Record installation revenue offsets decreased series production in 2012.
New CGI product development and product launches provide
opportunities for new installations and increased series production.
Fourth Quarter 2012
* Revenue for Period: SEK 14.4 million (SEK 16.0 million)
* Operating Result: SEK 2.0 million (SEK 4.1 million)
* Earnings per Share: SEK -0.5 per share (SEK 0.7)
* Cashflow from Operations: SEK 1.8 million (SEK 4.6 million)
* Average Annualised Production during the Period*: 1.20 million Engine
Equivalents (1.62 million)
* Record installation revenue of SEK 9.0 million in 2012
* New order received for commercial vehicle series production installation
* Pre-production underway for first high-volume petrol engine, with series
production starting in 2013
* Breakthrough in US light duty pick-up market as SinterCast-CGI V6 diesel
confirmed for Ram 1500
Full Year 2012
* Revenue: SEK 45.9 million (SEK 49.0 million)
* Operating Result: SEK 1.0 million (SEK 11.6 million)
* Earnings per Share: SEK -0.5 per share (SEK 2.1)
* Cashflow from Operations: SEK 1.3 million (SEK 14.5 million)
* Dividend: Proposed ordinary dividend of SEK 1.0 per share (SEK 1.0)
* Installed Base: 20 fully automated systems and 13 Mini-Systems in Europe,
Asia and the Americas
Series Production*
For graph, see Press Release PDF
Series production declined to 1.2 million Engine Equivalents during the fourth
quarter, primarily due to decreased commercial vehicle volumes in Europe and the
Americas. Foundry production of the Navistar 13 Litre cylinder block,
interrupted during the second half of 2012, has resumed, providing an increase
in the annualised volume in January.
* Annualised average production of Engine Equivalents during the quarter (1
Engine Equivalent = 50 Kg)
CEO Comments
Production affected by commercial vehicle demand; V-diesels remain strong
Annualised series production during the quarter was 1.20 million Engine
Equivalents, which represents a decline of approximately 8% relative to the
third quarter of 2012. Much of the decline continues to be attributed to the
interrupted shipment of the Navistar Big Bore commercial vehicle cylinder block
in North America, and to reduced commercial vehicle demand in Europe. However,
foundry production of the Navistar 13 Litre cylinder block resumed at both the
Tupy foundry in Brazil and the Pure Power foundry in the USA during January,
providing an overall increase in annualised series production for the first
month of 2013. Sales of the Navistar MaxxForce(TM) 13 engine are expected to
resume during March 2013. The near-term production outlook continues to be
linked to the recovery of commercial vehicle production and the launch of new
CGI engines.
Series production of high volume passenger vehicle V-diesel engines continued at
a strong pace throughout the quarter, with stable contributions from the Audi
and Ford engines and increased production of the VM Motori 3.0 Litre V6 engine.
The VM Motori engine was launched in the Jeep Grand Cherokee at the North
American International Auto Show in Detroit on 14 January. Thereafter, on 14
February, Ram Trucks announced the application of the engine in the Ram 1500,
providing a breakthrough for diesel and SinterCast in the high volume US light
duty pick-up sector. The diesel Grand Cherokee will be available in US dealer
showrooms during the second quarter of 2013 while the Ram 1500 is scheduled to
begin sales during the third quarter of 2013. The engine was introduced in
North America following successful debuts in the Jeep Grand Cherokee, Chrysler
300 and Lancia Thema in Europe. VM Motori is an Italian specialist diesel
engine manufacturer, jointly owned by Fiat and General Motors. Increased
volumes of the VM Motori V6 are expected as the Grand Cherokee and Ram 1500
sales begin, and as the engine is applied to additional vehicles within the
Fiat/Chrysler group.
Despite the wider economic uncertainty, new CGI series production commitments
were secured during the period and new product development programmes have been
initiated in Europe, Asia and the Americas. The increased CGI product
development activities provided the foundation for record installation revenues
during 2012 as foundries prepared for the series production planning of their
customers. The installation outlook remains positive and SinterCast announced
its first series production installation of 2013 on 11 February. The
installation, ordered by an undisclosed major European commercial vehicle OEM,
is scheduled to be shipped and commissioned during the second half of February.
