Interim Report
9M 2023
1 January –
30 September 2023
Company announcement no. 17
Vigerslev Allé 77
CVR No. 58180912
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 2
Management review
Highlights Q3 2023 4
Financial performance highlights 5
Sustainability performance highlights 6
Key figures 7
Mining financial performance 9
Cement financial performance 11
Non-Core Activities financial performance 13
Consolidated financial performance Q3 2023 14
Consolidated financial performance 9M 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 Acquisition 30
10. Disposal of activities 31
11. Events after the balance sheet date 31
12. Accounting policies 31
Statements
Statement by Management 33
Forward-looking statements 34
Contents
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 3
Management
review
Highlights Q3 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 Q3 2023 14
Consolidated financial performance 9M 2023 17
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 4
During the third quarter, we have continued to see strong progression on all our
core transformation efforts. This has led to continued improvement in our under-
lying performance and profitability despite the current global macroeconomic
and geopolitical turmoil. While we have made good progress on reducing our
water usage and emissions from own operations, our safety performance re-
mains unsatisfactory and additional mitigating actions are being implemented.
Our Mining Service business continued to show good development, positively im-
pacting profitability. The service market remained stable with a good inflow of
customer enquiries. The products market remains more volatile with some cus-
tomers delaying larger investment decisions. Despite this, our Mining Products
business saw good growth in both order intake and revenue during Q3.
Our Cement business continued to be adversely affected by the global slow-
down in market demand. Consequently, we continue to take the steps necessary
to preserve the long-term profitability of the business, including a significant right-
sizing of the organisation. Further, our pure play strategy is progressing accord-
ing to plan, and the ongoing operational and legal separation of the Cement
business is expected to be finalised towards the end of 2023.
Our exit from Non-Core Activities (NCA) continued to progress at an accelerated
pace. Since the establishment of the NCA segment we have reduced the order
backlog by more than 80% and we are well on track for full exit by end 2024
(previously towards end of 2025).
Mikko Keto, Group CEO
Highlights Q3 2023
*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 Q3 2022 includes Non-Core Activities.
Mining
Cement
■
12% organic order intake* growth
■
12% organic revenue* growth
■
Continued improvement with
adj. EBITA margin of 11.1%
■
Service centre expansions in the
US and KAZ announced
■
Second wave of synergy take-
outs commenced
■
20% decrease in organic order in-
take reflecting market conditions
and transformation efforts
■
Organic revenue decline of 12%
■
EBITA of 11.7%, incl. one-off net
gain from Advanced Filtration
Technologies (AFT) sale
■
Underlying EBITA margin (excl.
sale of AFT) of 4.7%
■
New President for FLSmidth Ce-
ment appointed in October 2023
■
Significant organisational rightsiz-
ing initiated
Sustainability
Performance and other
■
Two large MissionZero orders re-
ceived in Mining
■
Water withdrawal and scope 1 & 2
emissions reduced to 2022 levels
■
Continued unsatisfactory safety
performance
■
Continued improvement in spend
with suppliers with SBT targets
■
Transformation progressing well
■
On track for new pure play com-
pany structure in 2024
■
Non-Core Activities order backlog
reduced to DKK 636m
■
Financial guidance for FY2023
updated
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 5
Financial performance highlights
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Cash flow from operating activi-
ties
DKKm -276 ▼ from DKKm 476 in Q3 2022
GROUP
5,601
▼ -2.0%
5,723
▲ 1.8%
460 8.0% (adj. 10.1%)
▲ 37.7%
Earnings per share
DKK 4.8 ▲ from DKK 2.9 in Q3 2022
Net working capital ratio*
11.4% ▲ from 9.2% end of Q3 2022
NIBD/EBITDA
1.0x ▲ from 0.7x end of Q3 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
4,320
▲ 5.4%
4,094
▲ 3.8%
337 8.2% (adj. 11.1%)
▲ 18.7%
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by Products &
Service
CEMENT
1,225
▼ -24.2%
1,399
▼ -16.5%
164 11.7%
▲ 228.0%
Order intake
DKKm
Revenue
DKKm
EBITA & EBITA margin
DKKm - %
Revenue split by Products &
Service
NON
-CORE
ACTIVITIES
57
230
(42) -18.3%
18,633
16,756
5,714
5,601
9M 2022
9M 2023
Q3 2022
Q3 2023
15,354
18,138
5,621
5,723
9M 2022
9M 2023
Q3 2022
Q3 2023
943
1,026
334
460
9M 2022
9M 2023
Q3 2022
Q3 2023
4,097
4,320
Q3
2022
Q3
2023
3,946
4,094
Q3
2022
Q3
2023
284
337
Q3
2022
Q3
2023
65%
(Q3 2022: 66%)
35%
(Q3 2022: 34%)
Service
Products
1,617
1,225
Q3
2022
Q3
2023
1,675
1,399
Q3
2022
Q3
2023
50
164
Q3
2022
Q3
2023
51%
(Q3 2022: 53%)
49%
(Q3 2022: 47%)
Service
Products
-
57
Q3
2022
Q3
2023
-
230
Q3
2022
Q3
2023
-
(42)
Q3 2022
Q3 2023
34%
66%
Service
Products
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 6
Sustainability performance highlights
Safety (Total recordable injury rate)
Total recordable injury rate/million working
hours
Women managers
%
MissionZero developments
FLSmidth is committed to
improving the sustainability
footprint of the global mining
and cement industries not only
by offering innovative
technology to our customers,
but also through initiatives and
research in our own operations.
FLSmidth to deliver beneficiation equipment
to phosphate mine
Ma’aden mining company has chosen FLSmidth
to supply key equipment and technical support
services for its phosphate beneficiation plant in
Saudi Arabia. The equipment to be supplied in-
cludes our paste thickening and de-watering
technology, which will play a key role in reduc-
ing emissions and water spend from the benefi-
ciation process—two key pillars of our Mission-
Zero agenda to reduce the environmental
impact of mining operations.
Steel recycling and reuse programme driving
circularity in manufacturing
FLSmidth ABON® in Melbourne runs a highly
successful steel reuse and recycling pro-
gramme. Based on strong relationships with
customers and suppliers, the programme drives
circular economy practices, reduces emissions,
saves on natural resources and reduces waste
metal sent to landfill. Steel offcuts and machine
turnings from the manufacturing processes, as
well as worn teeth and shafts from refurbish-
ments, are recovered and recycled.
New research to accelerate cement decarbon-
isation
Led by FLSmidth, a new research partnership
aims to maximise the use of supplementary ce-
mentitious materials (SCMs) in cement. SCMs
play a key role in cement industry pathways to
net zero. Funded by Horizon Europe, the
DETOCS (Data Enabling Transformation and
Optimization towards Concrete Sustainability)
partnership comprises industrial and academic
partners and will be supported by 15 PhD stu-
dents.
3.1
2023 Target: 1.2
▼ 1.6 deterioration
16.5
2023 Target: 16.3%
▲ 2.2%-points improvement
Our safety performance has continued to deteriorate,
primarily due to an increased use of third-party con-
tractors. The safety of our people remains of the ut-
most importance and we will continue our work in
training and awareness campaigns, including initiating
safety stand downs. We do not expect to meet our
2023 target.
In Q3 2023, we surpassed our full-year target for
women managers mainly as result of organisational
changes, lower attrition rate and continued internal
movements and recruiting initiatives.
Water withdrawal
m
3
Scope 1 & 2 greenhouse gas
emissions
tCO
2
e (market-based)
Spend with suppliers with science-
based targets
%
125,262
2023 Target: <205,093
▲ 3.3% improvement
28,381
2023 Target: <46,019
▲ 3.5% improvement
11.8%
2023 Target: 10%
▲ 4.1%-points improvement
Water withdrawal is less than the same period last
year and shows good progress toward the end of
year target. There is a slight seasonal increase from
Q2 to Q3 2023 as warmer months increase the use
of water. However, our active water saving initiatives
and leak detection activities are overall reducing our
use of water.
Emissions from own operations continue to decrease
as we make good progress on our end of year target.
This is due to the purchase of new renewable electric-
ity agreements in a number of sites and continuous
work with energy reduction initiatives.
We are on track to surpass our 2023 target of 10%
spend with suppliers with science-based targets. We
continue to work actively to assist more suppliers to
set their own targets and are seeing positive improve-
ment.
