Interim Report
Q1 2023
1 January –
31 March 2023
Company announcement no. 11
FLSmidth & Co. A/S
Vigerslev Allé 77
CVR No. 58180912
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 2
Management review
Highlights 4
Financial performance highlights Q1 2023 5
Sustainability performance highlights Q1 2023 6
Key figures 7
2023 financial guidance 8
Mining financial performance Q1 2023 9
Cement financial performance Q1 2023 11
Non-Core Activities financial performance Q1
2023 13
Consolidated financial performance Q1 2023 14
Consolidated Condensed
Financial statements
Income statement 18
Statement of comprehensive income 18
Cash flow statement 19
Balance sheet 20
Equity statement 21
Notes
1. Key accounting estimates and judgements 23
2. Income statement by function 23
3. Segment information 24
4. Revenue 25
5. Provisions 26
6. Contractual commitments and contingent
liabilities 26
7. Discontinued activities 27
8. Net working capital 27
9. Shareholders’ equity 28
10. Events after the balance sheet date 28
11. Accounting policies 28
Statements
Statement by Management 30
Forward looking statements 31
Contents
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 3
Management
review
Highlights 4
Financial performance highlights Q1 2023 5
Sustainability performance highlights Q1 2023 6
Key figures 7
2023 financial guidance 8
Mining financial performance Q1 2023 9
Cement financial performance Q1 2023 11
Non-Core Activities financial performance Q1 2023 13
Consolidated financial performance Q1 2023 14
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 4
We have had a good start to the year. The key transformation efforts, which we
initiated last year, positively impacted our performance in the first quarter of
2023. Our Mining business saw good underlying development in both revenue
and profitability, reflecting our increased focus on the Service business and our
continued de-risking approach. Sentiment in the mining industry remains posi-
tive and service activity levels remain healthy.
The cement market has remained largely stable compared to the prior quarter
despite macroeconomic challenges. Our Cement business’ profitability has
continued to benefit from our operating model simplification efforts and our in-
creased focus on key markets.
We are pleased with how our transformation journey has progressed during the
first quarter of 2023. This includes the accelerated pace of the synergy takeout
from the Mining Technologies* integration and the Non-Core Activities exit, as
successful execution of these is essential in our journey to improve our long-
term profitability.
- Mikko Keto, Group CEO
Highlights Q1 2023
Mining
Cement
■
Service orders intake growth of
15%
■
Strong Service revenue growth
of 48%
■
Adj. EBITA margin of 9.6%
■
Cost synergy takeout slightly
ahead of plan (reduction of
+800 FTEs)
■
Service orders represented
60% of order intake
■
Service revenue growth
of 6%
■
Sustained profitability with
EBITA margin of 4.3%
■
Positive impact from operating
model simplification
Sustainability
Performance and other
■
Increased spend with suppliers
with SBT targets
■
Improvement in share of women
managers
■
Negative development on
safety (TRIR)
■
Transformation progress
on track
■
Non-Core Activities order back-
log reduced to DKK 2.1bn
■
Negative cash flow in line with
expectations
■
Financial guidance for 2023
maintained
*Mining Technologies refers to the former thyssenkrupp Mining business, which FLSmidth acquired on 31
August 2022.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 5
Financial performance highlights Q1 2023
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Cash flow from operating activities
DKKm (404) ▼ from DKKm (70) in Q1 2022
GROUP
5,632
▼ -19.7%
6,016
▲ 27.8%
235 3.9% (adj. 6.0%)
▼ - 22.2%
Earnings per share
DKK 1.5 ▼ from DKK 2.3 in Q1 2022
Net working capital ratio*
10.6% ▲ from 7.3% end of Q1 2022
NIBD/EBITDA
1.0x ▲ from -0.6x end of Q1 2022
*For an explanation on the calculation of the net working
capital ratio refer to section 7.8 in the 2022 Annual Report.
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by Service & Products
%
MINING
4,177
▼ -19.0%
4,185
▲ 29.4%
274 6.5% (adj. 9.6%)
▲ 10.0%
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by Service & Products
%
CEMENT
1,344
▼ -27.8%
1,582
▲ 7.4%
68 4.3%
▲ 28.3%
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by Service & Products
%
NON
-CORE
ACTIVITIES
111
249
(107) -43.0%
7,018
5,632
Q1
2022
Q1
2023
4,706
6,016
Q1
2022
Q1
2023
302
235
Q1
2022
Q1
2023
5,157
4,177
Q1
2022
Q1
2023
3,233
4,185
Q1
2022
Q1
2023
249
274
Q1
2022
Q1
2023
65%
(Q1 2022: 56%)
35%
(Q1 2022: 44%)
Service
Products
1,861
1,344
Q1
2022
Q1
2023
1,473
1,582
Q1
2022
Q1
2023
53
68
Q1
2022
Q1
2023
56%
(Q1 2022: 57%)
44%
(Q1 2022: 43%)
Service
Products
-
111
Q1
2022
Q1
2023
-
249
Q1
2022
Q1
2023
-
(107)
Q1
2022
Q1
2023
37%
63%
Service
Products
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 6
Sustainability performance highlights Q1 2023
Safety (Total recordable injury rate)
Total recordable injury rate/million working
hours
Women managers
%
MissionZero developments
We continue to support our
customers in their journey to
reduce carbon emissions in
both mining and cement.
Demand for our MissionZero
offerings remains strong as we
improve efficiency and deliver
innovative energy-reducing
solutions.
FLS crushing technology to improve copper
mine’s production and efficiency
In continuing efforts to boost the sustainable
performance of its crushing operations, one of
the world’s leading copper miners, First Quan-
tum, selected a FLSmidth semi-mobile crushing
plant for its Sentinel copper mine in Zambia.
This was the ninth in-pit crushing and conveying
(IPCC) solution supplied by FLSmidth to First
Quantum and it will significantly reduce emis-
sions associated with, for example, truck haul-
age. It will also improve the safety of operations
and maintenance. The value of the order has
not been disclosed.
Innovative combustion system accelerates
cement producer’s pursuit of net zero
The Irish construction products manufacturer
Mannok expects to eliminate fossil fuel use in
clinker production using the FLSmidth
FUELFLEX® Pyrolyzer combustion system. This
is the result of a co-development project be-
tween FLSmidth and Mannok, where the system
has operated successfully since July 2022.
Mannok expects to remove around 40,000
tonnes of coal and reduce CO2 emissions by
58,000 tonnes per year, taking advantage of
greater efficiency in alternative fuels utilisation.
2.6
2023 Target: 1.2
▼ 1.5 deterioration
14.9
2023 Target: 16.3%
▲ 0.6%-points improvement
Total recordable injury rate increased compared to Q1
2022. There is no clear pattern that explains the
increase in incidents and they are spread across all re-
gions. As a consequence we will look into our safety
guidance and create even more awareness so that we
can prevent incidents from happening going forward.
Due to our ongoing recruitment and leadership initia-
tives, the number of women managers has increased
to 14.9% from 14.3% compared to end of 2022.
Water withdrawal
m
3
Scope 1 & 2 greenhouse gas
emissions
tCO
2
e (market-based)
Spend with suppliers with science-
based targets
%
38,030
▼ 11.4% deterioration
10,913
2023 Target: 38,302*
▼ 1.5% deterioration
10.8%
2023 Target: 10%
▲ 3.1%-points improvement
Water reductions initiatives have been successful in
cutting back water consumption, particularly in wa-
ter-stressed areas. The increase in water usage com-
pared to Q1 2022 is due to the increase in sites after
the acquisition of Mining Technologies.