Pre-production began during 2012 with on-site engineering support.
The commissioning of SinterCast's most comprehensive installation to date, at
the Tupy foundry in Saltillo, Mexico, is planned for March 2013. The
installation is designed to support the production of a new passenger vehicle
cylinder block with a planned mature volume of more than 300,000 blocks per
year, potentially the highest volume CGI engine in the world. In parallel with
the installation of the new System 3000 Plus, the existing SinterCast equipment
on the passenger vehicle production line at the Saltillo foundry will be moved
to the commercial vehicle production line to support ongoing product development
for heavy duty engine applications.
SinterCast continues to support product development programmes for passenger
vehicle, commercial vehicle and industrial power applications in Europe, Asia
and the Americas. This development includes SinterCast's first high volume CGI
petrol engine commitment, which remains on schedule for the start of series
production during 2013. Pre-production of the petrol engine began during
January. It is estimated that the combined potential of the current series
production programmes and the programmes currently under development represents
a market opportunity of approximately 4.65 million Engine Equivalents per year
within SinterCast's five year planning horizon.
Continued progress in new Ductile Iron technology
The development of the ductile iron technology continued throughout the quarter
in anticipation of market introduction at the Ductile Iron Society annual
meeting in June 2013. The ductile iron technology is expected to provide a
cost-benefit by reducing magnesium consumption, improving mould yield and
reducing casting defects in the foundry, and by improving machinability. In the
lead-up to the market introduction, the development will continue with in-house
testing and a planned external case study to further define the technical
correlations, the process control applications and the magnitude of the cost-
benefit opportunity.
Financial Summary
Revenue
The revenue for the SinterCast Group relates primarily to income from equipment,
series production and engineering service.
Revenue Breakdown October-December January-December
(Amounts in SEK million if 2012 2011 2012 2011
not otherwise stated)
-------------------------------------------------------------------------------
Number of Sampling Cups 21,500 33,100 102,400 138,200
shipped
Equipment (1) 7.0 4.6 9.0 7.9
Series Production (2) 7.2 11.0 35.8 39.0
Engineering Service( 3) 0.2 0.4 1.0 2.0
Other 0.0 0.0 0.1 0.1
-------------------------------------------------------------------------------
Total 14.4 16.0 45.9 49.0
-------------------------------------------------------------------------------
Notes: 1. Includes revenue from system sales and leases and sales of
spare parts
2. Includes revenue from production fees, consumables and
software licence fees
3. Includes revenue from technical support, on-site trials and
sales of test pieces
The October-December 2012 revenue amounted to SEK 14.4 million (SEK 16.0
million). Equipment revenue amounted to SEK 7.0 million (SEK 4.6 million),
including revenue from the System 3000 Plus process control system shipped to
the Tupy foundry in Saltillo, Mexico, the Teksid System 3000 refurbishment, and
the Mini-System 3000 shipped to an undisclosed Asian foundry. The revenue from
series production decreased due to lower Sampling Cup shipments and reduced
series production, primarily related to the Navistar Big Bore commercial vehicle
cylinder block in North America and to lower commercial vehicle demand in
Europe.
The January-December 2012 revenue amounted to SEK 45.9 million (SEK 49.0
million). The revenue decrease is a result of lower series production and a
reduction in Sampling Cup shipments, as predicted at the 2012 AGM, primarily due
to reduced demand for exhaust components produced for passenger vehicles in
Europe. A new record for revenue from Equipment, SEK 9.0 million (SEK 7.9
million) was established in 2012.
Results
The business activities of SinterCast are best reflected by the Operating
Result. This is because the "Result for the period after tax" and the "Earnings
per Share" are influenced by the financial income and costs and by the
revaluation of tax assets.
