Concentric loses business with a global OEM, but underlying business performing well
Concentric received a formal notice from a global OEM that will result in the loss of sales for Concentric in 2019 amounting to approximately 10% of projected sales in 2018, underlying EBIT margin expected to improve to 22% in 2018.
As previously communicated in the Q2-18 report, the global OEM has had a stated ambition of having a dual supply contract for all its sourced products. This has now resulted in Concentric losing the contract for supplying engine pumps on specific engine platforms, translating into a loss of sales in 2019 amounting to approximately 10% of projected sales in 2018. Concentric will continue to supply the global OEM and their joint venture associates with pumps to its Americas, India & China operations.
There will be one-off profits associated with end of contract pricing which will increase EBIT during the fourth quarter 2018. The underlying business is performing well and the operating margin, before these one-off profits is now expected to be 22% for the full year 2018.
David Woolley, CEO of Concentric comments:
“We are obviously disappointed with their decision but Concentric remains a key supplier to the global OEM and we continue to collaborate on new technology. We are convinced that our strategy of defending our value proposition of quality products, cost savings for fleet managers and reliable delivery will secure long-term value for both Concentric and our customers. We remain committed to continue to grow the business profitably, and are actively exploring both new customers to expand our engines business and potential acquisition targets.”
For additional information please contact Marcus Whitehouse, telephone +44-121-445 6545
Concentric AB is an innovator in flow control and fluid power, supplying proprietary systems and components to the world’s truck, agricultural machinery, construction equipment and industrial applications end-markets. The company has a global manufacturing presence including in the UK, USA, Germany, Sweden, India, China and Argentina. Concentric’s focus is to develop world class technology with innovative solutions that meet the sustainability needs of our customers. Concentric offers engine products including lubricant, coolant and fuel pumps, hydraulic products encompassing gear pumps and power packs, and finally several key technologies for the fast growing market for electrical and hybrid powertrains. The Group has a turnover of circa MSEK 2,100 and circa 1,000 employees.