CO2e emissions for the first quarter show good pro-
gress from effective emissions reductions initiatives. An
increase in emissions compared to the same period
last year reflects the inclusion of new Mining Technol-
ogies sites.
Spend with suppliers with science-based targets has
increased by 3.1%-points from the end of 2022. This re-
flects dedicated efforts to increase our procurement
from suppliers who already have set science-based
targets.
*2023 scope 1&2 targets are in the process of being reviewed after the acquisition of Mining Technologies and will be restated in line with the GhG Protocol in Q2.
1.1
2.6
Q1
2022
Q1
2023
14.3%
14.9%
Q4
2022
Q1
2023
34,127
38,030
Q1
2022
Q1
2023
10,747
10,913
Q1
2022
Q1
2023
7.7%
10.8%
2022
Q1
2023
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 7
*
Key figures
DKKm
Q1
2023
Q1
2022
2022
Income statement
Revenue
6,016
4,706
21,849
Gross profit
1,397
1,107
5,076
EBITDA
322
382
1,300
EBITA
235
302
943
Adjusted EBITA*
362
339
1,395
EBIT
177
222
619
Financial items, net
(16)
(29)
(67)
EBT
161
193
552
Profit for the period, continuing activities
103
123
351
Loss for the period, discontinued activities
(19)
0
1
Profit for the period
84
123
352
Orders
Order intake
5,632
7,018
24,644
Order backlog
22,027
19,358
23,541
Earning ratios
Gross margin
23.2%
23.5%
23.2%
EBITDA margin
5.4%
8.1%
5.9%
EBITA margin
3.9%
6.4%
4.3%
Adjusted EBITA margin*
6.0%
7.2%
6.4%
EBIT margin
2.9%
4.7%
2.8%
EBT margin
2.7%
4.1%
2.5%
Cash flow
Cash flow from operating activities (CFFO)
(404)
(70)
968
Acquisitions of property, plant and equipment
(24)
(15)
(88)
Cash flow from investing activities (CFFI)
(24)
35
(2,310)
Free cash flow
(428)
(35)
(1,342)
Free cash flow adjusted for acquisitions and
disposals of enterprises and activities
(428)
(35)
777
Balance sheet
Net working capital
2,613
1,354
1,893
Net interest-bearing debt (NIBD)
(1,187)
864
(726)
Total assets
29,643
23,878
29,845
CAPEX
79
91
424
Equity
10,611
10,679
10,787
Dividend to shareholders, paid
0
0
173
DKKm
Q1
2023
Q1
2022
2022
Financial ratios
Book-to-bill
93.6%
149.1%
112.8%
Order backlog / Revenue
95.1%
104.2%
107.7%
Return on equity**
3.1%
4.7%
3.3%
Equity ratio
35.8%
44.7%
36.1%
ROCE, average**
5.1%
7.8%
5.9%
Net working capital ratio, end**
10.6%
7.3%
7.8%
NIBD / EBITDA**
1.0x
-0.6x
0.6x
Capital employed, average**
17,034
14,715
15,888
Number of employees
10,345
10,039
10,977
Share ratios
Cash flow per share (CFPS), (diluted)
(7.1)
(1.2)
17.0
Earnings per share (EPS), (diluted)
1.5
2.3
6.5
Share price
262.2
177.5
251.7
Number of shares (1,000), end
57,650
57,650
57,650
Market capitalisation, end
15,116
10,233
14,511
Sustainability key figures
Scope 1 & 2 GHG emissions (tCO2e) market-based
10,913
10,747
36,767
Water withdrawal (m3)
38,030
34,127
178,064
Safety, TRIR Total Recordable Injury Rate (including contractors)
2.6
1.1
1.5
Women managers
14.9%
14.6%
14.3%
Spend with suppliers with science-based targets
10.8%
n/a
7.7%
Other key figures
Quality, DIFOT Delivery In Full On Time
83.0%
79.5%
81.9%
Use of alternative performance measures
Throughout the report we present financial measures which are not defined according to IFRS. The financial ratios have been computed in
accordance with the guidelines of the Danish Finance Society. We have included additional information in note 7.4 Alternative performance
measures and 7.8 Definition of terms in the 2022 Annual Report and in note 11 of this report.
FLSmidth acquired Mining Technologies as per 31
st
August 2022.
*To reflect the underlying business performance, we present an adjusted EBITA margin to cover for the integration costs of DKK 127m (2022:
DKK 252m) related to the integration of Mining Technologies. In 2022, EBITA was also adjusted for cost related to the exit of Russian activities
of DKK 200m.
**For an explanation on the ratios, please refer to the Annual Report 2022, pages 121 - 122. Return on equity is based on an annualised profit
determined four times the profit for Q1.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 8
2023 financial guidance
Mining
Revenue (DKKbn)
16.0-17.0
(DKK 4.2bn)
Adj. EBITA margin
9-10%
(9.6%)
Cement
Revenue (DKKbn)
6.0-6.5
(DKK 1.6bn)
EBITA margin
4.0-5.0%
(4.3%)
Non-Core
Activities
Revenue (DKKbn)
0.8-1.0
(DKK 249m)
EBITA
Loss of ~DKK
250-350m
(Loss of DKK 107m)
Group
Revenue (DKKbn)
23.0-24.5
(DKK 6.0bn)
Adj. EBITA margin
6.0-7.0%
(6.0%)
EBITA margin
4.0-5.0%
(3.9%)
Following a strong 2022, we expect market
activity levels in 2023 to remain largely
stable versus 2022.
The former Mining Technologies business
is expected to contribute with less than
DKK 3bn in revenue in 2023 and is ex-
pected to have a dilutive effect on the full
year 2023 adjusted Mining EBITA margin
of around 2%-points.
Guidance for Adjusted EBITA margin in-
cludes adjustments for integration costs of
around DKK 550m for the full year 2023.
Short-term outlook for the Cement industry
remains impacted by overcapacity and the
potential recession is expected to impact
market demand negatively over the com-
ing period.
Non-Core Activities EBITA margin guidance
for 2023 reflects the operationally loss-
making nature of the business as well as
costs related to contract negotiations
aimed at reducing the scope of the Non-
Core Activities order backlog.
Consolidated Group guidance reflects the
sum of the guidance for the three business
segments.
Guidance for Adjusted EBITA margin in-
cludes adjustments for integration costs of
around DKK 550m for the full year 2023.
Guidance for 2023 is subject to uncertainty
due to the global supply chain situation,
potential recession and geopolitical
turmoil.
Note: Numbers in brackets represent realised Q1 2023 results
Financial guidance for 2023 is maintained. Guidance for full year 2023 reflects continued improvement of the underlying legacy FLSmidth
Mining business, integration of Mining Technologies and the establishment of the Non-Core Activities segment.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 9
Market outlook and trends in Q1 2023
The mining industry remains in an active steady
state with continued positive long-term demand
for minerals essential to economic growth and the
green transition.
Q1 2023 was marked by continued high activity in
gold and lithium projects, however dampened by
some cautiousness in large copper projects in
South America due to the political situation and
lengthy permitting processes. We however con-
tinue to see a strong pipeline supporting the long-
term demand for minerals across all regions, de-
spite current macroeconomic uncertainty.
