Source: SinterCast AB
SinterCast Results January-March 2014
Record quarterly series production of 1.70 million Engine Equivalents
First Quarter 2014
* Revenue for Period: SEK 14.6 million (SEK 11.7 million)
* Operating Result: SEK 2.9 million (SEK 1.5 million)
* Earnings per Share: SEK 0.45 per share (SEK 0.33 per share)
* Cashflow from Operations: SEK -2.1 million (SEK 0.2 million)
* New System 3000 Plus installation shipped to world's first purpose-built CGI
foundry, in China
* 100% year-on-year Engine Equivalent growth for commercial vehicles
* Ram diesel pick-up enjoys strong start of sales in North America
* Installed Base: 23 fully automated systems and 16 mini-systems in Europe,
Asia and the Americas
Series Production*
See PDF for graph
Series production increased 30% year-on-year, with the first quarter of 2014
providing a new quarterly record of 1.70 million Engine Equivalents. The outlook
for series production remains positive as commercial vehicle and pick-up volumes
continue to grow.
* Annualised average production of Engine Equivalents during the quarter (1
Engine Equivalent = 50 kg)
CEO Comments
Commercial vehicles and pick-ups lead the increase in series production
Annualised series production during the quarter increased to 1.70 million Engine
Equivalents, providing a new quarterly record and 30% growth compared to the
first quarter of 2013. Production in March totalled 1.75 million Engine
Equivalents, SinterCast's second highest month ever.
The increase in series production was primarily driven by a 100% year-on-year
increase in commercial vehicle volume, benefitting from new engine launches and
the introduction of Euro 6 emissions legislation on 1 January 2014. All
commercial vehicles produced for sale in Western Europe must now comply with the
Euro 6 standard. Series production also benefitted from increased pick-up
volume in North America, with the Ram 1500 becoming the second best-selling
vehicle in North America during March 2014, due in part to the start of diesel
sales in February. The three best-selling vehicles in North America throughout
the first quarter were all pick-ups. SinterCast's links to the important pick-
up sector were further reinforced during the first quarter, following Ford's
introduction of the first-ever high volume CGI petrol engine. Announced at the
North American International Auto Show on 13 January, the 2.7 litre V6 petrol
engine will be available later this year in the Ford F150. Nissan has also
announced the introduction of a SinterCast-CGI V8 diesel engine in the next
generation Titan, which has been confirmed for launch at the North American
International Auto Show in January 2015. This progress provides SinterCast with
a presence in three of the five full-size pick-up entries, in a market of
approximately two million vehicles per year.
The first quarter also marked the start of series production of industrial power
components at the Tupy foundry in Brazil, with the production of a CGI cylinder
head for an upgrade of the MTU Series 2000 engine. The use of SinterCast-CGI
was specified to enable increased power while ensuring durability in the
demanding duty cycles experienced by marine, mining, construction and stationary
power generating applications. The MTU cylinder head establishes CGI series
production at Tupy across the complete spectrum of passenger vehicle petrol and
diesel cylinder blocks, commercial vehicle cylinder blocks and heads, and
industrial power engine components. The entry into industrial power applications
is a part of Tupy's announced strategy to increase the CGI share in its cylinder
block and head production from the current 16% to 25%.
Intensified installation activity
Following record installation revenue in 2013, the Technical Team is
particularly busy supporting new installations and upgrades in Europe, Asia and
the Americas. During January, SinterCast secured a new order for a System 3000
Plus from one of China's largest automotive component conglomerates, to be
installed at a purpose-built CGI foundry in China. The equipment was shipped
during the first quarter and is planned to be installed during summer 2014.
SinterCast will also supply the mechanical infrastructure for the cored-wire
base treatment and correction operations and will provide technical support
during the installation and start of production. New installation discussions
are ongoing, providing opportunities to further expand the production base.
SinterCast continues to provide technical support for product development
programmes for passenger vehicle, commercial vehicle and industrial power
applications in Europe, Asia and the Americas. 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 4.7 million Engine Equivalents per year within SinterCast's five
year planning horizon. It is further estimated that the programmes that are
currently in series production have the potential to provide more than 2.5
million Engine Equivalents when they reach mature volume.
