FLSmidth & Co.

Annual Report (ESEF) • Aug 15, 2024

FLSmidth & Co. A/S Interim Report H1 2024 1 January – 30 June 2024 Company announcement no. 10 FLSmidth & Co. A/S Vigerslev Allé 77 DK-2500 Valby CVR No. 58180912 FLSmidth ■ Interim Report H1 2024 2 Management review Highlights Q2 2024 4 Financial performance highlights 5 Sustainability performance highlights 6 Key figures 7 2024 financial guidance 8 Mining financial performance 9 Cement financial performance 11 Non-Core Activities financial performance 13 Consolidated financial performance Q2 2024 14 Consolidated financial performance H1 2024 17 Consolidated Condensed Interim 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. Financial costs 28 5. Provisions 28 6. Contractual commitments and contingent liabilities 28 7. Discontinued activities 28 8. Net working capital 29 9. Business acquisitions 29 10. Disposal of activities 29 12. Events after the balance sheet date 30 13. Accounting policies 30 Statements Statement by Management 32 Forward looking statements 33 Contents Introduction Highlights Business Mining business Cement business Non-Core Activities Financial performance Governance Financial statements FLSmidth ■ Interim Report H1 2024 3 Management review Highlights Q2 2024 4 Financial performance highlights 5 Sustainability performance highlights 6 Key figures 7 2024 financial guidance 8 Mining financial performance 9 Cement financial performance 11 Non-Core Activities financial performance 13 Consolidated financial performance Q2 2024 14 Consolidated financial performance H1 2024 17 Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 4 Our performance in the first half of the year is a testament to our continued strong progression across all of our core transformation activities, with additional improvements in profitability for both Mining and Cement. In Mining, we delivered an Adjusted EBITA margin of 13.1% in the second quarter of the year - the highest level in many years. This was driven by strong margin execution and a continued robust performance by our Service business. We con- tinue to see a stable and healthy service market, whereas the products market remains soft due to persisting hesitation by some customers on larger investment decisions. Our Cement business achieved an Adjusted EBITA margin of 9.6% in the second quarter of the year, demonstrating our successful efforts in simplifying its operat- ing model and driving Service growth in our core market clusters. The largely sta- ble cement market continues to provide good opportunities for the Service busi- ness, whereas we continue to de-risk the Products business to preserve profitability. The process for the divestment of the Cement business is progressing according to plan and it remains our expectation that a potential transaction can take place at the earliest by the end of 2024. Looking ahead, the resilience of our service-oriented business model, our contin- ued focus on business simplification to ensure a cost-efficient operating model and our dedicated focus on strategy execution gives us great confidence that we are well on track to meet our long-term financial ambitions for both Mining and Cement. Mikko Keto, Group CEO Mining Cement ■ 7% growth in Service order in- take, whereas the significant de- cline in Products orders reflects market softness ■ Revenue decline of 13% primar- ily reflects timing of the execu- tion of certain Products orders ■ Strong gross margin driven by mix and good backlog execution ■ Continued profitability progress with adj. EBITA margin of 13.1% ■ Service order intake growth in core market clusters partly off- sets impacts from de-risking and divestments ■ Revenue declined by 32% as a result of portfolio pruning and di- vestments ■ Adj. EBITA margin of 9.6% re- flecting strong margin execution and lower SG&A costs ■ Divestment process proceeding according to plan Sustainability Performance and other ■ Continued good progression on all our Science Based Targets ■ Safety performance improved from end of 2023 but remains be- hind our 2024 target ■ First commercial REFLUX™ flota- tion cell order, supporting our MissionZero programme ■ Continued business simplification with >2,000 less FTEs vs. Q2’23 ■ Dedicated focus on implementing a cost-efficient operating model and corporate structure over the next 12-18 months ■ Financial guidance for 2024, as set out on 7 August 2024, is maintained Highlights Q2 2024 Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 5 Financial performance highlights Mining Cement Non-Core Activities Group Order intake (DKKm) ▼ -18.8% 3,423 Order intake (DKKm) ▼ -21.2% 1,006 Order intake (DKKm) ▼ -78.1% 7 Order intake (DKKm) ▼ -19.7% 4,436 Revenue (DKKm) ▼ -13.1% 3,783 Revenue (DKKm) ▼ -32.3% 1,131 Revenue (DKKm) ▼ -88.4% 44 Revenue (DKKm) ▼ -22.5% 4,958 EBITA & EBITA margin (DKKm - %) ▲ 16.7% 434 11.5% (adj. 13.1%) EBITA & EBITA margin (DKKm - %) ▲ 31.5% 96 8.5% (adj. 9.6%) EBITA & EBITA margin (DKKm - %) ▲ 13.3% (99) -225.0% EBITA & EBITA margin (DKKm - %) ▲ 29.8% 431 8.7% (adj. 10.2%) Revenue split by Service & Products (%) Revenue split by Service & Products (%) Revenue split by Service & Products (%) Cash flow from operating activities DKK 14m ▼ from DKK 372m in Q2 2023 Earnings per share DKK 3.2 ▲ from DKK 2.0 in Q2 2023 Net working capital ratio 9.4% ▼ from 10.1% end of Q2 2023 NIBD/EBITDA 0.7x ▼ from 1.0x end of Q2 2023 4,215 3,423 Q2 2023 Q2 2024 1,276 1,006 Q2 2023 Q2 2024 32 7 Q2 2023 Q2 2024 11,155 9,684 5,523 4,436 H1 2023 H1 2024 Q2 2023 Q2 2024 4,351 3,783 Q2 2023 Q2 2024 1,670 1,131 Q2 2023 Q2 2024 378 44 Q2 2023 Q2 2024 12,415 9,797 6,399 4,958 H1 2023 H1 2024 Q2 2023 Q2 2024 372 434 Q2 2023 Q2 2024 73 96 Q2 2023 Q2 2024 (113) (99) Q2 2023 Q2 2024 567 796 332 431 H1 2023 H1 2024 Q2 2023 Q2 2024 68% (Q2 2023: 65%) 32% (Q2 2023: 35%) Service Products 57% (Q2 2023: 52%) 43% (Q2 2023: 48%) Service Products 55% (Q2 2023: 34%) 45% (Q2 2023: 66%) Service Products Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 6 Sustainability performance highlights Scope 1 and 2 greenhouse gas emissions tCO 2 e (market-based) Scope 3: Economic intensity (use of sold products) tCO 2 e/DKKm order intake Spend with suppliers with sci- ence-based targets % MissionZero developments Through our MissionZero programme, we enable our customers to drive their green transition by providing innovative technologies and solutions across the full flowsheet. First REFLUX™ flotation cell order Included in order intake for the quarter, FLSmidth re- ceived its first commercial order for our REFLUX™ flotation cell (RFC) with a US based customer. The RFC delivers fast and high-efficiency flotation, which raises the stand- ard when it comes to concentrate grade and recovery. The RFC significantly shifts the grade and recovery curve, whilst at the same time reducing energy consumption and significantly increasing throughput. Solar panel car park installation at FLS- midth manufacturing site FLSmidth recently completed the installation of 914 solar panels over our parking structure in Tucson, Arizona. The solar panel system will generate enough electricity to cover 35% of the annual power consumption of the facility and, when combined with certified renewable energy cer- tificates from local utilities, the project is expected to off- set 100% of our electrical consumption and reduce our carbon footprint by approximately 600t CO 2 per annum. The project has been designed to also provide a shaded parking area for more than 100 cars, enhancing safety in a city that sees temperatures often above 38 C. 16,817 Target: 39,445 in 2024 14.8% improvement 3,050 Target: 4,065 by 2030 43.8% improvement 19.2 Target: 15% in 2024 6.6%-points improvement Scope 1 and 2 CO 2 emissions declined by 14.8% com- pared to H1 2023. Consolidation of Mining Technolo- gies sites during 2023 and the sale of MAAG in Q1 2024 continue to be supportive in reducing emissions. Further emissions reduction initiatives, such as the Tuc- son solar panel project completed during Q2 2024, will further contribute to our emissions target for 2024. Scope 3 economic intensity for H1 2024 declined by 43.8% compared to 2023. The significant reduction is driven by the order mix, with Mining orders represent- ing a greater share of order intake relative to Cement orders year-to-date. Cement Product orders within pyro systems remain subdued and is a key driver to our eco- nomic intensity. We expect quarterly volatility with this KPI relating to order mix. Spend with suppliers with science-based targets in- creased by 6.6%-points compared to 2023. Perfor- mance for the first half of the year was supported by a greater share of our large suppliers committing to the Science Based Targets initiative. The improvement re- flects our ongoing engagement with suppliers to pro- mote environmentally responsible practices. Water withdrawal m 3 Women managers % Safety (Total recordable injury rate) Total recordable injury rate/million working hours 71,828 Target: 192,738 in 2024 4.7% improvement 15.0 Target: 18.4% in 2024 1.3%-points reduction 2.5 Target: 1.1 in 2024 0.5 improvement Water withdrawal was reduced by 4.7% compared to H1 2023. Consolidation of Mining Technologies sites during 2023 and the sale of MAAG were supportive for the performance year-to-date. However, with- drawal has trended upwards during Q2 2024 due to seasonal impacts. Performance remains on track to meet our annual target. The percentage of women managers decreased during the first half of 2024. Further delayering within the or- ganisation resulted in several managers moving to an individual contributor role. These changes largely im- pacted parts of the organisation with a higher repre- sentation of our female workforce. We will continue with our initiatives to progress toward our targets de- spite short term swings. Safety performance has improved compared to H1 2023 but we remain behind our target for the full year. To support improvement, we implemented several initi- atives towards the end of 2023. This has improved per- formance and stabilised the incident rate, and we will continue our efforts toward our long-term target of ‘Zero Harm’. 