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INTERIM
REPORT
H1 2022
1 January –
30 June 2022
Company announcement no. 14
CVR No. 58180912
FLSmidth
Interim Report H1 2022 2
Management Review
Management Review
3
4
7
8
10
12
15
Consolidated Condensed
Interim Financial
Statements
17
17
18
19
20
Notes
21
21
22
24
25
25
26
26
27
27
27
27
Statements
28
CONTENTS
FLSmidth
Interim Report H1 2022 3
Management Review
Mining highlights Q2 2022
Mining order intake increased 26% organically in
Q2 2022, as a result of improved service activity
compared to Q2 2021. The quarter included one
large product order, valued at around DKK 270m.
Revenue increased organically by 19%, driven by
both service and capital. The quarter includes
revenue of DKK 257m from contracts with non-
sanctioned Russian and Belarusian customers.
Mining EBITA increased by 19%. The EBITA mar-
gin of 7.8% includes costs related to the acquisi-
of DKK
45m and costs of DKK 50m to the wind-down of
our Russian activities. Adjusted for these costs,
the Mining EBITA margin was 10.5%.
Cement highlights Q2 2022
Cement order intake increased 8% organically,
as a result of improved underlying performance
and improved market conditions. The quarter in-
cluded one large product order, valued at more
than DKK 400m.
Cement revenue increased 12% organically,
driven mainly by an increase in service revenue.
Cement EBITA continued the positive trend and
increased to DKK 31m in Q2 2022 compared to
DKK -34m in Q2 2021. Cement EBITA margin
was positive at 2.1%, compared to -2.7% in Q2
2021, driven by higher revenue in the quarter
and improvements from the successfully exe-
cuted reshaping activities in 2021.
Consolidated highlights Q2 2022
Group order intake increased 20% organically,
driven predominantly by Mining. Currency tail-
winds supported order intake in the quarter by
8%. Capital orders increased by 23% and service
orders increased 31%.
The order backlog increased to DKK 19.5bn, of
which around DKK 1.5bn related to Russian and
Belarusian contracts at the end of Q2 2022
(around DKK 2.6bn at end Q1 2022).
Organic revenue increased 17% driven primarily
by Mining. Gross profit increased by 22%, with
the corresponding gross margin decreasing
slightly from 25.0% to 24.7%. EBITA increased by
56% and the corresponding EBITA margin in-
creased to 6.1% from 4.8% in Q2 2021. Adjusted
for the costs related to the wind-down of Russian
Mining business, the EBITA margin was 8.0% in
Q2 2022.
Cash flow was, as expected, negative due to the
increase in net working capital.
Financial guidance 2022
FLSmidth financial guidance for 2022 is up-
dated. Guidance for Mining revenue, consoli-
dated Group revenue and Cement EBITA margin
is raised.
Please see page 4 for detailed guidance for Min-
ing, Cement and consolidated for the Group.
Following a solid start to the year, the second quarter of 2022 saw continued
growth in order intake and financial performance. Revenue and EBITA in-
creased by 23% and 56%, respectively, driven by a solid Mining performance
with an underlying EBITA margin of 10.5% when adjusting for costs related to
the acquisition of thyssenkrupp’s Mining business and the winding down of our
Russian activities. In addition, Cement continued its positive trajectory on im-
proving profitability. The increased revenue and EBITA was despite inflationary
pressure, supply chain challenges and costs related to our ongoing wind-down
of Russian activities.
We are very pleased to have announced that all conditions and requirements
for the acquisition of thyssenkrupp’s Mining business have been met and that
all regulatory clearances have been obtained without imposition of any compe-
tition related remedies. Accordingly, the transaction will close on 31 August
2022. We are very excited to soon welcome our ~2,000 new colleagues and
TK Mining’s customers to FLSmidth. Our combined company will offer custom-
ers a stronger, complementary value proposition, while creating significant af-
termarket opportunities, driving value creation through compelling synergies
and further strengthening our sustainability and digitalisation agenda.
“As I reflect on my first six months as CEO, our common ambition is to drive
faster decision-making, improved profitability and an ambitious sustainability
agenda. To support this, and to prepare for the integration of thyssenkrupp’s
Mining business, we have adjusted our organisation. Our three Mining Business
Lines (Service, Products and Systems) have been elevated to Group Executive
Management, and Cement is operating on a clearer standalone basis. I have
no doubt this streamlined organisation will ensure clear accountability and
drive more focused execution and profitability for both Mining and Cement.”
- Mikko Keto, Group CEO
HIGHLIGHTS
Highlights
FLSmidth
Interim Report H1 2022 4
Management Review
Mining
The outlook for the mining industry remains posi-
tive, despite current fears of a global recession.
The outlook is driven by global economic devel-
opment and increased demand for minerals re-
quired for the green transition, positively impact-
ing revenue and EBITA.
Mining EBITA margin is expected to be impacted
by a higher share of capital revenue, higher lo-
gistics costs and inflation. Guidance includes
around DKK 110m in integration costs until clos-
ing of the thyssenkrupp Mining business transac-
tion. The transaction will close on 31 August
2022.
Mining revenue is expected to be negatively im-
pacted by lower revenue in Russia, partly offset
by mitigating actions. Due to costs related to the
winding-down of our activities in Russia and miti-
gating actions, the Mining EBITA margin is, as
previously communicated, expected to remain in
the lower end of the guidance range.
Cement
Following a year of reshaping, we expect the Ce-
ment business to continue its positive EBITA tra-
jectory in 2022. Cement EBITA margin is ex-
pected to be impacted by higher logistics costs
and inflation.
The short-term outlook for the cement industry
remains impacted by overcapacity and slow re-
covery Mid-term recovery is expected in the ce-
ment industry driven by increased demand for
sustainability solutions.
Our Cement business is still expected to see an
insignificant impact from the winding down of our
activities in Russia.
Group
The financial guidance for 2022 is for the
FLSmidth Group standalone and excludes the
Mining business. Guidance includes around
DKK 110m in integration costs until closing of the
thyssenkrupp Mining business transaction. The
transaction will close on 31 August 2022. We will
publish a new financial guidance no later than in
connection with our 9M 2022 financial release.
Guidance for 2022 is subject to increased uncer-
tainty due to the pandemic, global supply chain
situation and geopolitical turmoil.
FINANCIAL GUIDANCE 2022
FLSmidth’s financial guidance for 2022 is updated. Guidance for Mining revenue, consolidated Group revenue
and Cement EBITA margin is raised. The Mining EBITA margin is, as previously communicated, expected to
remain in the lower end of the guidance range due to the impact from our Russian business.