Order intake development in Q1 2023
Q1 2023 order intake declined by 20% excluding
currency effects. Compared to Q1 2022, Mining or-
der intake in Q1 2023 does not include Russia or
Non-Core Activities. However, Q1 2023 order
intake includes Mining Technologies. When
adjusting for Russia, Non-Core Activities and Min-
ing Technologies the underlying order intake in
the quarter declined approximately 23%. This
development reflects our ongoing transformation
and the strong comparison quarter.
The 51% decline in Products order intake was
largely due to the strong Q1 2022 comparison
quarter, which included four large announced
product orders at a total combined value of
around DKK 1.4bn. Q1 2023 included one large an-
nounced product order valued at around DKK
350m to supply mineral processing equipment for
a gold mine in the Middle East.
The lower Products order intake in Q1 2023 also
reflected our continued de-risking strategy, where
we remain focused on opportunities with reduced
risks and larger long-term service potential.
Service order intake increased by 15% in Q1 2023
supported by the acquisition of Mining Technolo-
gies. The increase reflected improved sales efforts
to the installed base as well as a strong activity in
spare and wear parts especially in North America,
Asia-Pacific and the Sub-Saharan and Middle
Eastern regions. The increase indicated a continu-
ing improvement in service activity levels and pos-
itive market sentiment, partially offset by our ef-
forts of exiting low margin basic labour services.
During the quarter, Service and Products order in-
take represented 70% and 30% of Mining order in-
take, compared to 49% and 51% in Q1 2022, re-
spectively, which is in line with our de-risking
strategy and service focus.
Mining order intake
split per region Q1 2023
*ECANA refers to the region of Europe, Central Asia and North
Africa.
Order intake Q1 2023
split by Products & Service
%
Mining order intake
split by commodity Q1 2023
%
Mining financial performance Q1 2023
70%
(Q1 2022: 49%)
30%
(Q1 2022: 51%)
Service
Products
35%
21%
7%
3%
11%
23%
Copper
Gold
Coal
Fertilizer
Iron ore
Other
25%
32%
18%
9%
16%
NAMER
SAMER
ECANA*
SSAMESA
APAC
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report Q1 2023 10
Revenue development in Q1 2023
Q1 2023 revenue increased by 28% excluding cur-
rency effects. This development reflects our exit of
Russia, the establishment of the Non-Core Activi-
ties segment and the acquisition of Mining Tech-
nologies. Adjusting for these factors, the underly-
ing revenue growth in the quarter was
approximately 29%. Excluding Russia, revenue in-
creased by 45% in Q1 2023.
The key driver for the revenue growth was the
Service business, fully in line with our ongoing
transformation strategy. Service revenue in-
creased by 48% in the quarter and accounted for
92% of the total revenue growth in the quarter.
This growth was, mainly driven by a continued
healthy spare and wear parts demand, especially
in North and South America. Service revenue
growth was further supported by the acquisition of
Mining Technologies.
De-risking our Products portfolio combined with
our increased focus on the Service business re-
duced Products’ share of revenue from 44% in Q1
2022 to 35%. Products revenue increased by 5%
supported by the acquisition of Mining Technolo-
gies.
Gross profit development in Q1 2023
Gross profit increased by 40% to DKK 1,065m from
DKK 760m in Q1 2022. The corresponding gross
margin increased to 25.4% as a result of the
higher Service revenue, partly offset by integra-
tion costs related to Mining Technologies.
EBITA development in Q1 2023
Adjusted for integration costs of DKK 127m, the ad-
justed EBITA margin was 9.6% in Q1 2023. The ad-
justed EBITA margin was realised despite an ap-
proximated dilutive effect from the acquisition of
Mining Technologies of around 2%-points.
Including integration costs, the reported EBITA
margin decreased to 6.5% from 7.7% in Q1 2022.
While the number of employees in Mining in-
creased compared to Q1 2022 mainly due to Min-
ing Technologies, the number of employees in
Mining has been reduced by more than 1,300 em-
ployees since the end of Q3 2022. The reduction
reflects the establishment of the Non-Core Activi-
ties segment as of Q4 2022 and the ongoing syn-
ergy takeout related to the Mining Technologies'
integration.
Mining financial performance Q1 2023
Growth in Mining in Q1 2023 (vs. Q1
2022)
Revenue and EBITA margin
DKKm EBITA margin %
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
4,500
Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Products
Service
EBITA margin %
Adj. EBITA margin %
Order intake
Revenue
Organic*
-20%
28%
Currency
1%
1%
Total growth
-19%
29%
*Acquired growth from Mining Technologies is included in
organic growth, as it is no longer possible to fully separate
this from the legacy FLSmidth Mining business. Mining Q1
2022 includes Non-Core Activities.
Mining
(DKKm)
Q1 2023
Q1 2022
Change (%)
Order intake
4,177
5,157
-19%
- Hereof service order intake
2,902
2,530
15%
- Hereof products order intake
1,275
2,627
-51%
Order backlog
13,876
12,911
7%
Revenue
4,185
3,233
29%
- Hereof service revenue
2,700
1,820
48%
- Hereof products revenue
1,485
1,413
5%
Gross profit
1,065
760
40%
Gross margin
25.4%
23.5%
Adjusted EBITA
400
286
40%
Adjusted EBITA margin
9.6%
8.8%
EBITA
274
249
10%
EBITA margin
6.5%
7.7%
Number of employees
6,821
6,305
8%
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report Q1 2023 11
Market outlook and trends in Q1 2023
In Q1 2023, we have seen continued stable activ-
ity in both the Service and Products markets ver-
sus prior quarters. Cement producers remain fo-
cused on the cement industry’s required green
transition. We are in continued close dialogue with
our key customers on how we can help them drive
their next steps in this regard.
Despite overcapacity in the market, we see an in-
creased demand in India for additional local
capacity due to investments in infrastructure and
other development areas. The Chinese market
continues to focus on modernisation of existing
plants with new and more efficient and sustaina-
ble products. In general, we continue to see focus
towards on more sustainable cement production
trending globally. However, in Europe, the ongo-
ing war in Ukraine, inflation and increasing inter-
est rates have impacted the business climate and
decisions for investments have on some occasions
been delayed.
Overall, the Service market showed stable perfor-
mance throughout Q1 2023. Products pipeline
continues to be healthy, where there is an in-
creased focus on sustainability improvements.
Order intake development in Q1 2023
Cement order intake in Q1 2023 declined by 29%
excluding currency effects. This development
mainly reflects a 42% decrease in Products order
intake compared to Q1 2022, which included sev-
eral sizeable orders, as well as our de-risking
strategy.
Service order intake decreased by 14% compared
to Q1 2022. The decrease reflected our continued
de-risking approach and the implementation of
our new simplified operating model. In all our lead
countries, we have however seen growth in the
Service order intake versus Q1 2022.
During the quarter Service and Products orders
represented 60% and 40% of Cement order intake
compared to 51% and 49% in Q1 2022, respec-
tively, which is in line with our de-risking strategy
and service focus.
Cement financial performance Q1 2023
Cement order intake
split per region Q1 2023
%
*ECANA refers to the region of Europe, Central Asia and North
Africa.