1.5
3.1
2022
9M
2023
14.3%
16.5%
2022
9M
2023
129,585
125,262
9M
2022
9M
2023
29,413
28,381
9M
2022
9M
2023
7.7%
11.8%
2022
9M
2023
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 7
*
Key figures
DKKm
Q3
2023
Q3
2022
9M
2023
9M
2022
2022
Income statement
Revenue
5,723
5,621
18,138
15,354
21,849
Gross profit
1,636
1,431
4,530
3,782
5,076
EBITDA
538
419
1,275
1,189
1,300
EBITA
460
334
1,026
943
943
Adjusted EBITA*
579
449
1,369
1,190
1,395
EBIT
404
256
848
713
619
Financial items, net
31
14
(57)
(20)
(67)
EBT
435
270
791
693
552
Profit for the period, continuing activities
274
166
500
426
351
Loss for the period, discontinued activities
(2)
(4)
(26)
(7)
1
Profit for the period
272
162
474
419
352
Orders
Order intake
5,601
5,714
16,756
18,633
24,644
Order backlog
19,933
25,476
23,541
Earning ratios
Gross margin
28.6%
25.5%
25.0%
24.6%
23.2%
EBITDA margin
9.4%
7.5%
7.0%
7.7%
5.9%
EBITA margin
8.0%
5.9%
5.7%
6.1%
4.3%
Adjusted EBITA margin*
10.1%
8.0%
7.5%
7.8%
6.4%
EBIT margin
7.1%
4.6%
4.7%
4.6%
2.8%
EBT margin
7.6%
4.8%
4.4%
4.5%
2.5%
Cash flow
Cash flow from operating activities (CFFO)
(276)
476
(308)
192
968
Acquisitions of property, plant and equipment
(76)
(29)
(134)
(62)
(88)
Cash flow from investing activities (CFFI)
125
(2,146)
(53)
(2,194)
(2,310)
Free cash flow
(151)
(1,670)
(361)
(2,002)
(1,342)
Free cash flow adjusted for acquisitions and
disposals of enterprises and activities
(436)
433
(604)
117
777
Balance sheet
Net working capital
2,796
2,170
1,893
Net interest-bearing debt (NIBD)
(1,325)
(985)
(726)
Total assets
29,236
31,051
29,845
CAPEX
431
269
424
Equity
11,131
11,555
10,787
Dividend to shareholders, paid
170
170
170
DKKm
Q3
2023
Q3
2022
9M
2023
9M
2022
2022
Financial ratios
Book-to-bill
97.9%
101.7%
92.4%
121.4%
112.8%
Order backlog / Revenue
80.9%
124.3%
107.7%
Return on equity**
5.8%
5.1%
3.3%
Equity ratio
38.1%
37.2%
36.1%
ROCE, average**
5.6%
6.3%
5.9%
Net working capital ratio, end**
11.4%
9.2%
7.8%
NIBD / EBITDA**
1.0x
0.7x
0.6x
Capital employed, average**
18,710
18,060
15,888
Number of employees
9,674
11,820
10,977
Share ratios
Cash flow per share (CFPS), (diluted)
(4.8)
8.4
(5.4)
3.4
17.0
Earnings per share (EPS), (diluted)
4.8
2.9
8.3
7.7
6.5
Share price
319.2
165.9
251.7
Number of shares (1,000), end
57,650
57,650
57,650
Market capitalisation, end
18,402
9,564
14,511
Sustainability key figures
Scope 1 & 2 GHG emissions (tCO2e) market-based
28,381
29,413
36,767
Water withdrawal (m3)
125,262
129,585
178,064
Safety, TRIR Total Recordable Injury Rate (including
contractors)
3.1
1.6
1.5
Women managers
16.5%
14.1%
14.3%
Spend with suppliers with science-based targets
11.8%
n/a
7.7%
Other key figures
Quality, DIFOT Delivery In Full On Time
82.3%
82.2%
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 343m in 9M
2023 (9M 2022: DKK 127m and FY 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 four times the quarterly average of the profit for 9M 2023.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 8
2023 financial guidance
Note: Numbers in brackets represent realised 9M 2023 results. Mining Technologies refers to the former thyssenkrupp Mining business, which FLSmidth acquired on 31 August 2022
Mining
Cement
Non-Core Activities
Group
Guidance
August 2023
Guidance
November 2023
Revenue
(DKKbn)
Around 17.0
Around 17.0
(DKK 12.6bn)
Adj.
EBITA
margin
10.0-11.0%
10.5-11.0%
(10.5%)
Guidance
August 2023
Guidance
November 2023
Revenue
(DKKbn)
Around 6.0
Around 6.0
(DKK 4.7bn)
EBITA
margin
5.5-6.5%
5.5-6.5%
(6.5%)
Guidance
August 2023
Guidance
November 2023
Revenue
(DKKbn)
0.8-1.0
0.9-1.0
(DKK 857m)
EBITA
Loss of ~DKK
250-350m
Loss of ~DKK
300-350m
(Loss of DKK
263m)
Guidance
August 2023
Guidance
November 2023
Revenue
(DKKbn)
Around 24.0
Around 24.0
(DKK 18.1bn)
Adj.
EBITA
margin
7.5-8.5%
7.5-8.5%
(7.5%)
EBITA
margin
5.5-6.5%
5.5-6.5%
(5.7%)
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, which was recognised in Q3
2023. The underlying operational performance
of Cement is expected to remain unchanged.
Non-Core Activities (NCA) EBITA margin guid-
ance for 2023 reflects the operationally loss-
making nature of the business as well as costs
related to contract negotiations aimed at re-
ducing the scope of the NCA order backlog.
As previously communicated, the total loss for the
Non-Core Activities segment over the exit period
is expected to be around DKK 1.0bn. It is expected
that the Non-Core Activities segment will be ex-
ited around end of 2024.
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 is updated. Guidance for the full year 2023 reflects a continued improvement of the underlying legacy FLSmidth
Mining business and the integration of Mining Technologies.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 9
Market outlook and trends in Q3 2023
The global mining market remained active within
major commodities, especially for copper, lithium
and gold, albeit with some adverse effects from
delayed large capital investment decisions and
permitting issues in certain countries as well as
prevailing macroeconomic and geopolitical uncer-
tainties.
The service market remains stable and active,
whereas the products market is inherently more
volatile. We continue to see a consistent inflow of
customer service enquiries as miners aim to en-
hance operations through continued investments
in productivity and sustainability solutions.
The mid-term outlook for the industry remains pos-
itive, supported by a promising pipeline. In addi-
tion, the growing demand for minerals crucial to a
successful green transition supports the long-term
outlook for the mining industry.
Order intake development in Q3 2023
Q3 2023 order intake increased by 5% to DKK
4,320m compared to Q3 2022. However, Q3
2022 included only one month of Mining Technol-
ogies activities, while Q3 2023 does not include
the NCA segment. Excluding currency effects, the
order intake increased by 12%.
It is estimated that excluding the impact of the
NCA segment, the underlying order intake would
have increased by approximately 6% compared to
Q3 2022.
Compared to Q3 2022, which was characterised
by an unusually high level of large spare parts or-
ders, the Service order intake decreased by 6% in
Q3 2023. Sequentially (i.e., compared to Q2 2023)
Service order intake grew by 8%. This reflected
continued focus on maximising customers’ equip-
ment reliability and improving energy efficiency in
their operations, partly offset by our continued ef-
forts to exit low-margin, basic labour services.
Products order intake increased by 37% compared
to Q3 2022. Two large Products orders with a
combined value of around DKK 730m were an-
nounced in the quarter (Q2 2023: DKK 785m),
whereas the comparative quarter of 2022 did not
include any large, announced Products orders.
In Q3 2023, Service and Products order intake ac-
counted for 65% and 35% of the total order intake,
respectively, compared to 73% and 27% in Q3
2022, respectively in line with our targeted share
of Service order intake.
Order intake development in 9M 2023
9M 2023 order intake decreased by 4% to DKK
12,712m compared to 9M 2022 which included
only one month of Mining Technologies activities.
9M 2023 does not include the NCA segment or
Russia. If excluding a high-level estimate of the im-
pact from those changes the underlying order in-
take would have decreased by 6% compared to
9M 2022.
Service order intake increased by 3% in 9M 2023.
