Interim Report
H1 2023
1 January –
30 June 2023
Company announcement no. 15
Vigerslev Allé 77
CVR No. 58180912
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 2
Management review
Highlights Q2 2023 4
Financial performance highlights 5
Sustainability performance highlights 6
Key figures 7
2023 financial guidance 8
Mining financial performance 9
Cement financial performance 11
Non-Core Activities financial performance 13
Consolidated financial performance Q2 2023 14
Consolidated financial performance H1 2023 17
Consolidated Condensed
Financial statements
Income statement 20
Statement of comprehensive income 20
Cash flow statement 21
Balance sheet 22
Equity statement 23
Notes
1. Key accounting estimates and judgements 25
2. Income statement by function 25
3. Segment information 26
4. Revenue 27
5. Provisions 28
6. Contractual commitments and contingent
liabilities 28
7. Discontinued activities 29
8. Net working capital 29
9. Business acquisitions 30
10. Events after the balance sheet date 30
11. Accounting policies 30
Statements
Statement by Management 32
Forward looking statements 33
Contents
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 3
Management
review
Highlights Q2 2023 4
Financial performance highlights 5
Sustainability performance highlights 6
Key figures 7
2023 financial guidance 8
Mining financial performance 9
Cement financial performance 11
Non-Core Activities financial performance 13
Consolidated financial performance Q2 2023 14
Consolidated financial performance H1 2023 17
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 4
We have maintained the strong momentum on our key transformation efforts,
positively impacting both operational and financial performance during Q2 2023.
While we have continued to progress on our MissionZero agenda, our safety
performance has been unsatisfactory and mitigating actions have been taken.
Our Mining business has seen good revenue growth and continued improvement
in underlying profitability in a relatively stable mining market. This has primarily
been driven by strong execution in the Service business coupled with a better-
than-expected progression of the Mining Technologies* integration. This positive
development was offset by delays in some customers' larger investment deci-
sions, mainly in the Products business.
While our Cement business has been impacted by an increasing slow-down in
market demand, a stable profitability has been maintained as a result of the
operating model simplification and de-risking approach. Our Cement business
remains on target for the full year, however its short- to mid-term market out-
look has deteriorated. Consequently, continued organisational rightsizing is re-
quired to preserve profitability.
Going into the second half of the year we remain positive with a continued strong
focus on executing our core transformation efforts.
Mikko Keto, Group CEO
Highlights Q2 2023
Mining
Cement
■
6% growth in order intake sup-
ported by Mining Technologies
■
Revenue growth of 23% mainly
driven by Service
■
Adj. EBITA margin of 10.8%
■
Morse Rubber acquired to
strengthen mill liner business
■
FY’23 adj. EBITA guidance was
raised mainly due to better-than-
expected Service performance
■
33% decline in order intake due to
a slow-down in market demand
■
Revenue growth of 11% driven
by order backlog execution
■
EBITA margin of 4.3%
■
FY’23 EBITA guidance was
raised due to one-off net gain of
around DKK 100m from sale of
AFT media business
Sustainability
Performance and other
■
Two large MissionZero related
orders received in Mining
■
Continued improvement in
share of women managers
■
Unsatisfactory development on
safety (TRIR)
■
Calcined clay technology gains
sustainability recognition
■
Transformation progressing
ahead of plans
■
Non-Core Activities order back-
log reduced to DKK 1.4bn**
■
Good cash flow generation
■
Financial guidance for 2023
was raised on 8
August 2023
*Mining Technologies refers to the former thyssenkrupp Mining business, which FLSmidth acquired on 31
August 2022.
**Non-Core Activities order backlog includes around DKK 400m, which is expected to be transferred to KOCH Solutions
as part of the Asset Purchase & Transfer Agreement announced on 14 June 2023. The transaction is expected to be
completed in Q3 2023, subject to customary regulatory approvals from relevant authorities.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 5
Financial performance highlights
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Cash flow from operating activi-
ties
DKKm 372 ▲ from DKKm (214) in Q2 2022
GROUP
5,523
▼ -6.4%
6,399
▲ 27.3%
332 5.2% (adj. 6.7%)
▲ 8.1%
Earnings per share
DKK 2.0 ▼ from DKK 2.5 in Q2 2022
Net working capital ratio*
10.1% ▲ from 9.2% end of Q2 2022
NIBD/EBITDA
1.0x ▲ from -0.3x end of Q2 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 Products &
Service
MINING
4,215
▲ 5.7%
4,351
▲ 23.3%
372 8.6% (adj. 10.8%)
▲ 34.8%
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by Products &
Service
CEMENT
1,276
▼ -33.3%
1,670
▲ 11.5%
73 4.3%
▲ 135.5%
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by Products &
Service
NON
-CORE
ACTIVITIES
32
378
(113) -29.9%
12,919
11,155
5,901
5,523
H1 2022
H1 2023
Q2 2022
Q2 2023
9,733
12,415
5,027
6,399
H1 2022
H1 2023
Q2 2022
Q2 2023
609
567
307
332
H1 2022
H1 2023
Q2 2022
Q2 2023
3,989
4,215
Q2
2022
Q2
2023
3,529
4,351
Q2
2022
Q2
2023
276
372
Q2
2022
Q2
2023
65%
(Q2 2022: 60%)
35%
(Q2 2022: 40%)
Service
Products
1,912
1,276
Q2
2022
Q2
2023
1,498
1,670
Q2
2022
Q2
2023
31
73
Q2
2022
Q2
2023
52%
(Q2 2022: 57%)
48%
(Q2 2022: 43%)
Service
Products
-
32
Q2
2022
Q2
2023
-
378
Q2
2022
Q2
2023
-
(113)
Q2
2022
Q2
2023
34%
66%
Service
Products
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 6
Sustainability performance highlights
Safety (Total recordable injury rate)
Total recordable injury rate/million working
hours
Women managers
%
MissionZero developments
Through our MissionZero
programme, we aim to drive the
green transition in the mining
and cement industries. Our
customers continue to adopt
our innovative technologies to
reduce emissions, water
consumption and waste across
the full flowsheet.
Australian gold mine aims to reduce energy
consumption
A range of crushing, milling, flotation and de-
watering equipment will be supplied to a major
gold mine in Australia. The unique flotation
mechanism delivers the lowest power draw on
the market compared to similar systems. The
high-energy milling equipment will be opti-
mised via our mill scanner smart sensor tech-
nology and will incorporate lighter weight com-
posite wear liners. A high-tech vision system
across the circuit will further optimise productiv-
ity and reduce energy consumption.
Gearless mill drives for better energy effi-
ciency
A northern Chilean copper mine has ordered
several FLSmidth grinding mills as part of its
grinding capacity expansion plans, adding to its
existing FLSmidth mineral processing technol-
ogy. The order includes a SAG mill and two
Ball mills installed with gearless mill drives of-
fering improved efficiency, energy savings and
long-lasting quality.
Calcined clay technology gains recognition
The Danish financial media Børsen selected our
calcined clay technology as one of Denmark's
50 most innovative and green projects. In a se-
ries of cases, Børsen features initiatives from
various companies as inspiration for outstand-
ing sustainable practices. Our work within
scope 3 emissions reductions in cement pro-
duction has been recognised for its innovation,
scalability and impact on global CO2 reduc-
tions.
3.0
2023 Target: 1.2
▼ 1.5 deterioration
16.1
2023 Target: 16.3%
▲ 1.8%-points improvement
In Q2 2023, we saw a rise to the number of incidents,
particularly in North America. In response, we have im-
plemented both immediate and long-term mitigation
actions, and we will monitor the progress and success
of these closely. We continue to work with team lead-
ers and regional managers to ensure incident preven-
tion. Safety is a top priority at all times and our em-
ployees are trained to implement safe working
practices.
The share of women managers increased during Q2
2023. Dedicated activities such as diverse hiring
pools, diverse interview panels, managers taking a
more active role in hiring and promoting women plus
continued restructuring contributed to this improve-
ment especially in our products, engineering and R&D
functions.
Water withdrawal
m
3
Scope 1 & 2 greenhouse gas
emissions
tCO
2
e (market-based)
Spend with suppliers with science-
based targets
%
75,382
2023 Target: <205,093
▲ 5.1% improvement
19,742
2023 Target: <46,019*
▼ 9.7% deterioration
10.5%
2023 Target: 10%
▲ 2.8% points improvement
Water withdrawal in Q2 2023 decreased compared
to Q1 2023 and H1 2022, showing a good progress
towards our end-of-year target. The main reason for
the decrease is less usage of water during the wet
season in some regions, and less staff in some sites.
