Interim / Quarterly Report • Aug 15, 2012
Interim / Quarterly Report
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Very strong order intake and solid EBITA results in all segments except Bulk Materials. EBIT impacted by a one off write-down of capitalised R&D costs of DKK 188m. Cembrit sales process initiated and Cembrit to be reported as discontinued activities from Q3 2012. Full year revenue guidance for continuing activities narrowed to DKK 25-26bn (including Ludowici and excluding Cembrit). EBITA margin guidance of minimum 10% maintained.
20% to DKK 7,246m (Q2 2011: DKK 6,048m)
26% to DKK 6,036m (Q2 2011: DKK 4,795m)
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased
32% to DKK 670m (Q2 2011: DKK 508m), corresponding to an EBITDA margin of 11.1% (Q2 2011: 10.6%)
Earnings before amortisation and write-down of intangible assets (EBITA) increased
36% to DKK 605m (Q2 2011: DKK 445m), corresponding to an EBITA margin of 10.0% (Q2 2011: 9.3%)
14% to DKK 349m (Q2 2011: DKK 404m), corresponding to an EBIT margin of 5.8% (Q2 2011: 8.4%)
21% to DKK 326m (Q2 2011: DKK 412m)
Cash flow from operating activities amounted to DKK 333m (Q2 2011: DKK 426m)
24% to DKK 13,667m (Q1-Q2 2011: DKK 11,012m)
14% to DKK 30,803m (end of 2011: DKK 27,136m)
22% to DKK 11,181m (Q1-Q2 2011: DKK 9,180m)
22% to DKK 1,139m (Q1-Q2 2011: DKK 935m) corresponding to an EBITDA margin of 10.2% (Q1-Q2 2011: 10.2%)
25% to DKK 1,007m (Q1-Q2 2011: DKK 808m), corresponding to an EBITA margin of 9.0% (Q1-Q2 2011: 8.8%)
4% to DKK 683m (Q1-Q2 2011: DKK 709m) corresponding to an EBIT margin of 6.1% (Q1-Q2 2011: 7.7%)
2% to DKK 672m (Q1-Q2 2011: DKK 661m)
Profit for the period decreased
1% to DKK 464m (Q1-Q2 2011: DKK 467m)
amounted to DKK 216m (Q1-Q2 2011: DKK 325m)
at the end of Q2 2012 amounted to DKK 943m (end of 2011: DKK 98m)
at the end of Q2 2012 amounted to DKK 2,117m (end of 2011: DKK 1,620m)
Q2 showed continued strong underlying demand and order intake, and, at this point, no significant changes in our project pipeline or ongoing dialogue with customers have been observed. However, based on recent statements by mining companies, the outlook for mining capex appears to have deteriorated in the short term due to increased macroeconomic uncertainty.
Long term, the positive outlook for mining capex is unchanged. Thus, the demand for minerals continues to grow due to societal changes in the developing countries where the growing middle class is boosting demand for infrastructure and consumer goods based on metals and other minerals. Meanwhile, the supply of minerals is suffering from several years' lack of investments in the mining industry and the declining quality of existing ore bodies and accessibility of unexploited ore deposits.
Capacity utilisation of existing mines is pushed to the limit to take advantage of current favourable prices and demand,
while installation of new capacity is challenged by lengthy permitting processes and increased capex per ton of installed capacity and slightly tighter financing.
In Cement, proposal activity remained high in many parts of the world, most notably in Latin America and certain parts of the Middle East, Africa and South East Asia. In India, cement consumption remains subdued, but inquiry levels and tender activity have started to increase.
FLSmidth & Co. A/S narrows expectations to consolidated revenue for continuing activities to DKK 25-26bn (previously DKK 24-26bn) (2011: DKK 22bn) including Ludowici and excluding Cembrit. EBITA margin expectation of minimum 10% (2011: 10.9%) is maintained although expectations to Bulk Materials have been downgraded and risk associated with the margin guidance has increased due to short term macroeconomic uncertainty.
EBIT margin expectation is lowered to 8-9% (previously 9-10%) due to a DKK 188m one-off write down of capitalized R&D costs in Q2 (2011: 9.9%).
The effect of purchase price allocations is expected to increase to approximately DKK 260m in 2012 (previously approximately DKK 220m) (2011: DKK 178m) due to acquisitions announced so far in 2012.
Cash flow from investing activities (exclusive of acquisitions and their subsequent capex needs) is expected to amount to DKK -900m in 2012 (2011: DKK -733m) due to investments in supercentres and expansion of manufacturing in India and China.
The effective tax rate is expected to be 30-32% in 2012 (2011: 31%) and tax payable slightly lower.
Each of the four segments are now expected to see the following developments in 2012:
| Expected revenue1) in 2012 |
Expected EBITA margin trend in 2012 |
Expected order intake1) trend in 2012 |
|
|---|---|---|---|
| Customer Services |
Strongly increasing2) (2011: DKK 5.3bn) | Stable (2011: ~16%) | Strongly increasing2) (2011: DKK 5.3bn) |
| Bulk Materials | Increasing (2011: DKK 5.0bn) | Decreasing3) (2011:~5%) | Increasing (2011: DKK 5.5bn) |
| Non-Ferrous | Strongly increasing2) (2011: DKK 6.8bn) | Slightly decreasing (2011: ~12%) Strongly increasing3) (2011: DKK 9.7bn) | |
| Cement | Slightly increasing (2011: DKK 4.4bn) | Slightly increasing4) (2011: ~11%) | Slightly increasing (2011: DKK 4.4bn) |
1 ) Elimination in the form of inter-company trade is expected to amount to approximately DKK 1bn in 2012 2
) Previous expectation "Increasing"
3 ) Previous expectation "Stable"
4 ) Previous expectation "Decreasing"
| DKKm | Q2 2012 | Q2 2011 | Q1-Q2 2012 | Q1-Q2 2011 | Year 2011 |
|---|---|---|---|---|---|
| INCOME STATEMENT | |||||
| Revenue | 6,036 | 4,795 | 11,181 | 9,180 | 21,998 |
| Gross profit | 1,500 | 1,229 | 2,809 | 2,335 | 5,734 |
| Earnings before non-recurring items, depreciation, amortisation and write-downs (EBITDA) | 670 | 508 | 1,139 | 935 | 2,647 |
| Earnings before amortisations and write-down on intangible assets (EBITA) | 605 | 445 | 1,007 | 808 | 2,405 |
| Earnings before interest and tax (EBIT) | 349 | 404 | 683 | 709 | 2,171 |
| Earnings from financial items, net | (23) | 8 | (11) | (48) | (101) |
| Earnings before tax (EBT) | 326 | 412 | 672 | 661 | 2,070 |
| Profit/loss for the period, continuing activities | 223 | 289 | 464 | 463 | 1,424 |
| Profit/loss for the period, discontinued activities | - | 5 | - | 4 | 13 |
| Profit/loss for the period | 223 | 294 | 464 | 467 | 1,437 |
| CASH FLOW | |||||
| Cash flow from operating activities | 333 | 426 | 216 | 325 | 1,148 |
| Acquisition and disposal of enterprises and activities | (143) | (6) | (146) | (157) | (915) |
| Acquisition of tangible assets | (182) | (110) | (348) | (177) | (497) |
| Other investments, net | (61) | (32) | (101) | (71) | (236) |
| Cash flow from investing activities | (386) | (148) | (595) | (405) | (1,648) |
| Cash flow from operating and investing activities of continuing activities | (54) | 280 | (378) | (73) | (496) |
| Cash flow from operating and investing activities of discontinued activities | 1 | (2) | (1) | (7) | (4) |
| WORKING CAPITAL | 2,117 | 835 | 1,620 | ||
| NET INTEREST-BEARING DEBT/(RECEIVABLES) | 943 | (687) | 98 | ||
| ORDER INTAKE, CONTINUING ACTIVITIES (GROSS) | 7,246 | 6,048 | 13,667 | 11,012 | 24,044 |
| ORDER BACKLOG, CONTINUING ACTIVITIES | 30,803 | 25,011 | 27,136 | ||
| BALANCE SHEET | |||||
| Non-current assets | 11,102 | 9,251 | 10,795 | ||
| Current assets | 16,884 | 13,384 | 14,745 | ||
| Total assets | 27,986 | 22,635 | 25,540 | ||
| Consolidated equity | 8,976 | 7,774 | 8,907 | ||
| Long-term liabilities | 5,687 | 3,392 | 3,533 | ||
| Short-term liabilities | 13,323 | 11,469 | 13,100 | ||
| Total equity and liabilities | 27,986 | 22,635 | 25,540 | ||
| DIVIDEND TO THE SHAREHOLDERS | 471 | 472 | 471 | 472 | 479 |
| FINANCIAL MARGIN Continuing activities |
|||||
| Gross margin | 24.9% | 25.6% | 25.1% | 25.4% | 26.1% |
| EBITDA margin | 11.1% | 10.6% | 10.2% | 10.2% | 12.0% |
| EBITA margin | 10.0% | 9.3% | 9.0% | 8.8% | 10.9% |
| EBIT margin | 5.8% | 8.4% | 6.1% | 7.7% | 9.9% |
| EBT margin | 5.4% | 8.6% | 6.0% | 7.2% | 9.4% |
| Return on equity | 10% | 12% | 17% | ||
| Equity ratio | 32% | 34% | 35% | ||
| Number of employees end of period, Group | 13,818 | 12,145 | 13,204 | ||
| Number of employees in Denmark | 1,565 | 1,656 | 1,609 | ||
| Share and dividend figures, the Group | |||||
| CFPS (cash flow per share), (diluted) | 6.4 | 8.1 | 4.1 | 6.2 | 21.7 |
| EPS (earnings per share), (diluted) | 4.3 | 5.6 | 8.9 | 8.9 | 27.1 |
| FLSmidth & Co. share price | 320.0 | 437.0 | 337.5 | ||
| Number of shares (1,000), end of period | 53,200 | 53,200 | 53,200 | ||
| Average number of shares (1,000) (diluted) | 52,410 | 52,580 | 52,489 | 52,605 | 52,550 |
| Market capitalisation | 17,024 | 23,248 | 17,955 |
The financial ratios have been computed in accordance with the guidelines of the Danish Society of Financial Analysts from 2010.
Strong order intake and solid EBITA results delivered in Q2 except in Bulk Materials. The EBIT result was impacted by a DKK 188m one-off write-down of capitalized R&D costs. Cembrit sales process initiated in Q3. Full-year revenue guidance for continuing activities narrowed to DKK 25-26bn including Ludowici and excluding Cembrit, and the EBITA margin guidance of minimum 10% is maintained.
