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INTERIM
REPORT
9M 2022
1 January –
30 September 2022
Company announcement no. 18
FLSmidth & Co. A/S
Vigerslev Allé 77
DK-2500 Valby
C
VR No. 581
80912
FLSmidth
Interim Report 9M 2022 2
Management Review
Management Review
3
4
7
8
10
12
13
16
Consolidated Condensed
Interim Financial
Statements
18
18
19
20
21
Notes
22
22
23
25
26
26
27
27
28
29
29
29
29
Statements
30
CONTENTS
FLSmidth
Interim Report 9M 2022 3
Management Review
Mining highlights Q3 2022
Mining order intake increased 13% organically
as a result of improved service activity com-
pared to Q3 2021. Including currency effects
and the impact from the acquisition of TK Min-
ing, order intake increased by 30%, comprising
a 53% increase in service orders and an 8% de-
cline in capital orders. This reflects our focus
on increasing the share of higher margin ser-
vice orders and portfolio de-risking approach.
Revenue increased organically by 7% and by
24% including currency effects and the additional
revenue coming from the acquisition of TK Mining.
The adjusted EBITA margin* was 10.1% (exclud-
ing the dilutive impact from TK Mining, legacy
FLSmidth Mining would on a standalone basis
have delivered an adjusted EBITA margin of
12.1%). Including integration costs related to the
TK Mining acquisition of DKK 45m and costs of
DKK 70m related to the wind-down of our activ-
ities in Russia, the reported EBITA margin was
7.2%.
Cement highlights Q3 2022
Cement order intake increased 8% organically
compared to Q3 2021. Revenue increased 7%
organically and by 13% including favourable
currency effects.
Cement EBITA continued the positive trend
seen during 2022, mainly as a result of the im-
proved gross margin. EBITA amounted to DKK
50m in Q3 2022 compared to DKK 3m in Q3
2021. The corresponding EBITA margin was
3.0%, compared to 0.2% in Q3 2021.
Consolidated Group highlights
Q3 2022
Group order intake increased by 11% organi-
cally, driven by both Mining and Cement. Cur-
rency tailwinds and the acquisition of TK Min-
ing supported order intake in the quarter by 9%
and 6%, respectively.
The order backlog amounted to around DKK
25.5bn, an increase of 31% compared to Q2
2022. The inclusion of the backlog of the for-
mer TK Mining represented DKK 5.5bn of the
total Group backlog at the end of Q3 2022.
Organic revenue increased 7% driven equally by
Mining and Cement, while the EBITA margin de-
creased to 5.9% from 6.5%. Adjusted for the costs
of DKK 70m related to the wind-down of our Rus-
sian activities and integration costs of DKK 45m
related to the acquisition of TK Mining, the ad-
justed EBITA margin was 8.0% in Q3 2022.
Financial reporting for the new reporting struc-
ture, with the new Non-Core Activities segment,
will be effective from Q4 2022.
Financial guidance 2022
The financial guidance for 2022 as set out in
the Company Announcement no. 17-2022 on
20 October 2022 is maintained. This reflects
the underlying business performance, the inte-
gration of TK Mining including the updated syn-
ergy target and integration costs, and the es-
tablishment of the Non-Core Activities segment.
Please see page 4 for detailed guidance for
Mining, Cement, Non-Core Activities and con-
solidated for the Group.
The positive momentum that we saw in the second quarter has been sustained in the
third quarter where we have seen robust growth in both order intake and revenue.
The Mining business continued to benefit from a healthy backlog and fundamentally
positive market conditions, with a 53% growth in service order intake and an adjusted
Mining EBITA margin (including the combination with the former TK Mining business)
reaching 10.1% in the quarter. This was driven by a strong service business and con-
tinued focus on de-risking the portfolio. In addition, the Cement business delivered an
EBITA margin of 3.0% and the short-term outlook has improved based on stable per-
formance despite an emerging recession. Following the negative cash flow in the first
half of 2022, cash flow turned, as expected, positive again in Q3 2022.
On 31 August 2022, we successfully completed the acquisition of TK Mining. With this
acquisition, FLSmidth is better positioned than ever before and we are highly dedi-
cated to provide our customers with best-in-class full flowsheet technologies and ser-
vice solutions to enhance their productivity and sustainability agenda. While the stra-
tegic rationale for the acquisition has been reconfirmed, additional cost synergy
potential has been uncovered and the pace to realise this has been accelerated.
Following the integration of TK Mining, we conducted a planned strategic review of
the combined mining product portfolio. As a result of this, we have decided to split
our Mining business into two segments: a continuing Mining segment, and a Non-
Core Activities segment effective from Q4 2022. This will ensure sharpened strategic
focus and stronger execution of the continuing Mining activities that are key to accel-
erate our long-term profitability and growth. At the same time, we have decided to di-
vest or wind-down non-core and unprofitable mining activities, and dedicated focus
and resources will be allocated to ensure effective execution and to minimise losses
from these activities.
- Mikko Keto, Group CEO
HIGHLIGHTS
*To reflect the underlying business performance, we have introduced an adjusted EBITA margin to adjust for the
integration costs related to the integration of TK Mining and costs related to the wind-down of Russian activities.
FLSmidth
Interim Report 9M 2022 4
Management Review
Mining
Revenue guidance reflects continued positive
momentum, the integration of the former TK Min-
ing and establishment of the Non-Core Activities
segment. The former TK Mining is expected to
contribute around DKK 1.0bn in revenue in 2022
for the four months of September-December.
Around DKK 500m in expected combined revenue
in 2022 is transferred from the Mining segment to
the Non-Core Activities segment for Q4 2022, of
which approximately half originates from FLSmidth
Mining and half from the former TK Mining.
The integration of TK Mining, as of 1 September
2022, is expected to have a dilutive effect on the
full year 2022 Mining EBITA margin of around
1%-point. In addition, the Mining EBITA margin re-
flects the transfer of specific activities and prod-
ucts to the Non-Core Activities segment.
Guidance for Adjusted EBITA margin includes
adjustments for integration costs of DKK 250m
and costs related to the wind-down of Russian
activities of DKK 140m for the full year 2022.
Cement
Cement revenue guidance as set out in Octo-
ber 2022 is maintained, on the expectation of
continued stable performance. Compared to
the August guidance, EBITA margin guidance
was narrowed towards the upper end of guid-
ance in October.
Our Cement business is still expected to see an
insignificant impact from the winding down of
our Russian activities.
Non-Core Activities (New)
Revenue guidance for Non-Core Activities is
based on a starting order backlog of around
DKK 3.6bn and the expected maturity hereof in
Q4 2022.
Non-Core Activities EBITA margin guidance for
Q4 2022 reflects the loss-making nature of the
business. Following the wind-down decision,
additional exit costs of around DKK 300m are
expected to be recognised in Q4 2022. This in-
cludes non-recurring severance costs and
costs related to contract negotiations aimed at
reducing the scope of the Non-Core Activities
order backlog.
For more information on the newly established
Non-Core Activities segment, please refer to
page 12 of this report.
Group
Consolidated Group guidance reflects the sum
of the guidance for the three business seg-
ments.
Guidance for 2022 is subject to uncertainty
due to the global supply chain situation and
geopolitical turmoil.
FINANCIAL GUIDANCE 2022
The financial guidance for 2022 as set out in the Company Announcement no. 17-2022 on 20 October 2022 is maintained. This reflects the
underlying business performance, integration of TK Mining including the updated synergy target and integration costs, and the establishment of
the Non-Core Activities segment. Adjusted EBITA margin guidance was introduced to drive transparency on the underlying business
performance. The adjustment covers integration costs and costs related to the wind-down of Russian activities.
Mining
Cement
Non-Core Activities
Group
9M
2022
Guidance
August
2022
Guidance
October
2022
9M
2022
Guidance
August
2022
Guidance
October
2022
9M
2022
Guidance
August
2022
Guidance
October
2022
9M
2022
Guidance
August
2022
Guidance
October
2022
Highlights
Russia update Q3 2022
■
Outstanding order backlog from Russian and Bela-
rusian contracts was DKK 1.6bn at end Q3 2022
compared to DKK 1.5bn at end Q2 2022 (increase
due to inclusion of DKK 240m from the former TK
Mining order backlog)
■
Revenue of DKK 153m from non-sanctioned Rus-
sian and Belarusian customers recognised in Q3
2022 (9M 2022: DKK 790m)
■
We continue the effort to wind down the activities in
Russia and Belarus and have incurred DKK 70m in
costs in Q3 2022 related to the wind-down (9M
2022: DKK 120m)
■
The wind-down of activities in Russia has resulted in
a net loss for 9M 2022 on Russian activities
FLSmidth
Interim Report 9M 2022 5
Management Review
FINANCIAL HIGHLIGHTS
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Cash flow from operating activities
DKKm 476 ▲ from DKKm (192) in Q3 2021
Earnings per share
DKK 2.9 from DKK 1.8 in Q3 2021
Net working capital ratio*
9.2% from 10.4% end of Q3 2021
NIBD/EBITDA
0.7x from 0.0x end of Q3 2021
GROUP
5,714
26%
5,621
21%
334 5.9% (adj. 8.0%)
10%
Order intake
DKKm
Revenue
DKKm
EBITA, EBITA margin
DKKm - %
Revenue split by capital & service
%
MINING
4,097
30%
3,946
24%
284 7.2% (adj. 10.1%)
-6%
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by capital & service
%
CEMENT
1,617
16%
1,675
13%
50 3%
1,567%
14,149
18,633
4,549
5,714
9M
2021
9M
2022
Q3
2021
Q3
2022
12,446
15,354
4,660
5,621
9M
2021
9M
2022
Q3
2021
Q3
2022
692
943
305
334
9M
2021
9M
2022
Q3
2021
Q3
2022
3,152
4,097
Q3
2021
Q3
2022
3,180
3,946
Q3
2021
Q3
2022
302
284
Q3
2021
Q3
2022
34%
(Q3 2021: 45%)
66%
(Q3 2021: 55%)
Capital
Service
1,397
1,617
Q3
2021
Q3
2022
1,480
1,675
Q3
2021
Q3
2022
3
50
Q3 2021
Q3 2022
47%
(Q3 2021: 53%)
53%
(Q3 2021: 47%)
Capital
Service
FLSmidth
Interim Report 9M 2022 6
Management Review
MissionZero and ESG
developments
We continue to drive
sustainability across our entire
value chain. Our core focus is to
deliver sustainability solutions to
our customers, while at the same
time reducing the environmental
impact of our own operations.
