WE DISCOVER POTENTIAL
INTERIM
REPORT
H1 2021
1 January –
Company announcement no. 9
CVR No. 58180912
FLSmidth
Interim Report H1 2021 2
Management Review
Management Review
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Consolidated Condensed
Interim Financial
Statements
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Notes
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Statements
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CONTENTS
Towards zero emissions
in mining and cement
Read more on page 5
FLSmidth
Interim Report H1 2021 3
Management Review
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
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 im-
pacted by reshaping activities to improve
profitability in Cement.
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
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 reve-
nue 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 ac-
quisition of thyssen
estimated at around DKK 100m for the full
year. The Mining business revenue is ex-
pected 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
Cement reshaping costs and low capacity utili-
sation in the service business, particularly re-
lated to the impact of the pandemic in H1.
Our second quarter showed positive progress across the board: A strong
order intake, including the award of Europe’s first full-scale clay calcina-
tion 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 signifi-
cant milestone in our MissionZero sustainability ambitions. The transac-
tion offers an attractive opportunity to create long-term value for our
shareholders, a stronger value proposition for our customers and im-
proved 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.
HIGHLIGHTS
Guidance 2021
H1
2021
Initial
Guidance
2021
Updated
Guidance
2021
Highlights
FLSmidth
Interim Report H1 2021 4
Management Review
FINANCIAL HIGHLIGHTS
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Cash flow from operating activities
DKKm 507 from DKKm 533 in Q2 2020
GROUP
4,615
38%
4,073
6%
197 4.8%
50%
Earnings per share
DKK 1.1 from DKK (0.3) in Q2 2020
Net working capital ratio
8.2% from 12.3% end of Q2 2020
NIBD/EBITDA
1.0x from 1.5x end of Q2 2020
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by service & capital
%
MINING
2,933
32%
2,802
11%
231 8.2%
18%
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by service & capital
%
CEMENT
1,682
50%
1,271
4%
-34 -2.7%
48%
9,874
9,600
3,348
4,615
H1
2020
H1
2021
Q2
2020
Q2
2021
8,371
7,786
3,846
4,073
H1
2020
H1
2021
Q2
2020
Q2
2021
359
387
131
197
H1
2020
H1
2021
Q2
2020
Q2
2021
2,223
2,933
Q2
2020
Q2
2021
2,520
2,802
Q2
2020
Q2
2021
196
231
Q2
2020
Q2
2021
64%
Q2 2020:
64%
36%
Q2 2020:
36%
Service
Capital
1,125
1,682
Q2
2020
Q2
2021
1,326
1,271
Q2
2020
Q2
2021
(65)
(34)
Q2
2020
Q2
2021
54%
Q2 2020:
55%
46%
Q2 2020:
45%
Service
Capital
FLSmidth
Interim Report H1 2021 5
Management Review
MissionZero developments
Through our sustainability pro-
gramme MissionZero, we de-
velop 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 up-
coming EU Taxonomy.
Europe’s first full-scale clay calcination
installation
At a new project in France, FLSmidth will de-
liver equipment to replace clinker with environ-
mentally friendly clay, cutting up to 16% of CO
2
emissions compared to existing cement prod-
ucts. The order includes the new FLSmidth
flash calciner technology, environmental con-
trol system and alternative fuel storage at the
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 cap-
ture in the global cement industry. The combi-
technology and our extensive process
knowledge will make a significant contribution to
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 vehi-
cles 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-
-boron project in
Nevada, while in Europe, Keliber a Finnish
company producing sustainable, battery-grade
lithium appointed FLSmidth for process engi-
neering services at its Päiväneva concentrator
plant. FLSmidth has also started delivering ad-
vanced lithium-centred technologies, including
acid roasting, rotary cooler and pre-heat cyclone
technology to Covalent in Australia, following an
order placed in 2019.
SUSTAINABILITY HIGHLIGHTS
Safety (TRIR)
Total Recordable Injury Rate/
million working hours
Women managers
%
1.7
Target: zero harm (10% y-o-y reduction through 2030)
14.5
2021 Target: 14.3%
Following a strong safety performance in Q1, our safety
performance deteriorated in Q2, mostly as a result of em-
ployees returning to sites following relaxation of COVID-19
restrictions. Mitigation plans are being implemented.
Progress on gender diversity has continued in Q2 in line
with our long-term target. Improvements driven by re-
gional actions focused on diversity in recruitment and in-
ternal growth opportunities as well as retention of talent.
Water withdrawal
m
3
Greenhouse gas emissions
(CO
2
emissions)
tonnes
84,805
2021 Target: 187,479
16,167
2021 Target: 38,685
Solid progress against our 2021 target. Slight increase in
water withdrawal from Q1 to Q2 due to pipe burst occur-
rence on two sites and re-opening of sites as pandemic
eases in some regions
During the quarter, we saw a positive progress against our
target to reduce greenhouse gas emissions with an addi-
tional 13 sites having implemented energy efficiency pro-
grammes, including savings in using air conditioning, in-
stallation of LED systems as well as compressed air
systems.
1.0
1.7
2020
H1
2021
13.1%
14.5%
2020
H1
2021
197,346
84,805
2020
H1
2021
41,155
16,167
2020
H1
2021
FLSmidth
Interim Report H1 2021 6
Management Review
KEY FIGURES
DKKm
Q2
2021
Q2
2020
H1
2021
H1
2020
2020
INCOME STATEMENT
ORDERS
EARNING RATIOS
CASH FLOW
BALANCE SHEET
DKKm
Q2
2021
Q2
2020
H1
2021
H1
2020
2020
FINANCIAL RATIOS
SHARE RATIOS
SUSTAINABILITY KEY FIGURES
Use of alternative performance measures
FLSmidth
Interim Report H1 2021 7
Management Review
GROWTH
Group order intake increased 42%
organically year-on-year, driven by
both Mining and Cement. Service
orders increased by 20%. Two
large orders were announced in
the quarter, including the award of
Europe’s first full-scale clay calcina-
tion installation which will cut plant
CO
2
emissions by up to 16%. Group
revenue increased 9% organically,
attributable to Mining. The book-to-
bill was 113% in Q2.
Order intake
Order intake in Q2 increased 38% to DKK 4,615m
(Q2 2020: DKK 3,348m) and by 42% organically,
related to both Mining and Cement. Service or-
ders increased by 20% and accounted for 58% of
the total order intake in Q2 2021. Capital order
intake increased by 74% in Q2 2021 and in-
cluded two large orders with a combined value
of more than DKK 400m (Q2 2020: No large or-
ders).
Order backlog and maturity
The order backlog increased 3% on the previous
quarter to DKK 16,677m (Q1 2021: DKK 16,251m),
based on a book-to-bill of 113% in Q2 2021, partly
offset by currency adjustments of DKK 0.1bn.
It is expected that 42% of the backlog will be
converted to revenue in 2021, 41% in 2022, and
17% in 2023 and beyond.
Backlog maturity
Mining
Cement
FLSmidth
Group
Revenue
Revenue increased 6% to DKK 4,073m in Q2
2021 (Q2 2020: DKK 3,846m), driven by both
service and capital revenue. A positive trajectory
following a period of substantial headwind from
the pandemic. Organically, revenue increased
9%, entirely related to Mining, whereas Cement
revenue was in line with Q2 2020.
Service revenue accounted for 61% of the total
revenue during the quarter (Q2 2020: 61%).
Based on a higher backlog and easing of the
pandemic in parts of the world, Mining revenue is
expected to show modest year-on-year growth in
the second half of the year. Cement revenue is
expected to remain soft and decline in 2021.
