CONCENTRIC INTERIM REPORT JANUARY – MARCH 2016

First quarter of 2016:

• Net sales: MSEK 518 (623) – down 15% y-o-y, after adjusting for currency (-2%)
• Operating income: MSEK 85 (117), generating an operating margin of 16.5% (18.8) – comparative for Q1 2015 includes negative goodwill of MSEK 15 recognised on acquisition of GKN Pumps
• Earnings after tax: MSEK 60 (89); basic EPS of SEK 1.46 (2.10)
• Solid cash flow generated from operating activities: MSEK 64 (63)
• Group’s net debt: MSEK 513 (630); gearing ratio of 63% (84)

President and CEO, David Woolley, comments on Q1 2016 interim report:

The group’s sales for the first quarter were down year-on-year by 15% in constant currency. The primary reason for the lower sales year-on-year was the lower US volumes in the Class 8 heavy duty truck market, down by over 30% in the quarter, following a peak in the replacement cycle during the second half of 2015 and a subsequent correction of inventory levels. Conversely, the European truck market has continued to show steady growth. Off-highway sectors in both North America and Europe have remained soft as a result of low commodity prices and dealers having to de-stock inventory.

Concentric Business Excellence (“CBE”) has been key in our ability to adapt operations to lower demand and thereby defend our margins. All parts of the business participate in this programme, driving continuous improvement in customer service levels, employee motivation and operational excellence. The successful implementation of this model has continued to strengthen the consolidated results, ensuring that the underlying EBIT margin for the first quarter improved slightly to 16.5%, in spite of the continuing market headwinds.

Outlook

Looking forward, the orders received, and expected to be fulfilled during the second quarter of 2016, were in line with the sales levels of the first quarter of 2016. We expect that the positive demand trend for European medium and heavy duty trucks will continue but that North and South America will remain challenging for both on- and off-highway sectors. Market indices suggest that production volumes will improve across all end sectors during the second half of 2016. 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

Concentric AB (publ) is listed on NASDAQ OMX Stockholm, Mid Cap. The information in this report is of the type that Concentric is required to disclose under the Swedish Securities Market Act. The information was submitted for publication at 8.00am on 26 April, 2016.  

This report contains forward-looking information in the form of statements concerning the outlook for Concentric’s operations. This information is based on the current expectations of Concentric’s management, as well as estimates and forecasts. The actual future outcome could vary significantly compared with the information provided in this report, which is forward-looking, due to such considerations as changed conditions concerning the economy, market and competition.