Denmark: FLSmidth 2H16 late order pick up

FLSmidth reports that in its 2H16 results, the EBITA margin was eight per cent (adjusted for one-off costs), adversely impacted by lower revenue, particularly in the first half. Towards the end of the year, activity picked up and the adjusted EBITA margin increased to 9.7 per cent in the fourth quarter.

"After a weak first half, activity picked up, finishing the year on a strong note. Rising commodity prices positively impacted sentiment in the mining industry in 2016, although it has yet to translate into higher capital investments. The cement industry is showing early signs of recovery," commented Group CEO, Thomas Schulz.
 
"Our range of projects, products, and services assist our customers in their pursuit of enhanced productivity, and we continue to improve our offerings to maintain our competitive edge," added Thomas Schulz.
 
Order intake increased two per cent organically in 2016, while revenue was five per cent down due to a lower order backlog at the beginning of the year and a slow start to the year.
 
Capital efficiency improved in 2016. The equity ratio increased to 35 per cent and the financial gearing (NIBD/EBITDA) declined to 1.6, both comfortably within the targeted capital structure, reports FLSmidth. Improved working capital and positive operating cash flow reduced net interest-bearing debt by DKK1.1bn (US$157.7m) in 2016.
 
Guidance for 2017
The guidance for 2017 reflects the lower order backlog at the beginning of the year combined with an assumption of stable market activity in 2017. The EBITA margin guidance includes expected one-off costs related to corrective actions.  Accordingly, revenue is expected to be DKK17-19bn and the EBITA margin to be 7-9 per cent. The return on capital employed (ROCE) is expected to be 8-10 per cent.