FLSmidth & Co. Group 2021 Annual Report: Strong

Highlights in 2021

• Order intake increased by 5% organically
• Revenue of DKK 17.6 billion, driven by organic revenue growth of 8%
• EBITA increased by 34% and corresponding EBITA margin increased to 5.9%
• Strong cash flow from operating activities of DKK 1.4 billion
• Mikko Keto appointed Group CEO effective January 1, 2022
• Announcement of acquisition of Thyssenkrupp mining business¹
• Validated science-based targets

Order intake increased by 5% organically in 2021, due to the easing of the impact of the pandemic and improved access to the site compared to 2020. Including currency effects , order intake increased by 4% to DKK 19,233 million. Mining and Cement contributed equally to the growth in order intake. Services orders increased by 14%, while investment orders decreased by 7%.

FLSmidth Group CEO Mikko Keto commented: “FLSmidth delivered a strong performance in 2021. Despite the challenges posed by the pandemic and global supply chain constraints, order intake, revenue and EBITA increased significantly compared to 2020 and cash
flow performance was strong. The main performance drivers for 2021 are continued good momentum in the mining sector and improvements in our Cement business. Additionally, we announced one of the largest acquisitions in our history, the acquisition of thyssenkrupp’s mining business. This will position FLSmidth as one of the mining industry’s strongest providers with complete pit-to-mill flowsheet solutions that drive sustainable productivity.

Financial performance
Leveraging our flexible supply chain coupled with the easing of pandemic related restrictions in the second half of 2021, full year 2021 organic revenue increased by 8%. Adjusting for currency effects, Group revenue increased by 7% to DKK 17,581 million, mainly driven by the Capital business.

Gross margin increased by 8% and EBITA by 34% thanks to higher revenues and operating leverage. EBITA margin improved to 5.9% with improvements in both Mining and Cement. Adjusted for the costs related to the acquisition of thyssenkrupp’s mining business, the EBITA margin was 6.5%.

We secured six large orders in 2021 and a 109% book-to-bill for the year. Cash remains a key priority and with a net working capital ratio of 6.0% at the end of 2021, we generated cash flow from operating activities of DKK 1.4 billion in 2021.

Fourth Quarter 2021 Highlights

• Order intake grew 6% organically
• Revenue of DKK 5.1 billion drove organic revenue growth of 19%
• EBITA increased by 44% and corresponding EBITA margin increased to 6.6%
• Solid cash and improved net working capital

Group order intake increased by 8% to DKK 5,084 million, the highest level in the fourth quarter for several years. Order intake growth was entirely driven by Mining, which grew 35% organically and accounted for 71% of total order intake. Group services orders rose 20% on positive sentiment in the mining industry.

Group revenue increased by 19% organically, attributable to both Mining and Cement activities, as well as investment and services activities. Including currency effects, revenue increased by 21% to DKK 5,135 million.

Gross margin increased due to higher revenues. Gross margin decreased due to an increased share of capital income. Group EBITA increased by 44% compared to Q4 2020. The corresponding EBITA margin increased to 6.6%, the highest quarterly EBITA margin since 2019. Adjusted for costs related to the acquisition of the business Thyssenkrupp Mining Company, the EBITA margin was 7.3%.

Fourth quarter 2021 and full year 2021 results include costs related to the acquisition of thyssenkrupp Mining’s mining business of DKK 37 million and DKK 107 million, respectively. Subject to regulatory approvals, closing of the transaction is still expected in the second half of 2022.

Orientation 2022

The outlook for our two end markets remains very different. The outlook for the mining industry remains positive, driven by global economic development and increased demand for minerals needed for the green transition. The short-term outlook for the cement industry remains affected by overcapacity and the slow recovery. Medium-term recovery expected in the cement industry, driven by increased demand for sustainable solutions.

Mikko Keto commented: ” Beyond managing our two businesses, each of which pursues a strategy and cost structure most appropriate to their market environment, we are deeply committed to ensuring the smooth integration of thyssenkrupp’s mining business into FLSmidth and to build an even stronger brand for the green future. In addition, we will focus on promoting operational excellence to improve our financial performance. »

Separate guidance for mining and cement introduced as part of the 2021 annual report:

The financial forecast for 2022 relates to the FLSmidth group alone and excludes the impact of the combination with the mining activity of thyssenkrupp. It includes approximately DKK 110 million of integration costs until the closing of the thyssenkrupp Mining business transaction. We expect to issue a new financial guidance after the closing of the transaction. The transaction is expected to be finalized in the second half of 2022.

Forecasts for 2022 are subject to uncertainty due to the pandemic, the global supply chain situation and geopolitical unrest.

The Board of Directors will propose, at the Annual General Meeting on March 30, 2022, a dividend of DKK 3 per share for 2021, corresponding to a payout ratio of 48%, in line with our target payout ratio, to be distributed in 2022.

The chairman of the board of directors, Vagn Ove Sørensen, has decided not to stand again at the annual general meeting in March 2022. The board of directors proposes that the current vice-chairman of the board of directors, Tom Knutzen, be elected chairman of the board of directors. Board of Directors.

Call for results

A presentation of the annual results will take place on February 16, 2022 at 11:00 a.m. CET. Mr. Mikko Keto (Group CEO) and Mr. Roland M. Andersen (Group CFO) will comment on the report and developments within the Group. The presentation will be followed by a question and answer session. The presentation is available on: www.flsmidth.com/reports-and-presentations

Live audio webcast

The presentation can be followed live or in replay through the the Internet here.

Conference call

If you want to ask questions or just listen to the presentation by telephoneplease call one of the following numbers: DK: +45 78 15 01 09, SE: +46 856 642 692, UK: +44 33 3300 9261 or US: +1 833 249 8405

2021 key figures

contacts:

Investor Relations
Jannick Lindegaard Denholt, +45 21 69 66 57, jli@flsmidth.com
Therese Möllevinge, +45 41 37 16 38, tmo@flsmidth.com
Mikkel Johansen, +45 23 30 29 50, mjoh@flsmidth.com

Media Relations
Rasmus Windfeld, +45 40 44 60 60, rwin@flsmidth.com

About FLSmidth
FLSmidth delivers sustainable productivity to the global mining and cement industries. We provide market-leading engineering, equipment and service solutions that enable our customers to improve performance, reduce costs and reduce environmental impact. Our operations span the globe and we have approximately 10,100 employees, present in more than 60 countries. In 2021, FLSmidth generated a turnover of DKK 17.6 billion. MissionZero is our sustainability ambition towards zero emissions in mining and cement by 2030. FLSmidth works within fully validated science-based goals, our commitment to keep global warming below 1.5°C and to become carbon neutral in our own operations by 2030. www.flsmidth.com

¹ Pending approvals from customary authorities, the transaction is expected to be finalized in the second half of 2022