Ductile Iron technology
The recent development of the ductile iron technology has been affected by the
increased intensity in CGI activities and the need to allocate resources to the
core business. However, the technical development is continuing and market
opportunities remain. The R&D function was reinforced during the first quarter
with the recruitment of a specialist engineer with a PhD in cast iron
solidification and extensive cast iron research experience in Swedish academia.
The new Senior Research Engineer began employment at the Technical Centre in
Katrineholm on 14 April and will provide additional resources to expand and
accelerate SinterCast's development activities. The SinterCast ductile iron
technology is expected to provide additional benefit to customers by reducing
magnesium consumption, improving mould yield and reducing casting defects in the
foundry, and by improving machinability.
Financial Summary
Revenue
The revenue for the SinterCast Group relates primarily to income from equipment,
series production and engineering service.
Revenue Breakdown January-March January-December
(Amounts in SEK million if not 2014 2013 2013 2012
otherwise stated)
--------------------------------------------------------------------------------
Number of Sampling Cups shipped 37,100 28,900 118,500 102,400
Equipment (1) 2.5 2.3 10.1 9.0
Series Production (2) 11.6 9.0 40.2 35.8
Engineering Service( 3) 0.5 0.3 1.4 1.0
Other 0.0 0.1 0.2 0.1
--------------------------------------------------------------------------------
Total 14.6 11.7 51.9 45.9
--------------------------------------------------------------------------------
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 January-March 2014 revenue amounted to SEK 14.6 million (SEK 11.7 million).
The revenue from series production increased by approximately 30% to SEK 11.6
million (SEK 9.0 million), due to the production of approximately 1.70 million
(1.30 million) annualised Engine Equivalents and the shipment of 37,100 (28,900)
Sampling Cups. Equipment revenue amounted to SEK 2.5 million (SEK 2.3 million),
following the shipment of a complete System 3000 Plus to one of China's largest
automotive component conglomerates. Engineering Service amounted to SEK 0.5
million (SEK 0.3 million) following support provided to various customers
globally and the sale of test pieces.
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 January-March January- December
(Amounts in SEK million if not otherwise stated) 2014 2013 2013 2012
--------------------------------------------------------------------------------
Operating Result 2.9 1.5 7.3 1.0
Result for the period after tax 3.2 2.4 8.1 -3.7
Earnings per Share (SEK) 0.5 0.3 1.2 -0.5
--------------------------------------------------------------------------------
The January-March 2014 Operating Result of SEK 2.9 million (SEK 1.5 million)
increased by SEK 1.4 million, as a result of higher gross results of SEK 1.5
million derived from higher revenue, higher operational expenses of SEK 0.3
million, and higher exchange gains from operating receivables and liabilities of
SEK 0.2 million.
The Result for the period after tax amounted to SEK 3.2 million (SEK 2.4
million), primarily related to an increase in the Operating Result of SEK 1.4
million, the increased financial net of SEK 0.2 million and decreased tax net of
SEK 0.8 million.
Deferred Tax Asset
Tax amounted to SEK -0.1 million (SEK 0.7 million). The difference is explained
by the increase of the deferred tax asset that was made during the first quarter
2013. The estimated future taxable profit and deferred tax asset calculation is
reassessed every quarter. As of 31 March 2014, SEK 128.5 million (SEK 128.5
million) of SinterCast's total carried-forward tax losses have been used as the
basis of the updated calculation, resulting in SEK 28.3 million (SEK 28.3
million) being capitalised as a deferred tax asset.
Cashflow, Liquidity and Investments
Cashflow Summary January-March January- December
(Amounts in SEK million if not otherwise stated) 2014 2013 2013 2012
--------------------------------------------------------------------------------
Cashflow from operations, before change in 3.4 1.9 8.1 3.5
working capital
Change in working capital -5.5 -1.7 6.3 -2.2
--------------------------------------------------------------------------------
Cashflow from operations, after change in -2.1 0.2 14.4 1.3
working capital
Cashflow from investment activities -0.1 0.0 -0.6 -1.6
Cashflow from financing activities - - -1.4 -11.9
--------------------------------------------------------------------------------
Cashflow total -2.2 0.2 12.4 -12.2
Liquidity 45.6 35.6 47.8 35.4
--------------------------------------------------------------------------------
The January-March 2014 cashflow from operations before change in working capital
was SEK 3.4 million (SEK 1.9 million). The cashflow after changes in working
capital amounted to SEK -2.1 (SEK 0.2 million) primarily related to increased
receivables (SEK 3.7 million), decreased stock (SEK 0.4 million) and decreased
operating liabilities (SEK 2.2 million). The total cashflow result amounted to
SEK -2.2 million (SEK 0.2 million), after investments of SEK 0.1 million (SEK
0.0 million).