FLSmidth
Interim Report H1 2021
QUARTERLY FINANCIAL PERFORMANCE
Order intake
DKKm
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q2
2019
Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2
Mining Cement
Growth in order intake in Q2 2021
(vs. Q2 2020)
Mining
Cement
FLSmidth
Group
Total growth
32%
50%
38%
Growth in revenue in Q2 2021
(vs. Q2 2020)
Mining
Cement
FLSmidth
Group
Total growth
11%
-4%
6%
Group – continued activities
(DKKm)
Q2 2021
Q2 2020
Change (%)
H1 2021
H1 2020
Change (%)
Order intake (gross)
4,615
3,348
38%
9,600
9,874
-3%
Order backlog
16,677
15,227
10%
16,677
15,227
10%
Revenue
4,073
3,846
6%
7,786
8,371
-7%
Gross profit
1,020
912
12%
1,955
1,959
0%
SG&A cost
(735)
(689)
7%
(1,383)
(1,417)
-2%
EBITA
197
131
50%
387
359
8%
EBIT
109
46
137%
210
192
9%
FLSmidth
Interim Report H1 2021 8
Management Review
PROFIT
Gross profit increased by 12% and
gross margin improved 1.3%-points,
positively impacted by business
improvement initiatives. EBITA in-
creased by 50%, despite the ef-
fects from costs related to acquisi-
tion and continued reshaping of
the Cement business.
Gross profit and margin
Gross profit increased 12% to DKK 1,020m (Q2
2020: DKK 912m), due to higher revenue and an
increase in the gross margin which improved to
25.0% (Q2 2020: 23.7%). The gross margin im-
proved for both Mining and Cement and was
positively impacted by implementation of busi-
ness improvement activities and Cement reshap-
ing activities.
In Q2 2021, total research and development
costs (R&D) amounted to DKK 81m (Q2 2020:
DKK 77m), representing 2.0% of revenue (Q2
2020: 2.0%).
R&D costs (DKKm)
Q2 2021
Q2 2020
R&D costs in Q2 related especially to new and
improved sustainable mining and cement tech-
nologies as well as digital solutions. In addition to
the reported R&D, products and solutions are be-
ing developed on-site in cooperation with cus-
tomers in the ordinary course of business.
SG&A costs
Sales, general and administrative costs (SG&A)
and other operating items increased 7% to DKK
735m (Q2 2020: DKK 689m), explained by costs
related to the acquisition of TK Mining of DKK
40m and Cement reshaping activities in the quar-
ter. SG&A costs as a percentage of revenue
were largely unchanged at 18.0% (Q2 2020:
17.9%).
EBITA and EBITA margin
EBITA increased by 50% to DKK 197m compared
to a low quarter last year (Q2 2020: DKK 131m) as
a result of the higher revenue and gross margin.
The Group EBITA margin increased to 4.8% (Q2
2020: 3.4%), related to both Mining and Cement
and showing a clear positive underlying develop-
ment. Cement profitability improved but the Ce-
ment business remained loss-making, still im-
pacted by costs of reshaping the Cement
business, while Mining EBITA was impacted by
costs related to the acquisition of TK Mining, as
described above. The comparison quarter in-
cluded costs related to the implementation of
business improvement initiatives of DKK 74m for
the Group.
Amortisation of intangible assets amounted to
DKK 88m (Q2 2020: DKK 85m). The effect of
purchase price allocations amounted to DKK
23m (Q2 2020: DKK 24m) and other amortisation
to DKK 65m (Q2 2020: DKK 61m).
Earnings before interest and tax (EBIT) increased
137% to DKK 109m (Q2 2020: DKK 46m), mainly
due to the growth in revenue and implemented
business improvement activities, as described
above.
Financial items
Net financial items amounted to DKK -27m (Q2
2020: DKK -55m), of which foreign exchange
and fair value adjustments amounted to DKK
-12m (Q2 2020: DKK -37m) and net interest
amounted to DKK -15m (Q2 2020: DKK -18m).
Tax
Tax for Q2 2021 totalled DKK 32m (Q2 2020:
DKK 5m), corresponding to an effective tax rate
of 39% (Q2 2020: Negative EBT). Reduced tax
credits on withholding taxes and an increase in
the profit before tax derived from countries with
a higher base corporate tax rate caused the high
effective tax rate in Q2.
Profit for the period
Mainly as a result of the higher EBIT and lower
net financial cost, profit for the period increased
to DKK 47m (Q2 2020: DKK -17m), equivalent to
DKK 1.1 per share (diluted) (Q2 2020: DKK -0.3).
Return on capital employed
ROCE decreased to 5.4% (Q2 2020: 8.0%) as a
Employees
The number of employees decreased by 100 to
10,089 at the end of Q2 2021 (end of Q1 2021:
10,189). The decrease related to ongoing activi-
ties to reshape the Cement business.
Backlog
DKKm
Revenue & EBITA margin
DKKm EBITA%
EBITA
DKKm
0
3,000
6,000
9,000
12,000
15,000
18,000
Q2
2019
Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2
Mining Cement
0%
2%
4%
6%
8%
10%
12%
14%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q2
2019
Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2
Revenue EBITA margin
(100)
0
100
200
300
400
500
600
Q2
2019
Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2
Mining Cement
FLSmidth
Interim Report H1 2021 9
Management Review
CAPITAL
Net working capital has declined
by DKK 1.5bn over the past five
quarters and the net working capi-
tal ratio decreased to 8.2% in the
quarter. Q2 posted strong free
cash flow of DKK 443m. The net
debt to EBITDA ratio improved to
1.0x from 1.4x in Q1 2021.
Net working capital
Net working capital has declined by DKK 1.5bn
over the past five quarters and decreased to DKK
1,305m at the end of Q2 2021 (end of Q1 2021:
DKK 1,678m). The reduction related mainly to an
increase in prepayments from customers and
trade payables. As expected, utilisation of supply
chain financing increased in Q2. The net working
capital ratio decreased to 8.2% of 12-months trail-
ing revenue in Q2 (Q1 2021: 10.7%), which was
the lowest level in several years and a result of
ersistent cash
focus throughout the pandemic.
Cash flow from operating activities
Cash flow from operating activities (CFFO) was
solid at DKK 507m, albeit marginally below the
strong comparison quarter (Q2 2020: DKK
533m). In addition to higher EBITDA, the main
positive contributor to CFFO was the net working
capital inflow of DKK 320m, however, this was
lower than the net working capital inflow of DKK
431m in Q2 2020. Provisions had a DKK 41m pos-
itive impact in Q2 2021 (Q2 2020: DKK -17m),
whereas taxes paid increased to DKK 125m from
DKK 83m in Q2 2020.
Cash flow from investing activities
Cash flow from investing activities was largely
unchanged at DKK -64m (Q2 2020: DKK -65m).
Free cash flow
Free cash flow (cash flow from operating and in-
vesting activities) adjusted for business acquisi-
tions and disposals amounted to DKK 451m in
Q2 2021 (Q2 2020: DKK 476).
Net interest-bearing debt
Due to the positive free cash flow, net interest-
bearing debt (NIBD) decreased to DKK 1,159m
(end of Q1 2021: DKK 1,577 m), and financial gear-
ing improved to 1.0x (end of Q1 2021: 1.4x), repre-
senting a positive development in the quarter.
Financial position
By the end of Q2 2021, FLSmidth had DKK 6.8bn
of available committed credit facilities of which
DKK 4.6bn was undrawn. The committed credit
facilities have a weighted average time to ma-
turity of 4.0 years. DKK 1.6bn of credit facilities
will mature in 2023 and the majority, DKK 5.0bn,
will mature in 2026. The remaining DKK 0.2bn
matures in later years.
Equity ratio
Equity at the end of Q2 2021 decreased to DKK
8,369m (end of Q1 2021: DKK 8,451 m) as the
positive profit for the period was more than offset
by negative currency adjustments regarding
translation of foreign entities in the quarter. The
equity ratio was 39.7% (end of Q1 2021: 40.2%),
above our capital structure target of minimum
30% through-the-cycle.
