Flsmidth & Co A/S B Shs

Welcome to FLSMIT quarter one 25 earnings call. We are very pleased about the result that we were able to deliver on quarter one. The highlights are that we exceeded expectations with the order execution in service. Backlog management, supply chain, the improvements what we've done in that area are now visible in higher than expected revenue. And of course, service revenue is driving the profitability. Very pleased with that one. Order intake both in capital and service is in line with our expectations and we see areas for growth inside those numbers and we've seen growth in consumables and also pumps and cyclones related capital orders. So those are two areas that we've seen year-on-year growth. Adjusted EBITDA. 15.1%. It means that we are now in the category of a quality company. That is a big milestone for us. We want to become and be the quality company in 2025. It means high quality order intake for products, high quality order intake for services, predictable high margin revenues. In cement, we reached the agreement for exclusivity with a potential buyer. And now we have a period of exclusivity where we are aiming for closing of the sale of the cement. At the core level, we are welcoming two new presidents, Julian to be president for mining products for capital business, and Toni Laaksonen as a head of services, expected to join in beginning of June. We also seized non-co-activities, so that is now officially closed, so that segment does not exist. and there's more backlog and which is now part of the mining capital. We are very confident about our performance and therefore we increase our guidance for the full year. Regarding ESD and sustainability, we are advancing with most of the KPIs well ahead of the plan and last year only area which requires continued attention is safety. And safety mainly inside our own operations, not at the customer sites. On the left, we are also highlighting areas that are high interest for the customer in the area of sustainability. Recycling of mill liners. We launched that in Antofagasta in Chile. Corsair flotation cell. And then we got an order for largest tower mills, vertical mills in the world with significant energy savings. We've been looking at tariffs and potential impact for the company and the conclusion is that it does not have any material impact on our operations nor for the profitability. We have fairly significant footprint inside USA and most of the commercial terms are such that the customer will carry the extra cost of the tariff. And this is also one reason we were able to raise guidance for the full year. We don't expect anything material negative coming out of the tariffs. Tariff impact on the whole global economy is a different thing. Of course, if the global economy would go into recession, that would impact all the companies around the world. But tariffs as such directly will not have a material impact on FLS. When we are looking at the market, service market is stable and active. We had a slight softness in the first part of the year in North America, but it seems that the North America market in services, OPEX, is back in the business, so that softness is gone. Product market continues to be similar to last year. We haven't really seen any change in the market. And the activity in EPCMs, what we actually referred in the previous course, when visiting Chile a couple of weeks back, talking to major EPCMs, everybody's still super busy. Everybody's short of resources to attract, to do the work. That work is still study work, preparation for the projects and we are expecting activity in the actual execution to pick up toward the latter part of 26. We continue to be a leader in technology, and that is very significant. Even the smaller capital order intake, we are highlighting the fact that we are getting significant orders there in terms of technical references and cementing our position as a market leader. This is something that we wanted to highlight to you, what we've done with the portfolio. This has had an impact on profitability and also for the volumes. So we have given up quite a bit of volume to improve quality of earnings. NCA non-core backlog when we started winding down the business was about 3.5 billion. We had lots of third-party content in projects. On average, 30% of what we sold and delivered was third-party. And we've been scaling down basic labor services in all parts of the world. As a result, it has had roughly 3 billion impact on our volumes. But as a result, In our estimate the EBITDA percentage has gone up between three and four percent. So the portfolio choices ensure that we have a high quality order intake, high quality revenue and therefore very predictable business model. At the same time, we have a full portfolio for mining flow sheet. We have the best and fullest portfolio there. So we have not given up any critical elements in the process plant. We have everything what one needs to build the plant. Regarding order intake. We are happy with the order intake. It's at the level what we expected. We are still estimating service order intake to be stable for remainder of the year and typically around 2.6 to 2.8 billion DKK. So this quarter was right in the middle of that estimate. As I presented about portfolio pruning, with the portfolio what we have and what are the cases in the marketplace, we are happy with the one billion order intake. Inside that one billion order intake is also increased conversions of the pumps, meaning that the site sales selling pumps to existing installations and also winning key orders for technology. To highlight what I mentioned in the previous slide about scope, we announced yesterday Lloyds Iron ore, which is one of the future flowsheets for mining in iron ore beneficiation. We announced flotation order. There was opportunity to take 30% more volume by having third-party content in our order. But we recommended customer to go direct to third parties rather than passing that through our books. So by choice, we took the product order, technology order, and recommended customer to go direct to third party regarding non-core technology. So we are very disciplined at the moment when we are taking orders, talking to customers, so that we stick with the technology and services in our portfolio. As I said in the beginning, the big success of the quarter was service, backlog management and order execution. It shows that we've done improvements there to the previous year where the revenues were slightly behind order intake. So now we can do the catch up. So very pleased about that improvement over the course of latter part of last year and the first quarter. And that of course ensures that we can deliver good result for the quarter and for the year. I said in the beginning that I feel that we are entering into category to become high quality company and adjusted EBITDA 15.1 reported 13.7 is a sign of that one. With every quarter continuous we are pushing up the profitability, improving the quality of the order intake, quality of the revenues and it's finally showing what we are doing. And we are very proud of the result. This has been hard work for two or three years, and now we see the benefit of that one. And therefore we also increased our guidance for the year. We can't talk too much about cement sale, but we've entered into exclusive agreement for the potential buyer, Pacific Avenue Capital Partners. which is a financial sponsor, private equity fund. And criteria for going into exclusive period for the Pacific, our criteria is that buyer needs to be willing to take full perimeter of cement. And also we've been assessing about deal certainty. So full perimeter, deal certainty were the key selection criteria for choosing Pacific to be shortlisted for the exclusive period with us. Seventh. Order intake on the low side, slightly disappointing quarter for quarter one for services and we are expecting some recovery in the coming quarters. Revenue very much in line with the expectation. And you can see that I'm going through the cement result quite fast because our expectation is that we could conclude the negotiations for the Pacific in the coming weeks and months. Adjusted EBITDA margin for cement 9.5 and reported 8.6. Very proud of this one, it shows that same medicine what we've done for mining, de-risking, focusing on service, pricing, all that is resulting in higher relative profitability as before. Then handing over to Roland.

