Series production remains at record levels
Second Quarter 2014
* Revenue for Period: SEK 10.9 million (SEK 11.8 million)
* Operating Result: SEK 0.7 million (SEK 1.4 million)
* Earnings per Share: SEK 0.3 per share (SEK 0.2 per share)
* Cashflow from Operations: SEK 3.0 million (SEK 5.3 million)
* Series production consolidated at record level of 1.70 million Engine
Equivalents
* Ford petrol engine ready for ramp-up in advance of showroom sales before
year-end
* Increased development in passenger vehicle, commercial vehicle and
industrial power sectors
2014 Year-to-Date
* Revenue: SEK 25.5 million (SEK 23.5 million)
* Operating Result: SEK 3.6 million (SEK 2.9 million)
* Earnings per Share: SEK 0.7 per share (SEK 0.5 per share)
* Cashflow from Operations: SEK 0.9 million (SEK 5.5 million)
* Installed Base: 23 fully automated systems and 16 mini-systems in Europe,
Asia and the Americas
Series Production*
See PDF for graph
Series production remained at the record level of 1.70 million Engine
Equivalents for the second consecutive quarter. The outlook for series
production remains positive as commercial vehicle and pick-up opportunities
continue to grow and as the overall market awareness of CGI continues to
increase.
* Annualised average production of Engine Equivalents during the quarter (1
Engine Equivalent = 50 kg)
CEO Comments
Series production strong and stable
Annualised series production was 1.70 million Engine Equivalents during the
quarter, consolidating the record production achieved during the first quarter
of 2014. Production in June totalled 1.80 million Engine Equivalents, equalling
the record production of 1.80 million Engine Equivalents set in October 2013.
Series production benefitted from continued strong production of the Ford 6.7
litre V8 engine used in Super Duty pick-up applications and from the VM Motori
3.0 litre V6 engine used in Ram, Jeep, Chrysler, Lancia and Maserati
applications. Production also benefitted from commercial vehicle engines,
following the introduction of Euro 6 emissions legislation on 1 January 2014.
The strong production volume helped buoy the result and to balance the fact that
no new installation commitments were secured during the second quarter.
Installation discussions are ongoing and new installation commitments are
targeted during the second half of the year.
The outlook for series production remains positive, including the ramp-up of the
Ford 2.7 litre V6 petrol engine in advance of the announced start of model year
2015 F150 pick-up sales before year-end. Ford has announced that the weight
saving in the new F150 will be more than 318 kg and SinterCast is pleased that
the weight reduction provided by the downsized CGI cylinder block has
contributed to this achievement. Ford has also recently announced the
application of the SinterCast-CGI petrol engine to the Edge crossover vehicle
and other vehicle applications are expected.
Increased market development
The market development of CGI increased noticeably during the first half of the
year and several programmes in the development pipeline have made positive
strides toward series production. As a result of the increased confidence in
some of these programmes, an additional SEK 4.8 million of the carried forward
tax losses have been activated, resulting in an increase of SEK 1.0 million in
the deferred tax asset. The increasing awareness in CGI is also evident from
the number of new contacts received from OEMs in the passenger vehicle,
commercial vehicle and industrial power sectors, to discuss new CGI applications
for both diesel and petrol engines. While many of these enquiries are at the
early stages, the increased interest provides medium-term and long-term growth
opportunities, and underlines the strength of the core CGI market.
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
programmes currently in series production have the potential to provide
approximately 2.5 million Engine Equivalents at mature volumes. A similar number
of Engine Equivalents may be realised from the current development pipeline.
However, the Board of Directors has decided to refrain from quantitative forward
looking statements regarding the total near-term addressable market.