Mining
H1
2022
Initial
guidance
2022
Updated
guidance
2022
Cement
H1
2022
Initial
guidance
2022
Updated
guidance
2022
Highlights
Group
H1
2022
Initial
guidance
2022
Updated
guidance
2022
Russian wind-down well
progressed in Q2 2022
Actions taken in Q2 2022
We have amended our outstanding or-
der backlog from Russian and Belarus-
ian contracts to around DKK 1.5bn at
end Q2 2022 from around DKK 2.6bn
at end Q1 2022
We have reduced the number of em-
ployees in Russia by ~50% from +80
employees at end Q1 2022 and we will
continue towards a full wind-down
We have incurred DKK 50m in costs re-
lated to the wind-down and taken a
write-down of DKK 10m on deferred tax
assets
FLSmidth’s wind-down approach
New business in Russia and Belarus is
suspended and we are winding down
activities in Russia in a responsible
manner
We are working on mitigating actions
and efforts
We are obliged to fulfil legal obligations
with regards to ongoing activities to the
extent possible
We will donate any net profit gener-
ated in 2022 from activities in Russia
and Belarus to humanitarian purposes
We have donated DKK 2m to Ukrainian
conflict relief efforts
FLSmidth
Interim Report H1 2022 5
Management Review
FINANCIAL HIGHLIGHTS
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Cash flow from operating activities
DKKm (214) from DKKm 507 in Q2 2021
GROUP
5,901
28%
5,027
23%
307 6.1%
56%
Earnings per share
DKK 2.5 from DKK 1.1 in Q2 2021
Net working capital ratio
9.2% from 8.2% end of Q2 2021
NIBD/EBITDA
-0.3x from 1.0x end of Q2 2021
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by capital & service
%
MINING
3,989
36%
3,529
26%
276 7.8%
19%
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by capital & service
%
CEMENT
1,912
14%
1,498
18%
31 2.1%
191%
9,600
12,919
4,615
5,901
H1
2021
H1
2022
Q2
2021
Q2
2022
7,786
9,733
4,073
5,027
H1
2021
H1
2022
Q2
2021
Q2
2022
387
609
197
307
H1
2021
H1
2022
Q2
2021
Q2
2022
2,933
3,989
Q2
2021
Q2
2022
2,802
3,529
Q2
2021
Q2
2022
231
276
Q2
2021
Q2
2022
40%
(Q2 2021: 36%)
60%
(Q2 2021: 64%)
Capital
Service
1,682
1,912
Q2
2021
Q2
2022
1,271
1,498
Q2
2021
Q2
2022
(34)
31
Q2 2021
Q2 2022
43%
(Q2 2021: 46%)
57%
(Q2 2021: 54%)
Capital
Service
FLSmidth
Interim Report H1 2022 6
Management Review
MissionZero and ESG
developments
We continue to drive sustainabil-
ity across our entire value chain.
Our core focus is to deliver sus-
tainability solutions to our cus-
tomers while at the same time
reducing the impact from our
own operations.
Upgrade of thickener to improve customer
sustainability and profitability
A recent thickener upgrade at one of
performance. Plant capacity increased by 9%
without increasing the amount of ore mined,
while water going to the tailings dam has been
reduced by 11%. Based on these benefits, the
expected within less than 12 months.
Cement MissionZero flagship product
reaches signficant milestone
The FLSmidth Cross-Bar Cooler delivers com-
pelling financial and sustainability benefits to
cement producers. In end April, the state-of-
the-art clinker cooling technology reached the
milestone of 200 units sold. Where our Cross-
Bar coolers have replaced older, inefficient
equipment, the combined estimated greenhouse
gas emissions savings from reduced fuel and
power consumption now accounts for more than
1.6 million tonnes of CO
2
equivalent per year.
International partnership to eliminate fossil
fuels in the cement clay calcination process
Replacing limestone-based clinker with calcined
clay is essential to reduce the environmental
footprint of cement production. A new partner-
ship led by FLSmidth is moving to the next stage
in eliminating fossil fuels by electrifying the clay
calcination process with renewable sources. The
ECoClay partnership unites cement producers
with research institutes and high-tech start-ups,
who aim to develop and commercialise the tech-
nology needed to halve C0
2
emissions from cur-
rent levels.
Reducing own carbon emissions through solar
power in China
During Q2 2022, the FLSmidth team in China
completed a 1.4 MW solar power generation pro-
solar installation is expected to generate 1.6 mil-
lion kWh of electricity annually, covering 42% of
city consumption and reduce CO
2
emissions by 32%.
SUSTAINABILITY HIGHLIGHTS
Safety (TRIR)
Total Recordable Incident Rate/
million working hours
Women managers
%
1.3
Target: zero harm; 2022 Target: <1.3
14.1
2022 Target: 15.7%
TRIR increased slightly during Q2 2022 due to increased
medical treatment cases without lost time. TRIR however
remains on target with an ongoing campaign to increase
safety awareness aiming at key areas where the injury
rates are the highest.
Ongoing changes to the organisation have resulted in a
decline in the percentage of women managers during Q2
2022 (Q1 2022: 14.6%). We have ongoing activities in
place to address this including active recruitment and ca-
reer development strategy.
Water withdrawal
m
3
Scope 1 & 2 GHG
Emissions
tCO
2
e (market-based)
79,436
18,002
Target: carbon neutral; 2022 Target: 43,622 tCO
2
e
Water withdrawal is lower compared to 84,805m
3
in H1
2021. This is due to ongoing initiatives to save on water,
as well as increased levels of remote working across the
organisation.
CO
2
e emissions are higher compared to 16,167 tCO
2
e in
H1 2021 and is due to operations being back to full capac-
ity: In H1 2021, we temporarily closed some sites due to
the pandemic. We however remain on target for the year.
1.9
1.3
2021
H1
2022
14.3%
14.1%
2021
H1
2022
201,997
79,436
2021
H1
2022
34,737
18,002
2021
H1
2022
FLSmidth
Interim Report H1 2022 7
Management Review
KEY FIGURES
DKKm
Q2
2022
Q2
2021
H1
2022
H1
2021
2021
INCOME STATEMENT
ORDERS
EARNING RATIOS
CASH FLOW
BALANCE SHEET
DKKm
Q2
2022
Q2
2021
H1
2022
H1
2021
2021
FINANCIAL RATIOS
SHARE RATIOS
SUSTAINABILITY KEY FIGURES
Use of alternative performance measures
FLSmidth
Interim Report H1 2022 8
Management Review
The mining sector has remained resilient with
few visible signs of a slowdown despite the
sharp decline in commodity prices during the
second quarter. Many industrial metals have ex-
perienced the worst quarter since the 2008 fi-
nancial crisis as the pace of construction slowed
down in China and fears of a global recession in-
tensified. The inflationary pressure is evidenced
in the operational costs of the mines and many
customers are now expecting that a possible re-
cession is lurking. However, the global supply of
many commodities remains at critically low levels
and the green transition will require the mining
industry to scale up on investments to meet the
long-term demand for minerals.
In South America, the mining market remains
solid despite political uncertainty around new
taxations and environmental protection rules in
Chile and Peru. Mining activity is high in both Ar-
gentina and Colombia with an increased demand
for brownfield projects. The pipeline remains
strong and price adjustments have not had any
significant impact on order intake.
Across regions, bottlenecks in supply chains and
repeated pandemic lockdowns in China continue
to cause challenges. Customers in some regions
are concerned about the dependence on China
as a major supplier. During the second quarter,
we have seen a push towards localisation of sup-
ply to de-risk the supply from China and a willing-
ness to pay higher prices for reduced supply
chain risk.
In Australia, the supply chain risk remains an is-
sue especially for items being supplied from
overseas. While the iron ore price has dropped
on the back of recession fears and lower Chi-
nese steel mill uptake, it remains at profitable lev-
els for miners. Gold prices have decreased from
their peak but remain elevated and still at profita-
ble margins levels.
We have a healthy pipeline in Europe, North Af-
rica and other countries of the Commonwealth of
Independent States (CIS) that will partly compen-
sate the loss of business in Russia. Customers in
these regions are mainly concerned about the
general inflation, raw material and freight pricing
as well as increased lead time.
FLSmidth
Interim Report H1 2022
MINING MARKET DEVELOPMENTS
Activity and sentiment in the mining industry continues to be positive,
despite the decline in commodity prices during the quarter and current
fears of a global recession. Copper and many other metal markets are
still facing tight supply conditions. The long-term outlook for minerals
required to meet global economic development and drive the green
transition remains positive.
