
FLSmidth & Co A/S
CSE:FLS

FLSmidth & Co A/S
FLSmidth & Co A/S, hailing from the industrious roots of Denmark, has woven itself into the very fabric of the global engineering and technology sectors. Originating in 1882, the company initially grounded its expertise in the cement and mining industries, establishing a robust blueprint that has shaped its century-long journey. Today, FLSmidth stands as a leader in delivering sustainable productivity within these sectors, leveraging a comprehensive portfolio that encompasses everything from project building and engineering to handling maintenance and optimization. Their primary proposition lies in providing equipment and full-service strategies that empower their clients to enhance production efficiency while ensuring environmental compliance, addressing the modern-day demand for sustainability.
The financial engine of FLSmidth is fueled by its dual focus on the cement and mining divisions, each accounting for significant revenue streams. The mining sector offers an expansive range of equipment and systems for mineral processing, seamlessly integrating with the demands of a fluctuating global mining industry. Simultaneously, the cement division provides pioneering technologies and services that help plants maximize operational efficiency and reduce emissions. FLSmidth's ability to generate revenue is intricately linked to its proactive investment in research and development, ensuring its solutions are on the cutting edge of innovation. Through comprehensive aftermarket services and long-term client partnerships, the company not only secures steady cash flows but also positions itself as an essential partner in the continuous optimization of its client’s operations.
Earnings Calls
In the latest earnings call, the company reported a robust Q1, with an adjusted EBITA margin of 15.1%, resulting from effective order execution and service revenue growth. Capital orders, particularly in pumps and cyclones, displayed encouraging year-on-year growth of approximately 10%. The firm increased its full-year adjusted EBITA margin guidance from 12.5%-13% to 13%-13.5%, and for the Mining division specifically, from 13.5%-14% to 14%-14.5%. A divestment of the Cement business is underway, enhancing focus on high-quality revenues. The company's confidence in performance is bolstered by a stable service market and improved supply chain management, setting a positive tone for future growth.
Welcome to FLSmidth Quarter 1 '25 Earnings Call. We are very pleased about the results that we were able to deliver on quarter 1. 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 for 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're seeing growth in consumables and also pumps and cyclones related capital orders. So those are 2 areas that we've seen year-on-year growth.
Adjusted EBITA, 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 group level, we are welcoming 2 new presidents. Julian will 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 the noncore 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 increased our guidance for the full year.
Regarding ESG and sustainability, we are advancing. Well, the 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 side. 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 have launched that in Antofagasta in Chile, coarseAIR Flotation Cell. And then we got an order for largest tower mills, vertical mills in the world were 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 a fairly significant footprint inside U.S.A. and most of the commercial terms are such that the customer will carry the extra cost of the tariff.
And there 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 economies are defensing. 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 calls. When visiting Chile a couple of weeks back, talking to major EPCMs, everybody is still super busy. Everybody is sort of resources to attract, to do the work. That work is still study work, preparation for the project, and we are expecting activity in the actual execution to pick up towards 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 have done with the portfolio. These have 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, backlog, noncore backlog when we started winding down the business was about DKK 3.5 billion. We had a lot of third-party content in projects. On average, 30% of what we sold and delivered was third party. And we'll be scaling down labor -- basic labor services in all parts of the world.
As a result, it have had roughly DKK 3 billion impact on our volumes. But as a result, in our estimate, the EBITA percentage has gone up between 3% and 4%. So the portfolio choices and so that we have a high-quality order intake, high-quality revenue and therefore, a 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 a plant.
Regarding order intake, we are happy with the order intake. It's at the level of what we expected. We are still estimating service order intake to be stable for the remainder of the year and typically around DKK 2.6 billion to DKK 2.8 billion. 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 DKK 1 billion order intake. Inside that DKK 1 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 flow sheets 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 recommend customers to call direct to third party regarding noncore 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 and -- order 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 of the course of latter part of last year and the first quarter. And that, of course, ensures that we can deliver a good result for the quarter and for the year.
