FLSmidth & Co. Group Interim Report for 1 January - 31 March 2019

Company Announcement No. 6-2019, 2 May 2019

Strong order intake and order backlog - modest revenue growth

Highlights of Q1 2019

• Order intake increased 12% on Q1 2018
• Largest order backlog since 2013
• Revenue slightly up on Q1 2018
• Lower profitability due to Cement
• Positive free cash flow
• Positive sentiment in Mining continues and unchanged outlook for Cement
• 2019 guidance maintained

FLSmidth's order intake during the first quarter of 2019 aggregated DKK 5.6bn, including two large cement orders from Paraguay and Vietnam. The order backlog grew to DKK 17.8bn, the highest level since 2013 and up from DKK 13.9bn at the same time last year.

Group CEO Thomas Schulz commented: "Our order intake and order backlog demonstrate our competitive strength. Each new order is the result of a customer's careful selection of us to deliver and install mission critical equipment or to provide important services to enhance their productivity. The strong order intake paves the way for further advances in both revenue and profitability in 2019 and onwards."

Quarterly revenue came in at DKK 4.4bn against DKK 4.2bn in the same quarter of last year. The gross margin was adversely affected by business mix, particularly in Cement, and fell to 24.5% from 25.4% in Q1 2018. As a consequence, the EBITA margin was 7.1%, down from 8.1% in Q1 last year.

The Group's return on capital employed (ROCE) advanced to 10.8%, up from 10.4% in Q1 last year. The equity ratio stood at 35.7% at the end of the first quarter, comfortably above the 30% target, and the financial gearing (NIBD/EBITDA) was 1.1.

Guidance for 2019 maintained
Management's guidance for the full year is unchanged. Thus, expectations for revenue in 2019 remains at DKK 19-21bn (2018: DKK 18.8bn), and the EBITA margin is expected to be 9-10%, up from 8.5% in 2018. The return on capital employed is expected to be 12-14% against 11% for 2018. Revenue and earnings are expected to pick up in the remainder of 2019, driven by higher revenue, particularly in Mining, and improved profitability in Cement.

Commenting on the outlook, Thomas Schulz said: "The positive sentiment in Mining continues, while the Cement market remains competitive. We continue to pursue a range of attractive business opportunities fueled by our determined efforts in digitalization and sustainability. This enables us to continuously innovate our services and products, while advancing our in-house efficiency. Our role is to support our customers in their constant pursuit of enhancing productivity."