CONCENTRIC INTERIM REPORT JANUARY – SEPTEMBER 2012
First nine months of 2012: Continued profit and cash improvements on flat sales
- Year on year sales flat at MSEK 1,698 (1,706) for first nine months of 2012 (down -4% in constant currency). The Group’s average sales per working day in the first nine months of 2012 was MSEK 9.0 (8.9).
- EBIT for the first nine months of 2012 was MSEK 227 (201), up 13% year on year, increasing the operating margin to 13.4% (11.8). Adjusting for ‘one-off’ items affecting comparability, the underlying EBIT and EBIT margin was MSEK 236 (225) and 13.9% (13.2) respectively.
- Earnings after tax were MSEK 143 (116) - EPS of SEK 3.24 (2.63). Adjusting for post-tax impact of ‘one-off’ items affecting comparability, the underlying EPS was SEK 3.36 (3.02).
- Cash flow from operating activities was strong in the first nine months of 2012, amounting to MSEK 190 (122), which represents SEK 4.30 (2.76) per share.
- The Group’s net debt was MSEK 78 (220) at 30 September 2012, representing a reduction of MSEK 124 for the nine months, derived primarily from operating cash flows, before taking account of the dividend payout of MSEK 88 (nil) and buy-back of own shares of MSEK 12 (nil). Accordingly, the gearing ratio (debt/equity) was 8% (25).
Third quarter of 2012: Strong management of costs and cash, despite fall in volumes
- Year on year sales fell significantly by -17% to MSEK 492 (593) during the third quarter of 2012 (down -18% in constant currency). The Group’s average sales per working day in the third quarter of 2012 was MSEK 7.9 (9.4). The sharp decline in demand was experienced across both regions driven primarily by customer de-stocking.
- EBIT for the third quarter of 2012 was MSEK 66 (83), down 20% year on year, taking the EBIT margin to 13.4% (14.1). Adjusting for ‘one-off’ items affecting comparability, the underlying EBIT and EBIT margin was MSEK 63 (83) and 12.8% (14.1) respectively.
- Earnings after tax were MSEK 45 (52) - EPS of SEK 1.01 (1.19). Adjusting for post-tax impact of ‘one-off’ items affecting comparability, the underlying EPS was SEK 0.95 (1.19).
- Cash flow from operating activities was also strong in the third quarter of 2012, amounting to MSEK 61 (55), which represents SEK 1.39 (1.24) per share.
President and CEO, David Woolley, comments on the interim report for the first nine months of 2012:
“Global trading conditions in our end-markets became more difficult through the third quarter, with the US end-markets also slowing down. The economic ‘head wind’ reported in the second quarter persisted and was compounded by de-stocking of product by the original equipment manufacturers. The reduction in demand, amplified in the supply chain by customer de-stocking, has adversely affected Concentric’s sales in a similar manner to that experienced during the 2008/09 recession, although not as severe. As a result, year-on-year sales were down -18% in constant currency for the third quarter.
Concentric has responded to this sharp decline in demand by rapidly and decisively taking action to flex the business accordingly. Operating margins were maintained at 13.4%, generating a cash inflow from operations of MSEK 61 and reducing the gearing (debt/equity) ratio to 8% for the third quarter. This resilience in the Group’s performance has been achieved through effective cost management and tight control of capital as activity levels have dropped, supported by the Concentric Business Excellence programme.
Looking forward, the orders received during the third quarter of 2012 were slightly below sales, indicating that activity levels will be slightly lower in the fourth quarter because of a combination of lower demand and de-stocking.
It is apparent from the latest market indices that current customer order trends have not yet been reflected in the full year forecasts for 2012. However, the announcement today of two new multi-year supply contracts on Euro 6 / US EPA 13 engine launches for global truck manufacturers reaffirms our ambition to outperform the underlying market trend and we continue to see further opportunities for growth from our leading technology addressed at the key market drivers, such as emissions legislation and reduced fuel consumption.”
For further information, please contact:
David Woolley (President and CEO), David Bessant (CFO), or Lena Olofsdotter (SVP Corporate Communications), at
Tel: +44 121 445 6545