Record production. Record revenue.
40% Increase in full year operating result
Fourth Quarter 2014
* Revenue for Period: SEK 15.6 million (SEK 14.4 million)
* Operating Result: SEK 3.5 million (SEK 2.1 million)
* Earnings per Share: SEK 0.5 per share (SEK 0.3 per share)
* Cashflow from Operations: SEK 3.2 million (SEK 7.6 million)
* Year-end awards for Ford and Ram pick-up trucks with SinterCast-CGI engines
* New heavy duty cylinder head series production for Deutz and Hyundai
* Dongfeng Trucks adopts SinterCast technology for CGI product development
Full Year 2014
* Revenue: SEK 54.5 million (SEK 51.9 million)
* Operating Result: SEK 10.2 million (SEK 7.3 million)
* Earnings per Share: SEK 1.7 per share (SEK 1.2 per share)
* Cashflow from Operations: SEK 6.7 million (SEK 14.4 million)
* Dividend: Proposed ordinary dividend of SEK 1.5 per share (SEK 1.2 per
share) plus an extraordinary dividend of SEK 0.7 per share
* Installed Base: 23 fully automated systems and 17 mini-systems in Europe,
Asia and the Americas
Series Production*
For paragraph, see Press Release PDF
Annualised series production reached a new record of 1.85 million Engine
Equivalents in the fourth quarter, providing a 16% year-on-year increase and
contributing to a 40% year-on-year increase in the operating result.
* Annualised average production of Engine Equivalents during the quarter (1
Engine Equivalent = 50 kg)
CEO Comments
Record series production and record revenue
Series production in the fourth quarter amounted to 1.85 million Engine
Equivalents, providing a new quarterly record and a 16% year-on-year increase.
Overall, every quarter during 2014 either provided or maintained record levels
of series production. The strong growth in production resulted in a 12%
increase in Sampling Cup shipments and led toward record revenue of SEK 54.5
million. Beyond the record production and record revenue, the operating result
finished 40% higher than 2013. The outlook remains positive in each of the
passenger vehicle, commercial vehicle and industrial power sectors, as
competitive benchmarks and market awareness continue to grow. It is estimated
that the current series production programmes have the potential to provide
approximately 2.5 million Engine Equivalents at mature volume.
Series production was buoyed by the continued ramp-up of commercial vehicle
production, particularly in Europe, and by the start of series production of new
heavy duty cylinder heads for Deutz and Hyundai. The cylinder head for Deutz is
for a high performance 7.8 litre engine developed for agricultural
applications. Produced at the Halberg foundry in Leipzig Germany, Deutz
specified CGI for the cylinder head to meet three of the main requirements of
agricultural machinery: high torque, durability, and a compact engine package to
minimise turning circle. This engine establishes a new benchmark for CGI in the
agriculture sector and it is an honour for our technology to be embraced by
Deutz, the world's first engine company, founded in 1864 by Nicolaus Otto, the
inventor of the internal combustion engine. The Hyundai cylinder head is a CGI
upgrade of a current 12.7 litre engine. The cylinder head was converted from
grey iron to CGI to ensure durability in parallel with power and torque
increases. The 12.7 litre head is Hyundai's sixth SinterCast-CGI component,
extending Hyundai's CGI leadership in Asia.
Accolades for SinterCast castings, engines and vehicles
SinterCast's technology featured prominently in the year-end award
recognitions. The Ford F150 won the North American Truck/Utility of the Year
award at the North American International Auto Show in January. The F150, with
the SinterCast-CGI 2.7 litre V6 petrol engine also won the Automotive Science
Group's Best All-Around Performance Award full size trucks, recognising the best
total cost of ownership and the best life cycle environmental performance. At
the same time, the Ram 1500 won the Green Truck of the Year award presented by
Green Car Journal while the Ram 3.0 litre V6 diesel engine won a second
consecutive Wards 10 Best Engines award, and was the only diesel to receive the
coveted award this year. SinterCast's technology was also recognised by the
Cast Metal Federation in the UK as it awarded Grainger & Worrall the Casting of
the Year award for the Ford 2.7 litre V6 petrol engine cylinder block. These
prestigious awards, together with new vehicle launches at the North American
International Auto Show such as the Nissan Titan XD pick-up with a SinterCast-
CGI diesel engine designed and built by Cummins, constitute significant steps in
the awareness of CGI and in the competitive benchmarks in the automotive
industry.
New installation for commercial vehicle product development
Following negotiations during the fourth quarter, Dongfeng Trucks, China's
largest heavy duty truckmaker, signed an agreement for the installation of a
Mini-System 3000, planned to be shipped during the first quarter of 2015. The
installation will enable Dongfeng to independently develop high quality CGI
cylinder blocks and heads. The Dongfeng order marks SinterCast's ninth
installation in China, following installations at Zhongding Power and Impro
Industries during 2014, broadening SinterCast's presence and brand awareness,
and providing additional opportunities to increase SinterCast-CGI production in
the commercial vehicle sector.
