FLSmidth Falls as Goldman Sees Delays in Fixes: Copenhagen Mover

FLSmidth & Co. A/S fell in Copenhagen trading after Goldman Sachs Global Investment Research said profit at the Danish mining equipment maker will stall through 2015 as a restructuring process drags on.

FLSmidth fell as much as 2.5 percent to 280.70 kroner, making it the biggest loser in the Nasdaq OMX Copenhagen 20 Index. The stock declined 1.8 percent to 282.70 kroner at 9:46 a.m. in the Danish capital, with volume at 27 percent of the three-month daily average.

FLSmidth, which has missed analyst profit estimates in its last six quarterly reports, presented on Aug. 23 a restructuring plan which it said will boost profits by eliminating 1,100 jobs and cutting other costs. Goldman said in a note distributed today that the plan won’t lift the company fast enough out of its “trough year in margins,” and lowered its recommendation on the stock to neutral from sell.

“Given the poor demand outlook for mining, we now believe that restructuring will still be required post 2013 and therefore do not expect as fast margin recovery as we did before,” Goldman said in the note. The Copenhagen-based company faces “too strong a headwind” in its markets, the bank said.

Goldman cut its price estimate on the share to 310 kroner from 325 kroner. The average price target of 14 analysts covering the stock is 346 kroner, according to estimates compiled by Bloomberg.

“Key downside risks include failure to execute on the materials handling restructuring, lower metal prices, slowing global growth, project execution issues,” Goldman said.

FLSmidth’s restructuring plans targets an increase in earnings before interest, tax and amortization of 750 million kroner ($135 million) in 2015. The company, which has missed analyst net income estimates in its last six quarterly reports, is scheduled to publish third-quarter earnings on Nov. 6.

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