FLSmidth swings to full-year loss, Denmark
FLSmidth reported its first full-year net loss for over a decade and saw cement orders fall by 26 per cent despite a strong increase in the final quarter.
The Denmark-based equipment supplier reported a net loss of DKK784m (US$143.9m) for last year compared with a net profit of DKK1.3bn in 2012. The company's overall order intake decreased 25 per cent to DKK 20,911m compared to DKK 27,727m the year before. The order backlog fell 24 per cent to DKK 22,312m (end of 2012: DKK 29,451m). Revenue increased two per cent to DKK 26,923m compared to DKK26,284m in 2012.
In December, FLSmidth cut its 2013 earnings outlook by more than 10 per cent after it lost an arbitration case against Danish construction firm MT Hoejgaard about delays to building a cement plant in Buxton, East Midlands, England in 2004.
In its cement division alone, the order intake fell 26 per cent to DKK3417m in 2013 against DKK4599m the year before. However, the order intake increased 87 per cent in 4Q13 to DKK1150m following two large orders close to year-end in Qatar and Indonesia, respectively.
The order backlog decreased 29 per cent in 2013 to DKK5389m (end of 2012: DKK7585m). "The order backlog has suffered from a significant reduction in the market for new cement capacity since the
2008 financial crisis. A gradual rebuilding of the order backlog is expected as the recovery of the global cement industry gathers speed," FLSmidth said it its annual report.
Cement revenue increased 23 per cent to DKK5201m in 2013. Overall, the translating of foreign currency into Danish krone had an impact of DKK111m on revenue in 2013 compared to 2012.
Outlook
Chief Executive, Thomas Schulz, said 2014 would be "tough." "2015 will be flattish. In 2016 the whole industry will be back in growth."
The company said it expects consolidated revenue to fall to between DKK21-24bn this year from DKK26.9bn in 2013. Cost associated with its Efficiency Programme is expected to amount to approximately DKK-70m in 2014, which is included in the guidance.
On its outlook for the cement division, FLSmidth expects revenue in 2014 will be in the range of DKK3.5-4.5bn (2013: DKK5.2bn) "reflecting a relatively solid backlog going into the year and a view that the market for new cement capacity most likely will increase slightly in the coming year," the company noted. It is expected that the EBITA margin in 2014 will be in the range of 5-7 per cent (2013: 2.4 per cent).