Ductile Iron technology
The recent development of the ductile iron technology has benefitted from the
recent recruitment of two new engineers and trials resumed during the second
quarter to validate the initial correlations. Metallurgical development and
application programming are underway, with the intention to conduct field trials
during the second half of the year. 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 April-June January-June
(Amounts in SEK million if not 2014 2013 2014 2013
otherwise stated)
-------------------------------------------------------------------------------
Number of Sampling Cups shipped 29,000 33,200 66,100 62,100
Equipment (1) 0.1 0.4 2.6 2.7
Series Production (2) 10.4 10.7 22.0 19.7
Engineering Service( 3) 0.3 0.6 0.8 0.9
Other 0.1 0.1 0.1 0.2
-------------------------------------------------------------------------------
Total 10.9 11.8 25.5 23.5
-------------------------------------------------------------------------------
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 April-June 2014 revenue amounted to SEK 10.9 million (SEK 11.8 million). The
Production Fee revenue increased due to the higher series production level of
approximately 1.70 million (1.65 million) annualised Engine Equivalents.
However, the total revenue from series production decreased slightly to SEK
10.4 million (SEK 10.7 million), due to the lower shipment of 29,000 (33,200)
Sampling Cups. Engineering Service amounted to SEK 0.3 million (SEK 0.6
million).
The January-June 2014 revenue amounted to SEK 25.5 million (SEK 23.5 million).
The revenue from Series Production increased to SEK 22.0 million (SEK 19.7
million) due to a 12% increase in series production revenue and a 6% increase in
Sampling Cup shipments. Equipment revenue amounted to SEK 2.6 million (SEK 2.7
million), following the shipment of a complete System 3000 Plus to one of
China's largest automotive component conglomerates. Engineering Service amounted
to SEK 0.8 million (SEK 0.9 million) following support provided to various
customers globally and the sale of test pieces. The revenue from the leased
installations is accrued over the lease period.
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 April-June January- June
(Amounts in SEK million if not otherwise stated) 2014 2013 2014 2013
--------------------------------------------------------------------------
Operating Result 0.7 1.4 3.6 2.9
Result for the period after tax 1.9 1.2 5.1 3.6
Earnings per Share (SEK) 0.3 0.2 0.7 0.5
--------------------------------------------------------------------------
The April-
June 2014 Operating Result of SEK 0.7 million (SEK 1.4 million)
decreased by SEK 0.7 million, as a result of lower gross results of SEK 0.5
million derived from lower revenue, higher operational expenses of SEK 0.1
million and lower other operating income and costs of SEK 0.1 million.
The Result for the period after tax amounted to SEK 1.9 million (SEK 1.2
million), primarily related to the decrease in the Operating Result of SEK 0.7
million, the increased financial net of SEK 0.3 million and the increased tax
income of SEK 1.1 million, primarily due to the deferred tax adjustment.
The January-June 2014 Operating Result of SEK 3.6 million (SEK 2.9 million),
increased as a result of higher gross results of SEK 1.0 million primarily
derived from higher revenue, combined with higher operational expenses of SEK
0.4 million and increased operating income (exchange gains) of SEK 0.1 million.
The Result for the period after tax amounted to SEK 5.1 million (SEK 3.6
million), primarily related to the increased operating result of SEK 0.7
million, a SEK 0.5 million increase in the financial net (primarily exchange
gains), and increased tax income amounting to SEK 0.3 million, primarily due to
the deferred tax adjustment.
Deferred Tax Asset
Tax amounted to SEK 0.9 million (SEK 0.6 million) during the January-June 2014
period. The difference is primarily explained by the increase of the deferred
tax asset during the quarter by SEK 1.0 million (SEK 0.8 million). The estimated
future taxable profit and deferred tax asset calculation is reassessed every
quarter. As of 30 June 2014, SEK 133.3 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 29.3 million (SEK 28.3 million) being
capitalised as a deferred tax asset.
