FLSmidth & Co. release first quarter financial results
Published by Alfie Lloyd-Perks,
Editorial Assistant
World Cement,
FLSmidth & Co announce 'better than expected' Q1 2025, with a strong financial performance in Mining driving an upgraded full-year guidance.
Highlights in Q1 2025:
- 14% increase in Mining Service revenue driven by effective backlog management and order execution.
- Mining Adjusted EBITA margin of 15.1% reflecting continued profitability improvements.
- Negative growth in Cement order intake and revenue continue to reflect de-risking and impact from divestments.
- Cement Adjusted EBITA margin of 9.5% reflecting good strategic execution, with reduced SG&A costs and effective de-risking.
- FLSmidth has entered exclusive negotiations for the potential divestment of the Cement business.
- The financial guidance for the full year 2025 was raised on 14 May 2025 (ref. Company Announcement no. 7-2025).
- Continued progression on all our science-based sustainability targets.
FLSmidth Group CEO, Mikko Keto, comments: “The year has started better than anticipated, with strong financial results and a solid commercial performance driving an upgraded financial guidance. This robust performance was achieved in a quarter with increased uncertainty and turbulence from US tariff measures. Amid this market backdrop, there was growth seen in orders within consumables and pumps, cyclones, and valves businesses. Further, effective backlog management and order execution resulted in a 14% growth in Mining Service revenue. Combined with the continued implementation of the corporate model, this was the primary driver behind the realisation of an Adjusted EBITA margin of 15.1% for the quarter. In Cement, FLSmidth continue to see improvements in financial performance with an Adjusted EBITA margin of 9.5% in the first quarter of the year. FLSmidth have made further progress towards the potential sale of the Cement business and have entered exclusive negotiations with Pacific Avenue Capital Partners. All in all, FLSmidth are very pleased with the results delivered in the first quarter, and are well positioned to deliver on their updated targets for the full year.
Implications from US tariff measures
The US accounted for approximately 20% of sales in 2024, with approximately half of those sales involving imports. FLSmidth’s flexible supply chains and proactive tariff mitigation measures – including reducing China-US supply flows, potentially passing on tariff costs to customers, and optimising supply chain efficiency – help mitigate associated risks. Currently, limited direct impacts on operations are observed.
However, FLSmidth recognise that continued tariff-related uncertainty may further delay larger investment decisions and impact the overall market sentiment if prolonged.
Results in Q1 2025
Commercial performance
Mining order intake decreased by 10% compared to Q1 2024 (currencies had no impact on Mining order intake in Q1 2025). Service order intake decreased by 2% driven by the exit from basic labour contracts, partly offset by higher order intake within consumables. Products order intake decreased by 25% compared to Q1 2024. No large Products orders were announced in Q1 2025, whereas two large Products orders with a combined value of DKK 680m were announced in Q1 2024. Service and Products comprised 72% and 28% of the total Mining order intake in the quarter, respectively (67% and 33% in Q1 2024, respectively).
Cement order intake decreased by 18% compared to Q1 2024 (decrease of 12% if excluding currency effects and effects from divestments). Service order intake decreased by 14% primarily reflecting the divestment of the MAAG business in Q1 2024. Products order intake decreased by 27% driven in part by the divestment of the MAAG business as well as continued portfolio pruning. Service and Products comprised 73% and 27% of the total Cement order intake in the quarter, respectively (69% and 31% in Q1 2024, respectively).
Group order intake decreased by 12% compared to Q1 2024 (decrease of 11% if excluding currency effects and effects from divestments). Service order intake decreased by 4% driven by relatively lower order intake in both the Mining and Cement businesses. Products order intake decreased by 27% driven by lower Products orders in both the Mining and Cement businesses. Service and Products comprised 72% and 28% of the total order intake in Q1 2025, respectively (67% and 33% in Q1 2024, respectively).
Financial performance
Mining revenue increased by 4% compared to Q1 2024 (currencies had no impact on Mining order intake in Q1 2025). Service revenue increased by 14% as a result of higher revenue from consumables, spare parts and upgrades & retrofits, driven by effective backlog management and enhanced order execution. Products revenue decreased by 18% primarily reflecting the de-risking of our products portfolio and the timing of the execution of certain large-scale Products orders. Gross profit increased by 13% to DKK 1304m (DKK 1153m in Q1 2024) corresponding to a gross margin of 35.2% (32.2% in Q1 2024). Excluding transformation and separation costs of DKK 51m, the Adjusted EBITA margin was 15.1% in Q1 2025. Including these items, the EBITA margin was 13.7% compared to 10.3% in Q1 2024.
Cement revenue decreased by 15% compared to Q1 2024 (decrease of 11% if excluding currency effects and effects from divestments). Service revenue decreased by 1% due to the divestment of the MAAG business in Q1 2024. Products revenue decreased by 37% driven by continued portfolio pruning and the divestment of the MAAG business. Gross profit increased by 20% to DKK 325m (DKK 271m in Q1 2024) corresponding to a gross margin of 31.8% (22.4% in Q1 2024). Excluding transformation and separation costs of DKK 9m, the Adjusted EBITA margin was 9.5% in Q1 2025. Including these items, the EBITA margin was 8.6% compared to 4.7% in Q1 2024.
Group revenue decreased by 2% compared to Q1 2024 (decrease of 1% if excluding currency effects and effects from divestments). Service revenue increased by 11% driven by higher Service revenue in the Mining business. Products revenue decreased by 26% driven by lower Products revenue in both the Mining and the Cement businesses. Gross profit increased by 18% to DKK 1629m (DKK 1384m in Q1 2024) corresponding to a gross margin of 34.4% (28.6% in Q1 2024). Excluding transformation and separation costs of DKK 60m, the Adjusted EBITA margin was 13.9% in Q1 2025. Including these items, the EBITA margin was 12.6% compared to 7.5% in Q1 2024.
Cement
FLSmidth expect the short-term outlook for the cement industry to remain impacted by macroeconomic uncertainty. The guidance for revenue reflects the divestment of the MAAG business completed in 2024.
The guidance for the Adjusted EBITA margin excludes transformation and separation costs of around DKK 50m for the full year 2025.
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Read the article online at: https://www.worldcement.com/europe-cis/14052025/flsmidth-co-release-first-quarter-financial-results/
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