Company Announcement No. 5-2018, 2 May 2018
Positive trends in mining and aftermarket continue
Solid free cash flow. Significant currency headwinds.
Q1 highlights
- Highest service order intake since Q4 2012
- Solid free cash flow
- First large mining order in three years
- Significant currency headwinds
- 2018 guidance maintained
- New operating model effective 1 July 2018
Effective from 1 July 2018, FLSmidth will apply a simplified operating model, realigning the organisation from the current four divisions into two industries, Cement and Mining, and from a country setup into an agile regional structure. This will be combined with a new central digital organisation to further capture growth (press release 25 April 2018).
"The mining industry is recovering, and winning our first large mining order since 2015 is one of several indicators that mining capex is trending positively," said Group CEO Thomas Schulz.
The return on capital employed (ROCE) increased to 10.4% in Q1 2018 from 9.4% in Q1 2017. Net working capital decreased to the lowest level since 2012 and the net working capital ratio declined to 8.9%. Driven by a positive contribution from the change in net working capital, net interest-bearing debt declined to DKK 1.2bn and the financial gearing (NIBD/EBITDA) decreased to 0.7.
FLSmidth saw significant currency headwinds, which impacted both revenue and the order intake by 8% in Q1 2018. Thus, revenue was down 3% in DKK but increased 3% organically. The order intake was down 10% in DKK but only 3% organically from the very strong order intake in Q1 2017, which included three large cement orders.
The total service order intake was the highest since Q4 2012, despite a 9% negative foreign exchange impact year on year.
EBITA decreased 8% due to lower revenue and a slightly lower gross margin. The EBITA margin fell to 8.1% from 8.5%.
Guidance for 2018
The guidance for 2018 is unchanged at revenue of DKK 18-20bn and an EBITA margin of 8-10%. The return on capital employed (ROCE) is expected to be 10-12%.
Link to the 25 April 2018 press release announcing FLSmidth's new operating model:
FLSmidth realigns its organisation to capture growth through enhanced digitalization and productivity offerings (http://www.flsmidth.com/en-US/News+and+Press/Company+Announcements?feeditem=2187325)
Contacts
Investors
Pernille Friis Andersen, tel +45 36 18 18 87, pefa@flsmidth.com
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 Q1 2018
| (DKKm) | Q1 2018 | Q1 2017 | Change (%) | Year 2017 |
| Order intake (gross) | 5,018 | 5,561 | -10% | 19,170 |
| - of which service order intake | 2,885 | 2,868 | 1% | 10,710 |
| Service order intake share | 57% | 52% | 56% | |
| Order backlog | 13,874 | 14,998 | -7% | 13,654 |
| Revenue | 4,235 | 4,371 | -3% | 18,000 |
| - of which service revenue | 2,507 | 2,675 | -6% | 10,473 |
| Service revenue share | 59% | 61% | 58% | |
| Gross profit | 1,074 | 1,134 | -5% | 4,597 |
| Gross margin | 25.4% | 25.9% | 25.5% | |
| EBITDA | 396 | 436 | -9% | 1,732 |
| EBITA | 343 | 372 | -8% | 1,515 |
| EBITA margin | 8.1% | 8.5% | 8.4% | |
| EBITA margin adjusted for one-off costs | 8.1% | 8.6% | 8.9% | |
| EBIT | 248 | 272 | -9% | 1,115 |
| EBIT margin | 5.9% | 6.2% | 6.2% | |
| Profit | 136 | 161 | -16% | 74 |
| CFFO | 343 | 149 | 130% | 1,065 |
| Free cash flow | 301 | 114 | 164% | 952 |
| Net working capital | 1,590 | 2,182 | -27% | 1,833 |
| Net interest-bearing debt | (1,167) | (2,333) | -50% | (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. www.flsmidth.com
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: FLSmidth via Globenewswire