Risks and Uncertainty Factors
The main uncertainty factor for SinterCast continues to be the 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 European and Asian
economies continue to be uncertain and this may impact passenger vehicle and
commercial vehicle sales. SinterCast's diversification between V-diesel engines
for passenger vehicles, commercial vehicle engines, exhaust components,
industrial power engines and most recently, the first high volume CGI petrol
engine launch, 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.46 in
SinterCast's Annual Report 2013
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 offices in Sweden, the United Kingdom, the United States, China
and Korea. As of 31 March 2014, the Group had 17 (19) employees, following the
reassignment of two individuals from employees to retained consultants. Three
(three) of the employees are female. A new Senior Research Engineer was
recruited during the period, with start of employment at the Technical Centre in
Katrineholm on 14 April. 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 12 (13)
employees. The majority of the operations are managed by the Parent Company
while local operations in the UK, USA, Korea and China are managed by the local
companies. The information given for the Group in this report corresponds in
all material respects to the Parent Company.
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 the Parent Company are in agreement
with the accounting policies used in 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 release has been issued:
15 April 2014 - Notice of the Annual General Meeting of SinterCast AB (publ)
There have been no other significant events since the balance sheet date of 31
March 2014 that could materially change these financial statements.
Annual Report 2013
The Annual Report 2013 was published on the SinterCast website on 3 April 2014.
In consideration of cost efficiency and environmental concern, the Annual Report
2013 was only issued in electronic format, as a PDF file.
Annual General Meeting
The Annual General Meeting 2014 of SinterCast AB (publ) will be held at 15:00 on
Tuesday 20 May 2014, at the Royal Swedish Academy of Engineering Sciences (IVA),
Grev Turegatan 16, Stockholm. The notice to the Annual General Meeting was
published on 15 April 2014 and is available on the SinterCast website.
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 1.2 per share (SEK
1.0), representing a transfer of SEK 8.5 million (SEK 7.0 million) to the
shareholders of SinterCast AB (publ). The Board proposes 23 May, 2014 as the
record date for entitlement to receive dividends. In deciding the amount of the
dividend to be proposed to the AGM 2014, 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.
The Board of Directors propose the following dates for the Annual General
Meeting and for entitlement to receive dividends:
14 May 2014 Shareholders who wish to participate in the AGM, must be recorded in
the share register maintained by Euroclear, in their own names, and
notify SinterCast of their attendance.
15 May 2014 Shares traded on this date are eligible for dividend
16 May 2014 Shares traded on this date are not eligible for dividend
20 May 2014 The Annual General Meeting will be held at 15:00
23 May 2014 The record date for entitlement to receive dividends is three bank
days after the AGM.
28 May 2014 Anticipated payment of dividend via Euroclear, three bank days after
the record date for entitlement to receive dividends.
Information
The Interim Report April-June 2014 will be published on 20 August 2014
The Interim Report July-September 2014 will be published on 5 November 2014
The Interim Report October-December 2014 and Full Year Results 2014 will be
published on 11 February 2015
The Interim Report January-March 2015 will be published on 29 April 2015
This report has not been reviewed by the Company's Auditors.
Stockholm 23 April 2014
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 size, weight, noise and emissions. The SinterCast technology, with 39
installations in 12 countries, is primarily used for the production of petrol
and diesel engine cylinder blocks and exhaust components for passenger vehicles,
medium-duty and heavy-duty cylinder blocks and heads for commercial vehicles,
and industrial power engine components for marine, rail, off-road and stationary
engine applications. SinterCast's series production components range from 2 kg
to 9 tonnes, all using the same proven process control technology. The
SinterCast share is quoted on the Small Cap segment of the Stockholm NASDAQ OMX
stock exchange (Stockholmsbörsen: SINT). For more information:
www.sintercast.com
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