Highlights in FY2023
Mining service order intake increased by 3% in 2023 reflecting stable market conditions
Adjusted Mining EBITA margin of 10.8% driven by better-than-expected Mining Technologies integration, ongoing transformation and synergy take-out Solid improvement in underlying Cement profitability with an EBITA margin of 6.7%1
Decision to explore divestment options for the Cement business announced in
Exit from the Non-Core Activities (NCA) segment continuing at an accelerated pace
Positive cash flow from operations of
Mining order intake decreased 5% organically in 2023, driven by Products. This development reflects our ongoing transformation efforts and market conditions. Currencies had a 4% negative impact on Mining order intake for the year. 2022 only included four months of Mining Technologies activities and the establishment of the NCA segment as of Q4 2022, whereas 2023 reflects the full year impact of Mining Technologies activities, the NCA segment and our exit from
Cement order intake declined by 26% in 2023, mainly due to Products, which decreased by 40% compared to 2022 driven in part by the implementation of our GREEN'26 Cement strategy, which includes de-risking and product portfolio pruning, as well as adverse effects from market conditions. Cement Service order intake decreased 16% due to lower orders for consumables and Upgrades & Retrofits. Organically, Cement order intake decreased by 24%.
Non-Core Activities order backlog amounted to
Group CEO,
1. Includes a one-off net gain of
Financial performance 2023
Mining revenue increased organically by 18% and by 13% including currency effects. Mining EBITA was impacted by costs related to the integration of Mining Technologies of
Cement revenue decreased by 3% compared to 2022. Organically, Cement revenue decreased by 1%. Service revenue decreased by 8% due to the continued challenging market conditions as well as the divestment of the AFT business, while Products revenue increased by 3% compared to 2022 as a result of good backlog execution. EBITA increased by 100% compared to 2022, mainly as a result of the net gain from the divestment of the AFT business as well as relatively lower SG&A costs due to the ongoing transformation efforts. The corresponding EBITA margin was 6.7% compared to 3.3% in 2022.
NCA revenue amounted to
Integration, synergies and transformation
During the year, we have successfully improved our legacy Mining business, while at the same time managed to integrate Mining Technologies ahead of our initial expectations. As a result, we have raised the total annual cost synergy takeout from the acquisition to around
We have continued to simplify, de-risk and right-size our Cement business to improve profitability and make it 'fit-for-purpose' with a strategic focus on the core products and services required in the cement industry.
The exit from Non-Core Activities continued to progress at an accelerated pace. Since the NCA segment was established in Q4 2022, we have reduced the order backlog by more than 85% and we are well on track for a full exit by the end of 2024. We still expect a total loss of around
Embracing a future as two companies
As part of the pure play separation process between Mining and Cement, we have assessed different business models, investment scenarios and potential ownership structures. Based on these assessments, we have concluded that the Cement business in the longer-term could benefit from an alternative ownership than
The process of exploring divestment options for the Cement business has been initiated, however any transaction is of course not guaranteed. Until further notice, the Cement business will continue to execute on its 'GREEN'26' strategy and work towards the long-term financial target that has been set for the business.
Financial performance Q4 2023
Mining order intake decreased by 22% compared to Q4 2022, reflecting a stable Service market and very large Products orders in Q4 2022. Excluding currency effects, the Mining order intake decreased by 18%. Mining revenue increased by 2% in the quarter and the adjusted EBITA margin was 11.8% when excluding integration costs related to the acquisition of Mining Technologies of
Cement order intake decreased by 15% in Q4 2023 compared to Q4 2022, reflecting continued challenging market conditions and product pruning. Excluding currency effects, order intake decreased by 13%. Cement revenue decreased by 14% in the quarter. EBITA increased by 47%, primarily a result of relatively lower SG&A costs due to positive effects from our ongoing transformation efforts including non-recurring one offs related to the ongoing rightsizing. The corresponding EBITA margin improved by 3.1%-points to 7.4% in Q4 2023.
Non-Core Activities order intake amounted to
Mining
Compared to 2023, we expect market demand to be softer in 2024, mainly driven by the Products business due to some customers delaying larger investment decisions. However, the mining industry continues to benefit from a positive long-term outlook for minerals crucial to global economic development and the green transition. Guidance for adjusted EBITA margin includes adjustment for transformation and separation costs of around
Cement
We expect the short-term outlook for the cement industry to remain impacted by macroeconomic uncertainty. The guidance for revenue and adjusted EBITA margin reflects the ongoing execution of the 'GREEN'26' strategy, continued business simplification and product portfolio pruning, including the expected closing of sale of the MAAG gears and drives business during Q1 2024. Further, the guidance for adjusted EBITA margin includes adjustment for transformation and separation costs of around
Non-Core Activities
The guidance for revenue reflects continued execution of the order backlog and contract negotiations aimed at reducing the scope of the remaining Non-Core Activities order backlog. The EBITA margin guidance reflects the operational lossmaking nature of the business as well as costs related to finalise the exit of the business segment by end of 2024.
Contact:
Jannick Lindegaard Denholt
Tel: +45 21 69 66 57
Email: jli@flsmidth.com
Andreas Escherich Holkjaer
Tel: +45 24 85 03 84
Email: andh@flsmidth.com
Therese Mollevinge
Tel: +45 41 37 16 38
Email: tmo@flsmidth.com
About
MissionZero is our sustainability ambition towards zero emissions in mining and cement by 2030.
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