Order intake Q1 2023
split by Products & Service
%
60%
(Q1 2022: 51%)
40%
(Q1 2022: 49%)
Service
Products
36%
17%
21%
13%
13%
NAMER
SAMER
ECANA*
SSAMESA
APAC
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 12
Revenue development in Q1 2023
Q1 2023 revenue increased by 6% excluding cur-
rency effects and by 9% excluding Russia com-
pared to Q1 2022. The increase was driven by
both Products and Service.
Products revenue increased by 9% compared to
Q1 2022 driven by good execution on the order
backlog. Service revenue increased by 6% and
accounted for 56% of revenue in Q1 2023, driven
mainly by a high demand for spare and wear
parts especially in North and South America.
Gross profit development in Q1 2023
Gross profit increased by 7% to DKK 372m, as a
result of a good execution on higher margin or-
ders. The corresponding gross margin of 23.5%
was largely in line with Q1 2022, impacted by ad-
ditional footprint optimisation costs following the
new simplified operating model in Cement.
EBITA development in Q1 2023
Cement EBITA continued the positive trend and in-
creased by 28% compared to Q1 2022. This was
driven by a focus on higher Service revenue and
cost improvements from the execution of the new
simplified operating model activities. EBITA
amounted to DKK 68m in Q1 2023 compared to
DKK 53m in Q1 2022. The corresponding EBITA
margin improved by 0.7%-points to 4.3% in Q1
2023.
The number of employees in Cement has been re-
duced by 710 compared to Q1 2022. The reduc-
tion mainly related to the global footprint optimi-
sation and operating model simplification to
improve operations and ensure sustainable profit-
ability.
Cement financial performance Q1 2023
Growth in Cement in Q1 2023 (vs.
Q1 2022)
Revenue and EBITA margin
DKKm EBITA margin %
Order intake
Revenue
Organic
-29%
6%
Currency
1%
1%
Total growth
-28%
7%
Cement
(DKKm)
Q1 2023
Q1 2022
Change (%)
Order intake
1,344
1,861
-28%
- Hereof service order intake
813
944
-14%
- Hereof products order intake
531
917
-42%
Order backlog
6,066
6,447
-6%
Revenue
1,582
1,473
7%
- Hereof service revenue
890
838
6%
- Hereof products revenue
692
635
9%
Gross profit
372
347
7%
Gross margin
23.5%
23.6%
EBITA
68
53
28%
EBITA margin
4.3%
3.6%
Number of employees
3,024
3,734
-19%
-4%
-2%
0%
2%
4%
6%
8%
10%
0
500
1,000
1,500
2,000
Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Service Products EBITA margin %
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 13
Non-Core Activities outlook
The Non-Core Activities segment was established
as of Q4 2022 and comprises products that are no
longer deemed to be of core strategic importance
to FLSmidth and are to a large extent loss-making
mining activities. Activities in the segment will be
fully exited either by way of divestment or wind
down of the order backlog over the period Q4
2022 to end 2025. We are in dialogue with a po-
tential buyer who has shown interest in acquiring
parts of the Non-Core Activities business. This
may lead to an agreement in the near future.
Order intake development in Q1 2023
Order intake for Non-Core Activities amounted to
DKK 111m. During the quarter, Service and Prod-
ucts orders represented 72% and 28% of Non-
Core Activities order intake, respectively. The or-
der intake related to contractual obligations and
parts already in stock and showed a decrease of
47% compared to order intake in Q4 2022 of DKK
209m.
Order backlog development in Q1 2023
The order backlog amounted to around DKK 2.1bn
by end of Q1 2023, which represented a decrease
of DKK 0.8bn compared to Q4 2022. The de-
crease reflected the execution of the order back-
log as well as re-scoping and contract termina-
tions. This was partly offset by the order intake in
the quarter. This is fully in line with our strategy to
divest or wind down the backlog. The majority of
the order backlog is destined for countries within
APAC and ECANA.
Revenue development in Q1 2023
Non-Core Activities revenue in Q1 2023 amounted
to DKK 249m, which was a decrease of 50% com-
pared to Q4 2022 (DKK 503m). Products
accounted for 63% of total revenue, while 37% of
revenue was related to Service.
Gross profit development in Q1 2023
Gross profit was negative as expected and
amounted to DKK -40m, reflecting the general vol-
atility and operationally loss-making nature of the
Non-Core Activities business. The corresponding
gross margin amounted to -16.1%.
EBITA development in Q1 2023
EBITA for Non-Core Activities amounted to DKK
-107m, in line with guidance. The corresponding
EBITA margin amounted to -43.0% driven by the
negative gross profit, timing of the execution of
one specific order, and costs related to exiting
Non-Core Activities.
The number of employees amounted to 500 as of
end Q1 2023, which is a decline of 81 employees
compared to end Q4 2022.
Non-Core Activities financial performance Q1 2023
Q1 2023 order intake split per
region
%
*ECANA refers to the region of Europe, Central Asia and North
Africa.
Q1 2023 order intake split by
commodity
%
Non-Core Activities
(DKKm)
Q1 2023
Order intake
111
- Hereof service order intake
80
- Hereof products order intake
31
Order backlog
2,085
Revenue
249
- Hereof service revenue
92
- Hereof products revenue
157
Gross profit
(40)
Gross margin
-16.1%
EBITA
(107)
EBITA margin
-43.0%
Number of employees
500
1%
9%
83%
7%
Copper
Coal
Iron ore
Other
Minerals
9%
24%
6%
9%
52%
NAMER
SAMER
ECANA*
SSAMESA
APAC
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 14
Growth
Group order intake decreased
20% in Q1 2023 driven by a
decline in Products. Group
revenue increased 28%, driven
primarily by the Mining service
business and the acquisition of
Mining Technologies.
Order intake development in Q1 2023
Q1 2023 order intake declined by 21% excluding
currency effects. Compared to Q1 2022, Group
order intake in Q1 2023 includes Mining Technolo-
gies, but does not include Russia. When adjusting
for Russia and Mining Technologies the
underlying order intake in the quarter declined
approximately 27%. This development reflects our
ongoing transformation and the strong compari-
son quarter, which included several large product
orders.
Service order intake increased by 9% supported
by continued healthy market conditions and the
acquisition of Mining Technologies. Service repre-
sented 67% of total order intake in Q1 2023
against 50% in Q1 2022. Products order intake de-
creased by 48% compared to Q1 2022, reflecting
the year-over-year comparison and our de-risking
strategy.
Order backlog and maturity
The order backlog decreased 6% to DKK 22.0bn
compared to the prior quarter (Q4 2022: DKK
23.5bn) due to strong execution of the order backlog
and the exit of our Russian and Belarusian activities.
Outstanding order backlog related to Russian and
Belarusian contracts declined to DKK 0.3bn at the
end of Q1 2023 (end of Q4 2022: DKK 0.7bn) re-
flecting successful contract terminations. The re-
maining orders are suspended by FLSmidth and are
due to the uncertainty included in the ‘2025 and
beyond’ maturity. The Non-Core Activities backlog
represented around DKK 2.1bn at the end of Q1 2023.
Backlog
maturity
Mining
Cement
Non-Core
Activities
FLSmidth
Group
2023
56%
48%
37%
52%
2024
41%
29%
36%
37%
2025 & beyond
3%
23%
27%
11%
Revenue development in Q1 2023
Revenue increased by 27% excluding currency ef-
fects and by 39% excluding Russia compared to
Q1 2022. When adjusting for Russia and Mining
Technologies the underlying revenue growth in
the quarter was approximately 20%. In line with
expectations, the quarter included DKK 249m in
revenue from Non-Core Activities.