Q2 2012 saw another quarter of strong order intake of DKK 7,246m representing an increase of 20% compared to Q2 2011 (Q2 2011: DKK 6,048m) and a sequential increase of 13% (Q1 2012: DKK 6,421). The order intake was especially strong in Cement, Non-Ferrous and Customer Services, while Bulk Materials was at the same level as Q2 2011. Quarterly order intake related to projects is inherently volatile. The list of possible projects remains strong in Bulk Materials – particularly within mobile conveying and in-pit crushing systems for coal and iron ore, although competition is fierce and decision making appears to be dragging out.
Announced orders in Q2 2012 amounted to DKK 2.2bn and included processing equipment for a phosphate terminal in Morocco, material handling equipment for coal port facilities in Mozambique, as well as a cement production line in the Middle East and a cement modernisation project in the USA.
The order backlog increased 7% to DKK 30,803m in Q2 2012 (end of Q1 2012: DKK 28,736m), which is the highest level yet since the peak in mid 2008.
Revenue increased 26% to DKK 6,036m in Q2 (Q2 2011: DKK 4,795m), which is attributable to positive developments in all segments except for Cement where revenue decreased 7% - reflecting the decline in order intake experienced in 2009 and 2010 in the wake of the global financial crisis. Revenue growth was particularly strong in Customer Services and Non-Ferrous as a consequence of strong order intake in previous quarters.
Overall, the foreign exchange effect of translating into DKK had a 3% positive impact on consolidated revenue compared to Q2 2011. Acquisitions made in 2011 and 2012 (ESSA Australia Limited, Darimec S.r.L, Phillips Kiln Service Ltd., Knelson Canada, Transweigh India Ltd. and Knelson Russia) had a 3% positive impact on consolidated revenue in Q2. For further details regarding the enterprises acquired, please see note 4.
Q2 2012 saw total investments in research and development of DKK 85m (Q2 2011: DKK 85m), representing 1.4% of revenue (Q2 2011: 1.8%), of which DKK 23m was capitalised (Q2 2011: DKK 19m) and the balance reported as production costs. In addition, project financed development is taking place in cooperation with customers.
| DKKm | Q2 2012 | Q2 2011 | Change (%) | Q1-Q2 2012 | Q1-Q2 2011 | Change (%) |
|---|---|---|---|---|---|---|
| Order intake | 7,246 | 6,048 | 20% | 13,667 | 11,012 | 24% |
| Order backlog | 30,803 | 25,011 | 23% | 30,803 | 25,011 | 23% |
| Revenue | 6,036 | 4,795 | 26% | 11,181 | 9,180 | 22% |
| EBITDA | 670 | 508 | 32% | 1,139 | 935 | 22% |
| EBITDA margin | 11.1% | 10.6% | 10.2% | 10.2% | ||
| EBITA | 605 | 445 | 36% | 1,007 | 808 | 25% |
| EBITA margin | 10.0% | 9.3% | 9.0% | 8.8% | ||
| EBIT | 349 | 404 | (14%) | 683 | 709 | (4%) |
| EBIT margin | 5.8% | 8.4% | 6.1% | 7.7% | ||
| Number of employees | 13,818 | 12,145 | 14% | 13,818 | 12,145 | 14% |
The gross profit amounted to DKK 1,500m (Q2 2011: DKK 1,229m), corresponding to a gross margin of 24.9% which is lower than last year (Q2 2011: 25.6%) and also reflecting underlying changes in the business mix.
Sales, distribution and administrative costs, etc. amounted to DKK 830m (Q2 2011: DKK 721m) equivalent to 13.8% of revenue (Q2 2011: 15.0%), down from 16.3% in Q1 2012.
Due to the nature of FLSmidth's project business with delivery times of up to 2-3 years, higher sales and order activity generally generates increasing sales and distribution costs in the short term, but only revenue and earnings at a later stage.
Sales, distribution and administrative costs, etc. in the first half 2012 included costs of non-recurring nature amounting to approximately DKK 100m and included:
Earnings before interest, tax, depreciation and amortization (EBITDA) increased 32% to DKK 670m (Q2 2011: DKK 508m) corresponding to an EBITDA margin of 11.1% (Q2 2011: 10.6%).
Depreciation and write-down of tangible assets amounted to DKK 65m (Q2 2011: DKK 62m).
Earnings before amortisation and write-down of intangible assets (EBITA) increased 36% to DKK 605m (Q2 2011: DKK 445m), corresponding to an EBITA margin of 10.0% (Q2 2011: 9.3%).
All segments delivered solid EBITA results in Q2 except for Bulk Materials, where the execution problems mentioned in Q1 are having a prolonged impact on profitability.
The Bulk Materials Handling business has in 2012 been faced with challenges related to difficulties in project execution, stemming from underestimated risks in connection with orders received in previous years combined with a lack of timely handling and mitigation hereof. Under the new division management a number of initiatives have been put in place to transfer project management know-how and best practices from other divisions and to build up competencies in Bulk Materials Handling.
Amortisation and write-down of intangible assets amounted to DKK 256m (Q2 2011: DKK 41m) of which the effect of purchase price allocations related to acquisitions accounted for DKK 55m (Q2 2011: DKK 41m). The Q2 results include a one-off write-down of capitalized R&D costs and decommissioning costs of DKK 188m related to a R&D project in a ground-breaking new technology, where important milestones have been met and patents have been taken out. However the commercial tests have not been able to demonstrate acceptable results. The R&D project pertains to Cement, Non-Ferrous and Customer Services, and thus the EBIT results in three divisions have each been negatively impacted by approximately DKK 60m as a consequence of the write-down.
As a consequence of the write-down Earnings before interest and tax (EBIT) decreased 14% to DKK 349m (Q2 2011: DKK 404m) corresponding to an EBIT margin of 5.8% (Q2 2011: 8.4%).
Financial items amounted to DKK -23m (Q2 2011: DKK 8m). This amount includes foreign exchange adjustments of DKK 27m (Q2 2011: DKK -13m).
Earnings before tax (EBT) decreased 21% to DKK 326m (Q2 2011:
DKK 412m).
0
Q2 Q3 Q4 2010
2,000
4,000
6,000
8,000
DKKm
10,000
Tax for the period amounted to DKK 103m (Q2 2011: DKK 123m) corresponding to an effective tax rate of 32% (Q2 2011: 30%).
Profit for the period decreased 24% to DKK 223m (Q2 2011: DKK 294m).
Earnings per share (diluted) amounted to DKK 4.3 (Q2 2011: DKK 5.6).
Cash flow from operating activities amounted to DKK 333m in Q2 2012 (Q2 2011: DKK 426m) and decreased even though EBITDA increased. The decrease is a consequence of increasing working capital as described below.
Taxes paid amounted to DKK -110m in Q2 which is considerably down from last year, (Q2 2011: DKK -218m) - the reason being that taxes paid in 2011 increased temporarily due to intercompany sale of intellectual property rights to the Danish parent company, which released tax payments abroad in 2011.
Working capital increased by DKK 191m in Q2 2012 to DKK 2,117m (end of Q1 2012: DKK 1,926m) as a consequence of increasing inventories and a decrease in work in progress (net).
The increase in inventories to DKK 2,735m at the end Q2 2012 (end of Q1 2012: DKK 2,521m) was caused by an initiative to reduce delivery lead times from certain production companies as well as postponed shipments caused by customer delays.
Work in progress net (liability) inclusive of prepayments to subcontractors amounted to DKK 491m at the end of Q2 2012 (end of 2011: DKK 660m). The change was caused by high level of order execution in Q2 and an increase in prepayments to subcontractors.
CFFO
Trade receivables decreased to DKK 5,120m in Q2 2012 (end of 2011: DKK 5,554m) due to an increased focus on debt collection and customers' payment terms.
It is the ambition to control the working capital development from the present level. A program to manage working capital more closely has been launched.
Cash flow from investing activities amounted to DKK -386m in Q2 2012 (Q2 2011: DKK -148m), primarily related to acquisitions of Process Engineering Resources Inc. and Knelson Russia and acquisition of tangible assets related to investments in supercentres, extension of workshop facilities in Qingdao, China and of production facilities in New Delhi, India.
The number of employees amounted to 13,818 by the end of Q2 2012, representing an increase of 14% compared to the same period last year (end of Q2 2011: 12,145). Exclusive of acquisitions the number of employees increased 9%, these being primarily hourly paid workers in relation to operation and maintenance contracts.
FLSmidth & Co. A/S narrows expectations to consolidated revenue for the continuing business to DKK 25-26bn (previously DKK 24- 26bn) (2011: DKK 22bn) including Ludowici and excluding Cembrit. The EBITA margin expectation of minimum 10% (2011: 10.9%) is maintained although expectations to Bulk Materials have been downgraded and risk associated with the margin guidance has increased due to short term macroeconomic uncertainty. The EBIT margin expectation is lowered to 8-9% (previously 9-10%) due to a DKK 188m one-off write down of capitalized R&D costs in Q2 (2011: 9.9%).
The effect of purchase price allocations is expected to increase to approximately DKK 260m in 2012 (previously approximately DKK 220m) (2011: DKK 178m) due to acquisitions.
Cash flow from investing activities (exclusive of acquisitions and their subsequent capex needs) is expected to be around DKK
-900m in 2012 (2011: DKK -733m) due to the investment in supercentres and the expansion of manufacturing in India and China.
The effective tax rate is expected to be 30-32% in 2012 (2011: 31%) and tax payable slightly lower.
The acquisition of Ludowici Limited is expected to have the following impact on financial results in 2012, which is included in the above mentioned expectations:
| Revenue: | DKK 0.8bn |
|---|---|
| EBITA margin: | 9.2% |
| Group one-off transaction costs: | DKK 35m |
| Effect of purchase price allocations: | DKK -40m |
| Net interest-bearing debt: | DKK -2,300m |
FLSmidth Ludowici will be included evenly in Customer Services and Non-Ferrous, and as a consequence, both estimated revenue and order intake in the two divisions are revised upwards. Revenue guidance in Cembrit is taken down from "slightly increasing" to "stable" as a consequence of macroeconomic uncertainty in Europe.
Group EBITA margin guidance of minimum 10% is maintained as strong performance in Cement, Customer Services and Non-Ferrous is expected to mitigate consequences of continued difficulties in Bulk Materials.
The EBITA margin guidance in Cement is raised from "decreasing" to "slightly increasing" due to expected lower costs in projects in the second half of 2012 related to finalisation of projects taken in previous years.
The EBITA margin guidance in Bulk Materials is lowered from "stable" to "decreasing" as a consequence of continued difficulties in project execution.
In view of short-term increased macroeconomic uncertainty, the coming quarters will see increased focus on costs and a temporary slowdown in acquisitions.
