FLSmidth (FLS) Q2 2024 earnings summary

Executive summary

• Transformation and cost-efficiency initiatives are ahead of schedule, with strong Q2 2024 results and profitability improvements in both Mining and Cement segments, despite a 23% year-over-year revenue decline.

• Mining service order intake grew 7% while product orders dropped 61%; Cement service orders rose 1% and product orders fell 53%, reflecting market softness and divestments.

• Workforce reduced by over 2,000 FTEs year-over-year as part of ongoing right-sizing and business simplification.

• The divestment process for the Cement business is progressing, with signing targeted by end-2024 or Q1 2025.

• Non-Core Activities exit is on track by year-end, with order backlog reduced by 88% since Q3 2022.

Financial highlights

• Q2 2024 revenue was DKK 4,958m, down 23% year-over-year; group gross margin improved to 31.8%.

• Adjusted EBITA margin rose to 10.2% (from 6.7%); reported EBITA margin at 8.7%.

• Net income for Q2 2024 was DKK 187m, up from DKK 118m in Q2 2023.

• Free cash flow in Q2 2024 was DKK -89m, impacted by working capital changes; leverage (NIBD/EBITDA) at 0.7x, well below target.

• One-off items of DKK 75m impacted reported EBITA.

Outlook and guidance

• 2024 guidance maintained: group revenue expected at DKK 20bn, adjusted EBITA margin 10.0–11.0%.

• Mining revenue guidance at DKK 15.5bn–17.0bn, adjusted EBITA margin 12.5–13.0%; Cement revenue DKK 4.0–4.5bn, margin 8.0–9.0%.

• Non-Core Activities expected to be fully exited by end-2024, with total expected loss of ~DKK 1.0bn over the exit period.

• Guidance reflects ongoing transformation and is subject to macroeconomic and geopolitical uncertainties.