WE DISCOVER POTENTIAL | |
INTERIM | |
REPORT | |
H1 | 2021 |
1 January - | |
30 June 2021 | |
Company announcement no. 9 | |
FLSmidth & Co. A/S | |
Vigerslev Allé 77 | |
DK-2500 Valby | |
CVR No. 58180912 |
CONTENTS
Highlights Key figures
Quarterly financial performance Financial performance in H1 2021 Mining
Cement
Quarterly key figures
Consolidated Condensed | ||
Interim Financial | ||
Statements | ||
6 | ||
7 | Income statement | 18 |
10 | Statement of comprehensive income | 18 |
12 | Cash flow statement | 19 |
14 | Balance sheet | 20 |
16 | Equity statement | 21 |
Notes | ||
1. Key accounting estimates and | ||
judgements | 22 | |
2. Income statement by function | 22 | |
3. Segment information | 23 | |
4. Revenue | 24 | |
5. Provisions | 25 | |
6. Contractual obligations and contingent | ||
liabilities | 25 | |
7. Disposal of enterprises | 26 | |
8. Discontinued activities | 26 | |
9. Net working capital | 27 | |
10. Fair value measurement | 27 | |
11. Events after the balance sheet date | 28 | |
12. Accounting policies | 28 | |
Statements | ||
Statement by Management | 29 | |
Management Review
Towards zero emissions in mining and cement
Read more on page 5
FLSmidth ■ Interim Report H1 2021 | 2 |
Highlights
Management Review
HIGHLIGHTS
Our second quarter showed positive progress across the board: A strong order intake, including the award of Europe's first full-scale clay calcination installation which will cut plant CO2 emissions by up to 16%. Higher revenue from both service and capital businesses and 50% higher EBITA compared to Q2 2020. Further reduction in net working capital and a strong free cash flow. Overall, a good performance by our organisation.
On 29 July, we announced the acquisition of thyssenkrupp's Mining busi- ness.1 A transformational deal, creating one of the world's largest and strongest suppliers to the mining industry, and at the same time a significant milestone in our MissionZero sustainability ambitions. The transaction offers an attractive opportunity to create long-term value for our shareholders, a stronger value proposition for our customers and improved career pathways for the combined pool of talented employees.
- Thomas Schulz, Group CEO
1 Closing of the transaction is expected in H2 2022 and is subject to customary approvals from relevant authorities.
Mining
Mining order intake increased 36% organi- cally. Capital orders increased by 86% and service orders increased 12%, accounting for 62% of Mining order intake.
Revenue increased by 13% organically and EBITA increased by 18%. The EBITA margin increased to 8.2% from 7.8% in Q2 2020.
Adjusted for acquisition costs, the EBITA margin was 9.7%.
Cement
Cement order intake increased 55% organi- cally. Capital orders increased 59% and Service orders increased 42%, accounting for 52% of Cement order intake.
Organically, revenue in Q2 2021 was in line with Q2 2020. The EBITA margin was -2.7% compared to -4.9% in Q2 2020, still impacted by reshaping activities to improve profitability in Cement.
- EBITA margin increased to 5.0%, from 4.3% in H1 2020, positively impacted by a higher share from service and positive ef- fects from implemented business im- provement activities
Guidance 2021
FLSmidth updates its guidance to group revenue of DKK 16.0-17.0bn (previously: DKK 15.5- 17.0bn) and a group EBITA margin of 5-6%.