Acquisition of TK Mining
On 29 July, FLSmidth and thyssenkrupp Indus-
trial Solutions AG reached an agreement that
business (TK Mining) for a total consideration (en-
terprise value) of EUR 325 million, corresponding
to approximately DKK 2.4 billion. This is a trans-
formational deal which will add more than 50% to
mining industry. Closing of the transaction is ex-
pected in H2 2022 and is subject to customary
approvals from relevant authorities (see Com-
pany announcement No. 7-2021).
Funding of the acquisition is secured through
debt facilities which are available beyond trans-
action close and are expected to be supple-
mented with equity before transaction close. Ac-
cording to plan, FLSmidth has delivered a good
cash flow in recent quarters. Despite this and
given the carve-out nature of this transaction, the
project focused nature of the current TK Mining
business, and the expected duration of the inte-
gration period, FLSmidth plans to seek approval
to raise up to 20% new equity at an Extraordinary
General Meeting, to be held on 26 August 2021.
Based on current market conditions, FLSmidth
expects to raise 15-20% new equity.
Cash flow
DKKm
Net interest-bearing debt
DKKm
Net working capital
DKKm NWC%
(100)
0
100
200
300
400
500
600
700
Q2
2019
Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2
Cash flow from operating activities
0
500
1,000
1,500
2,000
2,500
3,000
Q2
2019
Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2
Net interest bearing debt (NIBD)
0%
3%
6%
9%
12%
15%
18%
0
500
1,000
1,500
2,000
2,500
3,000
Q2
2019
Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2
Net working capital
Net working capital ratio, end
FLSmidth
Interim Report H1 2021 10
Management Review
GROWTH
Order intake
Order intake increased 1% organically, driven by
Cement and a higher level of base orders in Min-
ing. Including currency effects, order intake in the
first half of 2021 decreased 3% to DKK 9,600m
compared to the same period last year (H1 2020:
DKK 9,874m). The decrease was attributable to
the booking of three large Mining orders in the
comparison period, with a combined value of
DKK 2.4bn. As a result, Mining order intake de-
creased 12% for the first half of the year. This de-
crease was offset by Cement which, in addition
to a higher level of service orders, booked a se-
ries of sustainability-related orders, resulting in a
26% increase in Cement order intake. This in-
cluded the new FLSmidth flash calciner order for
France and two me-
dium-sized sustainability related product orders
booked in Q1 2021.
Service order intake for the Group picked up by
5% from the comparison period driven by both
Mining and Cement.
Order backlog
Order backlog increased 10% to DKK 16,677m by
the end of H1 2021 (end of H1 2020: DKK
15,227m). The increase came from both Cement
and Mining which saw 11% and 9% increases re-
spectively. This is the third consecutive quarter in
which the order backlog has increased.
Revenue
Revenue decreased 7% to DKK 7,786m in H1
2021, driven by negative growth in Cement. Or-
ganically, revenue declined by 3%, comprising a
3% increase in Mining and a 13% decline in Ce-
ment.
The pandemic and a low backlog entering the
year continued to reduce Cement capital and
service revenue which decreased 25% and 11%
respectively in the first half of the year, with Q1
having the greater negative impact. In compari-
son, Mining revenue was resilient with a 3% in-
crease in service revenue offsetting a capital rev-
enue decrease of 8%.
PROFIT
Gross profit and margin
Gross profit in H1 2021 was largely unchanged at
DKK 1,955m. Gross margin went up 1.7-points to
25.1%, positively impacted by a higher share from
service and effects from implemented business
improvement activities.
In the first half of 2021, research and develop-
ment costs were DKK 133m (H1 2020: 143m), of
which DKK 65m were capitalised (H1 2020: 49m)
and the balance reported as production costs.
EBITA and margin
EBITA increased 8% to DKK 387m, a further re-
flection of the savings realised from business im-
provement initiatives which have reduced SG&A
costs in the first half of the year. The EBITA mar-
gin was 5.0% up from 4.3% in H1 2020. The im-
provement was despite the impact from costs re-
lated to the acquisition of TK Mining of DKK 40m
in the second quarter of 2021.
Profit for the period
Profit for the period increased by 20% to DKK
101m. Continuing activities improved to DKK
107m from DKK 94m. Discontinued activities re-
ported a DKK 6m loss, compared to a DKK 10m
loss in H1 2020.
Earnings per share
Earnings per share (diluted) increased to DKK 2.1
from DKK 1.7 in H1 2020.
FINANCIAL PERFORMANCE IN H1 2021
EBITA split by segment
DKKm
(200)
0
200
400
600
800
H1 2020 H1 2021
Mining Cement
Growth in order intake in H1 2021
(vs. H1 2020)
Mining
Cement
FLSmidth
Group
Total growth
-12%
26%
-3%
Growth in revenue in H1 2021
(vs. H1 2020)
Mining
Cement
FLSmidth
Group
Total growth
-1%
-17%
-7%
FLSmidth
Interim Report H1 2021 11
Management Review
CAPITAL
Net working capital
Following the strong development in net working
capital in 2020
improving processes related to cash manage-
ment has supported further efficiencies, driving
net working capital lower for the first half of 2021.
Net working capital decreased to DKK 1,305m
(end of 2020: DKK 1,752m), and the correspond-
ing net working capital ratio was 8.2% of 12-
months trailing revenue, compared to 10.7% at
the end of 2020.
The decrease was primarily through good cash
collection, with a DKK 244m reduction in trade
receivables from the end of 2020 and an in-
crease in prepayments from customers of DKK
619m. This was partly offset by lower trade paya-
bles and increased inventories to support our
growth agenda for standardised products and
parts services.
Cash flow from operating activities
Cash flow from operating activities increased to
DKK 792m (H1 2020: DKK 498m), mainly due to
the positive change in net working capital.
Cash flow from investing activities
Cash flow used for investments decreased to
DKK -115m from DKK -174m in H1 2020.
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK -338m primarily spent on reducing net inter-
est-bearing debt.
A dividend was paid out in the first half of 2021
amounting to DKK 101m whereas no dividend
was paid in the same period last year.
Free cash flow
Free cash flow adjusted for business acquisitions
and disposals was DKK 683m in H1 2021 (H1
2020: DKK 373m).
Balance sheet
Total assets increased to DKK 21,077m at the
end of H1 2021 (end of 2020: DKK 20,456), pri-
marily related to foreign exchange effects.
Net interest-bearing debt
Net interest-bearing debt (NIBD) by the end of H1
2021 decreased to DKK 1,159m (end of 2020:
DKK 1,808m). This has been supported by posi-
was 1.0x (end of 2020: 1.6x).
Equity
Equity at the end of H1 2021 increased to DKK
8,369m (end of 2020: DKK 8,130m). The increase
related to profit for the period and currency ad-
justments regarding translation of entities, less
dividend paid.
Treasury shares
The holding of treasury shares amounted to
1,093,928 shares at the end of H1 2021 (2020:
1,097,718 shares), representing 2.1% of the total
share capital (2020: 2.1%). Treasury shares are
used to hedge our share-based incentive pro-
grammes.
Cash flow from operating activities
DKKm
Cash flow from investing activities
DKKm
Free cash flow
DKKm
0
200
400
600
800
1,000
H1 2020 H1 2021
(500)
(400)
(300)
(200)
(100)
0
H1 2020 H1 2021
0
200
400
600
800
1,000
H1 2020 H1 2021
Free cash flow
Free cash flow adjusted for business acquisitons
and disposals
FLSmidth
Interim Report H1 2021 12
Management Review
Overall, the situation improved during Q2 and
the mining industry is emerging from the pan-
demic, though with regional differences. Produc-
tion levels remain high and lockdowns and site
access restrictions are easing in some regions.
In North America, there is increased focus on re-
placement of equipment which was delayed dur-
ing the pandemic. Australia remains steady with
continued high production of iron ore and gold.
Battery metals, nickel and lithium, are seeing in-
creased activity with mines that were in care and
maintenance being restarted.