Mining order intake
split per Region Q2 2022
%
Mining order intake
split by commodity Q2 2022
%
27%
31%
8%
17%
5%
12%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia
Australia
35%
18%
9%
2%
12%
24%
Copper
Gold
Coal
Fertilizer
Iron ore
Other
FLSmidth
Interim Report H1 2022 9
Management Review
Q2 2022
Mining order intake increased 26% organically as
a result of improved service activity compared to
Q2 2021. Including currency effects, order intake
increased by 36% to DKK 3,989m, comprising a
40% increase in service orders and a 29% in-
crease in capital orders.
Q2 2022 capital order intake contains one large
announced product order valued at around DKK
270m, compared to Q2 2021 which contained
one large order valued at DKK 200m. During the
quarter, service orders and capital orders repre-
sented 64% and 36% of Mining order intake, re-
spectively.
Revenue increased organically by 19% and by
26% including currency effects to DKK 3,529m.
The quarter includes revenue of DKK 257m de-
rived from contracts with non-sanctioned Russian
and Belarusian customers.
The increase in capital revenue of 38% was
driven by the higher backlog entering the quarter
and improved market conditions compared to
Q2 2021. Service revenue increased by 19%
driven mainly by higher demand for spare and
wear parts. Service accounted for 60% of Mining
revenue in Q2 2022 compared to 64% in Q2
2021.
Gross profit increased by 17% to DKK 876m, from
DKK 749m in Q2 2021. The corresponding gross
margin decreased to 24.8% due to the higher
share of capital revenue, increased inflationary
pressure, supply chain challenges and cost re-
lated to the wind-down of our activities in Russia.
EBITA increased by 19% to DKK 276m in Q2
2022 as a result of the higher revenue. The cor-
responding EBITA margin decreased to 7.8%
from 8.2% in Q2 2021. EBITA in Q2 2022 was im-
pacted by costs related to the acquisition of
well as costs of DKK 50m related to the wind-
down of our activities in Russia. Adjusted for
these costs, the EBITA margin was 10.5%.
H1 2022
Mining order intake in H1 2022 increased by 40%
to DKK 9,146m (H1 2021: DKK 6,518m). The main
driver was the extraordinary strong capital order
intake in the first quarter of the year, which in-
cluded four large capital product orders with a
combined value of around DKK 1.4bn. Mining or-
der backlog in H1 2022 increased 22% to DKK
12,544m (H1 2021: DKK 10,310m).
Mining revenue increased by 30% to DKK
6,762m (H1 2021: DKK 5,214m), driven mainly by
capital revenue. EBITA increased by 18% to DKK
525m (H1 2021: DKK 444m) and the correspond-
ing EBITA margin decreased to 7.8% from 8.5%
in H1 2021. EBITA in H1 2022 was impacted by
Mining business of DKK 82m and costs of DKK
50m related to the wind-down of our activities in
Russia. Adjusted for these costs, the EBITA mar-
gin was 9.7% in H1 2022.
MINING FINANCIAL PERFORMANCE
Growth in Mining in Q2 2022
(vs. Q2 2021)
Order intake
Revenue
Total growth
36%
26%
Order intake Q2 2022
split by capital & service
%
Revenue and EBITA margin
DKKm EBITA %
36%
(Q2 2021: 38%)
64%
(Q2 2021: 62%)
Capital
Service
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
2020
Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2
Service Capital
EBITA % Adjust. for tk costs
Mining
(DKKm)
Q2 2022
Q2 2021
Change (%)
H1 2022
H1 2021
Change (%)
Order intake (gross)
3,989
2,933
36%
9,146
6,518
40%
Order backlog
12,544
10,310
22%
12,544
10,310
22%
Revenue
3,529
2,802
26%
6,762
5,214
30%
Gross profit
876
749
17%
1,636
1,384
18%
EBITA
276
231
19%
525
444
18%
EBIT
222
170
31%
414
322
29%
Industry and therefore included in the
relevant lines of gross profit and EBITA. The comparison quarter Q1 2021 has been restated accordingly.
FLSmidth
Interim Report H1 2022 10
Management Review
Cement is navigating the high inflationary
environment coupled with persisting supply
chain challenges and an emerging recession.
While the surge in energy prices has forced
some cement producers to temporarily shut
down production of older and inefficient cement
plants, it has also created new opportunities in
terms of increased interest in productivity
enhancement solutions. This drives sales of both
new products capable of reducing energy
consumption as well as technologies related to
change to lower cost and more sustainable fuels.
In South America, activity remains stable but with
increased political and economic uncertainty. In
North America, cement demand remains high
and service activity continues to be solid. Supply
chain disruptions and the increase in fuel cost
are the main concerns of our customers. Energy
prices and import costs in North America have
skyrocketed at the same time as private
construction is facing pressure from production
bottlenecks, higher interest rates and rising
construction costs.
In Asia, China remains stable and a significant
market for FLSmidth. There are concerns of an
anticipated recession, but the focus on reducing
energy consumption continues to drive a
significant upgrade market for FLSmidth,
regardless of reduced cement production levels.
Investment activity in Europe is stable but a po-
tential recession could change this picture. A
high utilisation is still driving service activity, but
supply chain challenges are causing some de-
lays. Current investments continue to be directed
towards productivity and sustainability solutions.
CEMENT MARKET DEVELOPMENTS
The cement market remains at a stable level, despite an emerging
recession. Cement consumption is driven by economic expansion and
the anticipated global recession could impact market demand. The
soaring cost inflation and supply chain challenges continue to create a
difficult environment for many cement producers. On the positive side, it
drives increased interest for productivity and sustainability solutions.
Cement order intake
split per Region Q2 2022
%
28%
5%
12%
20%
34%
1%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia
Australia
FLSmidth
Interim Report H1 2022 11
Management Review
Q2 2022
Cement order intake increased 8% organically
compared to Q2 2021. Including favourable cur-
rency effects, the order intake in Q2 2022 in-
creased by 14% to DKK 1,912m, comprising an in-
crease in both service orders and capital orders
of 13% and 15%, respectively.
The increase in Cement order intake was a result
of improved underlying performance and im-
proved market conditions compared to Q2 2021,
where order intake was still impacted by sub-
dued investment appetite and travel restrictions.
The improved capital order intake was due to the
announced large order to deliver process tech-
nology equipment for a greenfield cement plant
at a total value of more than DKK 400m. The
comparative quarter in 2021 contained one large
order at a value of around DKK 200m.
Service orders and capital orders represented
52% and 48% of cement order intake, respec-
tively, which was unchanged compared to Q2
2021.
Revenue increased 12% organically compared to
Q2 2021, driven mainly by the increase in service
revenue and a higher demand for spare and
wear parts. Including favourable currency effects,
revenue increased by 18% to DKK 1,498m in Q2
2022. The financial impact from our business in
Russia has been insignificant. Service accounted
for 57% of Cement revenue in Q2 2022 com-
pared to 54% in Q2 2021.
Gross profit increased 36% to DKK 368m, com-
pared to DKK 271m in Q2 2021. The correspond-
ing gross margin increased by 3.3%-point to
24.6% as a result of the successful implementa-
tion of reshaping activities in 2021, improved ex-
ecution management and mitigation of material
price increases.
Cement EBITA continued the positive trend seen
in Q1 2022, driven by higher revenue in the quar-
ter and improvements from the successfully exe-
cuted reshaping activities in 2021. EBITA
amounted to DKK 31m in Q2 2022 compared to
DKK -34m in Q2 2021. The corresponding EBITA
margin was positive at 2.1%, compared to -2.7%
in Q2 2021.
H1 2022
Cement order intake in H1 2022 increased by
22% to DKK 3,773m (H1 2021: DKK 3,082m),
driven by growth in both capital by 31% and ser-
vice by 15%.
