CONCENTRIC INTERIM REPORT JANUARY – JUNE 2017

SECOND QUARTER

  • Net sales: MSEK 540 (522) – flat y-o-y, after adjusting for currency (+4%).
  • Operating income: MSEK 100 (89), generating an operating margin of 18.5% (17.0).
  • Earnings after tax: MSEK 75 (63); basic EPS of SEK 1.86 (1.52).
  • Cash flow generated from operating activities: MSEK 77 (132) is lower mainly due to increase in working capital.
  • Group’s net debt: MSEK 335 (686); gearing ratio of 42% (112) mainly due to recognition of pension remeasurement losses last year.

FIRST SIX MONTHS

  • Net sales: MSEK 1,086 (1,040) – up 2% y-o-y, after adjusting for currency (+2%).
  • Operating income: MSEK 200 (174), generating an operating margin of 18.4% (16.7).
  • Earnings after tax: MSEK 149 (123); basic EPS of SEK 3.69 (2.98).
  • Cash flow generated from operating activities: MSEK 155 (196) is lower mainly due to increase in working capital.

President and CEO, David Woolley, comments on Q2 2017 interim report.

Sales development
Group sales for the second quarter were flat year-on-year in constant currency, slightly behind the published market indices. The activity levels in the second quarter have reflected a slight correction downwards in order levels of our customers after the distribution channels were refilled in the first quarter. Overall, both European and US end-markets remained broadly flat year-on-year during the quarter. As a result, group sales for the first six months were up year-on-year by 2% in constant currency.

Operating leverage
The restructuring plans initiated and executed during the second half of 2016 have continued to deliver cost savings in line with expectations during the first half of 2017. The Concentric Business Excellence programme (“CBE”) has also supported further improvements to the group’s operating leverage, such that the operating margin for the second quarter and the first six months increased to 18.5% (17.0) and 18.4% (16.7) respectively.

Technology
During the first six months we exhibited at the International Fluid Power Exhibition (IFPE) 2017 where Concentric presented its extensive range of pumps, including recent product developments such as the patented Dual Cone Clutch pump, for use in systems requiring intermittent flow and pressure, which received a lot of positive feedback.

We continue to make progress on our organic growth objectives, as evidenced by the following technology wins:

  • Successful roll-out of the LICOS clutch technology on two-speed water pumps in the US truck market with a global OEM, which is expected to ramp up to mature volumes in 2017;
  • Order received from a global OEM of heavy trucks and buses to produce electric oil pumps for their hybrid applications, with start of production planned in the second half of 2018;
  • Contracts awarded from global OEMs to produce low noise, compact hydraulic power units (HPUs) and supplementary steering units platforms. 

We also continue to explore acquisition opportunities for enabling technologies that will enhance our solutions for variable displacement pumps and provide us with an even greater presence alongside our global customers.

Outlook
Looking forward, the orders received, and expected to be fulfilled during the third quarter of 2017, were slightly behind of the sales levels of the second quarter of 2017. We expect that the relatively stable demand trend for all end-markets will continue. Market indices suggest that production volumes blended to Concentric’s end-markets and regions will be up 2% year-on-year for the full year 2017. Concentric remains well positioned both financially and operationally, to fully leverage our market opportunities.

For further information, please contact:
David Woolley (President and CEO) or David Bessant (CFO) at Tel: +44 121 445 6545 or E-mail: info@concentricab.com 

The information in this report is of the type that Concentric AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 08.00 CET on 21 July, 2017. 

About Us

Concentric AB is the former Hydraulics Division of Haldex AB and from June 16 2011 a separate listed company.Concentric is one of the world’s leading pump manufacturers. Our flow dynamics gives customers advanced technology oil pumps, water pumps, fuel pumps and hydraulic systems. We aim to increase fuel economy, reduce emissions and improve engine control through our technical solutions and precision engineering. Concentric’s global manufacturing presence includes factories in Sweden, Germany, the UK, the USA, Argentina, India and China, backed by central support and development functions. This means we sell locally to our global customers. The business fuses Concentric’s strengths as a pumps maker with longstanding expertise in hydraulic products. Our customers make trucks, construction equipment, agricultural machinery and general industrial applications.

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