FL Smidth announces year-end loss, expects downturn to continue in 2014

Major Danish services supplier FLSmidth (CPH:FLS) ended the year in the red with a loss of DKK-784 million compared to a profit of DKK1,303 million in 2012.

The company was 7.16% lower to DKK277.30

The company was gored by all the major miners announcing cost cutting. FL Smidth said the order intake decreased 25% to DKK20,911 million. In 2012 it booked DKK 27,727 million.

The company lowered its dividend to DKK2 a share, from DKK9 a share for 2012.

The mineral processing division is expected to decline, DKK55 to 6.5 billion in 2014 compared to DKK9.3 billion in 2013.

Overall, the company was gloomy:

Most commodity prices declined in 2013, reducing miners' returns after a period of extensive capacity expansions. Consequently, miners are focusing on cost and capital efficiency, resulting in the present mining capex downturn.

That said, most commodity prices are still well above cash costs and investment thresholds, whereas the short-term outlook for most bulk materials, and in particular coal, continue to be weak. Overall, the downturn is expected to continue throughout 2014 and to flatten out or slightly drop in 2015, before returning to slow growth in 2016. Long term, the positive outlook for mining capex remains encouraging.

One bright spot was the company's service division.

The company said its after market held up well due to mines running continuously leading to wear and tear on equipment. The company forecast revenue of DKK7.5-8.5 billion in 2014, about the same as 7.6 billion in 2013.