Products order intake decreased by 15% reflecting
our continued de-risking efforts in addition to cur-
rent market conditions. Products order intake in
9M 2023 included five large, announced Products
orders with a combined value of approximately
DKK 1.9bn. (9M 2022: DKK 1.6bn).
Service and Products order intake represented
66% and 34%, respectively, of the total Mining or-
der intake in 9M 2023, compared to 61% and 39%
in 9M 2022.
Mining financial performance
Order intake
split per region Q3 2023
*ECANA refers to the region of Europe, Central Asia and North
Africa.
Order intake
split by Products & Service Q3 2023
Order intake
split by commodity Q3 2023
Mining financial performance
23%
29%
10%
21%
17%
NAMER
SAMER
ECANA*
SSAMESA
APAC
65%
(Q3 2022: 73%)
35%
(Q3 2022: 27%)
Service
Products
35%
11%
6%
12%
8%
28%
Copper
Gold
Coal
Fertilizer
Iron ore
Other
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 10
Revenue development in Q3 2023
Q3 2023 revenue increased by 4%. Excluding cur-
rency effects, revenue increased organically by
12%. However, Q3 2022 included only one month
of Mining Technologies activities, while Q3 2023
reflects the establishment of the NCA segment
and our exit from Russia. If excluding a high-level
estimate of the impact from those changes, the
underlying revenue growth in the quarter was ap-
proximately 13%.
Mining Service revenue increased by 1% com-
pared to Q3 2022 mainly driven by a continued
healthy demand for spare parts and consumables
but partly offset by relatively lower revenue within
professional services. Mining Service revenue ac-
counted for 65% of the total Mining revenue in the
quarter.
Products revenue increased by 8% compared to
Q3 2022 and accounted for 35% of the total Min-
ing revenue. The increase was driven by strong
backlog execution.
Gross profit development in Q3 2023
Gross profit increased by 21% to DKK 1,242m from
DKK 1,026m in Q3 2022. The corresponding gross
margin increased to 30.3% as a result of good
margin execution, our de-risking strategy and
scalability.
EBITA development in Q3 2023
Adjusted for integration costs of DKK 119m, the
EBITA margin was 11.1% in Q3 2023. This was
mainly driven by continued strong execution in
our Service business across spare parts, consuma-
bles and upgrades & retrofit.
Including integration costs, the EBITA margin in-
creased to 8.2% from 7.2% in Q3 2022.
The number of employees in Mining has been re-
duced by more than 1,550 since the end of Q3
2022. The reduction reflects the establishment of
the NCA segment in Q4 2022, and the ongoing
synergy takeout related to the integration of Min-
ing Technologies.
Revenue development in 9M 2023
9M 2023 Mining revenue increased by 18% com-
pared to 9M 2022. Excluding currency effects, rev-
enue increased by 22%. The increase was mainly
driven by relatively higher revenue in the Service
business.
9M 2022 included only one month of Mining Tech-
nologies activities, while 9M 2023 reflects the es-
tablishment of the NCA segment and our exit from
Russia. If excluding a high-level estimate of the im-
pact from those changes the underlying revenue
growth in 9M 2023 was approximately 18% com-
pared to 9M 2022
Gross profit development in 9M 2023
Gross profit increased by 28% to DKK 3,414m in
9M 2023. The corresponding gross margin of
27.0% was 2.1%-points above 9M 2022 as a result
of good margin execution, de-risking strategy and
a relatively higher share of Service revenue.
EBITA development in 9M 2023
Adjusted for integration costs of DKK 343m, the
EBITA margin was 10.5% in 9M 2023.
Mining financial performance
Growth in Mining in Q3 2023 (vs. Q3
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
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3
Products
Service
EBITA margin %
Adj. EBITA margin %
Order intake
Revenue
Organic*
12%
12%
Currency
-7%
-8%
Total growth
5%
4%
*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 Q3
2022 includes Non-Core Activities.
Mining
(DKKm)
Q3 2023
Q3 2022
Change (%)
9M 2023
9M 2022
Change (%)
Order intake
4,320
4,097
5%
12,712
13,243
-4%
- Hereof Service order intake
2,826
3,003
-6%
8,342
8,075
3%
- Hereof Products order intake
1,494
1,094
37%
4,370
5,168
-15%
Order backlog
13,859
18,502
-25%
13,859
18,502
-25%
Revenue
4,094
3,946
4%
12,630
10,708
18%
- Hereof Service revenue
2,643
2,607
1%
8,176
6,550
25%
- Hereof Products revenue
1,451
1,339
8%
4,454
4,158
7%
Gross profit
1,242
1,026
21%
3,414
2,662
28%
Gross margin
30.3%
26.0%
27.0%
24.9%
Adjusted EBITA
456
399
14%
1,328
1,056
26%
Adjusted EBITA margin
11.1%
10.1%
10.5%
9.9%
EBITA
337
284
19%
985
809
22%
EBITA margin
8.2%
7.2%
7.8%
7.6%
Number of employees
6,588
8,154
-19%
6,588
8,154
-19%
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 11
Market outlook and trends in Q3 2023
The general slow-down in market demand, which
characterised the second quarter of the year, con-
tinued into the third quarter. This is in large parts
driven by rising interest rates and global inflation
levels adversely impacting construction activity
and thus the demand for cement.
As a result, cement producers are showing strict
capital spending discipline leading to substantial
delays in major investment decisions.
Market conditions continue to vary across regions
and some markets, such as India and the US, are
relatively less impacted by the market slow-down
and are showing some positive signs - especially
in the Service business. Other markets, however,
including China and Europe, remain weaker.
The long-term trend towards more sustainable ce-
ment production remains, supported by the grow-
ing urgency of the green transition. However, the
short-to-mid-term market outlook remains chal-
lenging.
Order intake development in Q3 2023
Cement order intake in Q3 2023 declined organi-
cally by 20% and including currency effect by
24% to DKK 1,225m. The underlying margins in the
pipeline remain stable and the profitability of the
order intake improved across all offerings.
Service order intake decreased by 20% compared
to Q3 2022. The decrease reflected the challeng-
ing market conditions arising from continued geo-
political and macroeconomic uncertainties.
In our main markets, our Service business has
maintained an overall satisfactory performance
throughout Q3 2023. However, some markets
continue to see a slow-down in market demand
which is adversely impacting order intake.
Compared to Q3 2022, Products order intake de-
creased by 31% as a result of current market con-
ditions as well as continued pruning of our product
offerings as well as the AFT sale. Further, as part
of our de-risking approach, we continue to assess
new installation products and investments and en-
suring the long-term profitability of our order back-
log.
Service and Products orders represented 67% and
33% of Cement order intake, respectively, com-
pared to 64% and 36% in Q3 2022.
Order intake development in 9M 2023
In 9M 2023, Cement order intake declined by 29%
compared to 9M 2022 mainly driven by Products
orders which declined by 40% compared to 9M
2022.
Service order intake decreased by 19% compared
to 9M 2022 reflecting the current market condi-
tions. We have seen some growth in Service or-
ders within our main markets. This was, however,
more than offset by declining orders in markets
where we have decided to service through third-
party agents and/or exit in full.
Cement financial performance
Order intake
split per region Q3 2023
Order intake
split by Products & Service Q3 2023
25%
9%
23%
31%
12%
NAMER
SAMER
ECANA
SSAMESA
APAC
67%
(Q3 2022: 64%)
33%
(Q3 2022: 36%)
Service
Products
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 12
Revenue development in Q3 2023
Q3 2023 revenue decreased by 16%, and by 12%
excluding currency effects, driven by both the
Products and Service business.
Service revenue decreased by 20% compared to
Q3 2022 due to the challenging market conditions
arising from the macroeconomic and geopolitical
turmoil as well as the divestment of AFT. Service
accounted for 51% of total Cement revenue in Q3
2023.
Products revenue decreased by 13% compared to
Q3 2022 as a result of customers’ strict capital
spending discipline leading to significant delays in
larger investment decisions.
Gross profit development in Q3 2023
Gross profit decreased by 5% to DKK 385m
mainly as a result of the relatively lower revenue.
The corresponding gross margin of 27.5% was
however 3.3%-points above the gross margin for
Q3 2022 reflecting the impact of the continued
business simplification, product pruning and exe-
cution of higher margin orders.
