FLSmidth (FLS) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw revenue decline by 12% year-over-year, mainly due to divestments in Cement and softer Mining Products demand, but profitability improved with a higher gross margin and lower SG&A costs.

• Adjusted EBITA margin reached 13.3% in Mining and 10.8% in Cement, with transformation and business simplification efforts leading to a 19% reduction in headcount and positive cash flow.

• Strategic cooperation agreement signed in Uzbekistan, one of the largest in company history, supplying 80% of the MOF flow sheet.

• Cement business is being prepared for sale, with divestments impacting year-on-year comparisons and the process proceeding as planned.

• Non-Core Activities segment is expected to be fully exited by end-2024, with accumulated loss below DKK 1 billion.

Financial highlights

• Q3 2024 revenue decreased 12% year-over-year to DKK 5,059m; adjusted EBITA margin rose to 12.6% (from 10.1%); EBITA margin at 11.4% (from 8.0%).

• Q3 2024 profit was DKK 289m, up from DKK 272m in Q3 2023; 9M 2024 profit at DKK 670m, up from DKK 474m.

• Gross margin increased to 33.1% (from 28.6%); 9M 2024 gross margin at 31.4%.

• Free cash flow in Q3 2024 was DKK 128m; cash flow from operations was DKK 357m.

• Net interest-bearing debt/EBITDA at 0.6x, well below target.

Outlook and guidance

• 2024 group revenue guidance maintained at ~DKK 20bn; adjusted EBITA margin guidance raised to ~11.0%.

• Mining revenue guidance at ~DKK 15.5bn, adjusted EBITA margin at 13.0%; Cement revenue at DKK 4.0-4.5bn, adjusted EBITA margin at 9.0%.

• Non-Core Activities revenue guidance at DKK 200m, with loss of DKK 200-250m expected for 2024.

• Guidance subject to macroeconomic and geopolitical uncertainties.

• Service market expected to remain stable in 2025; capital order intake to stay at current levels until late 2025 or 2026.