Danish based company
The group, which supplies everything from engineering, single machines and complete processing plants, to maintenance, support services and operation of processing, says revenues increased 14% in the quarter, while the total order intake declined by 22%.
During the last three months FLSmidth has undergone a health check of its strategy, and the conculsion is “clear.”
“FLSmidth’s overall strategic direction as well as the long term financial targets have been verified and remain unchanged. However, a few adjustments to increase focus in specific areas are needed as are initiatives to improve efficiency throughout the organisation.
“Our conclusion is that there is no need to change the overall strategic direction or long term financial targets of FLSmidth. We have a strong foothold in our key industries, our organisation into four divisions supports our strategic goals, and we are still a Danish company based on Nordic values,” says group CEO, Thomas Schulz, who performed the health check.
In the interim report Schulz says: “To fulfil our ambitions, there is a need for us to make a few adjustments. Going forward, we will focus even more on areas such as organic growth, integration, quality and safety, research and development, and human resource development.”
The results show that the order intake decreased 22% to DKK 5,626 million (€754 million)/(Q2 2012: DKK 7,246 million) although revenue increased 14% to DKK 6,456 million (Q2 2012: DKK 5,653 million).
Earnings before amortisation and impairment of intangible assets (EBITA) decreased 50% to DKK 287 million (Q2 2012: DKK 576 million), corresponding to an EBITA margin of 4.4% (Q2 2012: 10.2%).
Earnings before interest and tax (EBIT) decreased 39% to DKK 195 million (Q2 2012: DKK 321 million) corresponding to an EBIT margin of 3.0% (Q2 2012: 5.7%)
The profit decreased 36% to DKK 143 million (Q2 2012: DKK 223 million).
The group says the outlook for mining capital investments has deteriorated further in Q2, whereas customer services is still a healthy and growing business.
Lower growth in China has led to a broad-based decline in commodity prices and a subsequent decline in the planned investments by mining companies. On the other hand, most mature economies are now starting to grow again.
“We consider the recent developments in the mining industry to be a normal business cycle, where we have come off the peak after a number of years of significant growth. We expect mining investments to hit the bottom in 2014. With respect to cement, we have already been walking on the bottom of the cycle for a couple of years and see early signs of recovery,” says Schulz.
“In general, we expect a flattish market the next 2-3 years for the three project divisions, whereas customer services is still on a healthy growth path. It is important for us to emphasise that this is not an extraordinary situation, but a normal development in a cyclical industry. We remain optimistic with respect to the mid- and long-term outlook for both the cement and minerals industries.”