Thus, each of the four segments are now expected to see the following developments in 2012:
| Expected revenue1) in 2012 |
Expected EBITA margin trend in 2012 |
Expected order intake1) trend in 2012 |
|
|---|---|---|---|
| Customer Services |
Strongly increasing2) (2011: DKK 5.3bn) | Stable (2011: ~16%) | Strongly increasing2) (2011: DKK 5.3bn) |
| Bulk Materials | Increasing (2011: DKK 5.0bn) | Decreasing3) (2011:~5%) | Increasing (2011: DKK 5.5bn) |
| Non-Ferrous | Strongly increasing2) (2011: DKK 6.8bn) | Slightly decreasing (2011: ~12%) Strongly increasing3) (2011: DKK 9.7bn) | |
| Cement | Slightly increasing (2011: DKK 4.4bn) Slightly increasing4) (2011: ~11%) | Slightly increasing (2011: DKK 4.4bn) |
1 ) Elimination in the form of inter-company trade is expected to amount to approximately DKK 1bn in 2012 2
) Previous expectation "Increasing"
3 ) Previous expectation "Stable"
4 ) Previous expectation "Decreasing"
Customer Services is a separate and dedicated division that delivers a variety of services and spare parts to all prioritised industries and geographies across the Group.
Market activity was largely unchanged in Q2 and inquiry levels remained high throughout the division and in particular in the non-ferrous markets. In cement, positive signs were witnessed throughout Latin America, the African Continent, and South East Asia. However, most other regions continue to be sluggish.
Order Intake for Q2 2012 was DKK 1,569m representing an increase of 16% compared to Q2 2011. Order Intake in first half of 2012 is 26% higher than the corresponding period last year. The strong order intake performance reflects the good market conditions and high capacity utilization throughout the non-ferrous industries and in certain regions of the cement business.
Revenue increased by 28% in Q2 2012 to DKK 1,608m (Q2 2011: DKK 1,253m) reflecting the positive development in order intake in previous quarters.
Overall, the foreign exchange effect of translating into DKK had a 3% positive impact on revenue compared to Q2 2011.
EBITA amounted to DKK 231m reflecting an 8% increase over the 2011 result of DKK 214m. EBITA margin in Q2 was 14.4% which is a decrease compared to the corresponding quarter last year (Q2 2011: 17.1%), but a sequential increase from the previous quarter (Q1 2012: 13.2%). The decline in margin compared to last year is primarily due to increasing capacity costs related to acquisitions and costs associated with implementation of strategic initiatives that are expected to contribute to growth in future, but adds to costs now.
The Supercenter rollouts are proceeding according to plans. The Chilean Supercenter in Santiago was officially opened in June, and the Australian Supercenter in Perth opened for local operations in early July.
Tender activity is increasing with respect to operation and maintenance contracts, and late July, a large seven year O&M contract was received from Egypt.
As a consequence of acquisitions, expectations to both order intake and revenue in Customer Services have been upgraded to strongly increasing, while the EBITA margin is still expected to be stable (2011: 15.9%).
| DKKm | Q2 2012 | Q2 2011 | Change (%) | Q1-Q2 2012 | Q1-Q2 2011 | Change (%) |
|---|---|---|---|---|---|---|
| Order intake | 1,569 | 1,358 | 16% | 3,415 | 2,713 | 26% |
| Order backlog | 6,708 | 6,202 | 8% | 6,708 | 6,202 | 8% |
| Revenue | 1,608 | 1,253 | 28% | 2,976 | 2,304 | 29% |
| EBITDA | 244 | 227 | 7% | 437 | 369 | 18% |
| EBITDA margin | 15.2% | 18.1% | 14.7% | 16.0% | ||
| EBITA | 231 | 214 | 8% | 411 | 342 | 20% |
| EBITA margin | 14.4% | 17.1% | 13.8% | 14.8% | ||
| EBIT | 155 | 213 | (27%) | 329 | 340 | (3%) |
| EBIT margin | 9.6% | 17.0% | 11.1% | 14.8% | ||
| Number of employees | 4,326 | 3,764 | 15% | 4,326 | 3,764 | 15% |
FLSmidth is strongly placed in the bulk material handling market and offers a complete range of products for transporting bulk materials from the mine to their final destination. Bulk Materials such as coal, iron ore and fertilizers need to be produced, conveyed and exported in large quantities.
The market outlook for bulk materials such as coal and iron ore appears to be slightly weakening in the short term based on capex statements by mining companies as well as declining commodity prices and increasing stockpiling. As a consequence, competition is fierce and decision making is dragging out. Nevertheless, the list of potential projects remains strong – particularly within mobile conveying and in-pit crushing systems, and the medium and long term prospects are encouraging.
The above mentioned factors combined with a prudent tender approach and a primary focus on improved operational excellence have led to a modest order intake in Q2. The order intake in Q2 amounted to DKK 1,272m which is on par with the corresponding quarter last year (Q2 2011: DKK 1,261m).
Revenue increased 19% to DKK 1,271m in Q2 (Q2 2011: DKK 1,068m) reflecting increasing order intake in previous years. Overall, the foreign exchange effect of translating into DKK had a 1% positive impact on revenue compared to Q2 2011.
The EBITA result amounted to DKK 17m, showing an improvement over last year (Q2 2011: DKK -11m), but the EBITA margin of 1.3% was lower than aspired (Q2 2011: -1.3%).
The Bulk Materials Handling business has in the first half 2012 been faced with challenges related to difficulties in project execution, stemming from underestimated risks in connection with orders received in previous years combined with a lack of timely handling and mitigation hereof. A number of initiatives have been put in place to transfer project management know-how and best practices from other divisions and to build up competencies in the Bulk Materials Division. The new division head, Carsten R. Lund took office on 1 July 2012 and will be heading the efforts going forward. Based on the new management's assessments, expectations to profitability in 2012 have been reduced.
Both revenue and order intake are expected to increase in 2012, while the EBITA margin guidance for the Bulk Materials Division is changed from "stable" to "decreasing" (2011: 4.5%).
| DKKm | Q2 2012 | Q2 2011 | Change (%) | Q1-Q2 2012 | Q1-Q2 2011 | Change (%) |
|---|---|---|---|---|---|---|
| Order intake | 1,272 | 1,261 | 1% | 2,215 | 2,902 | (24%) |
| Order backlog | 5,230 | 5,340 | (2%) | 5,230 | 5,340 | (2%) |
| Revenue | 1,271 | 1,068 | 19% | 2,331 | 1,985 | 17% |
| EBITDA | 28 | (5) | n/a | 56 | 7 | 700% |
| EBITDA margin | 2.2% | (0.5%) | 2.4% | 0.4% | ||
| EBITA | 17 | (11) | n/a | 33 | (5) | n/a |
| EBITA margin | 1.3% | (1.3%) | 1.4% | (0.3%) | ||
| EBIT | 12 | (24) | n/a | 16 | (36) | n/a |
| EBIT margin | 0.9% | (2.2%) | 0.7% | (1.8%) | ||
| Number of employees | 3,352 | 2,920 | 15% | 3,352 | 2,920 | 15% |
The Non-Ferrous division is home to FLSmidth's full suite of leading minerals processing technologies. These are delivered globally as single machines and as complete concentrator, hydromet, pyromet and beneficiation solutions to miners of base, precious and other minerals. Presently primarily focused on copper, gold and related industries.
Revenue increased 63% to DKK 2,057m in Q2 2012 (Q2 2011: DKK 1,262m) as a consequence of strong order intake and acquisitions in previous quarters.
Overall, the foreign exchange effect of translating into DKK had a 5% positive impact on revenue compared to Q2 2011.
EBITA increased 77% to DKK 193m (Q2 2011: DKK 108m), equivalent to an EBITA margin of 9.4% (Q2 2011: 8.6%).
As a consequence of acquisitions, expectations to both order intake and revenue in Non-Ferrous have been upgraded to strongly increasing, while the EBITA margin is still expected to be slightly decreasing (2011: 12.0%) which is explained by the fact that the order book in 2011 included several orders taken in 2007 and 2008 at more favourable terms and conditions than today.
Market activity remains high, but approval processes for projects continues to be a prolonged affair. Capacity utilisation of existing mines is pushed to the limit to take advantage of favourable price level and demand, while installation of new capacity is challenged by lengthy permitting processes, budget overruns and slightly tighter financing.
| DKKm | Q2 2012 | Q2 2011 | Change (%) | Q1-Q2 2012 | Q1-Q2 2011 | Change (%) |
|---|---|---|---|---|---|---|
| Order intake | 2,808 | 2,322 | 21% | 5,253 | 4,002 | 31% |
| Order backlog | 10,362 | 6,975 | 49% | 10,362 | 6,975 | 49% |
| Revenue | 2,057 | 1,262 | 63% | 3,779 | 2,425 | 56% |
| EBITDA | 209 | 119 | 74% | 356 | 251 | 42% |
| EBITDA margin | 10.2% | 9.5% | 9.4% | 10.4% | ||
| EBITA | 193 | 108 | 77% | 328 | 228 | 44% |
| EBITA margin | 9.4% | 8.6% | 8.7% | 9.4% | ||
| EBIT | 89 | 82 | 9% | 183 | 169 | 8% |
| EBIT margin | 4.3% | 6.6% | 4.8% | 7.0% | ||
| Number of employees | 2,417 | 1,921 | 26% | 2,417 | 1,921 | 26% |
FLSmidth is the global cement industry's leading supplier of complete cement plants, production lines and single machine units. FLSmidth's strength is its complete world marketleading product range combined with the capability and experience needed to implement high-quality projects and products everywhere in the world.
Two major orders in the USA and the Middle East were received in the second quarter, completing a satisfactory first half of the year in terms of order intake. Thus, Q2 2012 saw a strong order intake of DKK 1,902m representing an increase of 47% compared to Q2 2011 (Q2 2011: DKK 1,291m).
In Cement, proposal activity remains high in many parts of the world, most notably in Latin America and certain parts of the Middle East, Africa and South East Asia. In India, cement consumption remains subdued, but inquiry levels and tender activity have started to pick up. Russia also offers interesting opportunities but decision making is dragging out.
Overall, the global cement market is affected by macroeconomic uncertainty and slow growth, but there are several local pockets of demand, where the economy is growing and where cement demand has out-paced supply.
Revenue declined 7% to DKK 952m in Q2 2012 (Q2 2011: DKK 1,028m) due to lower order intake in previous years.
The foreign exchange effect of translating into DKK did not have any significant impact on revenue compared to Q2 2011.
EBITA increased 36% to DKK 144m (Q2 2011: DKK 106m), equivalent to an increased EBITA margin of 15.1% (Q2 2011: 10.3%), which is mainly due to projects being executed better than expected.