Cement revenue increased by 16% to DKK
2,971m in H1 2022 (H1 2021: DKK 2,572m). Ser-
vice and capital revenue increased by 14% and
18%, respectively.
EBITA improved in H1 2022 and amounted to
DKK 84m (H1 2021: DKK -57m) with a corre-
sponding EBITA margin of 2.8% (H1 2021: -2.2%).
Adjusted for a gain of DKK 23m from a sale of a
property related to the Cement business in Q1
2022, the Cement EBITA margin in H1 2022 was
2.1%.
CEMENT FINANCIAL PERFORMANCE
Growth in Cement in Q2 2022
(vs. Q2 2021)
Order intake
Revenue
Total growth
14%
18%
Order intake Q2 2022
split by capital & service
%
Revenue and EBITA margin
DKKm EBITA %
48%
(Q2 2021: 48%)
52%
(Q2 2021: 52%)
Capital
Service
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
0
300
600
900
1,200
1,500
1,800
2,100
2,400
Q2
2020
Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2
Capital revenue Service revenue
EBITA margin
Cement
(DKKm)
Q2 2022
Q2 2021
Change (%)
H1 2022
H1 2021
Change (%)
Order intake (gross)
1,912
1,682
14%
3,773
3,082
22%
Order backlog
6,917
6,367
9%
6,917
6,367
9%
Revenue
1,498
1,271
18%
2,971
2,572
16%
Gross profit
368
271
36%
715
571
25%
EBITA
31
(34)
191%
84
(57)
247%
EBIT
13
(61)
121%
43
(112)
138%
Industry and therefore included in the
relevant lines of gross profit and EBITA. The comparison quarter Q1 2021 has been restated accordingly.
FLSmidth
Interim Report H1 2022 12
Management Review
GROWTH
Group order intake increased by
20% organically, driven predomi-
nantly by Mining. Currency tail-
winds supported order intake in
the quarter by 8%. Solid organic
revenue growth of 17%.
Order intake
Order intake in Q2 2022 increased 28% to DKK
5,901m and by 20% organically. Q2 2022 order
intake included two large orders at a combined
value of DKK 670m, compared to a combined
value of DKK 400m of large orders in Q2 2021.
Following a period of lower investments and ser-
vice activity, demand has significantly increased
as a result of improved market conditions. Ser-
vice orders increased by 31% and capital orders
increased 23% in Q2 2022 compared to Q2
2021.
Order backlog and maturity
The order backlog amounted to around DKK
19.5bn, an increase by 17% compared to Q2
2021. Russian contracts of a total value of ap-
proximately DKK 750m were amended during
the quarter.
Outstanding order backlog related to Russian
and Belarusian contracts amounted to around
DKK 1.5bn at the end of Q2 2022 (end of Q1
2022: around DKK 2.6bn) and is due to uncer-
turity. 35% of the backlog is expected to be con-
verted to revenue in the remainder of 2022.
Backlog maturity
Mining
Cement
FLSmidth
Group
Revenue
Revenue increased 23% to DKK 5,027m in Q2
2022, driven by a 20% increase in service reve-
nue and 28% increase in capital revenue. Service
revenue accounted for 59% of the total revenue
during the quarter, compared to 61% in Q2 2021.
Organic revenue increased 17% driven primarily
by a 19% organic growth in Mining, however Ce-
ment also contributed with an organic growth of
12%. The increase was a result of a higher order
backlog entering Q2 2022 and improved market
conditions compared to Q2 2021.
Cost inflation and global supply chain issues re-
main challenging. However, we have been able
to partly mitigate the supply chain pressure due
to our flexibility to switch between suppliers and
use regional sourcing.
CONSOLIDATED FINANCIAL PERFORMANCE IN Q2 2022
Order intake
DKKm
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q2
2020
Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2
Service Order intake Capital Order intake
Growth in order intake in Q2 2022
(vs. Q2 2021)
Mining
Cement
FLSmidth
Group
Total growth
36%
14%
28%
Growth in revenue in Q2 2022
(vs. Q2 2021)
Mining
Cement
FLSmidth
Group
Total growth
26%
18%
23%
Group – continued activities
(DKKm)
Q2 2022
Q2 2021
Change (%)
H1 2022
H1 2021
Change (%)
Order intake (gross)
5,901
4,615
28%
12,919
9,600
35%
Order backlog
19,461
16,677
17%
19,461
16,677
17%
Revenue
5,027
4,073
23%
9,733
7,786
25%
Gross profit
1,244
1,020
22%
2,351
1,955
20%
SG&A cost
(856)
(735)
16%
(1,581)
(1,383)
14%
EBITA
307
197
56%
609
387
57%
EBIT
235
109
116%
457
210
118%
FLSmidth
Interim Report H1 2022 13
Management Review
PROFIT
Gross profit increased by 22% and
EBITA increased by 56% com-
pared to the second quarter of
2021, as a result of higher revenue
and healthy underlying perfor-
mance. The adjusted EBITA margin
improved to 8.0%.
Gross profit and margin
Gross profit increased by 22% to DKK 1,244m,
due to the higher revenue. The corresponding
gross margin decreased slightly from 25.0% to
24.7%, impacted by the higher share of capital
revenue, inflationary pressure, supply chain chal-
lenges and cost related to the wind-down of our
activities in Russia.
In Q2 2022, total research and development
costs (R&D) amounted to DKK 81m, representing
1.6% of revenue (Q2 2021: 2.0%).
R&D costs (DKKm)
Q2 2022
Q2 2021
SG&A costs
As a result of the increased revenue, SG&A costs
as a percentage of revenue declined to 17.0% in
Q2 2022 compared to 18.0% in Q2 2021.
Sales, general and administrative costs (SG&A)
and other operating items increased 16% com-
pared to Q2 2021, mainly due to the higher activ-
ity level, wage inflation and cost related to the
wind-down of our activities in Russia. Further,
currencies had a negative impact on SG&A of
DKK 31m in the quarter. Cost related to the acqui-
amounted to DKK 45m in the quarter.
EBITA and EBITA margin
EBITA increased by 56% to DKK 307m, as a re-
sult of the higher revenue. The EBITA margin in-
creased to 6.1% from 4.8% in Q2 2021. Adjusted
for the costs of DKK 50m related to the wind-
down of our Russian activities and costs of DKK
45m related to the acquisition of
Mining business, the EBITA margin was 8.0% in
Q2 2022.
Amortisation in Q2 2022 was DKK 72m (Q2
2021: DKK 88m) of which the effect of purchase
price allocations amounted to DKK 14m (Q2 2021:
DKK 23m) and other amortisations to DKK 58m
(Q2 2021: DKK 65m).
Earnings before interest and tax (EBIT) increased
116% to DKK 235m.
Financial items
Net financial items amounted to DKK -5m (Q2
2021: DKK -27m), of which foreign exchange and
fair value adjustments amounted to DKK 9m (Q1
2021: DKK -12m). Net interest amounted to DKK
-11m (Q2 2021: DKK -15m) and income from asso-
ciates amounted to DKK -3m (Q2 2021: 0m).
Tax
Tax for Q2 2022 totalled DKK -93m (Q2 2021:
DKK -32m), corresponding to an effective tax rate
of 40% (Q2 2021: 39%). The increased effective
tax rate is due to a DKK 10m write-down of de-
ferred tax assets in Russia.
Profit for the period
Profit for the period increased to DKK 134m (Q2
2021: DKK 47m), equivalent to DKK 2.5 per share
(Q2 2021: DKK 1.1). The increase resulted from
the significantly higher EBT, partly offset by
higher tax.
Return on capital employed
As a result of the higher EBITA in the quarter and
only slightly higher average capital employed
compared to Q2 2021, return on capital em-
ployed (ROCE) increased to 8.4% (Q2 2021:
5.4%).