19,742 16,817 H1 2023 H1 2024 5,430 3,050 2023 H1 2024 12.6% 19.2% 2023 H1 2024 75,382 71,828 H1 2023 H1 2024 16.3% 15.0% 2023 H1 2024 3.0 2.5 H1 2023 H1 2024 Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 7 Key figures DKKm, unless otherwise stated Q2 2024 Q2 2023 H1 2024 H1 2023 2023 Income statement Revenue 4,958 6,399 9,797 12,415 24,106 Gross profit 1,579 1,497 2,993 2,894 6,087 EBITDA 501 415 943 737 1,761 EBITA 431 332 796 567 1,438 Adjusted EBITA 506 429 949 791 1,919 EBIT 372 267 677 444 1,200 Financial items, net (80) (73) (82) (89) (146) EBT 292 194 595 355 1,054 Profit for the period, continuing activities 187 123 381 226 672 Loss for the period, discontinued activities 0 (5) 0 (24) (181) Profit for the period 187 118 381 202 491 Orders Order intake 4,436 5,523 9,684 11,155 21,376 Order backlog 16,518 20,544 17,593 Earning ratios Gross margin 31.8% 23.4% 30.6% 23.3% 25.3% EBITDA margin 10.1% 6.5% 9.6% 5.9% 7.3% EBITA margin 8.7% 5.2% 8.1% 4.6% 6.0% Adjusted EBITA margin 10.2% 6.7% 9.7% 6.4% 8.0% EBIT margin 7.5% 4.2% 6.9% 3.6% 5.0% EBT margin 5.9% 3.0% 6.1% 2.9% 4.4% Cash flow Cash flow from operating activities (CFFO) 14 372 (338) (32) 623 Acquisitions of property, plant and equipment (80) (34) (138) (58) (176) Cash flow from investing activities (CFFI) (103) (154) (57) (178) (257) Free cash flow (89) 218 (395) (210) 366 Free cash flow adjusted for acquisitions and disposals of enterprises and activities (89) 260 (543) (168) 201 Balance sheet Net working capital 2,021 2,542 1,382 Net interest-bearing debt (NIBD) (1,227) (1,214) (639) Total assets 28,086 29,217 27,011 CAPEX 293 215 604 Equity 11,112 10,715 10,828 Dividend to shareholders, paid 227 170 227 170 170 DKKm, unless otherwise stated Q2 2024 Q2 2023 H1 2024 H1 2023 2023 Financial ratios Book-to-bill 89.5% 86.3% 98.8% 89.9% 88.7% Order backlog / Revenue 76.9% 83.7% 73.0% Return on equity 6.1% 3.8% 4.5% Equity ratio, end 39.6% 36.7% 40.1% ROCE, average 8.3% 5.0% 8.2% Net working capital ratio, end 9.4% 10.1% 5.7% NIBD / EBITDA 0.7.x 1.0x 0.4x Capital employed 18,211 18,041 17,552 Number of employees 8,225 10,234 9,377 Share ratios Cash flow per share (CFPS), (diluted), (DKK) 0.2 6.5 (5.9) (0.6) 10.9 Earnings per share (EPS), (diluted), (DKK) 3.2 2.0 6.5 3.6 8.7 Share price, (DKK) 346.2 330.2 287.2 Number of shares (1,000), end 57,650 57,650 57,650 Market capitalisation, end 19,958 19,036 16,557 Sustainability key figures Scope 1 & 2 GHG emissions (tCO2e) market-based 16,817 19,742 38,022 Scope 3 Economic intensity 3,050 5,430 Spend with suppliers with science-based targets 19.2% 10.5% 12.6% Water withdrawal (m3) 71,828 75,382 167,610 Women managers 15.0% 16.1% 16.3% Safety, TRIR Total Recordable Injury Rate (including contractors) 2.5 3.0 2.7 Other key figures Quality, DIFOT Delivery In Full On Time 84.1% 83.0% 81.9% Use of alternative performance measures Throughout the report, we present financial measures which are not defined according to IFRS. We refer to note 7.4, Alternative performance measures, and note 7.8, Definition of terms, in the 2023 Annual Report for further information. The financial ratios have been computed in accordance with the guidelines of the Danish Finance Society. Refer to note 7.8 in the 2023 Annual Report for definitions of terms. To reflect the underlying business performance, we present an adjusted EBITA margin by excluding costs related to our ongoing transformation activities and the separation of Mining and Cement. In 2023, adjustments were made for integration costs related to the integration of Mining Technologies. From 1 January 2024, the remaining responsibilities to finalise legacy projects within discontinued activities are included in Non-Core Activities. From 2024, we measure Scope 3 Economic intensity quarterly as year to date number. Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 8 2024 financial guidance Financial guidance for 2024, as set out in Company Announcement no. 9-2024 on 7 August 2024, is maintained. The guidance reflects the ongoing busi- ness simplification and transformation efforts, continued improvement in the core Mining business, realisation of the full cost synergies from the Mining Technologies acquisition, continued profitability progress in the Cement business and the ongoing exit from the Non-Core Activities segment. Mining Cement Non-Core Activities Group Guidance May 2024 Guidance August 2024 Guidance May 2024 Guidance August 2024 Guidance May 2024 Guidance August 2024 Guidance May 2024 Guidance August 2024 Revenue (DKKbn) 16.0-17.0 ∼ 15.5 (7.4) Revenue (DKKbn) 4.0-4.5 4.0-4.5 (2.3) Revenue (DKKm) 250-350 200-300 (94) Revenue (DKKbn) 20.0-21.5 ∼ 20.0 (9.8) Adj. EBITA margin 11.5-12.5% 12.5-13.0% (12.3%) Adj. EBITA margin 5.5-6.5% 8.0-9.0% (8.6%) Adj. EBITA margin 9.0-10.0% 10.0-11.0% (9.7%) EBITA (DKKm) Loss of 200-300 Loss of 200-300 (Loss of 161) EBITA margin 7.5-8.5% 8.5-9.5% (8.1%) The numbers in brackets represent H1 2024 results. We expect the mining service market to remain stable, whereas the products market remains soft due to persistent hesitation by some customers on larger investment decisions. Longer term, the mining industry continues to benefit from a posi- tive outlook for minerals crucial to continued global economic development and a successful green energy transition. The guidance for the adjusted EBITA margin in- cludes an adjustment for transformation and sep- aration costs of around DKK 200m for the full year 2024. The adjusted EBITA margin is im- pacted by the realisation of the full cost syner- gies from the Mining Technologies acquisition, cost base inflation and re-investment of parts of the synergies into key commercial areas to sup- port our CORE’26 strategy and to fuel our long- term growth ambitions. We expect the short-term outlook for the cement industry to remain impacted by macroeconomic uncertainty. The guidance for revenue and adjusted EBITA margin reflects the ongoing execution of the ‘GREEN’26’ strategy, continued business simplifi- cation and product portfolio pruning, including the completed sale of the MAAG business in Q1 2024. Further, the guidance for adjusted EBITA margin includes an adjustment for transformation and separation costs of around DKK 100m for the full year 2024. The guidance for revenue reflects continued exe- cution of the order backlog and contract negotia- tions aimed at reducing the scope of the remain- ing Non-Core Activities order backlog. The EBITA margin guidance reflects the operational loss- making nature of the business as well as costs re- lated to finalising the exit of the business seg- ment by end of 2024. The Consolidated Group guidance reflects the sum of the guidance for the three business seg- ments. The guidance for 2024 is subject to uncertainties stemming from the current macroeconomic and geopolitical environment. Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 9 The mining service market remains stable with increased customer appetite for upgrading and rebuilding equipment to extend equipment life and improve operational efficiency as well as continued interest in smaller capex opportunities to increase production. We have continued to observe a stable mining service market, with customers continuously look- ing to service providers for ways of enhancing their operational efficiency and extending equip- ment life through upgrades and rebuilds. Further, we continue to see good interest in services which enable increased mineral throughput and recov- ery rates as well as lower energy usage, which in combination will not only lead to enhanced opera- tional efficiency but will also greatly improve cus- tomers’ sustainability performance. We have seen interest in smaller capex opportuni- ties to increase production and improve process performance, although larger project awards con- tinue to be delayed due to persisting hesitation by some customers on larger investment decisions. However, activity within gold project is somewhat of an exception with a slight positive development in the quarter. Despite continued volatility in commodity prices, optimism on the longer-term demand outlook per- sists, bolstered by encouraging indicators from major economies and growing needs from the en- ergy transition. Order intake development in Q2 2024 Mining order intake decreased by 19% compared to Q2 2023, due to lower Products order intake. Excluding currency effects, the order intake de- creased by 17%. Service order intake increased by 7% compared to Q2 2023, mainly driven by consumables and up- grades & retrofits. In the quarter, a leading Chil- ean iron ore miner awarded FLSmidth with a multi- year contract to service its five high-pressure grinding rolls (HPGRs) across three of its mines in Chile. Key focus for the customer has been to en- hance productivity and extend the lifetime of its HPGRs. Products order intake decreased by 61% com- pared to Q2 2023 as a result of our general de- risking approach as well as continued customer hesitation to approve larger brownfield and green- field expansions. In addition, no large orders were signed in the quarter compared to two large, an- nounced Products orders with a combined value of around DKK 785m signed in Q2 2023. During the quarter, Service and Products orders accounted for 82% and 18% of the total order in- take, respectively, compared to 62% and 38% in Q2 2023. Order intake development in H1 2024 H1 2024 order intake, compared to H1 2023, de- creased by 9% to DKK 7,599m. Excluding currency effects order intake decreased by 7%. Service order intake increased by 1% in H1 2024, reflecting stable and healthy market conditions for mining service activities. Products order intake decreased by 30% as cus- tomers continue to hesitate on large capital in- vestments, combined with an ongoing environ- ment of political uncertainties and permitting issues. Two large Products orders with a com- bined value of DKK 680m were announced in H1 2024 compared to three large orders with a com- bined value of DKK 1.1bn announced in H1 2023. During the first half of the year, Service and Prod- ucts order intake represented 