Danish cement and mining equipment and solutions provider FLSmidth has announced a healthy set of Q1 trading results.
The Group’s Mining Service revenue grew 48% in the quarter, with an Adjusted Mining EBITA margin of 9.6%. FLSmidth says the cost synergy takeout from Mining Technologies integration is slightly ahead of schedule.
There was sustained profitability for FLSmidth’s Cement business, with an EBITA margin of 4.3%. The Group’s non-core activities order backlog decreased to DKK 2.1bn (end Q4 2022: DKK 2.9bn). Negative cash flow aligns with expectations, with the Group’s financial guidance for 2023 maintained.
FLSmidth Mining order intake declined by 20%, excluding currency effects. When adjusting for Russia, Non-Core Activities and Mining Technologies, the underlying Mining order intake in the quarter declined by approximately 23%. This development reflects our ongoing transformation and the strong comparison quarter.
Cement order intake in Q1 2023 declined by 29%, excluding currency effects. This development reflects a 42% decrease in Products order intake compared to Q1 2022, which included several sizeable orders and our de-risking strategy. Order intake for Non-Core Activities amounted to DKK 111mn. The Non-Core Activities order backlog amounted to around DKK 2.1bn at the end of Q1 2023, representing a decrease of DKK 0.8bn compared to Q4 2022. Group order intake declined by 21%, excluding currency effects. When adjusting for Russia and Mining Technologies, the underlying Group order intake in the quarter declined by approximately 27%.
FLSmidth Group CEO Mikko Keto said: “We have had a good start to the year. The key transformation efforts we initiated last year positively impacted our performance in the first quarter of 2023. Our Mining business saw good underlying development in both revenue and profitability, reflecting our increased focus on the Service business and our continued de-risking approach. Our Cement business’s profitability has continued to benefit from our operating model simplification efforts and our increased focus on key markets.
“We are pleased with how our transformation journey has progressed during the first quarter of 2023, including the accelerated pace of the synergy takeout from the Mining Technologies integration and the Non-Core Activities exit, as the successful execution of these is essential in our journey to improve our long-term profitability.”
FLSmidth Mining revenue increased by 28%, excluding currency effects. Excluding Russia, Mining revenue increased by 45% in Q1 2023. Adjusting for the Group’s exit from Russia, the establishment of the Non-Core Activities segment, and the acquisition of Mining Technologies, the underlying Mining revenue growth in the quarter was approximately 29%. The adjusted Mining EBITA margin was 9.6% in Q1 2023, realised despite an approximated dilutive effect from the acquisition of Mining Technologies of around 2%-points. Including integration costs of DKK 127mn, the reported Mining EBITA margin was 6.5%.
FLSmidth Cement revenue increased by 6%, excluding currency effects and 9%, excluding Russia, compared to Q1 2022. Cement EBITA continued the positive trend and increased by 28% compared to Q1 2022. The corresponding Cement EBITA margin was 4.3% in Q1 2023.
Consolidated FLSmidth Group revenue increased by 27%, excluding currency effects and by 39%, excluding Russia, compared to Q1 2022. When adjusting for Russia and Mining Technologies, the underlying revenue growth in the quarter was approximately 20%. In line with expectations, the quarter included DKK 249mn in revenue from Non-Core Activities. The adjusted EBITA margin for FLSmdith Group was 6% in Q1 2023. Including integration costs, the Group EBITA margin was 3.9% in Q1 2023.
