Q3 2024 FLSmidth & Co A/S Earnings Call Transcript
Key Points
- FLSmidth & Co AS (FLIDY) signed one of its largest agreements, supplying 80% of the MOF flowsheet in Uzbekistan, indicating strong market presence and potential growth in the region.
- The company successfully implemented a new ERP system in its Tucson facility, enhancing operational efficiency and contributing to revenue growth.
- There has been a significant improvement in profitability, with reported EBITA increasing from 8.2% to 12.4%, indicating effective cost management and operational improvements.
- The company is ahead of its transformation plan, particularly in closing the non-core activity (NCA) segment, which is expected to be completed by the end of 2024.
- FLSmidth & Co AS (FLIDY) is progressing well in its sustainability targets and continues to focus on safety improvements across its operations.
- The capital market remains slow, with subdued activity expected until the end of 2025, impacting potential growth in capital order intake.
- The service business in the cement sector experienced a low quarter, with expectations for improvement in the fourth quarter, indicating volatility in this segment.
- There is uncertainty in the timing of CapEx investments, with significant activity not expected until late 2025 or early 2026, which could delay revenue growth.
- The company is facing challenges with provisioning levels, particularly in the mining segment, which could impact financial stability.
- FLSmidth & Co AS (FLIDY) is still working on reducing SG&A costs, which remain high relative to current volumes, indicating ongoing cost management challenges.
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(audio in progress)
One of the largest, if not the largest, agreement we signed as an FLSmidth and it's a clean supply of production services, which means that there's no third-party content and that is exactly what we want. And we are supplying 80% of the MOF flowsheet in Uzbekistan, we like the country, we are established in Uzbekistan. And if I look at the prospects in the country, we are and we will be fairly significant play in the country for all mining investments going there.
Capital market is still on the slow side and the activity will remain subdued until I would say maybe end of 2025. I've visited quite a few EPCM companies around the world, the engineering companies, everybody speaks about the study work, they are full on doing study work and study work typically is the preface of the order and then for them order and then project execution.
So we expect that all the study work that EPCMs are doing in all the mining hubs will result in significant CapEx investment
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