The guidance includes cost related to the acquisition of thyssenkrupp's Mining business estimated at around DKK 100m for the full year. The Mining business revenue is expected to grow in 2021 with modest growth in the second half of the year. EBITA margin for Mining is expected to be high-single digit for the full year. The Cement business revenue is expected to remain soft in the second half of 2021 and decline for the full year. Initiatives to reshape the Cement business are progressing well. The Cement business is not expected to be EBITA positive in 2021 due to continued
Highlights Q2 2021
- Order intake increased 42% organically year-on-year driven by both Mining and Cement. Service orders increased 20%. The book-to-bill was 113%
- Revenue increased 9% organically, en- tirely attributable to Mining and driven equally by service and capital
- EBITA was up by 50% on a low compari- son and the EBITA margin increased to 4.8%, driven by both Mining and Cement
- Continued positive effects from imple- mented business improvement activities
- Q2 included costs in Mining of DKK 40m related to the acquisition of TK Mining
- Net working capital has improved over the past five quarters and the net working capital ratio decreased to 8.2%
- Free cash flow was strong at DKK 443m and financial gearing improved to 1.0x NIBD to EBITDA
Highlights H1 2021
- Order intake increased 1% organically, driven by Cement and increased base or- ders in Mining, whereas H1 2020 included a higher level of large Mining orders. Ser- vice orders increased 5%
- Revenue decreased 3% organically, com- prising a 3% increase in Mining and a 13% decline in Cement compared to H1 2020
Cement reshaping costs and low capacity utilisation in the service business, particularly related to the impact of the pandemic in H1.
Guidance 2021
H1 | Initial | Updated | |
2021 | Guidance | Guidance | |
2021 | 2021 | ||
Revenue (DKKbn) | 7.8 | 15.5-17.0 | 16.0-17.0 |
EBITA margin | 5.0% | 5-6% | 5-6% |
FLSmidth ■ Interim Report H1 2021 | 3 |
FINANCIAL HIGHLIGHTS
Management Review
GROUP
MINING
CEMENT
Order intake
DKKm
4,615
▲ 38%
Q2 | 4,615 | ||||
2021 | |||||
Q2 | 3,348 | ||||
2020 | |||||
H1 | 9,600 | ||||
2021 | |||||
H1 | 9,874 | ||||
2020 |
Order intake
DKKm
2,933
- 32%
Q2
20212,933
Q2
20202,223
Order intake
DKKm
1,682
- 50%
Q2
2021 1,682
Q2
2020 1,125
Revenue
DKKm
4,073
- 6%
Q2
20214,073
Q2
20203,846
H1
2021
H1
2020
Revenue
DKKm
2,802
- 11%
Q2
20212,802
Q2
20202,520
Revenue
DKKm
1,271
- 4%
Q2
2021 1,271
Q2
2020 1,326
EBITA & EBITA margin | Cash flow from operating activities | |||||||||||||||||||
DKKm - % | DKKm 507 ▼ from DKKm 533 in Q2 2020 | |||||||||||||||||||
197 4.8% | Earnings per share | |||||||||||||||||||
DKK 1.1 ▲ from DKK (0.3) in Q2 2020 | ||||||||||||||||||||
▲ 50% | ||||||||||||||||||||
Q2 | 197 | Net working capital ratio | ||||||||||||||||||
2021 | ||||||||||||||||||||
Q2 | 131 | 8.2% ▼ from 12.3% end of Q2 2020 | ||||||||||||||||||
2020 | ||||||||||||||||||||
7,786 | H1 | 387 | ||||||||||||||||||
2021 | NIBD/EBITDA | |||||||||||||||||||
H1 | ||||||||||||||||||||
8,371 | 359 | |||||||||||||||||||
2020 | 1.0x ▼ from 1.5x end of Q2 2020 | |||||||||||||||||||
EBITA & EBITA margin | Revenue split by service & capital | |||||||||||||||||||
DKKm - % | % | |||||||||||||||||||
231 8.2% | 36% | |||||||||||||||||||
Q2 2020: | ||||||||||||||||||||
36% | ||||||||||||||||||||
▲ 18% | ||||||||||||||||||||
64% | ||||||||||||||||||||
Q2 | Q2 2020: | |||||||||||||||||||
231 | 64% | |||||||||||||||||||
2021 | ||||||||||||||||||||
Service | ||||||||||||||||||||
Q2 | 196 | Capital | ||||||||||||||||||
2020 | ||||||||||||||||||||
EBITA & EBITA margin | Revenue split by service & capital | |||||||||||||||||||
DKKm - % | % | |||||||||||||||||||
-34 -2.7% | 46% | |||||||||||||||||||
Q2 2020: | ||||||||||||||||||||
▲ 48% | 54% | |||||||||||||||||||
45% | ||||||||||||||||||||
Q2 2020: | ||||||||||||||||||||
Q2 | (34) | 55% | ||||||||||||||||||
2021 | ||||||||||||||||||||
Q2 | (65) | Service | ||||||||||||||||||
2020 | ||||||||||||||||||||
Capital | ||||||||||||||||||||
FLSmidth ■ Interim Report H1 2021 | 4 |
SUSTAINABILITY HIGHLIGHTS
Management Review
Safety (TRIR)
Total Recordable Injury Rate/ million working hours
1.7
Target: zero harm (10% y-o-y reduction through 2030)
H1
20211.7
2020 1.0
Following a strong safety performance in Q1, our safety performance deteriorated in Q2, mostly as a result of employees returning to sites following relaxation of COVID-19 restrictions. Mitigation plans are being implemented.
