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Annual Report 2016 for FLSmidth & Co.

09.02.2017


Company Announcement no. 2-2017, 09 February 2017

Market activity picked up in the second half of 2016

Highlights

  • Positive momentum in service orders in the second half of 2016
  • Revenue above and EBITA margin within guidance for 2016
  • Debt significantly reduced on the back of strong operating cash flow
  • Revenue and EBITA margin in 2017 is expected to be at a level similar to 2016
  • Q4 2016 saw the highest quarterly revenue in two years

"After a weak first half, activity picked up, finishing the year on a strong note. Rising commodity prices positively impacted sentiment in the mining industry in 2016, although it has yet to translate into higher capital investments. The cement industry is showing early signs of recovery," commented Group CEO Thomas Schulz.

"Our range of projects, products, and services assist our customers in their pursuit of enhanced productivity, and we continue to improve our offerings to maintain our competitive edge," said Thomas Schulz.

Order intake increased 2% organically in 2016, while revenue was 5% down due to a lower order backlog at the beginning of the year and a slow start to the year.

In 2016, the EBITA margin was 8.0% (adjusted for one-off costs), adversely impacted by lower revenue, particularly in the first half. Towards the end of the year, activity picked up, and the adjusted EBITA margin increased to 9.7% in the fourth quarter.

Capital efficiency improved in 2016. The equity ratio increased to 35% and the financial gearing (NIBD/EBITDA) declined to 1.6, both comfortably within the targeted capital structure. Improved working capital and positive operating cash flow reduced net interest-bearing debt by DKK 1.1bn in 2016.

Guidance for 2017
The guidance for 2017 reflects the lower order backlog at the beginning of the year combined with an assumption of stable market activity in 2017. The EBITA margin guidance includes expected one-off costs related to corrective actions.

Accordingly, revenue is expected to be DKK 17-19bn and the EBITA margin to be 7-9%. The return on capital employed (ROCE) is expected to be 8-10%.


Contacts

Investors
Pernille Friis Andersen, phone +45 36 18 18 87, pefa@flsmidth.com
Nicolai Mauritzen, phone +45 36 18 18 51, nicm@flsmidth.com  

Media
Sofie Karen Lindberg, phone +45 30 93 18 77, skl@flsmidth.com 

Key Figures Q4 and full-year 2016

DKKm Q4 2016 Q4 2015 Change 2016 2015 Change
Order intake 4,544 3,691 23% 18,303 18,490 -1%
Service 2,610 2,271 15% 10,029 9,660 4%
Service share 57% 62%   55% 52%  
Order backlog 13,887 14,858 -7% 13,887 14,858 -7%
Revenue 5,525 5,297 4% 18,192 19,682 -8%
Service 2,889 2,807 3% 10,262 10,901 -6%
Service share 52% 53%   56% 55%  
Gross profit 1,301 1,255 4% 4,581 4,946 -7%
Gross margin 23.5% 23.7%   25.2% 25.1%  
EBITDA 515 463 11% 1,588 1,878 -15%
EBITA 426 384 11% 1,289 1,582 -19%
EBITA margin 7.7% 7.2%   7.1% 8.0%  
EBITA margin adj. for one off costs 9.7% 8.9%   8.0% 9.7%  
EBIT 308 279 10% 881 1,141 -23%
EBIT margin 5.6% 5.3%   4.8% 5.8%  
Profit 182 23 691% 522 425 23%
CFFO 608 148 311% 1447 538 169%
Free cash flow 564 168 +291% 1,253 1,288 -3%
Net working capital 2,099 2,583 -19% 2,099 2,583 -19%
Net interest-bearing debt 2,525 3,674 -31% 2,525 3,674 -31%

For additional information, Investor Room at www.flsmidth.com.

FLSmidth is the market-leading supplier of productivity to the global mining and cement industries. Headquartered in Copenhagen, Denmark, and with offices in more than 50 countries, FLSmidth delivers engineering, equipment and service solutions to customers worldwide. Productivity, sustainability, and quality are focus areas for the 12,000 employees in FLSmidth. The company generates annual revenue of approximately DKK 18 billion. Read more on www.flsmidth.com