I said in the beginning that I feel that we are entering in the category to become a high-quality company. And adjusted EBITA of 15.1%, reported 13.7% is a sign of that one. We -- every quarter continues, 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 2 or 3 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 have entered into exclusive agreement for the potential buyer, Pacific Avenue Capital Partners, which is financial sponsor private equity fund. And criteria for going into exclusive period with the Pacific 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.
Cement, order intake on the low side, a slightly disappointing quarter for quarter 1 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 EBITA 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, derisking, 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 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 DKK 4.7 billion and adjusted EBITA margin for the group of 13.9% and then reported EBITA margin of 12.6% and net profit and loss for the group of DKK 351 million. Gross profit continues up at a long-time high, 34.4%. It's driven by both Mining and Cement, and both segments had good share -- relatively strong share of service revenues in the quarter.
Our SG&A cost 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 cost have started to come down, and it's offset so far by strategic investments in the sales side. So it's a bit up, 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 EBITA continues up, as mentioned by Mikko, 13.9%. And on the right-hand side, we do the EBITA 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 and a bit reductions in trade receivables too. That means our cash flow improves around CFFO of minus 12% compared to minus DKK 352 million in the same quarter last year and a free cash flow for the quarter after M&A of minus DKK 120 million. And that means that our leverage ratio is flat on Q-on-Q, 0.4x, well below our capital structure target.
And as we got off to a good start in Mining -- 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 remain unchanged. That means that the group's guidance increased on adjusted EBITA margin from previously 12.5% to 13% to now 13% to 13.5% and a reported EBITA margin for the group is lifted also 0.5 percentage points 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 or the 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 consumables and pump cycles and valves 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 is -- was full perimeter and then deal certainty. So those were selection criteria for the party to be -- to go exclusive.
And then we go to the Q&A, please.
[Operator Instructions] Your first question comes from Christian Hinderaker from Goldman Sachs.
My first one is on the Mining service mix. I guess curious whether basic labor contracts are now at 0. And how do we think about the percent of service sales or orders more broadly across consumables, capital spares and refurbishments this quarter? And maybe you can remind us on the typical lead times for those pieces. And then you flagged in the report hesitancy around capital equipment. I wonder whether that's positive or negative currently for refurbishment and modernization. I'll stop there.
Looking at the service, we have only one large labor service contract left. So in that sense, we might say that there's no materiality starts to be quite small. So you can consider that the portfolio is something what we want to have. Instead of basic labor service, we have professional services, which is high-level services.
Then looking at the service mix, the highest share is spare parts. Second high is this wear parts or consumables. And then the remaining maybe 25%, 30% maximum is then professional services, upgrade refurbishments. But by far, the largest portion is spare parts and consumables, but we don't give out the exact percentages.
Then we haven't seen any big hesitation in upgrades and refurbishment. Sos in what we see in the activities exactly as before. So we have seen no hesitation to do needed refurbishments or upgrades. And it's more about timing of the operations is for most of the customers, it's not a financial decision. It's more operative decision when it's good time to do those upgrades. And then we've seen some customers in South America for example, upgrading and repairing mills. We've seen those orders actually coming in.
And then you asked about capital spares versus recurring space. So it's not an exact number, but in rough terms, the 70% of the spare part is annually recurring and 20% is not annually recurring. But of course, that 30% will not go to 0 or maximum every year, but there's a volatility there. So spare parts, 70%, annual recurring, 30% is basically capital spares, and there's more variability there.
Very clear. Maybe the second one then, just in terms of the SG&A cost ambitions, obviously, good improvement on gross margins, but how do we think about the SG&A progress as we look ahead?
Yes. So the way to think of it is that the savings will come in gradually over the year. So we did a lot in Q4. We also have done something in Q1, and that will be more pruning as we go through the year. So it will come in drift-wise. In Q1, we still have a lot of people working here.