On 31 August 2022, we completed the
acquisition of the TK Mining business. With
this acquisition, we are in an even stronger
position to offer full-flow sheet sustainability
solutions to our customers. Our Q3 2022
numbers include preliminary ESG data from
the former TK Mining business for the month
of September. We are working to fully
integrate the new sites in our ESG reporting
and will continue with this going into 2023.
MissionZero Mine in Kazakhstan
FLSmidth will supply several solutions from
the MissionZero Mine flowsheet to a zinc and
lead mine in Kazakhstan. The solutions
include nextSTEP advanced flotation, which
can reduce power consumption in the
flotation process by 40%, VXP vertical mills
and the Pneumapress Filter. In addition,
various automation and digital solutions will
save water and energy as well as improve
New consortium to accelerate carbonation
technologies in the cement industry
With EUR
rope funding programme, FLSmidth has estab-
lished the CO
2
Valorize consortium. This brings
together universities, technology providers and
research institutions to mature and deploy car-
bonation technologies in cement production.
Such technologies are expected to eliminate
up to 30% of CO
2
emissions from the process.
First sustainability linked term loan
FLSmidth has in October 2022 signed its first
sustainability linked term loan of DKK 1.1bn with
the Nordic Investment Bank to support the de-
velopment of technologies with a sustainability
profile. The loan is linked to that will
ensure a strong focus on driving the green tran-
sition in the mining and cement industries.
SUSTAINABILITY HIGHLIGHTS
Safety (TRIR)
Total Recordable Incident Rate/
million working hours
Women managers
%
1.6
Target: zero harm; 2022 Target: <1.3
14.1
2022 Target: 15.7%
TRIR has increased since Q2 2022 due to increased
medical treatment cases without lost time. In August a
safety campaign was initiated to target awareness to
key areas where the injury rates are the highest. We
will monitor the progress of the campaign into the next
quarter.
The percentage of women managers has remained flat
since prior quarter and remains below target for 2022.
We continue to monitor our recruitment process, and di-
versity strategy to address improvements to our perfor-
mance.
Water withdrawal
m
3
Scope 1 & 2 GHG
Emissions
tCO
2
e (market-based)
129,585
29,413
Target: carbon neutral; 2022 Target: 43,622 tCO
2
e
Due to our ongoing water conservation efforts, water
withdrawal continues to show good progress into Q3
2022 and is expected to be below 2021 levels.
Fuel reduction and energy efficiency initiatives have
supported the ongoing decrease in Scope 1 & 2 emis-
sions during this quarter, despite the inclusion of new
sites to our operations.
1.9
1.6
2021
9M
2022
14.3%
14.1%
2021
9M
2022
201,997
129,585
2021
9M
2022
34,737
29,413
2021
9M
2022
FLSmidth
Interim Report 9M 2022 7
Management Review
KEY FIGURES
DKKm
Q3
2022
Q3
2021
9M
2022
9M
2021
2021
INCOME STATEMENT
5,621
4,660
15,354
12,446
17,581
1,431
1,074
3,782
3,029
4,180
419
392
1,189
964
1,401
334
305
943
692
1,030
449
n/a
1,190
n/a
n/a
256
219
713
429
668
14
(43)
(20)
(79)
(81)
270
176
693
350
587
166
107
426
214
374
(4)
(12)
(7)
(18)
(17)
162
95
419
196
357
ORDERS
5,714
4,549
18,633
14,149
19,233
25,476
16,548
16,592
EARNING RATIOS
25.5%
23.0%
24.6%
24.3%
23.8%
7.5%
8.4%
7.7%
7.7%
8.0%
5.9%
6.5%
6.1%
5.6%
5.9%
8.0%
n/a
7.8%
n/a
n/a
4.6%
4.7%
4.6%
3.4%
3.8%
4.8%
3.8%
4.5%
2.8%
3.3%
CASH FLOW
476
(192)
192
600
1,449
(29)
(28)
(62)
(56)
(116)
(2,146)
(61)
(2,194)
(176)
(273)
(1,670)
(253)
(2,002)
424
1,176
433
(253)
117
430
1,185
BALANCE SHEET
2,170
1,735
1,058
(985)
16
889
31,051
21,916
23,053
269
261
397
11,555
9,983
10,368
170
101
101
DKKm
Q3
2022
Q3
2021
9M
2022
9M
2021
2021
FINANCIAL RATIOS
8.5%
-4.1%
1.3%
4.8%
8.2%
101.7%
97.6%
121.4%
113.7%
109.4%
124.3%
99.2%
94.4%
5.1%
2.9%
3.9%
37.2%
45.6%
45.0%
6.3%
6.3%
7.2%
9.2%
10.4%
6.0%
0.7x
0.0x
-0.6x
18,060
14,753
14,384
11,820
10,135
10,117
SHARE RATIOS
8.4
(3.8)
3.4
11.9
27.8
2.9
1.8
7.7
3.9
6.9
165.9
224.2
244.3
57,650
57,650
57,650
9,564
12,925
14,084
SUSTAINABILITY KEY FIGURES
29,413
25,857
34,737
129,585
144,126
201,997
1.6
1.8
1.9
14.1%
14.1%
14.3%
82.2%
86.8%
85.1%
596
494
641
Use of alternative performance measures
FLSmidth
Interim Report 9M 2022 8
Management Review
This year has seen a material correction in
metal prices, but copper and many other metal
markets are still facing tight supply conditions.
The global supply of many commodities is near
historical lows, and the decline in metals prices
during the last couple of months may result in
supply conditions becoming even tighter in the
future.
Whereas the underlying commodity prices
have softened, the global increase in demand
for critical minerals continues to drive activity
and the green transition will require the mining
industry to scale up on investments to meet the
long-term demand for minerals. The pipeline
for new projects and products is robust across
regions and the service aftermarket business
remains active with significant volumes of en-
quiries.
In the US, the recently passed climate law de-
signed to support a domestic battery supply
chain, has increased the incentives for produc-
ing electric cars with domestic materials. To
this end, we currently have a healthy pipeline
of opportunities, especially within lithium.
In South America, the market outlook for the
key commodities copper, iron ore and lithium
remains healthy. Mining activity remains high
and the pipeline continues to be strong. Some
customers are however hesitant in booking
large capital orders due to current political in-
stability and the expected economic recession.
Iron ore remains a strong commodity driver for
new projects in India, whereas copper and gold
continue to dominate in Africa as well as in the
Middle East.
We continue to have a healthy pipeline in Eu-
rope, North Africa and other countries of the
Commonwealth of Independent States (CIS)
that will partly compensate the loss of business
in Russia.
Bottlenecks in supply chains continue to cause
challenges but the situation has eased during
the third quarter. There is however still signifi-
cant pressure from customers in particularly re-
mote areas of Africa and Australia to reduce
the lead times associated with supply of spare-
and wear parts. We continue to see a push to-
wards localisation of supply to de-risk the sup-
ply from China and a willingness to pay higher
prices for reduced supply chain risk.
FLSmidth Interim Report 9M 2022
MINING MARKET DEVELOPMENTS
The mining sector remains resilient with few visible signs of a
slowdown, despite the lower commodity prices and fears of a global
recession. The long-term outlook for minerals required to meet global
economic development and drive the green transition continues to be
positive.
Mining order intake
split per Region Q3 2022
%
Mining order intake
split by commodity Q3 2022
%
25%
32%
11%
14%
18%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia, Australia*
39%
15%
8%
1%
13%
24%
Copper
Gold
Coal
Fertilizer
Iron ore
Other
FLSmidth
Interim Report 9M 2022 9
Management Review
Q3 2022
Mining order intake increased 13% organically
as a result of improved service activity com-
pared to Q3 2021. Including currency effects
and the impact from the acquisition of TK Min-
ing, order intake increased by 30%, comprising
a 53% increase in service orders (46% exclud-
ing TK Mining) and an 8% decline in capital or-
ders. This was in line with our focus on increas-
ing the share of higher margin service orders
and portfolio de-risking approach. Service or-
ders and capital orders represented 73% and
27%, respectively. The order intake from TK
Mining amounted to DKK 260m for the month
of September.