We continue to focus on initiatives to reduce water
withdrawal at our sites and improve water efficiency
in our processes.
CO2e emissions are higher compared to H1 2022. This
is due to the increased number of sites after the acqui-
sition of Mining Technologies. Q2 2023 emissions
were lower than in Q1 2023 due to more renewable
energy usage at three sites and less heating usage in
regions with warmer temperatures. We are performing
well and are on track to meet our end of year target.
Spend with suppliers who have set science-based tar-
gets has shown good development since 2022 and re-
mains above our 2023 target of 10%. We continue to
work closely with our suppliers to support them in set-
ting their own science-based targets.
*Scope 1&2 target has been updated since Q1 2023 to reflect the inclusion of Mining Technologies.
1.5
3.0
2022
H1
2023
14.3%
16.1%
2022
H1
2023
79,436
75,382
H1
2022
H1
2023
18,002
19,742
H1
2022
H1
2023
7.7%
10.5%
2022
H1
2023
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 7
*
Key figures
DKKm
Q2
2023
Q2
2022
H1
2023
H1
2022
2022
Income statement
Revenue
6,399
5,027
12,415
9,733
21,849
Gross profit
1,497
1,244
2,894
2,351
5,076
EBITDA
415
388
737
770
1,300
EBITA
332
307
567
609
943
Adjusted EBITA*
429
402
791
741
1,395
EBIT
267
235
444
457
619
Financial items, net
(73)
(5)
(89)
(34)
(67)
EBT
194
230
355
423
552
Profit for the period, continuing activities
123
137
226
260
351
Loss for the period, discontinued activities
(5)
(3)
(24)
(3)
1
Profit for the period
118
134
202
257
352
Orders
Order intake
5,523
5,901
11,155
12,919
24,644
Order backlog
20,544
19,461
23,541
Earning ratios
Gross margin
23.4%
24.7%
23.3%
24.2%
23.2%
EBITDA margin
6.5%
7.7%
5.9%
7.9%
5.9%
EBITA margin
5.2%
6.1%
4.6%
6.3%
4.3%
Adjusted EBITA margin*
6.7%
8.0%
6.4%
7.6%
6.4%
EBIT margin
4.2%
4.7%
3.6%
4.7%
2.8%
EBT margin
3.0%
4.6%
2.9%
4.3%
2.5%
Cash flow
Cash flow from operating activities (CFFO)
372
(214)
(32)
(284)
968
Acquisitions of property, plant and equipment
(34)
(18)
(58)
(33)
(88)
Cash flow from investing activities (CFFI)
(154)
(83)
(178)
(48)
(2,310)
Free cash flow
218
(297)
(210)
(332)
(1,342)
Free cash flow adjusted for acquisitions and
disposals of enterprises and activities
260
(281)
(168)
(316)
777
Balance sheet
Net working capital
2,542
1,805
1,893
Net interest-bearing debt (NIBD)
(1,214)
528
(726)
Total assets
29,217
24,509
29,845
CAPEX
215
163
424
Equity
10,715
11,033
10,787
Dividend to shareholders, paid
170
170
170
170
170
DKKm
Q2
2023
Q2
2022
H1
2023
H1
2022
2022
Financial ratios
Book-to-bill
86.3%
117.4%
89.9%
132.7%
112.8%
Order backlog / Revenue
83.7%
99.7%
107.7%
Return on equity**
3.8%
4.8%
3.3%
Equity ratio
36.7%
45.0%
36.1%
ROCE, average**
5.0%
8.4%
5.9%
Net working capital ratio, end**
10.1%
9.2%
7.8%
NIBD / EBITDA**
1.0x
-0.3x
0.6x
Capital employed, average**
18,041
14,830
15,888
Number of employees
10,234
10,055
10,977
Share ratios
Cash flow per share (CFPS), (diluted)
6.5
(3.8)
(0.6)
(5.0)
17.0
Earnings per share (EPS), (diluted)
2.0
2.5
3.6
4.8
6.5
Share price
330.2
174.5
251.7
Number of shares (1,000), end
57,650
57,650
57,650
Market capitalisation, end
19,036
10,060
14,511
Sustainability key figures
Scope 1 & 2 GHG emissions (tCO2e) market-based
19,742
18,002
36,767
Water withdrawal (m3)
75,382
79,436
178,064
Safety, TRIR Total Recordable Injury Rate (including
contractors)
3.0
1.3
1.5
Women managers
16.1%
14.1%
14.3%
Spend with suppliers with science-based targets
10.5%
n/a
7.7%
Other key figures
Quality, DIFOT Delivery In Full On Time
83.0%
81.2%
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 12 of this report.
*To reflect the underlying business performance, we present an adjusted EBITA margin to adjust for the integration costs of DKK 224m in H1
2023 (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 as two times the profit for H1.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 8
2023 financial guidance
Note: Numbers in brackets represent realised H1 2023 results
Mining
Cement
Non-Core Activities
Group
Guidance
July 2023
Guidance
August 2023
Revenue
(DKKbn)
16.0-17.0
Around 17.0
(DKK 8.5bn)
Adj.
EBITA
margin
9.0-10.0%
10.0-11.0%
(10.2%)
Guidance
July 2023
Guidance
August 2023
Revenue
(DKKbn)
Around 6.0
Around 6.0
(DKK 3.3bn)
EBITA
margin
5.5-6.5%
5.5-6.5%
(4.3%)
Guidance
July 2023
Guidance
August 2023
Revenue
(DKKbn)
0.8-1.0
0.8-1.0
(DKK 627m)
EBITA
Loss of ~DKK
250-350m
Loss of ~DKK
250-350m
(Loss of DKK
220m)
Guidance
July 2023
Guidance
August 2023
Revenue
(DKKbn)
23.0-24.0
Around 24.0
(DKK 12.4bn)
Adj.
EBITA
margin
6.5-7.5%
7.5-8.5%
(6.4%)
EBITA
margin
4.5-5.5%
5.5-6.5%
(4.6%)
Following a strong 2022, we expect mining
market activity levels in 2023 to remain largely
stable versus 2022 with some delays in larger
investment decisions, mainly within Products.
The former Mining Technologies business is
expected to contribute less than DKK 3bn in
revenue in 2023 and is expected to have a di-
lutive effect on the full year 2023 adjusted
Mining EBITA margin of less than 2%-points.
Guidance for Adjusted EBITA margin includes
adjustments for integration costs of around
DKK 550m for the full year 2023.
The short- to mid-term outlook for the cement
industry is increasingly impacted by a slow-
down in market demand.
Cement EBITA is positively impacted by a one-
off net gain of around DKK 100m from the sale
of the Advanced Filtration Technologies filter
media business. The underlying operational
performance of Cement is expected to remain
unchanged.
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 seg-
ments.
Guidance for Adjusted EBITA margin includes
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, poten-
tial recession and geopolitical
turmoil.
Financial guidance for 2023, as set out in the Company Announcement no. 14-2023 on 8 August 2023, is maintained. Guidance for full year
2023 reflects continued improvement of the underlying legacy FLSmidth Mining business and integration of Mining Technologies.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 9
Market outlook and trends in Q2 2023
Q2 2023 continued to show an active mining mar-
ket in major commodities, specifically in lithium,
gold and copper. This has been partly offset by
continued delays in large capital investment deci-
sions due to political uncertainties and permitting
issues in certain markets as well as prevailing
macroeconomic uncertainty. The pipeline how-
ever remains encouraging supporting the long-
term demand for minerals across all regions, par-
ticularly within copper, lithium and gold.
The service market remained stable and active
with continued healthy influx of inquiries as cus-
tomers aim to optimise operations and maximise
production volumes, partly offset by some timing
delays within larger capital spares.
Order intake development in Q2 2023
Q2 2023 order intake increased by 6% to DKK
4,215m. Excluding currency effects the order in-
take increased by 12%.
Compared to Q2 2022, Mining order intake in Q2
2023 includes Mining Technologies but does not
include Non-Core Activities. If excluding a high-
level estimate of the impact from those changes
the underlying order intake in the quarter in-
creased approximately 1% compared to Q2 2022.