Ductile Iron technology
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.
Development of the ductile iron technology accelerated during the quarter with
field trials and continued product development. The current development is
focussing on the optimisation of the ductile iron thermal analysis sampling
device and the metallurgical correlations, and on the preparation for reference
case studies.
Financial Summary
Revenue
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 2014 2013 2014 2013
not otherwise stated)
-------------------------------------------------------------------------------
Number of Sampling Cups 38,200 28,600 133,000 118,500
shipped
Equipment (1) 1.1 4.2 4.9 10.1
Series Production (2) 13.9 10.0 47.8 40.2
Engineering Service( 3) 0.3 0.2 1.4 1.4
Other 0.3 0.0 0.4 0.2
-------------------------------------------------------------------------------
Total 15.6 14.4 54.5 51.9
-------------------------------------------------------------------------------
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
October-December 2014 revenue amounted to SEK 15.6 million (SEK 14.4 million).
Revenue from series production increased by 39% to SEK 13.9 million (SEK 10.0
million), due to record annualised production of approximately 1.85 million
(1.60 million) annualised Engine Equivalents during the quarter and the
increased shipment of 38,200 (28,600) Sampling Cups. During the period,
additional equipment was sold to the Tupy foundry in Brazil to expand and
reinforce the production capability. However, the total equipment revenue for
the quarter was lower compared to the strong installation activity during the
fourth quarter of 2013. Engineering Service amounted to SEK 0.3 million (SEK
0.2 million).
January-December 2014 revenue amounted to SEK 54.5 million (SEK 51.9 million).
Revenue from series production increased by 19% to SEK 47.8 million (SEK 40.2
million) due to increased production and Sampling Cup shipments. Equipment
revenue amounted to SEK 4.9 million (SEK 10.1 million). Engineering Service
amounted to SEK 1.4 million (SEK 1.4 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 October-December January - December
(Amounts in SEK million if not otherwise 2014 2013 2014 2013
stated)
-------------------------------------------------------------------------------
Operating Result 3.5 2.1 10.2 7.3
Result for the period after tax 3.7 2.1 12.3 8.1
Earnings per Share (SEK) 0.5 0.3 1.7 1.2
-------------------------------------------------------------------------------
The October-December 2014 operating result of SEK 3.5 million (SEK 2.1 million)
increased as a result of higher gross results of SEK 2.0 million, higher
operational expenses of SEK 0.1 million and lower other operating income
(exchange gains) of SEK 0.5 million. The result for the period after tax
amounted to SEK 3.7 million (SEK 2.1 million), primarily related to the increase
in the operating result from SEK 2.1 million to SEK 3.5 million, the increased
financial net of SEK 0.1 million and the decreased tax expenses of SEK 0.1
million.
The January- December 2014 operating result of SEK 10.2 million (SEK 7.3
million) increased as a result of higher gross results of SEK 3.5 million
primarily derived from higher revenue, combined with higher operational expenses
of SEK 0.8 million and increased operating income from exchange gains of SEK
0.2 million. The result for the period after tax amounted to SEK 12.3 million
(SEK 8.1 million), primarily related to the increased operating result of SEK
2.9 million, the increased financial net of SEK 1.0 million (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-December
2014 period, primarily explained by the SEK 1.0 million increase in the deferred
tax asset during the second quarter of 2014. The estimated future taxable
profit and deferred tax asset calculation is reassessed every quarter. As of 31
December 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, Investments and Liquidity
Cashflow Summary Fourth Quarter October - December Cashflow Changes
(Amounts in SEK million if not otherwise 2014 2013 2014 vs. 2013
stated)
-------------------------------------------------------------------------------
Cashflow from operations, before change in 3.6 1.8 1.8
working capital
Change in working capital -0.4 5.8 -6.2
-------------------------------------------------------------------------------
Cashflow from operations 3.2 7.6 -4.4
Cashflow from investing activities -0.5 -0.1 -0.4
Cashflow from financing activities - 5.6 -5.6
-------------------------------------------------------------------------------
Exchange rate differences in cash and cash 0.2 0.0 0.2
equivalents
-------------------------------------------------------------------------------
Cashflow total 2.9 13.1 -10.2
October-December 2014 cashflow from operations decreased by SEK 4.4 million
compared to the same period in 2013, primarily due to an increase in working
capital (SEK 6.2 million), derived from decreased inventory (SEK 1.2 million),
increased receivables (SEK 3.9 million) and decreased operating liabilities (SEK
3.5 million). The total cashflow decreased by SEK 10.2 million, primarily due to
the net contribution in 2013 of the new share issue associated with the exercise
of the employee stock options (SEK 5.6 million). Investments increased by SEK
0.4 million, primarily from the activation of products under development (SEK
0.3 million). After positive exchange rate differences of SEK 0.2 million, the
total cashflow amounted to SEK 2.9 million (SEK 13.1 million).