73% and 27% of Mining order intake, respectively, compared to 66% and 34% in H1 2023. Mining financial performance Order intake split by region, Q2 2024 Order intake split by Service and Products, Q2 2024 Order intake split by commodity, Q2 2024 12% 19% 11% 31% 27% ECANA APAC SSAMESA SAMER NAMER 82% (Q2 2023: 62%) 18% (Q2 2023: 38%) Service Products 53% 13% 3% 1% 9% 21% Copper Gold Coal Fertilizer Iron ore Other Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 10 Revenue development in Q2 2024 Revenue decreased by 13% compared to Q2 2023. Excluding currency effects, revenue de- creased by 12%. Service revenue decreased by 10% compared to Q2 2023 to DKK 2,557m. The year-on-year de- crease was primarily due to lower revenue within spare parts and professional services driven by timing of order execution in South America as well as Q2 2023 included order execution from two major orders. The decline was partly offset by rel- atively higher revenue within consumables. Products revenue decreased by 19% compared to Q2 2023 driven by our de-risking strategy and timing of the execution of certain larger Products orders. Service and Products revenue comprised 68% and 32% of total Mining revenue in Q2 2024. Gross profit development in Q2 2024 Gross profit increased by 14% to DKK 1,263m, from DKK 1,107m in Q2 2023. The corresponding gross margin increased from 25.4% in Q2 2023 to 33.4% in Q2 2024. The strong gross margin was a result of good execution on higher-margin orders follow- ing our de-risking strategy. EBITA development in Q2 2024 The Adjusted EBITA margin was 13.1% when ex- cluding transformation and separation costs of DKK 63m related to our ongoing separation of the Mining and Cement businesses as well as the on- going business simplification. The higher Adjusted EBITA margin was driven by the improvement in gross profit partly offset by an increase in SG&A costs due to new hirings in key commercial areas. The EBITA margin increased to 11.5% from 8.6% in Q2 2023. Revenue development in H1 2024 Mining revenue decreased by 14% compared to H1 2023. Excluding currency effects, revenue de- creased by 12%. Service revenue decreased by 10% compared to H1 2023 primarily as a result of lower revenue within spare parts as well as the ongoing exit from basic labour services. Products revenue decreased by 20% as a result of our de- risking strategy and timing of the execution of cer- tain larger Products orders. Gross profit development in H1 2024 Gross profit increased by 12% to DKK 2,443m in H1 2024. The corresponding gross margin of 33.2% was driven by good execution on higher-margin orders and lower cost of production resulted from the realised synergies from the business simplifi- cation. EBITA development in H1 2024 EBITA increased by 24% in H1 2024 with a corre- sponding EBITA margin of 10.9%, reflecting good execution on higher-margin orders, partly offset by relatively higher SG&A costs due to new hir- ings in key commercial areas. Excluding transfor- mation and separation costs of DKK 104m, the ad- justed EBITA margin was 12.3%. Employees The number of employees in Mining has been re- duced by 632 since the end of Q2 2023. This re- duction reflects the synergy takeout related to the integration of Mining Technologies and the busi- ness simplification, partly offset by new hirings in key commercial areas to fuel our long-term growth ambitions to support our CORE’26 strat- egy. Mining financial performance Growth in order intake and revenue in Q2 2024 (vs. Q2 2023) Revenue and EBITA margin DKKm EBITA margin % Revenue split by Service and Products, Q2 2024 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 2022 Q3 Q4 Q1 2023 Q2 Q3 Q4 Q1 2024 Q2 Products Service EBITA margin % Adj. EBITA margin % 68% (Q2 2023: 65%) 32% (Q2 2023: 35%) Service Products Order intake Revenue Organic -17% -12% Currency -2% -1% Total growth -19% -13% Mining (DKKm) Q2 2024 Q2 2023 Change (%) H1 2024 H1 2023 Change (%) Order intake 3,423 4,215 -19% 7,599 8,392 -9% - Hereof service order intake 2,794 2,615 7% 5,578 5,517 1% - Hereof products order intake 629 1,600 -61% 2,021 2,875 -30% Order backlog 11,852 13,472 -12% 11,852 13,472 -12% Revenue 3,783 4,351 -13% 7,364 8,536 -14% - Hereof service revenue 2,557 2,833 -10% 4,961 5,533 -10% - Hereof products revenue 1,226 1,518 -19% 2,403 3,003 -20% Gross profit 1,263 1,107 14% 2,443 2,172 12% Gross margin 33.4% 25.4% 33.2% 25.4% Adjusted EBITA 497 469 6% 908 869 4% Adjusted EBITA margin 13.1% 10.8% 12.3% 10.2% EBITA 434 372 17% 804 646 24% EBITA margin 11.5% 8.6% 10.9% 7.6% Number of employees 6,110 6,742 -9% 6,110 6,742 -9% Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 11 Q2 2024 has shown promising signs for the Cement business, continuing the positive trend that began earlier in the year. While global cement demand is relatively unchanged, regional outlooks vary widely, with pockets of high demand in parts of the world. Q2 2024 has shown tight competition among ce- ment producers in mature markets, such as Eu- rope and the US, and rising input prices are driv- ing investments in optimisation, efficiency, and cost optimisation efforts. Meanwhile, in some re- gional markets, especially in India, growing infra- structure investments are driving a demand in- crease driven by housing and commercial construction as well as infrastructure development projects by the government. We anticipate these trends will support a prolonged appetite for ce- ment plant equipment and services. In the longer term, there will be a growing and sig- nificant need for solutions and services that sup- port decarbonisation, such as calcined clay, alter- native fuel solutions, energy efficient technologies and digital offerings. We are already seeing ce- ment producers in countries such as Turkey and Egypt making investments in green solutions, driven by rising primary fuel costs as well as the anticipation of the EU Carbon Border Adjustment Mechanism (CBAM) and possible equivalents in other developed markets. Finally, despite a slow cement demand and overcapacity in China, ce- ment producers are also implementing technolo- gies to minimise their environmental footprint in line with the government’s strict requirements. Order intake development in Q2 2024 Cement order intake decreased by 21% in Q2 2024 compared to Q2 2023, as a result of lower Products order intake and due to the divestment of the AFT and MAAG businesses. Excluding di- vestments and currency effects of 5%, the organic order intake decreased by 16%. Service order intake increased by 1% compared to Q2 2023, despite the AFT divestment in Q3 2023 and the sale of the MAAG business in Q1 2024. We have seen continued strong growth in orders for spare parts and professional services within our core market clusters, partly offset by lower or- ders for upgrades & retrofits. Product order intake decreased by 53% compared to Q2 2023, driven in part by the continued prun- ing of our product portfolio, following our de-risk- ing strategy and the impact of divestments. Service and Products comprised 75% and 25% of the total Cement order intake in Q2 2024, respec- tively, compared to 59% and 41% in Q2 2023. Order intake development in H1 2024 Cement order intake in H1 2024 declined by 22%. This was mainly due to a 46% decrease in Prod- ucts order intake compared to H1 2023, driven by the same factors as in Q2 2024. Excluding divest- ments and currency effects of 4%, the order intake decreased organically by 18%. Service order intake decreased by 6% compared to H1 2023 mainly driven by lower orders related to upgrades and retrofits. The decrease was partly offset by an increase in orders for our core offerings, spare parts and professional services, as a result of stable market conditions and our ability to offset the impact of the recent divest- ments of AFT and MAAG with growth in share of wallet in our installed customer base. Order intake split by cluster in Q2 2024 For more information on clusters, please refer to page 31 in the 2023 Annual Report Order intake split by Service and Products, Q2 2024 Cement financial performance 23% 5% 14% 5% 1% 33% 3% 16% India Turkey Denmark China Indonesia Export cluster Brazil US 75% (Q2 2023: 59%) 25% (Q2 2023: 41%) Service Products Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 12 Revenue development in Q2 2024 Revenue decreased by 32% compared to Q2 2023. Excluding the effect from divestments and currency of 8%, revenue decreased organically by 24%. Service revenue decreased by 26% compared to Q2 2023 due to the divestments of the AFT and MAAG businesses in Q3 2023 and Q1 2024, re- spectively. Products revenue decreased by 40% compared to Q2 2023 driven in part by the contin- ued pruning of our product portfolio, following our de-risking strategy and the impact of divestments. Service and Products comprised 57% and 43% of total Cement revenue in Q2 2024, respectively, compared to 52% and 48% in Q2 2023. Gross profit development in Q2 2024 Gross profit decreased by 16% compared to Q2 2023 as a result of the lower revenue, partly off- set by good execution on higher-margin orders. However, the corresponding gross margin in- creased by 6.1%-points to 31% in Q2 2024 com- pared to Q2 2023, which represents the highest gross margin achieved in several years. EBITA development in Q2 2024 The Adjusted EBITA margin was 9.6% when ex- cluding transformation and separation costs of DKK 12m related to the ongoing separation of the Mining and Cement businesses as well as our on- going business simplification. The higher Adjusted EBITA margin was driven by the improvement in gross profit and a reduction in SG&A costs. EBITA increased by 32% to DKK 96m compared to DKK 73m in Q2 2023. The corresponding EBITA margin improved by 4.2%-points to 8.5% in Q2 2024. Employees The number of employees in Cement was reduced by 966 compared to end Q2 2023. The reduction reflects the continued optimisation of our global footprint, simplification of the operating model to improve long-term profitability as well as the di- vestments of the AFT and MAAG businesses. Revenue development in H1 2024 Cement revenue decreased by 28% to