FLSmidth half-year report for 01.01.–30.06.2018

Organic order intake up 13 % driven by mining projects and services

"We saw the highest order intake in the Minerals division for several years, which shows that miners are starting to put action behind their investment plans. Most activity is related to single equipment and brownfield expansion. We benefit from our business model of full life-cycle offerings which enables us to support customers in their pursuit of productivity enhancements", said Group CEO Thomas Schulz.

Currency headwinds impacted order intake and revenue negatively by 7 % and 6 %, respectively, in Q2 2018. The organic order intake grew 13 %, driven by mining projects and services. Revenue was up 7 % organically, driven by projects and services.

EBITA rose 11 % in Q2 thanks to higher revenue and no reported one-off costs. Consequently, the EBITA margin increased to 8.1 % from 7.5 % in the same quarter of last year. Operating cash flow was negative due to a temporary increase in net working capital and a cash payment related to provisions made in 2017. 

ROCE increased to 10.4 % as a result of the higher EBITA over the past 12 months and the lower capital employed. Net interest-bearing debt increased to DKK 2.1 billion in the second quarter due to the payment of dividend, an increase in net working capital and a cash payment related to provisions made in 2017. The financial gearing (NIBD/EBITDA) increased to 1.2, which is still well within the long-term target (NIBD/EBITDA<2).

Guidance for 2018 unchanged

Based on the results delivered in the first half of 2018 and the developments expected for the remainder of the year, FLSmidth is guiding for FY 2018 revenue of DKK 18-20 billion and an EBITA margin of 8-10 %. The return on capital employed is expected to be 10-12 %. Thus, the company expects higher revenue in the second half of 2018, especially in Mining, accompanied by operating leverage and higher margins.

Effective 01.07.2018, the operating model and organisational structure were changed. The FLSmidth organisation now consists of two industries – Cement and Mining – supported by a regional setup to strengthen customer focus and life-cycle solutions combined with the establishment of the new digital organisation.

"We are extending our customer coverage and are now able to offer our entire life-cycle portfolio anywhere around the globe. In addition, digitalisation is becoming an extremely important part of our customers' capex plans, and being able to offer digital solutions means that we can enhance productivity throughout the entire product life-cycle, thereby positioning us for further growth", said Group CEO Thomas Schulz.

The half-year report 2018 provides restated quarterly numbers from Q1 2016 to Q2 2018 as well as restated annual numbers from 2004 to 2017.

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