intake 2010 Order backlog 2010

Order Intake 2010 (after country of origin)

KHD is one of the world‘s leadingsuppliers of cement plant equipment

*

* Influenced through major order (EUR 85 million)

• History of over 150 years of building on new technologies, innovations and high-end processes to meet the global cement industry demand (based in Cologne)

• Traditionally a technology focused company specialized in process engineering and project execution

• Wide range of services and products for the cement industry

• High competence in eco-friendly and efficientproducts for pyro processing and grinding

• Worldwide 767 employees• Presence in emerging markets like India and

Russia / CIS as well as in USA and EMEA


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Jouni Salo, CEO• At KHD since 2008• President of Construction Materials Division at Metso Minerals Inc. prior to joining KHD• More than 25 years of experience in the international construction and mining

equipment business• Bachelor of Science for Mechanical Engineering from Technical College, Hameenlinna

(Finland)

Manfred Weinandy, CFO• Joined KHD in 2003 – appointed CFO 2010• Began career as auditor and held various senior management positions in the industrial

plants sector and in accounting and controlling at Thysssen-Krupp• More than 20 years of experience in the areas of finance, IT and personnel• MBA (Diplom-Kaufmann) from the University of Cologne

Management-Team

Yizhen “Mario” Zhu, COO Asia Pacific• At KHD since End of March 2011• Previously Assistant President of cement business of CATIC Beijing Co. Ltd. • Longstanding experience in working abroad, MBA and engineering degree• Will develop global EPC business as well as KHD’s new Customer Service Center the

Asia-Pacific region


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Agenda


II. Highlights 2010

III. Financials

IV. Share

V. Outlook 2011

VI. AGM agenda


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KHD Structure per end of March 2010


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Legal structure as of April 1, 2010


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KHD Operating Structure


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• Technical leadership in the cement process• Core equipment for cement plants• Close to customers with Customer Service

Centers in EMEA, India, CIS/Russia and N. America• Very experienced global team• Strong financial background

• Among Top 10 conglomerates in China • EPC expertise in the cement sector• Represented in over 30 countries and 56 locations• Access to Chinese cement market• Low-cost sourcing for auxiliary equipment and

fabrication• Strong financial background with access to

financing

win -win

By combining the best of East and West, customers have another EPC option for cement plant projects

Opens Chinese market, which is 50% of global cement capacity markets

Will strengthen position in emerging markets

Increases competitiveness

Highlight: Cooperation with AVIC


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• Exclusive global long-term sales agreement with WEIR Minerals to grow KHD’s market share in the minerals sector

• WEIR Minerals is KHD`s agent, as well as aftermarket partner in the mining industry• WEIR Minerals and KHD complement one another very well. KHD’s HPGR (roller press for minerals) product

is becoming increasingly accepted for minerals applications. However local service is becoming more and more a requirement for selling capital equipment in the minerals processing sector

• WEIR Minerals has access to the main minerals customers and a strong sales and service network in all the major mining markets as well as a strategic interest to develop other products

Win-Win situation for both companies

Head office: GlasgowListed: London Stock ExchangeBranches: worldwideEmployees: > 9,000

The company constructs and develops equipmentfor the mining processing industry. Stronger focuson services than on equipment.

WEIR Group company profile

Highlight: Cooperation with WEIR Group

Core competencies:


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• Worldwide there are 2,360 modern Cement Plants including 1000 in China

• Because of the transport costs cement is a local business. In 2010 only 151 m.t. were traded on the global market

• Brazil now no. 4 in global cement demand• 10 m.t. growth expected for Russia by 2012• Global growth to continue fueled by India and

China

Global Cement Consumption

Source: Global Cement Report, 9. Edition (2011)

Global cement consumption: 3 bn tons

Global Cement Production Capacity


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The Global Cement Industry


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North America:+3%

Latin America: +6%

Western Europe +2%

Med Rim:+3%

Middle East +7%

Oceania+8%

India: +7%

China: +6%

Asia (mature) +5%

Eastern Europe+1%

Africa: +4%

Source: Exane BNP Paribas (April 2011)