EBITA development in Q3 2023
Cement EBITA increased by DKK 114m compared
to Q3 2022 due to the one-off net gain from the
divestment of AFT in July 2023. The underlying
EBITA, excluding the one-off net gain, amounted
to DKK 66m in Q3 2023 compared to DKK 50m in
Q3 2022, reflecting continued product pruning
and business simplification. The corresponding
underlying EBITA margin improved by 1.7%-points
to 4.7% in Q3 2023.
The number of employees in Cement has been re-
duced by around 800 compared to Q3 2022.
The reduction reflects the divestment of AFT, con-
tinued optimisation of our global footprint and sim-
plification of the operating model to improve oper-
ations and long-term profitability.
Revenue development in 9M 2023
Cement revenue of DKK 4,651 in 9M 2023 was in
line with 9M 2022, reflecting a 4% decrease in
Service revenue due to the divestment of AFT and
continued overall challenging market conditions,
partly offset by a 5% increase in Products reve-
nue.
Gross profit development in 9M 2023
Gross profit increased by 5% to DKK 1,173m in 9M
2023 reflecting a good margin execution. The cor-
responding gross margin of 25.2% was 1.1%-points
above 9M 2022.
EBITA development in 9M 2023
EBITA increased by 127% in 9M 2023 mainly as a
result of the net gain from the divestment of AFT.
The underlying EBITA of DKK 206m increased by
54% compared to 9M 2022. The corresponding
EBITA margin of 4.4% was 1.5%-points above 9M
2022 reflecting the impact of the continued busi-
ness simplification, product pruning and focus on
higher margin orders.
Cement financial performance
Growth in Cement in Q3 2023 (vs.
Q3 2022)
Revenue and EBITA margin
DKKm EBITA margin %
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
0
500
1,000
1,500
2,000
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3
Service Products EBITA margin %
Order intake
Revenue
Organic
-20%
-12%
Currency
-4%
-4%
Total growth
-24%
-16%
Cement
(DKKm)
Q3 2023
Q3 2022
Change (%)
9M 2023
9M 2022
Change (%)
Order intake
1,225
1,617
-24%
3,844
5,390
-29%
- Hereof Service order intake
820
1,027
-20%
2,385
2,958
-19%
- Hereof Products order intake
405
590
-31%
1,459
2,432
-40%
Order backlog
5,438
6,974
-22%
5,438
6,974
-22%
Revenue
1,399
1,675
-16%
4,651
4,646
0%
- Hereof Service revenue
717
895
-20%
2,477
2,582
-4%
- Hereof Products revenue
682
780
-13%
2,174
2,064
5%
Gross profit
385
405
-5%
1,173
1,120
5%
Gross margin
27.5%
24.2%
25.2%
24.1%
EBITA
164
50
228%
304
134
127%
EBITA margin
11.7%
3.0%
6.5%
2.9%
Number of employees
2,869
3,666
-22%
2,869
3,666
-22%
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 13
Non-Core Activities outlook
On 23 August 2023, FLSmidth closed the previ-
ously announced Asset Purchase & Transfer
Agreement with KOCH Solutions, thereby transfer-
ring a total of around DKK 400m of contract back-
log to KOCH Solutions.
Order intake development in Q3 2023
Order intake for NCA amounted to DKK 57m. This
related to contractual obligations and parts al-
ready in stock. Service and Products orders repre-
sented 84% and 16% of NCA order intake in Q3
2023, respectively.
Order backlog development in Q3 2023
The order backlog amounted to around DKK
0.6bn by end of Q3 2023, representing a de-
crease of around DKK 0.8bn compared to Q2
2023 and a decrease of around DKK 2.3bn since
the establishment of the NCA segment as of Q4
2022. The decrease reflected the divestment to
KOCH Solutions and execution of the order back-
log as well as continued re-scoping and contract
terminations. The majority of the remaining order
backlog is to be executed in countries within the
APAC and ECANA regions.
Revenue development in Q3 2023
NCA revenue in Q3 2023 amounted to DKK 230m.
Products and Service accounted for 66% and 34%
of revenue, respectively.
Gross profit development in Q3 2023
Gross profit was DKK 9m with a corresponding
gross margin of 3.9% reflecting the general volatil-
ity and the nature of the NCA business.
EBITA development in Q3 2023
EBITA amounted to DKK -42m with a correspond-
ing EBITA margin of -18.3% driven by the low gross
profit and costs related to the ongoing exit of the
activities in the segment. The divestment to KOCH
Solutions had no material impact on EBITA for Q3
2023.
The number of employees amounted to 217 as of
the end of Q3 2023, representing a decline of 222
employees compared to end of Q2 2023. This
was driven by the divestment to KOCH Solutions,
continued rightsizing and natural attrition.
Order intake development in 9M 2023
Order intake for NCA amounted to DKK 200m in
9M 2023. Service and Products orders repre-
sented 75% and 25%, respectively.
Revenue development in 9M 2023
NCA revenue amounted to DKK 857m in 9M 2023.
Service and Products revenue represented 35%
and 65%, respectively.
Gross profit development in 9M 2023
Gross profit amounted DKK -57m in 9M 2023 with
a corresponding gross margin of -6.7% reflecting
the general volatility and operationally loss-mak-
ing nature of the NCA segment.
EBITA development in 9M 2023
EBITA in 9M 2023 amounted to DKK -263m with a
corresponding EBITA margin of -30.7% reflecting
the operationally loss-making nature of the NCA
business and costs related to the exit.
Non-Core Activities financial performance
Order intake
split per region Q3 2023
Order intake
split by commodity Q3 2023
14%
42%
30%
14%
NAMER
SAMER
ECANA
SSAMESA
APAC
Non-Core Activities
(DKKm)
Q3 2023
9M 2023
Order intake
57
200
- Hereof Service order intake
48
149
- Hereof Products order intake
9
51
Order backlog
636
636
Revenue
230
857
- Hereof Service revenue
79
300
- Hereof Products revenue
151
557
Gross profit
9
(57)
Gross margin
3.9%
-6.7%
EBITA
(42)
(263)
EBITA margin
-18.3%
-30.7%
Number of employees
217
217
3%
9%
67%
21%
Copper
Gold
Coal
Fertilizer
Iron ore
Other
Minerals
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 14
Growth
Group order intake in Q3 2023
increased organically by 4%
mainly driven by Products. Group
revenue increased 2%, also
driven by Products.
Order intake
Q3 2023 order intake declined by 2% to DKK
5,601m. Q3 2022 included only one month of Min-
ing Technologies activities. Excluding currency ef-
fects order intake increased by 4% compared to
Q3 2022.
Service order intake decreased by 8% compared
to Q3 2022, reflecting current market challenges
in Cement and a stable Service level in Mining.
Service represented 66% of total order intake in
Q3 2023 against 71% in Q3 2022. Products order
intake increased by 13% compared to Q3 2022,
mainly driven by Mining Products.
Order backlog and maturity
The order backlog decreased by 3% to DKK 19.9bn
compared to the prior quarter (Q2 2023: DKK
20.5bn) due to strong execution of the order back-
log, the divestments in Cement and NCA, the exit of
our Russian and Belarusian activities as well as
continued wind-down of our NCA segment. Out-
standing order backlog related to Russian and Bel-
arusian contracts remained stable at DKK 0.2bn at
the end of Q3 2023 (end of Q2 2023: DKK 0.2bn).
The remaining orders are suspended by FLSmidth.
We are working on potential termination options
and are due to uncertainty included in the ‘2025
and beyond’ maturity. The Non-Core Activities
backlog represented around DKK 0.6bn at the end
of Q3 2023.
Backlog
maturity
Mining
Cement
Non-Core
Activities
FLSmidth
Group
2023
15%
13%
23%
15%
2024
57%
50%
77%
56%
2025 & beyond
28%
37%
0%
29%
Revenue
Revenue increased by 2% to DKK 5,723m. Exclud-
ing currency effects, revenue increased by 9%
compared to Q3 2022. The increase was driven
by an 8% increase in Products revenue, partly off-
set by a 2% decrease in Service revenue com-
pared to Q3 2022. Service revenue accounted for
60% of total revenue in the quarter, compared to
62% in Q3 2022.
Q3 2022 included only one month of Mining Tech-
nologies activities, while Q3 2023 reflects our exit
from Russia. If excluding a high-level estimate of
the impact of our exit from Russia, the underlying
revenue growth would be 5%.