We've done most of the salary increases as from 1st of Jan in most of the world. And yet, as you see, administration cost is coming down, sales are slightly up, and the combo will come down slowly but surely throughout the year. So we're not going to give you numbers yet. We'll move forward and then if you come by the end of the year.
Maybe just a quick one. Cement gross margin delivery, I think you had an inventory write-down last year in Q1. At the time, it wasn't quantified. Are you able to help us now with that magnitude?
No. No, we're not giving that granularity. I think the gross margin, as you see it now, is a relatively clean number. That should be helpful.
Your next question comes from Casper Blom from Danske Bank. Casper, your line is now live.
Your next question comes from Claus Almer from Nordea.
Also a few questions from my side. The first one is, as you also mentioned in the presentation, is this growth you had within pump and cyclones of 10% year-over-year? And you also had some comments about the nature of this growth. But could you put some more color to -- is it mainly successful testing in the Mining sites that is triggering some conversion? Or is more the usual customers that is buying more pumps? That will be the first question.
So it's dominantly conversions because the project activity is quite slow. So the sale of the project sales, meaning that it's part of the project package, the pumps and cyclones is much below the normal level. So it's mainly success converting other brands out and replacing those with the Krebs FLSmidth brand. So it's dominantly driven by site sales and conversions.
Congratulations. So we have been discussing this in the past that you could actually offer these pumps at a rather huge discount and still making a good business case out of it. But it is growing 10% in the order intake means, I guess, that you are getting a decent price on these pumps and cyclones. Is that a correct assumption?
So typically, where you see big discounts on pumps, you see as a part of the capital package so that if they are part of the big package, sometimes you see discounts there. But typically, if you do site sales, you get full price because reason to change out other pump is never commercial. It's always performance.
So in that sense, there's no price competition at the site level. You see price competition when you are bidding a large package and then pumps as a part of that package. So the site sales, our product margin for pumps is actually at a really good level because it's a technical sale, performance sale, it's is not a price sale.
Sounds good. Should we expect this 10%-ish level to continue throughout the year? Or is it some easy comps from last year?
We are pushing for year-on-year growth and whether it's 10% or 6% or 7% or 8%, we don't know, but I think it's a very promising start for the year. And of course, there's some variability between the quarters, but we are confident that we can grow year-on-year, but we don't give exact percentage of our internal targets.
Of course, not. Okay. Then my second question is, I guess, to you, Roland. So you did 15.1% EBITA margin within Mining in Q1. How should we see this level compared to the 13% to 15% '27 guidance range?
Yes. So thank you for that, Claus. It's -- so first of all, the 15% is an adjusted number. And as I'm sure you've seen 0.5 percentage point, it's carried by a few asset sales and so on. So I think good quarter. It's an adjusted number. Our reported number for the quarter is 13.7% and maybe half of that is asset sales. So we are pushing towards the long-term range. I leave it at that, Claus.
Sounds great. Fair enough. Well done in this quarter. I think that was all for me.
Your next question comes from Tore Fangmann from Bank of America.
Two from my side. The first one would be your Mining peers, more positive Mining equipment demand, strong growth rates here. So my question is, are you losing some market share here? Or is this rather due to the changes you made to your portfolio? That will be my first question. I'll come back with another one.
We're actually not losing any market share. We are rather increasing the market share because we are -- as I said, we are focusing on core technology. We don't take third-party content in. And yesterday, we announced a significant order from India for the iron ore flow sheet. The same customer gave us an order for the largest HPGRs in the world, which we flagged before.
And there, we are basically dominating the market and also that 18 vertical mills and now we got the flotation. And there's quite a lot of competition for the flotation. It seems that our technology was superior there. So we don't think that we are losing any market share. We are rather increasing market share in some of the products, but there's a big impact that with the last order, as an example, we left more than 30% of volume to the table because we did not want to take third-party content in flowing through our books.
And so that was a decision where we are very disciplined about quality of earnings, quality of the order intake. Whenever we can, we always push third-party content out. And then, of course, results that the deal, what was announced yesterday is 30% smaller than what was on offer, but it was our conscious decision to focus on quality of the earnings, technology and products, not third-party content in signing that agreement.
