INTERIM REPORT JANUARY – DECEMBER 2011

INTERIM REPORT JANUARY – DECEMBER 2011

Full Year 2011: Annual results are best on record since business formed in 2008

  · Sales increased by 16% to MSEK 2,283 (1,977) during the full year 2011
compared to the full year 2010. In constant currencies, sales increased by 25%
year on year, reflecting strong market demand across all end sectors and regions
for the full year 2011.
  · Earnings before interest and taxation (“EBIT” or “Operating Income”) and
EBIT margin amounted to MSEK 281 (109) and 12.3% (5.5) respectively. One-time
costs totalling MSEK 24 associated with the de-merger were included in the first
half result. Adjusting for these costs, the EBIT and EBIT margin was MSEK 305
and 13.4%.
  · Earnings after tax amounted to MSEK 176 (35). Earnings per share amounted to
SEK 3.98 (0.79). After adjusting for the post-tax impact of one-time de-merger
costs, the earnings per share was SEK 4.38.
  · Cash flow from operating activities remained strong for the full year,
amounting to MSEK 227 (204).
  · The Group’s net debt was MSEK 114 (312), a year-on-year reduction of MSEK
198 derived primarily from operating cash flows.
  · Due to the Group’s strong earnings and financial position, the Board of
Directors intend to propose to the shareholders at the Annual General Meeting a
dividend of SEK 2.00 per share for the 2011 fiscal year, corresponding to around
50% of earnings per share.

Fourth quarter 2011: Sustained sales and margins with very strong cash flow

  · Sales increased by 11% to MSEK 577 (521) during the fourth quarter 2011
compared to the same quarter 2010. In constant currencies, sales increased by
12% compared with the corresponding period in the preceding year.
  · The Group’s average sales per working day in the fourth quarter was
sustained from the third quarter, with the rise in the Americas offsetting the
slightly lower activity experienced in Europe and the Rest of the World (“Europe
& RoW”).
  · EBIT and EBIT margin for the fourth quarter amounted to MSEK 80 (53) and
13.9% (10.2) respectively.
  · Earnings after tax amounted to MSEK 60 (49). Earnings per share amounted to
SEK 1.35 (1.09).
  · Cash flow from operating activities was very strong in the quarter,
amounting to MSEK 105 (65).

President and CEO David Woolley comments on the fourth quarter 2011:

“Concentric delivered strong results during the fourth quarter of 2011. The
robust market demand from the first nine months was largely sustained. The
strong sales and operating performance have both contributed to maintaining the
EBIT margin at 13.9%.

The Group maintains robust working capital disciplines which generated an
operating cash flow in the fourth quarter of SEK 105 million.

Orders received during the fourth quarter indicate that the Group’s underlying
sales activity will be sustained into the first quarter of 2012, with a
continuing trend of stronger demand in North America compared to Europe.

We firmly believe that our geographical spread and four distinct end-customer
segments, together with the flexibility we have in our operations through our
Business Excellence program, make Concentric very well positioned to tackle any
challenges in 2012.

We continue to see great opportunities for long-term growth by providing value
to our customers through our leading technology addressing the key drivers in
our market niches, such as the forthcoming changes in emissions legislation and
increased focus on reducing fuel consumption.”

Key business events – full year 2011

  · The positive trend in Concentric’s end market segments and regions
experienced year on year in the first nine months of the year continued into the
fourth quarter of 2011. Inventory replenishment has been completed. Sales for
the full year 2011 were supported by a pre-buy from the introduction of new
off-highway emissions programs in North America and Europe.
  · Hire fleets replacing aging construction machinery overdue in the
replacement cycle and increasing demand in the US heavy truck sector have both
helped to drive demand during the full year 2011.
  · Market share growth experienced in the first nine months of the year for
both India and China continued into the fourth quarter of 2011.
  · During 2011, the Group has been successful with passing through raw material
increases to its customers through existing material escalator agreements.
  · A number of initiatives were successfully launched in the second quarter to
increase capacity, both internally and externally, and additional supplier
capacity has supported a catch up in order backlog and further sales growth.
  · New financing agreements were put in place during the first half of 2011.
  · The reorganization of Haldex was completed and Concentric AB became an
independently listed company on the NASDAQ OMX on June 16th.
  · Advisor costs associated with the de-merger totalling MSEK 17 were charged
in the first half 2011. These costs consisted mainly of expenses incurred in
conjunction with tax advisory services and accounting, legal expenses and other
listing costs. In addition, double corporate costs of MSEK 7 were also absorbed
in the first half 2011 prior to the separation.
  · David Woolley, previously the regional head of Europe & RoW, was appointed
the new CEO of Concentric on 1 August 2011.
  · Wim Goossens was appointed as regional head of Europe & RoW on 1 December
2011.
  · Concentric received its first order for its premium variable flow oil pump
from a global truck manufacturer during the fourth quarter of 2011.
  · Alfdex, a 50/50 joint venture between Alfa Laval and Concentric, signed an
exclusive supplier agreement with one of the world’s largest producer of heavy
trucks. The agreement to supply Alfdex Oil Mist Separators is valid until 2017,
with a total estimated value of at least SEK 500 million.

 

For further information, please contact:
David Woolley, President and CEO, David Bessant, CFO, or Lena Olofsdotter, SVP
Corporate Communications, at Tel: +44 121 445 6545
E-mail: info@concentricab.com
Corporate Registration Number 556828-4995