Employees
The number of employees increased slightly to
10,055 at the end of Q2 2022, compared to
10,039 at the end of Q1 2022.
Backlog
DKKm
Revenue & EBITA margin
DKKm EBITA%
EBITA
DKKm
0
4,000
8,000
12,000
16,000
20,000
Q2
2020
Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2
Mining Cement
0%
2%
4%
6%
8%
10%
12%
0
1,000
2,000
3,000
4,000
5,000
6,000
Q2
2020
Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2
Revenue EBITA margin
(100)
0
100
200
300
400
Q2
2020
Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2
Mining Cement
FLSmidth
Interim Report H1 2022 14
Management Review
CAPITAL
Net working capital increased to
DKK 1,805m, driven by an in-
crease in inventories. The net
working capital ratio increased
from 7.3% in Q1 2022 to 9.2% in
Q2 2022.
Net working capital
Net working capital increased to DKK 1,805m at
the end of Q2 2022 (end of Q1 2022: DKK
1,354m). The primary driver of the increase in the
quarter was trade receivables that increased as a
result of increased activity. Inventories increased
in line with expectations to mitigate the supply
chain challenges. The net working capital ratio
increased to 9.2% of 12-months trailing revenue
(Q1 2022: 7.3%).
Utilisation of supply chain financing increased
slightly in the second quarter of 2022 to DKK
614m (Q1 2022: DKK 547m).
Cash flow from operating activities
Cash flow from operating activities (CFFO) de-
clined in line with expectations to DKK -214m in
Q2 2022 (Q2 2021: DKK 507m).
The main contributor to the negative CFFO was
the net working capital outflow of DKK 566m in
Q2 2022, compared to a net working capital in-
flow of DKK 320m in Q2 2021.
Cash flow from investing activities
Cash flow from investing activities resulted in a
net cash outflow of DKK 83m in Q2 2022, mainly
due to the acquisition of intangible assets.
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK -26m as paid dividend of DKK 170m and re-
payment of lease liabilities was funded by in-
creased net interest-bearing debt.
Free cash flow
Free cash flow (cash flow from operating and in-
vesting activities) adjusted for business acquisi-
tions and disposals amounted to DKK -281m in
Q2 2022 (Q2 2021: DKK 451).
Net interest-bearing debt
As a result of the completed issue of new shares,
raising proceeds of approximately DKK 1.4bn in
2021, the net interest-bearing debt (NIBD) re-
mains at a net cash position. The net cash posi-
tion was DKK 528m at the end of Q2 2022 (Q1
2022: DKK 864 m) and corresponds to a financial
gearing of -0.3x (Q1 2022: -0.6x).
Financial position
By the end of Q2 2022, FLSmidth had DKK
5.2bn of available committed credit facilities of
which DKK 5.0bn was undrawn. The committed
credit facilities have a weighted average time to
maturity of 4.7 years. DKK 5.0bn of credit facili-
ties will mature in 2027 and the remaining DKK
0.2bn matures in later years. In addition, FLS-
midth has a credit facility commitment specifically
for the purpose of funding the acquisition of
with the proceeds from the completed issue of
new shares.
Equity ratio
Equity at the end of Q2 2022 increased to DKK
11,033m (Q1 2022: DKK 10,679m), due to the pos-
itive profit for the period and the translation ef-
fect from foreign currencies. The equity ratio was
largely stable at 45.0% (Q1 2022: 44.7%).
At the Annual General Meeting held in March
2022, it was approved to pay a dividend of DKK
3 per share. The corresponding pay out of DKK
170m was paid in Q2 2022.
OTHER BUSINESS
Acquisition of TK Mining
As announced on 11 August 2022, all conditions
and requirements for the acquisition of
(TK Mining) have
been met. All regulatory clearances have been
obtained without imposition of any competition
related remedies. In accordance with the sale
and purchase agreement, final closing of the
transaction will take place on the last business
day of the month. Accordingly, the transaction
will close on 31 August 2022.
The combination of FLSmidth and TK Mining will
create a leading global mining technology and
service provider with operations from pit-to-plant
with a strong focus on productivity and sustaina-
bility. Further impact of the transaction, including
updated financial guidance for 2022, will be
communicated no later than in connection with
the release of our 9M 2022 financial results.
New members in Group Executive
Management
Our organisation has been adjusted to ensure
clear accountability and drive more focused exe-
cution and profitability. As a result, our three Min-
ing Business Lines have been elevated to Group
Executive Management. To this end, Joshua
Meyer has been appointed President, Mining
Service, Chris Reinbold has been appointed
President, Mining Products and Axel Baumeister,
President Mining Systems. In addition to his role
as Chief Operating Officer, Asger Lauritsen has
been appointed President for Cement.
Cash flow
DKKm
Net interest-bearing debt
DKKm
Net working capital
DKKm NWC%
(400)
(200)
0
200
400
600
800
1,000
Q2
2020
Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2
Cash flow from operating activities
(4,000)
(3,000)
(2,000)
(1,000)
0
1,000
2,000
Q2
2020
Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2
Net interest bearing debt (NIBD)
0%
3%
6%
9%
12%
15%
0
500
1,000
1,500
2,000
2,500
Q2
2020
Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2
Net working capital
Net working capital ratio, end
FLSmidth
Interim Report H1 2022 15
Management Review
GROWTH
Order intake
Order intake increased 28% organically, driven
by both Mining and Cement. Including currency
effects, order intake in the first half year of 2022
increased 35% to DKK 12,919m (H1 2021: DKK
9,600m). Service order intake and capital order
intake increased by 29% and 42% respectively,
driven by both Mining and Cement.
Mining service orders increased by 35%, and
capital orders by 48%. Several large Mining or-
ders with a combined value of around DKK 1.6bn
were announced in H1 2022 (H1 2021: large Min-
ing orders with a combined value of DKK 0.4bn).
As a result, Mining order intake increased 32%
organically in the first half year. Cement contrib-
uted to the growth by an order intake increase of
17% organically.
Order backlog
The order backlog increased 17% to DKK 19,461m
by 30 June 2022 (30 June 2021: DKK 16,677m),
and includes amendment of Russian contracts at
a total value of approximately DKK 750m. The
higher backlog is related to both Mining and Ce-
ment which increased by 22% and 9% respec-
tively.
Revenue
Organically, revenue grew by 20%, comprising a
24% increase in Mining and an 11% increase in
Cement. Including favourable currency effects,
Group revenue increased 25% to DKK 9,733m in
the first half year of 2022.
Growth in Mining revenue comprised a 16% in-
crease in service revenue and a 54% increase in
capital revenue.
In the first half year of 2022, Cement continued
the positive trend from Q4 2021 and showed rev-
enue growth of 14% and 18% in service and capi-
tal revenue, respectively.
PROFIT
Gross profit and margin
Gross profit in the first half year of 2022 in-
creased by 20% to DKK 2,351m. Gross margin
decreased to 24.2% from 25.1% in the compari-
son period H1 2021, impacted by the higher
share of capital revenue, inflationary pressure,
supply chain challenges and cost related to the
wind-down of our activities in Russia.
In the first half year of 2022, Research and De-
velopment costs were DKK 146m (H1 2021: 133m),
of which DKK 64m were capitalised (H1 2021:
65m) and the balance reported as production
costs.
EBITA and margin
EBITA increased 57% to DKK 609m, as a result of
higher revenue and improved gross margin in
Cement. Group EBITA margin was 6.3%, up from
5.0% in the first half year of 2021. The improve-
ment was despite the impact from costs related
to the acquisition of thyssenkrupp's Mining busi-
ness of DKK 82m in H1 2022 as well as costs of
DKK 50m related to the wind-down of our activi-
ties in Russia. Adjusted for these costs, the EBITA
margin was 7.6% in H1 2022.