The DKK 330m order, announced in September
2022, has been recognised in the acquired or-
der backlog instead of recorded as acquired
order intake in Q3 2022.
Revenue increased organically by 7% and by
24% including currency effects and the addi-
tional revenue of DKK 287m coming from the
acquisition of TK Mining. The quarter included
DKK 118m in revenue from contracts with non-
sanctioned Russian and Belarusian customers.
Service revenue increased by 50%, driven
mainly by higher spare and wear parts de-
mand.
Gross profit increased by 33% to DKK 1,026m,
from DKK 770m in Q3 2021. The corresponding
gross margin increased to 26.0% as a result of
the higher share of service revenue, partly off-
set by increased inflationary pressure and cost
related to the wind-down of our activities in
Russia.
Adjusted EBITA margin was 10.1%. Including in-
tegration costs related to the TK Mining acqui-
sition of DKK 45m and costs of DKK 70m re-
lated to the wind-down of our activities in
Russia, the reported EBITA margin was 7.2%.
Excluding the former TK Mining business, leg-
acy FLSmidth Mining would on a standalone
basis have delivered a reported EBITA margin
of 9.0% and an adjusted EBITA margin of 12.1%
in Q3 2022. The dilutive impact from TK Mining
was partly driven by costs related to the transi-
tion into FLSmidth.
9M 2022
Mining order intake in 9M 2022 increased by
37% to DKK 13,243m. Mining order backlog in
9M 2022 increased 81% to DKK 18,502m, as a
result of continued positive market conditions
and the addition of the former TK Mining
der backlog of DKK 5,451m.
Mining revenue increased by 28% in 9M 2022.
EBITA increased by 8% to DKK 809m and the
corresponding EBITA margin decreased to
7.6% from 8.9% in 9M 2021. EBITA in 9M 2022
was impacted by costs related to the acquisi-
tion of TK Mining of DKK 127m and costs of DKK
120m related to the wind-down of our activities
in Russia. Adjusted for these costs, the EBITA
margin was 9.9% in 9M 2022.
MINING FINANCIAL PERFORMANCE
Order intake Q3 2022
split by capital & service
%
Revenue and EBITA margin
DKKm EBITA %
27%
(Q3 2021: 38%)
73%
(Q3 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
Q3
2020
Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3
Capital Service
EBITA % Adjusted EBITA %
Growth in Mining in Q3 2022
(vs. Q3 2021)
Order intake
Revenue
Total growth
30%
24%
Mining
(DKKm)
Q3 2022
Q3 2021
Change (%)
9M 2022
9M 2021
Change (%)
Order intake (gross)
4,097
3,152
30%
13,243
9,670
37%
Order backlog
18,502
10,248
81%
18,502
10,248
81%
Revenue
3,946
3,180
24%
10,708
8,394
28%
Gross profit
1,026
770
33%
2,662
2,154
24%
Adjusted EBITA*
399
n/a
1,056
n/a
EBITA
284
302
-6%
809
746
8%
EBIT
235
242
-3%
649
564
15%
refore included in
the relevant lines of gross profit and EBITA. The comparison quarter Q3 2021 has been restated accordingly.
-down Russian activities.
FLSmidth
Interim Report 9M 2022 10
Management Review
The emerging recession and increased energy
prices have dominated the dialogue with
customers during the third quarter of 2022.
Cement producers are currently navigating
high uncertainty, as cement consumption is
driven by economic expansion and a global
recession is expected to impact market
demand over the coming period. Our healthy
and expanded order backlog will continue to
benefit us for a while, but when a recession
hits, we expect that many customers will
postpone investment decisions and hold back
on capex.
Despite a more pessimistic view on the near-
term future, sentiment in the cement industry
differs from region to region. We continue to
see the demand for green energy and sustain-
ability solutions, and thus a shift away from
conventional cement production facilities. Cus-
tomers are working on making their sustainabil-
ity ambitions more tangible and investments in
the green transition are building momentum.
The concern around energy prices and stability
in energy supply continue to drive sales of both
new energy reduction products as well as tech-
nologies related to change to lower cost and
more sustainable fuels.
In some regions we have started to see the first
cases of budget constraints imposed by
customers to counter the increasing energy
cost. A high utilisation is still driving service
activity in Europe, but some customers have
put large capital investments on stand-by and
we have experienced a slowdown in decision-
making processes. Nevertheless, the positive
dialogue on sustainability continues and the
full effect of the EU Taxonomy and phase-out
of carbon allowances have brought urgency to
the conversations.
In Asia, the interest in alternative fuels remains
high and the focus on reducing energy
consumption continues to drive a significant
upgrade market.
We have experienced a continued positive
trend in the Americas during Q3 2022, with a
particular focus on grinding equipment. In the
US, cement producers are evaluating steps
needed to capture opportunities from the large
infrastructure packages announced last year.
Supply chain constraints for standard electrical
components are still challenging, but the
situation is slowly improving across regions.
CEMENT MARKET DEVELOPMENTS
Despite an emerging global recession, the cement market currently
remains at a stable level. The soaring energy prices and inflationary
pressure create a difficult environment, but it also supports increased
interest for productivity and sustainability solutions.
Cement order intake
split per Region Q3 2022
%
44%
18%
20%
18%
Americas*
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia, Australia**
FLSmidth
Interim Report 9M 2022 11
Management Review
Q3 2022
Cement order intake increased 8% organically
compared to Q3 2021. Including favourable
currency effects, the order intake increased by
16% to DKK 1,617m, mainly due to an increase in
capital order intake.
No large orders were received during the
quarter, with the increase in capital order in-
take rather reflecting an increase in medium-
sized product orders.
Service orders and capital orders represented
64% and 36% of the cement order intake, re-
spectively.
Revenue increased 7% organically compared
to Q3 2021, driven by an increase in service
revenue and a robust demand for wear parts
and technical services. Including favourable
currency effects, revenue increased by 13% to
DKK 1,675m in Q3 2022. Service accounted for
53% of Cement revenue in Q3 2022 compared
to 47% in Q3 2021. The quarter included DKK
35m in revenue from contracts with non-sanc-
tioned Russian and Belarusian customers.
Gross profit increased 33% to DKK 405m, com-
pared to DKK 304m in Q3 2021. The corre-
sponding gross margin increased by 3.7%-point
to 24.2% as a result of the increased revenue,
mitigation of material price increases and im-
proved execution management.
Cement EBITA continued the positive trend
seen during 2022, mainly as a result of the im-
proved gross margin but also as a result of the
successful implementation of reshaping activi-
ties in 2021. EBITA amounted to DKK 50m in
Q3 2022 compared to DKK 3m in Q3 2021. The
corresponding EBITA margin was 3.0%, com-
pared to 0.2% in Q3 2021.
9M 2022
Cement order intake in 9M 2022 increased by
20% to DKK 5,390m, driven by growth in both
capital and service by 34% and 11%, respec-
tively.
Cement revenue increased by 15% to
DKK 4,646m in 9M 2022. Service and capital
revenue increased by 19% and 10%, respec-
tively.
EBITA improved in 9M 2022 and amounted to
DKK 134m with a corresponding EBITA margin
of 2.9%. Adjusted for a gain of DKK 23m from a
sale of a property related to the Cement busi-
ness in Q1 2022, the Cement EBITA margin in
9M 2022 was 2.4%.
CEMENT FINANCIAL PERFORMANCE
Order intake Q3 2022
split by capital & service
%
Revenue and EBITA margin
DKKm EBITA %
36%
(Q3 2021: 29%)
64%
(Q3 2021: 71%)
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
Q3
2020
Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3
Capital revenue Service revenue
EBITA margin
Growth in Cement in Q3 2022
(vs. Q3 2021)
Order intake
Revenue
Total growth
16%
13%
Cement
(DKKm)
Q3 2022
Q3 2021
Change (%)
9M 2022
9M 2021
Change (%)
Order intake (gross)
1,617
1,397
16%
5,390
4,479
20%
Order backlog
6,974
6,300
11%
6,974
6,300
11%
Revenue
1,675
1,480
13%
4,646
4,052
15%
Gross profit
405
304
33%
1,120
875
28%
EBITA
50
3
1,567%
134
(54)
348%
EBIT
21
(23)
191%
64
(135)
147%
Starting from 1 January 2022, the Cement
in the relevant lines of gross profit and EBITA. The comparison quarter Q3 2021 has been restated accordingly.
FLSmidth
Interim Report 9M 2022 12
Management Review
Strategic portfolio review
The review intended to assess all combined
mining activities and products from a strategic,
financial and sustainability perspective against
-term strategic direction and
ambitions. As a result of the strategic review, it
was decided to split the Mining business into
two separate segments for operational and re-
porting purposes:
1. a continuing Mining segment focused on
profitability, growth and sustainability
2. a new Non-Core Activities segment, where
activities will be fully exited either by way of
divestment or wind-down of the order back-
log
The new segment split will ensure sharpened
strategic focus and stronger execution of the
continuing Mining activities that are key to accel-
erating long-term profitability and growth for
FLSmidth. At the same time, dedicated focus and
resources will be allocated to the Non-Core Ac-
tivities to ensure transparency and effective exe-
cution of the divestment or wind-down and to
minimise losses from these activities.
Financial reporting for this new structure will
be effective from Q4 2022.