Both revenue and order intake are expected to be slightly increasing in 2012. The expected EBITA margin is raised from "decreasing" to "slightly increasing" due to expected lower costs in the second half of 2012 related to finalisation of projects taken in previous years.
| DKKm | Q2 2012 | Q2 2011 | Change (%) | Q1-Q2 2012 | Q1-Q2 2011 | Change (%) |
|---|---|---|---|---|---|---|
| Order intake | 1,902 | 1,291 | 47% | 3,317 | 1,818 | 82% |
| Order backlog | 9,240 | 7,151 | 29% | 9,240 | 7,151 | 29% |
| Revenue | 952 | 1,028 | (7%) | 1,811 | 2,177 | (17%) |
| EBITDA | 155 | 121 | 28% | 257 | 257 | 0% |
| EBITDA margin | 16.3% | 11.8% | 14.2% | 11.8% | ||
| EBITA | 144 | 106 | 36% | 237 | 227 | 4% |
| EBITA margin | 15.1% | 10.3% | 13.1% | 10.4% | ||
| EBIT | 74 | 104 | (29%) | 159 | 221 | (28%) |
| EBIT margin | 7.8% | 10.1% | 8.8% | 10.2% | ||
| Number of employees | 2,621 | 2,454 | 7% | 2,621 | 2,454 | 7% |
Cembrit is Europe's largest dedicated provider of fibre-cement products to the building materials industry. Its main product lines are flat sheets for interior and exterior cladding of facades, walls and ceilings, as well as corrugated sheets and slates used primarily as roofing materials
For Cembrit, as a provider of building materials in Europe, Q2 is high-season. However, this year Q2 was slightly below expectations due to increased macroeconomic uncertainty in Europe. As a consequence, revenue in Q2 decreased 3% to DKK 383m compared to the same quarter last year (Q2 2011: DKK 394m). Overall, the foreign exchange effect of translating into DKK did not have any significant impact on revenue compared to Q2 2011. Renovation activities are still the key market driver, as activity in the new build segment remains subdued.
EBITA increased 32% to DKK 33m in Q2 2012 (Q2 2011: DKK 25m) and the EBITA margin increased to 8.6% (Q2 2011: 6.3%).
Cembrit has been part of the FLSmidth Group since 1927 and it is the only remaining Building Materials company in the Group. The company has been through a restructuring and is now leveraging its position as Europe's largest dedicated provider of fibre-cement products to the building materials industry. While it has been clear for a number of years that Cembrit is not part of FLSmidth's long term strategy, it has now been decided to initiate a sales process. As a consequence, Cembrit will be reported as discontinued activities from Q3.
FLSmidth cautions that there is no assurance that the process will in fact lead to a sale and that no firm timeline has been set for the completion of the process.
| DKKm | Q2 2012 | Q2 2011 | Change (%) | Q1-Q2 2012 | Q1-Q2 2011 | Change (%) |
|---|---|---|---|---|---|---|
| Revenue | 383 | 394 | (3%) | 699 | 684 | 2% |
| EBITDA | 46 | 43 | 7% | 59 | 51 | 16% |
| EBITDA margin | 12.0% | 10.9% | 8.4% | 7.5% | ||
| EBITA | 33 | 25 | 32% | 27 | 17 | 59% |
| EBITA margin | 8.6% | 6.3% | 3.9% | 2.5% | ||
| EBIT | 32 | 25 | 28% | 25 | 16 | 56% |
| EBIT margin | 8.4% | 6.3% | 3.6% | 2.3% | ||
| Number of employees | 1,101 | 1,083 | 2% | 1,101 | 1,083 | 2% |
The balance sheet total amounted to DKK 27,986m at the end of Q2 2012 (end of Q1 2012: DKK 25,574m). The increase is primarily attributable to acquisitions and in particular to Ludowici. Even though the acquisition was not finalised until 3 July 2012, financing was raised at the end of June, increasing bank loans and temporarily also cash and cash equivalents.
The equity showed a decrease to DKK 8,976m (end of Q1 2012: DKK 9,118m) due to distribution of dividend of DKK 471m in April. The equity ratio decreased to 32% (end of Q1 2012: 36%) as a consequence of the lower equity but more so due to the above mentioned boost of the balance sheet total.
Net interest-bearing debt at the end of Q2 2012 amounted to DKK 943m (end of Q1 2012: DKK 386m), reflecting negative cash flow of DKK 53m and distribution of dividend of DKK 471m in Q2 2012.
The Group's financial gearing calculated as NIBD/EBITDA (12 months trailing) amounted to 0.3 at end of Q2 2012 (end of Q1 2012: 0.1).
The target is to maintain an equity ratio of more than 30% and to have a net debt position with a gearing of maximum 2 times EBITDA.
The capital resources currently consist of committed credit facilities totaling DKK 6.8bn with a weighted time to maturity of 3.4 years and mortgage financing amounting to DKK 0.4bn.
FLSmidth's treasury share capital amounted to 908,167 shares at the end of Q2 2012 (end of Q1 2012: 920,745 shares) representing 1.7% of the total share capital (end of Q1 2012: 1.7%). The holding of treasury shares is adjusted continuously to match the Group's incentive plans.
At the end of Q2 2012, there were a total of 964,976 unexercised share options under the Group's incentive plan and the fair value of them was DKK 88m. The fair value is calculated by means of a Black & Scholes model based on a current share price of 320, a volatility of 44.82% and annual dividend of DKK 9 per share. The effect of the plan on the income statement for Q2 2012 was DKK 7m (Q2 2011: DKK 5m).
The Board of Directors has today decided to grant new share options to the Executive Management and key staff (106 persons). The exercise price will be calculated as the average closing price for the next five trading days (16 August 2012 to 22 August 2012) and the exercise period will be 2015 to 2018. It is expected that between 250,000 and 300,000 share options will be issued, depending on the exercise price and the fair value.
FLSmidth expects to purchase between 300,000 and 350,000 shares in the market to cover the share option plan.
13 November 2012: Q3 Interim Report
As announced on 3 July 2012, the acquisition of Ludowici Limited, Australia was completed. The enterprise value amounted to approximately AUD 388m, equal to an implicit EV/EBITDA multiple in 2011 of 13.4x, based on FLSmidth's estimate of pro forma 2011 EBITDA of AUD 29m.
Ludowici is the world's leading provider of coal centrifuges, vibrating screens and complementary wear resistant products and services for the minerals industries. Headquartered in Brisbane, Australia, and with some 450 of its about 1,100 employees, and approximately 65% of its revenue being generated in Australia, the acquisition of Ludowici will significantly expand FLSmidth's presence in this important mining region. Furthermore, the acquisition will support FLSmidth's aspiration to expand its Customer Services offering as approximately 50% of Ludowici's revenue is related to service activities, spare parts and consumables.
Considerable sales synergies are expected to be achieved over the next couple of years.
The acquisition of Ludowici will allow FLSmidth to complete its concentrator flow sheet used in copper, gold and other base metals. Futhermore it enhances FLSmidth's coal preparation and iron ore proprietary technology packages which now cover most key production steps.
As announced on 13 July 2012, OppenheimerFunds, Inc.'s holding of FLSmidth & Co. A/S shares has increased to 2,743,887 corresponding to 5.158% of the total nominal share capital in FLSmidth & Co. A/S.
As announced on 30 July 2012, FLSmidth has received a large seven year operating and maintenance contract from the Egyptian National Cement Company.
Cembrit has been part of the FLSmidth Group since 1927 and it is the only remaining Building Materials company in the Group. The company has been through a restructuring and is now leveraging its position as Europe's largest dedicated provider of fibre-cement products to the building materials industry. While it has been clear for a number of years that Cembrit is not part of FLSmidth's long term strategy, it has now been decided to initiate a sales process. As a consequence, Cembrit will be reported as discontinued activities from Q3. FLSmidth cautions that there is no assurance that the process will in fact lead to a sale and that no firm timeline has been set for the completion of the process.
FLSmidth & Co. A/S' financial reports, whether in the form of annual reports or interim reports, filed with the Danish Business Authority and/or announced via the company's website and/or NASDAQ OMX Copenhagen, as well as any presentations based on such financial reports, and any other written information released, or oral statements made, to the public based on this interim 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 connection 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 containing projections of or targets for revenues, profit (or loss), capital expenditures, dividends, capital structure or other net financial items
• statements regarding future economic performance, future actions and outcome of contingencies such as legal proceedings and statements regarding the underlying assumptions or relating to such statements
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's influence, and which could materially affect such forward-looking statements.
FLSmidth & Co. A/S cautions that a number of important factors, including those described in this report, could cause actual results to differ materially from those contemplated in any forward-looking 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 reductions for FLSmidth & Co. A/S' products and/or services, introduction of competing products, reliance on information technology, FLSmidth & Co. A/S' ability to successfully market current and new products, exposure to product liability and legal proceedings and investigations, changes in legislation or regulation and interpretation thereof, intellectual property protection, perceived or actual failure to adhere to ethical marketing practices, investments in and divestitures of domestic and foreign enterprises, unexpected growth in costs and expenses, failure to recruit and retain the right employees and failure to maintain a culture of compliance.
Unless required by law FLSmidth & Co. A/S is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of financial reports.
The Board of Directors and the Group Executive Management have today considered and approved the interim report of FLSmidth & Co. A/S for the period 1 January – 30 June 2012.
The interim report is prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU and Danish disclosure requirements for interim reports of listed companies. The interim report has not been audited or reviewed by the Group's independent auditors.
In our opinion, the interim report gives a true and fair view of the Group's financial position at 30 June 2012 as well as of its financial performance and its cash flow for the period 1 January - 30 June 2012.
We believe that the management commentary contains a fair review of the development of the Group's business and financial affairs, the result for the period and the financial position of the Group, together with a description of the principal risks and uncertainties that the Group faces.
