SinterCast Results April-June 2013
Record automotive engine volume achieved during the quarter
Positive outlook for further installations
Second Quarter 2013
* Revenue for Period: SEK 11.8 million (SEK 11.3 million)
* Operating Result: SEK 1.4 million (SEK 0.0 million)
* Earnings per Share: SEK 0.2 per share (SEK 0.0 per share)
* Cashflow from Operations: SEK 5.3 million (SEK 0.3 million)
* Halberg, Germany, commissions second System 3000 for increased commercial
vehicle production
* Tupy, Brazil, orders automated base treatment installation to improve
process efficiency
* Two new European commercial vehicle programmes start series production in
second quarter
* First high-volume petrol engine remains on schedule for start of series
production before year-end
2013 Year-to-Date
* Revenue: SEK 23.5 million (SEK 23.0 million)
* Operating Result: SEK 2.9 million (SEK 1.3 million)
* Earnings per Share: SEK 0.5 per share (SEK 0.3 per share)
* Cashflow from Operations: SEK 5.5 million (SEK 0.0 million)
* Installed Base: 21 fully automated systems and 15 mini-systems in Europe,
Asia and the Americas
Series Production*
See PDF for graph
With increasing contributions from all automotive engine sectors, including the
start of production of two new European commercial vehicle cylinder blocks,
SinterCast posted record series production of 1.65 million Engine Equivalents in
the second quarter.
* Annualised average production of Engine Equivalents during the quarter (1
Engine Equivalent = 50 kg)
CEO Comments
Series production continues to increase
Following an 8% recovery to 1.30 million Engine Equivalents in the first
quarter, annualised series production increased by a further 27% in the second
quarter to reach 1.65 million Engine Equivalents. The second quarter production
represents a new record, surpassing the previous record of 1.60 million Engine
Equivalents set in the first quarter of 2012. The increased production was a
result of continued strong performance in the passenger vehicle V-diesel sector;
increased commercial vehicle production in Europe and America, including the
start of production of two new European heavy duty cylinder blocks; and,
contributions from the pre-production of the first high volume CGI petrol
engine, which remains on schedule for the start of series production during the
second half of the year.
In advance of the start of US sales of the Ram 1500 light duty pick-up during
the fourth quarter, production of the VM Motori 3.0 litre V6 diesel engine
continued to increase during the quarter. Chrysler has publicly indicated a
competitive pricing strategy for the Ram diesel option, in order to establish a
diesel foothold before competitive offerings are introduced. In parallel, VM
Motori has publicly announced the potential demand for 135,000 engines
(approximately 200,000 Engine Equivalents) within two years. Chrysler's diesel
initiative, augmented by attractive pricing, continues to increase the
competitive pressure in the important US light duty pick up sector and enhances
the overall growth opportunity for SinterCast.
Positive installation outlook
New installation discussions are at an advanced stage with foundries in Asia and
the Americas, providing a positive outlook for new installations. During May,
the Halberg foundry in Germany announced its second System 3000 installation in
order to accommodate increased heavy duty commercial vehicle production. The
installation was successfully commissioned in early August and is being used to
support production of two commercial vehicle cylinder blocks and the ongoing
product development of commercial vehicle cylinder blocks and heads.
Installation revenue was also derived from the sale of an automated base
treatment station to the Tupy foundry in Brazil in order to upgrade the existing
System 3000 to a System 3000 Plus. Commissioning is scheduled for September.
The Halberg installation and the Tupy upgrade follow a System 3000 installation
at the Scania foundry in February and the sale of a Mini-System 3000 to the
University of Alabama in April. These installation activities, together with
ongoing discussions for additional installations, provide the opportunity for a
third consecutive year of record installation performance.
SinterCast continues to support product development programmes for passenger
vehicle, commercial vehicle and industrial power applications in Europe, Asia
and the Americas. It is estimated that the combined potential of the current
series production programmes and the programmes currently under development
represents a market opportunity of approximately 4.65 million Engine Equivalents
per year within SinterCast's five year planning horizon.
Ductile iron technology
The ductile iron technology was presented at the Ductile Iron Society annual
meeting in the United States in June. SinterCast's innovative approach to
thermal analysis and process control was well received and discussions are
ongoing with various companies that have expressed interest to serve as
reference partners. As a result of the technical development, two new patent
applications were filed during July. The ductile iron technology is expected to
provide a cost-benefit by reducing magnesium consumption, improving mould yield
and reducing casting defects in the foundry, and by improving machinability.