Core Mining segment
cated to provide customers with best-in-class
full flowsheet technologies and services solu-
tions to enhance their productivity and sustain-
ability agenda. Key focus for FLSmidth Mining
is to enhance profitability through:
1. a significant service and aftermarket potential
2. low execution risks
3. high technology content and process know-
how
4. a strong sustainability impact
This includes offering single services or prod-
ucts as well as projects with lower risk consist-
ing of product bundles with related perfor-
mance guarantees in accordance with
The continuing Mining segment encompasses,
ey products
systems); milling & grinding (incl. former TK
thickening & filtration; pumps, cyclones &
valves; sizers, screens & centrifuges; pyro-pro-
cessing; sampling, preparation & analysis; and
mine shaft systems.
Non-Core Activities segment
The Non-Core Activities segment comprises
products that are no longer deemed to be of
core strategic importance to FLSmidth as well
as specific loss-making mining activities. The
selection criteria for these activities and prod-
uct types have been that either they; offer lim-
ited or no aftermarket potential, are character-
ised by high execution risks, are highly
engineered and/or lack standardisation, and
we see no viable commercial model for FLS-
midth to turn these around. Furthermore, these
products are not aligned with or important for
Consequently, FLSmidth will either divest or
wind-down the following activities and products:
■
All legacy FLSmidth and former TK Mining
brands: Port Systems, Stockyard equipment
and Standard bucket wheel excavators
■
Legacy FLSmidth Mining brands: Continuous
Surface Mining equipment and Mine & Over-
land Conveyors
■
Former TK Mining activities: Oil extraction
technology and aggregate products
Existing contracts and ongoing activities in the
order backlog will be executed and honoured,
if not divested. FLSmidth will not take new or-
ders for the Non-Core Activities segment.*
A designated organisational structure will be
established to oversee the Non-Core Activities
segment, with the Head of the segment report-
ing directly to the Group CFO. Around 450 em-
ployees are expected to be included in the
Non-Core Activities segment.
The Non-Core Activities segment comprises of
an order backlog of around DKK 3.6bn as of
end Q3 2022, of which approximately half orig-
inates from FLSmidth and half from the former
TK Mining. The vast majority of the order back-
log relates to Capital orders.
The Non-Core Activities order backlog is ex-
pected to be divested or wound down within
the next three years with an expected total
EBITA loss over the period of around DKK
1.2bn. The estimate is based on historical per-
formance and costs associated with the wind-
down or divestment decision. This estimate is
subject to uncertainty due to the nature of
winding the business down and may change
depending on which parts of the business are
divested.
*Subject to local exemptions in France
NON-CORE ACTIVITIES
Following the recent acquisition of TK Mining, FLSmidth initiated a planned strategic review of the combined
FLSmidth and TK Mining product portfolio. As a result of the review that was completed in October, a strate-
gic change was announced to enhance long-term profitability and to accelerate growth in the core Mining
business. This change includes the decision to divest or wind-down non-core and unprofitable mining activi-
ties.
FLSmidth
Interim Report 9M 2022 13
Management Review
GROWTH
Group order intake increased
by 11% organically, driven by both
Mining and Cement. Currency
tailwinds and the acquisition of TK
Mining supported order intake in
the quarter by 9% and 6%
respectively.
Order intake
Order intake in Q3 2022 increased 26% to
DKK 5,714m, including the impact from the ac-
quisition of TK Mining of DKK 260m as well as
currency effects. Organically, order intake in-
creased by 11%.
Service order intake increased by 36%, in line
with our focus on expanding the share of
higher margin service orders and our portfolio
de-risking approach. Capital orders increased
by 6% compared to Q3 2021.
Order backlog and maturity
The order backlog amounted to around DKK
25.5bn, an increase of 31% compared to Q2
2022. The inclusion of the backlog of TK
Mining represented DKK 5,451m of the total
Group backlog at the end of Q3 2022.
Outstanding order backlog related to Russian
and Belarusian contracts amounted to around
DKK 1.6bn at the end of Q3 2022 (end of Q2
2022: around DKK 1.5bn) and is due to uncer-
maturity. The increase compared to end of Q2
2022 is due to the inclusion of the outstanding
Russian order backlog from TK Mining, which
amounted to around DKK 240m.
Backlog maturity
Mining
Cement
FLSmidth
Group
Revenue
Revenue increased 21% to DKK 5,621m in Q3
2022, driven by a 44% increase in service reve-
nue. Service revenue accounted for 62% of to-
tal revenue in the quarter, compared to 52% in
Q3 2021. The quarter included DKK 153m in rev-
enue from contracts with non-sanctioned Rus-
sian and Belarusian customers. Total revenue in
the quarter included DKK 287m coming from
TK Mining for the month of September. Organi-
cally, revenue increased 7%, driven by both
Mining and Cement.
Cost inflation and global supply chain issues
remain challenging, but the situation has eased
somewhat during the quarter. We have contin-
ued to be able to partly mitigate the supply
chain pressure due to our flexibility to switch
between suppliers and use regional sourcing.
CONSOLIDATED FINANCIAL PERFORMANCE IN Q3 2022
Order intake
DKKm
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q3
2020
Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3
Capital Order intake Service Order intake
Growth in order intake in Q3 2022
(vs. Q3 2021)
Mining
Cement
FLSmidth
Group
Total growth
30%
16%
26%
Growth in revenue in Q3 2022
(vs. Q3 2021)
Mining
Cement
FLSmidth
Group
Total growth
24%
13%
21%
Group – continued activities
(DKKm)
Q3 2022
Q3 2021
Change (%)
9M 2022
9M 2021
Change (%)
Order intake (gross)
5,714
4,549
26%
18,633
14,149
32%
Order backlog
25,476
16,548
54%
25,476
16,548
54%
Revenue
5,621
4,660
21%
15,354
12,446
23%
Gross profit
1,431
1,074
33%
3,782
3,029
25%
SG&A cost
(1,012)
(682)
48%
(2,593)
(2,065)
26%
Adjusted EBITA*
449
n/a
1,190
n/a
EBITA
334
305
10%
943
692
36%
EBIT
256
219
17%
713
429
66%
-down Russian activities.
FLSmidth
Interim Report 9M 2022 14
Management Review
PROFIT
Gross profit increased by 33%
and the EBITA margin was 5.9% in
Q3 2022. Adjusted for costs
related to wind-down our Russian
activities and integration costs
related to the acquisition of TK
Mining, the adjusted EBITA
margin was 8.0%.
Gross profit and margin
Gross profit increased by 33% to DKK 1,431m
and the corresponding gross margin increased
to 25.5%. This was driven by the higher share
of service revenue, partly offset by inflationary
pressure and cost related to the wind-down of
our activities in Russia.
In Q3 2022, total research and development
costs (R&D) amounted to DKK 93m, represent-
ing 1.7% of revenue (Q3 2021: 1.7%). The in-
crease in R&D is directly related to the acquisi-
tion of TK Mining.
R&D costs (DKKm)
Q3 2022
Q3 2021
SG&A costs
Sales, general and administrative costs (SG&A)
and other operating items increased 48% com-
pared to Q3 2021, mainly due to the higher ac-
tivity level and cost related to the wind-down of
our activities in Russia. Further, currencies had
a negative impact on SG&A of DKK 24m in the
quarter. Integration costs related to the acquisi-
tion of TK Mining business amounted to DKK
45m in the quarter. In addition, the SG&A costs
of TK Mining itself contributed to the increase in
overall SG&A costs.
As a result of this, SG&A costs as a percentage
of revenue increased to 18.0% in Q3 2022 com-
pared to 14.6% in Q3 2021.
EBITA and EBITA margin
EBITA increased by 10% to DKK 334m, as a re-
sult of the higher revenue. The EBITA margin
decreased to 5.9% from 6.5% in Q3 2021. Ad-
justed for costs of DKK 70m related to the wind-
down of our Russian activities and integration
costs of DKK 45m related to the acquisition of
TK Mining, the adjusted EBITA margin was
8.0% in Q3 2022.
Amortisation in Q3 2022 was DKK 78m (Q3
2021: DKK 86m) of which the effect of purchase
price allocations amounted to DKK 14m (Q3
2021: DKK 23m) and other amortisations to
DKK 64m (Q3 2021: DKK 63m).
Earnings before interest and tax (EBIT)
increased 17% to DKK 256m.
Financial items
Net financial items amounted to DKK 14m
(Q3 2021: DKK -43m), of which net interest
amounted to DKK 6m (Q3 2021: DKK -32m) and
foreign exchange and fair value adjustments
etc. amounted to DKK 8m (Q3 2021: DKK -11m).
Tax
Tax for Q3 2022 totalled DKK -104m (Q3 2021:
DKK -69m), corresponding to an effective tax
rate of 38.5% (Q3 2021: 39.2%).
Profit for the period
Profit for the period increased to DKK 162m (Q3
2021: DKK 95m), equivalent to DKK 2.9 per
share (Q3 2021: DKK 1.8). The increase resulted
from the significantly higher EBT, partly offset
by higher tax.
Return on capital employed
Return on capital employed (ROCE) remained
stable at 6.3% (Q3 2021: 6.3%).
Employees
The number of employees increased to 11,820
at the end of Q3 2022, compared to 10,055 at
the end of Q2 2022. The increase is a direct re-
sult of around 2,000 FTEs coming from the ac-
quisition of TK Mining.