Copenhagen, 15 August 2012
| Group Executive Management: | Jørgen Huno Rasmussen Group Chief Executive Officer |
Ben Guren Group Executive Vice President and Chief Financial Officer |
Bjarne Moltke Hansen Group Executive Vice President |
|---|---|---|---|
| Carsten R. Lund Group Executive Vice President |
Peter Flanagan Group Executive Vice President |
Per Mejnert Kristensen Group Executive Vice President |
|
| Board of Directors: | Vagn Ove Sørensen Chairman |
Torkil Bentzen Vice Chairman |
Jens Palle Andersen |
| Mette Dobel | Caroline Grégoire Sainte Marie | Martin Ivert | |
| Sten Jakobsson | Frank Lund | Tom Knutzen |
| DKKm | Q2 2012 | Q2 2011 | Q1-Q2 2012 | Q1-Q2 2011 | |
|---|---|---|---|---|---|
| Notes | |||||
| Revenue | 6,036 | 4,795 | 11,181 | 9,180 | |
| Production costs | (4,536) | (3,566) | (8,372) | (6,845) | |
| Gross profit | 1,500 | 1,229 | 2,809 | 2,335 | |
| Sales and distribution costs | (407) | (359) | (832) | (694) | |
| Administrative costs | (443) | (359) | (880) | (758) | |
| Other operating income | 26 | - | 56 | 60 | |
| Other operating costs | (6) | (3) | (14) | (8) | |
| Earnings before special non-recurring items, depreciation, | |||||
| amortisation and write-downs (EBITDA) | 670 | 508 | 1,139 | 935 | |
| Special non-recurring items | - | (1) | (3) | (4) | |
| Depreciation and write-downs of tangible assets | (65) | (62) | (129) | (123) | |
| Earnings before amortisation and write-downs on | |||||
| intangible assets (EBITA) | 605 | 445 | 1,007 | 808 | |
| Amortisation and write-downs of intangible assets | (256) | (41) | (324) | (99) | |
| Earnings before interest and tax (EBIT) | 349 | 404 | 683 | 709 | |
| Financial income | 125 | 148 | 590 | 477 | |
| Financial costs | (148) | (140) | (601) | (525) | |
| Earnings before tax (EBT) of continuing activities | 326 | 412 | 672 | 661 | |
| Tax for the period, continuing activities | (103) | (123) | (208) | (198) | |
| Profit/loss for the period, continuing activities | 223 | 289 | 464 | 463 | |
| Profit/loss for the period, discontinued activities | - | 5 | - | 4 | |
| Profit/loss for the period | 223 | 294 | 464 | 467 | |
| To be distributed as follows: | |||||
| FLSmidth & Co. A/S shareholders' share of profit/loss for the period | 225 | 295 | 466 | 466 | |
| Minority shareholders' share of profit/loss for the period | (2) | (1) | (2) | 1 | |
| 223 | 294 | 464 | 467 | ||
| 2 | Earnings per share (EPS): | ||||
| Continuing and discontinued activities | 4.3 | 5.6 | 8.9 | 8.9 | |
| Continuing and discontinued activities, diluted | 4.3 | 5.6 | 8.9 | 8.9 | |
| Continuing activities | 4.3 | 5.5 | 8.9 | 8.8 | |
| Continuing activities, diluted | 4.3 | 5.5 | 8.9 | 8.8 | |
| 1 | Income statement classified by function |
| DKKm | Q2 2012 | Q2 2011 | Q1-Q2 2012 | Q1-Q2 2011 |
|---|---|---|---|---|
| Notes | ||||
| Profit/loss for the period | 223 | 294 | 464 | 467 |
| Other comprehensive income for the period | ||||
| Foreign exchange adjustment regarding enterprises abroad | 64 | (29) | 35 | (294) |
| Foreign exchange adjustment of loans classified as equity in | ||||
| enterprises abroad | 77 | (16) | 44 | (80) |
| Value adjustments of hedging instruments: | ||||
| Value adjustments for the period | (33) | 24 | (16) | 24 |
| Value adjustments transferred to revenue | 1 | (4) | 3 | (7) |
| Value adjustments transferred to production costs | (2) | (17) | (4) | (6) |
| Value adjustments transferred to financial income and costs | 2 | - | 1 | - |
| Value adjustments transferred to balance sheet items | - | (1) | 3 | - |
| Tax on other comprehensive income | (17) | 5 | (10) | 21 |
| Other comprehensive income for the period after tax | 92 | (38) | 56 | (342) |
| Comprehensive income for the period | 315 | 256 | 520 | 125 |
| Comprehensive income for the period attributable to: | ||||
| FLSmidth & Co. A/S shareholders' share of comprehensive income | ||||
| for the period | (313) | 258 | 522 | 130 |
| Minority shareholders' share of comprehensive income for the period | (2) | (2) | (2) | (5) |
| (315) | 256 | 520 | 125 |
| DKKm | Q1-Q2 2012 | Q1-Q2 2011 |
|---|---|---|
| Earnings before special non-recurring items, depreciation, amortisation, write-downs | ||
| (EBITDA), continuing activities | 1,139 | 935 |
| Earnings before special non-recurring items, depreciation, amortisation, write-downs | ||
| (EBITDA), discontinued activities | - | 5 |
| Earnings before special non-recurring items, depreciation, amortisation and | ||
| write-downs (EBITDA) | 1,139 | 940 |
| Adjustment for profits/losses on sale of tangible and intangible assets and foreign | ||
| exchange adjustments | 25 | (14) |
| Adjusted earnings before special non-reccurring items, depreciation, | ||
| amortisation and write-downs (EBITDA) | 1,164 | 926 |
| Change in provisions | (31) | (159) |
| Change in working capital | (475) | 111 |
| Cash flow from operating activities before financial items and tax | 658 | 878 |
| Financial payments received and made | (29) | (163) |
| Taxes paid | (413) | (390) |
| Cash flow from operating activities | 216 | 325 |
| Acquisition of enterprises and activities Acquisition of intangible assets |
(146) (92) |
(157) (92) |
| Acquisition of tangible assets | (348) | (177) |
| Acquisition of financial assets | (22) | - |
| Disposal of tangible assets | 13 | 19 |
| Disposal of financial assets | - | 2 |
| Cash flow from investing activities | (595) | (405) |
| Dividend | (471) | (474) |
| Acquisition of treasury shares | (2) | (29) |
| Disposal of treasury shares | 5 | 2 |
| Change in other interest-bearing net receivables/(debt) | 2,360 | 104 |
| Cash flow from financing activities | 1,892 | (397) |
| Change in cash and cash equivalents | 1,513 | (477) |
| Cash and cash equivalents at 1 January | 1,402 | 2,398 |
| Foreign exchange adjustment, cash and cash equivalents * | 55 | (120) |
| Cash and cash equivalents at 30 June | 2,970 | 1,801 |
The cash flow statement cannot be inferred from the published financial information only.
* Foreign exchange adjustment, cash and cash equivalents in Q2 2012 primarily consists of positive changes in the exchange rate of ZAR (USD 64m), CNY (DKK 7m) and AUD (DKK 5m) and negative changes in the exchange rate of CZK (DKK 6m) in relation to DKK.
| DKKm | End of Q2 2012 | End of 2011 | |
|---|---|---|---|
| Notes | |||
| Goodwill | 4,275 | 4,119 | |
| Patents and rights acquired | 1,167 | 1,159 | |
| Customer relations | 1,112 | 1,130 | |
| Other intangible assets | 138 | 185 | |
| Completed development projects | 46 | 47 | |
| Intangible assets under development | 424 | 511 | |
| 6 Intangible assets | 7,162 | 7,151 | |
| Land and buildings | 1,480 | 1,365 | |
| Plant and machinery | 721 | 699 | |
| Operating equipment, fixtures and fittings | 225 | 213 | |
| Tangible assets in course of construction | 379 | 284 | |
| 7 | Tangible assets | 2,805 | 2,561 |
| Investments in associates | 9 | 1 | |
| Other securities and investments | 74 | 59 | |
| Pension assets | 39 | 9 | |
| Deferred tax assets | 1,013 | 1,014 | |
| Financial assets | 1,135 | 1,083 | |
| Total non-current assets | 11,102 | 10,795 | |
| Inventories | 2,735 | 2,292 | |
| Trade receivables | 5,120 | 5,554 | |
| 9 | Work-in-progress for third parties | 4,100 | 3,633 |
| Prepayments to subcontractors | 571 | 467 | |
| Other receivables | 1,159 | 1,112 | |
| Prepayments | 201 | 181 | |
| Receivables | 11,151 | 10,947 | |
| Bonds and listed shares | 28 | 104 | |
| Cash and cash equivalents | 2,970 | 1,402 | |
| Total current assets | 16,884 | 14,745 | |
| TOTAL ASSETS | 27,986 | 25,540 | |
| DKKm | End of Q2 2012 | End 2011 | |
|---|---|---|---|
| Notes | |||
| Share capital | 1,064 | 1,064 | |
| Foreign exchange adjustments | 221 | 142 | |
| Value adjustments of hedging transactions | (27) | (14) | |
| Retained earnings | 7,669 | 7,189 | |
| Proposed dividend | - | 479 | |
| FLSmidth & Co. A/S shareholders' share of equity | 8,927 | 8,860 | |
| Minority shareholders' share of equity | 49 | 47 | |
| Total equity | 8,976 | 8,907 | |
| Deferred tax liabilities | 890 | 886 | |
| Pension liabilities | 221 | 207 | |
| 8 | Other provisions | 649 | 530 |
| Mortgage debt | 352 | 352 | |
| Bank loans | 2,959 | 825 | |
| Finance lease liabilities | 14 | 10 | |
| Prepayments from customers | 358 | 435 | |
| Other liabilities | 244 | 288 | |
| Long-term liabilities | 5,687 | 3,533 | |
| Pension liabilities | 34 | 19 | |
| 8 | Other provisions | 1,309 | 1,384 |
| Bank loans | 479 | 126 | |
| Finance lease liabilities | 9 | 8 | |
| Prepayments from customers | 1,972 | 1,771 | |
| 9 | Work-in-progress for third parties | 5,162 | 4,760 |
| Trade payables | 2,619 | 2,682 | |
| Current tax liabilities | 372 | 398 | |
| Other liabilities | 1,326 | 1,917 | |
| Deferred revenue | 41 | 35 | |
| Short-term liabilities | 13,323 | 13,100 | |
| Total liabilities | 19,010 | 16,633 | |
| TOTAL EQUITY AND LIABILITIES | 27,986 | 25,540 |
| DKKm | Share capital |
Foreign exchange adjustments |
Value adjustments of hedging transactions |
Reserve, financial assets available for sale |
Retained earnings |
Proposed dividend |
FLSmidth & Co. A/S' shareholders' share |
Minority interests' share |
Total |
|---|---|---|---|---|---|---|---|---|---|
| Equity at 1 January 2012 | 1,064 | 142 | (14) | 0 | 7,189 | 479 | 8,860 | 47 | 8,907 |
| Comprehensive income for the period | |||||||||
| Profit/loss for the period | 466 | 466 | (2) | 464 | |||||
| Other comprehensive income | |||||||||
| Foreign exchange adjustments regarding enterprises abroad |
35 | 35 | 35 | ||||||
| Foreign exchange adjustments of loans classified as equity in enterprises abroad |
44 | 44 | 44 | ||||||
| Value adjustments of hedging instruments: | |||||||||
| Value adjustments for the period | (16) | (16) | (16) | ||||||
| Value adjustments transferred to revenue | 3 | 3 | 3 | ||||||
| Value adjustments transferred to production cost | (4) | (4) | (4) | ||||||
| Value adjustments transferred to financial income and costs |
1 | 1 | 1 | ||||||
| Value adjustments transferred to balance sheet items |
3 | 3 | 3 | ||||||
| Tax on other comprehensive income | (10) | (10) | (10) | ||||||
| Other comprehensive income total | 0 | 79 | (13) | 0 | (10) | 0 | 56 | 0 | 56 |
| Comprehensive income for the period | 0 | 79 | (13) | 0 | 456 | 0 | 522 | (2) | 520 |
| Dividend distributed | (471) | (471) | (471) | ||||||
| Dividend treasury share | 8 | (8) | 0 | 0 | |||||
| Share-based payment, share options | 13 | 13 | 13 | ||||||
| Disposal of treasury shares | 5 | 5 | 5 | ||||||
| Acquisition of treasury shares | (2) | (2) | (2) | ||||||
| Acquisition of minority interests | 0 | 4 | 4 | ||||||
| Equity at 30 June 2012 | 1,064 | 221 | (27) | 0 | 7,669 | 0 | 8,927 | 49 | 8,976 |
| The period's movements in holding of treasury shares (number of shares): | 2012 | 2011 |
|---|---|---|
| Treasury shares at 1 January | 927,425 shares | 760,459 shares |
| Acquisition of treasury shares | 4,242 shares | 22,210 shares |
| Share options settled | (23,500) shares | (20,000) shares |
| Treasury shares at 30 June | 908,167 shares | 762,669 shares |
| Representing 1.7% (2011: 1.4%) of the share capital |
| DKKm | Share capital |
Foreign exchange adjustments |
Value adjustments of hedging transactions |
Reserve, financial assets available for sale |
Retained earnings |
Proposed dividend |
FLSmidth & Co. A/S' shareholders' share |
Minority interests' share |
Total |
|---|---|---|---|---|---|---|---|---|---|
| Equity at 1 January 2011 | 1,064 | 235 | 10 | (31) | 6,328 | 479 | 8,085 | 54 | 8,139 |
| Comprehensive income for the period | |||||||||
| Profit/loss for the period | 466 | 466 | 1 | 467 | |||||
| Other comprehensive income | |||||||||
| Foreign exchange adjustments regarding enterprises abroad |
(288) | (288) | (6) | (294) | |||||
| Foreign exchange adjustments of loans classified as equity in enterprises abroad |
(80) | (80) | (80) | ||||||
| Foreign exchange adjustment, liquidation of company |
|||||||||
| Value adjustments of hedging instruments: | |||||||||
| Value adjustments for the period | 24 | 24 | 24 | ||||||
| Value adjustments transferred to revenue | (7) | (7) | (7) | ||||||
| Value adjustments transferred to production costs | (6) | (6) | (6) | ||||||
| Tax on other comprehensive income | 21 | 21 | 21 | ||||||
| Other comprehensive income total | 0 | (368) | 11 | 0 | 21 | 0 | (336) | (6) | (342) |
| Comprehensive income for the period | 0 | (368) | 11 | 0 | 487 | 0 | 130 | (5) | 125 |
| Dividend distributed | (472) | (472) | (2) | (474) | |||||
| Dividend treasury shares | 7 | (7) | 0 | ||||||
| Share-based payment, share options | 10 | 10 | 10 | ||||||
| Disposal of treasury shares | 2 | 2 | 2 | ||||||
| Acquisition of treasury shares | (29) | (29) | (29) | ||||||
| Acquisition minority interests | 0 | 1 | 1 | ||||||
| Equity at 30 June 2011 | 1,064 | (133) | 21 | (31) | 6,805 | 0 | 7,726 | 48 | 7,774 |
.
