Company Announcement No. 9 2018, 7 November 2018
Order intake up 71% - strongest in six years
Q3 highlights
· Strong order intake
· Revenue growth insufficient to generate operating leverage and improve profitability
· Reduction in net working capital and net debt
· Positive free cash flow
· Strong performance in Mining; action taken to improve profitability in Cement
· Profit of DKK 162m against DKK 23m last year
· Guidance for 2018 maintained
Order intake of DKK 7.2bn in Q3, including contracts for two large cement plants in Central America at a combined value of approximately DKK 1.9bn - the orders were announced in August and confirmed as effective in September 2018. This brought the order backlog to DKK 17.2bn, the highest level in three years.
Group CEO Thomas Schulz commented: "It makes us proud each time a customer selects us to deliver and install mission critical equipment or grants FLSmidth an important service contract to enhance productivity. At the same time, our strong order intake paves the way for advances in both revenue and earnings in the coming years."
Quarterly revenue came in at DKK 4.3bn, 6% up from the same quarter of last year (DKK 4.1bn). The gross margin was unchanged at 26.0%.
EBITA climbed 4% from DKK 336m to DKK 350m, as a result of the higher revenue. The EBITA margin of 8.1% was slightly lower than last year (Q3 2017: 8.2%), due to increased costs related to digitalization and efficiency improvements.
Profit for Q3 was DKK 162m against DKK 23m in the corresponding quarter of last year.
The Group's return on capital employed (ROCE) advanced to 10.7% in Q3, up 0.7pp from Q3 last year (10.0%). The equity ratio stood at 37% at the end of the third quarter, comfortably above the minimum target of 30%, while the financial gearing (NIBD/EBITDA) was 1.1.
Commenting on the market outlook, Thomas Schulz said: "We've registered a positive trend in mining and are pleased to report strong financial performance. The outlook for our Cement business is stable, but we have taken action to improve efficiency. We continue assisting our customers in their constant pursuit of enhancing productivity."
Guidance for 2018 is unchanged
Based on the results delivered in the first three quarters of 2018 and the expected developments in the remainder of 2018, it is expected that revenue will be DKK 18-20bn and that the EBITA margin will be 8-10%. The return on capital employed is expected to be 10-12%. Revenue is expected to pick up
significantly in the fourth quarter, driven by both mining and cement, and accompanied by operating leverage and higher margins.
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 Q3 2018
| DKKm | Q3 2018 | Q3 2017 | Change | Q1-Q3 2018 | Q1-Q3 2017 | Change | Year 2017 |
| Order intake | 7,164 | 4,193 | 71% | 17,238 | 14,334 | 20% | 19,170 |
| Order backlog | 17,228 | 13,799 | 25% | 17,228 | 13,799 | 25% | 13,654 |
| Revenue | 4,335 | 4,101 | 6% | 13,300 | 13,057 | 2% | 18,000 |
| Gross profit | 1,126 | 1,065 | 6% | 3,381 | 3,363 | 1% | 4,597 |
| Gross margin | 26.0% | 26.0% | 25.4% | 25.8% | 25.5% | ||
| EBITDA | 408 | 398 | 3% | 1,244 | 1,239 | 0% | 1,732 |
| EBITA | 350 | 336 | 4% | 1,074 | 1,050 | 2% | 1,515 |
| EBITA margin | 8.1% | 8.2% | 8.1% | 8.0% | 8.4% | ||
| EBIT | 254 | 234 | 9% | 801 | 743 | 8% | 1,115 |
| EBIT margin | 5.9% | 5.7% | 6.0% | 5.7% | 6.2% | ||
| Profit | 162 | 23 | 604% | 466 | 259 | 80% | 74 |
| CFFO | 357 | 414 | -14% | 288 | 519 | -45% | 1,065 |
| Free cash flow | 248 | 345 | -28% | 54 | 350 | -85% | 952 |
| Net working capital | 1,809 | 2,232 | -19% | 1,809 | 2,232 | -19% | 1,833 |
| Net interest-bearing debt | (1,942) | (2,155) | -10% | (1,942) | (2,155) | -10% | (1,545) |
For additional information, go to the Investor Room at www.flsmidth.com
FLSmidth delivers sustainable productivity to the global mining and cement industries. As the market-leading supplier of engineering, equipment and service solutions, FLSmidth improves performance, drives down costs, and reduces the environmental impact of operations. Present in more than 50 countries and headquartered in Copenhagen, Denmark, the Group and its 11,700 employees generated revenue of DKK 18 billion in 2017.