DKK 2,339m in H1 2024. Service and Products revenue decreased by 22% and 35%, respectively, due to both the divestments and the continued pruning of our product portfolio as part of our de-risking strat- egy. Excluding divestments and currency effects of 7%, revenue decreased organically by 21%. Gross profit development in H1 2024 Gross profit decreased by 20% to DKK 627m in H1 2024 driven by the lower revenue. The corre- sponding gross margin of 26.8% was 2.6%-points higher than in H1 2023, driven by good execution on higher-margin orders. EBITA development in H1 2024 EBITA increased by 9% in H1 2024 with a corre- sponding EBITA margin of 6.6%, reflecting good execution on higher-margin orders and lower SG&A cost. Excluding transformation and separa- tion costs of DKK 49m, the Adjusted EBITA margin was 8.6%. Excluding the net gain of around DKK 30m from the sale of the MAAG business in Q1 2024, the EBITA margin was 5.3% and the Ad- justed EBITA margin was 7.4%. Cement financial performance Growth in order intake and revenue in Q2 2024 (vs. Q2 2023) Revenue and EBITA margin DKKm and EBITA margin Revenue split by Service and Products, Q2 2024 -4% -2% 0% 2% 4% 6% 8% 10% 12% 0 500 1,000 1,500 2,000 Q2 2022 Q3 Q4 Q1 2023 Q2 Q3 Q4 Q1 2024 Q2 Products Service EBITA margin % Adjusted EBITA margin 57% (Q2 2023: 52%) 43% (Q2 2023: 48%) Service Products Order intake Revenue Organic -16% -24% Divestments -5% -8% Currency 0% 0% Total growth -21% -32% Cement (DKKm) Q2 2024 Q2 2023 Change (%) H1 2024 H1 2023 Change (%) Order intake 1,006 1,276 -21% 2,048 2,620 -22% - Hereof service order intake 758 752 1% 1,478 1,565 -6% - Hereof products order intake 248 524 -53% 570 1,055 -46% Order backlog 4,231 5,658 -25% 4,231 5,658 -25% Revenue 1,131 1,670 -32% 2,339 3,252 -28% - Hereof service revenue 648 870 -26% 1,368 1,760 -22% - Hereof products revenue 483 800 -40% 971 1,492 -35% Gross profit 351 416 -16% 627 788 -20% Gross margin 31.0% 24.9% 26.8% 24.2% Adjusted EBITA 108 73 48% 202 141 43% Adjusted EBITA margin 9.6% 4.3% 8.6% 4.3% EBITA 96 73 32% 153 141 9% EBITA margin 8.5% 4.3% 6.6% 4.3% Number of employees 2,087 3,053 -32% 2,087 3,053 -32% Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 13 Order intake development in Q2 2024 Order intake for Non-Core Activities (NCA) of DKK 7m related to contractual obligations and orders of parts already in stock. Order backlog development in Q2 2024 The order backlog amounted to DKK 435m by the end of Q2 2024 representing a decrease of DKK 44m compared to Q1 2024 and a decrease of around DKK 0.1bn compared to Q4 2023. The de- crease reflected execution of the order backlog as well as continued re-scoping and contract termi- nations. The majority of the remaining executable order backlog is to be executed in countries within the Asia Pacific and Europe, Central Asia and Northern Africa regions. Revenue development in Q2 2024 Revenue amounted to DKK 44m in Q2 2024. Ser- vice and Products accounted for 55% and 45% of total NCA revenue, respectively. Gross profit development in Q2 2024 Gross profit was negative by DKK 35m reflecting the general volatility and operationally loss-mak- ing nature of the NCA segment. EBITA development in Q2 2024 EBITA for NCA amounted to DKK -99m driven by the negative gross profit and costs related to the ongoing exit of the activities in the segment. Order intake development in H1 2024 Order intake for NCA amounted to DKK 37m in H1 2024. Service and Products orders represented 11% and 89%, respectively. Revenue development in H1 2024 NCA revenue amounted to DKK 94m in H1 2024. Service and Products revenue represented 32% and 68%, respectively. Gross profit development in H1 2024 Gross profit amounted DKK -77m in H1 2024 with a corresponding gross margin of -81.9%. EBITA development in H1 2024 EBITA in H1 2024 amounted to DKK -161m with a corresponding EBITA margin of -171.3% reflecting the operationally loss-making nature of the NCA segment and costs related to the exit. It remains the expectation that the NCA segment will be fully exited by end-2024. Non-Core Activities financial performance Non-Core Activities (DKKm) Q2 2024 Q2 2023 Change (%) H1 2024 H1 2023 Change (%) Order intake 7 32 -78% 37 143 -74% - Hereof service order intake 4 21 -81% 4 101 -96% - Hereof products order intake 3 11 -73% 33 42 -21% Order backlog 435 1,414 -69% 435 1,414 -69% Revenue 44 378 -88% 94 627 -85% - Hereof service revenue 24 130 -82% 30 222 -86% - Hereof products revenue 20 248 -92% 64 405 -84% Gross profit (35) (26) -35% (77) (66) -17% Gross margin -79.5% -6.9% -81.9% -10.5% EBITA (99) (113) 12% (161) (220) 27% EBITA margin -225.0% -29.9% -171.3% -35.1% Number of employees 28 439 -94% 28 439 -94% Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 14 Order intake Order intake decreased by 20% in Q2 2024 to DKK 4,436m compared to DKK 5,523m in Q2 2023. Ex- cluding divestments in Cement and currency ef- fects of 2%, order intake decreased organically by 18%. Service order intake increased by 5% compared to Q2 2023, driven by higher order intake for the Mining business and a stable service order intake in the Cement business. Products order intake de- creased by 59% compared to Q2 2023 driven by lower order intake for both the Mining and Ce- ment businesses. Service and Products represented 80% and 20% of total order intake, respectively, compared to 61% and 39% in Q2 2023. Order backlog and maturity The order backlog decreased by 6% to DKK 16,518m compared to the prior quarter (Q1 2024: DKK 17,482m) as the order intake in Q2 2024 was more than offset by the de-risking strategy, con- tinued wind-down of the NCA segment and the ongoing execution of the order backlog. Outstanding order backlog related to Russian and Belarusian contracts was unchanged and amounted to DKK 0.1bn at the end of Q2 2024. The remaining orders are suspended by FLS- midth, and potential termination options are being investigated. Due to the uncertain nature of these contracts, they have been included in the backlog maturity for ‘Within 3 years and beyond’. Backlog maturity Mining Cement Non-Core Activities FLSmidth Group 2024 33% 25% 36% 31% 2025 54% 51% 0% 52% 2026 and beyond 13% 24% 64% 17% At the end of Q2 2024, outstanding backlog for the NCA segment amounted to DKK 435m. As a portion of the backlog is expected to be terminated, this has consequently been included in the backlog maturity for '2026 and beyond'. Revenue Revenue decreased by 23% to DKK 4,958 in Q2 2024, compared to Q2 2023, driven by lower rev- enue in both the Mining and Cement businesses. Excluding the effect of 3% from divestments in Ce- ment and currency, revenue decreased organi- cally by 20% compared to Q2 2023. The decrease in Service revenue by 16% com- pared to Q2 2023 was driven by both the Mining and Cement businesses. For Mining, the decrease was due to timing of order execution. For Cement, the development reflects the divestments. Products revenue decreased by 33% compared to Q2 2023. For Mining, the decrease was driven by our de-risking strategy and timing of the execu- tion of certain larger Products orders. For Cement, the decrease was driven by our de-risking strat- egy and divestments. Service and Products revenue accounted for 65% and 35% of total revenue in Q2 2024, respec- tively, compared to 60% and 40%, respectively, in Q2 2023. Consolidated financial performance Q2 2024 Order intake split by Service and Products Q2 2024 DKKm (1,000) 1,000 3,000 5,000 7,000 Q2 2022 Q3 Q4 Q1 2023 Q2 Q3 Q4 Q1 2024 Q2 Service order intake Products order intake Growth in order intake in Q2 2024 (vs. Q2 2023) Mining Cement Non-Core Activities FLSmidth Group Organic -17% -16% -80% -18% Divestments 0% -5% 0% -1% Currency -2% 0% 2% -1% Total growth -19% -21% -78% -20% Growth in revenue in Q2 2024 (vs. Q2 2023) Mining Cement Non-Core Activities FLSmidth Group Organic -12% -24% -88% -20% Divestments 0% -8% 0% -2% Currency -1% 0% 0% -1% Total growth -13% -32% -88% -23% Group (DKKm) Q2 2024 Q2 2023 Change (%) H1 2024 H1 2023 Change (%) Order intake 4,436 5,523 -20% 9,684 11,155 -13% - Hereof service order intake 3,556 3,388 5% 7,060 7,183 -2% - Hereof products order intake 880 2,135 -59% 2,624 3,972 -34% Order backlog 16,518 20,544 -20% 16,518 20,544 -20% Revenue 4,958 6,399 -23% 9,797 12,415 -21% - Hereof service revenue 3,229 3,833 -16% 6,359 7,515 -15% - Hereof products revenue 1,729 2,566 -33% 3,438 4,900 -30% Gross profit 1,579 1,497 5% 2,993 2,894 3% Gross margin 31.8% 23.4% 30.6% 23.3% SG&A cost (1,078) (1,095) -2% (2,086) (2,195) -5% SG&A ratio 21.7% 17.1% 21.3% 17.7% Adjusted EBITA 506 429 18% 949 791 20% Adjusted EBITA margin 10.2% 6.7% 9.7% 6.4% EBITA 431 332 30% 796 567 40% EBITA margin 8.7% 5.2% 8.1% 4.6% Number of employees 8,225 10,234 -20% 8,225 10,234 -20% SG&A cost has now been presented without Other operating net income. Comparative information has been restated. Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 15 Profit in Q2 2024 Gross profit and margin Gross profit increased by 5% to DKK 1,579m in Q2 2024, compared to DKK 1,497m in Q2 2023. The corresponding gross margin increased to 31.8% in Q2 2024 compared to 23.4% in Q2 2023. The gross margin reflects good execution of higher- margin orders following our de-risking strategy partly offset by lower revenue in the quarter. Fur- ther, the level represents the highest gross margin achieved in several years which applies to both the Mining and Cement segments. Research & development costs In Q2 2024, total research and development costs (R&D) amounted to DKK 69m, representing 1.4% of revenue (Q2 2023: 1.5%). (DKKm) Q2 2024 Q2 2023 Expensed 26 37 Capitalised 43 59 Total R&D 69 96 SG&A costs Sales, general and administrative costs (SG&A) decreased by 2% to DKK 1,078m compared to Q2 2023, reflecting positive effects from our ongoing transformation efforts and the realised synergies from the acquisition of Mining Technologies partly offset by transformation and separation costs. Further, currencies had a favourable impact on SG&A of DKK 9m in the quarter. SG&A costs as a percentage of revenue in- creased to 21.7% in Q2 2024 compared to 17.1% in Q2 2023 due to the lower revenue. EBITA and margin Excluding transformation and separation costs of DKK 75m, the Adjusted Group EBITA margin was 10.2% in Q2 2024 compared to 6.7% in Q2 2023. Including these costs, the EBITA margin was 8.7% in Q2 2024 compared to 5.2% in Q2 2023. Amortisation of intangible assets Amortisation of intangible assets amounted to DKK 59m (Q2 2023: DKK 65m). The effect of pur- chase price allocations amounted to DKK 11m (Q2 2023: DKK 11m) and other amortisation to DKK 48m (Q2 2023: DKK 54m). Financial items Net financial items amounted to DKK -80m (Q2 2023: DKK -73m), of which net interest amounted to DKK -39m (Q2 2023: DKK -20m) and foreign exchange and fair value adjustments amounted to DKK -2m (Q2 2023: DKK -53m). Financial items also included a loss from associates of DKK -39m (Q2 2023: DKK -12m) due to an impairment loss on the investment following a downward revision of expected future performance. Tax Tax in Q2 2024 totalled DKK -105m (Q2 2023: -71m), corresponding to an effective tax rate of 36.0% (Q2 2023: 36.6%). This includes impact from withholding tax in both periods. Profit for the period Profit in Q2 2024 was DKK 187m (Q2 2023: DKK 118m) driven by the improved profitability partly offset by an impairment loss of associates. Return on capital employed Return on capital employed (ROCE) increased to 8.3% (Q2 2023: 5.0%) due to higher earnings and a decrease in net working capital compared to Q2 2023. Employees The number of employees decreased by 544 to 8,225 at the end of Q2 2024, compared to 8,769 at the end of Q1 2024. The decrease was driven by workforce reductions across all business seg- ments relating to footprint optimisation and the continued rightsizing of the organisation. 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 2022 Q3 Q4 Q1 2023 Q2 Q3 Q4 Q1 2024 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 2022 Q3 Q4 Q1 2023 Q2 Q3 Q4 Q1 2024 Q2 Revenue EBITA margin % Adj. EBITA margin % (400) (200) 0 200 400 600 800 Q2 2022 Q3 Q4 Q1 2023 Q2 Q3 Q4 Q1 2024 Q2 Mining Mining adj. Cement Cement adj. NCA Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 16 Capital in Q2 2024 Cash flow from operating activities Cash flow from operating activities (CFFO) amounted to DKK 14m in Q2 2024 (Q2 2023: DKK 372m). The CFFO was negatively impacted by DKK 86m from an increase in net working capital and by DKK 190m from changes in provisions. In Q2 2023, the CFFO was positively impacted by changes in net working capital and provisions. Cash flow from investing activities Cash flow from investing activities amounted to DKK -103m (Q2 2023: DKK -154m) and was posi- tively impacted by DKK 60m from the sale of property, plant and equipment. Cash flow from financing activities Cash flow from financing activities amounted to DKK 42m (Q2 2023: DKK -180m) as paid dividend of DKK 227m was funded by interest-bearing debt. Free cash flow Free cash flow (the sum of cash flow from operat- ing and investing activities) amounted to DKK -89m in the quarter (Q2 2023: DKK 218m). Free cash flow adjusted for business acquisitions and disposals amounted to DKK -89m in Q2 2024 (Q2 2023: DKK 260m). Net working capital Net working capital increased by DKK 86m to DKK 2,021m at the end of Q2 2024 (end of Q1 2024: DKK 1,935m). The increase is primarily driven by the increase in amounts due from cus- tomers for work performed (i.e., net of trade re- ceivables, work-in-progress and prepayments for customers). The corresponding net working capital ratio in- creased from 8.4% of revenue in Q1 2024 to 9.4% in Q2 2024 in line with expectations. Utilisation of supply chain financing increased to DKK 504m in Q2 2024 (Q1 2024: 456m). Net interest-bearing debt Net interest-bearing debt (NIBD) at 30 June 2024 increased to DKK 1,227m (Q1 2024: DKK 830m). The financial gearing end of Q2 2024 amounted to 0.7x (Q1 2024: 0.5x) and remains comfortably below our target level of less than 2.0x. Financial position By the end of Q2 2024, FLSmidth had DKK 6.3bn of available committed credit facilities of which DKK 3.9bn remained undrawn. The committed credit facilities have a weighted average time to maturity of 3.8 years. Credit facilities of DKK 5.0bn and DKK 1.1bn will mature in 2027 and 2030, respectively. The re- maining DKK 0.2bn mature in later years. Addi- tionally, FLSmidth has DKK 0.8bn of uncommitted credit facilities available. Equity ratio Equity at the end of Q2 2024 increased to DKK 11,112m (end of Q1 2024: DKK 11,085m), driven pri- marily by currency adjustments, profit for the pe- riod and dividend paid out of DKK 227m. The eq- uity ratio was 39.6% at the end of Q2 2024 (end of Q1 2024: 41.2%). Treasury shares The holding of treasury shares as of 30 June 2024 has increased from Q1 2024 and amounts to 813,219 shares, representing 1.41% of the total share capital. Treasury shares are used to cover our obligations under the company’s share-based incentive programmes. The increase reflects pur- chase of shares for hedging the incentive pro- grammes. Cash flow DKKm Net interest-bearing debt DKKm Net working capital DKKm NWC% (500) 0 500 1,000 Q2 2022 Q3 Q4 Q1 2023 Q2 Q3 Q4 Q1 2024 Q2 Cash flow from operating activities (1,000) 0 1,000 2,000 Q2 2022 Q3 Q4 Q1 2023 Q2 Q3 Q4 Q1 2024 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 2022 Q3 Q4 Q1 2023 Q2 Q3 Q4 Q1 2024 Q2 Net working capital Net working capital ratio, end Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 17 Order intake Order intake decreased by 13% to DKK 9,684m and by 11% excluding divestments and currency effects. Services order intake decreased by 2% driven by Cement. Products order intake de- creased by 34%, driven by both Mining and Ce- ment. Mining Service orders increased by 1% in H1 2024 reflecting stable and healthy market conditions for mining service activities. Mining Products or- ders decreased by 30% as customers continue to hesitate larger capital investments combined with an ongoing environment of permitting delays as well as our de-risking approach. H1 2023 included three large Mining Products orders with a com- bined value of around DKK 1.1bn compared to two large Mining Products orders announced in H1 2024 with a combined value of around DKK 680m. Excluding currency effects, Mining order in- take decreased 7% in H1 2024 compared to H1 2023. Cement order intake decreased by 22% primarily due to a 46% decrease in Products order intake compared to H1 2023 driven by the continued pruning of our product portfolio, exit from larger projects and divestments. Cement Service order intake decreased 6% compared to H1 2023 driven by the AFT and MAAG divestments. Order backlog The order backlog decreased by 20% to DKK 16,518m by end of Q2 2024. The lower backlog is related to both Mining and Cement, which de- creased by 12% and 25%, respectively. Revenue Revenue decreased by 21% to DKK 9,797m in H1 2024 comprising a 14% decrease in Mining and a 28% decrease in Cement. Excluding divestments and currency effects revenue decreased by 18% compared to H1 2023. In line with expectations, H1 2024 included DKK 94m in revenue from Non- Core Activities. Mining revenue comprised a decrease of 10% in Service revenue and a 20% in Products revenue due to our de-risking strategy and timing of the execution of certain orders. In the first half year of 2024, Cement showed a decrease of 22% and 35% in Service and Products revenue, respec- tively due to the divestments and continued prun- ing of the product portfolio following our de-risk- ing strategy. Profit in H1 2024 Gross profit and margin Gross profit in the first half year of 2024 in- creased by 3% to DKK 2,993m. The correspond- ing gross margin increased by 7.3%-points to 30.6%. The strong gross margin was driven by good execution on higher-margin orders and lower cost of production partly offset by the cost related to the ongoing exit from our Non-Core Ac- tivities segment. Research and Development costs were DKK 140m (H1 2023: 178m), of which DKK 69m were capital- ised (H1 2023: 89m). EBITA and margin Adjusted EBITA of DKK 949m exclude transfor- mation and separation costs of DKK 153m. The corresponding adjusted Group EBITA margin was 9.7% in H1 2024. Including transformation and separation cost, EBITA was DKK 796m with an EBITA margin of 8.1% in H1 2024 compared to 4.6% in H1 2023. Excluding the net gain of around DKK 30m from the sale of the MAAG business, the EBITA margin was 7.8% and the Adjusted EBITA margin was 9.4%. Financial items Net financial items amounted to DKK -82m (H1 2023: DKK -89m), of which foreign exchange and fair value adjustments amounted to DKK 30m (H1 2023: DKK -52m). Net interest amounted to DKK -72m (H1 2023: DKK -37m). Financial items also in- clude a loss from associates of -40m (H1 2023: DKK -12m) due to an impairment loss on the in- vestment following a downward revision of ex- pected future performance. Tax Tax for H1 2024 totalled DKK -214m (H1 2023: DKK -129m), corresponding to an effective tax rate of 36.0% (H1 2023: 36.3%). Profit for the period Profit for the period was a gain of DKK 381m com- pared to a DKK 202m gain in the first half year of 2023. Earnings per share Earnings per share (diluted) increased to DKK 6.5 from DKK 3.6 in the first half year of 2023. Consolidated financial performance H1 2024 Growth in order intake in H1 2024 (vs. H1 2023) Growth in revenue in H1 2024 (vs. H1 2023) EBITA split by segment DKKm Mining Cement Non-Core Activities FLSmidth Group Organic -12% -21% -85% -18% Divestments 0% -7% 0% -1% Currency -2% 0% 0% -2% Total growth -14% -28% -85% -21% Mining Cement Non-Core Activities FLSmidth Group Organic -7% -18% -73% -11% Divestments 0% -4% 0% 0% Currency -2% 0% -1% -2% Total growth -9% -22% -74% -13% (200) 300 800 1,300 H1 2023 H1 2024 Mining Mining adj. Cement Cement adj. NCA Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 18 Capital in H1 2024 Net working capital Net working capital increased in H1 2024 to DKK 2,021m (end of 2023: DKK 1,382m). The corre- sponding net working capital ratio was 9.4% of 12- months trailing revenue, compared to 5.7% at the end of 2023. The increase was primarily driven by payments to suppliers