FLSmidth's group revenue rises 2% in 3Q23

FLSmidth's consolidated group revenue increased by two per cent in the 3Q23 compared to the 3Q22. Adjusted for integration costs of DKK119m (US$17m), the EBITA margin was 10.1 per cent in the 3Q23. Including integration costs, the EBITA margin was eight per cent in the 3Q23 compared to 5.9 per cent in the 3Q22. Excluding the AFT divestment gain, the underlying EBITA margin was 6.3 per cent. The Non-Core Activities (NCA) divestment to KOCH Solutions had no material impact on EBITA for the quarter.

FLSmidth's cement revenue decreased by 16 per cent in the 3Q23 compared to the 3Q22. Cement EBITA increased by DKK114m compared to the 3Q22 due to the one-off net gain from the divestment of Advanced Filtration Technologies'( AFT) filter media business in July 2023. The underlying EBITA, excluding the one-off net gain, amounted to DKK66m in the 3Q23 compared to DKK50m in the 3Q22. The corresponding underlying EBITA margin improved by 1.7 percentage points to 4.7 per cent in 3Q23.

The company's cement order intake decreased by 24 per cent in the 3Q23 compared to 3Q22, mainly driven by a 31 per cent fall in products order intake, reflecting both current market conditions as well as continued pruning of the product offering and the sale of the AFT business.

Mining
Mining revenue increased by four per cent compared to the 3Q22. However,  the 3Q22 included only one month of Mining Technologies activities, while the 3Q23 reflects the establishment of the NCA segment and FLSmidth's exit from Russia. If excluding a high-level estimate of the impact from those changes, the underlying revenue growth in the quarter was approximately 13 per cent. Adjusted for integration costs of DKK119m, the EBITA margin was 11.1 per cent in the 3Q23. Including integration costs, the EBITA margin increased to 8.2 per cent from 7.2 per cent in the 3Q022.

Mining order intake increased by five per cent compared to the 3Q22. Compared to the 3Q22, which was characterised by an unusually high level of large spare parts orders, the service order intake decreased by six per cent in 3Q23. Sequentially, service order intake grew by eight per cent.

Non-core activities
NCA revenue amounted to DKK230m in the 3Q23. EBITA amounted to -DKK42m with a corresponding EBITA margin of -18.3 per cent. The divestment to KOCH Solutions had no material impact on EBITA for the 3Q23.The order backlog for the NCA segment amounted to DKK0.6bn at the end of the 3Q23, representing a decrease of around DKK0.8bn compared to 2Q23 and a decrease of around DKK2.3bn since the establishment of the NCA segment as of 4Q22. The decrease reflected the divestment to KOCH Solutions which closed in the 3Q23 and execution of the order backlog as well as continued re-scoping and contract terminations.

Group order intake declined by two per cent compared to  the 3Q22 mainly due to the current market conditions for the cement business. The YoY decline was partly offset by the relatively higher Mining order intake. Service and Products order intake comprised 66 and 34 per cent of total Group order intake, respectively.