Very, very well understood. My second question would be, so you had a very strong margin now in Mining in Q1. So I'm just asking as compared to this, the guidance range that you listed up just looks like a small range to me. And is this because you expect the revenue catch-up effect that you had in Q1 to cease over the coming quarters and thereby losing some operating leverage? Or are there some other reasons for this?
I think there's a few considerations, right? So first of all, we had a half percentage point of what we did in Q1 was asset sales. We also had a relatively strong -- I think we had 74% revenue from service business, which is not a continued thing.
And secondly, it's relatively early in the year and a lot of turmoil in the world and just adjusting upwards. Yes, a lot of uncertainty around certain parts of the world. So we found this prudent. This is what we can stand by and what we are confident we can deliver. And that was behind the upward adjustment.
Your next question comes from Lars Topholm from DNB Carnegie.
Yes. Congratulations with the quarterly results. I have a couple of questions from me. On the gross margin of 35.1% in Mining, how should we think about that looking ahead?
Yes. And I think we've indicated 32%, 34%, even up to 35% if the service content is really high. But good average is around 33%, which is sustainable. And depending on the mix, if it's really like now high service mix, it can be pushed about 35%. But underlying, if you start from the product margin in the company, we don't see big changes in product margin in order intake or revenue. And if we, of course, manage underabsorption and all the other line items, I think around 35% is sustainable throughout the year.
That is very clear, Mikko. And then you have previously commented that in Mining to close the margin gap to metal, you need more top line. And now it seems you are close to spinning off the Cement business. How should we think about that top line growth, which I guess, has to be inorganic? When will we start to see Mining do M&A? Will this be one big or many small acquisitions? What words could you put on that?
So if I first focus on kind of organic growth potential, which is more incremental. And I think as Roland said earlier, we are still pushing for the SG&A and efficiencies. We can get -- we can actually become still much more efficient. So we are not happy with the SG&A level what we have at the moment.
So I think still continue to work on SG&A and efficiency will actually close the gap quite well. But of course, then it becomes a volume question. And we actually -- then bolt-ons, I think we have authority to do from the Board and then bigger acquisitions. Then we would need to debate with the Board and come up with strategic direction for that one. But bolt-ons, we're still going to do when those become available. But bigger ones, I think, strategic moves, I think, yes.
So maybe I'm kind of twisting and turning your words, Mikko, but you sound more comfortable in closing most of that gaps for Metso organically than when we spoke 6 or 12 months ago. Is that just me or is that correct?
So I think, Lars, if I can just -- so our long-term target is 13% to 15% reported EBITA margin, right? What Metso does is a little bit different. When then -- so that's what we stick to, just to -- for the avoidance of doubt. Now what we are saying is in order to get potentially better than that as we move forward, we will need to grow.
So we will grow better than the market in our service business, and we will grow with the market with the current product portfolio as we have now in our products business. Then on top of that, we will do bolt-on acquisitions and potentially larger acquisitions if we can get them. That will bring us potentially further than our current long-term targets in 2026.
That's very clear, Roland. And a final question. Now you, of course, highlighted you're beginning to look like a quality company. And if I may be cool here, quality companies have positive cash flows. So can you comment a bit on the bridge to a positive cash flow, but maybe more interestingly comment on what the cash flow looks like in Mining isolated. I mean, you do an EBITA of DKK 559 million before special items. If I add back, let's say, DKK 50 million of your total DKK 68 million in depreciation, that's an EBITA of DKK 609 million.
I assume most of the working capital change applies to Mining. Then you are in round numbers at DKK 180 million. That's before tax and before CapEx, which basically means there's no cash flow lift. Is that rough calculation approximately correct? And what's moving parts plays in when you look a little bit ahead where I assume you have an ambition of making a positive free cash flow...