Activity in Africa, the Middle East and South Asia
remained resilient, notwithstanding the severe
situation in India where conditions have subse-
quently improved towards the end of Q2.
In Asia, ex-China, COVID-19 is starting to have an
impact on some of the major mines in the region.
South America also experienced lockdowns dur-
ing the quarter and political risk is growing in
Peru and Chile. Concern about the potential for
higher mining royalty payments has led to cus-
tomers holding back on making large invest-
ments. Brazil, by comparison, is stable and grow-
ing, despite a high level of COVID-19 infections.
While the rally in commodity prices is supporting
market sentiment, it has also led to projects in
Europe being put on hold for investment review
and has triggered mounting concern within the
Chinese government about the impact of higher
costs for raw materials on domestic businesses.
The outlook for investments in mining remains
positive, particularly for copper, gold and battery
metals that are critical materials for the green en-
ergy transition. The sustainability agenda contin-
ues to gather steam with the Majors aligning their
business models to the Paris Agreement. In addi-
tion, miners are well capitalised though we ex-
pect that they will take a more disciplined and
sustainable approach to investment compared to
the last period of high commodity prices.
We maintain a healthy pipeline in both larger and
smaller opportunities and the postponement of
refurbishment and maintenance during the lock-
downs continues to translate into opportunities
as the market normalises this year.
MINING MARKET DEVELOPMENTS
Conditions in the mining industry are gradually returning to normal, albeit
at different speeds across the regions. Market sentiment is positive with
commodity prices at high levels and the long-term outlook remains
strong for copper, battery metals and other minerals required for the
green energy transition. Political risk is rising in Peru and Chile.
Mining order intake
split per Region Q2 2021
%
Mining order intake
split by commodity Q2 2021
%
27%
35%
9%
12%
5%
12%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia
Australia
36%
13%
9%
2%
17%
23%
Copper
Gold
Coal
Fertilizer
Iron ore
Other
FLSmidth
Interim Report H1 2021 13
Management Review
Q2 2021
Mining order intake increased 36% organically
compared to Q2 2020. Including currency ef-
fects, the order intake in Q2 2021 increased by
32% to DKK 2,933m (Q2 2020: DKK 2,223m),
comprising a 12% increase in service orders and
an 86% increase in capital orders. The increase
in order intake related to an emerging activity
level as compared to Q2 2020 which was more
severely impacted by the pandemic. Q2 2021 in-
cluded one large order valued at approximately
DKK 200m, whereas the comparison quarter in-
cluded no large orders. During the quarter, ser-
vice orders and capital orders represented 62%
and 38% of Mining order intake respectively.
Revenue increased by 13% organically and by 11%
including currency effects, to DKK 2,802m in Q2
2021 (Q2 2020: DKK 2,520m). Service revenue
increased by 11% supported by higher order in-
take in the past two quarters and improved site
access for local service technicians. Capital reve-
nue increased by 12% driven by the higher back-
log and a comparison quarter which was more
severely impacted by COVID-19. Service ac-
counted for 64% of Mining revenue in Q2 2021
(Q2 2020: 64%).
Gross profit, before allocation of shared cost, in-
creased by 15% to DKK 768m (Q2 2020: DKK
666m).
The corresponding gross margin increased to
27.4% (Q2 2020: 26.4%), mainly due to the posi-
tive effects from the business improvement pro-
gramme completed in 2020.
EBITA increased by 18% to DKK 231m in Q2 2021
(Q2 2020: DKK 196m) as a result of the higher
gross profit. The corresponding EBITA margin in-
creased to 8.2% from 7.8% in Q2 2020. EBITA
was impacted by costs related to the acquisition
of TK Mining of DKK 40m. The EBITA margin ad-
justed for acquisition costs was 9.7%. There will
be acquisition related costs in H2 2021 as well,
estimated at around DKK 60m.
H1 2021
Mining order intake in H1 2021 decreased by 12%
to DKK 6,518m (H1 2020: DKK 7,437m), mainly
due to exceptionally strong capital order intake
in the comparable period. This related to the
three large orders received in Russia and Bela-
rus, with a combined value of around DKK 2.4bn,
in the first quarter of 2020. Mining order backlog
in H1 2021 increased 9% to DKK 10,310 (H1 2020:
DKK 9,500m)
Mining revenue decreased slightly by 1% to DKK
5,214m (H1 2020: DKK 5,255m) with a 3% in-
crease in service revenue and a capital revenue
decline of 8%. EBITA increased by 12% to DKK
444m (H1 2020: DKK 397m) and the correspond-
ing EBITA margin increased to 8.5% from 7.6% in
H1 2020, owing to a higher service share and
cost efficiencies.
MINING FINANCIAL PERFORMANCE
Growth in Mining in Q2 2021
(vs. Q2 2020)
Order intake
Revenue
Total growth
32%
11%
Service and capital
order intake Q2 2021
%
Revenue and EBITA margin
DKKm EBITA %
62%
38%
Service
Capital
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Q2
2019
Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2
Capital revenue Service revenue
EBITA margin
Mining
(DKKm)
Q2 2021
Q2 2020
Change
(%)
H1 2021
H1 2020
Change
(%)
Order intake (gross)
2,933
2,223
32%
6,518
7,437
-12%
Order backlog
10,310
9,500
9%
10,310
9,500
9%
Revenue
2,802
2,520
11%
5,214
5,255
-1%
Gross profit before allocation of shared cost
768
666
15%
1,416
1,346
5%
EBITA before allocation of shared cost
425
404
5%
828
818
1%
EBITA
231
196
18%
444
397
12%
EBIT
170
135
26%
322
278
16%
FLSmidth
Interim Report H1 2021 14
Management Review
The cement industry is emerging from the pan-
demic with significant regional differences.
Economic recovery and higher construction ac-
tivity have led to improved sentiment in North
America with more opportunities tied to our digi-
tal and MissionZero products. The Build Back
Better stimulus programme, currently in progress,
is also expected to drive momentum going for-
ward.
In Europe, activity has recovered somewhat, and
customers are making smaller investments
driven by sustainability and capacity limitations at
certain plants. The launching of the NextGenera-
tionEU stimulus package is expected to trigger
upgrades to decarbonise and digitalise cement
plants, and we have a healthy pipeline for up-
grade projects driven by the ongoing conversion
to alternative fuels. Forthcoming spending plans
by member governments, particularly in infra-
structure, are also expected to stimulate activity
when they are released.
However, regulatory uncertainty remains for Eu-
ropean producers over the treatment of alloca-
tions in the EU Emissions Trading System and
the implementation of the new Carbon Border
55 package of proposals launched in July with
the aim of cutting the bloc's greenhouse gas
emissions by 55 per cent by 2030.
In Asia, China continues to be the main driver of
growth in the region whereas the rest of the re-
gion, including Indonesia and the Philippines, is
challenged by COVID-19 restrictions which tight-
ened in Q2.
Cement despatches in South Asia dipped by
around 20% in Q2 compared to Q1 due to
COVID-19 lockdowns. In addition, travel re-
strictions in the region are still hampering our
business, especially for service jobs. In South
America, activity remained soft due to the pan-
demic.
Overall, we are seeing increased demand for so-
lutions and upgrade projects to decarbonise and
de-bottleneck cement plants, although not
enough to compensate for a lacklustre market in
the short to medium-term.
CEMENT MARKET DEVELOPMENTS
The cement industry is slowly emerging from the pandemic with growing
demand for green solutions. Overall, the market outlook remains
unchanged with significant overcapacity and a recovery expected mid-
term fueled by large economic stimulus programmes combined with an
increasing focus on lower-carbon cement.
Cement order intake
split per Region Q2 2021
%
Cement revenue
split by categories Q2 2021
%
22%
6%
35%
21%
15%
1%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia
Australia
20%
26%
54%
Projects
Products
Service
FLSmidth
Interim Report H1 2021 15
Management Review
Q2 2021
The organic order intake in Q2 2021 increased
by 55% compared to Q2 2020. Including cur-
rency effects, the order intake in Q2 2021 in-
creased by 50% to DKK 1,682m (Q2 2020: DKK
1,125m), comprising a 42% increase in service or-
ders and a 59% increase in capital orders. During
the quarter, service orders and capital orders
represented 52% and 48% of cement order in-
take, respectively.
