FLSmidth records 3Q19 order intake down 36%

FLSmidth's order intake for the 3Q19 amounted to DKK4571m (US$704.5m), a decline of 36 per cent compared to the 3Q18.

The performance is explained by a sharp decline in the capital order intake that was partly offset by a record-high service order intake, combined with the exceptionally strong comparative quarter in 2018 that included two large cement plant orders worth a total of about DKK1.9bn. The order backlog decreased to DKK16,088m from DKK16,762m at the end of 2Q19.

The market for new cement capacity remains subdued on a global scale. Global growth, a key driver for cement demand, continues to be weakened by rising trade barriers and increasing geopolitical tensions. FLSmidth reports that: "We are experiencing increased interest in solutions supporting a lower environmental impact and higher operation efficiency.

"The growing intensity of the sustainability agenda is becoming increasingly important for securing financing for cement projects. Research shows that based upon current practices and other industries achieving their promised reductions, cement production could be responsible for a 26 per cent share of the global CO₂ emissions by 2050."

FLSmidth Group CEO, Thomas Schulz, added: "Global economic headwinds combined with challenges regarding license to operate have led to a more cautious outlook for mining capital investments. The social license to operate is becoming an increasingly important issue and is now considered a top risk for mining companies. This has caused some projects to be postponed. On the other hand, we are seeing growing interest in our sustainable technologies and tailings management, which can help mining companies maximise safety and attain a license to operate. Sustainability is also gaining traction in the cement industry, and customers looking to reduce their environmental footprint and enhance productivity are increasingly taking an interest in our pyro upgrades, including our Low-NO_x calciner technology and our HOTDISC^® systems."

Financial performance
Revenue increased by nine per cent for the group, driven by 26 per cent growth in mining. EBITA was up by eight per cent to DKK377m, while the EBITA margin decreased to  eight per cent from 8.1 per cent in 3Q18. Profitability in cement improved as expected, says FLSmidth.