Financial items
Net financial items amounted to DKK -34m (H1
2021: DKK -36m), of which foreign exchange and
fair value adjustments amounted to DKK -1m (H1
2021: DKK -9m). Termination of hedging Russian
Rubles had a negative impact of DKK 36m on for-
eign exchange adjustments. Net interest
amounted to DKK -30m (H1 2021: DKK -28m) and
income from associates amounted to DKK -3m
(H1 2021: DKK 1m).
Tax
Tax for H1 2022 totalled DKK -163m (H1 2021:
DKK -67m), corresponding to an effective tax rate
of 39% (H1 2021: 39%). The high effective tax rate
is impacted by a DKK 10m write-down of de-
ferred tax assets in Russia.
Profit for the period
Profit for the period increased by 154% to DKK
257m. Continuing activities improved to DKK
260m from DKK 107m. Discontinued activities re-
ported a DKK 3m loss, compared to a DKK 6m
loss in the first half year of 2021.
Earnings per share
Earnings per share (diluted) increased to DKK 4.8
from DKK 2.1 in the first half year of 2021.
CONSOLIDATED FINANCIAL PERFORMANCE IN H1 2022
EBITA split by segment
DKKm
(200)
0
200
400
600
800
H1 2021 H1 2022
Mining Cement
Growth in order intake in H1 2022
(vs. H1 2021)
Mining
Cement
FLSmidth
Group
Total growth
40%
22%
35%
Growth in revenue in H1 2022
(vs. H1 2021)
Mining
Cement
FLSmidth
Group
Total growth
30%
16%
25%
FLSmidth
Interim Report H1 2022 16
Management Review
CAPITAL
Net working capital
Net working capital increased in H1 2022 to DKK
1,805m (end of 2021: DKK 1,058m). In line with
expectations, the corresponding net working
capital ratio was 9.2% of 12-months trailing reve-
nue, compared to 6.0% at the end of 2021.
The increase related primarily to the expected in-
crease in inventories to mitigate the supply chain
challenges and an increase in net work in pro-
gress driven by the higher execution of capital
orders. Trade receivables increased mainly due
to currency effects.
Cash flow from operating activities
In line with expectations, cash flow from operat-
ing activities decreased to DKK -284m (H1 2021:
DKK 792m), due to the large cash outflow of DKK
785m to working capital in the period compared
to a cash inflow of DKK 469m in the comparison
period H1 2021.
Cash flow from investing activities
Cash flow used for investments was DKK -48m
compared to DKK -115m in the first half year of
2021.
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK -4m as paid dividend of DKK 170m and re-
payment of lease liabilities was funded by in-
creased net interest-bearing debt.
Free cash flow
Free cash flow adjusted for business acquisitions
and disposals was DKK -316m in H1 2022 (H1
2021: DKK 683m).
Balance sheet
Total assets increased to DKK 24,509m by 30
June 2022 (end of 2021: DKK 23,053), primarily
related to increased net working capital assets
and foreign exchange effects.
Net interest-bearing debt
Net interest-bearing debt (NIBD) by 30 June
2022 decreased to a positive net cash position
of DKK 528m (end of 2021: DKK 889m). The
-0.3x (end of 2021:
-0.6x).
Equity
Equity at end H1 2022 increased to DKK 11,033m
(end of 2021: DKK 10,368m). The increase related
to profit for the period and currency adjustments
regarding translation of entities, less dividend
paid.
Treasury shares
The holding of treasury shares as of 30 June
2022 was unchanged from year end 2021 and
amounts to 924,568 shares, representing 1.6% of
the total share capital. 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
-400
-200
0
200
400
600
800
1,000
H1 2021 H1 2022
Cash flow from operating activities
(200)
(150)
(100)
(50)
0
H1 2021 H1 2022
Cash flow from investing activities
-400
-200
0
200
400
600
800
1,000
H1 2021 H1 2022
Free cash flow
Free cash flow adjusted for net business acquisitons
FLSmidth
Interim Report H1 2022 17
Financial Statements
Notes
DKKm
Q2
2022
Q2
2021
H1
2022
H1
2021
3, 4
Revenue
Production costs
(3,783 )
(3,053 )
(7,382 )
(5,831 )
Gross profit
Sales costs
(394 )
(337 )
(736 )
(652 )
Administrative costs
(470 )
(404 )
(881 )
(742 )
Other operating items
EBITDA before special non-recurring items
Special non-recurring items
(4 )
(19 )
Depreciation and impairment of property,
plant and equipment and lease assets
(81 )
(84 )
(161 )
(166 )
EBITA
Amortisation and impairment
of intangible assets
(72 )
(88 )
(152 )
(177 )
EBIT
Financial income
Financial costs
(396 )
(259 )
(762 )
(567 )
EBT
Tax for the period
(93 )
(32 )
(163 )
(67 )
Profit for the period, continuing activities
3, 7
Loss for the period, discontinued activities
(3 )
(3 )
(3 )
(6 )
Profit for the period
Attributable to:
Shareholders in FLSmidth & Co. A/S
Minority interests
(8 )
(3 )
(15 )
(2 )
Earnings per share (EPS):
Continuing and discontinued activities per share
Continuing and discontinued activities per share, diluted
Continuing activities per share
Continuing activities per share, diluted
Notes
DKKm
Q2
2022
Q2
2021
H1
2022
H1
2021
Profit for the period
Items that will not be reclassified to profit or loss:
Actuarial gains on defined benefit plans
(25 )
(18 )
Items that are or may be reclassified
subsequently to profit or loss:
Currency adjustments regarding translation of entities
(90 )
Cash flow hedging:
- Value adjustments for the period
(52 )
(52 )
(12 )
- Value adjustments transferred to work in progress
(6 )
(14 )
Tax of total other comprehensive income
Other comprehensive income for the period after tax
(118 )
Comprehensive income for the period
(71 )
Attributable to:
Shareholders in FLSmidth & Co. A/S
(67 )
Minority interests
(6 )
(4 )
(15 )
(3 )
(71 )
CONSOLIDATED CONDENSED INTERIM
FINANCIAL STATEMENTS
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Financial performance
FLSmidth
Interim Report H1 2022 18
Financial Statements
CASH FLOW STATEMENT
Notes
DKKm
Q2
2022
Q2
2021
H1
2022
H1
2021
EBITDA before special non-recurring items
3
EBITDA, discontinued activities
(3 )
(3 )
(4 )
(6 )
Adjustment for gain on sale of property, plant and
equipment and other non-cash items
(1 )
(9 )
(15 )
Adjusted EBITDA
Change in provisions, pension and employee benefits
8
Change in net working capital
(566 )
(785 )
Cash flow from operating activities before financial
items and tax
(117 )
(3 )
Financial items received and paid
(11 )
(10 )
(29 )
(29 )
Taxes paid
(86 )
(125 )
(252 )
(227 )
Cash flow from operating activities
(214 )
(284 )
Acquisition of enterprises and activities
(16 )
(8 )
(16 )
(8 )
Acquisition of intangible assets
(48 )
(47 )
(84 )
(79 )
Acquisition of property, plant and equipment
(18 )
(9 )
(33 )
(28 )
Acquisition of financial assets
(4 )
(1 )
(9 )
(4 )
Disposal of enterprises and activities
Disposal of property, plant and equipment
Cash flow from investing activities
(83 )
(64 )
(48 )
(115 )
Dividend paid
(170 )
(18 )
(170 )
(101 )
10
Issue of shares, net of costs
0
0
0
0
Capital injection, minority interests
Exercise of share options
Repayment of lease liabilities
(32 )
(31 )
(61 )
(64 )
Change in net interest bearing debt
(306 )
(177 )
Cash flow from financing activities
(26 )
(352 )
(4 )
(338 )
Change in cash and cash equivalents
(323 )
(336 )
Cash and cash equivalents at beginning of period
Foreign exchange adjustment, cash and cash
equivalents
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
2022
Q2
2021
H1
2022
H1
2021
Free cash flow
(297 )
(332 )
Free cash flow, adjusted for acquisitions and disposals of
