FLSmidth’s Capital Markets Day on January 18, 2023 marked the culmination of a major portfolio review that really ramped up on the completion of its acquisition of thyssenkrupp’s mining business on September 1, 2022. But the overall change at FLSmidth also runs much deeper – Group CEO Mikko Keto also said during the CMD event that “many moving parts” of the past three years had kickstarted its transformation journey in 2022.

It was an impressive speaker line-up, which aside from Keto included CFO Roland Anderson; Annette Terndrup, Chief Legal & Strategy Officer; Cori Petersen, Chief HR & HSE Officer; Joshua Meyer the President of the Service Business Line; Chris Reinbold the Products Business Line President; Asger Lauritsen the COO and Cement President; Mikko Tepponen the Chief Digital Officer and Wouter de Grott Head of Sustainability.

Broadly there were four main themes to the presentation – its portfolio review and priorities bringing its ‘pure play’ mining strategy into line with the reality on the ground with its facilities and management structure; speeding up the commercialisation of its MissionZero approach and technologies; and a new financial goal – in mining it calls this CORE’26, where it is aiming at an EBITA margin of 13-15% for the FY2026. Finally a focus on mining’s green transition, focusing on the commodities behind green energy such as copper, nickel, lithium and cobalt. It also has strong positions in iron ore, gold and zinc mining. It describes this as part of an acceptance that energy systems powered by clean energy technologies differ profoundly from those fuelled by traditional resources.

Sustainability is “a key business driver for FLSmidth” and “a profitability level for our customers with no trade-offs.” Enabling profitable sustainability means leadership with its MissionZero technologies. Two examples – 35% reduction in grinding energy per kWh/t with the OK™ mill or a 45% reduction in flotation energy per kWh/t with the REFLUX™ cell. FLSmidth says: “With our core technologies and R&D roadmaps, including the MissionZero Mine, we have the solutions to drive productivity and sustainability for our customers.”

On the markets it plays in, as a full flowsheet provider FLSmidth refers to limited direct competition and high barriers to entry with “one key competitor” in an industry that has consolidated over the past decade – clearly referring to Metso Outotec but not named. Keto told IM after the TK Mining deal closed: “We are looking at competitiveness of the technologies and products on both sides – we want to be number one or two in all of our product lines.” And the company has duly given some information about where it sees its market position today – number 1 in IPCC, overland conveyors, HPGR, gyratory crushers, SAG/ball mills, cyclones and thickeners. Number 2 in screens, pyromet, pressure filtration and flotation. Then number 2/3 in pumps and number 4 in cone crushers.

Looking at its mills business as an example, it says it has more 40 ft SAG mills delivered than all other suppliers combined; and has installed the world’s largest capacity SAG mill. Ball mills are “also a cornerstone product for FLSmidth and paired with SAG mills as a first consideration in most grinding flowsheets.” IPCC remains a core business area as mines look to electrify. This strength is exemplified by the recent award of the world’s largest gyratory crusher as part of an IPCC system. Its gyratory top service design also improves safety and maintainability.

TK Mining brought about 5,000 active customer installations, over 900 active patents, a DKK5.2 billion order backlog and about 2,000 employees in over 20 countries. It was also a major boost to FLSmidth’s IPCC, primary crushing and HPGR businesses. And it added new services centres and production sites worldwide. But big deals mean committing to synergies and inevitably that means headcount reduction – the mining organisation has seen a reduction of about 800 employees in Q4 2022 and Q1 2023 so far, it says “supporting the synergy realisation.”

In terms of the portfolio review, there are no real surprises. It is keeping more or less all of its main technology product lines. As previously announced, gone are port systems, stockyard equipment and standard bucket wheel excavators plus FLSmidth continuous surface mining equipment and mine & overland conveyors. However, it is by no means the end for conveyors – the TK conveyor designs and strengths remain – largely focused on pit to plant, especially when combined with an in-pit crushing solution. These non-core activities will be exited over the next three years, while it will honour existing contracts as well as spares and wear part needs.

The company says it is moving away from a focus on engineering, and “all in” big scope projects and a conglomerate structure to a more technology and products focused approach – more pure play mining by which it means more pit to plant than pit to port. It believes this is a lower risk, “high quality of earnings” approach and more resilient to changing economic environments – the pandemic being a good example. A regional P&L structure has been replaced with a global one – that means global business lines with focused product sales teams. Active product management it says is driving improved mix and margins with focus on higher service intensity.

It also says it is transforming its service business model to further improve profitability whilst increasing value for customers. This includes more focus on higher margin spares and wear parts and service offerings standardisation and optimisation. It says there is large growth potential from increasing installed base penetration and targeting specific higher margin service offerings. One example – it has made strategic composite mill liner investments to increase market captivity including a greenfield, custom built facility strategically located in South America to meet mill liner growth plans.

Digital is a key business driver and it continues to invest and expand in that area. This includes strategic partnerships with Microsoft on Azure support plus with AVEVA on connected asset services. Acquisitions include KnowledgeScape and IMP Automation Group. An example of the power of digital – thickener optimisation using Advanced Process Control software has been shown to provide significant customer efficiency and sustainability gains. It says: “We are digitalising the entire flowsheet and continue to accelerate our digital capabilities and offerings.”