The increase in Cement service order intake re-
lated mainly to higher construction activity in
North America and pent-up service orders in
Sub-Saharan Africa and the Middle East.
The improvement in capital order intake was due
-scale
clay calcination installation valued above DKK
200m. A solution which will cut CO
2
emissions
from the French cement plant by up to 16%.
Organically, revenue in Q2 2021 was in line with
Q2 2020 but decreased by 4% to DKK 1,271m
when including currency effects. Cement service
revenue decreased by 5% while capital revenue
declined by 3%. Service accounted for 54% of
Cement revenue in Q2 2021 (Q2 2020: 55%).
Following a period of declining activity level in
Cement, the order backlog at end of Q2 2021
was up 11% year-on-year.
Gross profit, before allocation of shared cost, was
unchanged at DKK 279m (Q2 2020: DKK 279m),
and the gross margin increased to 22.0% (Q2
2020: 21.0%).
EBITA amounted to DKK -34m (Q2 2020: DKK
-65m) and the corresponding EBITA margin was
-2.7% (Q2 2020: -4.9%). EBITA in Q2 included
costs related to continued reshaping of Cement,
i.e., adjusting the cost structure and repositioning
the Cement business to benefit from and support
the green transition. Q3 2021 is expected to
carry a similar level of reshaping costs.
H1 2021
Cement order intake in H1 2021 increased by
26% to DKK 3,082m (H1 2020: DKK 2,437m)
driven by both service and capital order growth.
This was a strong development considering the
challenging market circumstances. Order back-
log increased 11% to DKK 6,367 (H1 2020: DKK
5,727m).
Cement revenue decreased by 17% to DKK
2,572m in H1 2021 (H1 2020: DKK 3,116m), im-
pacted by the pandemic and a low backlog at
the start of the year. Service and capital revenue
declined by 11% and 25% respectively.
EBITA decreased to DKK -57m (H1 2020: DKK
-33m), due to the revenue decline and ongoing
costs related to Cement reshaping. The corre-
sponding EBITA margin declined to -2.2% from
-1.1% in H1 2020.
CEMENT FINANCIAL PERFORMANCE
Growth in Cement in Q2 2021
(vs. Q2 2020)
Order intake
Revenue
Total growth
50%
-4%
Service and capital
order intake Q2 2021
%
Revenue and EBITA margin
DKKm EBITA %
52%
48%
Service
Capital
-7%
-5%
-3%
-1%
1%
3%
5%
7%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Q2
2019
Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2
Service revenue Capital revenue
EBITA margin
Cement
(DKKm)
Q2 2021
Q2 2020
Change
(%)
H1 2021
H1 2020
Change
(%)
Order intake (gross)
1,682
1,125
50%
3,082
2,437
26%
Order backlog
6,367
5,727
11%
6,367
5,727
11%
Revenue
1,271
1,326
-4%
2,572
3,116
-17%
Gross profit before allocation of shared cost
279
279
0%
585
670
-13%
EBITA before allocation of shared cost
86
91
-5%
193
288
-33%
EBITA
(34)
(65)
-48%
(57)
(33)
73%
EBIT
(61)
(89)
-31%
(112)
(81)
38%
FLSmidth
Interim Report H1 2021 16
Management Review
QUARTERLY KEY FIGURES
DKKm
2019
2020
2021
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
INCOME STATEMENT
Gross profit
1,315
1,126
1,327
1,047
912
884
1,022
935
1,020
EBITDA before special non-recurring items
574
459
580
319
223
255
337
287
285
EBITA
487
377
487
228
131
177
235
190
197
EBIT
381
294
393
146
46
91
145
101
109
EBT
349
284
323
150
(7)
89
149
92
82
Profit/loss on continuing activities for the period
234
190
229
106
(12)
48
84
57
50
Profit/loss for the period
223
190
227
101
(17)
43
78
54
47
Gross margin
24.0%
23.8%
22.0%
23.1%
23.7%
23.1%
24.1%
25.2%
25.0%
EBITDA margin before special non-recurring items
10.5%
9.7%
9.6%
7.0%
5.8%
6.7%
8.0%
7.7%
7.0%
EBITA margin
8.9%
8.0%
8.1%
5.0%
3.4%
4.6%
5.5%
5.1%
4.8%
EBIT margin
6.9%
6.2%
6.5%
3.2%
1.2%
2.4%
3.4%
2.7%
2.7%
FLSmidth
Interim Report H1 2021 17
Management Review
DKKm
2019
2020
2021
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
SEGMENT REPORTING
Mining
Gross margin before allocation of shared costs
26.1%
25.2%
23.4%
24.9%
26.4%
25.0%
25.1%
26.9%
27.4%
EBITA margin before allocation of shared costs
16.8%
16.3%
14.9%
15.1%
16.0%
16.8%
16.4%
16.7%
15.2%
EBITA margin
10.4%
9.2%
9.1%
7.3%
7.8%
9.0%
9.3%
8.8%
8.2%
EBIT margin
8.5%
6.9%
7.2%
5.2%
5.4%
6.8%
7.2%
6.3%
6.1%
Cement
Gross margin before allocation of shared costs
22.0%
22.8%
21.9%
21.8%
21.0%
19.5%
23.3%
23.5%
22.0%
EBITA margin before allocation of shared costs
14.1%
13.8%
13.3%
11.0%
6.9%
6.7%
9.7%
8.2%
6.8%
EBITA margin
6.3%
5.8%
6.6%
1.8%
-4.9%
-4.8%
-1.9%
-1.7%
-2.7%
EBIT margin
4.4%
4.9%
5.5%
0.4%
-6.7%
-7.1%
-4.1%
-3.9%
-4.8%
FLSmidth
Interim Report H1 2021 18
Financial Statements
Notes
DKKm
Q2
2021
Q2
2020
H1
2021
H1
2020
3, 4
Revenue
Production costs
(3,053 )
(2,934 )
(5,831 )
(6,412 )
Gross profit
Sales costs
(337 )
(352 )
(652 )
(730 )
Administrative costs
(404 )
(339 )
(742 )
(701 )
Other operating items
EBITDA before special non-recurring items
Special non-recurring items
(4 )
(13 )
(19 )
(13 )
Depreciation and impairment of property,
plant and equipment and lease assets
(84 )
(79 )
(166 )
(170 )
EBITA
Amortisation and impairment
of intangible assets
(88 )
(85 )
(177 )
(167 )
EBIT
Income from associates
Financial income
Financial costs
(259 )
(161 )
(567 )
(597 )
EBT
(7 )
Tax for the period
(32 )
(5 )
(67 )
(49 )
Profit for the period, continuing activities
(12 )
3, 8
Loss for the period, discontinued activities
(3 )
(5 )
(6 )
(10 )
Profit for the period
(17 )
Attributable to:
Shareholders in FLSmidth & Co. A/S
(14 )
Minority interests
(3 )
(3 )
(2 )
(17 )
Earnings per share (EPS):
Continuing and discontinued activities per share
(0.3 )
Continuing and discontinued activities per share, diluted
(0.3 )
Continuing activities per share
(0.2 )
Continuing activities per share, diluted
(0.2 )
Notes
DKKm
Q2
2021
Q2
2020
H1
2021
H1
2020
Profit for the period
(17 )
Items that will not be reclassified
to profit or loss:
Actuarial gains/(losses) on
defined benefit plans
(25 )
(21 )
(18 )
(21 )
Items that are or may be reclassified
subsequently to profit or loss:
Currency adjustments regarding
translation of entities
(90 )
(51 )
(387 )
Cash flow hedging:
- Value adjustments for the period
(1 )
(12 )
(32 )
- Value adjustments transferred
to work in progress
(6 )
(14 )
Tax of other comprehensive income
Other comprehensive income
for the period after tax
(118 )
(57 )
(425 )
Comprehensive income for the period
(71 )
(74 )
(341 )
Attributable to:
Shareholders in FLSmidth & Co. A/S
(67 )
(71 )
(340 )
Minority interests
(4 )
(3 )
(3 )
(1 )
(71 )
(74 )
(341 )
CONSOLIDATED CONDENSED INTERIM
FINANCIAL STATEMENTS
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Financial performance
FLSmidth
Interim Report H1 2021 19
Financial Statements
CASH FLOW STATEMENT
Notes
DKKm
Q2
2021
Q2
2020
H1
2021
H1
2020
EBITDA before special non-recurring items
3
EBITDA, discontinued activities