leading to a reduction in trade payables and increases in prepayments as the increased cash collection from customers in Q1 2024 was offset by increases in Q2 2024 in amounts due from customers for work performed. Cash flow from operating activities Cash flow from operating activities decreased to DKK -338m (H1 2023: DKK -32m). CFFO was neg- atively impacted by DKK 736m from the increase in working capital and by DKK 70m from changes in provisions. In H1 2023, changes in provisions impacted CFFO positively. Cash flow from investing activities Cash flow used for investments was DKK -57m compared to DKK -178m in the first half year of 2023. Cash flow from financing activities Cash flow from financing activities amounted to DKK 555m as the negative cash flow from opera- tions of DKK 338m and paid dividend of DKK 227m was funded by interest-bearing debt. Free cash flow Free cash flow (the sum of cash flow from operat- ing and investing activities) amounted to DKK -395m (H1 2023: DKK -210m). Free cash adjusted for business acquisitions and disposals amounted to DKK -543m in H1 2024 (H1 2023: DKK -168m). Balance sheet Total assets increased to DKK 28,086m by 30 June 2024 (end of 2023: DKK 27,011), primarily re- lated to increased net working capital assets and cash. Net interest-bearing debt Net interest-bearing debt (NIBD) by 30 June 2024 increased to DKK 1,227m (end of 2023: DKK 639m). The increase in debt was primarily due to the increase in working capital in the first half of 2024. The Group’s financial gearing in H1 2024 increased to 0.7x (end of 2023: 0.4x) following the increase in NIBD. Equity Equity at end H1 2024 increased to DKK 11,112m (end of 2023: DKK 10,828m). The increase was driven by currency adjustments, profit for the pe- riod and dividend paid out amounting to DKK 227m. Treasury shares The holding of treasury shares as of 30 June 2024 has decreased from year end 2023 and amounts to 813,219 shares, representing 1.41% 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 (200) (100) 0 100 H1 2023 H1 2024 Cash flow from operating activities (200) (100) 0 100 H1 2023 H1 2024 Cash flow from investing activities (600) (500) (400) (300) (200) (100) 0 100 H1 2023 H1 2024 Free cash flow Free cash flow adjusted for net business acquisitons Management review Consolidated Condensed Interim Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 19 Consolidated Condensed Interim Financial statements Income statement 20 Statement of comprehensive income 20 Cash flow statement 21 Balance sheet 22 Equity statement 23 Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 20 Income statement Statement of comprehensive income Notes DKKm Q2 2024 Q2 2023 H1 2024 H1 2023 3, 4 Revenue 4,958 6,399 9,797 12,415 Production costs (3,379) (4,902) (6,804) (9,521) Gross profit 1,579 1,497 2,993 2,894 Sales costs (446) (425) (862) (858) Administrative costs (632) (670) (1,224) (1,337) 10 Other operating net income 0 13 36 38 EBITDA 501 415 943 737 Depreciation and impairment of property, plant and equipment and lease assets (70) (83) (147) (170) EBITA 431 332 796 567 Amortisation and impairment of intangible assets (59) (65) (119) (123) EBIT 372 267 677 444 Financial income 183 367 407 791 Financial costs (263) (440) (489) (880) EBT 292 194 595 355 Tax for the period (105) (71) (214) (129) Profit for the period, continuing activities 187 123 381 226 3, 7 Profit (loss) for the period, discontinued activities 0 (5) 0 (24) Profit for the period 187 118 381 202 Attributable to: Shareholders in FLSmidth & Co. A/S 181 117 375 203 Minority interests 6 1 6 (1) 187 118 381 202 Earnings per share (EPS): Continuing and discontinued activities per share (DKK) 3.2 2.0 6.6 3.6 Continuing and discontinued activities per share, diluted (DKK) 3.2 2.0 6.5 3.6 Continuing activities per share (DKK) 3.2 2.1 6.6 4.0 Continuing activities per share, diluted (DKK) 3.2 2.1 6.5 4.0 Notes DKKm Q2 2024 Q2 2023 H1 2024 H1 2023 Profit for the period 187 118 381 202 Items that will not be reclassified to profit or loss: Actuarial gains on defined benefit plans 0 4 5 9 Items that are or may be reclassified subsequently to profit or loss: Currency adjustments regarding translation of entities 83 (25) 148 (152) Reclassification of currency adjustments on disposal (18) 0 (18) 0 Cash flow hedging: - Value adjustments for the period (10) 1 (15) 29 - Value adjustments transferred to work in progress (1) 4 2 9 Tax of total other comprehensive income 2 (2) 1 (13) Other comprehensive income for the period after tax 56 (18) 123 (118) Comprehensive income for the period 243 100 504 84 Attributable to: Shareholders in FLSmidth & Co. A/S 239 96 499 80 Minority interests 4 4 5 4 243 100 504 84 Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 21 Cash flow statement Notes DKKm Q2 2024 Q2 2023 H1 2024 H1 2023 EBITDA 501 415 943 737 Adjustment for gain on sale of property, plant and equipment and other non-cash items 23 19 6 8 Change in provisions, pension and employee benefits (190) 174 (70) 347 8 Change in net working capital (86) 62 (736) (632) Cash flow from operating activities before financial items and tax 248 666 143 447 Financial items received and paid (38) (20) (72) (38) Taxes paid (196) (274) (409) (441) Cash flow from operating activities 14 372 (338) (32) 9 Acquisition of enterprises and activities 0 (42) (93) (42) Acquisition of intangible assets (83) (77) (124) (120) Acquisition of property, plant and equipment (80) (34) (138) (58) Acquisition of financial assets 0 (2) (3) (2) 10 Disposal of enterprises and activities 0 0 241 0 Disposal of property, plant and equipment 60 1 60 34 Disposal of financial assets 0 0 0 1 Dividend from associates 0 0 0 9 Cash flow from investing activities (103) (154) (57) (178) Dividend paid (227) (170) (227) (170) Buyout of minority interests 0 (13) 0 (13) Acquisition of treasury shares (19) 0 (19) 0 Repayment of lease liabilities (21) (38) (49) (67) Change in interest bearing debt 309 41 850 151 Cash flow from financing activities 42 (180) 555 (99) Change in cash and cash equivalents (47) 38 160 (309) Cash and cash equivalents at beginning of period 1,560 1,757 1,352 2,130 Foreign exchange adjustment, cash and cash equivalents (1) (41) 0 (67) Cash and cash equivalents at 30 June 1,512 1,754 1,512 1,754 The cash flow statement cannot be inferred from the published financial information only. Free cash flow DKKm Q2 2024 Q2 2023 H1 2024 H1 2023 Free cash flow (89) 218 (395) (210) Free cash flow, adjusted for acquisitions and disposals of enterprises and activities (89) 260 (543) (168) Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 22 Balance sheet Notes DKKm 30/06 2024 31/12 2023 30/06 2023 Assets Goodwill 6,560 6,448 6,356 Patents and rights 653 688 731 Customer relations 311 331 359 Other intangible assets 116 143 131 Completed development projects 137 174 174 Intangible assets under development 776 653 527 Intangible assets 8,553 8,437 8,278 Land and buildings 1,640 1,777 1,908 Plant and machinery 342 391 461 Operating equipment, fixtures and fittings 98 117 120 Tangible assets in course of construction 210 104 67 Property, plant and equipment 2,290 2,389 2,556 Deferred tax assets 2,206 2,314 1,941 5 Investments in associates 41 81 130 Other securities and investments 56 56 56 Other non-current assets 2,303 2,451 2,127 Non-current assets 13,146 13,277 12,961 Inventories 3,544 3,450 3,978 Trade receivables 4,658 4,516 4,821 Work in progress 3,018 2,769 3,279 Prepayments 516 423 717 Income tax receivables 602 229 526 Other receivables 1,090 995 1,181 Cash and cash equivalents 1,512 1,352 1,754 Current assets 14,940 13,734 16,256 Total assets 28,086 27,011 29,217 Notes DKKm 30/06 2024 31/12 2023 30/06 2023 Equity and liabilities Share capital 1,153 1,153 1,153 Foreign exchange adjustments (748) (879) (674) Cash flow hedging (45) (32) (32) 11 Retained earnings 10,776 10,615 10,290 Shareholders in FLSmidth & Co. A/S 11,136 10,857 10,737 Minority interests (24) (29) (22) Equity 11,112 10,828 10,715 Deferred tax liabilities 210 207 236 Pension obligations 337 363 404 5 Provisions 675 660 856 Lease liabilities 87 132 187 Bank loans and mortgage debt 2,350 1,633 2,646 Prepayments from customers 190 338 532 Income tax liabilities 110 110 103 Other liabilities 41 53 90 Non-current liabilities 4,000 3,496 5,054 Pension obligations 2 2 2 5 Provisions 1,574 1,635 1,967 Lease liabilities 83 101 101 Bank loans and mortgage debt 144 54 46 Prepayments from customers 1,994 1,595 1,713 Work in progress 3,417 3,025 3,505 Trade payables 3,523 4,024 4,166 Income tax payables 359 277 336 Other liabilities 1,878 1,974 1,612 Current liabilities 12,974 12,687 13,448 Total liabilities 16,974 16,183 18,502 Total equity and liabilities 28,086 27,011 29,217 Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 23 Equity statement H1 2024 H1 2023 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 1,153 (879) (32) 10,615 10,857 (29) 10,828 1,153 (517) (70) 10,247 10,813 (26) 10,787 Comprehensive income for the period Profit/loss for the period 375 375 6 381 203 203 (1) 202 Other comprehensive income Actuarial gains/(losses) on defined benefit plans 5 5 5 9 9 9 Currency adjustments regarding translation of entities 149 149 (1) 148 (157) (157) 5 (152) Reclassification of currency adjustments on disposal (18) (18) (18) 0 0 Cash flow hedging: - Value adjustments for the period (15) (15) (15) 29 29 29 - Value adjustments transferred to work in progress 2 2 2 9 9 9 Tax on other comprehensive income 1 1 1 (13) (13) (13) Other comprehensive income total 0 131 (13) 6 124 (1) 123 0 (157) 38 (4) (123) 5 (118) Comprehensive income for the period 0 131 (13) 381 499 5 504 0 (157) 38 199 80 4 84 Transactions with owners: Dividend paid (227) (227) (227) (170) (170) (170) Share-based payment 26 26 26 27 27 27 Buyout of minority interests 0 0 (13) (13) (13) Acquisition of treasury shares (19) (19) (19) Equity at 30 June 1,153 (748) (45) 10,776 11,136 (24) 11,112 1,153 (674) (32) 10,290 10,737 (22) 10,715 Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 24 Notes 1. Key accounting estimates and judgements 25 2. Income statement by function 25 3. Segment information 26 4. Revenue 27 5. Financial costs 28 5. Provisions 28 6. Contractual commitments and contingent liabilities 28 7. Discontinued activities 28 8. Net working capital 29 9. Business acquisitions 29 10. Disposal of activities 29 12. Events after the balance sheet date 30 13. Accounting policies 30 Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 25 1. Key accounting estimates and judgements When preparing the consolidated condensed in- terim financial statements, we are required to make several estimates and judgements. The esti- mates and judgements that can have a significant impact on the consolidated condensed interim fi- nancial statements are categorised as key ac- counting estimates and judgements. Key account- ing estimates and judgements are regularly assessed to adapt to the market conditions and changes in political and economic factors. Areas affected by key accounting estimates and judgements are unchanged from the Annual re- port 2023, however, with no significant business acquisition made during the period. Therefore, key accounting judgements are made in relation to the accounting of revenue when determining the recognition method, while key accounting esti- mates relate to the estimation of warranty provi- sions and the valuation of inventories, trade re- ceivables, work in progress and deferred tax assets. For further details, reference is made to Annual Report 2023, Key accounting estimates and judgements, page 69 and to specific notes. 