CONCENTRIC INTERIM REPORT JANUARY – DECEMBER 2012

Full year 2012: Underlying performance improvements despite second half slowdown

• Sales for the full year were down to MSEK 2,129 (2,283) as reduced demand was experienced across most of the Group’s end-markets and regions during the second half of 2012, including a de-stocking effect from Concentric’s customers.
• EBIT for the full year was MSEK 253 (281), after charging MSEK 36 (nil) of restructuring costs. The underlying EBIT and EBIT margin was MSEK 293 (305) and 13.7% (13.4) respectively. 1)
• Earnings after tax were MSEK 155 (176), which equates to an EPS before and after dilution of SEK 3.51 (3.98). The underlying EPS was SEK 4.17 (4.38). 1)
• Cash flow from operating activities was strong for the full year, amounting to MSEK 298 (227), which represents SEK 6.76 (5.13) per share, which reduced the Group’s net debt to MSEK nil (114).
• Due to the Group’s strong earnings and financial position, the Board of Directors intend to propose a dividend of SEK 2.50 (2.00) per share and that the current mandate for share buybacks is renewed.

Fourth quarter of 2012: Strong management of costs and cash on lower volumes

• Sales for the fourth quarter were down to MSEK 431 (577), as demand across most end-markets and regions remained weak, with continued customer de-stocking.
• EBIT for the fourth quarter was MSEK 26 (80), after charging MSEK 36 (nil) of restructuring costs. The underlying EBIT was MSEK 57 (80). 2)
• Earnings after tax were MSEK 12 (60) which equates to an EPS before and after dilution of SEK 0.27 (1.35). The underlying EPS was SEK 0.81 (1.35). 2)
• Cash flow from operating activities was strong, amounting to MSEK 108 (105), which represents SEK 2.46 (2.37) per share.

1)     The underlying EBIT and EPS for the year have been adjusted for restructuring costs associated with Skanes Fagerhult of MSEK 36 and for other one-off items affecting comparability amounting to a net cost of MSEK 4.
2)     The underlying EBIT and EPS for the fourth quarter have been adjusted for restructuring costs associated with Skanes Fagerhult of MSEK 36 and for other one-off items affecting comparability amounting to a net income of MSEK -5.       

President and CEO, David Woolley, comments on interim report for full year 2012:
“The global slowdown experienced across all our end-markets during the third quarter has persisted throughout the fourth quarter, characterised by extended customer shutdowns and further de-stocking from the major OEMs. As a result, sales were down -23% year-on-year in constant currency for the fourth quarter.

Concentric has continued to respond to shortfall in demand by taking the necessary actions to flex the business accordingly. As a result, operating margins have largely been maintained at 13.1%, before items affecting comparability, generating a cash inflow from operations of MSEK 108 and reducing the net debt to nil for the fourth quarter. Margins were put under pressure in Europe & RoW during the quarter, whereas margins in Americas improved year-on-year. This continued strong 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 fourth quarter of 2012 were slightly above sales, indicating that end-customer demand seems to have stabilised, with no further significant destocking anticipated from the major OEMs.

It is apparent from the latest market indices that the actual sales trends experienced during the second half of the year have not yet been fully reflected in the engine and equipment production levels being quoted for 2012. Our ambition remains to outperform the market through organic growth from our leading technology addressed at the key market drivers, such as tougher emissions legislation and increased demand for fuel efficient solutions.”

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

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