Products order intake increased 11% compared to
Q2 2022. The second quarter of 2023 included
two large, announced product orders with a com-
bined value of around DKK 785m, whereas the
comparative quarter included one large, an-
nounced product order at around DKK 270m.
The higher Products order intake in Q2 2023 re-
flects continued healthy market conditions, partly
offset by our continued de-risking approach and
some customers delaying capex investments.
Service order intake increased by 3% in Q2 2023
supported by the acquisition of Mining Technolo-
gies. The increase was mainly driven by spare
and wear parts in North America and Asia-Pacific
as well as good Upgrade sales in North America,
South America and Asia-Pacific. This reflects con-
tinued focus on the larger post-acquisition in-
stalled base and customers' needs for improving
productivity. Service order intake growth was
partly offset by timing of capital spares and our ef-
forts of exiting low-margin basic labour services as
our focus remains on maximising customers’
equipment reliability and improving energy effi-
ciency.
During the quarter, Service and Products order in-
take represented 62% and 38% of Mining order in-
take, compared to 64% and 36% in Q2 2022, re-
spectively, reflecting our strong service focus.
Order intake development in H1 2023
H1 2023 order intake, compared to H1 2022, de-
creased by 8% to DKK 8,392m. Excluding cur-
rency effects order intake decreased by 6%.
Compared to H1 2022, Mining order intake in H1
2023 includes Mining Technologies but does not
include Non-Core Activities or Russia. If excluding
a high-level estimate of the impact from those
changes the underlying order intake in H1 2023
declined approximately 12%.
Product order intake decreased by 29% due to a
continued delay in large capital investments due
to political uncertainties and permitting issues and
an extraordinary strong Products order intake in
H1 2022 that included five large product orders
with a combined value of around DKK 1.6bn. H1
2023 included three large, announced product or-
ders with a combined value of approximately DKK
1.1bn.
Service order intake increased by 9% in H1 2023
supported by the acquisition of Mining Technolo-
gies.
During the first half of the year, Service and Prod-
ucts order intake represented 66% and 34% of
Mining order intake, compared to 55% and 45% in
H1 2022.
Mining financial performance
Order intake
split per region Q2 2023
*ECANA refers to the region of Europe, Central Asia and North
Africa.
Order intake
split by Products & Service Q2 2023
Order intake
split by commodity Q2 2023
Mining financial performance
21%
31%
7%
9%
32%
NAMER
SAMER
ECANA*
SSAMESA
APAC
62%
(Q2 2022: 64%)
38%
(Q2 2022: 36%)
Service
Products
41%
25%
6%
1%
7%
20%
Copper
Gold
Coal
Fertilizer
Iron ore
Other
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 10
Revenue development in Q2 2023
Q2 2023 revenue increased by 23%. Excluding
currency effects revenue increased by 29% and
by 39% excluding Russia compared to Q2 2022.
Compared to Q2 2022, Mining revenue in Q2
2023 reflects our exit of Russia, the establishment
of the separate Non-Core Activities segment and
the acquisition of Mining Technologies. If exclud-
ing a high-level estimate of the impact from these
factors, the underlying revenue growth in the
quarter was approximately 16%.
Revenue growth was mainly driven by the Service
business, fully in line with our ongoing transfor-
mation strategy. Service revenue increased by
33% in the quarter and accounted for 65% of the
total revenue in the quarter. This was mainly
driven by a continued healthy demand for spare
and wear parts especially in North and South
America. Service revenue growth was further sup-
ported by the acquisition of Mining Technologies.
The Products business’ share of revenue de-
creased from 40% in Q2 2022 to 35% in Q2 2023,
reflecting our de-risking portfolio strategy as well
as our increased service focus. Products revenue
increased by 8% supported by the acquisition of
Mining Technologies.
Gross profit development in Q2 2023
Gross profit increased by 26% to DKK 1,107m from
DKK 876m in Q2 2022. The corresponding gross
margin increased to 25.4% as a result of the
higher Service revenue, our de-risking strategy
and scalability, partly offset by integration costs
related to Mining Technologies.
EBITA development in Q2 2023
Adjusted for integration costs of DKK 97m, the ad-
justed EBITA margin was 10.8% in Q2 2023. The
adjusted EBITA margin was realised with an ap-
proximated dilutive effect from the acquisition of
Mining Technologies of less than 2%-points in the
quarter. Including integration costs, the EBITA
margin increased to 8.6% from 7.8% in Q2 2022.
The number of employees in Mining remains
higher than in Q2 2022 mainly due to Mining
Technologies. Since the end of Q3 2022, the num-
ber of employees in Mining has however been re-
duced by more than 1,400 employees. The reduc-
tion reflects the establishment of the Non-Core
Activities segment as of Q4 2022 and the ongoing
synergy takeout related to the Mining Technolo-
gies' integration.
Revenue development in H1 2023
Mining revenue increased by 26% and 42% ex-
cluding Russia compared to H1 2022. If excluding
a high-level estimate of the impact from our exit of
Russia, the establishment of the Non-Core Activi-
ties segment and the acquisition of Mining Tech-
nologies, the underlying revenue growth in H1
2023 was approximately 22%, compared to H1
2022. The increase was mainly driven by the Ser-
vice business.
Gross profit development in H1 2023
Gross profit increased by 33% to DKK 2,172m in H1
2023. The corresponding gross margin of 25.4% is
1.2%-points above H1 2022 as a result of good
margin execution and higher Service revenue.
EBITA development in H1 2023
Adjusted for integration costs of DKK 224m, the
adjusted EBITA margin was 10.2% in H1 2023.
Mining financial performance
Growth in Mining in Q2 2023 (vs.
Q2 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
Q2
2021
Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2
Products
Service
EBITA margin %
Adj. EBITA margin %
Order intake
Revenue
Organic*
12%
29%
Currency
-6%
-6%
Total growth
6%
23%
*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 Q2
2022 includes Non-Core Activities.
Mining
(DKKm)
Q2 2023
Q2 2022
Change (%)
H1 2023
H1 2022
Change (%)
Order intake
4,215
3,989
6%
8,392
9,146
-8%
- Hereof service order intake
2,615
2,542
3%
5,517
5,072
9%
- Hereof products order intake
1,600
1,447
11%
2,875
4,074
-29%
Order backlog
13,472
12,544
7%
13,472
12,544
7%
Revenue
4,351
3,529
23%
8,536
6,762
26%
- Hereof service revenue
2,833
2,123
33%
5,533
3,943
40%
- Hereof products revenue
1,518
1,406
8%
3,003
2,819
7%
Gross profit
1,107
876
26%
2,172
1,636
33%
Gross margin
25.4%
24.8%
25.4%
24.2%
Adjusted EBITA
469
371
26%
869
657
32%
Adjusted EBITA margin
10.8%
10.5%
10.2%
9.7%
EBITA
372
276
35%
646
525
23%
EBITA margin
8.6%
7.8%
7.6%
7.8%
Number of employees
6,742
6,314
7%
6,742
6,314
7%
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 11
Market outlook and trends in Q2 2023
Following relatively stable market conditions in
the beginning of the year, the cement market has
been increasingly impacted by a slow-down in
market demand during the second quarter of the
year.
While globally the long-term trend towards more
sustainable cement production remains, which
supports the long-term service potential, the short-
to mid-term market outlook has deteriorated. As a
result, cement producers are faced with difficulties
in securing adequate budgets for new expansions
leading to significant delays on major investment
decisions.
Market conditions continue to vary across regions.
While certain markets like India and the US have
shown increased demand for new capacity due to
infrastructure expansions and modernisation
plans, markets like China and Europe currently re-
main weaker.
Order intake development in Q2 2023
Cement order intake in Q2 2023 declined by 33%
to DKK 1,276m. The underlying margins in the
pipeline remain at stable levels and the profitabil-
ity of the order intake is improving across all offer-
ings.
Compared to Q2 2022, the decline in order intake
is mainly driven by a 43% decrease in Products or-
der intake. Q2 2022 included one large, an-
nounced product order at more than DKK 400m,
whereas Q2 2023 did not include any large, an-
nounced orders. This reflects our continuing de-
risking approach and our strategy of not accept-
ing product orders which do not support our ser-
vice business or green ambitions.
We continue to support customers through a
blend of Service, Products, Upgrades & Retrofits
and increased green offerings without engaging in
high-risk projects. In addition, we continue to focus
on standardisation and modularisation both within
Service and Products.
