FLSmidth (FLS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 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.

• Transformation and business simplification efforts led to a 19% reduction in headcount, positive cash flow, and improved profitability.

• Mining service market remained stable, while mining products saw softness; adjusted EBITA margin reached 13.3% in Mining, progressing toward 2026 targets.

• Cement business achieved an adjusted EBITA margin of 10.8%, supported by high-margin orders and provision releases; divestment process is on track.

• Non-Core Activities segment is expected to be fully exited by end-2024, with the Cement divestment process proceeding as planned.

Financial highlights

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

• Q3 2024 profit was DKK 289m, up from DKK 272m in Q3 2023; earnings per share in Q3 2024 was DKK 5.0, up from DKK 4.8.

• Free cash flow for Q3 2024 was DKK 128m, a significant improvement from negative DKK 151m in Q3 2023.

• Net interest-bearing debt/EBITDA ratio remained low at 0.6x, well below the <2.0x target.

• Gross margin reached 33.1% in Q3 2024, up from 28.6% in Q3 2023.

Outlook and guidance

• 2024 group revenue guidance maintained at ~DKK 20bn; adjusted EBITA margin guidance raised to ~11.0% (from 10.0-11.0%).

• 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 a loss of DKK 200-250m expected for 2024.

• Guidance and performance remain subject to macroeconomic and geopolitical uncertainties.

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