Cashflow Summary Full Year January - December Cashflow Changes
(Amounts in SEK million if not otherwise 2014 2013 2014 vs. 2013
stated)
-------------------------------------------------------------------------------
Cashflow from operations, before change in 10.9 8.1 2.8
working capital
Change in working capital -4.2 6.3 -10.5
-------------------------------------------------------------------------------
Cashflow from operations 6.7 14.4 -7.7
Cashflow from investing activities -1.3 -0.6 -0.7
Cashflow from financing activities -8.5 -1.4 -7.1
-------------------------------------------------------------------------------
Exchange rate differences in cash and cash 0.2 0.0 0.2
equivalents
-------------------------------------------------------------------------------
Cashflow total -2.9 12.4 -15.3
Liquidity 44.9 47.8
-------------------------------------------------------------------------------
January-December 2014 cashflow from operations decreased by SEK 7.7 million
compared to full-year 2013, primarily due to an increase in working capital (SEK
10.5 million), derived from decreased inventory (SEK 0.3 million), increased
receivables (SEK 4.3 million) and decreased operating liabilities (SEK 6.5
million). The total cashflow decreased by SEK 15.3 million, primarily related to
the net contribution in 2013 of the new share issue associated with the exercise
of the employee stock options (SEK 5.6 million) and the increased dividend of
SEK 1.5 million. Investments increased by SEK 0.7 million, primarily from the
activation of products under development (SEK 0.3 million) and from increased
patent investments (SEK 0.4 million). The total cashflow amounted to SEK -2.9
million (SEK 12.4 million). Liquidity on 31 December 2014 was SEK 44.9 million
(SEK 47.8 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 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 several years. The European passenger vehicle, commercial
vehicle, and construction equipment markets have begun to show some recovery,
but this growth is from a relatively low level and uncertainty remains in the
market. In Asia, the dominant Chinese market is characterised by overcapacity
in the commercial vehicle and construction equipment sectors, which represent
the primary opportunity for CGI. This overcapacity, coupled with the current
economic uncertainty in China, influences product development cycles and
production volumes. In contrast, consumer confidence has 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. However, as manufacturing continues to grow in
developing countries, many of the future installation opportunities will be in
price sensitive markets and this can present a challenge for the SinterCast fee
structure and Business Model.
For further 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 December 2014, the Group had 19 (17) employees, four
(three) of whom are 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. On 31 December 2014, the parent
company had 14 (12) employees. The majority of the operations are managed by the
parent company while local operations in the United Kingdom, United States,
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. However, the result for the period may differ between the Group and the
parent company due to intercompany transactions between the parent company and
its subsidiaries.
Patents
SinterCast currently holds 12 (13) patents, granted or pending, and maintains
59 (44) individual national phase patents worldwide. These patents address
SinterCast's metallurgical technology, thermal analysis, the Sampling Cup for
CGI and ductile iron, 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 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
There have been no significant events since the balance sheet date of 31
December 2014 that could materially change these financial statements. The
following press releases have been issued:
7 January 2015 - Dongfeng Trucks adopts SinterCast process control technology
15 January 2015 - Increased presence for SinterCast at North American
International Auto Show
Nomination Committee
The Nomination Committee, elected by the Annual General Meeting 2014, consists
of Karl-Arne Henriksson, Chairman, Andrea Fessler, Ulla-Britt Fräjdin-Hellqvist
and Hans-Erik Andersson. Shareholders wishing to provide input or proposals
should provide written submissions to the Nomination Committee (e-mail:
nomination.committee@sintercast.com) before 18 March 2015.
Annual General Meeting
The Annual General Meeting 2015 of SinterCast AB (publ) will be held on
Wednesday 20 May 2015.
Shareholders wishing to have a matter considered at the Annual General Meeting
should provide written submissions 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 of the meeting. Further details on how and when to
register will be published in advance of the Annual General Meeting.
Dividend 2014
The Annual General Meeting of SinterCast AB (publ) held on 20 May 2014 approved
an ordinary dividend for 2014 amounting to SEK 1.2 per share. A total amount of
SEK 8.5 million was transferred to the shareholders.
Proposed Dividend 2015
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 1.5 per share (SEK
1.2) plus an extraordinary dividend of SEK 0.7 per share, representing a
transfer of SEK 15.6 million (SEK 8.5 million) to the shareholders of SinterCast
AB (publ). The Board proposes 22 May 2015 as the record date for entitlement to
receive dividends. In deciding the amount of the ordinary dividend to be
proposed to the AGM 2015, 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 2015 will be published on 29 April 2015
The Interim Report April-June 2015 will be published on 29 July 2015
The Interim Report July-September 2015 will be published on 11 November 2015
The Interim Report October-December and Full Year Results 2015 will be published
on 17 February 2016
Annual Report 2014
The Annual Report 2014 will be published on 2 April 2015.
This report has not been reviewed by the Company's Auditors
Stockholm 11 February 2015
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 40
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#1893395]
