Flsmidth & Co. A/s · OMXCOP:FLS
Flsmidth & Co. A/s — Flsmidth & Co A/S B Shs — Q2 2024 Earnings Presentation
44 slides from Flsmidth & Co. A/s's earnings presentation, Aug 15, 2024
Slide 1: Interim Report Q2 2024
15 August 2024 Investor presentation Interim Report Q2 2024
Slide 2: Content
Content Highlights for Q2 2024 Sustainability highlights Mining performance Cement performance NCA performance Financial review 2024 financial outlook Forward-looking statements This presentation contains forward-looking statements. Appendix Such statements are subject to risks and uncertainties, as
Slide 3: Key highlights for Q2 2024
Key highlights for Q2 2024 MINING BUSINESS CEMENT BUSINESS 7% growth in Service order intake, whereas the significant Service order intake growth in core market clusters partly decline in Products orders reflects market softness offsets impacts from de-risking and divestments Revenue decline of 13%
Slide 4: Sustainability performance highlights for Q2 2024
Sustainability performance highlights for Q2 2024 Scope 1 and 2 greenhouse Scope 3: Economic intensity Spend with suppliers with gas emissions (use of sold products) science-based targets Year-to-date (tCO2e (market-based)) Year to date (tCO2e / DKKm order intake) As of end-Q2 2024 (%) 38,022 39,445
Slide 5: Good Mining Service order level, whereas Products orders remain impacted by market softness
Good Mining Service order level, whereas Pro- ducts orders remain impacted by market softness Q2’24 HIGHLIGHTS -17% Organic order intake growth MINING ORDER INTAKE (DKKm) 5,000 MINING ORDER INTAKE (DKKm) 4,215 -19% -19% Reported order intake growth 1,600 -61% 3,423 629 4,000 1,600 1,392 629 3,000 82
Slide 6: Decline in Mining revenue, primarily reflects timing of order execution for Products
Decline in Mining revenue, primarily reflects timing of order execution for Products Q2’24 HIGHLIGHTS -12% Organic revenue growth MINING REVENUE (DKKm) DKKm 5,000 MINING REVENUE (DKKm) -13% 4,351 -13% Reported revenue growth 1,518 -19% 3,783 1,226 4,000 1,518 1,226 3,000 1,177 68% Service share of r
Slide 7: Continued profitability improvement with an Adjusted EBITA margin of 13.1% in Q2 2024
Continued profitability improvement with an Adjusted EBITA margin of 13.1% in Q2 2024 MINING EBITA DKKm Margin ADJ. EBITA MARGIN Q2 2024 600 13.1% 14% 13.1% 11.5% 11.5% 12% 10.8% 10.3% 63 450 97 10% 42 Excluding DKK 63m of transformation 8% and separation costs 8.6% 300 6% 434 372 370 REPORTED EBITA
Slide 8: Service growth in core market clusters partly offsets impacts from de-risking and divestments
Service growth in core market clusters partly offsets impacts from de-risking and divestments Q2’24 HIGHLIGHTS -16% Organic order intake growth CEMENT ORDER INTAKE (DKKm) 2,000 CEMENT ORDER INTAKE (DKKm) 1,276 -21% -21% Reported order intake growth 524 -53% 1,006 1,500 248 1,000 524 75% Service shar
Slide 9: Continued de-risking and recent divestments drive relatively lower Cement revenue in Q2'24
Continued de-risking and recent divestments drive relatively lower Cement revenue in Q2’24 Q2’24 HIGHLIGHTS -24% Organic revenue growth CEMENT REVENUE (DKKm) 2,000 CEMENT REVENUE (DKKm) 1,670 -32% -32% Reported revenue growth 800 1,131 1,500 800 -40% 483 1,000 57% 487 483 Service share of revenue in
Slide 10: Improved Cement profitability reflecting strong margin execution and lower SG&A
Improved Cement profitability reflecting strong margin execution and lower SG&A CEMENT EBITA DKKm Margin 200 14% ADJ. EBITA MARGIN Q2 2024 9.6% 12% 150 9.6% 10% 7.7% 8.5% 8% 100 12 Excluding DKK 12m of transformation 6% and separation costs 4.3% 4.7% 30 4% 50 96 REPORTED EBITA MARGIN 36 73 2% 0 Q2 2
