FLSmidth has announced a rise in orders and revenues for the first quarter of 2020, but tougher times lie ahead says group CEO Thomas Schulz. The Denmark-headquartered global mining and cement industries equipment and engineering services group, which has significant operations in North America, is gearing up for a prolonged period of business disruption due to the COVID-19 pandemic.
“The COVID-19 pandemic has a significant impact on the current and future business and impacted our first-quarter results, especially in the month of March, as the pandemic has led to higher costs associated with more complex logistics and lower capacity utilization,” says Schulz.
“There will be economic impacts for both of our core industries, but we see a relatively resilient mining industry, and the extensive global policy response is already seen, such as the proposed US$2 trillion infrastructure package in the U.S., could fuel rapid growth in metals demand and boost construction and cement markets worldwide.”
Schulz said FLSmidth’s top priority at this time is the safety of its employees and customers. He added: “Around 70% of our employees are currently working from home and a safe working environment has been established for the remaining employees. At the same time, we have been adapting our operations to the changing circumstances to support our customers in the best way possible.”
FLSmidth’s Q1 2020 order intake was up 16% to DKK 6.526bn (€874.95mn), while group revenue rose 2% to DKK 4.525bn (€606.67mn). Meanwhile, FLSmdith profits were down 3% in the quarter to DKK 1.047bn (€140.37mn). The encouraging order intake rise was said to be due to a record high service order intake and three large announced orders in Mining. FLSmidth says the COVID-19 pandemic is intensifying hesitation on significant capital investments, but both mining and cement producers are increasingly looking at digitalised solutions, driven by the restrictions of on-site services.
Demand for spare and wear parts is seen relatively stable and in line with production rates, but dependent on activity level on sites.