Half Year 2026 FLSmidth & Co. A/S Earnings Call Transcript
Key Points
- FLSmidth & Co AS (FLIDY) delivered strong organic order intake growth of 14% in Services and 18% in Pumps, Cyclones & Valves, indicating robust market demand and share gains.
- The company achieved a significant improvement in adjusted EBITA margin to 17.3%, up 2 percentage points year-over-year, driven by strong revenue conversion across all business lines.
- FLSmidth & Co AS (FLIDY) raised its full-year guidance for organic revenue growth to 0%-4% and adjusted EBITA margin to 16%-16.5%, reflecting confidence in continued performance.
- The Products business line returned to profitability in the first half, a notable achievement, with improved supply chain management and faster project execution.
- The company maintains a strong balance sheet with leverage at 0.6x, well below its 2x target, providing ample dry powder for M&A and ongoing share buybacks.
- Management sees a positive outlook for larger greenfield projects, particularly in South America, with expectations for order intake to improve in late 2026 and 2027.
- FLSmidth & Co AS (FLIDY) reported negative free cash flow of DKK135 million in Q2, impacted by a significant build-up in net working capital, which is expected to persist into 2027.
- The company's cash flow from operations is expected to be below earlier expectations, with management indicating it may not reach DKK1 billion for the full year.
- Order intake for the Products business line remains heavily dependent on large orders, with smaller base orders at a low level, creating volatility and uncertainty.
- The company faces tough comparables in Q4, which may limit revenue growth in the second half, despite strong backlog conversion.
- Sustainability KPIs, excluding safety, showed slight declines due to seasonality, and the company has shifted to annual reporting for Scope 3 emissions, reducing quarterly transparency.
- The ongoing compliance case remains unresolved, with no updates provided, adding a layer of uncertainty for investors.
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Good morning and good afternoon, everyone, and welcome to the FLS Q2 Investor Call. My name is Toni Laaksonen, and I'll be presenting today with our CFO, Roland Andersen. And we start the presentation with the Q2 highlights.
So first, deep diving to the market and commercial aspects and from there, we can say that with two business lines, we saw excellent development in Q2. The Service business line continued their strong commercial performance with their order intake, and we were growing plus 14% organically in Q2, which was excellent development and continued development compared to the previous quarters. Then with our Pumps, Cyclones & Valves, we demonstrated similar great development, and we were gaining some shares from the market, and grew 18% organically in Q2, which was clearly ahead of the certain peers.
Then on the other hand, with our orders, we saw some development now with the bigger, larger orders. And the first one was now awarded during the quarter that
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