FLSmidth shares 2021 Q3 financial results

FLSmidth Group CEO, Thomas Schulz, commented: “Third quarter saw strong momentum in order intake. In particular for service orders, as activity in the mining industry continues to gather pace with pandemic restrictions easing globally. The cement industry is likewise emerging from the pandemic with improved service activity and growing demand for greener solutions. Revenue grew strongly and EBITA increased by 72% with an improved EBITA margin in both mining and cement. Our cement reshaping activities have progressed well and EBITA in cement was positive for the first time since Q1 2020.”

Financial performance

Revenue increased 22% to DKK 4660 million in Q3 2021 (Q3 2020: DKK 3834 million) and 21% organically, comprising a 20% increase in mining and 22% increase in cement.

Gross margin was largely maintained at 23.0% compared to Q3 2020, despite headwinds from a 10%-points higher share from capital revenue. The Group EBITA margin increased to 6.5% from 4.6% in Q3 2020, related to both mining and cement. EBITA in cement was positive for the first time since Q1 2020.

Despite the higher EBITDA, CFFO declined to DKK -192 million in Q3 2021, and free cash flow was DKK -253 million. The reduction in CFFO was driven mainly by net working capital which increased to DKK 1735 million at the end of Q3 2021 (end of Q2 2021: DKK 1305 million). The net working capital ratio increased to 10.4% of 12-months trailing revenue. The increase related primarily to an increase in trade receivables due to high project and invoicing activity towards the end of the quarter.

As a result of the completed issue of new shares, raising proceeds of DKK 1.4 billion, net interest-bearing debt (NIBD) decreased to a net cash position of DKK 16 million (end of Q2 2021: DKK -1159 million), and the financial gearing decreased to 0.0x (end of Q2 2021: 1.0x).

Thomas Schulz commented: “We successfully completed a directed issue of new shares, raising proceeds of DKK 1.4 billion to fund the acquisition of TK mining, in combination with debt facilities. This was an important milestone in creating one of the world’s largest, strongest and most sustainable suppliers to the mining industry. TK Mining’s offering is an ideal fit with FLSmidth’s sustainability and digitalisation agenda and will strengthen the combined business’ ability to digitalise mines from pit to plant and to reduce their environmental footprint.”

Guidance 2021

FLSmidth maintains its guidance for group revenue of DKK 16.0 – 17.0 billion and a group EBITA margin of 5-6%. The guidance includes costs related to the acquisition of thyssenkrupp’s Mining business estimated at around DKK 100 million for the full year.

Mining revenue is expected to grow in 2021 and the EBITA margin for Mining is expected to be high-single digit for the full year. Cement revenue is expected to decline for the full year. The cement business is not expected to be EBITA positive in 2021 due to reshaping costs and low-capacity utilisation in the service business, particularly related to the impact of the pandemic in H1.

Group CEO succession

As announced on 10 November, Mikko Keto has been appointed new Group CEO effective 01 January 2022, (see company announcement 16 – 2021).

Read the article online at: https://www.worldcement.com/europe-cis/11112021/flsmidth-shares-2021-q3-financial-results/