INTERIM REPORT OCTOBER – DECEMBER 2017 AND ANNUAL EARNINGS FOR 2017
Fourth quarter of 2017 (October to December):
- Net Turnover of SEK -0.8 million (SEK 1.5 million)
- Operating Loss/EBIT of SEK -14.9 million (SEK-8.2 million)
- Result for the period of SEK -14.5 million (SEK-11.0 million)
- Cashflow for the period SEK -29.4 million (SEK 9 million)
- Earnings per share amounted to SEK -0.60 (SEK -0.93)
- Production of OXE units: 0 (7)
Year to 31st December 2017:
- Net Turnover of SEK 14.6 million (SEK 6.9 million)
- Operating Loss/EBIT of SEK -46.1 million (SEK -21.4 million)
- Result for the period of SEK-50.8 million (SEK -27.1 million)
- Cashflow for the period SEK 5.1 million (SEK 7.7 million)
- Earnings per share amounted to SEK -2.69 (SEK -2.40)
- Production of OXE units: 55 (25)
- Cimco Board proposed nil dividend for 2017 (Nil)
Significant events in the Fourth quarter:
- Status update regarding technical quality issues, delivery target of OXE units and business update. The company is now unable to meet its target production run rate of 25 units per week in 2017. Various countermeasure solutions currently being validated. Its targets for fiscal year 2018 and long-term targets remain intact.
Significant event after the reporting period
- 150hp OXE launched in January 2018 whilst production of 200hp OXE is expected to resume by the end of Q2. Expect 150hp to be well received by the market. Root cause of Turbo leakage of the 200hp has been identified and currently working on solutions with the aim of re-starting production by the end of Q2 2018.
- New US patent issued. This covers the latest design of the transmission used in production of the OXE Diesel engine today. Cimco now has 32 approved patents and 6 pending approval.
- Public share issue of 30MSEK and Corporate bond launch of 80MSEK. The share issue is considered necessary to support the corporate bond launch – the proceeds to which will be used for working capital purposes for production ramp up in 2018
- Public share issue of 30MSEK substantially oversubscribed by 70%.
- Corporate bond issue of 80MSEK oversubscribed
Comments by the CEO, Cecilia Anderberg:
In our last quarterly report I highlighted my disappointment in not being able to sell our 200hp OXE engine due to quality assurance issues, particularly with its turbo. After meeting various end customers during this time, I was more than determined to ensure we ship quality products and develop our brand over the long term – our product to be synonymous with reliability, strength and endurance. Therefore, during quarter four, an extensive programme was implemented to secure supplier and product quality. This will require a lot of work but is crucial to ensure the long-term success of the OXE engine and for Cimco to achieve its financial targets. One important element is, of course, the work around securing a functioning turbo. Even though the problem occurs under very specific conditions, Cimco must and will put our users’ safety first. This means increasing the safety margin on the material specifications for OXE engines - changes that require new tooling which unfortunately has quite long lead-time.
In the meantime, we have brought forward the introduction of our 150hp OXE. There is a very small difference between the 150hp OXE and 200hp OXE in top speed, however, a 150hp engine allows longer usage intervals and is very suitable for governmental application for marine patrolling purposes, fishing fleets, passenger transports and other. The launch of 150hp OXE has been well received by our distributors and end customers. Some of our customers are to convert their 200hp OXE orders to 150hp OXE. Production commenced in January 2018 and is in accordance to our initial slow production ramp up.
During the fourth quarter of 2017 the company did not produce complete engines. There were two engine recalls, one engine treated as a demo and several new updates that were claimed under warranty. The new equity of 65MSEK raised in September assisted with additional working capital and to build up inventory in readiness of production re-start in January 2018. Although we are cautiously optimistic of our 2018 fiscal targets, we will monitor our progress and provide appropriate updates accordingly.
Cimco continues to attract new customers and we have recently signed an agreement with a Croatian distributor – the taxi boat market is significant and we believe there will be a strong uptake in our 150hp product.
Our work with the BMW 6-cylinder engine is now progressing according to plan with the aim of fast tracking its development to enable Cimco to offer products with a power of more than 200hp as soon as possible.
Whilst we are disappointed with the way 2017 ended, I strongly believe that we have the right skills, experience and ambition to meet our long term stated targets.
For the complete Q4 Interim report:
Please see pdf attached.
For further information, please contact:
Cecilia Anderberg, CEO, Cimco Marine AB, +46 763-10 22 50,
Andreas Blomdahl, Chairman of the Board of Cimco Marine AB, +46 706-28 01 30,
Myron Mahendra, CFO, Cimco Marine AB, +46 763-47 59 82,
Lars Sjögrell, Head of Public Relations, Cimco Marine AB, +46 702 69 53 00,
Västra Hamnen Corporate Finance AB is Certified Adviser for Cimco Marine AB.
Cimco Marine AB (publ) is obligated to make this information public pursuant to the EU Market Abuse Regulation. The information was provided by the contacts above to be submitted for publication on February 28th 2018, 07:30 CET.