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 2024 Q2 2023 H1 2024 H1 2023 Revenue 4,958 6,399 9,797 12,415 Production costs (3,447) (4,976) (6,944) (9,665) Gross profit 1,511 1,423 2,853 2,750 Sales costs, including depreciation and amortisation (452) (433) (873) (871) Administrative costs, including depreciation and amortisation (687) (736) (1,339) (1,473) Other operating net income 0 13 36 38 EBIT 372 267 677 444 Depreciation, amortisation and impairment consist of: Depreciation and impairment of property, plant and equipment and lease assets (70) (83) (147) (170) Amortisation and impairment of intangible assets (59) (65) (119) (123) (129) (148) (266) (293) Depreciation, amortisation and impairment are divided into: Production costs (68) (74) (140) (144) Sales costs (6) (8) (11) (13) Administrative costs (55) (66) (115) (136) (129) (148) (266) (293) Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 26 3. Segment information H1 2024 H1 2023 FLSmidth Group DKKm Mining Cement Non-Core Activities Total Mining Cement Non-Core Activities Continuing activities Discontinue d activities¹ Revenue 7,364 2,339 94 9,797 8,536 3,252 627 12,415 0 Production costs (4,921) (1,712) (171) (6,804) (6,364) (2,464) (693) (9,521) (8) Gross profit 2,443 627 (77) 2,993 2,172 788 (66) 2,894 (8) SG&A cost (1,540) (485) (61) (2,086) (1,427) (628) (140) (2,195) (5) Other operating net income 22 31 (17) 36 18 25 (5) 38 0 EBITDA 925 173 (155) 943 763 185 (211) 737 (13) Depreciation and impairment of property, plant and equipment and lease assets (121) (20) (6) (147) (117) (44) (9) (170) 0 EBITA 804 153 (161) 796 646 141 (220) 567 (13) Amortisation and impairment of intangible assets (105) (14) 0 (119) (85) (37) (1) (123) 0 EBIT 699 139 (161) 677 561 104 (221) 444 (13) Order intake 7,599 2,048 37 9,684 8,392 2,620 143 11,155 0 Order backlog 11,852 4,231 435 16,518 13,472 5,658 1,414 20,544 0 Gross margin 33.2% 26.8% -81.9% 30.6% 25.4% 24.2% -10.5% 23.3% EBITDA margin 12.6% 7.4% -164.9% 9.6% 8.9% 5.7% -33.7% 5.9% EBITA margin 10.9% 6.6% -171.3% 8.1% 7.6% 4.3% -35.1% 4.6% EBIT margin 9.5% 6.0% -171.3% 6.9% 6.6% 3.2% -35.2% 3.6% Number of employees at 30 June 6,110 2,087 28 8,225 6,742 3,053 439 10,234 0 Reconciliation of profit before tax for the period EBIT 677 444 (13) Financial income 407 791 2 Financial costs (489) (880) (13) EBT 595 355 (24) 1) From 1 January 2024, the remaining responsibilities to finalise legacy projects related to the non-mining bulk material handling sold in 2019 is included in Non-Core Activities. In 2023, it was presented as discontinued activities. Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 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 2023. Backlog The order backlog at 30 June 2024 amounted to DKK 16,518m (end of H1 2023: DKK 20,544m). 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 2024 % Revenue split by Regions H1 2023 % Backlog DKKm 27% 26% 14% 14% 19% NAMER SAMER ECANA SSAMESA APAC 24% 26% 19% 13% 18% NAMER SAMER ECANA SSAMESA APAC 2,290 2,808 11,964 8,589 6,290 5,121 0 5,000 10,000 15,000 20,000 25,000 H1 2023 H1 2024 2026 and beyond 2025 2024 Revenue split on timing of revenue recognition principle H1 2024 H1 2023 DKKm Mining Cement Non-Core Activities Group Mining Cement Non-Core Activities Group Point in time 4,306 1,119 30 5,455 4,995 1,423 260 6,678 Percentage of completion - Service, single machines and product bundles 2,455 1,094 3,549 3,040 1,635 0 4,675 - Product bundles with engineering under enhanced risk governance 603 126 64 793 501 194 367 1,062 Total revenue 7,364 2,339 94 9,797 8,536 3,252 627 12,415 * Mining revenue in Q1 2024 of DKK 0.4bn is reclassified from Point in time to Percentage of completion (Service, single machines and product bundles). Revenue split on segment and category H1 2024 H1 2023 DKKm Mining Cement Non-Core Activities Group Mining Cement Non-Core Activities Group Products business 2,403 971 64 3,438 3,003 1,492 405 4,900 Service business 4,961 1,368 30 6,359 5,533 1,760 222 7,515 Total revenue 7,364 2,339 94 9,797 8,536 3,252 627 12,415 Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 28 5. Financial costs Financial costs include an impairment loss of DKK 39m on the investment in the associate Intertek Robotics Laboratories Pty Ltd, Australia following a downward revision of expected future perfor- mance. 6. Provisions Provisions decreased by DKK 46m compared to 31 December 2023. The decrease reflects primarily the use of restructuring provisions following exe- cution on the transformation strategy that was partly offset by increase in other provisions. For a description of the main provision categories see note 2.7 in the 2023 Annual Report. 7. Contractual Commitments and contingent liabilities Contingent liabilities at Q2 2024 amounted to DKK 2,550m (31 December 2023: DKK 2,638m). Contingent liabilities primarily relate to customary performance and payment guarantees. The vol- ume of such guarantees amounted to DKK 2,266m (31 December 2023: DKK 2,272m). 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, qual- ity, and timing. The volume of the guarantees var- ies with the activity level and reflects the out- standing backlog, finalised projects and deliveries that are covered by warranties etc. Only a minor share of such guarantees is expected to material- ise 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 6. Other contingent liabilities of DKK 284m (31 De- cember 2023 DKK 366m) relate to our involve- ment 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. In 2021, a customer initiated arbitration against FLSmidth and certain partners for alleged contrac- tual breaches (‘the Tunisia contract’). In Q2 2024, the case was settled. 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 2023 Annual Report. 8. Discontinued activities Discontinued activities related to 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. In Q4 2023, we made a write down of DKK 149m as we foresee a high risk of not being able to collect amounts due from a customer that made an un- substantiated cash withdrawal on a performance bond in 2021. From 1 January 2024, the activities are included within the Non-Core Activities segment for full wind-down. This includes the remaining net asset of DKK 67m consisting of net working capital of DKK 132m and provisions of DKK 65m. We do not expect any material future financial impact from the full wind-down of the activities. Provisions DKKm 30/06 2024 31/12 2023 30/06 2023 Provisions at 1 January 2,295 2,507 2,507 Foreign exchange adjustments 10 (19) (22) Acquisition and disposal of Group enterprises (12) 14 2 Additions 645 1,598 874 Used (493) (1,399) (400) Reversals (196) (406) (138) Provisions 2,249 2,295 2,823 The split of provisions is as follows: Warranties 872 883 1,009 Restructuring 123 360 516 Other provisions 1,254 1,052 1,298 2,249 2,295 2,823 The maturity of provisions is specified as follows: Current liabilities 1,574 1,635 1,967 Non-current liabilities 675 660 856 2,249 2,295 2,823 Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 29 9. Net working capital Net working capital at 30 June 2024 has in- creased by DKK 0.6bn compared to 31 December 2023. The increase is primarily driven by pay- ments to suppliers leading to a reduction in trade payables and increase in prepayments. Utilisation of supply chain financing is at the same level as December 2023 and amounting to DKK 504m in H1 2024 (31 December 2023: 504m). 10. Business Acquisitions On 4 March 2024, FLSmidth acquired the Cana- dian mill engineering, supply and services pro- vider, Farnell-Thompson Applied Technologies Inc. Its offerings is integrated into FLSmidth’s core Mining business. The acquisition is aligned with our Mining CORE’26 strategy, which includes tar- geting service growth through strategic invest- ments and prioritisation. Farnell-Thompson is a global supplier of engi- neering services, parts and mills to the mining in- dustry. Prior to the acquisition Farnell-Thompson has been a consulting partner providing these ser- vices to FLSmidth for many years. Consequently, a seamless integration of the new business and staff is anticipated. The purchase price net of cash acquired is DKK 102m with DKK 9m falling due over the next three years. The acquisition increased working capital assets and liabilities by DKK 23m and DKK 18m. The excess of the purchase price over the net as- sets is recognised as goodwill of DKK 96m in the preliminary allocation of the purchase price. Goodwill represents primarily the value of the as- sembled workforce. The initial accounting will be retrospectively adjusted to reflect new information obtained in subsequent periods within a maximum period of 12 months after the acquisition date. The impact on net profit is insignificant. 