On 23 March, FLSmidth’s financial guidance for 2020 was suspended due to the global uncertainty caused by the COVID-19 pandemic. On 28 April, the company announced that full year results were expected to be below the initial guidance.
Due to the volatility in order intake and revenue combined with the suspension of guidance, the company has decided to disclose preliminary key figures ahead of the scheduled Q2 2020 interim report.
In Q2 2020, organic order intake declined 29% and organic revenue decreased 26% year-on-year. Order intake was DKK 3 348 million compared to DKK 4 954 million in Q2 2019 (-32%). Revenue amounted to DKK 3 846 compared to DKK 5 472 in Q2 2019 (-30%). The negative development in both order intake and revenue was larger in cement than in mining. Across both industries, and for both order intake and revenue, the service business was relatively more resilient than the capital business.
In H1 2020, order intake was DKK 9 874m compared to DKK 10 594 million in H1 2019 (-7%). Revenue amounted to DKK 8 371 compared to DKK 9 888 in H1 2019 (-15%).
Based on preliminary figures FLSmith’s business segments, EBITA is expected at DKK 131 million in Q2 2020 compared to DKK 487 million in Q2 2019 (-73%), and the EBITA margin is expected to be 3.4%. In H1 2020, EBITA is expected to reach DKK 359 million compared to DKK 799 million in H1 2019 (-55%), and the EBITA margin is expected to be 4.3%. The figures include costs associated with the company’s ongoing business improvement activities.
FLSmith maintains that its financial position is strong. The company’s net debt declined to DKK 2.3 billion from DKK 2.7 billion by the end of March 2020. The net debt to EBITDA was 1.5 compared to 1.4 the previous quarter.
Across all regions, the mining industry and especially the cement industry have been negatively affected by the pandemic. Whilst the general situation around COVID-19 is improving in parts of the world, it continues to escalate in other parts. As a global supplier with customers around the world, FLSmidth is subject to these varying market conditions. Even in the regions with easing of lockdowns and mobility restrictions, it is yet unclear how customers’ spending patterns will advance. Thus, visibility remains low and the company’s guidance remains suspended.
Read the article online at: https://www.worldcement.com/europe-cis/27072020/flsmidth-shares-preliminary-key-figures-for-q2-2020/