FLSmidth reports 2Q rise

FLSmidth reports 2Q rise
Published: 21 August 2009

FLSmidth & Co. A/S reported a 17% rise in second-quarter net profit and said it will pay an extraordinary dividend, but also warned that its order intake had plunged to its lowest level since 2004.

The Danish engineering company also raised its operating margin forecast for 2009 to 8.5%-9% from the previous estimate of 8%-9%. Chief Executive Jorgen Huno Rasmussen said the firm still has a deep order backlog and that it continues to benefit from industrialization and urbanisation in developing countries.

"In the short term, we’re not very vulnerable to the quarterly fluctuations in order intake," Rasmussen told Dow Jones Newswires.

Order intake in the quarter to end-June fell 70% to DKK2.50bn (US$478m) from DKK8.22 billion a year earlier, and was down 20% on the first quarter.

FLSmidth said it will pay out 2 Danish kroner a share, totaling DKK106m. It had said after reporting full-year earnings that it would postpone dividend payments to keep a cash war chest for possible acquisitions.

Rasmussen said his company is justified in paying the dividend despite reporting the lowest order intake since the fourth quarter of 2004.

"We see a satisfying development in revenues, in results and in cash flow," he said. "We now feel confident that we’re able to navigate through the crisis."

Net profit in the quarter ended June 30 rose to DKK437m from DKK372m a year earlier, benefiting from the still-deep although thinning order book. The earnings beat the average forecast of DKK323m in a Dow Jones/FactSet survey of four analysts.

FLSmidth said revenue in the quarter fell 5.2% to DKK5.59bn from DKK5.90bn, missing a forecast of DKK5.69bn. Operating profit dropped 1.3% to DKK437m, below analysts’ expectations of DKK479m.