(3 )
(4 )
(6 )
(6 )
Adjustment for gain on sale of property, plant and
equipment and other non-cash items
(1 )
(15 )
Adjusted EBITDA
Change in provisions, pension and employee benefits
(17 )
(75 )
9
Change in net working capital
Cash flow from operating activities before financial
items and tax
Financial items received and paid
(10 )
(29 )
(29 )
(47 )
Taxes paid
(125 )
(83 )
(227 )
(172 )
Cash flow from operating activities
7
Acquisition of enterprises and activities
(8 )
(8 )
(8 )
(49 )
Acquisition of intangible assets
(47 )
(28 )
(79 )
(63 )
Acquisition of property, plant and equipment
(9 )
(34 )
(28 )
(66 )
Acquisition of financial assets
(1 )
(3 )
(4 )
(6 )
7
Disposal of enterprises and activities
Disposal of property, plant and equipment
Dividend from associates
Cash flow from investing activities
(64 )
(65 )
(115 )
(174 )
Dividend
(18 )
(101 )
Capital injection, minority interests
Exercise of share options
Repayment of lease liabilities
(31 )
(27 )
(64 )
(57 )
Change in net interest bearing debt
(306 )
(524 )
(177 )
(501 )
Cash flow from financing activities
(352 )
(551 )
(338 )
(558 )
Change in cash and cash equivalents
(83 )
(234 )
Cash and cash equivalents at beginning of period
Foreign exchange adjustment, cash and cash
equivalents
(25 )
(64 )
Cash and cash equivalents at 30 June
The cash flow statement cannot be inferred from the published financial information only
Free cash flow
DKKm
Q2
2021
Q2
2020
H1
2021
H1
2020
Free cash flow
Free cash flow, adjusted for acquisitions and disposals of enterprises
and activities
Cash and cash equivalents at beginning of period
DKKm
Q2
2021
Q2
2020
H1
2021
H1
2020
Cash and cash equivalents
Cash and cash equivalents included in assets held for sale
Cash and cash equivalents at beginning of period
FLSmidth
Interim Report H1 2021 20
Financial Statements
Notes
DKKm
30/06 2021
31/12 2020
30/06 2020
ASSETS
Goodwill
Patents and rights
Customer relations
Other intangible assets
Completed development projects
Intangible assets under development
Intangible assets
Land and buildings
Plant and machinery
Operating equipment, fixtures and fittings
Tangible assets in course of construction
Property, plant and equipment
Lease assets
Deferred tax assets
Investments in associates
10
Other securities and investments
Other non-current assets
Non-current assets
Inventories
Trade receivables
Work in progress
Prepayments
Income tax receivables
Other receivables
Cash and cash equivalents
Current assets
Assets classified as held for sale
Total assets
Notes
DKKm
30/06 2021
31/12 2020
30/06 2020
EQUITY AND LIABILITIES
Share capital
Foreign exchange adjustments
(862 )
(1,131 )
(686 )
Cash flow hedging
(30 )
(4 )
(51 )
Retained earnings
Shareholders in FLSmidth & Co. A/S
Minority interests
(6 )
(6 )
Equity
Deferred tax liabilities
Pension obligations
5
Provisions
Lease liabilities
Bank loans and mortgage debt
Prepayments from customers
Income tax liabilities
Other liabilities
Non-current liabilities
Pension obligations
5
Provisions
Lease liabilities
Bank loans and mortgage debt
Prepayments from customers
Work in progress
Trade payables
Income tax liabilities
Other liabilities
Current liabilities
Liabilities associated with assets
classified as held for sale
Total liabilities
Total equity and liabilities
BALANCE SHEET
FLSmidth
Interim Report H1 2021 21
Financial Statements
EQUITY STATEMENT
H1 2021
H1 2020
DKKm
Share
capital
Currency
adjust-
ments
Cash flow
hedging
Retained
earnings
Share-
holders in
FLSmidth &
Co A/S
Minority
interests
Total
Share
capital
Currency
adjust-
ments
Cash flow
hedging
Retained
earnings
Share-
holders in
FLSmidth &
Co A/S
Minority
interests
Total
Equity at 1 January
(1,131 )
(4 )
(6 )
(300 )
(28 )
Comprehensive income for the period
Profit/loss for the period
(2 )
Other comprehensive income
Actuarial gains/(losses) on
defined benefit plans
(18 )
(18 )
(18 )
(21 )
(21 )
(21 )
Currency adjustments regarding
translation of entities
(1 )
(386 )
(386 )
(1 )
(387 )
Cash flow hedging:
- Value adjustments for the period
(12 )
(12 )
(12 )
(32 )
(32 )
(32 )
- Value adjustments transferred to work in
progress
(14 )
(14 )
(14 )
Tax on other comprehensive income
Other comprehensive income total
(26 )
(14 )
(1 )
(386 )
(23 )
(15 )
(424 )
(1 )
(425 )
Comprehensive income for the period
(26 )
(3 )
(386 )
(23 )
(340 )
(1 )
(341 )
Transactions with owners:
Dividend paid
(101 )
(101 )
(101 )
Share-based payment
Exercise of share options
Capital injection, minority interests
Equity at 30 June
(862 )
(30 )
(6 )
(686 )
(51 )
FLSmidth
Interim Report H1 2021 22
Notes
1. KEY ACCOUNTING
ESTIMATES AND
JUDGEMENTS
When preparing the financial statements, we are
required to make several estimates and judge-
ments. The estimates and judgements that can
have a significant impact on the financial state-
ments are categorised as key accounting esti-
mates and judgements. Key accounting esti-
mates and judgements are regularly assessed to
adapt to the market conditions and changes in
political and economic factors. In general, key ac-
counting judgements are made in relation to the
accounting for revenue when determining the
performance obligations and the recognition
method, while key accounting estimates relate to
the estimation of warranty provisions, valuation
of inventories, trade receivables, work in pro-
gress and deferred tax. For further details, refer-
ence is made to The Annual Report 2020, Key
accounting estimates and judgements, pages 63-
64 and to specific notes.
Similarly to what was disclosed in the Annual Re-
port 2020 the COVID-19 pandemic has imposed
additional uncertainty to the interim financial
statements.
As of 30 June 2021, we have included updated
estimates to assess the recoverability of our as-
set base, including inventories, work in progress,
trade receivables, intangible assets and deferred
tax assets. The uncertain market and liquidity
conditions still prevail globally, which continue to
be reflected in our expected credit losses (ECL).
We have reassessed our projects to reflect esti-
mated implications on project financials, includ-
ing cost forecasts due to the severity of re-
strictions. By nature, the updated key accounting
estimates contain uncertainties and it is possible
that the outcomes in the next financial period can
mates are based.
2. INCOME STATEMENT
BY FUNCTION
It is our policy to prepare the income statement
based on an adjusted classification of the cost by
function in order to show the earnings before
special non-recurring items, depreciation, amorti-
sation and impairment (EBITDA). Depreciation,
amortisation and impairment are therefore sepa-
rated from the individual functions and presented
in separated lines.
