Q2 2024 FLSmidth & Co A/S Earnings Call (Danish) Transcript
Key Points
- FLSmidth & Co AS (FLIDF) reported significant growth in its service business, with Mining services growing by 7% and Cement spare parts business increasing by over 10% year-on-year.
- The company achieved high EBITA profitability, with Mining posting an adjusted EBITA margin above 13% and Cement achieving more than 9%.
- Sustainability KPIs are progressing well, indicating a positive trajectory in environmental and operational metrics.
- The company has successfully reduced its workforce by over 2,000 people as part of its rightsizing efforts, aiming for a more cost-efficient operating model.
- FLSmidth & Co AS (FLIDF) reported a gross margin improvement to 31.8% for the group, with Cement now achieving a gross margin above 30%.
- The capital market remains slow, with no significant large orders in the quarter, impacting the order intake for products.
- There is a concern about safety improvements, particularly in North American operations, which remains a focus area.
- The company is still burdened by high SG&A costs, which it aims to reduce over the next 12 to 18 months.
- Mining revenues saw a significant decline in products due to legacy projects from thyssenkrupp times, although these have been provisioned for.
- The order pipeline in minerals remains stable at a low level, with no quick change expected in the capital business for the next 6 to 18 months.
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The result confirms that our transformation is progressing ahead of the schedule. You also see that the service business, both in Mining and Cement is growing faster than the market and the service-oriented business model works.
We both delivered high EBITA profitability both in Mining and in Cement segments. Mining posted adjusted EBITA margin above 13%. Cement posted adjusted EBITA margin of more than 9%. So both businesses performed well. And especially proud in both businesses about service growth.
In mining, 7% growth in order intake, whereas market was flat. Products was low due to timing, and I will talk about that in a bit. In Cement, what we celebrate is that for the remaining portfolio, as you remember, we've been selling some businesses the spare part business grew year-on-year more than 10% and a significant achievement in the Cement business.
Sustainability KPIs are progressing well, still concern about safety and improvement of the safety. We've been rightsizing the
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