FLSmidth reports 31% drop in cement order intake in 3Q24
FLSmidth reported that its cement business in the 3Q24 achieved an adjusted EBITA margin of 10.8 per cent, demonstrating continued strong execution of higher-margin orders as well as release of provisions related to the completion of legacy projects.
Cement order intake decreased by 31 per cent compared to the 3Q23 (a fall of 24 per cent if excluding currency effects and effects from divestments). Service order intake decreased by 20 per cent largely due to the recent divestments as well as less favourable market conditions in especially western Europe and timing of the booking of certain larger service orders. Products order intake decreased by 53 per cent driven by the recent divestments, continued de-risking of the order intake and exit from project-oriented business. Service and Products comprised 78 and 22 per cent of the total cement order intake in the quarter, respectively (compared to 67 and 33 per cent, respectively in the 3Q23).
The order backlog for the Non-Core Activities (NCA) segment amounted to DKK403m (US$57.4m) at the end of the 3Q24 compared to DKK435m at the end of 2Q24 and DKK 636m at the end of the 3Q23. It remains the expectation that the segment will be fully closed down by the end of 2024.
Group order intake decreased by 18 per cent compared to the 3Q23 (decrease of 14 per cent if excluding currency effects and effects from divestments). Service order intake decreased by 11 per cent driven by lower order intakes in both businesses. Products order intake decreased by 33 per cent, also driven by lower order intake in both the mining and cement businesses. Service and Products comprised 72 and 28 per cent of the total order intake, respectively (compared to 66 and 34 per cent in the 3Q23, respectively).
Mining order intake decreased by 14 per cent compared to the 3Q23 (decrease of 11 per cent if excluding currency effects). Service order intake decreased by six per cent mainly driven by lower order intake within upgrades and retrofits and professional services as well as our ongoing exit from basic labour services. The decline was partly offset by relatively higher order intake for consumables, including a multi-year contract for the supply of mill liners to a customer in Australia. Products order intake decreased by 28 per cent reflecting the continued softness of the mining products market and continued de-risking of our order backlog. One large order of DKK340m was announced in the quarter. Service and Products comprised 71 and 29 per cent of the total mining order intake in the quarter, respectively (compared to 65 and 35 per cent in the 3Q23, respectively).
Cement business 3Q24 financial performance
Cement revenue decreased by 27 per cent compared to the 3Q23 (decrease of 21 per cent if excluding currency effects and effects from divestments). Service revenue decreased by 17 per cent due to effects from divestments. Products revenue decreased by 39 per cent driven in part by the continued pruning of the company's product portfolio as a result of the de-risking strategy and the impact of divestments. Gross profit increased by one per cent to DKK388m (DKK385m in the 3Q23) as a result of continued good execution of higher-margin orders as well as release of provisions related to the completion of legacy projects.
