Interim report January – September 2016

Hesitant market
Hesitant market

  · Net sales increased by 10 % to 440.2 (400.1) MSEK
  · Operating income amounted to -0.7 (36.2) MSEK
  · Net income amounted to 6.7 (21.6) MSEK
  · Earnings per share amounted to 0.32 (1.11) SEK
  · 35 (34) systems were delivered in the period
  · Order intake amounted to 24 (29) systems

For the third quarter:

  · Net sales amounted to 132.6 (138.1) MSEK
  · Operating income amounted to -4.8 (12.6) MSEK
  · Net income amounted to -3.1 (4.9) MSEK
  · Order intake amounted to 9 (12) systems
  · 7 (11) EBM systems were delivered in the third quarter
  · Public tender by GE to acquire all shares in Arcam

Significant events after the end of September:

  · On October 18 GE Sweden extended the acceptance period of the tender until
November 1, 2016

Hesitant market

Sales for the period increased to 440.2 (400.1) MSEK and trailing twelve month
sales increased to 616.2 (537.3) MSEK. The Arcam Group continues to grow and the
growth in the period was 10%. Operating income for the first 9 months was -0.7
(36.2) MSEK and trailing twelve months, operating income amounts to 13.3 (51.5)
MSEK.

In the first 9 months we delivered 35 (34) EBM systems and we received 24 (29)
new EBM orders, whereof 9 (12) for the third quarter. The order book by the end
of the period was 16 EBM systems. Our metal powder manufacturer AP&C more than
doubled its order intake compared to the same period 2015. In May we decided to
add significant capacity by building a new powder manufacturing plant in
Montreal. The ground breaking ceremony was held on October 17.

The market is currently slightly hesitant and as a result we see that it takes
longer to close new orders. This is partly a result of the uncertainty over the
company’s future ownership structure.

We continue to pursue and develop our long-term strategy to industrialize the
EBM technology and simultaneously developing the metal powder manufacturing and
contract manufacturing businesses. We invest significantly in technology,
marketing and manufacturing capacity to meet our customers’ demands and growing
expectations on productivity and reliability.

Public offer by GE

As announced on September 6, GE made a public tender to acquire all shares in
Arcam. The initial acceptance period of the Offer expired on October 14. GE has
extended the acceptance period until November 1, 2016.

For us at Arcam the tender from GE is a strong confirmation that the company we
have built, our team together with you and other partners, is a major player in
the additive manufacturing industry and an attractive partner to GE.

We share with GE the belief that Additive Manufacturing is a fast growing,
strategically important industry. GE plans to retain and expand Arcam’s current
customer base, in aerospace as well as in orthopedics. GE also intends to keep
current locations of Arcam’s operations and to retain current management and
employees.
The Board of Arcam has unanimously recommended the shareholders to accept the
offer and the statement by the Board can be found as a press release on the
company website. Information about the public tender from GE can be found on our
website and can be ordered from GE or from Handelsbanken.

Business status

During the third quarter we delivered 7 EBM systems to customers in the implant
or in the aerospace industry. The demand for EBM systems is driven by how
quickly our customers in the aerospace and implant industry are moving towards
production, a process that is dependent on both technical and commercial
factors. In the period we received 9 new orders and the order book by the end of
the quarter amounts to 16 systems.

During the period Arcam Q10plus and Arcam Q20plus were launched. The new systems
are a significantly enhanced generation of the Arcam Q-series EBM systems for
Additive Manufacturing. Arcam Qplus offers up to 25 % higher productivity with
significantly improved surface finish and precision. With Qplus Arcam also
introduces Arcam xQam™, an X-ray based function for high precision auto
-calibration and improved beam control.

To meet the growing demand for AP&C’s high quality titanium powder for Additive
Manufacturing, we continue to add significant capacity by building a new powder
manufacturing plant. In May we decided to increase further the capacity by
building a new powder manufacturing plant outside Montreal, Canada. The new
facility will provide manufacturing redundancy, short term capacity increase and
long term expansion capability. With the present build-out AP&C will reach a
capacity by the end of 2017 of at least 750 tons per year. The new plant will be
built in modules and can be extended so that we reach a combined total capacity
of over 1,200 tons per year in both production plants.

Since February our contract manufacturer DiSanto has new management. The
business continues to be burdened by weak sales for implants made with
traditional technology. In the period several new customer projects for EBM
manufactured implants have been added. Revenues from this part of the business
is increasing but is still not compensating for the weak sales within
traditionally manufactured implants.

Strengthened organization

During the period we strengthened our sales and support organization in Germany,
Italy and in the USA with new sales people in the field and a strengthened sales
management.

A new sales office in Stuttgart will initially drive sales and in the future
also serve as a local support office.

On the important Italian market, we have strengthened the organization with
local management. The office in Turin is responsible for sales and service and
is working close to our important customers in Italy.

With 16 machines in order and a fast growing AM metal powder market we are well
positioned for a positive sales development in 2016.

Considering the hesitant market and our extensive investments in technology and
capacity, it will be a challenge to achieve a result in line with last year.

Mölndal, October 21, 2016

Magnus René, President and CEO

This report contains information that Arcam AB is obliged to make public
pursuant to the EU Market Abuse Regulation. The information was submitted for
publication at 08.30 CEST on October 21, 2016.

Telephone conference

Telephone conference with CEO Magnus René and CFO Johan Brandt on October 21,
2016 at 12.00 p.m. (CEST)

Phone number to the conference:

SE: +46 8 5664 2666
UK: +44 2030 0898 19

US: +1 8557 5322 35

Link to presentation:

Arcam Q3 conference
call (http://event.onlineseminarsolutions.com/r.htm?e=1282048&s=1&k=F3DB94FDC4DF
F 
A91C8560DED03E53655)
For further information:

Magnus René, CEO and President, Arcam
Cell: 46 702 79 89 99 or 1 781 266 6957
E-mail: magnus.rene@arcam.com
Arcam Group provides cost-efficient Additive Manufacturing solutions for
production of metal components. Arcam’s Electron Beam Melting (EBM®) technology
offers design freedom combined with excellent material properties and high
productivity. Arcam is, through its solution orientation and comprehensive
product offering, an innovative partner for advanced manufacturing, primarily
for the aerospace and medical industries. Arcam offers EBM systems through Arcam
AB in Sweden, powder metals through AP&C in Canada and implant contract
manufacturing through DiSanto in the U.S.The company is listed on Nasdaq
Stockholm and the Head Office is located in Mölndal, Sweden.

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Arcam AB • Krokslätts Fabriker 27A • SE-431 37 Mölndal, Sweden • 46-31-710 32 00
• www.arcam.com