11. Disposal of activities On 22 January 2024, FLSmidth Cement entered into an agreement to sell the MAAG gears and drives business to Solix Group AB. The transaction closed on 1 March 2024 and includes all related assets, including intellectual property, technology, employees and customer contracts. Total assets and liabilities related to the activities of DKK 460m and DKK 262m, respectively, were derecognised. The assets include goodwill of DKK 72m, other non-current assets of DKK 124m and current assets of DKK 264m (primarily working capital). The liabilities include lease liabilities of DKK 54m, provisions of DKK 12m, working capital and other liabilities of DKK 195m. The transaction led to a gain of around DKK 30m, subject to final purchase price adjustments and presented under Other operating net income. In Q3 2023, the transaction on the sale of material handling technology to KOCH Solutions was com- pleted. The final purchase price adjustments are currently being determined. It is now expected that the outcome will be a loss from the sale of around DKK 20m that has been included in Q2 2024 within Non-core activities under Other oper- ating net income. Net working capital DKKm 30/06 2024 31/12 2023 30/06 2023 Inventories 3,544 3,450 3,978 Trade receivables 4,658 4,516 4,821 Work in progress, assets 3,018 2,769 3,279 Prepayments 516 423 717 Other receivables 965 855 1,077 Derivative financial instruments 63 37 44 Prepayments from customers (2,184) (1,933) (2,245) Trade payables (3,523) (4,024) (4,166) Work in progress, liability (3,417) (3,025) (3,505) Other liabilities (1,569) (1,637) (1,417) Derivative financial instruments (50) (49) (41) Net working capital 2,021 1,382 2,542 Change in net working capital (639) 511 (649) Acquisitions/disposal of activities, financial instruments and foreign exchange effect on cash flow (97) (213) 17 Cash flow effect from change in net working capital (736) 298 (632) Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 30 12. 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 June 2024. 13. Accounting policies The condensed interim report of the Group for the first six months of 2024 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 2023 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 2023 Annual Report for further details. In addition to the changes mentioned in note 7.7 in Annual Report 2023, IASB has issued IFRS 18, Presentation and Disclosure in Financial State- ments with effective date 1 January 2027. The Standard replaces IAS 1, Presentation of Financial Statements, and includes requirements on presen- tation in the primary financial statements together with the disclosure of information in the notes. It is not expected that the implementation will have a significant impact on the presentation and disclo- sure. Changes in accounting policies As of 1 January 2024, FLSmidth Group has imple- mented all new or amended accounting standards and interpretations as adopted by the EU and ap- plicable for the 2024 financial year. This includes the changes to: • IAS 1 (Classification of Liabilities as Current or Non-current) and • IAS 7 and IFRS 7 (Supplier Finance Arrange- ments) and • IFRS 16 (Lease Liability in a Sale and Lease- back) The implementation has not had and is not ex- pected to have significant impact on the consoli- dated condensed interim financial statements. Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 31 Statements Statement by Management 32 Forward looking statements 33 Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 32 The Board of Directors and the Executive Board have today considered and approved the interim report for the period 1 January – 30 June 2024. The consolidated condensed interim financial statements are presented in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU and Danish disclosure requirements for interim reports of listed companies. The consoli-dated condensed interim financial statements have not been audited or reviewed by the Group’s inde- pendent auditors. In our opinion, the consolidated condensed inter- im financial statements give a true and fair view of the Group’s financial position at 30 June 2024 as well as of the results of its operations and cash flows for the period 1 January – 30 June 2024. In our opinion, the management’s review gives a fair review of the development in the Group’s ac- tivity and financial matters, results of opera-tions, cash flows and financial position as well as a de- scription of the principal risks and uncertain-ties that the Group faces. Valby, 15 August 2024 Executive management Mikko Juhani Keto Group CEO Roland M. Andersen Group CFO Board of directors Tom Knutzen Chair Mads Nipper Vice chair Anne Louise Eberhard Thrasyvoulos Moraitis Daniel Reimann Anna Kristiina Hyvönen Claus Østergaard Carsten Hansen Leif Gundtoft Statement by Management Management review Consolidated Condensed Financial Statements Notes Statements FLSmidth ■ Interim Report H1 2024 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 interest rate and exchange rate fluctuations, delays or faults in project execution, fluctuations in raw material prices, delays in research and/or development of new products or service concepts, interruptions of supplies and production, unexpected breach or termination of contracts, market-driven price re- ductions for FLSmidth & Co. A/S’ products and/or services, introduction of competing products, reli- ance on information technology, FLSmidth & Co. A/S’ ability to successfully market current and new products, exposure to product liability and le- gal proceedings and investigations, changes in legislation or regulation and interpretation thereof, intellectual property protection, perceived or ac- tual failure to adhere to ethical marketing prac- tices, investments in and divestitures 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 2024 34 Interim Report 1 January – 30 June 2024 FLSmidth & Co. A/S Vigerslev Allé 77 2500 Valby Denmark Tel.: +45 36 18 18 00 corppr@flsmidth.com www.flsmidth.com CVR No. 58180912 Interim report (6 months)No audit assistanceParsePort XBRL Converter2024-01-012024-06-302023-01-012023-06-30213800G7EG4156NNPG91Reporting class DDenmarkDK+4536181800+4536441146www.flsmidth.comcorppr@flsmidth.com213800G7EG4156NNPG913274327432743274213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember213800G7EG4156NNPG912024-04-012024-06-30213800G7EG4156NNPG912023-04-012023-06-30213800G7EG4156NNPG912024-01-012024-06-30213800G7EG4156NNPG912023-01-012023-06-30213800G7EG4156NNPG912024-03-31213800G7EG4156NNPG912024-06-30213800G7EG4156NNPG912023-03-31213800G7EG4156NNPG912023-06-30213800G7EG4156NNPG912023-12-31213800G7EG4156NNPG912022-12-31213800G7EG4156NNPG912023-12-31ifrs-full:IssuedCapitalMember213800G7EG4156NNPG912024-01-012024-06-30ifrs-full:IssuedCapitalMember213800G7EG4156NNPG912024-06-30ifrs-full:IssuedCapitalMember213800G7EG4156NNPG912023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800G7EG4156NNPG912024-01-012024-06-30ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800G7EG4156NNPG912024-06-30ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800G7EG4156NNPG912023-12-31ifrs-full:ReserveOfCashFlowHedgesMember213800G7EG4156NNPG912024-01-012024-06-30ifrs-full:ReserveOfCashFlowHedgesMember213800G7EG4156NNPG912024-06-30ifrs-full:ReserveOfCashFlowHedgesMember213800G7EG4156NNPG912023-12-31ifrs-full:RetainedEarningsMember213800G7EG4156NNPG912024-01-012024-06-30ifrs-full:RetainedEarningsMember213800G7EG4156NNPG912024-06-30ifrs-full:RetainedEarningsMember213800G7EG4156NNPG912023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember213800G7EG4156NNPG912024-01-012024-06-30ifrs-full:EquityAttributableToOwnersOfParentMember213800G7EG4156NNPG912024-06-30ifrs-full:EquityAttributableToOwnersOfParentMember213800G7EG4156NNPG912023-12-31ifrs-full:NoncontrollingInterestsMember213800G7EG4156NNPG912024-01-012024-06-30ifrs-full:NoncontrollingInterestsMember213800G7EG4156NNPG912024-06-30ifrs-full:NoncontrollingInterestsMember213800G7EG4156NNPG912022-12-31ifrs-full:IssuedCapitalMember213800G7EG4156NNPG912023-01-012023-06-30ifrs-full:IssuedCapitalMember213800G7EG4156NNPG912023-06-30ifrs-full:IssuedCapitalMember213800G7EG4156NNPG912022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800G7EG4156NNPG912023-01-012023-06-30ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800G7EG4156NNPG912023-06-30ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800G7EG4156NNPG912022-12-31ifrs-full:ReserveOfCashFlowHedgesMember213800G7EG4156NNPG912023-01-012023-06-30ifrs-full:ReserveOfCashFlowHedgesMember213800G7EG4156NNPG912023-06-30ifrs-full:ReserveOfCashFlowHedgesMember213800G7EG4156NNPG912022-12-31ifrs-full:RetainedEarningsMember213800G7EG4156NNPG912023-01-012023-06-30ifrs-full:RetainedEarningsMember213800G7EG4156NNPG912023-06-30ifrs-full:RetainedEarningsMember213800G7EG4156NNPG912022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember213800G7EG4156NNPG912023-01-012023-06-30ifrs-full:EquityAttributableToOwnersOfParentMember213800G7EG4156NNPG912023-06-30ifrs-full:EquityAttributableToOwnersOfParentMember213800G7EG4156NNPG912022-12-31ifrs-full:NoncontrollingInterestsMember213800G7EG4156NNPG912023-01-012023-06-30ifrs-full:NoncontrollingInterestsMember213800G7EG4156NNPG912023-06-30ifrs-full:NoncontrollingInterestsMember213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember1213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember2213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember1213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember2213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember3213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember4213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember5213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember6213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember7213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember8213800G7EG4156NNPG912024-01-012024-06-30cmn:ConsolidatedMember9iso4217:DKKiso4217:DKKxbrli:shares