SinterCast Results July-September 2015
(Thomson Reuters ONE) -
Year-to-date revenue surpasses previous full-year record
Six installation commitments equals record high
Third Quarter 2015
* Revenue for Period: SEK 20.6 million (SEK 13.4 million)
* Operating Result: SEK 7.1 million (SEK 3.1 million)
* Earnings per Share: SEK 1.0 per share (SEK 0.5 per share)
* Cashflow from Operations: SEK 6.5 million (SEK 2.6 million)
* Ford 2.7 litre petrol engine secures 25% of all F-150 pick-up orders in
first half of 2015
* Nissan Titan wins prestigious 2015 "Truck of Texas" award with Cummins 5.0
litre diesel engine
* Teksid Group orders third process control system for Teksid do Brasil
2015 Year-to-Date
* Revenue for Period: SEK 55.2 million (SEK 38.9 million)
* Operating Result: SEK 15.9 million (SEK 6.7 million)
* Earnings per Share: SEK 2.3 per share (SEK 1.2 per share)
* Cashflow from Operations: SEK 15.8 million (SEK 3.5 million)
* Installed Base: 24 fully automated systems and 20 mini-systems in Europe,
Asia and the Americas
Series Production*
See PDF for graph
Annualised series production decreased to 2.0 million Engine Equivalents in the
third quarter due to extended summer shutdowns in July and August. September
rebounded to provide 2.4 million Engine Equivalents, the second highest monthly
result on record.
* Annualised average production of Engine Equivalents during the quarter (1
Engine Equivalent = 50 kg)
CEO Comments
Return to full volume after summer shutdowns
Following extended summer shutdowns at key customers in July and August, series
production returned to full volume in September providing annualised volume of
2.4 million Engine equivalents, the second highest month on record. The
annualised series production for the third quarter amounted to 2.0 million
Engine Equivalents, providing an 11% year-on-year increase for the third quarter
and a 19% increase in the year-to-date production volume. In parallel with the
growing production, 112,000 Sampling Cups were shipped during the first three
quarters, representing a new record for the Company. The current results have
benefitted from strong performance on every front, including increased series
production, increased Sampling Cup shipments and increased installation
activity, all compounded by favourable exchange rates. Together, the progress
has resulted in a 54% increase in year-on-year revenue, with the revenue for the
first three quarters of 2015 surpassing the previous full-year revenue record
established in 2014.
The series production outlook remains positive with new products being well
received in the field. Following the start of sales of the 2.7 litre V6 petrol
engine in America's best-selling vehicle, the Ford F-150, in late-2014, the
popularity of the engine has continued to increase, with the take-rate for the
first half of the 2015 finishing at 25%. The successful ramp of the Ford petrol
engine has contributed to a 25% increase in passenger vehicle production in
2015 compared to 2014, increasing the passenger vehicle volume from 55% to 60%
of SinterCast's total production. SinterCast's newest entrant in the US pick-up
truck market, the Nissan Titan, won four top honours at the 2015 Texas Truck
Rodeo, one of the largest pick-up truck events in the United States. The Nissan
Titan received awards from the Texas Auto Writers Association for "2015 Best
Truck of Texas", "Luxury Pickup Truck of Texas" for the XD Platinum model, "Off-
Road Pickup Truck of Texas" for the XD PRO-4X model, and most significantly for
SinterCast, "Best Powertrain" for the new Cummins 5.0 litre V8 turbodiesel
engine with a SinterCast-CGI cylinder block. The initial ramp-up of the Cummins
5.0 litre V8 cylinder block is underway at the Tupy foundry in Brazil in advance
of the planned start of Nissan Titan sales in December. The production of
industrial power components also provided strong gains, with 40% growth compared
to 2014. This growth was primarily derived from the continued increase of the
General Electric locomotive cylinder head, and also benefitted from the start of
production of the new Cummins QSK95 industrial power engine during the quarter.
With SinterCast-CGI cylinder heads produced at the Motor Castings foundry in the
USA, the QSK95 industrial power engine is a 16-cylinder engine specifically
designed for mining, locomotive, marine, stationary power and offshore drilling
applications. New products such as the Cummins QSK95 provide the opportunity
for components other than automotive blocks and heads to continue to provide
approximately 10% of the total volume as the core automotive market grows.