The income statement classified by function in-
cludes allocation of depreciation, amortisation
and impairment.
Interim Report H1 2021
Income Statement by function
DKKm
Q2
2021
Q2
2020
H1
2021
H1
2020
Gross profit
931
834
1,783
1,791
EBIT
109
46
210
192
(172)
(164)
(343)
(337)
(172)
(164)
(343)
(337)
FLSmidth
Interim Report H1 2021 23
Notes
3. SEGMENT INFORMATION
H1 2021
H1 2020
FLSmidth Group
FLSmidth Group
DKKm
Mining
Cement
Shared
costs¹⁾
Other
com-
panies ²⁾
Continuing
activities
Discon-
tinued
activities³⁾
Mining
Cement
Shared
costs¹⁾
Other
com-
panies ²⁾
Continuing
activities
Discon-
tinued
activities³⁾
Revenue
5,214
2,572
-
0
7,786
0
5,255
3,116
-
0
8,371
0
Gross profit
1,416
585
(46)
0
1,955
0
1,346
670
(57)
0
1,959
0
EBITDA before special non-recurring items
903
242
(574)
1
572
(6)
896
333
(684)
(3)
542
(6)
EBITA before allocation of shared costs
828
193
(635)
1
387
(6)
818
288
(744)
(3)
359
(6)
EBITA
444
(57)
0
0
387
(6)
397
(33)
0
(5)
359
(6)
EBIT
322
(112)
-
0
210
(6)
278
(81)
-
(5)
192
(6)
Gross margin
27.2%
22.7%
25.1%
25.6%
21.5%
23.4%
EBITDA margin before special non-recurring items
17.3%
9.4%
7.3%
17.1%
10.7%
6.5%
EBITA margin before allocation of shared costs
15.9%
7.5%
-
15.6%
9.2%
-
EBITA margin
8.5%
-2.2%
5.0%
7.6%
-1.1%
4.3%
EBIT margin
6.2%
-4.4%
2.7%
5.3%
-2.6%
2.3%
Number of employees at 31 June
5,272
3,457
1,360
10,089
0
5,432
4,643
1,429
11,504
2
Reconciliation of profit for the period
EBT
174
(7)
143
(7)
1) Shared costs consist of costs that are managed on Region or Group level and subsequently allocated to the divisions. Cost include administration, procurement, logistic and digital.
2) Other companies consist of companies with no activity, real estate companies, eliminations and the parent company.
3) Discontinued activities mainly consist of bulk material handling.
FLSmidth
Interim Report H1 2021 24
Notes
4. REVENUE
Revenue arises from sale of life cycle offerings to
our customers. We sell a broad range of goods
and services within the Mining and Cement In-
dustries split into the main categories projects,
products and services.
Six Regions support the sales within the Mining
and Cement Industries. Revenue is presented in
the Regions in which delivery takes place. In the
first half year of 2021, South America repre-
sented a 3%-point lower share of Group revenue
than the same period last year. Asia and Australia
picked up a higher share of the Group revenue in
the first half year of 2021 compared to same pe-
riod in 2020.
Backlog
The order backlog at 30 June 2021 amounts to
DKK 16,677m (H1 2020: DKK 15,227m) and repre-
sents the value of outstanding performance obli-
gations on current contracts. The value of out-
standing performance obligations on current
contracts is combined of value from contracts
where we will transfer control at a future point in
time and the value of the remaining performance
obligations on contracts where we transfer con-
trol over time.
Based on the order backlog maturity profile, the
majority, 42% (H1 2020: 43%) of the order back-
log is expected to be converted into revenue in
2021, while 58% (H1 2020: 57%) is expected to
be converted to revenue in subsequent years.
Revenue split by Regions H1 2021
%
Revenue split by Regions H1 2020
%
Backlog
DKKm
22%
23%
17%
17%
10%
11%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia
Australia
23%
26%
18%
17%
8%
8%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia
Australia
43%
42%
34%
41%
23%
17%
0
3,000
6,000
9,000
12,000
15,000
18,000
H1 2020 H1 2021
Within current year Within next year Subsequent years
Revenue split by industry and category
H1 2021
H1 2020
DKKm
Mining
Cement
Group
Mining
Cement
Group
Capital business
1,826
1,090
2,916
1,976
1,456
3,432
Service business
3,388
1,482
4,870
3,279
1,660
4,939
Total revenue
5,214
2,572
7,786
5,255
3,116
8,371
Revenue split by recognition principle
H1 2021
H1 2020
DKKm
Mining
Cement
Group
Mining
Cement
Group
Total revenue
5,214
2,572
7,786
5,255
3,116
8,371
FLSmidth
Interim Report H1 2021 25
Notes
5. PROVISIONS
Additions to provisions amounted to DKK 261m
in H1 2021, compared to DKK 240m in H1 2020,
due to continued restructuring measures with
sites closed in US and Germany and marginal
changes to provision estimates for warranties,
loss-making projects as well as disputes and law-
suits.
Of the total used provisions of DKK 176m in H1
2021 restructuring provision used had a higher
share in H1 2021 compared to H1 2020. DKK 5m
related to discontinued activities in line with H1
2020 level. See note 8 for provision details re-
lated to discontinued activities.
For a description of the main provision catego-
ries see note 2.7 in the 2020 Annual Report.
6. CONTRACTUAL
OBLIGATIONS AND
CONTINGENT LIABILITIES
Contingent liabilities at 30 June 2021 amounted
to DKK 3.0bn (31 December 2020: DKK 2.7bn).
Contingent liabilities primarily relate to perfor-
mance and payment guaranteed issued to cover
project-related risks, such as performance, pay-
ment, quality, and delay. The volume of such
guarantees amounted to DKK 2.5bn (31 Decem-
ber 2020: DKK 2.4bn). In the event a guarantee
is expected to materialise, a provision is recog-
nized to cover the risk. The remaining contingent
liabilities relate to our involvement in legal dis-
putes, certain of which are already pending with
courts or other authorities and others of which
some may or may not lead to formal legal pro-
ceedings being initiated against us, including by
public authorities.
Except from the above mentioned no other sig-
nificant changes have occurred to the nature and
extent of our contractual obligations and contin-
gent liabilities compared to what was disclosed
in note 2.9 in the 2020 Annual Report.
FLSmidth has entered into a conditional agree-
ment to sell all and lease back part of its head-
quarters in Valby, Denmark . As described in the
Annual Report 2020 it has been decided to re-
visit the plans for the headquarter and options
are being explored. More certainty of the out-
come is expected during Q3 of 2021.
On 22 July 2021, a customer informed that it in-
tends to initiate arbitration against FLSmidth and
certain partners for an amount of EUR 28 million,
for alleged contractual breaches. The case was
our 2020
annual general meeting. FLSmidth will reject a
potential claim.
Provisions
DKKm
30/06
2021
31/12
2020
30/06
2020
Provisions
1,056
1,015
920
1,056
1,015
920
1,056
1,015
920
Provisions related to continued activities
DKKm
30/06
2021
31/12
2020
30/06
2020
Provisions
879
833
717
FLSmidth
Interim Report H1 2021 26
Notes
7. DISPOSAL AND
ACQUISITION OF
ENTERPRISES
On 23 December 2020, FLSmidth announced
the sale of advanced fabric filter technology
fective as of 1 March 2021. The gain from the
transaction was DKK 2m in H1 2021. The transac-
tion price was DKK 3m and the transaction costs
amounted to DKK 1m.
On 29 December 2020, FLSmidth announced
the sale of Möller pneumatic conveying systems
business to REEL. The sale of Möller pneumatic
conveying systems business was closed 1 Janu-
ary 2021. The disposal has no income statement
effect in H1 2021.
The assets related to the disposals were in-
cluded in assets classified as held for sale as of
31 December 2020. Following the two disposals
being effective in the first quarter of 2021 there
are no remaining assets classified as held for
sale.
