FLSmidth 2Q operating profit hit by one-off writedown

FLSmidth 2Q operating profit hit by one-off writedown
Published: 17 August 2012

Tagged Under: Denmark FLSmidth 

FLSmidth reported a drop in operating profits for the second quarter hit in part by a one-off writedown.

EBIT fell to DKK 349m (US$57.78m) in April-June from DKK404m in the second quarter last year. The result, which was hit by a DKK188m writedown on capitalised research and development.

Revenue for the period increased 26 per cent to DKK6036m, attributable to positive developments in all segments except for cement where revenue fell seven per cent - reflecting the decline in order intake experienced in 2009 and 2010 in the wake of the global financial crisis, the company said.

With regards to its cement division, FLSmidth said that in the second quarter: “…proposal activity remained high in many parts of the world, most notably in Latin America and certain parts of the Middle East, Africa and South East Asia. In India, cement consumption remains subdued, but inquiry levels and tender activity have started to increase.” During the period the division was awarded a contract for a cement production line in the Middle East and a modernisation project in the USA.

The company also confirmed that it has put its fibre-cement products unit Cembrit up for sale.
FLSmidth cut guidance for its 2012 EBIT margin to a range of 8-9 per cent from an earlier forecast of 9-10 percent, but maintained guidance for its margin on earnings before interest, tax and amortisation (EBITA) of at least 10 per cent.

"Expectations to Bulk Materials have been downgraded and risk associated with the margin guidance has increased due to short term macroeconomic uncertainty," FLSmidth & Co A/S said in a statement.

The EBITA margin guidance in cement is raised from “decreasing” to “slightly increasing” due to expected lower costs in projects in the second half of 2012 related to finalisation of projects taken in previous years.