It is Group policy to prepare the income statement based on an adapted classification of the costs by function in order to show the Earnings before non-recurring items, depreciation, amortisation and write-downs (EBITDA). Depreciation, amortisation and write-downs of tangible assets are therefore separated from the individual functions and presented on separate lines.
The income statement classified by function including allocation of depreciation, amortisation and write-downs appears from the following:
| DKKm | Q2 2012 | Q2 2011 | Q1-Q2 2012 | Q1-Q2 2011 |
|---|---|---|---|---|
| Revenue | 6,036 | 4,795 | 11,181 | 9,180 |
| Production costs | (4,779) | (3,617) | (8,672) | (6,649) |
| Gross profit | 1,257 | 1,178 | 2,509 | 2,231 |
| Sales and distribution costs | (408) | (361) | (835) | (697) |
| Administrative costs | (520) | (409) | (1,030) | (873) |
| Other operating income and costs | 20 | (3) | 42 | 52 |
| Special non-recurring items | - | (1) | (3) | (4) |
| Earnings before interest and tax (EBIT) | 349 | 404 | 683 | 709 |
| Financial income | 125 | 148 | 590 | 477 |
| Financial costs | (148) | (140) | (601) | (525) |
| Earnings before tax (EBT) | 326 | 412 | 672 | 661 |
| Tax for the period | (103) | (123) | (208) | (198) |
| Profit/loss for the period, continuing activities | 223 | 289 | 464 | 463 |
| Profit/loss for the period, discontinued activities | - | 5 | - | 4 |
| Profit/loss for the period | 223 | 294 | 464 | 467 |
| DKKm | Q2 2012 | Q2 2011 | Q1-Q2 2012 | Q1-Q2 2011 |
|---|---|---|---|---|
| Earnings | ||||
| FLSmidth & Co. A/S shareholders' share of profit/loss for the period | 225 | 295 | 466 | 466 |
| FLSmidth & Co. Group profit/loss from discontinued activities | - | 5 | - | 4 |
| Number of shares, average | ||||
| Number of shares issued | 53,200,000 | 53,200,000 | 53,200,000 | 53,200,000 |
| Adjustment for treasury shares | (914,456) | (761,023) | (918,779) | (760,835) |
| Potential increase of shares in circulation, options in-the-money | 124,703 | 141,158 | 208,274 | 165,584 |
| 52,410,247 | 52,580,135 | 52,489,495 | 52,604,749 | |
| Earnings per share | ||||
| • Continuing and discontinued activities per share DKK | 4.3 | 5.6 | 8.9 | 8.9 |
| • Continuing and discontinued activities, diluted, per share DKK | 4.3 | 5.6 | 8.9 | 8.9 |
| • Continuing activities, per share DKK | 4.3 | 5.5 | 8.9 | 8.8 |
| • Continuing activities, diluted, per share DKK | 4.3 | 5.5 | 8.9 | 8.8 |
Non-diluted earnings per share regarding discontinued activities amount to DKK 0 (2011 DKK 0).
| Q1-Q2 2012 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| DKKm | Customer Services |
Bulk Materials |
Non Ferrous |
Cement | Cembrit | Other compa nies etc.1) |
Continuing activities |
Discon tinued activities |
FLS Group |
| INCOME STATEMENT | |||||||||
| External revenue | 2,914 | 2,089 | 3,670 | 1,809 | 699 | - | 11,181 | 2 | 11,183 |
| Internal revenue | 62 | 242 | 109 | 2 | - | (415) | - | - | - |
| Revenue | 2,976 | 2,331 | 3,779 | 1,811 | 699 | (415) | 11,181 | 2 | 11,183 |
| Production costs | (2,150) | (1,939) | (2,970) | (1,281) | (467) | 435 | (8,372) | (2) | (8,374) |
| Gross profit | 826 | 392 | 809 | 530 | 232 | 20 | 2,809 | - | 2,809 |
| Sales, distr. and admin. costs and other | |||||||||
| operating items | (389) | (336) | (453) | (273) | (173) | (46) | (1,670) | - | (1,670) |
| Earnings before special non-recurring | |||||||||
| items, depreciation, amortisation and | |||||||||
| write-downs (EBITDA) | 437 | 56 | 356 | 257 | 59 | (26) | 1,139 | - | 1,139 |
| Special non-recurring items | - | - | - | - | (3) | - | (3) | - | (3) |
| Depreciation and write-downs of | |||||||||
| tangible assets | (26) | (23) | (28) | (20) | (29) | (3) | (129) | - | (129) |
| Earnings before amortisation and | |||||||||
| write-downs of intangible assets (EBITA) Amortisation and write-downs of |
411 | 33 | 328 | 237 | 27 | (29) | 1,007 | - | 1,007 |
| intangible assets | (82) | (17) | (145) | (78) | (2) | - | (324) | - | (324) |
| Earnings before interest and tax (EBIT) | 329 | 16 | 183 | 159 | 25 | (29) | 683 | - | 683 |
| ORDER INTAKE (GROSS) | 3,415 | 2,215 | 5,253 | 3,317 | N/A | (533) | 13,667 | - | 13,667 |
| ORDER BACKLOG | 6,708 | 5,230 | 10,362 | 9,240 | N/A | (737) | 30,803 | - | 30,803 |
| FINANCIAL MARGINS | |||||||||
| Gross margin | 27.8% | 16.8% | 21.4% | 29.3% | 33.2% | N/A | 25.1% | N/A | 25.1% |
| EBITDA margin | 14.7% | 2.4% | 9.4% | 14.2% | 8.4% | N/A | 10.2% | N/A | 10.2% |
| EBITA margin | 13.8% | 1.4% | 8.7% | 13.1% | 3.9% | N/A | 9.0% | N/A | 9.0% |
| EBIT margin | 11.1% | 0.7% | 4.8% | 8.8% | 3.6% | N/A | 6.1% | N/A | 6.1% |
| Number of employees at 30 June 2012 | 4,326 | 3,352 | 2,417 | 2,621 | 1,101 | 1 | 13,818 | - | 13,818 |
| DKKm | Q1-Q2 2012 |
|---|---|
| Reconciliation of the profit/loss for the period before tax, continuing activities | |
| Segment earnings before tax of reportable segments | 683 |
| Financial income | 590 |
| Financial costs | (601) |
| Earnings for the period before tax (EBT) of continuing activities | 672 |
1) Other companies consist of companies with no activities, real estate companies, eliminations and the parent company.
