FLSmidth reports higher EBITA margin despite lower revenue

Denmark-based FLSmidth reported a 14 per cent fall in revenues in 3Q17 to DKK4101m (US$642.4m) from DKK4774m in 3Q16. While gross profit decreased by nine per cent to DKK1065m and EBITA was off by two per cent to DKK336, the company saw its EBITA margin improve from 7.2 per cent in 3Q16 to 8.2 per cent in 3Q17 on the back of a higher gross margin and a significantly-lower cost base. However, net profit receded from DKK170m in 3Q16 to DKK23m one year later.

FLSmidth’s order intake grew four per cent, driven by stronger demand in the Minerals sector as reduced activity in the cement business caused a decline in service orders.

“Equipment orders are beginning to materialise thanks to the improved sentiment in the mining industry. We expect to see some recovery in large minerals projects in 2018, although we do not expect high growth rates next year. In addition, the cement industry is showing less strength than in recent quarters, and we do not expect to see a recovery in 2018, but our relentless efforts to achieve our long-term financial will continue,” commented Group CEO, Thomas Schulz.

In addition, the reduction of net working capital and the positive free cash flow resulted in a reduction of net debt to DKK2.2bn with financial gearing falling to 1.2, well within the long-term target, reported the company.