CONCENTRIC INTERIM REPORT JANUARY – DECEMBER 2013

Q4 2013: Quarterly sales and order trend improved with strong dropthrough rate

• Sales for Q4: MSEK 503 (431) – up 11% year-on-year in constant currency, adjusting for acquisition of LICOS Trucktec GmbH (“Licos”)
• EBIT for Q4: MSEK 75 (32), 60% dropthrough from additional sales; Operating margin of 14.9% (7.5) (1) – underlying year-on-year improvement from 13.3% to 14.9% for Q4 (2)
• Net income for Q4: MSEK 46 (16) – EPS before & after dilution SEK 1.04 (0.37) (1)
• Net cash inflow for Q4: MSEK 65 (78)
• Group’s net debt at year-end: MSEK 391 (446), including net pension liabilities of MSEK 406 (547) – Gearing ratio of 50% (73) (1)

Full year 2013: Operating margins strengthen despite sales drop for the year

• Sales for full year: MSEK 1,980 (2,129) – down 7% year-on-year in constant currency, adjusting for acquisition of Licos
• EBIT for full year: MSEK 284 (281); Operating margin of 14.3% (13.2) (1) – underlying operating margin improvement of 0.4% for the full year (2)
• Net income for full year: MSEK 176 (171) – EPS before & after dilution SEK 4.00 (3.88) (1)
• Net cash outflow for full year: MSEK 87 (inflow 109) – includes dividend payout of MSEK 110 (88) and net consideration paid for Licos of MSEK 105
• Based on strong earnings and financial position, the Board of Directors intend to propose a total dividend of SEK 2.75 (2.50) per share and renew the current mandate for share buybacks

1)  The 2012 comparative figures for EBIT, Earnings before tax and Net income for the period have all been adjusted for the amendments to IAS 19, Employee benefits (see Appendix 1 for restated income statements). In addition, the 2012 comparative figures for net debt and equity have also been adjusted for the amendments to IAS 19, Employee benefits and the associated impact on deferred tax assets (see Appendix 3 for restated balance sheets).

2)  The underlying Q4 comparative figures for EBIT and EPS 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 10. The underlying full year comparative figures for EBIT and EPS have also been adjusted for restructuring costs associated with Skånes Fagerhult of MSEK 36 and for other one-off items affecting comparability amounting to a net income of MSEK 20.

President and CEO, David Woolley, comments on interim report for Q4 2013:
“Concentric delivered another strong performance for the fourth quarter with sales up 11% on the same quarter as last year, after adjusting for both the impact of Licos (+8%) and currency (-2%).  

The clear polarisation highlighted in our last interim report between our two main geographical markets persists. Sales in Europe continues to improve, with this being the fourth consecutive quarter of sequential growth. On the other hand, US demand remains fragile, down -1% year-on-year in constant currency for the fourth quarter. Whilst our sales experience appears contrary to the latest market indices, we are confident that we have maintained our relative competitive position in all our North American end-markets.

Our Concentric Business Excellence programme, and specifically our third-party customer and people surveys, continues to be the foundation for continuous improvement throughout our business. As a result, I am pleased to say that our EBIT margin for the fourth quarter was further improved to 14.9%.

Orders received during this quarter were ahead of sales, even after seasonally adjusting sales for the fewer working days in the fourth quarter, bringing the Group’s year-end order backlog to its highest level since the first quarter of 2012.

As we look forward into 2014, we believe the business is in very good shape to maximize the opportunities we see and continue to outperform the market. As there is increasing pressure to reduce fuel consumption in all forms of machinery and trucks, our development programmes with our customers for our variable flow pump technology will continue. We are in the process of localising production in Brazil and this will enable us to better serve our global customers and win new business both for our engine and hydraulic products.

Following the successful acquisition and integration of LICOS Trucktec GmbH, we will continue to look at further acquisition opportunities to improve our competitive position. In short, Concentric is well positioned, financially and operationally to fully leverage the opportunities for 2014.”

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

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