| Q1-Q2 2011 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| DKKm | Customer Services |
Bulk Materials |
Non Ferrous |
Cement | Cembrit | Other compa nies etc1) |
Continuing activities |
Discon tinued activities |
FLS Group |
| External revenue | 2,229 | 1,711 | 2,388 | 2,168 | 684 | - | 9,180 | - | 9,180 |
| Internal revenue | 75 | 274 | 37 | 9 | - | (395) | - | - | - |
| Revenue | 2,304 | 1,985 | 2,425 | 2,177 | 684 | (395) | 9,180 | - | 9,180 |
| Production costs | (1.634) | (1,703) | (1,867) | (1,637) | (446) | 442 | (6,845) | - | (6,845) |
| Gross profit | 670 | 282 | 558 | 540 | 238 | 47 | 2,335 | - | 2,335 |
| Sales, distr. and admin. costs and other | |||||||||
| operating items | (301) | (275) | (307) | (283) | (187) | (47) | (1,400) | (4) | (1,404) |
| Earnings before special non-recurring items, depreciation, amortisation and |
|||||||||
| write-downs (EBITDA) | 369 | 7 | 251 | 257 | 51 | - | 935 | (4) | 931 |
| Special non-recurring items | - | (2) | (2) | - | - | - | (4) | - | (4) |
| Depreciation and write-downs of | |||||||||
| tangible assets | (27) | (10) | (21) | (30) | (34) | (1) | (123) | - | (123) |
| Earnings before amortisation and write-downs | |||||||||
| of intangible assets (EBITA) | 342 | (5) | 228 | 227 | 17 | (1) | 808 | (4) | 804 |
| Amortisation and write-downs of | |||||||||
| intangible assets | (2) | (31) | (59) | (6) | (1) | - | (99) | - | (99) |
| Earnings before interest and tax (EBIT) | 340 | (36) | 169 | 221 | 16 | (1) | 709 | (4) | 705 |
| ORDER INTAKE (GROSS) | 2,713 | 2,902 | 4,002 | 1,818 | N/A | (423) | 11,012 | - | 11,012 |
| ORDER BACKLOG | 6,202 | 5,340 | 6,975 | 7,151 | N/A | (440) | 25,011 | 8 | 25,019 |
| FINANCIAL MARGIN | |||||||||
| Gross margin | 29.1% | 14.2% | 23.0% | 24.8% | 34.8% | N/A | 25.4% | N/A | 25.4% |
| EBITDA margin | 16.0% | 0.4% | 10.4% | 11.8% | 7.5% | N/A | 10.2% | N/A | 10.2% |
| EBITA margin | 14.8% | (0.3%) | 9.4% | 10.4% | 2.5% | N/A | 8.8% | N/A | 8.8% |
| EBIT margin | 14.8% | (1.8%) | 7.0% | 10.2% | 2.3% | N/A | 7.7% | N/A | 7.7% |
| Number of employees at 30 June 2011 | 3,764 | 2,920 | 1,921 | 2,454 | 1,083 | 2 | 12,144 | 1 | 12,145 |
| DKKm | Q1-Q2 2011 |
|---|---|
| Reconciliation of the profit/loss for the period before tax, continuing activities | |
| Segment earnings before tax of reportable segments | 709 |
| Financial income | 477 |
| Financial costs | (525) |
| Earnings for the period before tax (EBT) of continuing activities | 661 |
1) Other companies consist of companies with no activities, real estate companies, eliminations and the parent company.
| Name of enterprise acquired | Primary activity | Acquisition date | Ownership acquired |
Voting share acquired |
Ownership interest |
Voting share |
|---|---|---|---|---|---|---|
| Conveyor Engineering Inc. | Bulk Materials | 1 March 2009 | 100% | 100% | 100% | 100% |
| ESSA Australia Limited | Bulk Materials | 17 February 2011 | 100% | 100% | 100% | 100% |
| Darimec S.r.L. | Bulk Materials | 29 July 2011 | 100% | 100% | 100% | 100% |
| Knelson Canada (acquisition of net assets) | Non-Ferrous | 21 September 2011 | - | - | - | - |
| Knelson Russia (acquisition of net assets) | Non-Ferrous | 24 January 2012 | - | - | - | - |
| Process Engineering Ressources Inc. | Non-Ferrous | 6 June 2012 | 100% | 100% | 100% | 100% |
| Ludowici Limited* | Non-Ferrous/ | 3 July 2012 | 100% | 100% | 100% | 100% |
| Customer Services |
| DKKm | Q1-Q2 2012 | Q1-Q2 2011 | ||||
|---|---|---|---|---|---|---|
| Carrying amount before adjustment |
Adjustments at fair value |
Fair value adjusted opening balance sheet |
Carrying amount before adjustment |
Adjustments at fair value |
Fair value adjusted opening balance sheet |
|
| Patents and rights acquired | - | 4 | 4 | - | 23 | 23 |
| Customer relations | - | 8 | 8 | - | 57 | 57 |
| Other intangible assets | - | 2 | 2 | - | 15 | 15 |
| Tangible assets | 5 | - | 5 | 5 | - | 5 |
| Financial assets including deferred tax | - | - | - | 4 | - | 4 |
| Inventories | 1 | - | 1 | 33 | - | 33 |
| Receivables | 11 | - | 11 | 43 | - | 43 |
| Cash and cash equivalents | 4 | - | 4 | 22 | - | 22 |
| Minority interests | - | - | - | (2) | - | (2) |
| Provisions including deferred tax | - | (36) | (36) | |||
| Other liabilities | - | (22) | (22) | (33) | - | (33) |
| Loans | - | - | - | (2) | - | (2) |
| Net assets | 21 | (44) | (23) | 70 | 95 | 165 |
| Goodwill | 95 | 14 | ||||
| Cost | 72 | 179 | ||||
| Cash and cash equivalents acquired | (4) | (22) | ||||
| Contingent consideration (earn out) | 78 | - | ||||
| Net cash effect, acquisitions | 146 | 157 | ||||
| Other specifications regarding transactions: Direct acquisition costs |
1 | 2 | ||||
Conveyor Engineering Inc. was acquired in March 2009. In 2012, a final earn-out payment was made which previously had not been included in the purchase consideration calculation. In accordance with valid IFRS rules at the time of acquisition, the payment resulted in an increase in goodwill and retained earnings.
ESSA Australia Limited was acquired in February 2011. In 2012, the fair value adjustment of the opening balance was completed, resulting in a reclassification between other liabilities and goodwill.
Darimec S.r.L. was acquired in July 2011. A lower acquisition price has resulted in a decrease in goodwill in 2012.
The activity of Knelson, Canada was aquired in September 2011. In 2012, a fair value adjustment of the opening balance was made, resulting in a increase in deferred tax liability, other liabilities and goodwill. An earn-out payment was made in Q2 2012 which is reflected in the remaining Contingent consideration (earn-out).
In September 2011, the activities of Knelson Group based in Vancouver, Canada, were acquired. The agreement to acquire Knelson's Russian activities, based in Irkutsk, Russia, was also signed at that time. FLSmidth received regulatory approval from the Russian authorities to acquire the Russian activities of Knelson Group on 24 January 2012. The non-allocated purchase consideration amounts to DKK 0m and is recognised as goodwill reflecting expected synergies. The activities are included in the consolidated financial statements with revenue of DKK 4m and earnings after tax of DKK 0m. If the acquisition of the activities of Knelson Russia had been consolidated as at 1 January 2012, revenue and earnings after tax from the activities would be included in the consolidated financial statements at the aggregate amounts of DKK 4m and DKK 0m, respectively.
Process Engineering Resources Inc. based in Salt Lake City, USA, is a company specialising in the development, manufacturing, and installation of on-line slurry analysis systems in the mining and minerals industries. The activities were consolidated at 6 June 2012. The non-allocated purchase consideration amounts to DKK 18m and is recognised as goodwill reflecting expected synergies. The activities are included in the consolidated financial statements with revenue of DKK 0m and earnings after tax of DKK 0m. If the acquisition of Process Engineering Resources Inc. had been consolidated as at 1 January 2012, revenue and earnings after tax from the enterprise would be included in the consolidated financial statements at the aggregate amounts of DKK 10m and DKK 2m, respectively.
On 3 July 2012, FLSmidth took control of Ludowici Limited, the world's leading provider of coal centrifuges, vibrating screens and complementary wear resistant products and services for the minerals industries. The consideration for the company on a cash- and debt-free basis amounts to approximately DKK 2,298m in cash. Due to the short time span between the acquisition and the disclosure of the Q2 2012 Interim Report, it was not practically possible to allocate the consideration to assets and liabilities acquired before its release. It is expected that a provisional allocation of the consideration will be included in the Q3 2012 Interim Report. For the period 1 January 2012 to 30 June 2012, Ludowici Limited reported revenue of DKK 650m and earnings after tax of DKK -78m.
Contingent liabilities at 30 June 2012 amount to 6.3bn (31 December 2011 6.3bn), which include performance bonds and payment guarantees at DKK 6.0bn (31 December 2011 5.9bn). See note 39 in the 2011 Annual Report for a general description of the nature of the Group's contingent liabilities.