Results Summary October-December January-December
(Amounts in SEK million if not otherwise 2012 2011 2012 2011
stated)
-------------------------------------------------------------------------------
Operating Result 2.0 4.1 1.0 11.6
Result for the period after tax -3.6 4.8 -3.7 14.5
Earnings per Share (SEK) -0.5 0.7 -0.5 2.1
-------------------------------------------------------------------------------
The October-December 2012 Operating Result of SEK 2.0 million (SEK 4.1 million),
decreased as a result of lower gross results of SEK 1.6 million, higher
operational expenses of SEK 0.9 million and improved other operating income of
SEK 0.4 million. The lower gross result is due to lower revenue and changes in
product mix, with a higher proportion of the 2012 revenue being derived from
Equipment revenue rather than series production.
The Result for the period after tax amounted to SEK -3.6 million (SEK 4.8
million), primarily related to the revaluation of the deferred tax asset, as
described in the section entitled "Deferred Tax Asset".
The January-December 2012 Operating Result of SEK 1.0 million (SEK 11.6
million), decreased as a result of lower gross results of SEK 2.6 million,
higher operational expenses of SEK 6.3 million, and reduced operational exchange
gains in the amount of SEK 1.7 million, reported as other operating income. The
higher operational expenses are related to recruiting and salary expenses
incurred in order to position the Company for further growth, as outlined at the
2012 AGM.
The Result after tax for January-December 2012 amounted to SEK -3.7 million (SEK
14.5 million), decreased as a result of lower Operating Results of SEK 10.6
million and the improved Financial Result of SEK 1.5 million. The remaining
difference of SEK 9.1 million is primarily related to revaluation of the
deferred tax asset, as described in the section entitled "Deferred Tax Asset".
The tax expenses refer mainly to business and income tax paid in China.
Deferred Tax Asset
Tax amounted to SEK -5.7 million (SEK 3.4 million) during the period, of which
SEK -5.4 million was due to the change in the Swedish corporate tax rate from
26.3% to 22%. SEK -0.3 million was due to tax paid in China.
The estimated future taxable profit and deferred tax asset calculation is
reassessed every quarter. As of 31 December 2012, SEK 125.1 million (SEK 125.1
million) of SinterCast's total carried-forward tax losses have been used as the
basis of the updated calculation, resulting in SEK 27.5 million (SEK 32.9
million) being capitalised as a deferred tax asset. The deferred tax asset is
included in the financial assets in the balance sheet.
Employee Stock Option Program
As of 31 December 2012, the total cost of the employee stock option program
2009-2013 was calculated at SEK 2.9 million (SEK 3.3 million), based on a
closing share price of SEK 43.8 (SEK 45.0). During 2012, SEK 0.4 million (SEK
0.7 million) was accounted for as costs related to the option program.
Cashflow, Liquidity and Investments
Cashflow Summary October-December January-December
(Amounts in SEK million if not otherwise 2012 2011 2012 2011
stated)
-------------------------------------------------------------------------------
Cashflow from operations 1.8 4.6 1.3 14.5
Cashflow from investment activities -1.4 -0.1 -1.6 -0.4
Cashflow from financing activities - -0.3 -11.9 -6.8
-------------------------------------------------------------------------------
Cashflow total 0.4 4.2 -12.2 7.3
Liquidity 35.4 47.6 35.4 47.6
-------------------------------------------------------------------------------
The October-December 2012 cashflow from operations was SEK 1.8 million (SEK 4.6
million). The positive cashflow from operations during the period is primarily
explained by the positive Operating Result. Investments, primarily related to
new production tooling, reduced the cashflow by SEK 1.4 million during the
period. The total cashflow amounted to SEK 0.4 million (SEK 4.2 million).
The January-December 2012 cashflow from operations was SEK 1.3 million (SEK
14.5 million). The lower cashflow result during the period, compared to 2011, is
primarily explained by reduced Operating Result and increased working capital
during 2012, including paid out accrued expenses of a one-time character.