Consolidated financial performance Q3 2023
Growth in order intake in Q3 2023
(vs. Q3 2022)
Growth in revenue in Q3 2023 (vs.
Q3 2022)
Order intake
DKKm
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
12%
-12%
9%
Currency
-8%
-4%
-7%
Total growth
4%
-16%
n/a
2%
*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 Q3
2022 includes Non-Core Activities.
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
12%
-20%
4%
Currency
-7%
-4%
-6%
Total growth
5%
-24%
n/a
-2%
*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 Q3
2022 includes Non-Core Activities.
Group – continued activities
(DKKm)
Q3 2023
Q3 2022
Change (%)
9M 2023
9M 2022
Change (%)
Order intake
5,601
5,714
-2%
16,756
18,633
-10%
- Hereof Service order intake
3,694
4,030
-8%
10,876
11,033
-1%
- Hereof Products order intake
1,907
1,684
13%
5,880
7,600
-23%
Order backlog
19,933
25,476
-22%
19,933
25,476
-22%
Revenue
5,723
5,621
2%
18,138
15,354
18%
- Hereof Service revenue
3,439
3,502
-2%
10,953
9,132
20%
- Hereof Products revenue
2,284
2,119
8%
7,185
6,222
15%
Gross profit
1,636
1,431
14%
4,530
3,782
20%
Gross margin
28.6%
25.5%
25.0%
24.6%
SG&A cost*
(1,186)
(1,032)
15%
(3,381)
(2,649)
28%
SG&A ratio*
20.7%
18.4%
18.6%
17.3%
Adjusted EBITA
579
449
29%
1,369
1,190
15%
Adjusted EBITA margin
10.1%
8.0%
7.5%
7.8%
EBITA
460
334
38%
1,026
943
9%
EBITA margin
8.0%
5.9%
5.7%
6.1%
Number of employees
9,674
11,820
-18%
9,674
11,820
-18%
*SG&A cost has now been presented without Other operating net income. Comparative information has been restated.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3
Service order intake Products order intake
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 15
Profit
Gross profit increased by 14%
driven by a 2% increase in
revenue and strong margin
execution compared to Q3 2022.
Adjusted EBITA increased by
29% reflecting positive impact
from our core transformation
efforts and the AFT sale.
Gross profit and margin
Gross profit increased by 14% to DKK 1,636m,
driven by the higher revenue level, lower produc-
tion costs and our ongoing transformation efforts,
partly offset by integration costs related to Mining
Technologies and the ongoing exit from the NCA
segment. The corresponding gross margin was
28.6% (Q3 2022: 25.5%).
In Q3 2023, total research and development costs
(R&D) amounted to DKK 96m, representing 1.7% of
revenue (Q3 2022: 1.7%).
Research & development costs
(DKKm)
Q3 2023
Q3 2022
Production costs
34
47
Capitalised
62
46
Total R&D
96
93
SG&A costs
Sales, general and administrative costs (SG&A) in-
creased by 15% compared to Q3 2022. The in-
crease was driven by the integration costs related
to Mining Technologies and our ongoing transfor-
mation efforts, which include the ongoing NCA
segment exit, principal company model implemen-
tation and pure play separation of the Mining and
Cement businesses. The increase compared to Q3
2022 was partly offset by a favourable currency
effect of DKK 44m.
The corresponding SG&A ratio as a percentage of
revenue was 20.7% in Q3 2023.
EBITA and margin
Excluding integration costs of DKK 119m related to
the acquisition of Mining Technologies, adjusted
Group EBITA margin was 10.1% in Q3 2023. Includ-
ing integration costs, the EBITA margin was 8% in
Q3 2023 compared to 5.9% in Q3 2022. Excluding
the AFT divestment gain, the underlying EBITA
margin was 6.3%. The NCA divestment to KOCH
Solutions had no material impact on EBITA for the
quarter.
Amortisation of intangible assets amounted to
DKK 56m (Q3 2022: DKK 78m). The effect of pur-
chase price allocations amounted to DKK 11m (Q3
2022: DKK 14m) and other amortisation to DKK
45m (Q3 2022: DKK 64m).
Financial items
Net financial items amounted to DKK 31m (Q3
2022: DKK 14m), of which net interest amounted to
DKK -29m (Q3 2022: DKK 6m).
Tax
Tax in Q3 2023 totalled DKK -161m (Q3 2022:
DKK -104m), corresponding to an effective tax rate
of 37.0% (Q3 2022: 38.5%).
Profit for the period
Profit in Q3 2023 was a gain of DKK 272m (Q3
2022: DKK 162m). Discontinued activities had a
loss of DKK -2m in Q3 2023 (Q3 2022: DKK -4m).
Return on capital employed
Return on capital employed (ROCE) decreased to
5.6% (Q3 2022: 6.3%) due to a relatively higher
average capital employed, driven by the acquisi-
tion of Mining Technologies, and net working capi-
tal partly offset by a relatively higher EBITA in the
quarter.
Employees
The number of employees decreased by 560 to
9,674 at the end of Q3 2023, compared to 10,234
at the end of Q2 2023. The decrease is a direct
result of workforce reductions carried out in Min-
ing, Cement and NCA relating to footprint optimi-
sation, synergies from the acquisition of Mining
Technologies, the NCA exit incl. the sale to KOCH
Solutions as well as the sale of AFT within Ce-
ment.
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
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3
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
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3
Revenue
EBITA margin %
Adj. EBITA margin %
(500)
(300)
(100)
100
300
500
700
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3
Cement Mining Mining adj. NCA
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 16
Capital
Cash flow from operations was
negative in the quarter. The net
working capital ratio increased to
11.4% in Q3 2023.
Net working capital
Net working capital increased by DKK 254m to
DKK 2,796m at the end of Q3 2023 (end of Q2
2023: DKK 2,542m). The increase was primarily
driven by relatively lower trade payables due to
the payment to suppliers with larger orders and a
build-up of work in progress, which will be in-
voiced in coming quarters partly offset by a de-
crease in inventory levels. The corresponding net
working capital ratio increased from 10.1% of reve-
nue in Q2 2023 to 11.4% of revenue in Q3 2023.
Utilisation of supply chain financing decreased to
DKK 614m in Q3 2023 (Q2 2023: DKK 648m).
Cash flow from operating activities
Cash flow from operations (CFFO) in Q3 2023
amounted to DKK -276m (Q3 2022: DKK 476m).
The decrease was primarily a result of a change
in provisions and an increase in net working capi-
tal adversely impacting CFFO by DKK -442m. The
decrease was partly offset by the relatively higher
earnings in the quarter. Discontinued activities im-
pacted CFFO negatively by DKK 1m in Q3 2023
(Q3 2022: DKK 30m).
Cash flow from investing activities
Cash flow from investing activities amounted to
DKK 125m (Q3 2022: DKK -2,146m, of which DKK
2,103m relates to the acquisition of Mining Tech-
nologies).
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK -113m (Q3 2022: DKK 2,291m, as the payment
of the acquisition of Mining Technologies was
funded by an increase in net interest-bearing
debt).
Free cash flow
Free cash flow (cash flow from operating and in-
vesting activities) amounted to DKK -151m in Q3
2023 (Q3 2022: DKK -1,670m). Free cash flow, ad-
justed for business acquisitions and disposals
amounted to DKK -436m in the quarter (Q3 2022:
DKK 433m).
Net interest-bearing debt
Net interest-bearing debt (NIBD) at 30 September
2023 increased to DKK 1,325m (Q2 2023: DKK
1,214m). The financial gearing end of Q3 2023 re-
mained at 1.0x (Q2 2023: 1.0x) well below our tar-
get level.
Financial position
By the end of Q3 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 4.5 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 DKK 0.8bn of uncommitted credit
facilities available at the end of Q3 2023.
Equity ratio
Equity at the end of Q3 2023 increased to DKK
11,131m (end of Q2 2023: DKK 10,715m), driven by
increased profit and currency adjustments. The
equity ratio was 38.1% (Q2 2023: 36.7%).
Other business
In October 2023, Christopher Ashworth was ap-
pointed new President of FLSmidth Cement report-
ing to the Group CEO, Mikko Keto. This appoint-
ment follows the departure of the former President
of FLSmidth Cement, Asger Lauritsen, in August
2023. During the interim period Group CFO, Ro-
land M. Andersen, has in addition to his duties as
Group CFO served as interim President of FLS-
midth Cement.