Service order intake decreased by 24% compared
to Q2 2022. The decrease reflected the challeng-
ing market conditions affected by the Ukrainian
war, inflation and interest rates.
In our main markets, our Service business has
maintained at a satisfactory performance through-
out Q2 2023. However, in some markets there has
been a slow-down in market demand during the
quarter.
During the quarter Service and Products orders
represented 59% and 41% of Cement order intake
compared to 52% and 48% in Q2 2022, respec-
tively, in line with our de-risking strategy and ser-
vice focus.
Order intake development in H1 2023
Cement order intake in H1 2023 declined by 31%.
This is mainly due to a 43% decrease in Products
order intake compared to H1 2022.
Service order intake decreased by 19% compared
to H1 2022 reflecting the current market condi-
tions. In the main parts of our main markets, we
have seen some growth in the Service order in-
take versus H1 2022, offset by a decline in mar-
kets we decided to serve through agents and/or
exit.
Cement financial performance
Order intake
split per region Q2 2023
Order intake
split by Products & Service Q2 2023
33%
7%
15%
38%
7%
NAMER
SAMER
ECANA
SSAMESA
APAC
59%
(Q2 2022: 52%)
41%
(Q2 2022: 48%)
Service
Products
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 12
Revenue development in Q2 2023
Q2 2023 revenue increased by 11%. Excluding cur-
rency effects revenue increased by 14% driven by
the Products business.
Products revenue increased by 23% compared to
Q2 2022 driven by good order backlog execution.
Service revenue increased by 2% despite chal-
lenging market conditions and the implementation
of the new simplified operating model. Service ac-
counted for 52% of revenue in Q2 2023.
Gross profit development in Q2 2023
Gross profit increased by 13% to DKK 416m, re-
flecting good execution on higher margin orders.
The corresponding gross margin of 24.9% was
largely in line with Q2 2022, impacted by footprint
optimisation costs related to the implementation
of the new operating model.
EBITA development in Q2 2023
Cement EBITA continued the positive trend in im-
proving profitability and increased by 135% com-
pared to Q2 2022. EBITA amounted to DKK 73m
in Q2 2023 compared to DKK 31m in Q2 2022, re-
flecting continued focus on higher margin orders
and cost improvements. The corresponding EBITA
margin improved by 2.2%-points to 4.3% in Q2
2023.
The number of employees in Cement has been re-
duced by around 690 compared to Q2 2022. The
reduction reflects the continued global footprint
optimisation and operating model simplification to
improve operations and ensure sustainable profit-
ability.
Revenue development in H1 2023
Cement revenue increased by 9% to DKK 3,252m
in H1 2023 mainly driven by Products revenue.
Service and Products revenue increased by 4%
and 16%, respectively.
Gross profit development in H1 2023
Gross profit increased by 10% to DKK 788m in H1
2023. The corresponding gross margin of 24.2%
was in line with H1 2022.
EBITA development in H1 2023
EBITA increased by 68% in H1 2023 with a corre-
sponding EBITA margin of 4.3%, reflecting good
execution on higher margin orders, partly offset
by the effect of the current market conditions.
Cement financial performance
Growth in Cement in Q2 2023 (vs.
Q2 2022)
Revenue and EBITA margin
DKKm EBITA margin %
-4%
-2%
0%
2%
4%
6%
8%
10%
0
500
1,000
1,500
2,000
Q2
2021
Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2
Service Products
EBITA margin %
Order intake
Revenue
Organic
-31%
14%
Currency
-2%
-3%
Total growth
-33%
11%
Cement
(DKKm)
Q2 2023
Q2 2022
Change (%)
H1 2023
H1 2022
Change (%)
Order intake
1,276
1,912
-33%
2,620
3,773
-31%
- Hereof service order intake
752
987
-24%
1,565
1,931
-19%
- Hereof products order intake
524
925
-43%
1,055
1,842
-43%
Order backlog
5,658
6,917
-18%
5,658
6,917
-18%
Revenue
1,670
1,498
11%
3,252
2,971
9%
- Hereof service revenue
870
849
2%
1,760
1,687
4%
- Hereof products revenue
800
649
23%
1,492
1,284
16%
Gross profit
416
368
13%
788
715
10%
Gross margin
24.9%
24.6%
24.2%
24.1%
EBITA
73
31
135%
141
84
68%
EBITA margin
4.3%
2.1%
4.3%
2.8%
Number of employees
3,053
3,741
-18%
3,053
3,741
-18%
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 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 to a large extent are loss-making
mining activities. Activities in the segment will be
fully exited either by way of divestment or wind-
down of the order backlog.
In June 2023, FLSmidth signed an Asset Purchase
& Transfer Agreement with KOCH Solutions, who
will acquire a mix of intellectual property, order
backlog, employees and facilities from the Non-
Core Activities segment. Assuming completion of
the transaction, it is expected that the Non-Core
Activities segment will be exited around end of
2024 (previously towards end of 2025).
Order intake development in Q2 2023
Order intake for Non-Core Activities amounted to
DKK 32m. This related to contractual obligations
and parts already in stock. Compared to Q1 2023,
order intake in Q2 2023 decreased by 71%. Ser-
vice and Products orders represented 66% and
34% of Non-Core Activities order intake in Q2
2023, respectively.
Order backlog development in Q2 2023
The order backlog amounted to around DKK 1.4bn
by end of Q2 2023. This represented a decrease
of around DKK 0.7bn compared to Q1 2023 and a
decrease of around DKK 1.5bn compared to Q4
2022. The decrease reflected the execution of the
order backlog as well as continued re-scoping
and contract terminations. The majority of the or-
der backlog remains destined for countries within
APAC and ECANA.
Revenue development in Q2 2023
Non-Core Activities revenue in Q2 2023
amounted to DKK 378m. Products and Service
accounted for 66% and 34% of total revenue, re-
spectively.
Gross profit development in Q2 2023
Gross profit was negative as expected, reflecting
the general volatility and operationally loss-mak-
ing nature of the Non-Core Activities business. The
corresponding gross margin amounted to -6.9%.
EBITA development in Q2 2023
EBITA amounted to DKK -113m with a correspond-
ing EBITA margin of -29.9% driven by the negative
gross profit and costs related to the exit.
The number of employees amounted to 439 as of
end of Q2 2023, which is a decline of 61 employ-
ees compared to end of Q1 2023.
Order intake development in H1 2023
Order intake for Non-Core Activities amounted to
DKK 143m in H1 2023. Service and Products orders
represented 71% and 29%, respectively.
Revenue development in H1 2023
Non-Core Activities revenue amounted to DKK
627m in H1 2023. Service and Products revenue
represented 35% and 65%, respectively.
Gross profit development in H1 2023
Gross profit amounted DKK -66m in H1 2023 with
a corresponding gross margin of -10.5%
EBITA development in H1 2023
EBITA in H1 2023 amounted to DKK -220m with a
corresponding EBITA margin of -35.1% reflecting
the operationally loss-making nature of the Non-
Core Activities business and costs related to the
exit.
Non-Core Activities financial performance
Order intake
split per region Q2 2023
Order intake
split by commodity Q2 2023
6%
41%
16%
9%
28%
NAMER
SAMER
ECANA
SSAMESA
APAC
Non-Core Activities
(DKKm)
Q2 2023
H1 2023
Order intake
32
143
- Hereof service order intake
21
101
- Hereof products order intake
11
42
Order backlog
1,414
1,414
Revenue
378
627
- Hereof service revenue
130
222
- Hereof products revenue
248
405
Gross profit
(26)
(66)
Gross margin
-6.9%
-10.5%
EBITA
(113)
(220)
EBITA margin
-29.9%
-35.1%
Number of employees
439
439
3%
8%
70%
19%
Copper
Coal
Iron ore
Other
Minerals
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 14
Growth
Group order intake in Q2 2023
decreased 6% mainly driven by
Products. Group revenue
increased 27% driven primarily
by the Mining service business
supported by the acquisition of
Mining Technologies.
Order intake
Q2 2023 order intake declined by 6% to DKK
5,523m. Excluding currency effects order intake
declined by 1% compared to Q2 2022.
Compared to Q2 2022, Group order intake in Q2
2023 includes Mining Technologies. If excluding a
high-level estimate of the impact from Mining
Technologies the underlying order intake in the
quarter declined approximately 14%.