Cashflow from financial activities amounted to SEK 11.9 million (SEK 6.8
million), following the payment of the dividend to shareholders in the amount of
SEK 11.9 million (SEK 3.5 million). The total cashflow result for the period
was SEK -12.2 million (SEK 7.3 million), resulting in SEK 35.4 million (SEK
47.6 million) in liquidity on 31 December 2012.
Investments amounted to SEK 2.0 million (SEK 1.0 million) during the period, of
which SEK 1.6 million (SEK 0.4 million) was paid out as cashflow during the
year. Investments include new production tooling, capitalised process control
equipment, computer equipment and capitalised patent expenses.
Risks and Uncertainty Factors
The main uncertainty factor for SinterCast continues to be the overall timing of
the CGI market ramp-up. This primarily depends on OEM decisions for new CGI
products, the global economy for new vehicle sales, and the individual sales
success of vehicles equipped with SinterCast-CGI components. The global economy
has recently become more uncertain and this has begun to influence consumer
confidence and automotive sales. SinterCast's diversification between V-diesel
engines for passenger vehicles, commercial vehicle engine components, and other
applications such as exhaust components and industrial power engines, combined
with its presence in Europe, Asia and the Americas, reduces the dependence on
individual product applications and geographical regions.
SinterCast enjoys global brand recognition and respect as the CGI technology
leader and is welcomed by the industry as a reliable and trustworthy partner.
However, virtually every company encounters competition, and SinterCast is no
exception. SinterCast judges that its technology and engineering know-how
provides the most reliable and cost-effective solution for series production of
high quality CGI.
New powertrain technologies, such as vehicle electrification (hybrid and plug-in
vehicles) and fuel cells attract significant media attention; however, the
development and implementation of these technologies remain a long-term prospect
and SinterCast does not expect these technologies to have a significant effect
on the Company's competitive position for the foreseeable future.
For full risk and uncertainty factor information, please see note 26 on p.39 in
SinterCast's Annual Report 2011
Organisation
With successful high volume CGI production in foundries located in Europe, Asia
and the Americas, SinterCast has established a global organisation with
employees and representatives in Sweden, the United Kingdom, the United States,
China, Korea, Japan, India and Australia. During the second quarter of 2012, a
new subsidiary was established in Korea and during the fourth quarter of 2012,
the establishment of the Chinese subsidiary was completed. As of 31 December
2012, the Group had 19 (17) employees, three (three) of whom were female. The
Company is well positioned to support global market activities and to drive
SinterCast's future growth.
Parent Company
SinterCast AB (publ) is the Parent Company of the SinterCast Group, with its
registered office located in Stockholm, Sweden. The Parent Company has 15 (14)
employees. The majority of the operations are managed by the Parent Company,
including responsibility for the representative office in China and sales
representatives in Australia, India and Japan. Operations in the UK, USA and
Korea are managed by the local companies. The information given for the Group in
this report corresponds in all material respects to the Parent Company.
Patents
SinterCast currently holds 11 (11) patents and maintains 43 (53) individual
national phase patents granted or pending worldwide. The 11 base patents address
SinterCast's metallurgical technology, the Sampling Cup, product applications
and machining.
Accounting Principles
The information provided on behalf of the Group in this interim report has been
prepared in accordance with Sweden's Annual Accounts Act and IAS 34 Interim
Financial Reporting. The reporting for the Parent Company has been prepared in
accordance with Sweden's Annual Accounts Act and RFR 2. The accounting policies
that have been applied for the Group and for the Parent Company are in agreement
with the accounting policies used in the preparation of the Company's latest
annual report.
No material transactions have taken place between SinterCast and the Board or
the Management during the period.
Events after the Balance Sheet Date
The following press releases have been issued since the balance sheet date of
31 December 2012.
11 February 2013: SinterCast secures new order for commercial vehicle series
production installation
18 February 2013: Breakthrough for SinterCast: First diesel engine for US light
duty pick-up trucks
There have been no other significant events since the balance sheet date of 31
December 2012 that could materially change these financial statements.