The increase was driven by a 39% increase in Ser-
vice revenue and 14% increase in Products reve-
nue. Service revenue accounted for 61% of total
revenue in the quarter, compared to 56% in Q1 2022.
Consolidated financial performance Q1 2023
Growth in order intake in Q1 2023
(vs. Q1 2022)
Growth in revenue in Q1 2023 (vs.
Q1 2022)
Order intake
DKKm
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
28%
6%
n/a
27%
Currency
1%
1%
n/a
1%
Total growth
29%
7%
n/a
28%
*Acquired growth from Mining Technologies is included in
organic growth, as it is no longer possible to fully separate
this from the legacy FLSmidth Mining business. Mining Q1
2022 includes Non-Core Activities.
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
-20%
-29%
n/a
-21%
Currency
1%
1%
n/a
1%
Total growth
-19%
-28%
n/a
-20%
*Acquired growth from Mining Technologies is included in
organic growth, as it is no longer possible to fully separate
this from the legacy FLSmidth Mining business. Mining Q1
2022 includes Non-Core Activities.
Group – continued activities
(DKKm)
Q1 2023
Q1 2022
Change (%)
Order intake
5,632
7,018
-20%
- Hereof service order intake
3,795
3,474
9%
- Hereof products order intake
1,837
3,544
-48%
Order backlog
22,027
19,358
14%
Revenue
6,016
4,706
28%
- Hereof service revenue
3,682
2,658
39%
- Hereof products revenue
2,334
2,048
14%
Gross profit
1,397
1,107
26%
Gross margin
23.2%
23.5%
SG&A cost
(1,075)
(725)
48%
SG&A ratio
17.9%
15.4%
Adjusted EBITA
362
339
7%
Adjusted EBITA margin
6.0%
7.2%
EBITA
235
302
-22%
EBITA margin
3.9%
6.4%
Number of employees
10,345
10,039
3%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Service order intake Products order intake
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 15
Profit
Gross profit increased 26% driven
by the 28% increase in revenue.
Adjusted EBITA margin was 6.0%
reflecting a continued positive
development in the underlying
profitability.
Gross profit and margin
Gross profit increased by 26% to DKK 1,397m,
driven by the higher revenue level. The corre-
sponding gross margin of 23.2% was largely in
line with Q1 2022 and was impacted by the new
simplified operating model in Cement, the integra-
tion cost of Mining Technologies and the ongoing
handling of our Non-Core Activities.
In Q1 2023, total research and development costs
(R&D) amounted to DKK 82m, representing 1.4% of
revenue (Q1 2022: 1.4%).
Research & development costs
(DKKm)
Q1 2023
Q1 2022
Production costs
52
38
Capitalised
30
27
Total R&D
82
65
SG&A costs
Sales, general and administrative costs (SG&A)
and other operating items increased 48% com-
pared to Q1 2022, mainly due to the cost base
and integration costs related to Mining Technolo-
gies in Q1 2023. Further, currencies had a nega-
tive impact on SG&A of DKK 5m in the quarter.
As a result of this, SG&A costs as a percentage of
revenue increased to 17.9% in Q1 2023 compared
to 15.4% in Q1 2022.
EBITA and margin
Excluding integration costs of DKK 127m related to
the acquisition of Mining Technologies, adjusted
Group EBITA margin was 6.0% in Q1 2023. Includ-
ing integration costs, the EBITA margin decreased
to 3.9% in Q1 2023 compared to 6.4% last year.
Amortisation of intangible assets amounted to
DKK 58m (Q1 2022: DKK 80m). The effect of pur-
chase price allocations amounted to DKK 11m (Q1
2022: DKK 14m) and other amortisation to DKK
47m (Q1 2022: DKK 66m).
Financial items
Net financial items amounted to DKK -16m (Q1
2022: DKK -29m), of which net interest amounted
to DKK -17m (Q1 2022: DKK -17m) and foreign ex-
change and fair value adjustments amounted to
DKK 1m (Q1 2022: DKK -12m).
Tax
Tax in Q1 2023 totalled DKK -58m (Q1 2022:
DKK -70m), corresponding to an effective tax rate
of 36% (Q1 2022: 36%).
Profit for the period
Profit in Q1 2023 was a gain of DKK 84m (Q1 2022:
DKK 123m). Discontinued activities had a loss of
DKK 19m in Q1 2023.
Return on capital employed
Return on capital employed (ROCE) decreased to
5.1% (Q1 2022: 7.8%) due to a decreased EBITA as
well as an increase in average capital employed
from the acquisition of Mining Technologies and
net working capital in general.
Employees
The number of employees decreased by 632 to
10,345 at the end of Q1 2023, compared to 10,977
at the end of Q4 2022. The decrease is a direct
result of workforce reductions carried out in both
Mining and Cement in Q1 2023 relating to foot-
print optimisation and synergies from the acquisi-
tion of Mining Technologies.
Backlog
DKKm
Revenue & EBITA margin
DKKm EBITA margin %
EBITA
DKKm
0
4,000
8,000
12,000
16,000
20,000
24,000
28,000
Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Mining Cement NCA
0%
2%
4%
6%
8%
10%
12%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Revenue
EBITA margin %
Adj. EBITA margin %
(500)
(300)
(100)
100
300
500
700
Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Cement Mining Mining adj. NCA
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 16
Capital
In line with expectations, cash
flow was negative in the quarter
mainly due to an increase in net
working capital. The net working
capital ratio increased to 10.6% in
Q1 2023.
Net working capital
Net working capital increased DKK 720m to DKK
2,613m at the end of Q1 2023 (end of Q4 2022:
DKK 1,893m). The primary driver of the increase in
the quarter was a build-up of work in progress,
which will be invoiced in coming quarters. Other
drivers were a lower accounts payables level due
to the payment of larger orders as well as a
higher inventory levels. The corresponding net
working capital ratio increased from 7.8% of reve-
nue in Q4 2022 to 10.6% of revenue in Q1 2023.
Utilisation of supply chain financing increased to
DKK 626m in Q1 2023 (Q4 2022: 590m).
Cash flow from operating activities
The decrease in cash flow from operations (CFFO)
in Q1 2023 amounted to DKK -404m (Q1 2022:
DKK -70m). This relates to the increase in net
working capital which impacted CFFO by
DKK -694m. Discontinued activities impacted
CFFO by DKK -5m in Q1 2023 (Q1 2022:
DKK -15m).
Cash flow from investing activities
Cash flow from investing activities amounted to
DKK -24m (Q1 2022: DKK 35m).
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK 81m (Q1 2022: DKK 22m).
Free cash flow
Free cash flow was negative DKK 428m in the
quarter (Q1 2022: DKK -35m) as a result of the in-
crease in net working capital.
Net interest-bearing debt
Net interest-bearing debt (NIBD) by 31 March
2023 increased to DKK 1,187m (end of 2022: DKK
726m). The increase in debt was primarily due to
the increase in working capital in the quarter. The
financial gearing end of Q1 2023 increased to 1.0x
(Q4 2022: 0.6x) following the increase in NIBD.
Financial position
By the end of Q1 2023, FLSmidth had DKK 6.3bn
of available committed credit facilities of which
DKK 4.0bn was undrawn. The committed credit fa-
cilities have a weighted average time to maturity
of 5.0 years.