Service order intake decreased by 4% compared
to Q2 2022, reflecting current service markets in
Cement. Service represented 61% of total order in-
take in Q2 2023 against 60% in Q2 2022. Prod-
ucts order intake decreased by 10% compared to
Q2 2022, reflecting our de-risking strategy and
prevailing macroeconomic uncertainty.
Order backlog and maturity
The order backlog decreased 7% to DKK 20.5bn
compared to the prior quarter (Q1 2023: DKK
22.0bn) due to strong execution of the order
backlog and the exit of our Russian and Belarusian
activities as well as wind-down of our Non-Core Ac-
tivities. Outstanding order backlog related to Rus-
sian and Belarusian contracts declined to DKK
0.2bn at the end of Q2 2023 (end of Q1 2023: DKK
0.3bn) reflecting successful contract terminations.
The remaining orders are suspended by FLSmidth
and are due to uncertainty included in the ‘2025
and beyond’ maturity. The Non-Core Activities
backlog represented around DKK 1.4bn at the end
of Q2 2023.
Backlog
maturity
Mining
Cement
Non-Core
Activities
FLSmidth
Group
2023
33%
27%
20%
31%
2024
61%
49%
66%
58%
2025 & beyond
6%
24%
14%
11%
Revenue
Revenue increased by 27% to DKK 6,399m. Ex-
cluding currency effects revenue increased by
32% and by 39% excluding Russia compared to
Q2 2022.
If excluding a high-level estimate of the impact
from Russia and Mining Technologies the underly-
ing revenue growth in the quarter was approxi-
mately 12%. The quarter included DKK 378m in
revenue from Non-Core Activities.
The increase was driven by a 29% increase in Ser-
vice revenue and 25% increase in Products reve-
nue compared to Q2 2022. Service revenue ac-
counted for 60% of total revenue in the quarter,
compared to 59% in Q2 2022.
Consolidated financial performance Q2 2023
Growth in order intake in Q2 2023
(vs. Q2 2022)
Growth in revenue in Q2 2023 (vs.
Q2 2022)
Order intake
DKKm
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
29%
14%
32%
Currency
-6%
-3%
-5%
Total growth
23%
11%
n/a
27%
*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 Q2
2022 includes Non-Core Activities.
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
12%
-31%
-1%
Currency
-6%
-2%
-5%
Total growth
6%
-33%
n/a
-6%
*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 Q2
2022 includes Non-Core Activities.
Group – continued activities
(DKKm)
Q2 2023
Q2 2022
Change (%)
H1 2023
H1 2022
Change (%)
Order intake
5,523
5,901
-6%
11,155
12,919
-14%
- Hereof service order intake
3,388
3,529
-4%
7,183
7,003
3%
- Hereof products order intake
2,135
2,372
-10%
3,972
5,916
-33%
Order backlog
20,544
19,461
6%
20,544
19,461
6%
Revenue
6,399
5,027
27%
12,415
9,733
28%
- Hereof service revenue
3,833
2,972
29%
7,515
5,630
33%
- Hereof products revenue
2,566
2,055
25%
4,900
4,103
19%
Gross profit
1,497
1,244
20%
2,894
2,351
23%
Gross margin
23.4%
24.7%
23.3%
24.2%
SG&A cost
(1,082)
(856)
26%
(2,157)
(1,581)
36%
SG&A ratio
16.9%
17.0%
17.4%
16.2%
Adjusted EBITA
429
402
7%
791
741
7%
Adjusted EBITA margin
6.7%
8.0%
6.4%
7.6%
EBITA
332
307
8%
567
609
-7%
EBITA margin
5.2%
6.1%
4.6%
6.3%
Number of employees
10,234
10,055
2%
10,234
10,055
2%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q2
2021
Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2
Service order intake Products order intake
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 15
Profit
Gross profit increased 20%
driven by the 27% increase in
revenue compared to Q2 2022.
Adjusted EBITA increased 7%
reflecting positive impact from
our key transformation efforts.
Gross profit and margin
Gross profit increased by 20% to DKK 1,497m,
driven by the higher revenue level. The corre-
sponding gross margin of 23.4% was impacted by
the new simplified operating model in Cement, the
integration cost of Mining Technologies and the
ongoing handling of our Non-Core Activities.
In Q2 2023, total research and development costs
(R&D) amounted to DKK 96m, representing 1.5% of
revenue (Q2 2022: 1.6%).
Research & development costs
(DKKm)
Q2 2023
Q2 2022
Production costs
37
44
Capitalised
59
37
Total R&D
96
81
SG&A costs
Sales, general and administrative costs (SG&A)
and other operating items increased 26% com-
pared to Q2 2022, mainly due to the cost base
and integration costs related to Mining Technolo-
gies in Q2 2023. On the contrary, currencies had
a positive impact on SG&A of DKK 27m in the
quarter.
SG&A costs as a percentage of revenue was
16.9% in line with the comparative quarter, reflect-
ing the increased revenue offset by the additional
costs mainly related to Mining Technologies.
EBITA and margin
Excluding integration costs of DKK 97m related to
the acquisition of Mining Technologies, adjusted
Group EBITA margin was 6.7% in Q2 2023. Includ-
ing integration costs, the EBITA margin was 5.2%
in Q2 2023 compared to 6.1% in Q2 2022.
Amortisation of intangible assets amounted to
DKK 65m (Q2 2022: DKK 72m). The effect of pur-
chase price allocations amounted to DKK 11m (Q2
2022: DKK 14m) and other amortisation to DKK
54m (Q2 2022: DKK 58m).
Financial items
Net financial items amounted to DKK -73m (Q2
2022: DKK -5m), of which net interest amounted to
DKK -20m (Q2 2022: DKK -11m) and foreign ex-
change and fair value adjustments amounted to
DKK -53m (Q2 2022: DKK 8m).
Tax
Tax in Q2 2023 totalled DKK -71m (Q2 2022:
DKK -93m), corresponding to an effective tax rate
of 36.6% (Q2 2022: 40.4%).
Profit for the period
Profit in Q2 2023 was a gain of DKK 118m (Q2
2022: DKK 134m). Discontinued activities had a
loss of DKK 5m in Q2 2023 (Q2 2022: DKK -3m).
Return on capital employed
Return on capital employed (ROCE) decreased to
5.0% (Q2 2022: 8.4%) due to a decreased EBITA
as well as an increase in average capital em-
ployed from the acquisition of Mining Technolo-
gies and net working capital in general.
Employees
The number of employees decreased by 111 to
10,234 at the end of Q2 2023, compared to 10,345
at the end of Q1 2023. The decrease is a direct re-
sult of workforce reductions carried out in both
Mining and Cement in Q2 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
Q2
2021
Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2
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
Q2
2021
Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2
Revenue
EBITA margin %
Adj. EBITA margin %
(500)
(300)
(100)
100
300
500
700
Q2
2021
Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2
Cement Mining Mining adj. NCA
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 16
Capital
In line with expectations, cash
flow from operations was positive
in the quarter and the net
working capital ratio decreased
to 10.1% in Q2 2023.
Net working capital
Net working capital decreased DKK 71m to DKK
2,542m at the end of Q2 2023 (end of Q1 2023:
DKK 2,613m). The primary drivers for the decrease
in the quarter were good cash collection from
trade receivables and work in progress and from
the increase in trade payables partly offset by
lower prepayments from customers. The corre-
sponding net working capital ratio decreased from
10.6% of revenue in Q1 2023 to 10.1% of revenue in
Q2 2023.
Utilisation of supply chain financing increased to
DKK 648m in Q2 2023 (Q1 2023: 626m).
Cash flow from operating activities
The increase in cash flow from operations (CFFO)
in Q2 2023 amounted to DKK 372m (Q2 2022:
DKK -214m). This relates to a positive impact in
change in provision of DKK 174m as well as the
decrease in net working capital, which positively
impacted CFFO by DKK 62m. Discontinued activi-
ties impacted CFFO by DKK 25m in Q2 2023 (Q2
2022: DKK -19m).
Cash flow from investing activities
Cash flow from investing activities amounted to
DKK -154m (Q2 2022: DKK -83m).
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK -180m (Q2 2022: DKK -26m) due to dividend
paid out amounting to DKK -170m.
Free cash flow
Free cash flow (cash flow from operating and in-
vesting activities) adjusted for business acquisi-
tions and disposals amounted to DKK 260m in the
quarter (Q2 2022: DKK -281m) as a result of the
decrease in net working capital.