World +5%(Including China)

Note : yoy % change

+5%

+6%

+2%

+5%

+8%

+5%

+7%

+5%

+2%

+2%

+5%

+5%(Including China)

Volume Outlook 2012

Volume Outlook 2011

Cement Market: Volume Outlook 2011, 2012

• Cement proposal activity is currently strongest in India, Indonesia, South America and Africa (political uncertainty in North Africa)

• Global prices down 5% until 2010• Emerging markets to continue

showing higher growth whilemature market recovering

• Better recovery in U.S with respect to previous year

• China will not be able to maintain the same higher growth but rest of emerging markets shall hold the ground

• India will sustain volume growth of 7% in coming year


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KHD Global Market Presence

> 80> 80

>185

> 140> 140

> 110> 110

> 25> 25

North and SouthAmerica

Europe

Africa

Australia 3

Asia

395

11

37

Installed BaseKHD employees

Russia

• KHD has built over 500 cement plants across the world

India> 28> 28291

> 150> 150

37


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Cooperation with AVIC – Transaction overview

Kind of transaction- Capital increase from authorized capital with statutory subscription

rights for all shareholders- Public offer and private placement in Germany

Share issue 16,561,021 new shares with a notional value of EUR 1.00

Subscription price EUR 4.53 per share

Issue Volume EUR 75,021,425.13

Use of proceeds

- Net proceeds planned to be used for research and development activities as well as for further standardization

- Joint investments with AVIC in design and manufacturingcapacities in China

Financial closing February 22, 2011

Lock-up period for AVIC 29 months following the date of registration


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Summary: Achievements

• New corporate structure focusing on cement business• Achieved order intake and revenues budget in 2010• Decent 2010 results after the financial crisis • Account Management implemented - Strong customer understanding enabled EUR 85 million order in

Sept 10 • Won first Project in Brazil after many years• Further standardization of KHD product portfolio

AVIC (2011)• Chinese procurement office for KHD group up and running• Bidding on many EPC projects that were not accessible to KHD in the past• Joint presence at the largest cement trade show in China in April 2011WEIR Minerals• Far more sales presence in the mining market in southern hemisphere• Trained over 50 WEIR sales and service experts who now offer direct local support• New orders of over EUR 20 million so far in 2011

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Agenda


II. Highlights 2010

III. Financials

IV. Share

V. Outlook 2011

VI. AGM agenda


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Order intake Revenues / EBIT Order backlog

Key figures 2010

• New order intake is the most important indicator for business trends• Major order received from UltraTech Cement (India) at end-September 2010 (EUR 85 million)

* pro forma: assuming new corporate structure as of 1 April, 2011, had existed before


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• Asset light model• Cash rich• Negative Working capital• Equity ratio decreased from 39.5% to 35.9%

due to € 49.4 million dividend• Retained earnings at € 112.5 million

Balance sheet (as of Dec 31, 2010)


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• Revenue cycle 12-24 months 2010: impact from low order

intake 2009• Order backlog: EUR 304 million• EBIT margin: 8.7% (legal und

proforma)• Key effects vs. 2009

• Revenues suffered from low order intake 2009

• Gross profit: 20% legal (18.3% pro forma)• Comparable SG&A costs year on year

EUR 55 million in 2009EUR 39 million in 2010

• EpS € 0.47 from € 1.13 in 2009

Income statement (2010)

In EUR thousandDec. 31,

2010 (legal)

Dec. 31, 2010

(pro forma)

Dec. 31, 2009

(legal)

Dec. 31, 2009

(pro forma)Sales 286,890 307,922 360,295 393,659Cost of sales (229,477) (246,995) (294,285) (316,891)Gross profit 57,413 60,927 66,010 76,768Expenses/otheroperating expenses (35,341) (37,090) (20,070) (16,111)Restructuring 2,881 2,881 3,773 3,309Finance result 1,068 1,393 3,952 4,801EBT 26,021 28,111 53,665 68,767Income tax expense (10,221) (11,119) (16,497) (22,924)Earnings attributableto parent companyshareholders 15,583 37,102Earnings attributableto minorityshareholders 217 66

Net profit for theyear 15,800 16,992 37,168 45,843


*

*20F KHD Ltd.