Credit facilities of DKK 5.0bn and DKK 1.1bn will
mature in 2027 and 2030, respectively. The re-
maining DKK 0.2bn matures in later years. FLS-
midth also had available DKK 1.2bn of uncommit-
ted credit facilities.
Equity ratio
Equity at the end of Q1 2023 decreased to DKK
10,611m (end of Q4 2022: DKK 10,787m), driven by
currency adjustments and provision for dividend
amounting to DKK 170m. The equity ratio was
35.8% (end of 2022: 36.1%).
Cash flow
DKKm
Net interest-bearing debt
DKKm
Net working capital
DKKm NWC%
(1,000)
0
1,000
2,000
Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Net interest-bearing debt (NIBD)
0%
2%
4%
6%
8%
10%
12%
0
500
1,000
1,500
2,000
2,500
3,000
Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Net working capital
Net working capital ratio, end
(600)
(400)
(200)
0
200
400
600
800
1,000
Q1
2021
Q2 Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Cash flow from operating activities
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 18
Income statement
Statement of comprehensive income
Notes
DKKm
Q1
2023
Q1
2022
3, 4
Revenue
Production costs
(4,619 )
(3,599 )
Gross profit
Sales costs
(433 )
(342 )
Administrative costs
(667 )
(411 )
Other operating items
EBITDA
Depreciation and impairment of property,
plant and equipment and lease assets
(87 )
(80 )
EBITA
Amortisation and impairment
of intangible assets
(58 )
(80 )
EBIT
Financial income
Financial costs
(440 )
(366 )
EBT
Tax for the period
(58 )
(70 )
Profit for the period, continuing activities
3, 7
Profit (loss) for the period, discontinued activities
(19 )
Profit for the period
Attributable to:
Shareholders in FLSmidth & Co. A/S
Minority interests
(2 )
(7 )
Earnings per share (EPS):
Continuing and discontinued activities per share (DKK)
Continuing and discontinued activities per share, diluted (DKK)
Continuing activities per share (DKK)
Continuing activities per share, diluted (DKK)
Notes
DKKm
Q1
2023
Q1
2022
Profit for the period
Items that will not be reclassified to profit or loss:
Actuarial gains on defined benefit plans
Items that are or may be reclassified
subsequently to profit or loss:
Currency adjustments regarding translation of entities
(127 )
Cash flow hedging:
- Value adjustments for the period
- Value adjustments transferred to work in progress
Tax of total other comprehensive income
(11 )
(5 )
Other comprehensive income for the period after tax
(100 )
Comprehensive income for the period
(16 )
Attributable to:
Shareholders in FLSmidth & Co. A/S
(16 )
Minority interests
(9 )
(16 )
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 19
Cash flow statement
Notes
DKKm
Q1
2023
Q1
2022
EBITDA
3
EBITDA, discontinued activities
(9 )
(1 )
Adjustment for gain on sale of property, plant and equipment and
other non-cash items
(11 )
(16 )
EBITDA adjusted to reflect cash flows
Change in provisions, pension and employee benefits
(32 )
8
Change in net working capital
(694 )
(219 )
Cash flow from operating activities before financial items and tax
(219 )
Financial items received and paid
(18 )
(18 )
Taxes paid
(167 )
(166 )
Cash flow from operating activities
(404 )
(70 )
Acquisition of intangible assets
(43 )
(36 )
Acquisition of property, plant and equipment
(24 )
(15 )
Acquisition of financial assets
(5 )
Disposal of property, plant and equipment
Disposal of financial assets
Dividend from associates
Cash flow from investing activities
(24 )
Repayment of lease liabilities
(29 )
(29 )
Change in net interest bearing debt
Cash flow from financing activities
Change in cash and cash equivalents
(347 )
(13 )
Cash and cash equivalents at beginning of period
Foreign exchange adjustment, cash and cash equivalents
(26 )
Cash and cash equivalents at 31 March
The cash flow statement cannot be inferred from the published financial information only
Free cash flow
DKKm
Q1
2023
Q1
2022
Free cash flow
(428 )
(35 )
Free cash flow, adjusted for acquisitions and disposals of
enterprises and activities
(428 )
(35 )
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 20
Balance sheet
Notes
DKKm
31/03 2023
31/12 2022
31/03 2022
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
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
31/03 2023
31/12 2022
31/03 2022
Equity and liabilities
Share capital
Foreign exchange adjustments
(646 )
(517 )
(348 )
Cash flow hedging
(37 )
(70 )
(40 )
9
Retained earnings
Shareholders in FLSmidth & Co. A/S
Minority interests
(26 )
(26 )
(12 )
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 payables
Other liabilities
Current liabilities
Total liabilities
Total equity and liabilities
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 21
Equity statement
Q1 2023
Q1 2022
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
(517 )
(70 )
(26 )
(665 )
(54 )
(3 )
Comprehensive income for the period
Profit/loss for the period
(2 )
(7 )
Other comprehensive income
Actuarial gains/(losses) on
defined benefit plans
Currency adjustments regarding
translation of entities
(129 )
(129 )
(127 )
(2 )
Cash flow hedging:
- Value adjustments for the period
- Value adjustments transferred to work in
progress
Tax on other comprehensive income
(11 )
(11 )
(11 )
(5 )
(5 )
(5 )
Other comprehensive income total
(129 )
(6 )
(102 )
(100 )
(2 )
Comprehensive income for the period
(129 )
(16 )
(16 )
(9 )
Transactions with owners:
Dividend transferred to other liabilities
(170 )
(170 )
(170 )
(170 )
(170 )
(170 )
Share-based payment
Equity at 31 March
(646 )
(37 )
(26 )
(348 )
(40 )
(12 )
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 22
Notes
1. Key accounting estimates and judgements 23
2. Income statement by function 23
3. Segment information 24
4. Revenue 25
5. Provisions 26
6. Contractual commitments and contingent
liabilities 26
7. Discontinued activities 27
8. Net working capital 27
9. Shareholders’ equity 28
10. Events after the balance sheet date 28
11. Accounting policies 28
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 23
1. Key accounting estimates
and judgements
When preparing the consolidated condensed fi-
nancial statements, we are required to make sev-
eral estimates and judgements. The estimates and
judgements that can have a significant impact on
the consolidated condensed financial statements
are categorised as key accounting estimates and
judgements. Key accounting estimates and judge-
ments are regularly 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 accounting
estimates relate to the estimation of warranty pro-
visions, valuation of inventories, trade receivables,
work in progress and deferred tax. For further de-
tails, reference is made to The Annual Report
2022, Key accounting estimates and judgements,
pages 69-70 and to specific notes.
The economic situation has been relatively stable
during the first quarter of 2023. However, the geo-
political situation following the war in Ukraine, the
inflationary environment etc continue to pose
challenges. More information on the resulting un-
certainties and the impact on key accounting esti-
mates and judgements can be found on pages 69-
70 of the 2022 Annual Report.
The change in estimates had no material impact
on the consolidated condensed financial state-
ments in the first quarter of 2023. By nature, the
updated key accounting estimates contain uncer-
tainties, and it is possible that the outcomes in the
next financial period can differ from those on
which management’s estimates are based.