Cash flow
DKKm
Net interest-bearing debt
DKKm
Net working capital
DKKm NWC%
(1,000)
0
1,000
2,000
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3
Net interest-bearing debt (NIBD)
0%
2%
4%
6%
8%
10%
12%
0
500
1,000
1,500
2,000
2,500
3,000
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3
Net working capital
Net working capital ratio, end
(600)
(400)
(200)
0
200
400
600
800
1,000
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3
Cash flow from operating activities
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 17
GROWTH
Order intake
Order intake decreased by 10% compared to 9M
2022. Excluding currency effects, order intake de-
creased by 7% compared to 9M 2022. Service or-
der intake decreased by 1% driven by Cement.
Products order intake decreased by 23%, driven
by both Mining and Cement.
9M 2022 included only one month of Mining Tech-
nologies activities, while 9M 2023 reflects our exit
from Russia. If excluding a high-level estimate of
the impact from our exit from Russia, the underly-
ing order intake would decrease by approxi-
mately 15% compared to 9M 2022.
Order backlog
Compared to 9M 2022, the order backlog de-
creased 22% to DKK 19,933m by end of 9M 2023
including Russian and Belarusian contracts of
around DKK 0.2bn. The lower backlog was a re-
sult of strong execution of the order backlog, de-
risking strategy, the divestments in Cement and
NCA, the exit of our Russian and Belarusian activi-
ties as well as wind-down of our NCA. Mining and
Cement order backlogs decreased by 25% and
22%, respectively.
Revenue
Revenue increased by 18% to DKK 18,138m com-
pared to 9M 2022. Excluding currency effects, rev-
enue increased by 22% compared to 9M 2022.
9M 2022 included only one month of Mining Tech-
nologies activities, while 9M 2023 reflects our exit
from Russia.
If excluding a high-level estimate of the impact
from our exit from Russia, the underlying revenue
growth would be approximately 12% compared to
9M 2022.
PROFIT
Gross profit and margin
Gross profit in the first nine months of 2023 in-
creased by 20% to DKK 4,530m. The correspond-
ing gross margin increased to 25.0% from 24.6% in
9M 2022, driven by the increased revenue and
our ongoing transformation efforts, partly offset by
costs related to the integration of Mining Technol-
ogies and the ongoing exit of our NCA segment.
In the first nine months of 2023, Research and De-
velopment costs amounted to DKK 274m (9M
2022: 239m), of which DKK 151m were capitalised
(9M 2022: 110m) and the balance reported as pro-
duction costs.
EBITA and margin
Adjusted EBITA of DKK 1,369m excludes integra-
tion costs of DKK 343m related to the acquisition
of Mining Technologies. The corresponding
adjusted Group EBITA margin was 7.5% in 9M
2023. Including integration costs, EBITA was DKK
1,026m with an EBITA margin of 5.7% in 9M 2023
compared to 6.1% in 9M 2022. Excluding the AFT
one-off net divestment gain, the underlying EBITA
margin was 5.1%. The NCA divestment to KOCH
Solutions had no material impact on EBITA.
Financial items
Net financial items amounted to DKK -57m (9M
2022: DKK -20m), of which net interest amounted
to DKK -66m (9M 2022: DKK -24m) and foreign ex-
change and fair value adjustments amounted to
DKK -9m (9M 2022: DKK 4m).
Tax
Tax for 9M 2023 totalled DKK -291m (9M 2022:
DKK -267m), corresponding to an effective tax rate
of 36.8% (9M 2022: 38.5%).
Profit for the period
Profit for the period was a gain of DKK 474m. Profit
for the period for continuing activities increased to
DKK 500m from DKK 426m in 9M 2022. Discontin-
ued activities reported a DKK 26m loss in 9M
2023, compared to a DKK 7m loss in the first nine
months of 2022.
Earnings per share
Earnings per share (diluted) increased to DKK 8.3
from DKK 7.7 in the first nine months of 2022
Consolidated financial performance 9M 2023
Growth in order intake in 9M 2023
(vs. 9M 2022)
Growth in revenue in 9M 2023 (vs.
9M 2022)
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
22%
2%
22%
Currency
-4%
-2%
-4%
Total growth
18%
0%
n/a
18%
*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 Q3
2022 includes Non-Core Activities.
Mining
Cement
Non-Core
Activities
FLSmidth
Group
Organic*
0%
-27%
-7%
Currency
-4%
-2%
-3%
Total growth
-4%
-29%
n/a
-10%
*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 Q3
2022 includes Non-Core Activities.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 18
CAPITAL
Net working capital
Net working capital increased to DKK 2,796m in
9M 2023 (end of 2022: DKK 1,893m). The corre-
sponding net working capital ratio was 11.4% of 12-
months trailing revenue, compared to 7.8% at the
end of 2022.
The increase related primarily to a lower trade
payables level due to the payment to suppliers
with larger orders, a decrease in prepayments
from customers due to the de-risking strategy and
a build-up of work in progress, which will be in-
voiced in coming quarters.
Cash flow from operating activities
Cash flow from operating activities decreased to
DKK –308m (9M 2022: DKK 192m) mainly due to
the decrease of DKK 1,074m from net working cap-
ital compared to 9M 2022 partly offset by the pos-
itive impact of DKK 250m in change in provisions
(9M 2022: DKK 86m).
Cash flow from investing activities
Cash flow used for investments was DKK -53m
compared to DKK -2,194m in 9M 2022 which in-
cluded cash flow related to the acquisition of Min-
ing Technologies.
Cash flow from financing activities
Cash flow from financing activities amounted to
DKK -212m 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 -604m in 9M 2023
(9M 2022: DKK 117m).
Balance sheet
Total assets decreased to DKK 29,236m by 30
September 2023 (end of 2022: DKK 29,845), pri-
marily due to the sale of AFT and the divestment
to KOCH Solutions.
Net interest-bearing debt
Net interest-bearing debt (NIBD) by 30 September
2023 increased to DKK 1,325m (end of 2022: DKK
726m). The increase in debt was primarily due to
the increase in working capital in the first nine
months of 2023. The Group’s financial gearing in
9M 2023 remained at 1.0x (end of 2022: 0.6x) fol-
lowing the increase in NIBD.
Equity
Equity at end 9M 2023 increased to DKK 11,131m
(end of 2022: DKK 10,787m). The increase was
driven by currency adjustments and dividend paid
out amounting to DKK 170m.
Treasury shares
The holding of treasury shares as of 30 Septem-
ber 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 pro-
grammes.
