FLSmidth & Co. Group Interim Report for Q1 2020

Company Announcement No. 9-2020, 28 April 2020

Strong order intake and growth in revenue

Highlights in Q1 2020

• Order intake increased by 16%
• Record high service order intake
• Strong capital order intake
• Revenue increased by 4% organically
• EBITA margin declined to 5% impacted by extraordinary costs
• Adjusted free cash flow amounted to DKK -103m
• Strong financial position

Order intake increased by 16% to DKK 6,526m in Q1 2020, owing to a record high service order intake and three large announced orders in Mining. The COVID-19 pandemic is intensifying the hesitation on large capital investments but producers in both mining and cement are increasingly looking at digitalized solutions, driven by the restrictions of on-site services. Mining order intake increased 73%, comprising a 16% increase in service orders and a 160% growth in capital orders. Cement service order intake was stable compared to Q1 2019 but total Cement order intake declined 50% due to hesitation on capital investments and the absence of large project orders.

The order backlog increased by 10% to DKK 15,591m in Q1 2020 (end of 2019: DKK 14,192m) as a consequence of the high Mining order intake during the quarter.

Apart from the announced mining orders, customer hesitation on capital investments has intensified. Technical services and commissioning are challenged by restricted access to sites.
Demand for spare and wear parts is seen relatively stable and in line with production rates, but dependent on activity level on sites.

FLSmidth Group CEO, Thomas Schulz, commented: “The COVID-19 outbreak has resulted in extraordinary times for all countries around the globe. Throughout the quarter, we have navigated the unpredictability and our clear top priority has been on the safety of our employees and customers. Around 70% our employees are currently working from home and a safe working environment has been established for the remaining employees. At the same time, we have been adapting our operations to the changing circumstances to support our customers the best way possible.”

Financial performance

Revenue increased 2% to DKK 4,525m in Q1 2020, explained by a 6% growth in Mining, partly offset by a 3% decline in Cement. Organic revenue growth for the Group was 4%.

EBITA decreased 27% to DKK 228m, as a result of extraordinary costs related to business improvement initiatives and COVID-19, as well as the previously announced lower profitability in the Mining capital business. Consequently, the EBITA margin decreased 2.1 percentage points to 5.0%.