Net interest-bearing debt
Net interest-bearing debt (NIBD) by 30 June
2023 increased to DKK 1,214m (Q1 2023: DKK
1,187m). The financial gearing end of Q2 2023 re-
mained at 1.0x (Q1 2023: 1.0x).
Financial position
By the end of Q2 2023, FLSmidth had DKK 6.3bn
of available committed credit facilities of which
DKK 3.7bn was undrawn. The committed credit fa-
cilities have a weighted average time to maturity
of 4.8 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 0.8bn of uncommit-
ted credit facilities.
Equity ratio
Equity at the end of Q2 2023 increased to DKK
10,715m (end of Q1 2023: DKK 10,611m), driven by
currency adjustments and dividend paid out
amounting to DKK 170m. The equity ratio was
36.7% (Q1 2023: 35.8%).
Cash flow
DKKm
Net interest-bearing debt
DKKm
Net working capital
DKKm NWC%
(1,000)
0
1,000
2,000
Q2
2021
Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2
Net interest-bearing debt (NIBD)
0%
2%
4%
6%
8%
10%
12%
0
500
1,000
1,500
2,000
2,500
3,000
Q2
2021
Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2
Net working capital
Net working capital ratio, end
(600)
(400)
(200)
0
200
400
600
800
1,000
Q2
2021
Q3 Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2
Cash flow from operating activities
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 17
GROWTH
Order intake
Order intake decreased 14% to DKK 11,155m and
by 11% excluding Russia compared to H1 2022.
Service order intake increased by 3% driven by
Mining. Products order intake decreased by 33%,
driven by both Mining and Cement.
Compared to H1 2022, Group order intake in H1
2023 includes Mining Technologies, but does not
include Russia. If excluding a high-level estimate
of the impact from Mining Technologies the under-
lying order intake in H1 2023 declined approxi-
mately 21%.
Mining Service orders increased by 9% largely
supported by the acquisition of Mining Technolo-
gies. Mining Products orders decreased by 29%
due to a strong Products order intake in H1 2022
that included five large, announced product or-
ders with a combined value of around DKK 1.6bn
compared to three large Mining Products orders
announced in H1 2023 with a combined value of
around DKK 1.1bn. Excluding currency effects, Min-
ing order intake decreased 6% in H1 2023 com-
pared to H1 2022.
Cement order intake decreased by 31%, reflecting
our de-risking strategy, challenging market condi-
tions and one large, announced order of more
than DKK 400m in the comparative quarter.
Order backlog
The order backlog increased 6% to DKK 20,544m
by end of Q2 2023 and includes Russian con-
tracts at a total value of approximately DKK
0.2bn. The higher backlog is related to Mining,
which increased by 7%. Cement order backlog de-
creased by 18%.
Revenue
Revenue grew by 28% to DKK 12,415m in the first
half year of 2023 comprising an 28% increase in
Mining and an 10% increase in Cement. Excluding
Russia revenue grew by 39% compared to H1
2022.
If excluding a high-level estimate of the impact
from Russia and Mining Technologies the underly-
ing revenue growth in H1 2023 was approximately
16%. In line with expectations, H1 2023 included
DKK 627m in revenue from Non-Core Activities.
Growth in Mining revenue comprised a 40% in-
crease in Service revenue and a 7% increase in
Products revenue. In the first half year of 2023,
Cement continued the positive trend from Q1 2023
and showed growth of 4% and 16% in Service and
Products revenue, respectively.
PROFIT
Gross profit and margin
Gross profit in the first half year of 2023 increased
by 23% to DKK 2,894m. The corresponding gross
margin decrease to 23.3% was impacted by costs
related to the implementation of the new simpli-
fied operating model in Cement, the integration
cost of Mining Technologies and the ongoing han-
dling of our Non-Core Activities.
In the first half year of 2023, Research and Devel-
opment costs were DKK 178m (H1 2022: 146m), of
which DKK 89m were capitalised (H1 2022: 64m)
and the balance reported as production costs.
EBITA and margin
Adjusted EBITA of DKK 791m exclude integration
costs of DKK 224m related to the acquisition of
Mining Technologies. The corresponding adjusted
Group EBITA margin was 6.4% in H1 2023. Includ-
ing integration costs, EBITA was 567m with an
EBITA margin of 4.6% in H1 2023 compared to
6.3% in H1 2022.
Financial items
Net financial items amounted to DKK -89m (H1
2022: DKK -34m), of which foreign exchange and
fair value adjustments amounted to DKK -37m (H1
2022: DKK -1m). Net interest amounted to DKK
-52m (H1 2022: DKK -33m).
Tax
Tax for H1 2023 totalled DKK -129m (H1 2022: DKK
-163m), corresponding to an effective tax rate of
36.3% (H1 2022: 38.5%).
Profit for the period
Profit for the period was a gain of DKK 202m. Con-
tinuing activities declined to DKK 226m from DKK
260m in H1 2022. Discontinued activities reported
a DKK 24m loss in H1 2023, compared to a DKK
3m loss in the first half year of 2022.
Earnings per share
Earnings per share (diluted) decreased to DKK 3.6
from DKK 4.8 in the first half year of 2022.
Consolidated financial performance H1 2023
Growth in order intake in H1 2023
(vs. H1 2022)
Growth in revenue in H1 2023 (vs.
H1 2022)
EBITA split by segment
DKKm
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
28%
10%
30%
Currency
-2%
-1%
-2%
Total growth
26%
9%
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 Q2
2022 includes Non-Core Activities.
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
-6%
-30%
-12%
Currency
-2%
-1%
-2%
Total growth
-8%
-31%
n/a
-14%
*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 Q2
2022 includes Non-Core Activities.
(200)
300
800
1,300
H1 2022 H1 2023
Cement Mining Mining adj. NCA
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 18
CAPITAL
Net working capital
Net working capital increased in H1 2023 to DKK
2,542m (end of 2022: DKK 1,893m). In line with ex-
pectations, the corresponding net working capital
ratio was 10.1% of 12-months trailing revenue, com-
pared to 7.8% at the end of 2022.
The increase related primarily to an increase in
net work in progress driven by higher execution of
Products orders and to a decrease in prepay-
ments from customers due to the de-risking strat-
egy creating a slow-down in Products orders.
Cash flow from operating activities
Cash flow from operating activities increased to
DKK –32m (H1 2022: DKK -284m), due to the posi-
tive impact of DKK 347m in change in provision
and a smaller cash outflow of DKK 632m to work-
ing capital in the period compared to the cash out-
flow of DKK 785m in the comparison period H1
2022.
Cash flow from investing activities
Cash flow used for investments was DKK -178m
compared to DKK -48m in the first half year of
2022.
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK -99m as paid dividend of DKK 170m and re-
payment of lease liabilities was partially funded
by increased net interest-bearing debt.
Free cash flow
Free cash (cash flow from operating and investing
activities) adjusted for business acquisitions and
disposals amounted to DKK -168m in H1 2023 (H1
2022: DKK -316m).
Balance sheet
Total assets decreased to DKK 29,217m by 30
June 2023 (end of 2022: DKK 29,845), primarily
related to decreased net working capital assets
and cash.
Net interest-bearing debt
Net interest-bearing debt (NIBD) by 30 June 2023
increased to DKK 1,214m (end of 2022: DKK 726m).
The increase in debt was primarily due to the in-
crease in working capital in the first half of 2023.
The Group’s financial gearing in H1 2023 in-
creased to 1.0x (end of 2022: 0.6x) following the
increase in NIBD.
Equity
Equity at end H1 2023 decreased to DKK 10,715m
(end of 2022: DKK 10,787m). The decrease was
driven by currency adjustments and dividend paid
out amounting to DKK 170m.