No, that's not at all cool. Lars, you're absolutely right. That's what needs to come. So the way we look at cash flow, Q1 is never a great cash quarter. This was better this year and considerably better than last year. This is the quarter with the bonuses relatively seasonally low and also tax payments and [indiscernible].
But what we are seeing this year, we expect CFFO to be better than last year of DKK 640 million, but no more than DKK 1 billion. And then we can all run our numbers on the directional CapEx, 2% to 3% of revenue we are giving. And then we're also saying that our provisions on especially other provisions needs to come to half over the next 2 to 3 years. And when that happens, and that will come in lumps, then our free cash flow will be positive and it has to be positive. We agree with that. So that's the type of guidance we give on that for now.
And can you put a word on the net working capital ratio relative to sales in Mining stand-alone?
Yes. So most of our balance sheet is Mining, and that includes the net working capital. So most of it is Mining. And that also means if you want to -- we'll give later guidance if and when Cement will leave the company, we'll give an update on the ratios and so on. But that means you can assume that the current level of working capital will stay, albeit with a lower revenue in Mining, of course. I think that's what to you're asking for.
On your margin journey and on that growth journey, should the working capital [ consider ] Mining increase?
So the net working capital, if that stays in nominal terms and revenue become a pure Mining revenue, then our ratio will be higher. It won't have a negative cash flow impact. It will be a mathematical change in the ratio and the ratio will be more in line with peers.
That I understand. But then if you look 2, 3 years ahead, will it then stay at the current ratio in Mining or will that ratio increase?
Expectedly, that would be increasing slightly as we become more of a service company.
Your next question comes from Klaus Kehl from the Nykredit.
Two questions from my side as well. First of all, just getting back to these margins in Mining. And I guess, yes, we are all pretty impressed. So I can ask perhaps in a slightly different way. Have you had perfect execution in Mining in this quarter? Or yes, how should we think about that? That would be my first question.
I would say very good execution, but far from perfect. So I think we still have room to improve. So I wouldn't call it perfect. But I think, improvement compared to the past. And if I look at the margins above our gross profit so that order intake margin for capital and service, they are stable year-on-year. And also the revenue, product margin, top line margin is stable.
So most of the swing between the kind of 35%, what we saw now and then maybe 33%, even down to 32% is for the mix. So the underlying top line margins are rather stable. And of course, we are managing then the other line items between product cost and gross profit the best we can, so we have a full attention. But they are quite stable at the moment. So there's no big movements in top line profitability, meaning product margin.
Okay. Okay. And then also a question related to this pump and cyclone business. Could you talk a little bit about what kind of size this business has? Yes, we can't see that in your numbers. And talk a little bit about your global market share and what kind of runway you potentially could have in this business?
So we're not disclosing several product areas. But what we're saying on PCV, which is sort of one area for us is that we have a market share of around 10%, and that is set to grow. That is our ambition.
Yes. Okay. But you have a market share of around 10%, okay, then what's the market size?
That's a longer discussion, right? But you have a major market player, which is [indiscernible] and then you have Metso in there as well and you have a tail end of players in that market. We're not going to, on this call, give you the specific numbers you're asking for. That is not disclosable.
Okay. Fair enough. Fair enough. Last question about this business. Could you just mention whether this margin in this business is above or below your margins for the Mining business?
So it's the highest. If you look at the businesses all combined, it's the highest margin business what we have.
Your next question comes from David Farrell from Jefferies.
Congratulations on the results. A couple of questions from me. Firstly, in terms of the Mining service revenue growth, you specifically called out effective management of the order book that is driving that. Is that referring that you've accelerated some service revenue into the first quarter from the second quarter, and therefore, that kind of service product mix will swing back quite sharply in the second quarter?
So we actually not have done any acceleration. But if you look at last year, we're a little bit falling behind. So in the steady market, we have a slightly higher order intake than revenue, meaning that we slightly fell behind. So I think now we are more on top of kind of order execution, meaning that it will be more steady going forward.