Cashflow, Liquidity and Investments
Cashflow Summary April-June January- June
(Amounts in SEK million if not otherwise stated) 2014 2013 2014 2013
-------------------------------------------------------------------------------
Cashflow from operations, before change in working 0.8 1.6 4.0 3.5
capital
Change in working capital 2.2 3.7 -3.1 2.0
-------------------------------------------------------------------------------
Cashflow from operations, after change in working 3.0 5.3 0.9 5.5
capital
Cashflow from investing activities -0.2 -0.3 -0.3 -0.3
Cashflow from financing activities -8.5 -7.0 -8.5 -7.0
-------------------------------------------------------------------------------
Cashflow total -5.7 -2.0 -7.9 -1.8
Liquidity 39.9 33.6 39.9 33.6
-------------------------------------------------------------------------------
The April-June 2014 cashflow from operations, before changes in working
capital,
was SEK 0.8 million (SEK 1.6 million). The decreased cashflow of SEK 0.8 million
is primarily explained by the lower operating result. The cashflow from
operations after changes in working capital amounted to SEK 3.0 (SEK 5.3
million), primarily related to, compared to the same period last year, lower
cashflow from operations before changes in working capital (SEK -0.8 million),
increased cashflow from receivables (SEK 0.3 million), decreased cashflow from
stock (SEK -0.6 million) and decreased cashflow from operating liabilities (SEK
-1.2 million). Following the dividend payment of SEK 8.5 million (SEK 7.0
million), and after investments of SEK 0.2 million (SEK 0.3 million), the total
cashflow result amounted to SEK -5.7 million (SEK -2.0 million).
The January-June 2014 cashflow from operations before changes in working capital
was SEK 4.0 million (SEK 3.5 million). The increased cashflow is primarily
explained by higher operating results of SEK 0.7 million. Cashflow from
operations after changes in working capital was SEK 0.9 million (SEK 5.5
million), primarily related to, compared to the same period last year, increased
cashflow from operations before changes in working capital of SEK 0.5 million,
decreased cashflow from receivables (SEK -0.7 million), decreased cashflow from
stock (SEK -1.0 million) and decreased cashflow from operating liabilities (SEK
-3.4 million). Following the dividend of SEK 8.5 million (SEK 7.0 million), the
total cashflow result for the period was SEK -7.9 million (SEK -1.8 million),
resulting in SEK 39.9 million (SEK 33.6 million) in liquidity on 30 June 2014.
Investments amounted to SEK 0.3 million (SEK 0.3 million) during the period.
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 engines and
other components, the global economy for new vehicle sales, and the individual
sales success of vehicles equipped with SinterCast-CGI components.
The global economy has developed differently in Europe, Asia and the Americas
over the last few years. The Asian and European economies continue to be
uncertain and this may impact passenger vehicle and commercial vehicle sales in
these regions. However consumer confidence has recently increased in North
America and SinterCast has benefitted from increased vehicle sales. SinterCast's
geographical diversification helps to mitigate changing macroeconomic conditions
in the different 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 30 June 2014, the Group had 18 (18) employees. Three (three)
of the employees are female. A new Senior Research Engineer joined the Company
during the period. 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 13 (12)
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
There have been no significant events since the balance sheet date of 30 June
2014 that could materially change these financial statements.
Information
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
The Interim Report April-June 2015 will be published on 29 July 2015
Beginning with the July-September 2014 report, all Interim Reports will be
published at 08:00 CET
This report has not been reviewed by the Company's Auditors.
The Board of Directors and the CEO certify that the half-yearly financial report
provides a true and fair overview of the operations, outlook, financial position
and results of the Company and the Group, and describes the material risks and
uncertainties that the Company and the companies in the Group face.
Stockholm 20 August 2014
Hans-Erik Andersson Aage Figenschou Robert Dover
Chairman of the Board Vice Chairman of the Member of the Board
Board
Laurence Vine-Chatterton Carina Andersson Jason Singer
Member of the Board Member of the Board Member of the Board
Steve Dawson
President & CEO
Member of the Board
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
END
[HUG#1849724]