On 31 August 2022, we obtained control of Mining
Technologies. During the first quarter of 2023, no
changes to the initial accounting of the acquisition
as shown in note 2.10 in Annual report 2022 has
been recognised. Due to the complexity of the
transaction, it is likely that the completion of the ini-
tial accounting will extend into Q3 2023. During the
measurement period ending no later than 12
months after acquisition, new information on facts
and circumstances that existed on 31 August 2022
is adjusted retrospectively in the initial accounting
with a resulting impact on goodwill as will the
change resulting from the final purchase price. Such
changes may be significant.
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 de-
preciation, amortisation and impairment. Depreci-
ation, amortisation, and impairment are therefore
separated from the individual functions and pre-
sented in separate lines.
The income statement prepared on the basis of
cost by function is shown below:
Income Statement by function
DKKm
Q1
2023
Q1
2022
Revenue
6,016
4,706
Production costs
(4,689)
(3,682)
Gross profit
1,327
1,024
Sales costs, including depreciation and amortisation
(438)
(351)
Administrative costs, including depreciation and amortisation
(737)
(479)
Other operating income
25
28
EBIT
177
222
Depreciation, amortisation
and impairment consist of:
Depreciation and impairment of property, plant and equipment and lease assets
(87)
(80)
Amortisation and impairment of intangible assets
(58)
(80)
(145)
(160)
Depreciation, amortisation
and impairment are divided into:
Production costs
(70)
(83)
Sales costs
(5)
(9)
Administrative costs
(70)
(68)
(145)
(160)
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FLSmidth
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Interim Report Q1 2023 24
3. Segment information
Q1 2023
Q1 2022
FLSmidth Group
FLSmidth Group
DKKm
Mining
Cement
Non-Core
Activities ¹⁾
Continuing
activities
Discontinued
activities ²⁾
Mining
Cement
Continuing
activities
Discontinued
activities ²⁾
Revenue
4,185
1,582
249
6,016
0
3,233
1,473
4,706
0
Production costs
(3,120)
(1,210)
(289)
(4,619)
(2)
(2,473)
(1,126)
(3,599)
0
Gross profit
1,065
372
(40)
1,397
(2)
760
347
1,107
0
SG&A costs
(731)
(281)
(63)
(1,075)
(7)
(457)
(268)
(725)
(1)
EBITDA
334
91
(103)
322
(9)
303
79
382
(1)
Depreciation and impairment of property, plant and equipment
and lease assets
(60)
(23)
(4)
(87)
0
(54)
(26)
(80)
0
EBITA
274
68
(107)
235
(9)
249
53
302
(1)
Amortisation and impairment of intangible assets
(40)
(18)
0
(58)
0
(57)
(23)
(80)
0
EBIT
234
50
(107)
177
(9)
192
30
222
(1)
Order intake
4,177
1,344
111
5,632
0
5,157
1,861
7,018
0
Order backlog
13,876
6,066
2,085
22,027
0
12,911
6,447
19,358
0
Gross margin
25.4%
23.5%
-16.1%
23.2%
23.5%
23.6%
23.5%
EBITDA margin
8.0%
5.8%
-41.4%
5.4%
9.4%
5.4%
8.1%
EBITA margin
6.5%
4.3%
-43.0%
3.9%
7.7%
3.6%
6.4%
EBIT margin
5.6%
3.2%
-43.0%
2.9%
5.9%
2.0%
4.7%
Number of employees at 31 March
6,821
3,024
500
10,345
0
6,305
3,734
10,039
0
Reconciliation of profit for the period
EBIT
177
(9)
222
(1)
Financial income
424
2
337
0
Financial costs
(440)
(13)
(366)
0
EBT
161
(20)
193
(1)
1) Non-Core Activities constitutes a separate reportable segment prospectively from 1 October 2022. Comparative information has not been restated. Further information can be found in the 2022 Annual
Report note 1.2. Under the previous segmentation Mining and Non-Core Activities was presented as one segment.
2) Discontinued activities mainly consist of non-mining bulk material handling.
Management review Consolidated Condensed Financial Statements Notes Statements
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Interim Report Q1 2023 25
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 seg-
ments split into the main businesses Products and
Services. Revenue within the Non-Core Activities
segment reflects the performance of the backlog
and the sale of parts already in stock.
In the graphs on the right, revenue is split by re-
gions in which delivery takes place.
Revenue is recognised either at a point in time
where the control over the goods and/or services
is transferred to the customer or over time to re-
flect the percentage of completion of the perfor-
mance obligations in the contracts. Percentage of
completion covers a wide range of different types
of contracts, from contracts where the customer
consumes the services over time, such as fixed
price service contracts, to more complex product
bundles with engineering subject to the enhanced
risk governance structure under the Risk Manage-
ment Board and to risk quotas. More information
on when and how the two recognition principles
are applied can be found in note 1.4 in the Annual
report 2022. To reflect the wide range of contracts
that are accounted for using percentage of com-
pletion, the category has been decomposed into
two subcategories from 1 January 2023 with com-
parative information restated.
Backlog
The order backlog at 31 March 2023 amounted to
DKK 22,027m (end of 2022: DKK 23,541m).
The backlog 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
contracts 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.
52% of the backlog is expected to be converted to
revenue in the remainder of 2023.
Revenue split by Regions Q1 2023
%
*ECANA refers to the region of Europe, Central Asia and
North Africa.
Revenue split by Regions Q1 2022
%
*ECANA refers to the region of Europe, Central Asia and
North Africa.
Backlog
DKKm
8,080
11,425
7,065
8,258
4,213
2,344
0
4,000
8,000
12,000
16,000
20,000
24,000
Q1 2022 Q1 2023
Within current year Within next year
Subsequent years
21%
37%
42%
11%
37%
52%
Revenue split by recognition principle
Q1 2023
Q1 2022
DKKm
Mining
Cement
Non-Core
Activities
Group
Mining
Cement
Group
Point in time
2,350
740
112
3,202
1,616
606
2,222
Percentage of completion
- Service, single machines and product bundles
1,549
741
0
2,290
938
712
1,650
- Product bundles with engineering under enhanced risk governance
286
101
137
524
679
155
834
Total revenue
4,185
1,582
249
6,016
3,233
1,473
4,706
Revenue split on industry and category
Q1 2023
Q1 2022
DKKm
Mining
Cement
Non-Core
Activities
Group
Mining
Cement
Group
Products business
1,485
692
157
2,334
1,413
635
2,048
Service business
2,700
890
92
3,682
1,820
838
2,658
Total revenue
4,185
1,582
249
6,016
3,233
1,473
4,706
24%
26%
19%
13%
18%
NAMER
SAMER
ECANA*
SSAMESA
APAC
26%
19%
22%
15%
18%
NAMER
SAMER
ECANA*
SSAMESA
APAC
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 26
5. Provisions
Net provisions increased by DKK 147m compared
to 31 December 2022. The increase relates pri-
marily to restructuring provisions following the im-
plementation of global synergies from the acquisi-
tion of Mining Technologies and from provisions
for loss-making contracts in Non-Core Activities.
For a description of the main provision categories
see note 2.7 in the 2022 Annual Report.
6. Contractual Commitments
and contingent liabilities
Contingent liabilities at 31 March 2023 amounted
to DKK 3.7bn excluding the Mining Technologies
issued corporate guarantees mentioned below (31
December 2022: DKK 3.8bn).