And so there was no acceleration is that we just fell a little bit behind last year if you look at every quarter order intake and then revenue. So it's a bit of kind of catch up, but there's nothing unusual there. So we are letting everything to flow through the books and deliveries as they go through. So we haven't done any extra acceleration, just a better management of backlog and then supply chain.
And then my second question relates to the Cement disposal. Excellent news there. I think people maybe being a bit concerned given the macroeconomic backdrop that, that might be kicked down the road. Can you give a bit more detail as to when you moved into exclusivity conversations and whether or not Pacific Avenue have got their financing in place for a transaction?
So the information we give here is what we're going to limit ourselves to give you that information. We are disclosing the parties name to send the signal that we are -- that the process is moving forward, and that's what we're going to leave it at. It's a delicate moment of that process. So whether there will be a transaction or not, we will have to see. But that was the intention with that statement. And we cannot give you the details in that level of detail that you're asking for.
Your next question comes from Casper Blom from Danske Bank.
And sorry for being silent earlier. I had some technical difficulties. A couple of questions also. I just wanted to follow up on your comments regarding provisions. You mentioned that other provisions were to roughly half over the next couple of years. Is it still also fair to assume that you'll be spending your restructuring provisions this year?
Yes. So theoretically, restructuring provisions should come to close to 0, it never will. But most of that will be spent this year, yes. The other provisions that we talk about is a bit more unpredictable for us because it's a bucket of stuff from the past that we are solving as we move forward. And some of that may come soon. Some of it may take some more time.
And we'll do it once and we are ready to solve it, and then we will pay it out or release it, right? So that's how that works. That's why it's so hard for us to say whether it will be 1 year, it will be 5 years, so on. But for the planning purpose, you need to assume that we will cut that in half over 3 years.
Okay. That's super clear. Then a second question, maybe a little bit of speculative, but your current headquarters in Valby and the potential sale of that, is there any update on potential timing of that?
No. But we're running the process. So currently, bidders are showing interest. And then we'll see where we go with that. So it is in process, and we are set to move from here to the new location beginning of the new year.
Okay. But is it then also the targets you have sold it when you're moving?
Yes, we're not going to give it away. But the intention is that we will sell it and then move. That's the intention.
Okay. Very clear. And then just a final one. You mentioned that you would probably get back with more details on the, I would say, targets for Mining when you closed the sale for -- of Cement. Should we expect sort of a separate announcement in connection with also selling Cement? Or will it be more sort of an update that you give us on the following quarter or et cetera? Just any kind of flavor as to what to expect in terms of communication on that.
So I'd like to come back to that in a bit more structure, but I hope if and when we sell the business, we will announce it. And then new targets -- long-term targets will only come later on, but directional guidance on working capital and CapEx spend and so on will come soon thereafter.
We have a follow-up question from Tore Fangmann from Bank of America.
Just one very quick clarification. So I understood in a way that the 15.1% margin in Mining was supported by 50 basis points coming from an asset sale. Could you just clarify this? And then one question, why did you not adjust for this?
Yes. So in the P&L, we have a line called Other Income. And that's when we do bits and pieces. And there's been a few smaller asset sales that add up to about 0.5 percentage point, 50 basis points, yes. That's right, for the quarter.
But you did not adjust for this downward. So it should be basically -- if we would adjust for this, we would have been at 14.6% basically.
That's right, yes.
This concludes our question-and-answer session. I would now like to turn the conference back over to the company for any closing remarks.
Thanks very much for the questions. And if I summarize the quarter, it has been a good quarter for us. And as we discussed earlier, we are moving in the territory of becoming quality company, high-quality order intake, high-quality revenues. Our SG&A is going down, and we are pushing for the efficiency.
And we are happy with the portfolio that we have. We have a leading technology for all of the key flow sheets for -- in Mining, copper, gold, iron ore, now we are building in India. So very pleased with the quarter. And we have a high level of confidence for full year despite the geopolitics and uncertainty. And then for that reason, we increased the guidance.
And thanks very much for your time and look forward to talking to you soon again.