CONCENTRIC INTERIM REPORT JANUARY – JUNE 2012
First six months of 2012: Concentric continues to grow ahead of the market
- Year on year sales growth of 8% to MSEK 1,206 (1,113) during the first six months of 2012 (4% in constant currency). The Group’s average sales per working day in the first six months of 2012 was MSEK 9.5 (8.9).
- EBIT for the first six months of 2012 was MSEK 161 (118), up 37% year on year, increasing the operating margin to 13.4% (10.6). Adjusting for pension charges and one-time de-merger costs, the underlying EBIT and EBIT margin was MSEK 173 (142) and 14.4% (12.7) respectively.
- Earnings after tax were MSEK 98 (64) - EPS of SEK 2.23 (1.44). Adjusting for post-tax impact of pension charges and one-time de-merger costs, the underlying EPS was SEK 2.41 (1.83).
- Cash flow from operating activities was strong in the first six months of 2012, amounting to MSEK 129 (67), which represents SEK 2.92 (1.52) per share.
- The Group’s net debt was MSEK 119 (269) at 30 June 2012, representing a reduction of MSEK 83 for the six months, derived primarily from operating cash flows, before taking account of the dividend payout of MSEK 88 (nil). Accordingly, the gearing ratio (debt/equity) was 13% (36).
President and CEO, David Woolley, comments on the interim report for the first six months of 2012:
“Concentric’s strong performance in the first quarter of 2012 was sustained in the second quarter of 2012, despite there being, on average, three less working days for the Group’s production facilities. Looking at the first six months of 2012, we have achieved year on year sales growth of 4% in constant currency, which remains above the 2% blended market growth rate.
Group sales for the second quarter were flat year on year, in constant currency, with growth in our North American regional operations offset by the decline in our European operations, driven by a softening in the construction equipment and medium/heavy truck markets.
This strong performance continues to be achieved without compromising our working capital and cost disciplines, resulting in both strong cash flow and margins. Adjusting for pension costs, Concentric recorded an underlying EBIT margin of 14.3% for the second quarter of 2012 and a cash flow from operating activities increased to 53 million.
Looking forward, orders received during the second quarter of 2012 indicate that the activity levels will be slightly lower in the third quarter of 2012. Despite the slight weakening in demand and economic confidence experienced in North America during the second quarter of 2012, we anticipate that the trend of stronger demand in the US compared to Europe will continue. The latest market indices indicate a market growth rate for the full year 2012 of 3%, applying our mix of sales by end-market and customer location. However, we also note this looks optimistic given that movements in the market indices tend to lag our order intake experience by 3-6 months. Our ambition remains for Concentric to grow faster than the market. We continue to firmly believe that our geographical spread and four distinct end-customer segments, together with the flexibility we have in our operations through our Business Excellence program, make Concentric very well positioned to tackle the challenges of the second half of 2012.
We continue to see great opportunities for long-term growth by providing value to our customers through our leading technology addressing the key drivers in our market niches, such as the forthcoming changes in emissions legislation and increased focus on reducing fuel consumption.”
Key business events – first six months of 2012:
- Alfdex, a 50/50 joint venture between Alfa Laval and Concentric, signed an exclusive supplier agreement with one of the world’s largest producer of heavy trucks. The agreement to supply Alfdex Oil Mist Separators is valid until 2017, with a total estimated sales during the contract period for the joint venture of at least SEK 500 million.
- During the first quarter of 2012, the group has invested in four new test stations for coolant pumps at its research and development facility based in Birmingham, UK to support the ongoing development of the next generation of engine products. The new test stations will enable accurate performance evaluation of engine coolant pumps, by measuring their flow, pressure, power consumption and cavitation performance.
- In addition, as part of its ongoing investment program, Concentric also unveiled a new automated facility at its production facility based in Birmingham, UK to assemble and test oil pumps for the new Perkins Tier 4 engine.
- Alfdex AB celebrated the production of its 1,000,000th separator on 3 July, 2012. Sales of Alfdex product for the first six months of 2012 were up 36% year on year.
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
E-mail: info@concentricab.com
Corporate Registration Number 556828-4995