Mining sector dominates FLSmidth 1Q23 results
FLSmidth has reported group revenue of DKK6016m (US$886.6m) in the first quarter of 2023, up 27.8 per cent from the DKK4706m recorded in the 1Q22. Group EBITA over the same period declined 22.2 per cent to DKK235m, compared to DKK302m in the 1Q22. Group profit in the 1Q23 stood at DKK84m, down from DKK123m in the 1Q22. Group order intake for the three-month period was DKK5632m, a contraction from the DKK7018m seen in the 1Q22.
Its cement business saw revenue of DKK1582m in the opening quarter of 2023, up 7.4 per cent YoY from DKK1473m in the same period a year earlier. EBITA in the cement business advanced 28.3 per cent YoY to DKK68m with an EBITA margin of 4.3 per cent. Gross profit improved seven per cent YoY to reach DKK372m in the 1Q23. According to the company, the “short-term outlook for the cement industry remains impacted by overcapacity and the potential recession is expected to impact market demand negatively over the coming period.”
Despite the overcapacity there is increased demand in India for additional local capacity due to investments in infrastructure and other development areas. The Chinese market continues to focus on the modernisation of existing plants with new and more efficient and sustainable products. However, the European market continues to be impacted by the war in Ukraine, inflation and rising interest rates delaying investment.
Meanwhile, the mining sector of the business reported revenue of DKK4185m, marking a 29.4 per cent improvement YoY, while EBITA increased 10 per cent YoY to DKK274m, versus DKK249m in the 1Q22. Following a strong 2022, the company expects market activity in the sector in 2023 to remain large stable. The opening quarter of 2023 was marked by continued high activity in gold and lithium projects, however this was dampened by some cautiousness in large copper projects in South America.
Non-core activities saw revenue of DKK249m in the 1Q22, with EBIT coming in at a loss of DKK107m.
“We have had a good start to the year. The key transformation efforts, which we initiated last year, positively impacted our performance in the first quarter of 2023. Our mining business saw good underlying development in both revenue and profitability, reflecting our increased focus on the service business and our continued de-risking approach. Sentiment in the mining industry remains positive and service activity levels remain healthy,” said Mikko Keto, group CEO, FLSmidth. “The cement market has remained largely stable compared to the prior quarter despite macroeconomic challenges. Our cement business’ profitability has continued to benefit from our operating model simplification efforts and our in- creased focus on key markets.”
In terms of sustainability, Scope 1 & 2 greenhouse gas emissions in the 1Q23 were reported at 10,913tCO2e. This is up from the 10,747tCo2e seen in the same period of the previous year. According to FLSmidth, the increase in emissions YoY reflects the inclusion of new Mining Technologies sites with Scope 1 & 2 targets in the process of being reviewed.
