Barclays flags subdued mining markets, weak FCF for FLSmidth

Metso Oyj

06/12/2024 08:40

** Barclays starts coverage of FLSmidth  FLS.CO  with an
"underweight" rating, TP DKK 315, citing subdued mining
equipment markets, operating leverage headwinds, and weak FCF
generation 
    ** The broker says slower global ore processing growth and
reliance on large projects could weigh on the company's
near-term revenue, with potential downside from weak mining
equipment orders in 2025-26, particularly in key markets
    ** It adds that while margins could improve with a higher
service mix, ongoing operating leverage challenges and limited
room for further cost cuts may result in flat EBITA margins in
2025
    ** The broker notes FCF is constrained by higher working
capital, weak orders, and elevated capex, with FCF yields
trailing peers Metso  METSO.HE  and Weir  WEIR.L  in 2025-26E
    ** Shares of FLSmidth slip 2.4%
    ** Out of 12 analysts that cover FLSmidth, eight rate the
stock "strong buy"/"buy, ​three "hold" and one "sell"

 (Reporting by Jesus Calero)
 ((Jesus.calero@thomsonreuters.com))