Cash flow from operating activities
DKKm
Cash flow from investing activities
DKKm
Free cash flow
DKKm
-350
-250
-150
-50
50
150
250
9M 2022 9M 2023
Cash flow from operating activities
(2,250)
(1,750)
(1,250)
(750)
(250)
9M 2022 9M 2023
Cash flow from investing activities
-2,200
-1,700
-1,200
-700
-200
300
9M 2022 9M 2023
Free cash flow
Free cash flow adjusted for net business acquisitons
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 20
Income statement
Statement of comprehensive income
Notes
DKKm
Q3
2023
Q3
2022
9M
2023
9M
2022
3, 4
Revenue
Production costs
(4,087 )
(4,190 )
(13,608 )
(11,572 )
Gross profit
Sales costs
(407 )
(438 )
(1,265 )
(1,174 )
Administrative costs
(779 )
(594 )
(2,116 )
(1,475 )
10
Other operating net income
EBITDA
Depreciation and impairment of property,
plant and equipment and lease assets
(78 )
(85 )
(249 )
(246 )
EBITA
Amortisation and impairment
of intangible assets
(56 )
(78 )
(178 )
(230 )
EBIT
Financial income
Financial costs
(272 )
(454 )
(1,152 )
(1,216 )
EBT
Tax for the period
(161 )
(104 )
(291 )
(267 )
Profit for the period, continuing activities
3, 7
Profit (loss) for the period, discontinued activities
(2 )
(4 )
(26 )
(7 )
Profit for the period
Attributable to:
Shareholders in FLSmidth & Co. A/S
Minority interests
(2 )
(5 )
(3 )
(20 )
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
Q3
2023
Q3
2022
9M
2023
9M
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
(30 )
Cash flow hedging:
- Value adjustments for the period
(15 )
(48 )
(100 )
- Value adjustments transferred to work in progress
(2 )
Tax of total other comprehensive income
(3 )
(16 )
Other comprehensive income for the period after tax
Comprehensive income for the period
Attributable to:
Shareholders in FLSmidth & Co. A/S
Minority interests
(4 )
(4 )
(19 )
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 21
Cash flow statement
Notes
DKKm
Q3
2023
Q3
2022
9M
2023
9M
2022
EBITDA
3
EBITDA, discontinued activities
(1 )
(5 )
(14 )
(9 )
Adjustment for gain on sale of property, plant and
equipment and other non-cash items
(87 )
(79 )
EBITDA adjusted to reflect cash flows
Change in provisions, pension and employee benefits
(97 )
8
Change in net working capital
(442 )
(1,074 )
(761 )
Cash flow from operating activities before financial items
and tax
(89 )
Financial items received and paid
(29 )
(7 )
(67 )
(36 )
Taxes paid
(158 )
(25 )
(599 )
(277 )
Cash flow from operating activities
(276 )
(308 )
9
Acquisition of enterprises and activities
(2,103 )
(42 )
(2,119 )
Acquisition of intangible assets
(88 )
(61 )
(208 )
(145 )
Acquisition of property, plant and equipment
(76 )
(29 )
(134 )
(62 )
Acquisition of financial assets
(1 )
(11 )
(3 )
(20 )
10
Disposal of enterprises and activities
Disposal of property, plant and equipment
Disposal of financial assets
Dividend from associates
Cash flow from investing activities
(2,146 )
(53 )
(2,194 )
Dividend paid
(170 )
(170 )
Buyout of minority interests
(13 )
Acquisition of treasury shares
(1 )
(1 )
Repayment of lease liabilities
(29 )
(32 )
(96 )
(93 )
Change in net interest bearing debt
(83 )
Cash flow from financing activities
(113 )
(212 )
Change in cash and cash equivalents
(264 )
(573 )
Cash and cash equivalents at beginning of period
Foreign exchange adjustment, cash and cash equivalents
(47 )
Cash and cash equivalents at 30 September
The cash flow statement cannot be inferred from the published financial information only
Free cash flow
DKKm
Q3
2023
Q3
2022
9M
2023
9M
2022
Free cash flow
(151 )
(1,670 )
(361 )
(2,002 )
Free cash flow, adjusted for acquisitions and disposals of
enterprises and activities
(436 )
(604 )
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 22
Balance sheet
Notes
DKKm
30/09 2023
31/12 2022
30/09 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
30/09 2023
31/12 2022
30/09 2022
Equity and liabilities
Share capital
Foreign exchange adjustments
(550 )
(517 )
Cash flow hedging
(46 )
(70 )
(139 )
Retained earnings
Shareholders in FLSmidth & Co. A/S
Minority interests
(26 )
(26 )
(22 )
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 9M 2023 23
Equity statement
9M 2023
9M 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
(3 )
(20 )
Other comprehensive income
Actuarial gains/(losses) on
defined benefit plans
Currency adjustments
regarding
translation of entities
(33 )
(33 )
(30 )
Cash flow hedging:
- Value adjustments for the
period
(100 )
(100 )
(100 )
- Value adjustments
transferred to work in progress
Tax on other comprehensive
income
(16 )
(16 )
(16 )
Other comprehensive income
total
(33 )
(85 )
Comprehensive income for
the period
(33 )
(85 )
(19 )
Transactions with owners:
Dividend paid
(170 )
(170 )
(170 )
(170 )
(170 )
(170 )
Share-based payment
Buyout of minority interests
(13 )
(13 )
(13 )
Acquisition of treasury shares
(1 )
(1 )
(1 )
Equity at 30 September
(550 )
(46 )
(26 )
(139 )
(22 )
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 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 Acquisition 30
10. Disposal of activities 31
11. Events after the balance sheet date 31
12. Accounting policies 31
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report 9M 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.
9M 2023 showed an active mining market in ma-
jor commodities albeit with some adverse effects
from delayed large capital investment decisions.
For the cement market, relatively stable market
conditions in the beginning of the year have dur-
ing second and third quarters of 2023 been im-
pacted by the general slow-down in market de-
mand.
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 nine
months 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. The initial accounting of the acquisi-
tion has been finalised in Q3 2023 and led to an in-
crease in goodwill of DKK 108m, consisting of an in-
crease in the purchase price of DKK 72m and a
decrease in net assets of DKK 36m. Further infor-
mation can be found in note 9.
2. Income statement
by function
It is our policy to prepare the income statement
based on an adjusted classification of the cost by
function in order to show the earnings before 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
Q3
2023
Q3
2022
9M
2023
9M
2022
Revenue
5,723
5,621
18,138
15,354
Production costs
(4,144)
(4,273)
(13,809)
(11,815)
Gross profit
1,579
1,348
4,329
3,539
Sales costs, including depreciation and amortisation
(412)
(447)
(1,283)
(1,200)
Administrative costs, including depreciation and amortisation
(851)
(665)
(2,324)
(1,682)
Other operating net income
88
20
126
56
EBIT
404
256
848
713
Depreciation, amortisation
and impairment consist of:
Depreciation and impairment of property, plant and equipment and
lease assets
(78)
(85)
(249)
(246)
Amortisation and impairment of intangible assets
(56)
(78)
(178)
(230)
(134)
(163)
(427)
(476)
Depreciation, amortisation
and impairment are divided into:
Production costs
(57)
(83)
(201)
(243)
Sales costs
(5)
(9)
(18)
(26)
Administrative costs
(72)
(71)
(208)
(207)
(134)
(163)
(427)
(476)
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report 9M 2023 26
3. Segment information
9M 2023
9M 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
12,630
4,651
857
18,138
0
10,708
4,646
15,354
0
Production costs
(9,216)
(3,478)
(914)
(13,608)
(9)
(8,046)
(3,526)
(11,572)
(6)
Gross profit
3,414
1,173
(57)
4,530
(9)
2,662
1,120
3,782
(6)
SG&A costs
3)
(2,261)
(929)
(191)
(3,381)
(5)
(1,699)
(950)
(2,649)
(3)
Other operating net income
3)
2
124
0
126
0
13
43
56
0
EBITDA
1,155
368
(248)
1,275
(14)
976
213
1,189
(9)
Depreciation and impairment of property, plant and equipment
and lease assets
(170)
(64)
(15)
(249)
0
(167)
(79)
(246)
0
EBITA
985
304
(263)
1,026
(14)
809
134
943
(9)
Amortisation and impairment of intangible assets
(127)
(51)
0
(178)
0
(160)
(70)
(230)
0
EBIT
858
253
(263)
848
(14)
649
64
713
(9)
Order intake
12,712
3,844
200
16,756
0
13,243
5,390
18,633
0
Order backlog
13,859
5,438
636
19,933
0
18,502
6,974
25,476
0
Gross margin
27.0%
25.2%
-6.7%
25.0%
24.9%
24.1%
24.6%
EBITDA margin
9.1%
7.9%
-28.9%
7.0%
9.1%
4.6%
7.7%
EBITA margin
7.8%
6.5%
-30.7%
5.7%
7.6%
2.9%
6.1%
EBIT margin
6.8%
5.4%
-30.7%
4.7%
6.1%
1.4%
4.6%
Number of employees at 30 September
6,588
2,869
217
9,674
0
8,154
3,666
11,820
0
Reconciliation of profit for the period
EBIT
848
(14)
713
(9)
Financial income
1,095
3
1,196
1
Financial costs
(1,152)
(15)
(1,216)
(2)
EBT
791
(26)
693
(10)
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.
3) Other operating net income is presented as a separate line item instead of presented together with SG&A cost. Comparative information has been restated.
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report 9M 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 NCA segment re-
flects execution of the backlog and 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 September 2023
amounted to DKK 19,933m (end of 9M 2022: DKK
25,476m).
