FLSmidth to explore divestment options for its Cement business
January 29 2024 - 12:04PM
FLSmidth to explore divestment options for its Cement business
COMPANY ANNOUNCEMENT NO. 1-2024 29 January 2024,
Copenhagen, Denmark
Today, FLSmidth announces that we will explore the
available divestment options for our Cement business. Our
objectives are to enable the Cement business to maximise its full
potential as well as to further strengthen our Mining business’
market-leading position as a full flowsheet technology and service
provider to the global mining industry.
As announced on 18 January 2023, FLSmidth has introduced pure
play strategies to separate its Mining and Cement businesses.
Additionally, long-term financial targets have been announced for
each of the two businesses (ref. Company Announcement no. 2-2023).
As of 1 January 2024, the new company structure is in place and the
remaining separation activities are expected to be completed during
the first half of 2024.
The Mining and Cement businesses are very different in terms of
market dynamics and industry fundamentals. In addition, the
synergies, overlap in customer base and overlap in product
offerings between the two businesses are limited. Consequently, by
separating the two businesses, both will benefit from increased
operational flexibility, strong accountability and improved
financial transparency. This allows them to focus on their own
unique opportunities and challenges, and thus maximise their
respective full potential.
Over the past year, we have simplified and rightsized the Cement
business to further strengthen its market-leading position, improve
profitability and make it fit-for-purpose with a strategic focus on
the core products and services required in the cement industry. We
continue to believe that the global economic development and the
green transition offer attractive long-term growth opportunities
for our Cement business, and that especially the Service business
holds significant untapped potential.
To unlock the full potential of the Cement business and to
maximise shareholder value, we have as part of the pure play
separation process assessed different business models, investment
scenarios and potential ownership structures. This assessment
suggests that the Cement business could benefit from an alternative
ownership. Consequently, the Board of Directors and Group Executive
Management have decided to explore the available divestment options
for the Cement business.
Chair of the Board of Directors, Tom Knutzen, says: “I am truly
proud of what we have achieved with our Cement business for more
than 140 years. I firmly believe the business is well positioned
for future success and that it has a significant role to play in
the decarbonisation of cement. However, when reviewing the
long-term options for FLSmidth as a business, for our customers and
for our shareholders, we have concluded that a separation of
ownership could be beneficial for both the Mining and Cement
businesses. Unlocking the full potential of the Cement business
requires substantial investments and dedicated management
attention, which we believe will be more easily achieved under a
different ownership than FLSmidth’s.”
Group CEO of FLSmidth A/S, Mikko Keto, says: “Our Cement
business has shown robust performance and good strategic progress
over the past years. This gives me great comfort in Cement’s
ability to continue its positive journey, also – and maybe even
more so – under another ownership than FLSmidth’s. We have a clear
ambition of further strengthening our market-leading position in
Mining, and we see tremendous long-term opportunities for the
business backed by strong industry fundamentals and a positive
long-term market outlook. Consequently, today’s decision of
exploring divestment options for our Cement business constitutes a
key step in unlocking the full long-term potential of both the
Mining and Cement businesses.”
There is no certainty that any transaction will transpire. Any
further announcements will be made as and when appropriate. We
would expect a potential transaction to take place by late-2024 at
the earliest. In the meantime, FLSmidth Cement will continue to
execute on its ‘GREEN’26’ strategy with no changes to leadership or
operations.
Today’s announcement does not impact FLSmidth’s financial
guidance for the full year 2023 (ref. Company Announcement no.
17-2023). The long-term financial targets for FY2026 of 13-15%
EBITA margin for Mining and ~8% EBITA margin for Cement remain
unchanged (ref. Company Announcement no. 2-2023).
Conference call On 30 January 2024 at 08:00
CET, Mr. Mikko Keto (Group CEO) and Mr. Roland M. Andersen (Group
CFO) will host a conference call to comment on this announcement.
The presentation will be followed by a short Q&A session. The
presentation will be held in English.
The presentation can be followed live or as a replay here.
If you wish to ask questions or just listen to the presentation
via telephone, please register here. After registration, you will
receive phone numbers, pin codes and a calendar invite. Please note
that you will receive two codes (a pass code and a PIN code), both
of which are needed when dialling into the webcast.
The presentation slides will be made available shortly after the
conference call has ended at
www.flsmidth.com/reports-and-presentations.
Contacts:
Investor RelationsJannick Lindegaard Denholt,
+45 21 69 66 57, jli@flsmidth.comAndreas Escherich Holkjær, +45 24
85 03 84, andh@flsmidth.com
Media RelationsRasmus Windfeld, +45 40 44 60
60, rwin@flsmidth.com
About FLSmidthFLSmidth is a full flowsheet
technology and service supplier to the global mining and cement
industries. We enable our customers to improve performance, lower
operating costs and reduce environmental impact. MissionZero is our
sustainability ambition towards zero emissions in mining and cement
by 2030. We work within fully validated Science-Based Targets, have
a clear commitment to reducing the sustainability footprint of the
global mining and cement industries and aim to become carbon
neutral in our own operations by 2030. www.flsmidth.com.
- FLSmidth Company Announcement no. 1-2024
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