Financial Summary
Revenue
The revenue for the SinterCast Group relates primarily to income from equipment,
series production and engineering service.
Revenue Breakdown April-June January-June
(Amounts in SEK million if not 2013 2012 2013 2012
otherwise stated)
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Number of Sampling Cups shipped 33,200 32,000 62,100 68,800
Equipment (1) 0.4 0.1 2.7 0.4
Series Production (2) 10.7 10.9 19.7 22.1
Engineering Service( 3) 0.6 0.2 0.9 0.4
Other 0.1 0.1 0.2 0.1
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Total 11.8 11.3 23.5 23.0
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Notes: 1. Includes revenue from system sales and leases and sales of
spare parts
2. Includes revenue from production fees, consumables and
software licence fees
3. Includes revenue from technical support, on-site trials and
sales of test pieces
The April-June 2013 revenue amounted to SEK 11.8 million (SEK 11.3 million).
Equipment revenue amounted to SEK 0.4 million (SEK 0.1 million), primarily
related to the Mini-System 3000 that was shipped to the University of Alabama
(UAB) during the period. Engineering Service amounted to SEK 0.6 million (SEK
0.2 million) following the installation support provided at Tupy Saltillo,
Mexico and Teksid Mexico. Series Production revenue decreased slightly to SEK
10.7 million (SEK 10.9 million), primarily due to changed product and price mix
and the increased value of the Swedish Krona compared to the US dollar and the
Euro.
The January-June 2013 revenue amounted to SEK 23.5 million (SEK 23.0 million).
Equipment revenue amounted to SEK 2.7 million (SEK 0.4 million), related to the
UAB Mini-System 3000 and to the System 3000 installation at the Scania foundry
during February. The revenue from the leased installations is accrued over the
lease period. The revenue from series production decreased primarily due to 2%
lower production volume, lower Sampling Cup shipments, and the increased value
of the Swedish Krona.
Results
The business activities of SinterCast are best reflected by the Operating
Result. This is because the "Result for the period after tax" and the "Earnings
per Share" are influenced by the financial income and costs and by the
revaluation of tax assets.
Results Summary April-June January-June
(Amounts in SEK million if not otherwise stated) 2013 2012 2013 2012
-------------------------------------------------------------------------
Operating Result 1.4 0.0 2.9 1.3
Result for the period after tax 1.2 0.1 3.6 1.8
Earnings per Share (SEK) 0.2 0.0 0.5 0.3
-------------------------------------------------------------------------
The April-June 2013 Operating Result of SEK 1.4 million (SEK 0.0 million)
increased as a result of higher gross results of SEK 0.3 million derived from
higher revenue, lower operational expenses of SEK 0.9 million and higher
exchange gains from operating receivables and liabilities of SEK 0.2 million.
Exchange gains, reported as other operating income, arise primarily when
payments in foreign currency for outstanding invoices arrive at a more
favourable exchange rate than the exchange rate prevailing on the date of the
issuing of the invoice and also arise when foreign bank holdings are
recalculated to Swedish Krona at the end of each accounting period.
The Result for the period after tax amounted to SEK 1.2 million (SEK 0.1
million), primarily related to the increased Operating Result of SEK 1.4 million
(SEK 0.0 million) and a decrease of SEK 0.3 million in the financial net
compared to last year.
The January-June 2013 Operating Result of SEK 2.9 million (SEK 1.3 million),
increased as a result of higher gross results of SEK 0.6 million derived from
higher revenue and decreased costs for engineering and production, lower
operational expenses of SEK 0.8 million and exchange gains of SEK 0.2 million.
The Result for the period after tax amounted to SEK 3.6 million (SEK 1.8
million), primarily related to the increased Operating Result, a SEK 0.6 million
decrease in the financial net compared to the previous year, and an SEK 0.8
million deferred tax adjustment.
Deferred Tax Asset
Tax amounted to SEK 0.6 million (SEK -0.2 million) during the January-June 2013
period, of which SEK 0.8 million is explained by the increase of the deferred
tax asset that was made during the first quarter 2013.
The estimated future taxable profit and deferred tax asset calculation is
reassessed every quarter. As of 30 June 2013, SEK 128.5 million (SEK 125.1
million) of SinterCast's total carried-forward tax losses have been used as the
basis of the updated calculation, resulting in SEK 28.3 million (SEK 32.9
million) being capitalised as a deferred tax asset. The deferred tax asset
compared to last year is primarily explained by the reduction during the fourth
quarter 2012 amounting to SEK -5.4 million due to the change in the Swedish
corporate tax rate from 26.3% to 22%. The deferred tax asset is included in the
financial assets in the balance sheet.