On 1 June 2019, FLSmidth acquired the IMP Au-
tomation Group that was integrated into the Min-
ing segment. In relation to the acquisition FLS-
midth paid DKK 8m in H1 2021 related to a
deferred payment from the acquisition.
8. DISCONTINUED
ACTIVITIES
Discontinued activities include the remaining re-
sponsibilities to finalise legacy projects, handling
of claims etc. retained on the sale of the non-min-
ing bulk material handling business in 2019. The
progress has been delayed, amongst others, due
to the COVID-19 pandemic. For further infor-
mation on discontinued activities, please refer to
note 2.11 of Annual report 2020.
In addition to provisions of DKK 177m shown in
the table below, discontinued activities include
DKK 222m (31 December 2020: DKK 220m) of
.
As of 30 June 2021, DKK 130m of
contingent liabilities relate to discontinued activi-
ties.
Loss for the period from discontinued activities
amounted to DKK -6m (H1 2020: DKK -10m), pri-
marily consisting of SG&A cost, refer to note 3.
Cash flow from discontinued operating activities
totalled DKK -16m (H1 2020: DKK -4m). The cash
outflow was due to a combination of the loss
from the period, used provisions of DKK -5m (H1
2020: DKK -8m) and cash flow from net working
capital of DKK -5m (H1 2020: DKK 14m).
Discontinued activities effect on cash flow from operating activities
DKKm
H1 2021
2020
H1 2020
Cash flow from operating activities before financial items and tax
(16)
(48)
0
Cash flow from operating activities
(16)
(52)
(4)
Discontinued activities share of Group provisions disclosed in note 5
DKKm
30/06
2021
31/12
2020
30/06
2020
Provisions
177
182
203
FLSmidth
Interim Report H1 2021 27
Notes
9. NET WORKING CAPITAL
Net working capital as at 30 June 2021 de-
creased due to a significant increase in prepay-
ments from customers. A lower level of trade re-
ceivables was offset by an increase in work in
progress and an increase in inventories.
Utilisation of supply chain financing increased
slightly in H1 compared to year end 2020.
10. FAIR VALUE
MEASUREMENT
Financial instruments measured at fair value are
measured on a recurring basis and categorised
into the following levels of the fair value hierar-
chy:
Level 1: Observable market prices for identical
instruments
Level 2: Valuation techniques primarily based
on observable prices or traded prices for com-
parable instruments
Level 3: Valuation techniques primarily based
on unobservable prices
Securities and investments measured at fair
value through profit/loss are either measured at
quoted prices in an active market for the same
type of instrument (level 1) or at fair value based
on available data (level 3).
Hedging instruments are not traded in an active
market based on quoted prices. They are meas-
ured instead using a valuation technique, where
all significant inputs are based on observable
market data; such as exchange rates, interest
rates, credit risk and volatilities (level 2).
There have been no significant transfers be-
tween the levels in the first half year of 2021 or
during 2020.
Net working capital
DKKm
30/06 2021
31/12 2020
30/06 2020
Net working capital
1,305
1,752
2,351
Cash flow effect from change in net working capital
469
706
234
Financial instruments
30/06 2021
DKKm
Level 1
Level 2
Level 3
Total
9
14
39
62
31/12 2020
DKKm
Level 1
Level 2
Level 3
Total
9
30
34
73
FLSmidth
Interim Report H1 2021 28
Notes
11. EVENTS AFTER THE
BALANCE SHEET DATE
As announced on 29 July 2021, FLSmidth and
thyssenkrupp Industrial Solution AG have
reached an agreement that FLSmidth will acquire
for a total com-
pensation of EUR 325m corresponding to ap-
proximately DKK 2.4 billion. Closing is expected
in H2 2022 and is conditional upon customary
regulatory approvals and formal approval by the
supervisory board of thyssenkrupp AG and the
supervisory board of thyssenkrupp Industrial So-
lution AG.
We are not aware of any subsequent matters that
nancial position at 30 June 2021.
12. ACCOUNTING POLICIES
The condensed interim report of the Group for
the first half year of 2021 is presented in accord-
ance with IAS 34, Interim Financial Reporting, as
approved by the EU and additional Danish dis-
closure requirements regarding interim reporting
by listed companies.
Apart from the below mentioned changes, the
accounting policies are unchanged from those
applied in the 2020 Annual Report. Reference is
made to note 7.5, Accounting policies, note 7.6,
Impact from new IFRS, note 7.7, New IFRS not yet
adopted and to specific notes in the 2020 An-
nual Report for further details.
Alternative Performance Measures (APM) are un-
changed from those applied in the 2020 Annual
Report, refer to note 7.4 in the 2020 Annual Re-
port for a description of used APM.
Changes in accounting policies
As of 1
st
January 2021, the FLSmidth Group has
implemented all new or amended accounting
standards and interpretations as adopted by the
EU and applicable for the 2021 financial year, in-
cluding the following, which is the most relevant
for FLSmidth:
Interest Rate Benchmark Reform Phase 2
(amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4
and IFRS 16) (issued 2020)
The implementation has not had and is not ex-
pected to have significant impact on the consoli-
dated financial statements.
FLSmidth
Interim Report H1 2021 29
Statements
Executive management
Board of directors
STATEMENT BY MANAGEMENT
FLSmidth
Interim Report H1 2021 30
Statements
A/S
the form of annual reports or interim reports, filed
with the Danish Business Authority and/or an-
NASDAQ Copenhagen, as well as any presenta-
tions based on such financial reports, and any
other written information released, or oral state-
ments made, to the public based on this report or
in the future on behalf of FLSmidth & Co. A/S,
may contain forward looking statements.
Wo
other words and terms of similar meaning in con-
nection with any discussion of future operating or
financial performance identify forward-looking
statements. Examples of such forward-looking
statements include, but are not limited to:
Statements of plans, objectives or goals for fu-
ture operations, including those related to FLS-
search and product development.
Statements containing projections of or targets
for revenues, profit (or loss), CAPEX, dividends,
capital structure or other net financial items.
Statements regarding future economic perfor-
mance, future actions and outcome of contin-
gencies such as legal proceedings and state-
ments regarding the underlying assumptions or
relating to such statements.
Statements regarding potential merger &
acquisition activities.
These forward-looking statements are based on
current plans, estimates and projections. By their
very nature, forward-looking statements involve
inherent risks and uncertainties, both general
and specific, which may be outside FLSmidth &
fect such forward-looking statements.
FLSmidth & Co. A/S cautions that a number of im-
portant factors, including those described in this
report, could cause actual results to differ materi-
ally from those contemplated in any forward-
looking statements.
Factors that may affect future results include, but
are not limited to, global as well as local political
and economic conditions, including the impact
from the COVID-19 pandemic, interest rate and
exchange rate fluctuations, delays or faults in
project execution, fluctuations in raw material
prices, delays in research and/or development of
new products or service concepts, interruptions
of supplies and production, unexpected breach
or termination of contracts, market-driven price
and/or services, introduction of competing prod-
ucts, reliance on information technology,
ully market
current and new products, exposure to product
liability and legal proceedings and investigations,
changes in legislation or regulation and interpre-
tation thereof, intellectual property protection,
perceived or actual failure to adhere to ethical
marketing practices, investments in and divesti-
tures of domestic and foreign enterprises, unex-
pected growth in costs and expenses, failure to
recruit and retain the right employees and failure
to maintain a culture of compliance. Unless re-
quired by law FLSmidth & Co. A/S is under no
duty and undertakes no obligation to update or
revise any forward-looking statement after the
distribution of this report.
FORWARD LOOKING STATEMENTS
Forward looking statement
MAIN CONCLUSIONS
– continued
5
Interim report Q3 2017
FLSMIDTH
Interim Report
1 January – 3
0 June
2021
DK-2500 Valby
Tel.: +45 36 18 18 00
Fax: +45 36 44 11 46
corppr@smidth.com
www.smidth.com
CVR No. 58180912