Thank you for that Mikko. So having a look at the consolidated financial performance as Mikko mentioned, our product portfolio, our pruning of our product portfolio as well as NCA is now out of the book. And hereafter, our revenue for the group is 4.7 billion and adjusted EBITDA margin for the group of 13.9 percent and reported EBITDA margin of 12.6 and net profit and loss for the group of 351 million. Gross profit continues up at a long-time high, 34.4%. It's driven by both mining and cement, and both segments have good share, relatively strong share, of service revenues in the quarter. Our SG&A costs compared to same quarter last year are flat and compared to Q4 it's down. It reflects that we continue our simplification and getting our global organization in place. Our administration costs have started to come down and it's offset so far by strategic investments in the sales side. So S a bit up, A a bit down. But the combination will come down in the quarters to come. throughout the remainder of the year, so we will be at a different lower level as we come into 2026. Group EBITDA continues up as mentioned by Mikko 13.9% and on the right hand side we do the EBITDA margin bridge where it's clear that most of this for this quarter is driven by a very healthy gross margin percentage. Our net working capital in line with our expectation 12%, payables are somewhat down and offset by work in progress asset and a bit reductions in trade with receivables too. That means our cash flow improves around CFFO minus 12% compared to minus 352 million at the same quarter last year and a free cash flow for the quarter after M&A of minus 120 million. And that means that our leverage ratio is flat on Q&Q 0.4x, well below our capital structure target. And as we got off to a good start in mining, a good start to the year in mining, we lift our financial guidance for the mining division from previously 13.5 to 14% to now 14.0 to 14.5%. The cement guidance remains unchanged. That means that the group's guidance increased for an adjusted EBITDA margin from previously 12.5 to 13% to now 13 to 13.5%. And a reported EBITDA margin for the group is lifted also half a percentage point to 11.5 to 12.0%. And with that I'll give you back to Mikko just to wrap up before we take Q&A.

So as a summary, we are very confident about our performance at the start of the year and for the full year and that's why we upgraded our guidance. Supply chain works well now. both for service and capital and we do have alternative sources for supply depending how the tariff situation will continue. So I have full confidence on that one and it will not have any material impact on our profitability. And with the portfolio pruning, we've reached the target portfolio, meaning that we have become product technology company with a 65 to 70% share of the service. So we are totally different profile as we were when we started this transformation journey. And we have all the key products in our portfolio. We have not given up anything that is significant to the customers. And it's evident now that the investment in the commercial front end is paying off and we see growth in consumer pools and pump cyclones as well. So both businesses show year on year growth. And also that we are very happy that we have chosen Pacific and entered exclusive negotiations about divestment of full cement perimeter. And as I said before, criteria for selection was full perimeter and then deal certainty. So those were selection criteria for the party to go exclusive. And then we call to the Q&A, please.