Impact on EPS and forward guidance
FLSmidth’s 2025 update signals a mixed‑bag for earnings per share. The upgraded adjusted EBITA margin suggests that profitability on each euro of sales will be higher than previously assumed, which should translate into a modest lift to the company’s net‑income trajectory and, consequently, a positive pressure on EPS for the 2025 horizon. However, the reduction in revenue guidance offsets part of that upside – a lower top line means the margin gain will be applied to a smaller sales base, so the net‑income boost is likely to be modest rather than transformational. In practice, analysts will probably trim the 2024‑2025 EPS forecasts slightly, but the margin improvement will soften the downside and may keep the 2025 EPS outlook near the prior consensus, perhaps a 2‑4 % upside versus the earlier guidance.
Trading implications
- Short‑to‑mid‑term (2024‑2025): The downward revision in revenue guidance is a bearish catalyst for the near‑term price, especially if the market had priced in stronger top‑line growth. Expect a near‑term price correction as the market digests the lower sales outlook. A short‑position or a defensive stance (e.g., buying protective puts) could be justified until the next earnings update clarifies whether the margin upgrade fully offsets the revenue shortfall.
- Long‑term (2025+): The upgraded EBITA margin points to an improving cost structure and operational efficiency, which could underpin gradual EPS expansion beyond 2025. If the company can sustain the higher margin while stabilising revenue, the stock may resume an up‑trend in the second half of 2025 and beyond. Positioning a small long‑term long (or a call spread) after the short‑term dip could capture upside once the market re‑prices the improved profitability.
In summary, the net effect is a slightly lower EPS outlook for 2024‑2025 with a modest upside for 2025, driven by higher margins but weaker revenue. Traders should anticipate a short‑term downside, followed by a potential rebound if the margin improvements begin to translate into sustainable earnings growth.