Backlog
DKKm
Revenue & EBITA margin
DKKm EBITA%
EBITA
DKKm
0
4,000
8,000
12,000
16,000
20,000
24,000
28,000
Q3
2020
Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3
Mining Cement
0%
2%
4%
6%
8%
10%
12%
0
1,000
2,000
3,000
4,000
5,000
6,000
Q3
2020
Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3
Revenue
EBITA margin
Adj. EBITA margin
(100)
0
100
200
300
400
500
Q3
2020
Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3
Cement Mining Mining adj.
FLSmidth
Interim Report 9M 2022 15
Management Review
CAPITAL
Net working capital increased to
DKK 2,170m, driven by the impact
from the acquisition of TK Mining.
The net working capital ratio
remained stable at 9.2% in Q3
2022 (Q2 2022: 9.2%).
Net working capital
Net working capital increased to DKK 2,170m at
the end of Q3 2022 (end of Q2 2022: DKK
1,805m). The increase is primarily due to the
impact from the acquisition of TK Mining as
well as a higher level of inventories to mitigate
supply chain challenges. The net working capi-
tal ratio remained stable at 9.2% of 12-months
trailing revenue (Q2 2022: 9.2%).
Utilisation of supply chain financing increased
slightly to DKK 636m due to a higher activity
level (Q2 2022: DKK 614m).
Cash flow from operating activities
Cash flow from operating activities (CFFO) in-
creased to DKK 476m in Q3 2022 (Q3 2021:
DKK -192m).
The main contributor to the positive CFFO was
the higher EBITDA for the period compared to a
net working capital outflow of DKK 494m in Q3
2021.
Cash flow from investing activities
Cash flow from investing activities resulted in a
net cash outflow of DKK 2,146m in Q3 2022, of
which DKK 2,103m relates to the acquisition of
TK Mining.
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK 2,291m as the payment of the acquisition
of TK Mining was funded by an increase in net
interest-bearing debt.
Free cash flow
Free cash flow (cash flow from operating and
investing activities) adjusted for business acqui-
sitions and disposals amounted to DKK 433m in
Q3 2022 supported by the focus on controlling
net working capital (Q3 2021: DKK -253m).
Net interest-bearing debt
Net interest-bearing debt (NIBD) increased to
DKK -985m at the end of Q3 2022 (Q2 2022:
DKK 528m) due to the payment of the acquisi-
tion of TK Mining. The financial gearing end of
Q3 2022 amounts to 0.7x (Q2 2022: -0.3x).
Financial position
By the end of Q3 2022, FLSmidth had DKK
5.2bn of available committed credit facilities of
which DKK 2.9bn was undrawn. The committed
credit facilities have a weighted average time
to maturity of 4.5 years. DKK 5.0bn will mature
in 2027 and the remaining DKK 0.2bn will ma-
ture later than 2027. FLSmidth has in October
2022 signed its first sustainability linked term
loan of DKK 1.1bn with the Nordic Investment
Bank. The term loan is a committed facility and
runs until 2029.
Equity ratio
Equity at the end of Q3 2022 increased to DKK
11,555m (Q2 2022: DKK 11,033m), due to the
positive profit for the period and the translation
effect from foreign currencies. The equity ratio
declined to 37.2% (Q2 2022: 45.0%) due to the
acquisition of TK Mining and the consequently
significant increase in total assets.
OTHER BUSINESS
Annual cost synergy target raised
The acquisition of TK Mining closed on 31 Au-
gust 2022. Following this, FLSmidth has revis-
ited the cost synergy potential from the com-
bined organisational setup, geographical
footprint and pooled innovation, procurement
and administration structures in relation to the
Mining segment. Based on this, further upside
has been uncovered.
The annual cost synergy target is now ex-
pected to be around DKK 560m (previously
DKK 360m) and the pace to realise these syn-
ergies will be accelerated. Consequently, the
annual cost synergy run-rate is now expected
to be achieved by end of 2023 (previously first
two years after closing of the acquisition).
Integration costs to realise these synergies are
now estimated to be around DKK 800m (previ-
ously DKK 560m), of which around DKK 250m
is expected to be recognised in 2022. Total in-
tegration costs are expected to be recognised
before the end of 2023.
New Headquarter
In September 2022, FLSmidth signed a lease of
a new headquarter at Havneholmen in Copen-
hagen. The headquarter is currently in the con-
struction phase and it is expected that the
lease will be effective late 2024.
Cash flow
DKKm
Net interest-bearing debt
DKKm
Net working capital
DKKm NWC%
(400)
(200)
0
200
400
600
800
1,000
Q3
2020
Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3
Cash flow from operating activities
(4,000)
(3,000)
(2,000)
(1,000)
0
1,000
2,000
Q3
2020
Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3
Net interest bearing debt (NIBD)
0%
3%
6%
9%
12%
15%
0
500
1,000
1,500
2,000
2,500
Q3
2020
Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3
Net working capital
Net working capital ratio, end
FLSmidth
Interim Report 9M 2022 16
Management Review
GROWTH
Order intake
Order intake increased 22% organically, driven
by both Mining and Cement. Including currency
effects and the impact of the acquisition of TK
Mining, order intake in the first nine months of
2022 increased 32% to DKK 18,633m (9M 2021:
DKK 14,149m). Service order intake and capital
order intake increased by 31% and 32% respec-
tively, driven by both Mining and Cement.
In 9M 2022, several large orders at a com-
bined value of around DKK 2.0bn were an-
nounced, compared to 9M 2021 when an-
nounced large orders had a combined value of
DKK 0.8bn.
Order backlog
The order backlog increased 54% to DKK
25,476m by 30 September 2022 (30 Septem-
ber 2021: DKK 16,548m). This includes the addi-
the amendment of Russian contracts at a total
value of approximately DKK 750m made in Q2
2022. The higher order backlog relates to both
Mining and Cement, which increased by 81%
and 11%, respectively.
Revenue
Organically, revenue grew by 15%, comprising
an 18% increase in Mining and a 10% increase
in Cement. Including the impact of TK Mining
for the month of September and favourable
currency effects, revenue increased 23% to
DKK 15,354m in the first nine months of 2022.
Growth in Mining revenue comprised a 28% in-
crease in service revenue and a 27% increase
in capital revenue.
In the first nine months of 2022, Cement contin-
ued the positive trend with revenue growth of
19% and 10% in service and capital revenue, re-
spectively.
PROFIT
Gross profit and margin
Gross profit for the first nine months of 2022 in-
creased by 25% to DKK 3,782m. Gross margin
was stable at 24.6%, compared to 24.3% in 9M
2021.
In 9M 2022, Research and Development costs
amounted to DKK 239m (9M 2021: 211m), of
which DKK 110m were capitalised (9M 2021:
102m) and the balance reported as production
costs.
EBITA and margin
EBITA increased 36% to DKK 943m, as a result
of higher revenue and improved gross profit in
both Mining and Cement. Group EBITA margin
was 6.1%, up from 5.6% in the first nine months
of 2021. The improvement was despite the im-
pact from costs related to the acquisition and
integration of TK Mining of DKK 127m in 9M
2022 as well as costs of DKK 120m related to
the wind-down of our activities in Russia. Ad-
justed for these costs, the EBITA margin was
7.8% in 9M 2022.
Financial items
Net financial items amounted to DKK -20m (9M
2021: DKK -79m), of which net interest
amounted to DKK -24m (9M 2021: DKK -60m)
and foreign exchange and fair value adjust-
ments etc. amounted to DKK 4m (9M 2021: DKK
-19m). Termination of hedging Russian Rubles
had a negative impact of DKK 36m on foreign
exchange adjustments.
Tax
Tax for 9M 2022 totalled DKK -267m (9M 2021:
DKK -136m), corresponding to an effective tax
rate of 38.5% (9M 2021: 38.9%). The high effec-
tive tax rate is impacted by a DKK 10m write-
down of deferred tax assets in Russia taken in
Q2 2022.
Profit for the period
Profit for the period increased by 114% to DKK
419m. Continuing activities improved to DKK
426m from DKK 214m. Discontinued activities
reported a DKK 7m loss, compared to a DKK
18m loss in the first nine months of 2021.
Earnings per share
Earnings per share (diluted) increased to DKK
7.7 from DKK 3.9 in the first nine months of
2021.
CONSOLIDATED FINANCIAL PERFORMANCE IN 9M 2022
EBITA split by segment
DKKm
(200)
300
800
1,300
9M 2021 9M 2022
Cement Mining Mining adj.
Growth in order intake in 9M 2022
(vs. 9M 2021)
Mining
Cement
FLSmidth
Group
Total growth
37%
20%
32%
Growth in revenue in 9M 2022
(vs. 9M 2021)
Mining
Cement
FLSmidth
Group
Total growth
28%
15%
23%
FLSmidth
Interim Report 9M 2022 17
Management Review
CAPITAL
Net working capital
Net working capital increased in 9M 2022 to
DKK 2,170m (end of 2021: DKK 1,058m). The in-
crease is primarily due to the impact from the
acquisition of TK Mining, a higher level of in-
ventories to mitigate supply chain challenges
as well as the usage of large prepayments.
In line with expectations, the corresponding net
working capital ratio was 9.2% of 12-months
trailing revenue, compared to 6.0% at the end
of 2021.
Cash flow from operating activities
Cash flow from operating activities decreased
to DKK 192m (9M 2021: DKK 600m), mainly due
to the cash outflow of DKK 761m in net working
capital compared to the period 9M 2021.
