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FLSmidth maintains 2019 revenue guidance

FLSmidth’s strong growth in capital equipment sales versus services business so far in 2019 is expected to restrain profit margin growth in the second half, while revenue tracks to the guided range of DKK19-21 billion (US$2.85-3.15 billion).
FLSmidth maintains 2019 revenue guidance FLSmidth maintains 2019 revenue guidance FLSmidth maintains 2019 revenue guidance FLSmidth maintains 2019 revenue guidance FLSmidth maintains 2019 revenue guidance

Staff reporter

The Denmark-based and listed equipment manufacturer said the lumpy but robust mining capital equipment market continued to look positive, with its mining capital business revenues up 36% for the first half of the year, versus the same period last year, at US$340 million, and 44% yoy for the second quarter, while services revenue was flat yoy for the half at US$530 million and up 2% yoy in the second quarter.

Overall company revenues (32% cement) in the June quarter totalled $820 million, plus 16% yoy, while its order backlog at the end of June was 16% higher than the same time a year earlier at $2.52 billion.

FLSmidth said the trend of higher capital-to-service business revenue - shown in the second quarter yoy comparison (42% this year versus 34% last year) - meant its "expected business mix for the year has changed" and it was now "more likely" revenue for the full year would be in the higher end of its guided range while EBITA margin fell in the lower end of the 9-10% guided range. The EBITA margin was 8.9% in Q2, compared with 8.1% last year, with earnings coming in at US$73 million for the quarter.

"The second quarter showed a strong performance with improved revenue and profitability, driven by both Mining and Cement," said FLSmidth Group CEO, Thomas Schulz.

"Following a slow start to the year, we have been successful at converting backlog to revenue in the second quarter.

"In Cement, we see higher demand for sustainable solutions; for example, alternative fuel systems to replace fossil fuels and minimise CO2 emissions. In Mining, we see increased interest for new technologies such as dry stack tailings but also a general need to reduce water consumption in the production process."

FLSmidth shares (FLS) were up 10% Thursday at DK270.1 (US$40.53), capitalising the company at US$1.89 billion. The shares have fallen by 9.4% so far this year.