Nomination Committee
The Nomination Committee, elected by the Annual General Meeting 2012, consists
of Karl-Arne Henriksson, Chairman, Ulla-Britt Fräjdin-Hellqvist and Torbjörn
Nordberg. The Nomination Committee can be contacted at:
nomination.committee@sintercast.com
Annual General Meeting
The Annual General Meeting 2013 of SinterCast AB (publ) will be held on
Wednesday 15 May 2013.
Shareholders wishing to have a matter considered at the Annual General Meeting
should submit their proposals in writing to agm.registration@sintercast.com or
to the Company: SinterCast AB (publ), P.O. Box 10203, SE-100 55 Stockholm,
Sweden, at least seven weeks prior to the Annual General Meeting for the
proposal to be included in the notice to the meeting. Further details on how and
when to register will be published in advance of the Annual General Meeting.
Dividend
The Annual General Meeting of SinterCast AB (publ) held on 24 May 2012 approved
an ordinary dividend for 2012 amounting to SEK 1.0 per share and an
extraordinary dividend amounting to SEK 0.7 per share. A total amount of SEK
11.9 million was transferred to the shareholders.
Proposed Dividend
The Board's intention is to continue to provide an ordinary dividend to the
shareholders, based primarily on the cashflow from operations. In the event that
the Board considers that the liquidity exceeds the amount needed to support the
operational requirements and strategic objectives, the Board has the option to
propose an extraordinary dividend or a share buy-back to further adjust the
liquidity.
The Board of Directors propose an ordinary dividend of SEK 1.0 per share (SEK
1.0), representing a transfer of SEK 7.0 million (SEK 7.0 million) to the
shareholders of SinterCast AB (publ). An extraordinary dividend in the amount of
SEK 0.7 per share was also paid in 2012, resulting in a total transfer of SEK
11.9 million to the shareholders in 2012. The Board proposes 20 May, 2013 as
the record date for entitlement to receive dividends. In deciding the amount of
the ordinary dividend to be proposed to the AGM 2013, the Board considered
cashflow from operations, the financial position, investment requirements and
other factors, such as market outlook, growth strategy and the internal
financial forecast for the Company and for the Group.
Information
The Interim Report January-March 2013 will be published on 24 April 2013
The Interim Report April-June 2013 will be published on 21 August 2013
The Interim Report July-September 2013 will be published on 6 November 2013
The Interim Report October-December and Full Year Results 2013 will be published
on 26 February 2014
Annual Report 2012
The Annual Report 2012 will be published on 5 April 2013.
This report has not been reviewed by the Company's Auditors.
Stockholm 20 February 2013
For further information please contact:
Dr. Steve Dawson
President & CEO
SinterCast AB (publ)
Office: +46 8 660 7750
Mobile: +44 771 002 6342
e-mail: steve.dawson@sintercast.com
website: www.sintercast.com
SinterCast is the world's leading supplier of process control technology for the
reliable high volume production of Compacted Graphite Iron (CGI). With at least
75% higher tensile strength, 45% higher stiffness and approximately double the
fatigue strength of conventional grey cast iron and aluminium, CGI allows engine
designers to improve performance, fuel economy and durability while reducing
engine weight, noise and emissions. The SinterCast technology is used for the
production of more than 50 CGI components, ranging from 2 kg to 17 tonnes, all
using the same proven process control technology. The end-users of SinterCast-
CGI components include Aston Martin, Audi, Cameron Compression, Caterpillar,
Chrysler, DAF Trucks, Ford, Ford-Otosan, General Electric Transportation
Systems, General Motors, Hyundai, Jaguar, Jeep, Kia, Lancia, Land Rover, MAN,
Navistar, Porsche, PSA Peugeot-Citroën, Renault, Rolls-Royce Power Engineering,
Scania, Toyota, VM Motori, Volkswagen, Volvo and Waukesha Engine. The SinterCast
share is quoted on the Small Cap segment of the NASDAQ OMX stock exchange
(Stockholmsbörsen: SINT). For more information: www.sintercast.com
END
[HUG#1679358]