Cash flow from investing activities
Cash flow used for investments was DKK
-2,194m compared to DKK -176m in the first nine
months of 2021, reflecting the acquisition of TK
Mining which resulted in a cash outflow of DKK
2,103m in Q3 2022.
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK 2,287m as the payment of the acquisition
of TK Mining was funded by an increase in net
interest-bearing debt.
Free cash flow
Free cash flow adjusted for business acquisi-
tions and disposals was DKK 117m in 9M 2022
(9M 2021: DKK 430m).
Balance sheet
Total assets increased to DKK 31,051m by 30
September 2022 (end of 2021: DKK 23,053m),
primarily related to the acquisition of
TK Mining.
Net interest-bearing debt
Net interest-bearing debt (NIBD) by 30 Septem-
ber 2022 increased to DKK -985m (end of
2021: DKK 889m) due to the payment of the ac-
quisition price for TK Mining
cial gearing was 0.7x (end of 2021: -0.6x).
Equity
Equity at end 9M 2022 increased to DKK
11,555m (end of 2021: DKK 10,368m). The in-
crease related to profit for the period and cur-
rency adjustments regarding translation of enti-
ties, less dividend paid.
Treasury shares
The holding of treasury shares as of 30 Sep-
tember 2022 amounts to 913,828 shares com-
pared to 924,568 shares at year end 2021, rep-
resenting 1.6% of the total share capital.
Treasury shares are used to hedge our share-
based incentive programmes.
Cash flow from operating activities
DKKm
Cash flow from investing activities
DKKm
Free cash flow
DKKm
0
200
400
600
800
9M 2021 9M 2022
Cash flow from operating activities
(2,500)
(1,500)
(500)
500
9M 2021 9M 2022
Cash flow from investing activities
-2,500
-2,000
-1,500
-1,000
-500
0
500
1,000
9M 2021 9M 2022
Free cash flow
Free cash flow adjusted for net business acquisitons
FLSmidth
Interim Report 9M 2022 18
Financial Statements
Notes
DKKm
Q3
2022
Q3
2021
9M
2022
9M
2021
(4,190 )
(3,586 )
(11,572 )
(9,417 )
Gross profit
(438 )
(330 )
(1,174 )
(982 )
(594 )
(352 )
(1,475 )
(1,094 )
EBITDA before special non-recurring items
(14 )
(33 )
(85 )
(73 )
(246 )
(239 )
EBITA
(78 )
(86 )
(230 )
(263 )
EBIT
(454 )
(136 )
(1,216 )
(703 )
EBT
(104 )
(69 )
(267 )
(136 )
Profit for the period, continuing activities
(4 )
(12 )
(7 )
(18 )
Profit for the period
(5 )
(20 )
Notes
DKKm
Q3
2022
Q3
2021
9M
2022
9M
2021
Profit for the period
Items that will not be reclassified to profit or loss:
Items that are or may be reclassified
subsequently to profit or loss:
(48 )
(18 )
(100 )
(30 )
(2 )
(9 )
(23 )
Other comprehensive income for the period after tax
Comprehensive income for the period
(4 )
(19 )
CONSOLIDATED CONDENSED INTERIM
FINANCIAL STATEMENTS
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Financial performance
FLSmidth
Interim Report 9M 2022 19
Financial Statements
CASH FLOW STATEMENT
Notes
DKKm
Q3
2022
Q3
2021
9M
2022
9M
2021
(5 )
(12 )
(9 )
(18 )
(7 )
(22 )
Adjusted EBITDA
(494 )
(761 )
(25 )
Cash flow from operating activities before financial
items and tax
(62 )
(7 )
(37 )
(36 )
(66 )
(25 )
(93 )
(277 )
(320 )
Cash flow from operating activities
(192 )
(2,103 )
(2,119 )
(8 )
(61 )
(41 )
(145 )
(120 )
(29 )
(28 )
(62 )
(56 )
(11 )
(1 )
(20 )
(5 )
Cash flow from investing activities
(2,146 )
(61 )
(2,194 )
(176 )
(170 )
(101 )
(32 )
(29 )
(93 )
(93 )
(1,339 )
(1,516 )
Cash flow from financing activities
(272 )
Change in cash and cash equivalents
(187 )
Cash and cash equivalents at 30 September
Free cash flow
DKKm
Q3
2022
Q3
2021
9M
2022
9M
2021
(1,670 )
(253 )
(2,002 )
(253 )
FLSmidth
Interim Report 9M 2022 20
Financial Statements
Notes
DKKm
30/09 2022
31/12 2021
30/09 2021
ASSETS
Intangible assets
Property, plant and equipment
Other non-current assets
Non-current assets
Current assets
Total assets
Notes
DKKm
30/09 2022
31/12 2021
30/09 2021
EQUITY AND LIABILITIES
(665 )
(814 )
(139 )
(54 )
(57 )
Shareholders in FLSmidth & Co. A/S
(22 )
(3 )
(3 )
Equity
Non-current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
BALANCE SHEET
FLSmidth
Interim Report 9M 2022 21
Financial Statements
EQUITY STATEMENT
9M 2022
9M 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
(20 )
Other comprehensive income
(100 )
(100 )
(100 )
(30 )
(30 )
(30 )
(23 )
(23 )
(23 )
Other comprehensive income total
(85 )
(53 )
Comprehensive income for the period
(85 )
(19 )
(53 )
(170 )
(170 )
(170 )
(101 )
(101 )
(101 )
Equity at 30 September
(139 )
(22 )
(814 )
(57 )
(3 )
FLSmidth
Interim Report 9M 2022 22
Notes
1. KEY ACCOUNTING
ESTIMATES AND
JUDGEMENTS
When preparing the financial statements, we
are required to make several estimates and
judgements. The estimates and judgements
that can have a significant impact on the finan-
cial statements are categorised as key
accounting estimates and judgements. Key
accounting estimates and judgements are reg-
ularly assessed to adapt to market conditions
and changes in political and economic factors.
In general, key accounting judgements are
made in relation to the accounting of revenue
when determining the performance obligations
and the recognition method, while key ac-
counting estimates relate to the estimation of
warranty provisions, valuation of inventories,
trade receivables, work in progress and
deferred tax. For further details, reference is
made to The Annual Report 2021, Key account-
ing estimates and judgements, pages 57-58
and to specific notes.
In the third quarter of 2022, the geopolitical sit-
uation remained on top of the agenda follow-
ing the war in Ukraine. Sanctions are continu-
ously being imposed on Russian and
Belarusian entities and individuals 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 suspended 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 and third 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 and central banks have increased inter-
est rates to reduce the inflationary pressure.
Further, the COVID-19 pandemic and govern-
ment-imposed 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 en-
sure that significant expected cost increases
are reflected in the total cost to complete. In
cases where customers are severely impacted
by the war, we assess the likelihood that the
customer will be able to pay the agreed con-
sideration for goods or services provided by us.
The assessment reflects the risk of any poten-
tial additional expected credit losses (ECL) on
trade receivables against Russian and Belarus-
sian customers. The assessments also consider
the need for write-down of inventory and other
assets.
The change in estimates had no material im-
pact on the financial statements in the first nine
months of 2022. By nature, the updated key
accounting estimates contain uncertainties,
and it is possible that the outcomes in the next
financial period can differ from those on which
On 1 September 2022, FLSmidth Group obtained
control of TK Mining. At initial recognition, assets
acquired and liabilities assumed are measured
at fair value and the excess of the purchase
price over the fair value of the net assets ac-
quired represents goodwill. Due to the short time
since the transaction settled, the initial account-
ing is still subject to change, and significant
changes to the fair value of assets acquired and
liabilities assumed may be expected as we ob-
tain further information on facts and circum-
stances that existed at the acquisition date. The
purchase price is also subject to change. Further
information can be found in note 9.
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, deprecia-
tion, amortisation and impairment (EBITDA).
Special non-recurring items, depreciation,
amortisation and impairment are therefore sep-
arated from the individual functions and pre-
sented in separated lines.
The income statement classified by function
includes allocation of special non-recurring
items, depreciation, amortisation and impair-
ment.
