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FLSmidth & Co. Group Interim Report for Q2 2019

Company Announcement No. 9-2019, 8 August 2019

Strong growth in revenue and profitability

Highlights for Q2 2019

  • Strong increase in revenue and profitability
    - in both Mining and Cement
  • Similar level of order intake
  • Positive free cash flow adjusted for acquisitions and disposals despite higher net working capital
  • Guidance maintained - revenue is more likely to be in the higher end of the guided range, and the EBITA margin is more likely to be in the lower end of the range

FLSmidth’s order intake for the second quarter of 2019 amounted to DKK 5bn – similar to the second quarter last year (-2%) – and included a large cement plant order in Morocco and a large mining order in Australia. The order backlog stood at DKK 16.8bn by the end of the quarter, up 16% from the same period last year.

Following strong order intake and build-up of order backlog in recent quarters, revenue increased 16% in the second quarter to DKK 5.5bn due to a high activity level.

FLSmidth Group CEO, Thomas Schulz, commented: “The second quarter showed a strong performance with improved revenue and profitability, driven by both Mining and Cement. Following a slow start to the year, we have been successful at converting backlog to revenue in the second quarter. In close cooperation with our customers, we have continued to deliver on our vision to provide sustainable productivity enhancement.”

Thomas Schulz continued: “Our success with both service and capital orders, demonstrates our customers’ confidence in our ability to enhance their productivity. This is supported by an increased push for sustainable solutions that ties in well with our position, capabilities and track record. In Cement, we see higher demand for sustainable solutions, for example alternative fuel systems to replace fossil fuels and minimise CO2 emissions. In Mining, we see increased interest for new technologies such as dry stack tailings but also a general need to reduce water consumption in the production process.”

As part of our digital journey, the acquisition of IMP Automation Group was successfully completed in June, strengthening our portfolio of automated laboratory solutions for the mining industry.

Profit and margin improved

EBITA came in at DKK 487m in the second quarter, up 28%. The EBITA margin increased to 8.9% from 8.1% in Q2 last year.

Capital
The Group generated cash flow from operations of DKK 143m in the second quarter, despite increased working capital associated with the higher activity level. The return on capital employed (ROCE) advanced to 11.1% from 10.4% at the same time last year.

Guidance
Management’s guidance for the full-year is maintained. Due to great progress on capital business versus a good development in services, the expected business mix for the year has changed. It is now more likely that the revenue will be in the higher end of the guided range of DKK 19-21bn, and the EBITA margin will be in the lower end of the guided range of 9-10%.

This has no implications for the expected return on capital employed.
Read the full Q2 2019 interim report here

Contacts

Investors
Nicolai Mauritzen, tel +45 36 18 18 51, nicm@flsmidth.com  

Media
Sofie Karen Lindberg, tel +45 30 93 18 77, skl@flsmidth.com


Key figures Q2 2019

(DKKm) Q22019 Q2 2018 Change (%) H1
2019
H2
2018
Change (%)
Order intake (gross) 4,954 5,056 -2% 10,594 10,074 5%
- of which service order intake 2,784 2,773 0% 5,432 5,658 -4%
Service order intake share 56.2% 54.9%   51.3% 56.2%  
Order backlog 16,762 14,454 16% 16,762 14,454 16%
Revenue 5,472 4,730 16% 9,888 8,965 10%
- of which service revenue 2,794 2,599 8% 5,208 5,106 2%
Service revenue share 51.1% 54.9%   52.7% 57.0%  
Gross profit 1,315 1,181 11% 2,396 2,255 6%
Gross profit margin 24.0% 25.0%   24.2% 25.2%  
EBITDA
before special non-recurring items
574 440 30% 969 836 16%
EBITA 487 381 28% 799 724 10%
EBITA margin 8.9% 8.1%   8.1% 8.1%  
EBIT 381 299 27% 599 547 10%
EBIT margin 6.9% 6.3%   6.1% 6.1%  
Profit 223 168 33% 359 304 18%
CFFO 143 (412)   377 (69)  
Free cash flow, adjusted for acquisitions and disposals 63 (565)   218 (274)  
Net working capital 2,519 2,003 26% 2,519 2,003 26%
Net interest-bearing debt 2,802 2,135 31% 2,802 2,135 31%

 
For additional information, go to our Investor Room at www.flsmidth.com

FLSmidth delivers sustainable productivity to the global mining and cement industries. We deliver market-leading engineering, equipment and service solutions to our customers enabling them to improve performance, drive down costs and reduce environmental impact. Our operations span the globe and our 11,400 employees are present in more than 60 countries. In 2018, FLSmidth generated a revenue of DKK 18.8 billion. www.flsmidth.com

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