Record year for installations
Following five new installation commitments in the first half of 2015, a new
order was received for a System 3000 Plus installation at the Teksid do Brasil
foundry in Belo Horizonte, Brazil. The equipment for the Teksid do Brasil
installation is planned to be shipped during the first quarter of 2016. The
Teksid do Brasil installation marks SinterCast's sixth installation of the
System 3000 Plus technology that was launched in 2012. The System 3000 Plus is
designed to provide the highest level of automation, productivity and process
security for high volume series production. The Teksid do Brasil order also
marks SinterCast's sixth installation commitment of 2015, equalling the records
set for new installation commitments in 2011 and 2013. The installation
commitments announced in the first half of 2015 in Asia and Europe have all been
successfully commissioned and product development is proceeding according to
schedule.
Ductile Iron technology
Development of the ductile iron technology continued during the quarter, with
the primary focus being on the design of the bespoke ductile iron thermal
analysis sampling device and on foundry trials to optimise the metallurgical
correlations. The objective of the SinterCast ductile iron project is 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 July-September January- September
(Amounts in SEK million if not 2015 2014 2015 2014
otherwise stated)
-------------------------------------------------------------------------------
Number of Sampling Cups 36,900 28,700 112,000 94,800
shipped
Equipment (1) 5.0 1.2 7.3 3.8
Series Production (2) 15.3 11.9 47.0 33.9
Engineering Service( 3) 0.3 0.3 0.8 1.1
Other 0.0 0.0 0.1 0.1
-------------------------------------------------------------------------------
Total 20.6 13.4 55.2 38.9
-------------------------------------------------------------------------------
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 July-September 2015 revenue amounted to SEK 20.6 million (SEK 13.4 million).
Revenue from series production increased by 29% to SEK 15.3 million (SEK 11.9
million), due to annualised production of approximately 2.0 million (1.8
million) Engine Equivalents, the increased shipment of 36,900 (28,700) Sampling
Cups and favourable exchange rates. Equipment revenue amounted to SEK 5.0
million (SEK 1.1 million) due to the Mini-System 3000 installations at Dongfeng
in China and Teksid in Portugal, and the System 3000 Plus installation at Asimco
in China. Service amounted to SEK 0.3 million (SEK 0.3 million) following
support provided to various customers globally and the sale of test pieces.
The January-September 2015 revenue amounted to SEK 55.2 million (SEK 38.9
million), surpassing the full year revenue record of SEK 54.5 million in 2014.
The revenue from Series Production increased by 39% to SEK 47.0 million (SEK
33.9 million) due to a 19% increase in year-to-date series production, an 18%
increase in Sampling Cup shipments and favourable exchange rates. Equipment
revenue amounted to SEK 7.3 million (SEK 3.8 million), derived from the third
quarter installations and the earlier Mini-System 3000 installations at Doosan
Infracore in Korea and at an undisclosed engine component foundry in Japan.
Engineering Service amounted to SEK 0.8 million (SEK 1.1 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 July-September January- September
(Amounts in SEK million if not otherwise 2015 2014 2015 2014
stated)
-------------------------------------------------------------------------------
Operating Result 7.1 3.1 15.9 6.7
Result for the period after tax 6.9 3.5 16.2 8.6
Earnings per Share (SEK) 1.0 0.5 2.3 1.2
-------------------------------------------------------------------------------
The July-September 2015 operating result of SEK 7.1 million (SEK 3.1 million)
increased by SEK 4.0 million as a result of higher gross results of SEK 4.9
million primarily derived from higher revenue, combined with higher operational
expenses of SEK 0.9 million.
The result for the period after tax amounted to SEK 6.9 million (SEK 3.5
million). The increase of SEK 3.4 million is primarily related to the increased
operating result of SEK 4.0 million, the decreased financial net of SEK 0.5
million (primarily unrealised revaluation losses derived from outstanding hedge
contracts) and increased tax expense of SEK 0.1 million.
The January-September 2015 Operating Result of SEK 15.9 million (SEK 6.7
million), increased as a result of higher gross results of SEK 13.2 million
primarily derived from higher revenue, combined with higher operational expenses
of SEK 2.7 million and decreased operating income (exchange losses) of SEK 1.3
million.
The Result for the period after tax amounted to SEK 16.2 million (SEK 8.6
million), primarily related to the increased operating result of SEK 9.2 million
and a SEK 1.6 million decrease in the financial net (primarily exchange losses).
Deferred Tax Asset
Tax for the period January-September 2015 amounted to SEK 0.9 million (SEK 0.9
million). The estimated future taxable profit and deferred tax asset calculation
is reassessed every quarter. As of 30 September 2015, SEK 137.8 million (SEK
133.3 million) of SinterCast's total carried-forward tax losses have been used
as the basis of the updated calculation, resulting in SEK 30.3 million (SEK
29.3 million) being capitalised as a deferred tax asset.
