Mineral Processing Division is the bright spot in FLSmidth results

Danish engineering company, FLSmidth, has released its 2012 Annual Report with mixed results from its Material Handling and Mineral Processing Divisions. Overall revenue increased 21% on 2011 to DKK 24.849 billion (US$ 4.478 billion); however, profit dropped by 9% to DKK 1.303 billion (US$ 234.8 million).

FLSmidth Material Handling Division faces challenges

The company’s Material Handling Division suffered with project execution challenges through 2012. These execution challenges related to “underestimated risks” on previous orders combined with a “lack of timely handling and mitigation thereof”. As a result, 10 projects have experienced serious cost overruns resulting from “extended stay onsite, quality issues and correction of engineering errors […] as well as underestimated costs related to material and manpower”. Another 15 projects are experiencing some cost overruns.

As a result the company has focused on improving its existing operations, transferring management expertise and best practices from other divisions, including the appointment of Carsten Lund as the new division head. This focus and a consequent “prudent tender approach”, as well as a temporary slowdown in market activity, saw order intake decrease by 17% year-on-year, while order intake for Q4 decreased 43% on the same period in 2011 and 60% on Q3. Revenue in 2012 was DKK 4.997 billion (US$ 899 million), down slightly from DKK 5.005 billion (US$ 900 million) in 2011; however, gross profit was down 31% year-on-year to DKK 604 million (US$ 108.7 million).

The company expects another tough year in 2013 as the short-term outlook for bulk materials, such as coal and iron ore, remains weak. Expected revenue in 2013 is DKK 4 – 6 billion (US$ 719 .7 – 1079.5 million).

Despite this, the company did achieve a number of notable contracts, including a contract from Vale to supply bulk handling material to the Port of Nacala in Mozambique. Meanwhile, in Indonesia, the company is constructing a material handling system, including in-pit crushing and conveying (IPCC) technology to handle coal from the mine, crush it and move it.

FLSmidth Minerals Processing

In contrast, the Minerals Processing Division saw its order intake rise by 6% in 2012, although order intake in Q4 dropped by 2% on the same period in 2011 and 5% on Q3. Order backlog increased by 9% on the back of “sound order intake”, while revenue increased a healthy 41% on 2011 to DKK 9.512 billion (US$ 1.711 billion) and gross profit rose 42% on 2011 to DKK 2.196 billion (US$ 395.1 million).

The division expects another healthy year in 2013 with expected revenues of DKK 10 – 12 billion (US$ 1.799 – 2.159 billion), making the division the largest by revenue of FLSmidth’s four operating divisions.

Last year saw FLSmidth increased its footprint in the coal processing industry with the acquisitions of Ludowici, an Australian company specialising in coal preparation and screening technologies, and Decanter Machine Inc., a US manufacturer of screen bowl and hyperbaric centrifuges.

Written by Jonathan Rowland.

Read the article online at: https://www.worldcoal.com/coal/13022013/flsmidth_minerals_processing_posts_strong_results_154/