Slide 11: NCA exit remains well on track with full exit still expected by the end of the year
NCA exit remains well on track with full exit still expected by the end of the year Q2’24 HIGHLIGHTS (DKK) 7 Order intake m Non-Core Activities (NCA) order backlog (DKKbn) Key comments • Initial order backlog of ~DKK 3.6bn -88% when NCA was established end Q3 2022. 44 Revenue m • • 28 employees rema
Slide 12: Consolidated financial performance in Q2 2024
Consolidated financial performance in Q2 2024 (DKKm) Q2 2024 Q2 2023 Change COMMENTS Order intake 4,436 5,523 -20% ▪ Q2 2024 revenue decreased by 23% compared to Q2 2023 and Revenue 4,958 6,399 -23% by 20% if excluding currency effects and effects from divestments Gross margin 31.8% 23.4% 8.4%p in C
Slide 13: Gross margin positively impacted by strong margin execution in both Mining and Cement
Gross margin positively impacted by strong margin execution in both Mining and Cement GROSS PROFIT GROSS MARGIN BY SEGMENT +5% growth in Q2 2024 vs. Q2 2023 Q2 2024 vs. Q2 2023 DKKm Gross margin 2,000 31.8% 35% 29.2% Mining Cement NCA 30% 1,500 23.4% 25% 20% 1,000 15% 33.4% 1,497 1,579 31.0% 1,415 2
Slide 14: Ongoing transformation positively impacts SG&A, partly offset by investments into core commercial areas
Ongoing transformation positively impacts SG&A, partly offset by investments into core commercial areas SG&A COSTS COMMENTS SG&A ratio up by 4.6%p vs. Q2 2023 ▪ SG&A costs decreased by 2% to DKK 1,078m compared to DKK DKKm SG&A ratio 1,095m in Q2 2023. 1,500 25% ▪ The decrease reflects positive effe
Slide 15: Q2'24 Group EBITA margin positively impacted by strong gross margin
Q2’24 Group EBITA margin positively impacted by strong gross margin, partly offset by the relatively lower revenue GROUP EBITA GROUP EBITA MARGIN BRIDGE Continued improvement in profitability Q2 2024 vs. Q2 2023 Approx. %p development DKKm EBITA margin 600 12% 10.2% 10.2% 0.5% -1.5% 8.7% 9.2% 10% 45
Slide 16: Net working capital increased mainly related to amounts due from customers for work performed
Net working capital increased mainly related to amounts due from customers for work performed in the quarter NET WORKING CAPITAL NET WORKING CAPITAL DEVELOPMENT IN Q2 2024 DKKm NWC ratio (DKKm) Q2 2024 Q1 2024 Change 3,000 12% 10.1% Inventories 3,544 3,447 97 2,500 9.4% 8.4% 9% Trade receivables 4,6
Slide 17: Slightly positive CFFO for the quarter, in line with expectations
Slightly positive CFFO for the quarter, in line with expectations, primarily impacted by changes in NWC and provisions Group (DKKm) Q2 2024 Q2 2023 GROUP CASH FLOW EBITDA adjusted 524 434 DKKm EBITDA, discontinued - -4 1,200 Change in provisions -190 174 1,000 Change in NWC -86 62 800 Financial paym
Slide 18: Financial gearing remains well-below our capital structure target
Financial gearing remains well-below our capital structure target LEVERAGE AS OF END NIBD Q2 2024 DKKm NIBD/EBITDA RATIO REMAINS LOW AT 0.7x NIBD/EBITDA 0.7x 1,500 2.5 2.0 1,000 1.5 Net interest-bearing debt / EBITDA ratio 500 0.7x 1.0 0 0.5 CAPITAL STRUCTURE TARGET 0.0 -500 2.0x -0.5 < -1,000 Q2 20
Slide 19: Financial guidance for 2024, as set out on 7 August 2024, is maintained
Financial guidance for 2024, as set out on 7 August 2024, is maintained Mining Cement Non-Core Activities Group Realised H1’24 Revenue (DKKbn) Realised H1’24 Revenue (DKKbn) Realised H1’24 Revenue (DKKm) Realised H1’24 Revenue (DKKbn) DKK 7.4bn ~15.5 DKK 2.3bn 4.0-4.5 DKK 94m 200-300 DKK 9.8bn ~20.0
Slide 20: Our transformation remains well on track