| DKKm | Q2 2012 | Q2 2011 | Q1-Q2 2012 | Q1-Q2 2011 |
|---|---|---|---|---|
| Goodwill | 74 | (2) | 95 | 14 |
| Patents and rights acquired | 20 | 7 | 22 | 25 |
| Customer relations | 8 | - | 8 | 57 |
| Other intangible assets | 3 | 3 | 4 | 16 |
| Intangible assets under development | 35 | 48 | 70 | 87 |
| Additions in the period | 140 | 56 | 199 | 199 |
| Goodwill | - | - | - | - |
| Patents and rights acquired | - | - | - | (5) |
| Customer relations | - | - | - | - |
| Other intangible assets | (12) | - | (12) | (10) |
| Completed development projects | - | (2) | - | (2) |
| Intangible assets under development | - | (2) | - | (2) |
| Disposals in the period | (12) | (4) | (12) | (19) |
| DKKm | Q2 2012 | Q2 2011 | Q1-Q2 2012 | Q1-Q2 2011 |
|---|---|---|---|---|
| Land and buildings | 23 | 14 | 50 | 24 |
| Plant and machinery | 39 | 11 | 61 | 24 |
| Operating equipment, fixtures and fittings | 19 | 18 | 35 | 29 |
| Tangible assets in course of construction | 97 | 58 | 203 | 100 |
| Additions in the period | 178 | 101 | 349 | 177 |
| Land and buildings | (1) | - | (8) | (8) |
| Plant and machinery | (12) | (2) | (12) | (5) |
| Operating equipment, fixtures and fittings | (8) | (2) | (9) | (10) |
| Disposals in the period | (21) | (4) | (29) | (23) |
| DKKm | Q2 2012 | Q2 2011 | Q4 2011 |
|---|---|---|---|
| Provisions at 1 January | 1,914 | 2,006 | 2,006 |
| Exchange rate and other adjustments | 16 | (32) | (11) |
| Acquisition of Group enterprises | - | 2 | 14 |
| Provisions for the period | 406 | 325 | 891 |
| Used during the period | (306) | (332) | (533) |
| Reversals | (72) | (155) | 400 |
| Discounting of provisions | - | - | 6 |
| Reclassification to other liabilities | - | - | (59) |
| Provisions end of period | 1,958 | 1,814 | 1,914 |
| The maturity of provisions is specified as follows: | |||
| Short-term liabilities | 1,309 | 1,265 | 1,384 |
| Long-term liabilities | 649 | 549 | 530 |
| 1,958 | 1,814 | 1,914 |
| DKKm | Q2 2012 | Q2 2011 | Q4 2011 |
|---|---|---|---|
| Cost incurred | 37,597 | 37,016 | 35,646 |
| Profit recognised as income | 7,230 | 7,170 | 6,811 |
| Work-in-progress for third parties | 44,827 | 44,186 | 42,457 |
| Invoicing on account to customers | (45,889) | (45,628) | (43,584) |
| (1,062) | (1,442) | (1,127) | |
| Of which work-in-progress for third parties is stated under assets | 4,100 | 3,381 | 3,633 |
| and under liabilities | (5,162) | (4,823) | (4,760) |
| (1,062) | (1,442) | (1,127) |
| DKKm | 2010 | 2011 | 2012 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | ||
| INCOME STATEMENT | |||||||||
| Revenue | 5,253 | 5,520 | 4,385 | 4,795 | 5,532 | 7,286 | 5,145 | 6,036 | |
| Gross profit | 1,406 | 1,409 | 1,106 | 1,229 | 1,483 | 1,916 | 1,309 | 1,500 | |
| Earnings before special non-recurring items, depreciation, amortisation | |||||||||
| and write-downs (EBITDA) | 707 | 633 | 427 | 508 | 717 | 995 | 469 | 670 | |
| Earnings before amortisation and write-downs of intangible assets (EBITA) | 670 | 579 | 363 | 445 | 659 | 938 | 402 | 605 | |
| Earnings before interest and tax (EBIT) | 617 | 536 | 305 | 404 | 592 | 870 | 334 | 349 | |
| Earnings before tax (EBT) | 650 | 512 | 249 | 412 | 567 | 842 | 346 | 326 | |
| Tax for the period | (195) | (182) | (75) | (123) | (170) | (278) | (105) | (103) | |
| Profit/loss on continuing activities for the period | |||||||||
| 455 | 330 | 174 | 289 | 397 | 564 | 241 | 223 | ||
| Profit/loss on discontinued activities for the period | 3 | (1) | (1) | 5 | 6 | 3 | - | - | |
| Profit/loss for the period | 458 | 329 | 173 | 294 | 403 | 567 | 241 | 223 | |
| Effect of purchase price allocation | (35) | (35) | (41) | (41) | (45) | (48) | (58) | (58) | |
| Gross margin | 26.8% | 25.5% | 25.2% | 25.6% | 26.8% | 26.3% | 25.4% | 24.9% | |
| EBITDA margin | 13.5% | 11.5% | 9.7% | 10.6% | 13.0% | 13.7% | 9.1% | 11.1% | |
| EBITA margin | 12.8% | 10.5% | 8.3% | 9.3% | 11.9% | 12.9% | 7.8% | 10.0% | |
| EBIT margin | 11.7% | 9.7% | 7.0% | 8.4% | 10.7% | 11.9% | 6.5% | 5.8% | |
| CASH FLOW | |||||||||
| Cash flow from operating activities | 367 | 232 | (101) | 426 | 563 | 260 | (117) | 333 | |
| Cash flow from investing activities | (129) | (434) | (257) | (148) | (846) | (397) | (209) | (386) | |
| Order intake, continuing activities (gross) | 3,636 | 4,428 | 4,964 | 6,048 | 7,176 | 5,856 | 6,421 | 7,246 | |
| Order backlog, continuing activities | 23,613 | 23,708 | 24,033 | 25,011 | 27,492 | 27,136 | 28,736 | 30,803 | |
| SEGMENT REPORTING | |||||||||
| Customer Services | |||||||||
| Revenue | 1,264 | 1,361 | 1,051 | 1,253 | 1,404 | 1,551 | 1,368 | 1,608 | |
| EBITDA | 229 | 182 | 142 | 227 | 253 | 260 | 193 | 244 | |
| EBITA | 217 | 170 | 128 | 214 | 240 | 256 | 180 | 231 | |
| EBIT | 213 | 169 | 126 | 213 | 238 | 255 | 174 | 155 | |
| Effect of purchase price allocations | 0 | 0 | 0 | 0 | 0 | 0 | (4) | (15) | |
| EBITDA margin | 18.2% | 13.4% | 13.5% | 18.1% | 18.0% | 16.7% | 14.1% | 15.2% | |
| EBITA margin | 17.1% | 12.5% | 12.2% | 17.1% | 17.1% | 16.5% | 13.2% | 14.4% | |
| EBIT margin | 16.9% | 12.4% | 12.0% | 17.0% | 17.0% | 16.4% | 12.7% | 9.6% | |
| Order intake (gross) | 1,039 | 1,663 | 1,355 | 1,358 | 1,270 | 1,288 | 1,846 | 1,569 | |
| Order backlog | 5,617 | 6,103 | 6,304 | 6,202 | 6,290 | 6,082 | 6,679 | 6,708 | |
| Bulk Materials | |||||||||
| Revenue | 930 | 1,248 | 917 | 1,068 | 1,248 | 1,772 | 1,060 | 1,271 | |
| EBITDA | 65 | 76 | 12 | (5) | 104 | 165 | 28 | 28 | |
| EBITA | 56 | 63 | 6 | (11) | 91 | 139 | 16 | 17 | |
| EBIT | 46 | 55 | (12) | (24) | 67 | 115 | 4 | 12 | |
| Effect of purchase price allocations | (4) | (4) | (12) | (14) | (15) | (15) | (11) | (5) | |
| EBITDA margin | 7.0% | 6.1% | 1.3% | (0.5%) | 8.3% | 9.3% | 2.6% | 2.2% | |
| EBITA margin | 6.0% | 5.0% | 0.7% | (1.3%) | 7.3% | 7.8% | 1.5% | 1.3% | |
| EBIT margin | 5.0% | 4.4% | (1.3%) | (2.2%) | 5.4% | 6.5% | 0.4% | 0.9% | |
| Order intake (gross) | 869 | 673 | 1,641 | 1,261 | 1,357 | 1,223 | 943 | 1,272 | |
| Order backlog | 4,872 | 4,524 | 5,123 | 5,340 | 5,416 | 5,136 | 5,023 | 5,230 |
| DKKm | 2010 | 2011 | 2012 | |||||
|---|---|---|---|---|---|---|---|---|
| Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |
| Non-Ferrous | ||||||||
| Revenue | 1,511 | 1,533 | 1,163 | 1,262 | 1,838 | 2,502 | 1,722 | 2,057 |
| EBITDA | 225 | 195 | 132 | 119 | 246 | 361 | 147 | 209 |
| EBITA | 216 | 189 | 120 | 108 | 238 | 348 | 135 | 193 |
| EBIT | 182 | 159 | 87 | 82 | 204 | 315 | 94 | 89 |
| Effect of purchase price allocations | (28) | (28) | (27) | (27) | (27) | (31) | (41) | (35) |
| EBITDA margin | 14.9% | 12.7% | 11.4% | 9.5% | 13.4% | 14.4% | 8.5% | 10.2% |
| EBITA margin | 14.3% | 12.3% | 10.3% | 8.6% | 13.0% | 13.9% | 7.8% | 9.4% |
| EBIT margin | 12.0% | 10.3% | 7.5% | 6.6% | 11.1% | 12.6% | 5.4% | 4.3% |
| Order intake (gross) | 1,093 | 1,471 | 1,680 | 2,322 | 3,222 | 2,507 | 2,445 | 2,808 |
| Order backlog | 5,780 | 5,801 | 6,032 | 6,975 | 8,482 | 8,779 | 9,482 | 10,362 |
| Cement | ||||||||
| Revenue | 1,373 | 1,277 | 1,149 | 1,028 | 844 | 1,333 | 859 | 952 |
| EBITDA | 172 | 153 | 136 | 121 | 52 | 232 | 102 | 155 |
| EBITA | 160 | 139 | 121 | 106 | 38 | 229 | 93 | 144 |
| EBIT | 155 | 135 | 117 | 104 | 33 | 221 | 85 | 74 |
| Effect of purchase price allocations | (2) | (2) | (2) | (2) | (2) | (2) | (2) | (3) |
| EBITDA margin | 12.5% | 12.0% | 11.8% | 11.8% | 6.1% | 17.4% | 11.9% | 16.3% |
| EBITA margin | 11.6% | 10.9% | 10.5% | 10.3% | 4.5% | 17.1% | 10.8% | 15.1% |
| EBIT margin | 11.3% | 10.6% | 10.2% | 10.1% | 3.9% | 16.5% | 9.9% | 7.8% |
| Order intake (gross) | 839 | 689 | 527 | 1,291 | 1,507 | 1,114 | 1,415 | 1,902 |
| Order backlog | 8,145 | 7,918 | 7,246 | 7,151 | 7,858 | 7,749 | 8,208 | 9,240 |
| Cembrit | ||||||||
| Revenue | 403 | 350 | 290 | 394 | 401 | 375 | 316 | 383 |
| EBITDA | 49 | 11 | 8 | 43 | 50 | 18 | 13 | 46 |
| EBITA | 28 | (7) | (8) | 25 | 33 | 8 | (6) | 33 |
| EBIT | 28 | (8) | (9) | 25 | 32 | 6 | (7) | 32 |
| EBITDA margin | 12.2% | 3.1% | 2.8% | 10.9% | 12.5% | 4.8% | 4.1% | 12.0% |
| EBITA margin | 6.9% | (2.0%) | (2.8%) | 6.3% | 8.2% | 2.1% | (1.9%) | 8.6% |
| EBIT margin | 6.9% | (2.3%) | (3.1%) | 6.3% | 8.0% | 1.6% | (2.2%) | 8.4% |
The Interim Report of the Group for the first half of 2012 is presented in accordance with IAS 34 "Presentation of financial statements" as approved by the EU and additional Danish disclosure requirements regarding interim reporting by listed companies as determined by NASDAQ OMX Copenhagen ("OMX"). Apart from the below amendments and changes in business segments, the accounting policies are unchanged from those adopted in the 2011 Annual Report. Reference is made to note 49 page 128 in the 2011 Annual Report for further details.
With effect from 1 January 2012, the Group has adopted amendments to IFRS 7 "Financial Instruments: Disclosures". The implementation of the amended standard has had no impact on recognition and measurement. Nor have the amendments effected presentation and disclosure.
Financial reporting for 2012 will be based on the five business segments, Customer Services, Bulk Materials, Non-Ferrous, Cement and Cembrit in line with the new Group strategy. The business segments are the same that Group Management uses when controlling and managing the Group internally. Comparative figures for 2011 have been reclassified based on the five new business segments. Restated segment information presented in accordance with the new Group Strategy was announced on 21 March 2012.
When preparing the Interim Report in accordance with the Group's accounting policies, it is necessary that the Management makes estimates and lays down assumptions that affect the recognised assets and liabilities, including the disclosures made regarding contingent assets and liabilities.
Management bases its estimates on historical experience and other assumptions considered relevant at the time in question. These estimates and assumptions form the basis of the recognised carrying amounts of assets and liabilities and the derived effects on the income statement. The actual results may deviate. Reference is made to note 1 page 94 in the 2011 Annual Report for further details regarding the items for which estimates and assessments by Management are primarily applicable when presenting the consolidated financial statements.
Vigerslev Allé 77 DK-2500 Valby Denmark Tel.: +45 36 18 18 00 Fax: +45 36 44 18 30 [email protected] www.flsmidth.com CVR No. 58180912
Page 33 of 33 FLSmidth: 1 January – 30 June 2012 Interim Report
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