enterprises and activities
(281 )
(316 )
FLSmidth
Interim Report H1 2022 19
Financial Statements
Notes
DKKm
30/06 2022
31/12 2021
30/06 2021
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
Deferred tax assets
Investments in associates
9
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
Total assets
Notes
DKKm
30/06 2022
31/12 2021
30/06 2021
EQUITY AND LIABILITIES
10
Share capital
Foreign exchange adjustments
(111 )
(665 )
(862 )
Cash flow hedging
(89 )
(54 )
(30 )
10
Retained earnings
Shareholders in FLSmidth & Co. A/S
Minority interests
(18 )
(3 )
(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
10
Other liabilities
Current liabilities
Total liabilities
Total equity and liabilities
BALANCE SHEET
FLSmidth
Interim Report H1 2022 20
Financial Statements
EQUITY STATEMENT
H1 2022
H1 2021
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
(665 )
(54 )
(3 )
(1,131 )
(4 )
(6 )
Comprehensive income for the period
Profit/loss for the period
(15 )
(2 )
Other comprehensive income
Actuarial gains/(losses) on
defined benefit plans
(18 )
(18 )
(18 )
Currency adjustments regarding
translation of entities
(1 )
Cash flow hedging:
- Value adjustments for the period
(52 )
(52 )
(52 )
(12 )
(12 )
(12 )
- Value adjustments transferred to work in
progress
(14 )
(14 )
(14 )
Tax on other comprehensive income
Other comprehensive income total
(35 )
(26 )
(14 )
(1 )
Comprehensive income for the period
(35 )
(15 )
(26 )
(3 )
Transactions with owners:
Dividend paid
(170 )
(170 )
(170 )
(101 )
(101 )
(101 )
Share-based payment
Exercise of share options
Capital injection, minority interests
Equity at 30 June
(111 )
(89 )
(18 )
(862 )
(30 )
(6 )
FLSmidth
Interim Report H1 2022 21
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 market conditions and changes in politi-
cal and economic factors. In general, key ac-
counting judgements are made in relation to the
accounting of 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 2021, Key ac-
counting estimates and judgements, pages 57-
58 and to specific notes.
In the first half year of 2022, the geopolitical situ-
ation was on top of the agenda following the war
in Ukraine. Sanctions are continuously being im-
posed on Russian and Belarusian entities and in-
dividuals resulting in restrictions on imports and
exports. We are closely monitoring the impact
from the war and the sanctions imposed by EU,
US and other western countries. We have sus-
pended new business in Russia and Belarus and
will in a responsible manner wind-down our
activities in Russia. Costs to wind-down have
been recognised. We are, however, obliged to
fulfil our remaining legal obligations with regards
to existing orders, provided the customer is not
sanctioned and to the extent possible. During the
second quarter of
2022, sanctions were introduced to further limit
the possibilities for the shipment of products to
Russia.
Besides the direct impact from the sanctions, the
war has also intensified bottlenecks in the global
supply chains that were already current at the
end of 2021. It has also led to further increases in
energy prices, contributed to rising inflation and
fluctuations in foreign exchange rates. Further,
the COVID-19 pandemic and government-im-
posed restrictions continue to pose challenges in
some parts of the world.
The resulting uncertainties have impacted our
key accounting estimates as described below.
We have reassessed our projects to reflect the
expected implications on project financials. This
includes updating of project costs to ensure that
significant expected cost increases are reflected
in the total cost to complete. In cases where cus-
tomers are severely impacted by the war, we as-
sess the likelihood that the customer will be able
to pay the agreed consideration for goods or ser-
vices provided by us. The assessment reflects
the risk of any potential additional expected
credit losses (ECL) on trade receivables against
Russian and Belarussian customers. The assess-
ments also consider the need for write-down of
inventory and other assets.
The change in estimates had no material impact
on the financial statements in the first half year of
2022. By nature, the updated key accounting es-
timates 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). Special non-re-
curring items, depreciation, amortisation and im-
pairment are therefore separated from the
individual functions and presented in separated
lines.
The income statement classified by function in-
cludes allocation of special non-recurring items,
depreciation, amortisation and impairment.
Interim Report H1 2022
Income Statement by function
DKKm
Q2
2022
Q2
2021
H1
2022
H1
2021
Gross profit
1,167
931
2,191
1,783
EBIT
235
109
457
210
Special non-recurring items, depreciation, amortisation
and impairment consist of:
(153)
(176)
(313)
(362)
Special non-recurring items, depreciation, amortisation
and impairment are divided into:
(153)
(176)
(313)
(362)
FLSmidth
Interim Report H1 2022 22
Notes
3. SEGMENT INFORMATION
H1 2022
H1 2021
FLSmidth Group
FLSmidth Group
DKKm
Mining
Cement
Continuing
activities
Discontinued
activities
2
⁾
Mining
1
⁾
Cement
1
⁾
Continuing
activities
Discontinued
activities
2
⁾
Revenue
6,762
2,971
9,733
0
5,214
2,572
7,786
0
Gross profit
1,636
715
2,351
(3)
1,384
571
1,955
0
EBITDA before special non-recurring items
635
135
770
(4)
566
6
572
(6)
EBITA
525
84
609
(4)
444
(57)
387
(6)
EBIT
414
43
457
(4)
322
(112)
210
(6)
Gross margin
24.2%
24.1%
24.2%
26.5%
22.2%
25.1%
EBITDA margin before special non-recurring items
9.4%
4.5%
7.9%
10.9%
0.2%
7.3%
EBITA margin
7.8%
2.8%
6.3%
8.5%
-2.2%
5.0%
EBIT margin
6.1%
1.4%
4.7%
6.2%
-4.4%
2.7%
Number of employees at 30 June
6,314
3,741
10,055
0
6,124
3,965
10,089
0
Reconciliation of profit for the period
EBT
423
(5)
174
(7)
1) Starting from 1 January 2022, shared costs are directly attributed to the industries based on consumption and therefore included in the relevant line items. Previously, the costs were allocated to the industries after the The numbers have been restated to
include shared costs in the cost line items for the industries. See next page for further explanation.
2) Discontinued activities mainly consist of non-mining bulk material handling.
FLSmidth
Interim Report H1 2022 23
Notes
3. SEGMENT INFORMATION
CONTINUED
Starting from 1 January 2022, shared costs are
directly attributed to the industries based on con-
sumption. Therefore, the costs are now included
in the relevant line items, being production costs,
SG&A costs and depreciation and impairment of
property, plant and equipment. Previously, the
costs were allocated to the industries and in-
For 2021, the information has been restated to
reflect the change.
The table below shows the impact on the line
items and margins in the segment information in
H1 2021 for the two industries.
Restated segment information for H1 2021, shared costs
DKKm
Mining
Cement
Other
companies
Shared costs
Gross profit
(384)
(250)
(1)
635
Gross margin
-0.6%
-0.5%
EBITDA margin before special non-recurring items
-6.5%
-9.2%
EBITA margin before allocation of shared costs
-7.4%
-9.7%
EBITA margin
0.0%
0.0%
EBIT margin
0.0%
0.0%
Number of employees at 30 June
852
508
0
(1,360)
FLSmidth
Interim Report H1 2022 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.
