In its interim report released today for the three month period to end March, FLSmidth was upbeat about mining: “Momentum in the market for minerals processing equipment started building in the second half of 2017 and continued into 2018. Miners are, on average, projecting moderately higher capital expenditures in 2018 which is underpinned by the actual tendering activity. While Q1 included the first large minerals project order since 2015 [new $100 million, 75,000 tonnes per day line at Aktogay copper mine in Kazakhstan], the focal point of customer interest is single equipment or smaller islands of equipment. A few larger orders are being discussed and could potentially secure project financing although environmental approvals and business licenses are becoming increasingly difficult to obtain.” While overall operating profit and order intake was down, it was still much better than analysts expected.
On services it added: “Demand for parts and services in mining remains healthy across regions and in general, the Americas show a positive development, especially related to gold in North America and copper in South America. Somewhat increased activity in iron ore and lithium as well. Customers show good interest in asset inspections, upgrades and wear products.
Effective from July 1, 2018, FLSmidth’s organisation will consist of two industries – Cement and Mining – supported by a regional setup to strengthen customer focus and life-cycle solutions
combined with a new central digital organisation. FLSmidth will transition from four divisions into two industries, Cement and Mining, and from a country setup into an agile regional structure. Customer relations will be decentralised in seven regions, while technology ownership for the full life-cycle offering will be anchored in the two industries. This will create a productivity-driven organisation with a strong, unified digital approach and fewer touchpoints. At the same time, it will strengthen FLSmidth’s local presence, customer-orientation, and life-cycle offering in order to capture growth.
In short:
- The two industries; Cement and Mining will develop and drive the life-cycle offering and product portfolio.
- The two industries will be supported by seven regions: North America; South America; Europe, Russia & North Africa; Sub-Saharan Africa & Middle East; Asia; Subcontinental India; and Australia. The regions will drive customer relations, sales and service for both industries.
- A central digital organisation will drive a unified approach to digitalisation.
On its results in the market context the company adds: “After a strong start to the year, the copper price fell back to the end 2017 level in March, likely due to fear of a trade war between the world’s two largest economies, which on the other hand drove up the gold price. A trade war could be damaging to commodity markets and investment sentiment but for now the mining recovery seems intact and, according to IMF, the prospects for global economic growth remain encouraging for 2018 and 2019. The US import tariffs on steel are not expected to have any significant direct impact on FLSmidth project costs due to our flexible and global sourcing platform. The mining aftermarket showed continued good momentum in Q1 with a healthy demand for parts and services
across regions.”