Our transformation remains well on track Ambition Progress Key comments and developments • Mining organisation reduced by >600 FTEs since end-Q2 2023 Simplification and operating model • On track for the implementation of a more cost-efficient operating model, including a leaner corporate structure,
Slide 21: Investor information
Investor information INVESTOR CALENDAR INVESTOR RELATIONS CONTACTS 23 September 2024 Investor event in Salt Lake City Jannick Lindegaard Denholt 12 November 2024 9M’24 interim report VP, Head of Investor Relations +45 2169 6657 jli@flsmidth.com SHARE INFORMATION Market Nasdaq Copenhagen Andreas Esch
Slide 22: Appendix
Appendix 1. Our equity story in a nutshell 2. Q2’24 financial appendix 22 15 August 2024
Slide 23: Our value proposition
Our value proposition Our pure play Key market Our value Our long-term targets strategies drivers creation drivers for the FY2026 • Full flowsheet coverage • Green transition • Large installed base Mining • Middle class • Service centricity 13-15% CORE´26 • growth Industry challenges • • Sustainabil
Slide 24: FLSmidth at a glance
FLSmidth at a glance We are a leading supplier of productivity and sustainability solutions to the global mining and cement industries We enable our customers in mining and cement to move towards zero emissions by 2030 1882 Danish company 8,769 employees using their unique 150+ countries across the
Slide 25: FLSmidth in the world
FLSmidth in the world Europe, Central Asia & North North America NAMER Africa ECANA 23% 5% Share of revenue ▲ Reported 19% Share of employees 18% ▲ 8% 24% 2022: 24% revenue growth 2022: 17% Share of revenue Reported Share of employees 2022: 19% revenue growth 2022: 25% Asia & Australia APAC 20% 20%
Slide 26: Our organisation and culture is evolving with our ongoing business transformation
Our organisation and culture is evolving with our ongoing business transformation Core transformation Core strategic focus Core P&L model Core values drivers Transition to pure play We have changed Sustainability T Trust (from Q4 2022) from regional P&L Region Region Region Region Region De-risking
Slide 27: Simplifying our operating model to realise efficiencies, ensure stronger execution and improve profitability
Simplifying our operating model to realise efficiencies, ensure stronger execution and improve profitability Transition to pure play Simplification De-risking Impact Footprint optimisation - Reduce risk exposure Reduced complexity Mining less countries, offices → risk quotas introduced and legal ent
Slide 28: Our pure play mining strategy: CORE'26
Our pure play mining strategy: CORE’26 Mining for a sustainable world Sustainability Service Building a better future for our Delivering Global partner for life-cycle employees, society and the planet performance and sustainability solutions for tomorrow's mine Technology Performance The complete pr
Slide 29: Our pure play Cement strategy - GREEN'26
Our pure play Cement strategy - GREEN’26 - has three focus areas driving Cement’s transformation Operating model Service business Green transition model transition transition 29 15 August 2024
Slide 30: We are digitalising the entire flowsheet
We are digitalising the entire flowsheet Pumps, Product Cyclones & Beneficiation Tailings digitalisation level Extraction Conveying Comminution Valves and Recovery Thickening Filtration Management Sensors Product Control Insights Health Optimisation 30 15 August 2024
Slide 31: How we will achieve our sustainability ambitions
How we will achieve our sustainability ambitions 1 Enabling profitable sustainability 2 Improving our ESG performance 31 15 August 2024
Slide 32: Key benefits delivered by a MissionZero Mine