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Agenda


II. Highlights 2010

III. Financials

IV. Share

V. Outlook 2011

VI. AGM agenda


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Shareholder structureEUR

Share

Trading volume in EUR million

Basic Data

(June 15, 2011)

ISIN DE0006578008Security IdentificationNumber (WKN) 657800 Ticker symbol KWGNo. of shares (Dec. 31, 2010) 33,142,552No. of shares (June 15, 2011) 49,703,573Stock exchanges Regulated Market,

Frankfurt (General Standard)

Designated sponsor Lang & Schwarz Market capitalizationJune 15, 2011 EUR 313.28 million


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Agenda


II. Highlights 2010

III. Financials

IV. Share

V. Outlook 2011

VI. AGM agenda


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• Growth will be driven by the emerging markets, BRIC countries will be 80% of the future growth market

• Environmental regulations, energy efficiency and lowering operational costs will drive more of the decision making

• Chinese cement plant market will slow down (will anyhow be by far the largest market) and environmental, energy saving requirements will increase in China at the same time

• Chinese competition is looking at opportunities outside of China as the home market is slowing down

Future trends


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• Maintain and further strengthen our already strong positions in India and Russia

• Utilize AVIC partnership to establish stronger design, procurement and manufacturing capabilities in China

• Win and execute well first joint EPC projects with AVIC

• Focus on the environmental niche projects in Chinese market

• Invest in Research and Development, technology partnerships and acquisitions

• Establish KHD / AVIC in Brazilian growth market

• Drive growth for the parts and service business

Strategic objectives 2011 and onwards


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• Cement consumption is slowly recovering, but not as fast as expected

• Growth will be driven by the emerging markets, BRIC take some 80% of the future growth market

• Slow first quarter overall in the industry due to global uncertainty

• More active quarters expected in remaining 2011 but this year will not be “the year of recovery” in the global cement industry

• We expect 2011 order intake to recover from the slow start

• Revenue line under pressure when the new order intake is delayed

• Highly competitive market giving pressure for GP margins

2011 Outlook


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Outlook 2011 - Regions

Americas• Most growth in N.

America driven by emissions regulations

• Establishing sales office in Brazil

EMEA• Situation in many

middle-eastern countries still uncertain

• Establishing sales office in Turkey, where KHD is no. 1 seller

• KHD and AVIC making inroads to EPC customers in Sub-Saharan Africa

CIS / Russia• Russian market

expected to pick up in 2012.

• Increasing service presence in Russia

India• India will

continue to grow• Roller Press

refurbishment business to be ready in 2011

APA• Customer

Service Center launched

• Working closely with AVIC to gain stronger foothold in world’s largest market, China


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Agenda


II. Highlights 2010

III. Financials

IV. Share

V. Outlook 2011

VI. AGM agenda


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AGM agenda

1. Management presentation 2. Resolution on the appropriation of the Company's unappropriated retained earnings.3. Resolution concerning the discharge of the Management Board members4. Resolution concerning the discharge of the Supervisory Board members

5. Appointment of the auditor of the single-entity annual financial statements and consolidated financial statements

6. CANCELLED - Resolution on the cancellation of the existing authorized capital and resolution on the authorisation of the Management Board to perform a capital increase with the authorisation to exclude subscription rights (authorized capital) and the relevant amendment to the articles of incorporation –CANCELLED

7. Election of Supervisory Board members8. Resolution concerning an amendment to the articles of incorporation to expand the Supervisory Board

9. Election of three new Supervisory Board members10. Resolution concerning an amendment to the articles of incorporation relating to an adjustment to Supervisory

Board compensation


KHD...KHD Global Market Presence > 80> 80 >185 > 140> 140 > 110> 110 > 25> 25 North and South...

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