FLSmidth reports 2Q13 results – cement orders down 30%

FLSmidth has released its interim results for 2Q13. Revenues increased 14% in the quarter, while the total order intake declined by 22%.

FLSmidth in the cement sector

In the cement sector, the order intake was down 30% as the company had exhausted its ‘pre-crisis’ orders by the beginning of 2013. Important orders were won for plants in Equatorial Guinea and India, though the value of these was less than half the value of those received in 2Q12. FLSmidth reports that the overall market remains subdued, though good opportunities can be found in parts of Africa, the Middle East, Russia, South America and Asia. Revenue for the cement sector increased by 37% y/y to DKK1304 million in 2Q13; revenue for the year is expected to fall around the DKK4 – 5 billion mark. In the medium to long term, FLSmidth expects continued expansion of cement consumption and a renewed demand for additional capacity.

Minerals and mining

The mining sector, which has been a significant area for FLSmidth in recent years, experienced a deterioration in 2Q13 as the weakness already impacting coal and iron ore began to show signs of spreading to gold and copper. Long-term, FLSmidth remains optimistic about the mining sector, given the needs of emerging middle classes in developing countries, but in the short-term customer hesitation and pricing pressure could push the sector further into a down cycle.

Sustainable efficiency

Thomas Schulz, FLSmidth’s new CEO, commented on the company’s Group Strategy, one year on from its initial implementation. Though the strategic direction of the company remains the same, Schulz said that a few adjustments are needed: “Going forward, we will focus even more on areas such as organic growth, integration, quality and safety, research and development, and human resource development.” The company has initiated a programme focused on sustainable efficiency improvements in response to unsatisfactory financial performance. “By lowering our costs, increasing the quality in what we do and by growing organically, we can boost our efficiency and significantly improve our performance and position in the market. The efficiency programme is our targeted effort to ensure that we become fit for the future, irrespective of market developments,” said Schulz.

Adapted from press release by Katherine Guenioui