Treasury shares
The holding of treasury shares as of 30 June
2023 was unchanged from year end 2022 and
amounts to 913,828 shares, representing 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
-300
-100
100
H1 2022 H1 2023
Cash flow from operating activities
(200)
(100)
0
100
H1 2022 H1 2023
Cash flow from investing activities
-500
0
500
H1 2022 H1 2023
Free cash flow
Free cash flow adjusted for net business acquisitons
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 20
Income statement
Statement of comprehensive income
Notes
DKKm
Q2
2023
Q2
2022
H1
2023
H1
2022
3, 4
Revenue
Production costs
(4,902 )
(3,783 )
(9,521 )
(7,382 )
Gross profit
Sales costs
(425 )
(394 )
(858 )
(736 )
Administrative costs
(670 )
(470 )
(1,337 )
(881 )
Other operating income
EBITDA
Depreciation and impairment of property,
plant and equipment and lease assets
(83 )
(81 )
(170 )
(161 )
EBITA
Amortisation and impairment
of intangible assets
(65 )
(72 )
(123 )
(152 )
EBIT
Financial income
Financial costs
(440 )
(396 )
(880 )
(762 )
EBT
Tax for the period
(71 )
(93 )
(129 )
(163 )
Profit for the period, continuing activities
3, 7
Profit (loss) for the period, discontinued activities
(5 )
(3 )
(24 )
(3 )
Profit for the period
Attributable to:
Shareholders in FLSmidth & Co. A/S
Minority interests
(8 )
(1 )
(15 )
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
Q2
2023
Q2
2022
H1
2023
H1
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
(25 )
(152 )
Cash flow hedging:
- Value adjustments for the period
(52 )
(52 )
- Value adjustments transferred to work in progress
Tax of total other comprehensive income
(2 )
(13 )
Other comprehensive income for the period after tax
(18 )
(118 )
Comprehensive income for the period
Attributable to:
Shareholders in FLSmidth & Co. A/S
Minority interests
(6 )
(15 )
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 21
Cash flow statement
Notes
DKKm
Q2
2023
Q2
2022
H1
2023
H1
2022
EBITDA
3
EBITDA, discontinued activities
(4 )
(3 )
(13 )
(4 )
Adjustment for gain on sale of property, plant and
equipment and other non-cash items
(9 )
EBITDA adjusted to reflect cash flows
Change in provisions, pension and employee benefits
8
Change in net working capital
(566 )
(632 )
(785 )
Cash flow from operating activities before financial items
and tax
(117 )
(3 )
Financial items received and paid
(20 )
(11 )
(38 )
(29 )
Taxes paid
(274 )
(86 )
(441 )
(252 )
Cash flow from operating activities
(214 )
(32 )
(284 )
Acquisition of enterprises and activities
(42 )
(16 )
(42 )
(16 )
Acquisition of intangible assets
(77 )
(48 )
(120 )
(84 )
Acquisition of property, plant and equipment
(34 )
(18 )
(58 )
(33 )
Acquisition of financial assets
(2 )
(4 )
(2 )
(9 )
Disposal of property, plant and equipment
Disposal of financial assets
Dividend from associates
Cash flow from investing activities
(154 )
(83 )
(178 )
(48 )
Dividend paid
(170 )
(170 )
(170 )
(170 )
Buyout of minority interests
(13 )
(13 )
Repayment of lease liabilities
(38 )
(32 )
(67 )
(61 )
Change in net interest bearing debt
Cash flow from financing activities
(180 )
(26 )
(99 )
(4 )
Change in cash and cash equivalents
(323 )
(309 )
(336 )
Cash and cash equivalents at beginning of period
Foreign exchange adjustment, cash and cash equivalents
(41 )
(67 )
Cash and cash equivalents at 30 June
The cash flow statement cannot be inferred from the published financial information only
Free cash flow
DKKm
Q2
2023
Q2
2022
H1
2023
H1
2022
Free cash flow
(297 )
(210 )
(332 )
Free cash flow, adjusted for acquisitions and disposals of
enterprises and activities
(281 )
(168 )
(316 )
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 22
Balance sheet
Notes
DKKm
30/06 2023
31/12 2022
30/06 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
30/06 2023
31/12 2022
30/06 2022
Equity and liabilities
Share capital
Foreign exchange adjustments
(674 )
(517 )
(111 )
Cash flow hedging
(32 )
(70 )
(89 )
Retained earnings
Shareholders in FLSmidth & Co. A/S
Minority interests
(22 )
(26 )
(18 )
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 H1 2023 23
Equity statement
H1 2023
H1 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
(1 )
(15 )
Other comprehensive income
Actuarial gains/(losses) on
defined benefit plans
Currency adjustments
regarding
translation of entities
(157 )
(157 )
(152 )
Cash flow hedging:
- Value adjustments for the
period
(52 )
(52 )
(52 )
- Value adjustments
transferred to work in progress
Tax on other comprehensive
income
(13 )
(13 )
(13 )
Other comprehensive income
total
(157 )
(4 )
(123 )
(118 )
(35 )
Comprehensive income for
the period
(157 )
(35 )
(15 )
Transactions with owners:
Dividend paid
(170 )
(170 )
(170 )
(170 )
(170 )
(170 )
Share-based payment
Buyout of minority interests
(13 )
(13 )
(13 )
Equity at 30 June
(674 )
(32 )
(22 )
(111 )
(89 )
(18 )
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 24
Notes
1. Key accounting estimates and judgements 25
2. Income statement by function 25
3. Segment information 26
4. Revenue 27
5. Provisions 28
6. Contractual commitments and contingent
liabilities 28
7. Discontinued activities 29
8. Net working capital 29
9. Business acquisitions 30
10. Events after the balance sheet date 30
11. Accounting policies 30
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 25
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.
H1 2023 showed an active mining market in major
commodities partly offset by delays in some cus-
tomers’ larger investment decisions. For the ce-
ment market, relatively stable market conditions
in the beginning of the year have been increas-
ingly impacted by a slow-down in market demand
during the second quarter of 2023.
The change in market conditions has not resulted
in any material impact on key accounting esti-
mates and judgements in the consolidated con-
densed financial statements in the first half of
2023.
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 management’s estimates are
based.
More information on the uncertainties and the im-
pact on key accounting estimates and judgements
can be found on pages 69-70 of the 2022 Annual
Report.
On 31 August 2022, we obtained control of Mining
Technologies. During the first half year 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, the completion of the initial accounting
will extend into Q3 2023. During the measurement
period ending no later than 12 months after
acquisition, new information on facts and circum-
stances that existed on 31 August 2022 is adjusted
retrospectively in the initial accounting with a result-
ing 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
Q2
2023
Q2
2022
H1
2023
H1
2022
Revenue
6,399
5,027
12,415
9,733
Production costs
(4,976)
(3,860)
(9,665)
(7,542)
Gross profit
1,423
1,167
2,750
2,191
Sales costs, including depreciation and amortisation
(433)
(402)
(871)
(753)
Administrative costs, including depreciation and amortisation
(736)
(538)
(1,473)
(1,017)
Other operating income
13
8
38
36
EBIT
267
235
444
457
Depreciation, amortisation
and impairment consist of:
Depreciation and impairment of property, plant and equipment and
lease assets
(83)
(81)
(170)
(161)
Amortisation and impairment of intangible assets
(65)
(72)
(123)
(152)
(148)
(153)
(293)
(313)
Depreciation, amortisation
and impairment are divided into:
Production costs
(74)
(77)
(144)
(160)
Sales costs
(8)
(8)
(13)
(17)
Administrative costs
(66)
(68)
(136)
(136)
(148)
(153)
(293)
(313)
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 26
3. Segment information
H1 2023
H1 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
8,536
3,252
627
12,415
0
6,762
2,971
9,733
0
Production costs
(6,364)
(2,464)
(693)
(9,521)
(8)
(5,126)
(2,256)
(7,382)
(3)
Gross profit
2,172
788
(66)
2,894
(8)
1,636
715
2,351
(3)
SG&A costs
(1,409)
(603)
(145)
(2,157)
(5)
(1,001)
(580)
(1,581)
(1)
EBITDA
763
185
(211)
737
(13)
635
135
770
(4)
Depreciation and impairment of property, plant and equipment
and lease assets
(117)
(44)
(9)
(170)
0
(110)
(51)
(161)
0
EBITA
646
141
(220)
567
(13)
525
84
609
(4)
Amortisation and impairment of intangible assets
(85)
(37)
(1)
(123)
0
(111)
(41)
(152)
0
EBIT
561
104
(221)
444
(13)
414
43
457
(4)
Order intake
8,392
2,620
143
11,155
0
9,146
3,773
12,919
0
Order backlog
13,472
5,658
1,414
20,544
0
12,544
6,917
19,461
0
Gross margin
25.4%
24.2%
-10.5%
23.3%
24.2%
24.1%
24.2%
EBITDA margin
8.9%
5.7%
-33.7%
5.9%
9.4%
4.5%
7.9%
EBITA margin
7.6%
4.3%
-35.1%
4.6%
7.8%
2.8%
6.3%
EBIT margin
6.6%
3.2%
-35.2%
3.6%
6.1%
1.4%
4.7%
Number of employees at 30 June
6,742
3,053
439
10,234
0
6,314
3,741
10,055
0
Reconciliation of profit for the period
EBIT
444
(13)
457
(4)
Financial income
791
2
728
0
Financial costs
(880)
(13)
(762)
(1)
EBT
355
(24)
423
(5)
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
FLSmidth
■
Interim Report H1 2023 27
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 reflect the performance of the backlog
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 30 June 2023 amounted to
DKK 20,544m (end of H1 2022: DKK 19,461m).