Income Statement by function
DKKm
Q3
2022
Q3
2021
9M
2022
9M
2021
5,621
4,660
15,354
12,446
(4,273)
(3,665)
(11,815)
(9,668)
Gross profit
1,348
995
3,539
2,778
(447)
(342)
(1,200)
(1,020)
(665)
(434)
(1,682)
(1,340)
20
0
56
11
EBIT
256
219
713
429
Special non-recurring items, depreciation, amortisation
and impairment consist of:
0
(14)
0
(33)
(85)
(73)
(246)
(239)
(78)
(86)
(230)
(263)
(163)
(173)
(476)
(535)
Special non-recurring items, depreciation, amortisation
and impairment are divided into:
(83)
(79)
(243)
(251)
(9)
(12)
(26)
(38)
(71)
(82)
(207)
(246)
(163)
(173)
(476)
(535)
FLSmidth
Interim Report 9M 2022 23
Notes
3. SEGMENT INFORMATION
9M 2022
9M 2021
FLSmidth Group
FLSmidth Group
DKKm
Mining
Cement
Continuing
activities
Discontinued
activities ²⁾
Mining ¹⁾
Cement ¹⁾
Continuing
activities
Discontinued
activities ²⁾
Revenue
10,708
4,646
15,354
0
8,394
4,052
12,446
0
(8,046)
(3,526)
(11,572)
(6)
(6,240)
(3,177)
(9,417)
0
Gross profit
2,662
1,120
3,782
(6)
2,154
875
3,029
0
(1,686)
(907)
(2,593)
(3)
(1,237)
(828)
(2,065)
(18)
EBITDA before special non-recurring items
976
213
1,189
(9)
917
47
964
(18)
0
0
0
0
(12)
(21)
(33)
0
(167)
(79)
(246)
0
(159)
(80)
(239)
0
EBITA
809
134
943
(9)
746
(54)
692
(18)
(160)
(70)
(230)
0
(182)
(81)
(263)
0
EBIT
649
64
713
(9)
564
(135)
429
(18)
13,243
5,390
18,633
0
9,670
4,479
14,149
0
18,502
6,974
25,476
0
10,248
6,300
16,548
0
Gross margin
24.9%
24.1%
24.6%
25.7%
21.6%
24.3%
EBITDA margin before special non-recurring items
9.1%
4.6%
7.7%
10.9%
1.2%
7.7%
EBITA margin
7.6%
2.9%
6.1%
8.9%
-1.3%
5.6%
EBIT margin
6.1%
1.4%
4.6%
6.7%
-3.3%
3.4%
Number of employees at 30 September
8,154
3,666
11,820
0
6,205
3,930
10,135
0
Reconciliation of profit for the period
713
(9)
429
(18)
1,196
1
624
1
(1,216)
(2)
(703)
(1)
EBT
693
(10)
350
(18)
FLSmidth
Interim Report 9M 2022 24
Notes
3. SEGMENT INFORMATION
CONTINUED
Starting from 1 January 2022, shared costs are
directly attributed to the industries based on
consumption. 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 equip-
ment. Previously, the costs were allocated to
the industries and included below the subtotal
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 9M 2021 for the two industries.
Restated segment information for 9M 2021, shared costs
DKKm
Mining
Cement
Other
companies
Shared costs
(49)
(23)
0
72
(454)
(325)
(2)
781
(70)
(20)
0
90
Shared costs directly attributed
(573)
(368)
(2)
943
Gross margin
-0.6%
-0.6%
EBITDA margin before special non-recurring items
-6.0%
-8.6%
EBITA margin before allocation of shared costs
-6.8%
-9.1%
EBITA margin
0.0%
0.0%
EBIT margin
0.0%
0.0%
Number of employees at 30 September
853
512
0
(1,365)
FLSmidth
Interim Report 9M 2022 25
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 Industries.
As of Q3 2022, five regions support the sales
within Mining and four regions within Cement.
Up until H1 2022, the region Asia, Australia was
presented as two regions 1) Asia and 2) Aus-
tralia. Further, in Cement, the regions North
America and South America have been merged
to Americas as of Q3 2022.
Revenue is presented in the Regions in which
delivery takes place. In the first nine months of
2022, the regions North America and Europe,
North Africa, Russia picked up a higher share of
the Group revenue than the same period last
year. The region Asia, Australia represented a
4%-point lower share of Group revenue in the
first nine months of 2022 compared to same
period in 2021. Sub-Saharan Africa, Middle East
& South Asia represented a 1%-point lower
share of Group revenue compared to the same
period in 2021.
Backlog
The order backlog at 30 September 2022
amounted to DKK 25,476m (end of 9M 2021:
DKK 16,548m). The increase is due to the acqui-
sition of TK Mining by DKK 5,451m.
The backlog represents the value of outstand-
ing performance obligations on current con-
tracts. The value of outstanding performance
obligations on current contracts is a
combination of value from contracts where we
will transfer control at a future point in time and
the value of the remaining performance obliga-
tions on contracts where we transfer control
over time.
22% of the backlog is expected to be con-
verted to revenue in the remainder of 2022.
Outstanding order backlog related to Russian
and Belarusian contracts amounted to around
DKK 1.6bn at the end of Q3 2022 (end of Q2
2022: DKK 1.5bn) and is due to uncertainty in-
. The
increase compared to end of Q2 2022 is due to
the inclusion of the outstanding Russian order
backlog from TK Mining, which amounted to
around DKK 240m.
Revenue split by Regions 9M 2022
%
Revenue split by Regions 9M 2021
%
Backlog
DKKm
25%
22%
19%
16%
18%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia, Australia*
22%
22%
17%
17%
22%
North America
South America
Europe, North Africa, Russia
Sub-Saharan Africa, Middle East & South Asia
Asia, Australia*
23%
22%
57%
59%
20%
19%
0
4,000
8,000
12,000
16,000
20,000
24,000
28,000
9M 2021 9M 2022
Within current year Within next year
Subsequent years
Revenue split by recognition principle
9M 2022
9M 2021
DKKm
Mining
Cement
Group
Mining
Cement
Group
5,687
1,929
7,616
4,506
1,360
5,866
5,021
2,717
7,738
3,888
2,690
6,578
0
0
0
0
2
2
Total revenue
10,708
4,646
15,354
8,394
4,052
12,446
Revenue split by industry and category
9M 2022
9M 2021
DKKm
Mining
Cement
Group
Mining
Cement
Group
3,132
881
4,013
2,209
855
3,064
1,026
1,183
2,209
1,062
1,022
2,084
Capital business
4,158
2,064
6,222
3,271
1,877
5,148
Service business
6,550
2,582
9,132
5,123
2,175
7,298
Total revenue
10,708
4,646
15,354
8,394
4,052
12,446
FLSmidth
Interim Report 9M 2022 26
Notes
5. PROVISIONS
Net provisions increased by DKK 740m com-
pared to 31 December 2021, of which
DKK 600m relate to the TK Mining acquisition.
Additions to provisions amounted to DKK 516m
in 9M 2022, compared to DKK 412m in
9M 2021 and the increase is related to higher
projects risks from litigation issues and loss-
making contracts.
Warranty provisions have increased by DKK
329m and other provisions by DKK 271m due to
the acquisition of TK Mining.
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 September 2022
amounted to DKK 4.7bn excluding the TK Min-
ing issued corporate guarantees mentioned be-
low (31 December 2021: DKK 3.1bn).
Contingent liabilities primarily relate to
customary performance and payment
guarantees. The volume of such guarantees
amounted to DKK 4.1bn (31 December 2021:
DKK 2.3bn). The increase relates to the acquisi-
tion of TK Mining. In addition to the above men-
tion guarantees, TK Mining has also issued
DKK 1.5bn of corporate contract-support guar-
antees to customers. Nearly half of all TK Min-
ing guarantees will expire during 2023, and by
end 2024 almost all will have expired. It is cus-
tomary market practice to issue guarantees to
customers, which serve as a security that we
will deliver as promised in terms of perfor-
mance, quality, and timing. The volume of the
guarantees varies with the activity level and re-
flects the outstanding backlog, finalised pro-
jects and deliveries that are covered by war-
ranties etc. Only a minor share of such
guarantees is expected to materialise into
losses. In the event a guarantee is expected to
materialise, a provision is recognised to cover
the risk. Information on provisions is included in
note 5.
The remaining contingent liabilities of DKK
0.6bn (31 December 2021: 0.8bn) relate to our
involvement in legal disputes, which are al-
ready pending with courts or other authorities
and other disputes which may or may not lead
to formal legal proceedings being initiated
against us.
In September 2022, FLSmidth signed a lease of
a new headquarter at Havneholmen in Copen-
hagen. The headquarter is currently in the con-
struction phase. It is expected that the lease
will be effective late 2024. The minimum lease
payments over the term of the lease amount to
DKK 0.2bn.
Besides the above, no significant changes have
occurred to the nature and extent of our con-
tractual commitments and contingent liabilities
compared to what was disclosed in note 2.9 in
the 2021 Annual Report.
Provisions
DKKm
30/09 2022
31/12 2021
30/09 2021
1,147
1,015
1,015
30
27
18
600
0
0
516
641
412
(301)
(384)
(242)
(105)
(152)
(86)
Provisions
1,887
1,147
1,117
961
543
531
30
47
106
896
557
480
1,887
1,147
1,117
1,152
697
693
735
450
424
1,887
1,147
1,117
Provisions related to continued activities
DKKm
30/09 2022
31/12 2021
30/09 2021
999
833
833
30
27
18
600
0
0
516
641
412
(282)
(350)
(225)
(105)
(152)
(86)
Provisions
1,758
999
952
FLSmidth
Interim Report 9M 2022 27
Notes
7. DISCONTINUED
ACTIVITIES
Discontinued activities include the remaining
responsibilities to finalise legacy projects, han-
dling 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 information on discontinued activities,
please refer to note 2.11 of Annual report 2021.
In addition to provisions of DKK 129m shown
in the table below, discontinued activities
accounts for DKK 381m (31 December 2021:
DKK 350
shown in note 8.
8. NET WORKING CAPITAL
Net working capital at 30 September 2022 has
increased by DKK 1.1bn compared to 31 Decem-
ber 2021. The increase is primarily due to the
impact from the acquisition of TK Mining, a
higher level of inventories to mitigate supply
chain challenges as well as the usage of large
prepayments.
Utilisation of supply chain financing increased
in the first nine months of 2022 to DKK 636m
(31 December 2021: DKK 490m).