Water withdrawal
m3
84,805
2021 Target: 187,479
H1
202184,805
2020 197,346
Solid progress against our 2021 target. Slight increase in water withdrawal from Q1 to Q2 due to pipe burst occurrence on two sites and re-opening of sites as pandemic eases in some regions
Women managers
%
14.5
2021 Target: 14.3%
H1
202114.5%
2020 13.1%
Progress on gender diversity has continued in Q2 in line with our long-term target. Improvements driven by regional actions focused on diversity in recruitment and internal growth opportunities as well as retention of talent.
Greenhouse gas emissions (CO2 emissions)
tonnes
16,167
2021 Target: 38,685
H1
202116,167
2020 41,155
During the quarter, we saw a positive progress against our target to reduce greenhouse gas emissions with an additional 13 sites having implemented energy efficiency pro- grammes, including savings in using air conditioning, installation of LED systems as well as compressed air systems.
MissionZero developments
Through our sustainability programme MissionZero, we develop and deliver solutions that enable our customers to operate with zero emissions by 2030.
Following the approval of our science-based targets in May, we are taking the next step to create a robust measurement system to track progress against them. This work will also pave the way to meeting the requirements of the upcoming EU Taxonomy.
Europe's first full-scale clay calcination installation
At a new project in France, FLSmidth will deliver equipment to replace clinker with environmentally friendly clay, cutting up to 16% of CO2 emissions compared to existing cement prod- ucts. The order includes the new FLSmidth flash calciner technology, environmental control system and alternative fuel storage at the customer VICAT's cement plant in Xeuilley.
Carbon Capture Partnership
Innovation is a cornerstone of the MissionZero programme. Increasingly we are working in partnerships to further drive innovation. In June, we announced a partnership with Car- bon8 Systems (C8S) to accelerate carbon capture in the global cement industry. The combination of C8S' advanced carbonation technology and our extensive process
knowledge will make a significant contribution to
the cement industry's Net Zero ambitions.
Plugging in to the growing demand for lithium
Lithium is key for the green energy transition due to its use in batteries for electric and hybrid vehicles and its ability to store energy produced by solar, tidal and wind sources. It is an area where MissionZero can play a big role - if we can help make lithium extraction more sustainable, then the path to a low-carbon future becomes more sustainable.
Increasing demand for lithium has led to some exciting new projects in the second quarter. FLSmidth will provide product engineering for pi- oneer's Rhyolite Ridge lithium-boron project in Nevada, while in Europe, Keliber - a Finnish company producing sustainable, battery-grade lithium - appointed FLSmidth for process engineering services at its Päiväneva concentrator plant. FLSmidth has also started delivering advanced lithium-centred technologies, including acid roasting, rotary cooler and pre-heat cyclone technology to Covalent in Australia, following an order placed in 2019.
FLSmidth ■ Interim Report H1 2021 | 5 |
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FLSmidth & Co. A/S published this content on 12 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2021 05:50:02 UTC.