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.
Revenue split by Regions H1 2023
%
Revenue split by Regions H1 2022
%
Backlog
DKKm
24%
26%
19%
13%
18%
NAMER
SAMER
ECANA
SSAMESA
APAC
26%
21%
20%
16%
17%
NAMER
SAMER
ECANA
SSAMESA
APAC
6,741
6,290
9,553
11,964
3,167
2,290
0
4,000
8,000
12,000
16,000
20,000
24,000
H1 2022 H1 2023
Within current year Within next year
Subsequent years
16%
49%
35%
11%
58%
31%
Revenue split by recognition principle
H1 2023
H1 2022
DKKm
Mining
Cement
Non-Core
Activities
Group
Mining
Cement
Group
Point in time
4,995
1,423
260
6,678
3,455
1,258
4,713
Percentage of completion
- Service, single machines and product bundles
3,040
1,635
0
4,675
2,040
1,414
3,454
- Product bundles with engineering under enhanced risk governance
501
194
367
1,062
1,267
299
1,566
Total revenue
8,536
3,252
627
12,415
6,762
2,971
9,733
Revenue split on industry and category
H1 2023
H1 2022
DKKm
Mining
Cement
Non-Core
Activities
Group
Mining
Cement
Group
Products business
3,003
1,492
405
4,900
2,819
1,284
4,103
Service business
5,533
1,760
222
7,515
3,943
1,687
5,630
Total revenue
8,536
3,252
627
12,415
6,762
2,971
9,733
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report H1 2023 28
5. Provisions
Net provisions increased by DKK 316m compared
to 31 December 2022. The increase relates pri-
marily to restructuring provisions following the im-
plementation of our transformation strategy 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 30 June 2023 amounted
to DKK 3.2bn 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 2.7bn
(31 December 2022: DKK 3.3bn). At the end of
2022, additional corporate contract-support guar-
antees to customers of DKK 0.7bn was outstand-
ing. By the end of June 2023, almost all such
guarantees have expired. It is customary market
practice to issue guarantees to customers, which
serve as a security that we will deliver as prom-
ised in terms of performance, quality, and timing.
The volume of the guarantees varies with the ac-
tivity level and reflects the outstanding backlog, fi-
nalised projects and deliveries that are covered
by warranties 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 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
30/06 2023
31/12 2022
30/06 2022
Provisions at 1 January
2,507
1,147
1,147
Foreign exchange adjustments
(22)
(17)
15
Acquisition of Group enterprises
2
682
0
Additions
874
1,388
288
Used
(400)
(461)
(212)
Reversals
(138)
(232)
(63)
Provisions
2,823
2,507
1,175
The split of provisions is as follows:
Warranties
1,009
980
605
Restructuring
516
404
13
Other provisions
1,298
1,123
557
2,823
2,507
1,175
The maturity of provisions is specified as follows:
Current liabilities
1,967
1,611
670
Non-current liabilities
856
896
505
2,823
2,507
1,175
Provisions related to continued activities
DKKm
30/06 2023
31/12 2022
30/06 2022
Provisions at 1 January
2,390
999
999
Foreign exchange adjustments
(22)
(17)
15
Acquisition of Group enterprises
2
682
0
Additions
869
1,385
288
Used
(391)
(428)
(199)
Reversals
(136)
(231)
(63)
Provisions
2,712
2,390
1,040
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report H1 2023 29
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 111m shown
in the table below, discontinued activities
accounts for DKK 332m (31 December 2022: DKK
362m) of the Group’s net working capital shown in
note 8.
8. Net working capital
Net working capital at 30 June 2023 has in-
creased by DKK 0.6bn compared to 31 December
2022. The increase related primarily to an in-
crease in net work in progress driven by higher ex-
ecution of Products orders and prepayments from
customers decrease due to the de-risking strategy
creating a slow-down in Products orders.
Utilisation of supply chain financing increased in
the first half of 2023 to DKK 648m (31 December
2022: DKK 590m).
Discontinued activities’ effect on cash flow from operating activities
DKKm
H1
2023
31/12 2022
H1
2022
EBITDA
(13)
(10)
(4)
Change in provisions
(6)
(31)
(13)
Change in net working capital
42
(6)
(16)
Cash flow from operating activities before financial items and tax
23
(47)
(33)
Financial items received and paid
(3)
(3)
(1)
Cash flow from operating activities
20
(50)
(34)
Discontinued activities share of Group provisions disclosed in note 5
DKKm
30/06 2023
31/12 2022
30/06 2022
Provisions at 1 January
117
148
148
Additions
5
3
0
Used
(9)
(33)
(13)
Reversals
(2)
(1)
0
Provisions
111
117
135
Net working capital
DKKm
30/06 2023
31/12 2022
30/06 2022
Inventories
3,978
3,971
2,976
Trade receivables
4,821
5,108
4,300
Work in progress, assets
3,279
3,147
3,085
Prepayments
717
874
758
Other receivables
1,077
1,030
846
Derivative financial instruments
44
54
52
Prepayments from customers
(2,245)
(2,771)
(2,510)
Trade payables
(4,166)
(4,339)
(3,687)
Work in progress, liability
(3,505)
(3,592)
(2,754)
Other liabilities
(1,417)
(1,509)
(1,173)
Derivative financial instruments
(41)
(80)
(88)
Net working capital
2,542
1,893
1,805
Change in net working capital
(649)
(835)
(747)
Financial instruments and foreign exchange effect on cash flow
17
389
(38)
Cash flow effect from change in net working capital
(632)
(446)
(785)
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report H1 2023 30
9. Business Acquisitions
Effective from 1 June 2023, FLSmidth has acquired
the American company Morse Rubber. The acqui-
sition supports FLSmidth Mining’s CORE’26 strat-
egy and will be adding advanced molding capa-
bilities for rubber and composite mill liners, as
well as screen media and various rubber and rub-
ber ceramic wear components to our existing of-
ferings.
The acquisition increased assets and liabilities by
DKK 48m and DKK 6m, respectively. The impact
on net profit was insignificant.
10. Events after the balance
sheet date
On 14 June 2023, FLSmidth and KOCH Solution
signed an asset purchase & transfer agreement in-
volving material handling technology that is part
of the Non-Core Activities segment. The transac-
tion is expected to be completed in the third quar-
ter of 2023, subject to customary regulatory ap-
provals from relevant authorities. No significant
gain is expected and the impact on assets and lia-
bilities from the divestment is expected to be insig-
nificant.
On 14 July 2023, FLSmidth Cement sold its Ad-
vanced Filtration Technologies (AFT) business to
Micronics, a leading global provider of industrial
filtration solutions. The sale included all related
assets, including intellectual property, technology,
employees and customer contracts.
The divestment of the AFT business is part of FLS-
midth Cement’s pure play strategy, which includes
focusing the cement Products portfolio on the core
technologies required for the green transition in
the cement industry.
The sale led to a gain of around DKK 100m that
will be included in the line item ‘Other operating
income in the Q3 2023 interim report’. The impact
on assets and liabilities is insignificant.
We are not aware of any subsequent matters that
could be of material importance to the Group’s fi-
nancial position at 30 June 2023.
11. Accounting policies
The condensed interim report of the Group for the
first half year 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 condensed financial statements.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report H1 2023 32
Valby, 15 August 2023
Executive management
Board of directors
Statement by Management
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 33
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,
unexpected growth in costs and expenses, failure
to recruit and retain the right employees and fail-
ure to maintain a culture of compliance. Unless re-
quired by law FLSmidth & Co. A/S is under no duty
and undertakes no obligation to update or revise
any forward-looking statement after the distribu-
tion of this report.
Forward looking statements
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report H1 2023 34
Interim Report
1 January – 30 June 2023
Tel.: +45 36 18 18 00
Fax: +45 36 44 11 46
CVR No. 58180 912