CONCENTRIC INTERIM REPORT JANUARY – MARCH 2017

FIRST QUARTER

  • Net sales: MSEK 546 (518) – up 4% y-o-y, after adjusting for currency (+1%).
  • Operating income: MSEK 100 (85), generating an operating margin of 18.3% (16.5).
  • Earnings after tax: MSEK 74 (60); basic EPS of SEK 1.83 (1.46).
  • Solid cash flow generated from operating activities: MSEK 78 (64) driven by management of working capital.
  • Group’s net debt: MSEK 224 (513); gearing ratio of 29% (63).

President and CEO, David Woolley, comments on Q1 2017 interim report.

Sales development
Group sales for the first quarter were up year-on-year by 4% in constant currency, slightly ahead of the published market indices. The increase in activity largely reflected the steady improvement experienced across all European end-markets. Overall, US end-markets remained broadly flat, as sales of hydraulic products for construction equipment returned to year-on-year growth for the first time in the last six quarters. The disposition of our larger customers was certainly more positive in the first quarter of 2017 compared to the second half of 2016. However, as distribution channels continue to be refilled, the level of end-customer demand remains a little unclear.

Operating leverage
The restructuring plans we initiated and executed during the second half of 2016 have delivered the expected cost savings during the first quarter of 2017. The Concentric Business Excellence programme (“CBE”) has continued to support further improvements to the group’s operating leverage, such that the EBIT margin for the first quarter increased to 18.3% (16.5).

Technology
We recently 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 recent technology wins:

  • Successful roll-out of the LICOS clutch technology on twospeed 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;
  • Contract awarded from a global OEM of material telehandlers, boom and vertical lifts to produce low noise, compact hydraulic power units (HPUs) for their next generation of material handling equipment, with production Already underway in the first quarter of 2017. 

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 second quarter of 2017, were slightly ahead of the sales levels of the first quarter of 2017. We expect that the positive demand trend for all European end-markets will continue. Market indices suggest that production volumes blended to Concentric’s end-markets and regions will be up 2% year-onyear for 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 3 May, 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.