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FLSmidth continues advancement in 1H17

Published by , Assistant Editor
World Cement,

FLSmidth has released its interim report for 1H17, indicating growth in revenue and EBITA, driven by the continued strong momentum in service activities.

The company reported that strong momentum in orders from service activities continued, and revenue increased as expected. Higher operating profit was also seen, despite one-off costs, while ROCE continued its upward trend. The mining capital business remained soft while equipment sentiment and order pipeline improved.

"We are pleased to report solid progress towards our KPI targets. The Group's service activities continue to benefit from the firming global growth and improvement in confidence. With Q2 marking the fourth consecutive quarter of strong aftermarket momentum, especially in mining, the service business is stabilising at a higher level," commented Group CEO Thomas Schulz.

"By constantly improving our offerings, based on knowledge from our rich global spectrum of projects, products, and services, we support our customers' pursuit of productivity, while at the same time enhancing our competitive edge," said Thomas Schulz.

The consolidated order intake grew by 5% in 2Q17, while revenue was up 11%. The growth was attributable to all divisions but Minerals, as mining capital investments remained soft despite a firmer sentiment and an improved order pipeline.

Operating profit (EBITA) amounted to DKK342 million in 2Q17, up 25% from the corresponding quarter of last year. EBITA included one-off costs of DKK-92 million, related to corrective actions announced last year and the demobilisation of an operation and maintenance contract. The EBITA margin was 9.5% adjusted for one-off costs.

The quarter also saw an improvement in the Group's capital efficiency. The return on capital employed advanced to 9.8% from 8.0% in 2Q16 of last year as a result of lower capital employed and higher EBITA.

The guidance for 2017 is confirmed. Revenue is expected to be DKK17 – 19 billion and the EBITA margin 7 – 9%. The return on capital employed (ROCE) is expected to be 8 – 10%.

The EBITA guidance includes one-off costs of DKK-150 million related to corrective actions launched in 2016 (previous expectation DKK-200 million) as well as other one-off costs of DKK-62 million recognised in 2Q17.

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