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 9M 2023
%
Revenue split by Regions 9M 2022
%
Backlog
DKKm
23%
26%
18%
14%
19%
NAMER
SAMER
ECANA
SSAMESA
APAC
25%
22%
19%
16%
18%
NAMER
SAMER
ECANA
SSAMESA
APAC
5,605
2,929
15,031
11,111
4,840
5,893
0
4,000
8,000
12,000
16,000
20,000
24,000
28,000
9M 2022 9M 2023
Within current year Within next year
Subsequent years
19%
59%
22%
29%
56%
15%
Revenue split by recognition principle
9M 2023
9M 2022
DKKm
Mining
Cement
Non-Core
Activities
Group
Mining
Cement
Group
Point in time
7,344
2,015
356
9,715
5,687
1,929
7,616
Percentage of completion
- Service, single machines and product bundles
4,438
2,313
0
6,751
3,342
2,248
5,590
- Product bundles with engineering under enhanced risk governance
848
323
501
1,672
1,679
469
2,148
Total revenue
12,630
4,651
857
18,138
10,708
4,646
15,354
Revenue split on industry and category
9M 2023
9M 2022
DKKm
Mining
Cement
Non-Core
Activities
Group
Mining
Cement
Group
Products business
4,454
2,174
557
7,185
4,158
2,064
6,222
Service business
8,176
2,477
300
10,953
6,550
2,582
9,132
Total revenue
12,630
4,651
857
18,138
10,708
4,646
15,354
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FLSmidth
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Interim Report 9M 2023 28
5. Provisions
Provisions increased by DKK 267m compared to
31 December 2022. The increase relates primarily
to restructuring provisions following the implemen-
tation of our transformation strategy and from pro-
visions for loss-making contracts in the NCA seg-
ment.
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 September 2023
amounted to DKK 2.9bn excluding the Mining
Technologies issued corporate guarantees men-
tioned 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 2.4bn
(31 December 2022: DKK 3.3bn). At the end of
2022, additional corporate contract-support guar-
antees to customers of DKK 0.8bn was outstand-
ing. By the end of September 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
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 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
30/09 2023
31/12 2022
30/09 2022
Provisions at 1 January
2,507
1,147
1,147
Foreign exchange adjustments
3
(17)
30
Acquisition of Group enterprises
15
682
600
Additions
1,141
1,388
516
Used
(721)
(461)
(301)
Reversals
(171)
(232)
(105)
Provisions
2,774
2,507
1,887
The split of provisions is as follows:
Warranties
926
980
961
Restructuring
521
404
30
Other provisions
1,327
1,123
896
2,774
2,507
1,887
The maturity of provisions is specified as follows:
Current liabilities
1,882
1,611
1,152
Non-current liabilities
892
896
735
2,774
2,507
1,887
Provisions related to continued activities
DKKm
30/09 2023
31/12 2022
30/09 2022
Provisions at 1 January
2,390
999
999
Foreign exchange adjustments
3
(17)
30
Acquisition of Group enterprises
15
682
600
Additions
1,136
1,385
516
Used
(712)
(428)
(282)
Reversals
(169)
(231)
(105)
Provisions
2,663
2,390
1,758
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report 9M 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 328m (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 September 2023 has in-
creased by DKK 0.9bn compared to 31 December
2022. The increase relates primarily to a lower
trade payables level due to the payment to sup-
pliers with larger orders, a decrease in prepay-
ments from customers due to the de-risking strat-
egy creating a slow-down in Products orders and
a build-up of work in progress, which will be in-
voiced in coming quarters.
Utilisation of supply chain financing increased in
the first nine months of 2023 to DKK 614m (31 De-
cember 2022: DKK 590m).
Discontinued activities’ effect on cash flow from operating activities
DKKm
9M
2023
12M
2022
9M
2022
EBITDA
(14)
(10)
(9)
Change in provisions
(6)
(31)
(19)
Change in net working capital
43
(6)
(35)
Cash flow from operating activities before financial items and tax
23
(47)
(63)
Financial items received and paid
(4)
(3)
(1)
Cash flow from operating activities
19
(50)
(64)
Discontinued activities’ share of Group provisions disclosed in note 5
DKKm
30/09 2023
31/12 2022
30/09 2022
Provisions at 1 January
117
148
148
Additions
5
3
0
Used
(9)
(33)
(19)
Reversals
(2)
(1)
0
Provisions
111
117
129
Net working capital
DKKm
30/09 2023
31/12 2022
30/09 2022
Inventories
3,847
3,971
4,030
Trade receivables
4,855
5,108
5,572
Work in progress, assets
3,450
3,147
3,440
Prepayments
548
874
1,004
Other receivables
1,030
1,030
1,055
Derivative financial instruments
32
54
72
Prepayments from customers
(2,180)
(2,771)
(2,712)
Trade payables
(3,719)
(4,339)
(4,580)
Work in progress, liability
(3,512)
(3,592)
(3,988)
Other liabilities
(1,513)
(1,509)
(1,556)
Derivative financial instruments
(42)
(80)
(167)
Net working capital
2,796
1,893
2,170
Change in net working capital
(903)
(835)
(1,112)
Acquisitions/disposal of activities, financial instruments and foreign
exchange effect on cash flow
(171)
389
351
Cash flow effect from change in net working capital
(1,074)
(446)
(761)
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report 9M 2023 30
9. Business Acquisitions
Mining Technologies
The provisional purchase price allocation pre-
sented in Annual report 2022 regarding the acqui-
sition of Mining Technologies (ex-TK) on 31 August
2022 (note 2.10) has been updated and finalised
in Q3 2023 to reflect new information obtained
about facts and circumstances that existed on 31
August 2022. This includes the finalisation of the
project reviews and the agreement with the Seller
on the final adjustments to the purchase price, the
latter being mainly the net of adjustments related
to net working capital at closing and the resolu-
tion of a dispute on adjustments related to the
project business. In total, the final adjustments
amounted to DKK 72m that was paid in the begin-
ning of Q4 2023.
The table below shows the final purchase price al-
location and the resulting increase in goodwill of
DKK 108m compared to the provisional purchase
price allocation presented in Annual report 2022.
The changes include the impact from the final ad-
justment of DKK 72m and a decrease in net assets
of DKK 36m. The decrease in net assets reflects
changes in the estimated fair value of property,
plant and equipment of DKK -45m, increase in pro-
ject related provisions of DKK 12m and impact on
net assets of DKK 21m from changes in tax assets
and tax liabilities.
Acquisition in 2023
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.
Business Acquisitions 2022 (Mining Technologies)
Allocation of purchase price on assets acquired and liabilities assumed (DKKm)
31/08 2022
Final
Patents and IP rights
65
Customer relations
32
Land and buildings
379
Other tangible assets
183
Deferred tax assets
60
Inventories
820
Trade and other receivables
1,113
Work in progress
181
Other current assets
368
Cash
1,019
Total assets
4,220
Pension liabilities
180
Other non-current liabilities
121
Provisions
694
Prepayments from customers
119
Work in progress
783
Trade payables
564
Other current liabilities
632
Total liabilities
3,093
Total identifiable net assets
1,127
Goodwill
2,067
Purchase price
3,194
Cash
1,019
Net cash transferred to the seller in 2022 (apart from DKK 72m to be transferred in Q4 2023)
2,175
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
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Interim Report 9M 2023 31
10. Disposal of activities
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 was completed on 1 September 2023 and led
to the derecognition of assets and liabilities of
around DKK 160m and DKK 50m, respectively,
and a reduction in the backlog in Non-Core Activi-
ties of around DKK 400m. The transaction had an
immaterial impact in the income statement in Q3
2023, subject to final price adjustments not yet
determined.
On 14 July 2023, FLSmidth Cement sold its Ad-
vance 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 completion of the trans-
action led to the derecognition of assets and lia-
bilities of around DKK 230m and DKK 80m, re-
spectively, and a reduction in the order backlog in
Cement of DKK 0.1bn. The transaction led to a
gain of around DKK 100m, subject to final price
adjustments not yet determined.
Gain and losses from disposal of activities are in-
cluded in the line item ‘Other operating net in-
come’.
11. 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 30 September 2023.
12. Accounting policies
The condensed interim report of the Group for the
first nine months of 2023 is presented in accord-
ance with IAS 34, Interim Financial Reporting, as
approved 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 9M 2023 33
Valby, 9 November 2023
Executive management
Board of directors
Statement by Management
Management review Consolidated Condensed Financial Statements Notes Statements
FLSmidth
■
Interim Report 9M 2023 34
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 9M 2023 35
Interim Report
1 January – 30 September 2023
Tel.: +45 36 18 18 00
Fax: +45 36 44 11 46
CVR No. 58180 912