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 2022, both North America and
Europe, North Africa and Russia regions picked
up a higher share of the Group revenue than the
same period last year. South America, Asia and
Australia regions each represented a 2%-point
lower share of Group revenue in the first half
year of 2022 compared to same period in 2021.
Backlog
The order backlog at 30 June 2022 amounts to
DKK 19,461m (end of H1 2021: DKK 16,677m) and
represents the value of outstanding performance
obligations on current contracts. The value of
outstanding performance obligations on current
contracts is a combination of value from con-
tracts where we will transfer control at a future
point in time and the value of the remaining per-
formance obligations on contracts where we
transfer control over time.
35% of the backlog is expected to be converted
to revenue in the remainder of 2022. Outstand-
ing order backlog related to Russian and Bela-
rusian contracts amounted to around DKK 1.5bn
at the end of Q2 2022 (end of Q1 2022: DKK
2.6bn) and is due to uncertainty included in the
.
Revenue split by Regions H1 2022
%
Revenue split by Regions H1 2021
%
Backlog
DKKm
26%
21%
20%
16%
8%
9%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia
Australia
22%
23%
17%
17%
10%
11%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia
Australia
42%
35%
41%
49%
17%
16%
0
4,000
8,000
12,000
16,000
20,000
H1 2021 H1 2022
Within current year Within next year
Subsequent years
Revenue split by recognition principle
H1 2022
H1 2021
DKKm
Mining
Cement
Group
Mining
Cement
Group
Total revenue
6,762
2,971
9,733
5,214
2,572
7,786
Revenue split by industry and category
H1 2022
H1 2021
DKKm
Mining
Cement
Group
Mining
Cement
Group
Capital business
2,819
1,284
4,103
1,826
1,090
2,916
Service business
3,943
1,687
5,630
3,388
1,482
4,870
Total revenue
6,762
2,971
9,733
5,214
2,572
7,786
FLSmidth
Interim Report H1 2022 25
Notes
5. PROVISIONS
Net provisions increased by DKK 28m compared
to 31 December 2021.
Additions to provisions amounted to DKK 288m
in H1 2022, compared to DKK 261m in H1 2021.
Additions to warranty provisions have increased
in line with the increasing level of activity.
For a description of the main provision catego-
ries see note 2.7 in the 2021 Annual Report.
6. CONTRACTUAL
COMMITMENTS AND
CONTINGENT LIABILITIES
Contingent liabilities at 30 June 2022 amounted
to DKK 3.2bn (31 December 2021: DKK 3.1bn).
Contingent liabilities primarily relate to perfor-
mance and payment guarantees issued to cover
project-related risks, such as performance, pay-
ment, quality, and delay. The volume of such
guarantees amounted to DKK 2.3bn (31 Decem-
ber 2021: DKK 2.3bn). 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, which are already pending with courts or
other authorities and other disputes which may
or may not lead to formal legal proceedings be-
ing initiated against us.
No significant changes have occurred to the na-
ture and extent of our contractual commitments
and contingent liabilities compared to what was
disclosed in note 2.9 in the 2021 Annual Report.
Provisions
DKKm
30/06
2022
31/12
2021
30/06
2021
Provisions
1,175
1,147
1,056
1,175
1,147
1,056
1,175
1,147
1,056
Provisions related to continued activities
DKKm
30/06
2022
31/12
2021
30/06
2021
Provisions
1,040
999
879
FLSmidth
Interim Report H1 2022 26
Notes
7. DISCONTINUED ACTIVITIES
Discontinued activities include the remaining re-
sponsibilities to finalise legacy projects, handling
of claims, etc. retained on the sale of the non-
mining bulk material handling business in 2019.
Progress on projects has been delayed, amongst
others, due to the COVID-19 pandemic and most
recently by the war in Ukraine. For further infor-
mation on discontinued activities, please refer to
note 2.11 of Annual report 2021.
In addition to provisions of DKK 135m shown in
the table below, discontinued activities accounts
for DKK 364m (31 December 2021: DKK 350m) of
8.
8. NET WORKING CAPITAL
Net working capital at 30 June 2022 has in-
creased DKK 0.7bn compared to 31 December
2021. The increase is primarily driven by in-
creased levels of inventories of DKK 0.5bn to
mitigate the supply chain challenges. Trade re-
ceivables increased DKK 0.2bn mainly due to
currency effects. Increased activities led to an in-
crease in net work in progress at 30 June 2022.
Utilisation of supply chain financing increased
slightly in the first half year of 2022 to DKK 614m
(31 December 2021: DKK 490m).
Net working capital
DKKm
30/06
2022
31/12
2021
30/06
2021
Net working capital
1,805
1,058
1,305
Cash flow effect from change in net working capital
(785)
612
469
Discontinued activities effect on cash flow from operating activities
DKKm
H1
2022
2021
H1
2021
Cash flow from operating activities before financial items and tax
(33)
(187)
(16)
Cash flow from operating activities
(34)
(188)
(16)
Discontinued activities share of Group provisions disclosed in note 5
DKKm
30/06
2022
31/12
2021
30/06
2021
Provisions
135
148
177
FLSmidth
Interim Report H1 2022 27
Notes
9. 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 2022 or
during 2021.
10. SHAREHOLDERS’ EQUITY
At the Annual General Meeting 30 March 2022,
a dividend of DKK 3 per share was declared. The
total dividend amounting to DKK 170m was paid
out in April 2022.
In September 2021, an issue of 6,400,000 new
shares of DKK 20 each at a price of DKK 228 per
share was completed. The proceeds received
net of transaction costs of DKK 25m increased
11. EVENTS AFTER THE
BALANCE SHEET DATE
As announced on 11 August 2022 (refer to Com-
pany Announcement No. 13-2022), all conditions
and requirements for the acquisition of
been met. In accordance with the sale and pur-
chase agreement, final closing of the transaction
will take place on the last business day of the
month. Accordingly, the transaction will close on
31 August 2022.
We are not aware of any other subsequent mat-
ters that could be of material importance to the
position at 30 June 2022.
12. ACCOUNTING POLICIES
The condensed interim report of the Group for
the first half year of 2022 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 2021 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 2021 Annual
Report for further details.
Alternative Performance Measures (APM) are un-
changed from those applied in the 2021 Annual
Report, refer to note 7.4 in the 2021 Annual Re-
port for a description of used APM.
Changes in accounting policies
As of 1 January 2022, the FLSmidth Group has
implemented all new or amended accounting
standards and interpretations as adopted by the
EU and applicable for the 2022 financial year.
This includes the changes to IFRS 3 Business
Combinations, IAS 16 Property, Plant and Equip-
ment, IAS 37 Provisions, Contingent Liabilities
and Contingent Assets and Annual Improvement
2018-2020. The latter includes changes to IFRS
9 Financial Instruments and IFRS 16 Leases.
The implementation has not had and is not ex-
pected to have significant impact on the consoli-
dated financial statements.
Financial instruments
H1 2022
DKKm
Level 1
Level 2
Level 3
Total
4
140
53
197
2021
DKKm
Level 1
Level 2
Level 3
Total
6
(2)
43
47
FLSmidth
Interim Report H1 2022 28
Statements
Executive management
Board of directors
STATEMENT BY MANAGEMENT
FLSmidth
Interim Report H1 2022 29
Statements
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.
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,
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 –
30 June 2022
Tel.: +45 36 18 18 00
Fax: +45 36 44 11 46
corppr@smidth.com
www.smidth.com
CVR No. 58180912