Net working capital
DKKm
30/09 2022
31/12 2021
30/09 2021
4,030
2,464
2,552
5,572
4,112
3,814
3,440
2,358
2,449
1,004
871
593
1,055
709
729
72
31
34
(2,712)
(2,490)
(2,042)
(4,580)
(3,367)
(3,094)
(3,988)
(2,373)
(2,012)
(1,556)
(1,224)
(1,245)
(167)
(33)
(43)
Net working capital
2,170
1,058
1,735
(1,112)
694
17
351
(82)
(42)
Cash flow effect from change in net working capital
(761)
612
(25)
Discontinued activities’ effect on cash flow from operating activities
DKKm
9M
2022
31/12 2021
9M
2021
(9)
(19)
(18)
(19)
(34)
(17)
(35)
(134)
(125)
Cash flow from operating activities before financial items and tax
(63)
(187)
(160)
(1)
(1)
0
0
0
0
Cash flow from operating activities
(64)
(188)
(160)
Discontinued activities share of Group provisions disclosed in note 5
DKKm
30/09 2022
31/12 2021
30/09 2021
148
182
182
(19)
(34)
(17)
Provisions
129
148
165
FLSmidth
Interim Report 9M 2022 28
Notes
9. BUSINESS ACQUISITION
As announced on 11 August 2022, the transac-
tion to acquire TK Mining closed on 31 August
2022, after which FLSmidth obtained control
over the acquired business.
TK Mining is a leading full-line supplier of solu-
tions for mining systems, material handling,
mineral processing and services.
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
sustainability. Furthermore, TK Minin
sive active installed base, together with FLS-
vide additional aftermarket opportunities, while
the joint R&D capabilities and combined portfo-
lio will enable accelerated innovation in digital-
isation and MissionZero solutions.
The mining industry is characterised by sound
fundamentals and a positive outlook, based on
underinvestment over the past decade and in-
creasing demand due to the clean energy tran-
sition. The timing of this acquisition positions
FLSmidth to capture enhanced value from the
mining growth cycle underway.
In addition to the competitive advantages of
scale, FLSmidth will be able to offer a stronger
value proposition to customers through com-
bined competencies, a wider offering and a
more extensive customer reach. Such
expected synergies as well as the value of the
assembled workforce constitute the major parts
of the goodwill recognised on the acquisition.
Initial recognition of TK Mining
On 31 August 2022, a consideration of EUR
420m (DKK 3,122m) was transferred to the sell-
er. Net of cash acquired, the consideration
amounted to DKK 2,103m and includes com-
pensation of DKK 212m for internal funding of
the acquired business previously provided by
the seller. The final purchase price depends on
certain adjustments primarily related to ongo-
ing projects and development in net working
capital. The adjustments are currently esti-
mated by the seller. Subsequent adjustments
to the consideration paid for the acquisition are
therefore expected during the coming quarters.
The acquisition is incorporated into the cash
generating unit Mining.
A preliminary allocation of the purchase price
on the fair value of identifiable assets acquired
and liabilities assumed at acquisition date is
shown in the table to the left. Provisions in-
clude the estimated fair value of contingent lia-
bilities of DKK 0.1bn to cover the risk on perfor-
mance and payment guarantees issued and to
cover for pending and potential legal disputes.
It is important to note that the initial accounting
for the business combination is subject to
change and will be retrospectively adjusted to
reflect new information obtained in subsequent
periods within a maximum period of 12 months
after the acquisition date. This includes infor-
mation on the identification of assets and liabil-
ities, including contingent liabilities, and the
measurement of those items at fair value.
Amongst other, project reviews (including the
identification of onerous contracts) are still on-
going and may lead to changes to the intitial
accounting. During the measurement period,
changes to the above will have a resulting im-
pact on goodwill as well as changes to the pur-
chase price that is currently only estimated as
explained. Significant changes can therefore
be foreseen during the measurement period.
Acquisition related costs amounted to DKK
33m in 2022 and DKK 89m in 2021 and are in-
cluded in the income statement as administra-
tive costs. The costs include costs incurred
both before and after signing of the agreement
in 2021 and after the agreement closed in
2022.
The consolidation of TK Mining has increased
Revenue by DKK 287m and reduced net profit
by DKK 38m. Assuming the Group had taken
over TK Mining with effect from 1 January 2022,
the currently estimated impact would be a fur-
ther increase in Revenue of DKK 2.7bn and de-
crease in Net profit of DKK 0.1bn.
Preliminary allocation of purchase price on assets acquired and liabilities assumed (DKKm)
31/08 2022
65
358
147
204
806
1,038
193
368
1,019
Total assets
4,198
180
63
600
117
757
555
627
Total liabilities
2,899
1,299
1,823
Purchase price, including intercompany funding taken over
3,122
1,019
Net cash transferred to TK
2,103
FLSmidth
Interim Report 9M 2022 29
Notes
10. FAIR VALUE
MEASUREMENT
Financial instruments measured at fair value
are measured on a recurring basis and catego-
rised into the following levels of the fair value
hierarchy:
■
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 ac-
tive market based on quoted prices. They are
measured 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 nine months of
2022 or during 2021.
11. SHAREHOLDERS’ EQUITY
At the Annual General Meeting 30 March
2022, a dividend of DKK 3 per share was de-
clared. 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 re-
ceived net of transaction costs of DKK 25m in-
12. EVENTS AFTER THE
BALANCE SHEET DATE
As announced on 20 October 2022, following
the recent acquisition of TK Mining, FLSmidth
initiated a planned strategic review of the com-
bined FLSmidth and TK Mining technology
product portfolio. As a result of the strategic re-
view, it has been decided to split the Mining
business into two separate segments for opera-
tional and reporting purposes: (1) a continuing
Mining segment focused on profitability, growth
and sustainability and (2) a new Non-Core Ac-
tivities segment, where activities will be fully
exited either by way of divestment or wind-
down of the order backlog. Financial reporting
for this new structure will be effective from Q4
2022.
Following the decision, additional exit costs of
around DKK 0.3bn are expected to be recog-
nised in Q4 2022. This includes non-recurring
severance costs and costs related to contract
negotiations aimed at reducing the scope of
the Non-Core Activities order backlog.
The previously announced signed contract to
supply all mineral processing technology to
ShalkiyaZinc, the operator of a zinc and lead
mine in the south of Kazakhstan, has become
effective in October 2022. The contract is val-
ued at around DKK 950 million and will be part
of the Q4 2022 order intake.
We are not aware of any other subsequent
matters that could be of material importance to
September
2022.
13. ACCOUNTING POLICIES
The condensed interim report of the Group for
the first nine months of 2022 is presented in ac-
cordance with IAS 34, Interim Financial Report-
ing, as approved by the EU and additional Dan-
ish disclosure 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. To better re-
flect the underlying performance, we present
EBITA and Adjusted EBITA margin for costs to
integrate TK Mining and costs to wind-down
Russian activities. Besides this, Alternative Per-
formance Measures (APM) are unchanged from
those applied in the 2021 Annual Report, refer
to note 7.4 in the 2021 Annual Report for a de-
scription 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 Busi-
ness Combinations, IAS 16 Property, Plant and
Equipment, IAS 37 Provisions, Contingent Lia-
bilities and Contingent Assets and Annual Im-
provement 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 con-
solidated financial statements.
Fair value of financial instruments
9M 2022
DKKm
Level 1
Level 2
Level 3
Total
4
0
67
71
0
72
0
72
0
(167)
0
(167)
4
(95)
67
(24)
2021
DKKm
Level 1
Level 2
Level 3
Total
6
0
43
49
0
31
0
31
0
(33)
0
(33)
6
(2)
43
47
FLSmidth
Interim Report 9M 2022 30
Statements
Executive management
Board of directors
STATEMENT BY MANAGEMENT
FLSmidth
Interim Report 9M 2022 31
Statements
in the form of annual reports or interim reports,
filed with the Danish Business Authority and/or
NASDAQ Copenhagen, as well as any presen-
tations based on such financial reports, and
any other written information released, or oral
statements made, to the public based on this
report or in the future on behalf of FLSmidth &
Co. A/S, may contain forward looking state-
ments.
meaning in connection with any discussion of
future operating or financial performance iden-
tify forward-looking statements. Examples of
such forward-looking statements include, but
are not limited to:
■
Statements of plans, objectives or goals for
future operations, including those related to
uct research and product development.
■
Statements containing projections of or tar-
gets for revenues, profit (or loss), CAPEX, divi-
dends, 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
materially affect such forward-looking state-
ments.
important factors, including those described in
this report, could cause actual results to differ
materially from those contemplated in any for-
ward-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 de-
velopment of new products or service con-
cepts, interruptions of supplies and production,
unexpected breach or termination of contracts,
market-driven price reductions for FLSmidth &
Co. A/
of competing products, reliance on information
technology,
cessfully market current and new products, ex-
posure to product liability and legal proceed-
ings and investigations, changes in legislation
or regulation and interpretation thereof, intel-
lectual property protection, perceived or actual
failure to adhere to ethical marketing practices,
investments in and divestitures of domestic and
foreign enterprises, unexpected growth in costs
and expenses, failure to recruit and retain the
right employees and failure to maintain a cul-
ture of compliance. Unless required by law
FLSmidth & Co. A/S is under no duty and under-
takes no obligation to update or revise any for-
ward-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 September 2022
Tel.: +45 36 18 18 00
Fax: +45 36 44 11 46
CVR No. 58180912