Key benefits delivered by a MissionZero Mine 45% reduction in flotation energy per kWh/t 30% overall energy 30% increase consumption in plant reduction throughput 35% reduction in grinding energy per 35% increase kWh/t in revenue from metals recovered Zero steel grinding balls 80% reduction used in
Slide 33: Financial appendix
Financial appendix Q2 2024 33 15 August 2024
Slide 34: Mining
Mining (DKKm) Q2 2024 Q2 2023 Change Organic H1 2024 H1 2023 Change Organic Order intake 3,423 4,215 -19% -17% 7,599 8,392 -9% -7% - Service order intake 2,794 2,615 7% 5,578 5,517 1% - Products order intake 629 1,600 -61% 2,021 2,875 -30% Order backlog 11,852 13,472 -12% 11,852 13,472 -12% Revenue
Slide 35: Mining order intake by commodity
Mining order intake by commodity MINING ORDER INTAKE Q2 2024 Other Mining 21% Iron ore 9% 53% Copper 1% Fertilizer 3% Coal 13% Gold 35 15 August 2024
Slide 36: Cement
Cement (DKKm) Q2 2024 Q2 2023 Change Organic H1 2024 H1 2023 Change Organic Order intake 1,006 1,276 -21% -16% 2,048 2,620 -22% -18% - Service order intake 758 752 1% 1,478 1,565 -6% - Products order intake 248 524 -53% 570 1,055 -46% Order backlog 4,231 5,658 -25% 4,231 5,658 -25% Revenue 1,131 1,6
Slide 37: Revenue and EBITA margin for Mining and Cement
Revenue and EBITA margin for Mining and Cement MINING CEMENT DKKm Margin DKKm Margin 5,000 13.1% 14% 2,500 14% 10.8% 11.5% 12% 12% 4,000 2,000 11.5% 9.6% 1,518 10% 10% 10.3% 1,226 7.7% 8.5% 3,000 1,177 8% 1,500 8% 8.6% 800 2,000 6% 1,000 6% 4.3% 487 483 2,833 4% 4.7% 4% 2,404 2,557 1,000 500 870 2%
Slide 38: Order intake and revenue growth
Order intake and revenue growth Order intake growth Mining Cement NCA Group Revenue growth Mining Cement NCA Group Q2 2024 vs. Q2 2023 Q2 2024 vs. Q2 2023 Organic -17% -16% -80% -18% Organic -12% -24% -88% -20% Acquisitions and disposals 0% -5% 0% -1% Acquisitions and disposals 0% -8% 0% -2% Currenc
Slide 39: Order backlog and conversion to revenue
Order backlog and conversion to revenue Order backlog / last 12 months revenue at 76.9% in Q2 2024 ORDER BACKLOG EXPECTED BACKLOG CONVERSION TO REVENUE -20% vs. Q2 2023 ▪ 31% during 2024 DKKm Order backlog/Revenue ▪ 52% during 2025 30.000 140% ▪ 17% during 2026 & beyond 25.000 120% Outstanding order
Slide 40: Regional revenue split
Regional revenue split REVENUE REVENUE 6M 2024 6M 2023 19% 18% 27% 24% 13% 14% 26% 14% 26% 19% North America Sub-Saharan Africa, Middle East and South Asia South America Asia and Australia Europe, Central Asia and North Africa 40 15 August 2024
Slide 41: Group
Group (DKKm) Q2 2024 Q2 2023 Change Organic H1 2024 H1 2023 Change Organic Order intake 4,436 5,523 -20% -18% 9,684 11,155 -13% -11% - Service order intake 3,556 3,388 5% 7,060 7,183 -2% - Products order intake 880 2,135 -59% 2,624 3,972 -34% Order backlog 16,518 20,544 -20% 16,518 20,544 -20% Reven
Slide 42: Cash flow statement
Cash flow statement GROUP (DKKm) Q2 2024 Q2 2023 Change EBITDA, adjusted 524 430 94 Change in provisions -190 174 -364 Change in NWC -86 62 -148 Financial payments -38 -20 -18 Taxes paid -196 -274 78 CFFO (Group) 14 372 -358 CFFI excl. acquisitions and disposals -103 -112 9 Acquisitions and disposal
Slide 43: Net working capital components
Net working capital components Net working capital increased to DKK 2,021m at the end of Q2 2024 DKKm DKKm DKKm NET WORKING CAPITAL TRADE RECEIVABLES TRADE PAYABLES, NET 3,000 6,000 4,000 5,000 4,658 3,007 2,021 3,000 2,000 4,000 3,000 2,000 1,000 2,000 1,000 1,000 0 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 44: FLSmidth A/S contact details
FLSmidth A/S Vigerslev Allé 77 2500 Valby, Copenhagen Denmark Phone: +45 3618 1000 Email: info@FLSmidth.com www.flsmidth.com CVR: 58180912
Flsmidth & Co A/S B Shs — Q2 2024 Earnings Presentation on 6ix