CONCENTRIC INTERIM REPORT JANUARY – DECEMBER 2015

Full year 2015: Solid results and strong cash flow

• Net sales for the full year, excluding Alfdex: MSEK 2,306 (2,078) – down 8% year-on-year, after adjusting for currency (+15%) and acquisition of GKN Pumps (+4%)
• Operating income for the full year: MSEK  381 (333), including income of MSEK 13 (nil) arising from negative goodwill and one-off expenses of MSEK 14, both associated with the acquisition of GKN Pumps. Underlying operating margin of 16.6% (16.0)
• Earnings after tax for the full year: MSEK 271 (241) – basic EPS of SEK 6.45 (5.54)
• Strong cash flow from operating activities for the full year: MSEK 366 (340), supported own share buy backs in the year of MSEK 142 (148)
• Group’s net debt at year-end: MSEK 488 (528) – gearing ratio of 57% (65)
• Based on the Group’s strong earnings and financial position, the Board of Directors intend to propose a total dividend of SEK 3.25 (3.00) per share and to renew the current mandate for share buybacks

Fourth quarter of 2015: Operations successfully flexed to match lower market demand   

• Net sales for Q4, excluding Alfdex: MSEK 504 (535) – down 16% year-on-year, after adjusting for currency (+6%) and acquisition of GKN Pumps (+4%)
• Operating income for Q4: MSEK  83 (86), including expenses of MSEK 2 (nil) arising from fair value adjustments reducing the negative goodwill arising from the acquisition of GKN Pumps. Underlying operating margin of 16.9% (16.1)
• Earnings after tax for Q4: MSEK 54 (64) – basic EPS of SEK 1.32 (1.49)
• Strong cash flow from operating activities for Q4: MSEK 127 (97), supported own share buybacks in the quarter of MSEK 50 (50)

President and CEO, David Woolley, comments on Q4 and FY 2015 interim report:

“The group’s full year performance has benefitted from significant translational currency gains derived from the relative weakness of the Swedish Krona and our ability to adapt to lower demand. The on-highway sector has been our strongest end-market, with the Class 8 heavy-duty truck cycle reaching its peak in the US towards the end of the year. The European truck market has also shown steady improvement during the year. Conversely, our off-highway sectors have been relatively weak throughout most of 2015, which has been further affected by dealers having to de-stock inventory. This softening in demand has particularly affected sales of our hydraulic product range and, as a result, the sales for the fourth quarter and full year were down year-on-year by 16% and 8% respectively, excluding the impact of currency and the acquisition of GKN Pumps.

Concentric Business Excellence has been key in our ability to adapt operations to lower demand and thereby defend our margins. All parts of the business are subject to this programme, including customer service, employee motivation and operational excellence. The successful implementation of this model has continued to strengthen the consolidated results, ensuring that the underlying EBIT margin for the fourth quarter and the full year actually improved year-on-year to 16.9% and 16.6% respectively, in spite of the market headwinds.

Looking forward, the orders received, and expected to be fulfilled during the first quarter of 2016, were broadly in line with the sales levels of the fourth quarter of 2015, taking into account the fewer working days in the fourth quarter. Furthermore, we expect that the European market will continue on its positive trend next quarter whereas North and South America will remain challenging for both on- and off-highway sectors. 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

Concentric AB (publ) is listed on NASDAQ OMX Stockholm, Mid Cap. The information in this report is of the type that Concentric is required to disclose under the Swedish Securities Market Act. The information was submitted for publication at 8.00am on 10 February, 2016.  

This report contains forward-looking information in the form of statements concerning the outlook for Concentric’s operations. This information is based on the current expectations of Concentric’s management, as well as estimates and forecasts. The actual future outcome could vary significantly compared with the information provided in this report, which is forward-looking, due to such considerations as changed conditions concerning the economy, market and competition.

Tags: