FLSmidth & Co. Group Interim Report for Q3 2023: Strong
progression on our transformation, improved Mining profitability
and NCA exit continuing at an accelerated pace
COMPANY ANNOUNCEMENT NO. 17-2023 9 November 2023,
Copenhagen, Denmark
Highlights in Q3 2023
- Mining order intake and revenue growth of 5% and 4%,
respectively, mainly driven by Products
- Adjusted Mining EBITA margin further improved to 11.1%, mainly
driven by Service
- Cement order intake decreased by 24% reflecting market
conditions and transformation efforts
- Cement EBITA margin positively impacted by one-off net gain
from sale of AFT
- Non-Core Activities order backlog reduced to DKK 0.6bn
- Financial guidance for 2023 updated
Group CEO, Mikko Keto, commented: “We continue to see good
progression on all our transformation efforts, leading to improved
underlying performance and profitability. Our Mining Service
business continued to show good development and the mining service
market remained stable with a good inflow of customer enquiries.
While the mining products market is inherently more volatile, our
Mining Products business saw good growth in both order intake and
revenue in the quarter. Our Cement business remains adversely
affected by the general demand slowdown and we continue to take the
steps necessary to improve long-term profitability, including a
significant rightsizing of the organisation. Our exit from Non-Core
Activities continues to progress at an accelerated pace. We have
now reduced the order backlog in the segment by more than 80% and
are well on track for a full exit by the end of 2024.”
Commercial performance Q3 2023
Mining order intake increased by 5% compared to Q3 2022
(increase of 12% if excluding currency effects and an estimated
increase of 6% if excluding the impact of the establishment of the
Non-Core Activities (NCA) segment). Compared to Q3 2022, which was
characterised by an unusually high level of large spare parts
orders, the Service order intake decreased by 6% in Q3 2023.
Sequentially (i.e., compared to Q2 2023), Service order intake grew
by 8%. Two large Mining Products orders with a combined value of
DKK 730m were announced in the quarter. No large Mining Products
orders were announced in Q3 2022.
Cement order intake decreased by 24% compared to Q3 2022
(decrease of 20% if excluding currency effects) mainly driven by a
31% decrease in Products order intake, reflecting both current
market conditions as well as continued pruning of the product
offering and the sale of the AFT business.
The order backlog for the NCA segment amounted to DKK 0.6bn at
the end of Q3 2023, representing a decrease of around DKK 0.8bn
compared to Q2 2023 and a decrease of around DKK 2.3bn since the
establishment of the NCA segment as of Q4 2022. The decrease
reflected the divestment to KOCH Solutions which closed in Q3 2023
and execution of the order backlog as well as continued re-scoping
and contract terminations.
Group order intake declined by 2% compared to Q3 2022 (increase
of 4% if excluding currency effects) mainly due to the current
market conditions for the Cement business. The year-on-year decline
was partly offset by the relatively higher Mining order intake.
Service and Products order intake comprised 66% and 34% of total
Group order intake, respectively.
Financial performance Q3 2023
Mining revenue increased by 4% compared to Q3 2022 (increase of
12% if excluding currency effects. However, Q3 2022 included only
one month of Mining Technologies activities, while Q3 2023 reflects
the establishment of the NCA segment and our exit from Russia. If
excluding a high-level estimate of the impact from those changes,
the underlying revenue growth in the quarter was approximately 13%.
Adjusted for integration costs of DKK 119m, the EBITA margin was
11.1% Q3 2023. Including integration costs, the EBITA margin
increased to 8.2% from 7.2% in Q3 2022.
Cement revenue decreased by 16% compared to Q3 2022 (decrease of
12% if excluding currency effects). Cement EBITA increased by DKK
114m compared to Q3 2022 due to the one-off net gain from the
divestment of Advanced Filtration Technologies (AFT) filter media
business in July 2023. The underlying EBITA, excluding the one-off
net gain, amounted to DKK 66m in Q3 2023 compared to DKK 50m in Q3
2022. The corresponding underlying EBITA margin improved by
1.7%-points to 4.7% in Q3 2023.
NCA revenue amounted to DKK 230m in Q3 2023. EBITA amounted to
DKK -42m with a corresponding EBITA margin of -18.3%. The
divestment to KOCH Solutions had no material impact on EBITA for Q3
2023.
Consolidated Group revenue increased by 2%% compared to Q3 2022
(increase of 9% if excluding currency effects and 5% if excluding
Russia). Adjusted for integration costs of DKK 119m, the EBITA
margin was 10.1% in Q3 2023. Including integration costs, the EBITA
margin was 8.0% in Q3 2023 compared to 5.9% in Q3 2022. Excluding
the AFT divestment gain, the underlying EBITA margin was 6.3%. The
NCA divestment to KOCH Solutions had no material impact on EBITA
for the quarter.
Other business
In October 2023, Christopher Ashworth was appointed new
President of FLSmidth Cement reporting to the Group CEO, Mikko
Keto. This appointment follows the departure of the former
President of FLSmidth Cement, Asger Lauritsen, in August 2023.
During the interim period Group CFO, Roland M. Andersen, has in
addition to his duties as Group CFO served as interim President of
FLSmidth Cement.
Financial guidance for 2023
The financial guidance for the full year 2023, as set out in the
Company Announcement no. 15-2023 on 15 August 2023, is updated. The
financial guidance reflects continued improvement of the underlying
legacy FLSmidth Mining business and integration of Mining
Technologies.
Financial guidance 2023 |
Mining |
Cement |
Non-Core Activities |
Consolidated Group |
Revenue, DKKbn |
Around 17.0 (Around 17.0) |
Around 6.0(Around 6.0) |
0.9-1.0 (0.8-1.0) |
Around 24.0(Around 24.0) |
Adj. EBITA margin |
10.5-11.0%(10.0-11.0%) |
|
|
7.5-8.5%(7.5-8.5%) |
EBITA margin |
|
5.5-6.5%(5.5-6.5%) |
Loss of ~DKK 300-350m(Loss of ~DKK 250-350m) |
5.5-6.5%(5.5-6.5%) |
Note: Numbers in brackets represent prior guidance as provided
on 15 August 2023 in Company Announcement No. 15-2023
The financial guidance for 2023 is subject to uncertainty due to
the global supply chain situation, potential recession and
geopolitical turmoil.
Earnings call
A presentation of the results will take place on 9
November 2023 at 11:00 CEST. Mr. Mikko Keto (Group CEO)
and Mr. Roland M. Andersen (Group CFO) will comment on the report
and developments in the Group. The presentation will be followed by
a Q&A-session. The presentation is available
at: www.flsmidth.com/reports-and-presentations.
Live audio-webcast
The presentation can be followed live or as
replay via the
internet here.
Conference call
If you wish to ask questions or just listen to the
presentation via telephone, please call one
of the following numbers: DK: +45 78 77 41 97, UK: +44 0 808 101
1183, US: +1 785 424 1739. Please use the PIN code: 73015#.
Consolidated key figures Q3 2023 and 9M
2023
DKK million unless otherwise stated |
Q3 2023 |
Q3 2022 |
Change (%) |
9M 2023 |
9M 2022 |
Change (%) |
Order intake |
5,601 |
5,714 |
-2% |
16,756 |
18,633 |
-10% |
- of which service order intake |
3,694 |
4,030 |
-8% |
10,876 |
11,033 |
-1% |
- of which products order intake |
1,907 |
1,684 |
13% |
5,880 |
7,600 |
-23% |
Order backlog |
19,933 |
25,476 |
-22% |
19,933 |
25,476 |
-22% |
Revenue |
5,723 |
5,621 |
2% |
18,138 |
15,354 |
18% |
- of which service revenue |
3,439 |
3,502 |
-2% |
10,953 |
9,132 |
20% |
- of which products revenue |
2,284 |
2,119 |
8% |
7,185 |
6,222 |
15% |
Gross profit |
1,636 |
1,431 |
14% |
4,530 |
3,782 |
20% |
Gross margin |
28.6% |
25.5% |
|
25.0% |
24.6% |
|
Adjusted EBITA |
579 |
449 |
29% |
1,369 |
1,190 |
15% |
Adjusted EBITA margin |
10.1% |
8.0% |
|
7.5% |
7.8% |
|
EBITA |
460 |
334 |
38% |
1,026 |
943 |
9% |
EBITA margin |
8.0% |
5.9% |
|
5.7% |
6.1% |
|
Profit |
272 |
162 |
68% |
474 |
419 |
13% |
CFFO |
-276 |
476 |
n.m. |
-308 |
192 |
n.m. |
Free cash flow |
-151 |
-1,670 |
n.m. |
-361 |
-2,002 |
n.m. |
Net working capital |
|
|
|
2,796 |
2,170 |
29% |
Net interest-bearing debt |
|
|
|
1,325 |
985 |
n.m. |
Contacts:
Investor RelationsJannick Lindegaard Denholt,
+45 21 69 66 57, jli@flsmidth.comAndreas Escherich Holkjær, +45 24
85 03 84, andh@flsmidth.com
Media RelationsRasmus Windfeld, +45 40 44 60
60, rwin@flsmidth.com
About FLSmidth
FLSmidth is a full flowsheet technology and service supplier to
the global mining and cement industries. We enable our customers to
improve performance, lower operating costs and reduce environmental
impact.MissionZero is our sustainability ambition towards zero
emissions in mining and cement by 2030. We work within fully
validated Science-Based Targets, have a clear commitment to
reducing the sustainability footprint of the global mining and
cement industries and aim to become carbon neutral in our own
operations by 2030. www.flsmidth.com.
- Interim Report 9M 2023
- Company Announcement Q3 2023
- 213800G7EG4156NNPG91-2023-09-30-en
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