FLSmidth & Co. Group Interim Report for Q1 2020 - Seite 2

Cash flow from operating activities decreased to DKK -35m in Q1 2020, due to a lower EBITDA and cash outflow from working capital, despite strong collection of receivables. The free cash flow adjusted for acquisitions and disposals decreased to DKK -103m, compared to DKK 155m in Q1 2019.

Average capital employed increased to DKK 15,424m, mainly related to working capital and intangible assets. Consequently, ROCE decreased slightly to 10.2%.

Thomas Schulz, continues: “The COVID-19 pandemic has a significant impact on the current and future business and impacted our first quarter results, especially in the month of March, as the pandemic has led to higher costs associated with more complex logistics and lower capacity utilisation. There will be economic impacts for both of our core industries, but we see a relatively resilient mining industry, and the extensive global policy response already seen, such as the proposed USD 2 trillion infrastructure package in the US, could fuel a rapid growth in metals demand and boost construction and cement markets worldwide.”

Guidance 2020 suspended

On 23 March, FLSmidth suspended its financial guidance for 2020 as a consequence of the global uncertainty caused by the current pandemic and pending further clarification of market developments and the actual financial impact on the business.

Visibility remains low and our guidance remains suspended. However, we now expect that the full year results will be below the initial guidance for the year.

We are increasingly seeing disruptions to cement plants and mine sites which could impact near-term demand for equipment and services. Lockdowns and mobility restrictions are affecting suppliers and parts of our own operations, resulting in more complex logistics and lower capacity utilisation. We expect the biggest direct impact in Q2 and a more moderate impact in Q3, but we are unable to assess the duration of disruptions and the extent of the impact.

The Board of Directors also decided on 23 March to withdraw the proposal to pay a dividend of DKK 8 per share to ensure resilience in a period of market uncertainty and to further strengthen FLSmidth’s financial position. Once market conditions have stabilised, the Board will revisit the capital structure and allocation to shareholders.

Read the full Interim report Q1 2020 here

Contacts

Media Relations
Rasmus Windfeld, [phone], [e-mail]
Investor Relations
Nicolai Mauritzen, [phone], [e-mail]