Contingent liabilities primarily relate to customary
performance and payment guarantees. The vol-
ume of such guarantees amounted to DKK 3.2bn
(31 December 2022: DKK 3.3bn). In addition to the
above mentioned guarantees DKK 0.7bn of corpo-
rate contract-support guarantees to customers in
connection with the acquisition of Mining Technol-
ogies remain outstanding (31 December 2022:
DKK 0.8bn). Most of these guarantees will expire
during 2023, and by end 2024 almost all will
have expired. It is customary market practice to is-
sue guarantees to customers, which serve as a se-
curity that we will deliver as promised in terms of
performance, quality, and timing. The volume of
the guarantees varies with the activity level and
reflects the outstanding backlog, finalised projects
and deliveries that are covered by warranties etc.
Only a minor share of such guarantees is ex-
pected 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 in-
cluded in note 5.
Other contingent liabilities of DKK 0.5bn (31 De-
cember 2022: 0.5bn) relate to our involvement in
legal disputes, which are already pending with
courts or other authorities and other disputes
which may or may not lead to formal legal pro-
ceedings being 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 2022 Annual Report.
Provisions
DKKm
31/03 2023
31/12 2022
31/03 2022
Provisions at 1 January
2,507
1,147
1,147
Foreign exchange adjustments
(10)
(17)
7
Acquisition of Group enterprises
0
682
0
Additions
386
1,388
114
Used
(164)
(461)
(117)
Reversals
(65)
(232)
(27)
Provisions
2,654
2,507
1,124
The split of provisions is as follows:
Warranties
994
980
567
Restructuring
462
404
19
Other provisions
1,198
1,123
538
2,654
2,507
1,124
The maturity of provisions is specified as follows:
Current liabilities
1,729
1,611
657
Non-current liabilities
925
896
467
2,654
2,507
1,124
Provisions related to continued activities
DKKm
31/03 2023
31/12 2022
31/03 2022
Provisions at 1 January
2,390
999
999
Foreign exchange adjustments
(10)
(17)
7
Acquisition of Group enterprises
0
682
0
Additions
384
1,385
114
Used
(160)
(428)
(108)
Reversals
(65)
(231)
(27)
Provisions
2,539
2,390
985
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report Q1 2023 27
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-min-
ing bulk material handling business in 2019. For
further information on discontinued activities,
please refer to note 2.11 of Annual report 2022.
In addition to provisions of DKK 115m shown
in the table below, discontinued activities
accounts for DKK 356m (31 December 2022: DKK
362m) of the Group’s net working capital shown in
note 8.
8. Net working capital
Net working capital at 31 March 2023 has in-
creased by DKK 0.7bn compared to 31 December
2022. The primary driver of the increase in the
quarter was the build-up of work in progress, that
will be invoiced in coming quarters. Other drivers
were higher inventory levels due to our focus on
the Service business and a lower level of trade
payables due to the payment of larger orders.
Utilisation of supply chain financing increased in
the first three months of 2023 to DKK 626m (31
December 2022: DKK 590m).
Disontinued activities’ effect on cash flow from operating activities
DKKm
Q1
2023
31/12 2022
Q1
2022
EBITDA
(9)
(10)
(1)
Change in provisions
(2)
(31)
(9)
Change in net working capital
7
(6)
(5)
Cash flow from operating activities before financial items and tax
(4)
(47)
(15)
Financial items received and paid
(1)
(3)
0
Cash flow from operating activities
(5)
(50)
(15)
Discontinued activities share of Group provisions disclosed in note 5
DKKm
31/03 2023
31/12 2022
31/03 2022
Provisions at 1 January
117
148
148
Additions
2
3
0
Used
(4)
(33)
(9)
Reversals
0
(1)
0
Provisions
115
117
139
Net working capital
DKKm
31/03 2023
31/12 2022
31/03 2022
Inventories
4,059
3,971
2,782
Trade receivables
5,022
5,108
3,848
Work in progress, assets
3,518
3,147
2,782
Prepayments
820
874
921
Other receivables
1,034
1,030
781
Derivative financial instruments
42
54
24
Prepayments from customers
(2,702)
(2,771)
(2,665)
Trade payables
(4,062)
(4,339)
(3,407)
Work in progress, liability
(3,599)
(3,592)
(2,420)
Other liabilities
(1,469)
(1,509)
(1,240)
Derivative financial instruments
(50)
(80)
(52)
Net working capital
2,613
1,893
1,354
Change in net working capital
(720)
(835)
(296)
Financial instruments and foreign exchange effect on cash flow
26
389
77
Cash flow effect from change in net working capital
(694)
(446)
(219)
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 28
9. Shareholders’ equity
At the Annual General Meeting 29 March 2023, a
dividend of DKK 3 per share was declared. The to-
tal dividend amounting to DKK 170m, excluding
the portion related to FLSmidth’s holding of treas-
ury shares, was paid out in April 2023. The
amount is included in Other liabilities in the bal-
ance sheet 31 March 2023.
10. Events after the balance
sheet date
We are not aware of any subsequent matters that
could be of material importance to the Group’s fi-
nancial position at 31 March 2023.
11. Accounting policies
The condensed interim report of the Group for the
first quarter of 2023 is presented in accordance
with IAS 34, Interim Financial Reporting, as ap-
proved by the EU and additional Danish disclo-
sure requirements regarding interim reporting by
listed companies.
Apart from the below mentioned changes, the ac-
counting policies are unchanged from those ap-
plied in the 2022 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 2022 Annual
Report for further details.
Note 7.4, Alternative Performance Measures, and
note 7.8, Definition of terms, in the 2022 Annual
Report describes the APMs used throughout an-
nual and interim reports. Following the significant
integration of Mining Technology into the Mining
segment it is impracticable to make the usual de-
composition of growth into organic growth and ac-
quired growth for the first 12 months. Starting from
Q1 2023, organic growth therefore also includes
acquired growth. Besides this, APMs are un-
changed from those applied in the 2022 Annual
Report.
Changes in accounting policies
As of 1 January 2023, the FLSmidth Group has im-
plemented all new or amended accounting stand-
ards and interpretations as adopted by the EU
and applicable for the 2023 financial year. This in-
cludes the changes to IAS 1 (Disclosure on Ac-
counting Policies), IAS 8 (definition of Accounting
Estimates) and IAS 12 (Deferred Tax).
The implementation has not had and is not ex-
pected to have significant impact on the consoli-
dated financial statements.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report Q1 2023 30
Valby, 11 May 2023
Executive management
Board of directors
Statement by Management
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 31
FLSmidth & Co. A/S’ financial reports, whether in
the form of annual reports or interim reports, filed
with the Danish Business Authority and/or an-
nounced via the company’s website and/or
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.
Words such as ‘believe’, ‘expect’, ‘may’, ‘will’,
‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’,
‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘target’ and
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
FLSmidth & Co. A/S’ markets, products, product
research 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 & Co.
A/S’ influence, and which could materially affect
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-look-
ing 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 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, unex-
pected breach or termination of contracts, market-
driven price reductions for FLSmidth & Co. A/S’
products and/or services, introduction of compet-
ing products, reliance on information technology,
FLSmidth & Co. A/S’ ability to successfully market
current and new products, exposure to product lia-
bility 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 re-
cruit and retain the right employees and failure to
maintain a culture of compliance. Unless required
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
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report Q1 2023 32
Interim Report
1 January – 31 March 2023
Tel.: +45 36 18 18 00
Fax: +45 36 44 11 46
CVR No. 58180 912