FLSmidth has reported solid operating results for FY18 and a modestly positive outlook for 2019. The company had its strongest order intake in six years and highlights for the year included resuming revenue growth, steps taken to improve profitability in cement, and a low free cash flow.
Revenue grew by 4% in 2018, with 13% of the company’s order intake being attributable to mining, which delivered a 24% growth. Cement remained unchanged. The company has stated that the strong order intake bodes well for revenue growth in 2019.
EBITDA was up by 5% in line with revenue and the EBITDA margin increased slightly to 8.5% from 8.4%. The cash flow from operating activities was impacted by significant negative developments in discontinued activities, and free cash flow amounted to only DKK 100 million.
Return on capital employed rose to 11% in 2018 from 10.4% in 2017. This was a result of the higher EBITDA and lower capital employed. The proposed dividend is DKK 9 per share.
Guidance for 2019
The company has guided a revenue of between DKK 19 billion and DKK 21 billion in 2019, compared to DKK 18.8 billion in 2018. An EBITDA margin of between 9% and 10% is expected, as well as a return on capital employed of between 12% and 14%. This is compared to 11% in 2018.
The company has stated that the positive trend in the mining industry is expected to continue modestly in 2019, while cement market conditions are expected to be stable, with global macroeconomic uncertainties from both industries.
“The higher order intake in 2018 is due to an improving mining market, but it also reflects our organisation, our good position, and strong lifecycle solutions,” said Thomas Schulz, Group CEO. “This combination lays a good foundation for future growth. Both our cement and mining customers are constantly pursuing productivity improvements. As a number one productivity provider, we are in the right spot to support their agenda by taking innovation and digitalisation to the next level, we will be an even stronger business partner going forward. Additional factors that will strengthen our competitiveness are our ongoing efforts to standardise our product offering and leverage our unique customer insight.”
Read the article online at: https://www.worldcement.com/europe-cis/05022019/flsmidth-releases-its-annual-report-for-2018/