Annual Report 2018 for FLSmidth & Co.

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Back 31 January 2019

Company Announcement No. 2-2018, 31 January 2019

Solid operating results and modestly positive outlook for 2019

Strongest order intake in six years

2018 highlights

· Strong order intake

· Revenue growth resumed

· Strong performance in Mining

· Steps taken to improve profitability in Cement

· Low free cash flow

"The high order intake in 2018 is due to an improving mining market, but it also reflects the performance of our organisation, our position and strong lifecycle solutions. This combination lays a good foundation for future growth," commented Group CEO Thomas Schulz.

Revenue grew by 4% in 2018. The 13% growth in the order intake was attributable to Mining delivering 24% growth, especially driven by copper, while Cement was unchanged. The strong order intake bodes well for revenue growth in 2019.

EBITA was up by 5% in line with revenue, and the EBITA margin increased slightly to 8.5% from 8.4%.

The cash flow from operating activities was impacted by significant negative developments in discontinued activities, and the free cash flow amounted to only DKK 100m.

The return on capital employed rose to 11.0% from 10.4% in 2017 as a result of the higher EBITA and lower capital employed.

The proposed dividend is DKK 9 per share (2018: DKK 8).

Guidance for 2019
FLSmidth guides for revenue of DKK 19-21bn (2018: DKK 18.8bn) and an EBITA margin of 9-10% (2018: 8.5%). The return on capital employed (ROCE) is expected to be 12-14% (2018: 11.0%).

The positive trend in the mining industry is expected to continue in 2019 modestly, while cement market conditions are expected to be stable with global macroeconomic uncertainties for both industries.

Group CEO Thomas Schulz commented: "Both our cement and mining customers are constantly pursuing productivity improvements. As Productivity Provider #1, we are in the right spot to support their agenda and by taking innovation and digitalization to the next level, we will be an even stronger business partner going forward. Additional factors that will strengthen our competitiveness are our ongoing efforts to standardise our product offering and leverage our unique customer insight," said Thomas Schulz.

Contacts

Investors
Nicolai Mauritzen, tel +45 36 18 18 51, nicm@flsmidth.com

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

Key figures 2018

(DKKm)	Q4 2018	Q4 2017	Change (%)	2018	2017	Change (%)
Order intake (gross)	4,503	4,836	*-7%*	21,741	19,170	*13%*
- of which service order intake	2,680	2,693	0%	10,907	10,710	2%
Service order intake share	60%	56%		50%	56%
Order backlog	16,218	13,654	19%	16,218	13,654	19%
Revenue	5,450	4,943	*10%*	18,750	18,000	4%
- of which service revenue	2,613	2,583	1%	10,208	10,473	-3%
Service revenue share	48%	52%		54%	58%
Gross profit	1,312	1,234	6%	4,693	4,597	2%
Gross margin	24.1%	25.0%		25.0%	25.5%
EBITDA before special non-recurring items	582	493	18%	1,826	1,732	5%
EBITA	511	465	10%	1,585	1,515	5%
EBITA margin	9.4%	9.4%		8.5%	8.4%
EBIT	419	372	13%	1,220	1,115	9%
EBIT margin	7.7%	7.5%		6.5%	6.2%
Profit	169	(185)		635	74	*758%*
CFFO	97	546	-82%	385	1,065	-64%
Free cash flow	46	602	-92%	100	952	-89%
Net working capital	2,200	1,833	+20%	2,200	1,833	+20%
Net interest-bearing debt	(1,922)	(1,545)	+24%	(1,922)	(1,545)	+24%

For additional information, go to the Investors at www.flsmidth.com

Read the Annual Report 2018 here

FLSmidth delivers sustainable productivity to the global mining and cement industries. We deliver market-leading engineering, equipment and service solutions to our customers enabling them to improve performance, drive down costs and reduce environmental impact. Our operations span the globe and our 11,400 employees are present in more than 60 countries. In 2018, FLSmidth generated a revenue of DKK 18.8 billion. www.flsmidth.com

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