Cashflow, Liquidity and Investments
Cashflow Summary 2015 Year-to-Date January- September Cashflow Changes
(Amounts in SEK million if not otherwise 2015 2014 2015 vs. 2014
stated)
-------------------------------------------------------------------------------
Cashflow from operations, before change in 16.7 7.3 9.4
working capital
Change in working capital -0.9 -3.8 2.9
-------------------------------------------------------------------------------
Cashflow from operations 15.8 3.5 12.3
Cashflow from investing activities -1.4 -0.8 -0.6
Cashflow from financing activities -15.6 -8.5 -7.1
-------------------------------------------------------------------------------
Exchange rate differences in cash and cash 0.0 0.0 0.0
equivalents
-------------------------------------------------------------------------------
Cashflow total -1.2 -5.8 4.6
Liquidity 43.7 42.0
-------------------------------------------------------------------------------
The January-September 2015 cashflow from operations increased by SEK 12.3
million compared to the same period in 2014, primarily due to an increase in
cashflow from operations before changes in working capital (SEK 9.4 million) and
from changes in working capital (SEK 2.9 million), derived from changed cashflow
from inventory (SEK 0.9 million), receivables (SEK -0.3 million) and operating
liabilities (SEK 2.3 million).
The total cashflow increased by SEK 4.6 million after increased investments by
SEK 0.6 million, primarily related to increased activation of products under
development (SEK 0.9 million) and increased patent investments (SEK 0.4
million). Following the dividend of SEK 15.6 million (SEK 8.5 million), the
total cashflow amounted to SEK -1.2 million (SEK -5.8 million). Liquidity on 30
September 2015 was SEK 43.7 million (SEK 42.0 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 engines and
other components, the global economy for new vehicle sales, and the individual
sales success of vehicles equipped with SinterCast-CGI components.
The economies have 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 full risk and uncertainty factor information, see Note 26 on pages 46 and
47 in SinterCast's Annual Report 2014
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 September 2015, the Group had 19 (19) employees, four
(four) 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 30 September 2015, the Parent
Company had 14 (14) 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.
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 30
September 2015 that could materially change these financial statements. The
following press releases have been issued:
6 November 2015 - Teksid orders third SinterCast installation
Nomination Committee
The Nomination Committee, elected by the Annual General Meeting 2015, consists
of Karl-Arne Henriksson, Chairman, Hans-Erik Andersson, Chairman of the Board of
Directors, Ulla-Britt Fräjdin-Hellqvist and Andrea Fessler. Shareholders wishing
to provide input or proposals should provide written submissions to the
Nomination Committee (e-mail: nomination.committee(at)sintercast.com) before 25
March 2016.
Annual General Meeting
The Annual General Meeting 2016 of SinterCast AB (publ) will be held on Thursday
19 May 2016.
Shareholders wishing to have a matter considered at the Annual General Meeting
should provide written submissions to agm.registration(at)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.
Information
The Interim Report October-December and Full Year Results 2015 will be published
on 17 February 2016
The Interim Report January-March 2016 will be published on 27 April 2016
The Interim Report April-June 2016 will be published on 24 August 2016
The Interim Report July-September 2016 will be published on 9 November 2016
This report has been reviewed by the company's Auditors.
Stockholm 11 November 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(at)sintercast.com
website: www.sintercast.com
Report of Review of Interim Financial Information
Introduction
We have reviewed the condensed interim financial information (interim report) of
SinterCast AB (publ) as of 30th of September 2015 and the nine-month period then
ended. The Board of Directors and the CEO are responsible for the preparation
and presentation of the interim financial information in accordance with IAS 34
and the Swedish Annual Accounts Act. Our responsibility is to express a
conclusion on this interim report based on our review.
Scope of Review
We conducted our review in accordance with the International Standard on Review
Engagements ISRE 2410, Review of Interim Report Performed by the Independent
Auditor of the Entity. A review consists of making inquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope
than an audit conducted in accordance with International Standards on Auditing,
ISA, and other generally accepted auditing standards in Sweden. The procedures
performed in a review do not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the interim report is not prepared, in all material respects, in accordance
with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with
the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, 10 November 2015
Öhrlings PricewaterhouseCoopers AB
Tobias Stråhle
Authorised Public Accountant
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 44
installations in 13 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
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Datum: 11.11.2015 - 08:00 Uhr
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