Cashflow, Liquidity and Investments
Cashflow Summary April-June January-June
(Amounts in SEK million if not otherwise stated) 2013 2012 2013 2012
-------------------------------------------------------------------------
Cashflow from operations 5.3 0.3 5.5 0.0
Cashflow from investment activities -0.3 -0.1 -0.3 -0.2
Cashflow from financing activities (dividend) -7.0 -11.9 -7.0 -11.9
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Cashflow total -2.0 -11.7 -1.8 -12.1
Liquidity 33.6 35.5 33.6 35.5
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The April-June 2013 cashflow from operations was SEK 5.3 million (SEK 0.3
million). The increased cashflow was primarily due to installation payments
received from Tupy Saltillo, Teksid and Scania. During the period, a dividend in
the amount of SEK 7.0 million (SEK 11.9 million) was paid to the shareholders,
resulting in a total cashflow result of SEK -2.0 million.
The January-June 2013 cashflow from operations was SEK 5.5 million (SEK 0.0
million). The increased cashflow was due to the aforementioned installations and
lower operational expenses compared to the same period last year. Following the
dividend of SEK 7.0 million (SEK 11.9 million), the total cashflow result for
the period was SEK -1.8 million (SEK -12.1 million), resulting in SEK 33.6
million (SEK 35.5 million) in liquidity on 30 June 2013. Investments amounted to
SEK 0.3 million (SEK 0.2 million) during the period.
Employee Stock Option Program
As of 30 June 2013, the total cost of the employee stock option program
2009-2013 was calculated to be SEK 2.9 million (SEK 3.1 million), based on a
closing share price of SEK 51.5 (SEK 52.0). Thus far during 2013, SEK 0.1
million (SEK 0.3 million) has been accounted for as costs related to the option
program.
Risks and Uncertainty Factors
The main uncertainty factor for SinterCast continues to be the timing of the CGI
market ramp-up. This primarily depends on OEM decisions for new CGI products,
the global economy for new vehicle sales, and the individual sales success of
vehicles equipped with SinterCast-CGI components. The European and Asian
economies continue to be uncertain and this may impact passenger vehicle and
commercial vehicle sales. SinterCast's diversification between V-diesel engines
for passenger vehicles, commercial vehicle engine components, and other
applications such as exhaust components and industrial power engines, combined
with its presence in Europe, Asia and the Americas, reduces the dependence on
individual product applications and geographical regions.
SinterCast enjoys global brand recognition and respect as the CGI technology
leader and is welcomed by the industry as a reliable and trustworthy partner.
However, virtually every company encounters competition, and SinterCast is no
exception. SinterCast judges that its technology and engineering know-how
provides the most reliable and cost-effective solution for series production of
high quality CGI.
New powertrain technologies, such as vehicle electrification (hybrid and plug-in
vehicles) and fuel cells attract significant media attention; however, the
development and implementation of these technologies remain a long-term prospect
and SinterCast does not expect these technologies to have a significant effect
on the Company's competitive position for the foreseeable future.
For full risk and uncertainty factor information, please see note 26 on p.42 in
SinterCast's Annual Report 2012
Organisation
With successful high volume CGI production in foundries located in Europe, Asia
and the Americas, SinterCast has established a global organisation with
employees and offices in Sweden, the United Kingdom, the United States, China
and Korea. As of 30 June 2013, the Group had 18 (20) employees, three (three) of
whom were female. The Company is well positioned to support global market
activities and to drive SinterCast's future growth.
Parent Company
SinterCast AB (publ) is the Parent Company of the SinterCast Group, with its
registered office located in Stockholm, Sweden. The Parent Company has 12 (17)
employees, due in part to reassignment of the Chinese employees to the local
company. The majority of the operations are managed by the Parent Company while
local operations in the UK, USA, Korea and China are managed by the local
companies. As a result of SinterCast's increased presence in Asia, the
representation agreements in Australia, India and Japan were terminated during
the period, although the former representatives remain available to assist on an
ad hoc basis upon request. The information given for the Group in this report
corresponds in all material respects to the Parent Company.
Accounting Principles
The information provided on behalf of the Group in this interim report has been
prepared in accordance with Sweden's Annual Accounts Act and IAS 34 Interim
Financial Reporting. The reporting for the Parent Company has been prepared in
accordance with Sweden's Annual Accounts Act and RFR 2. Except for the change,
described in the first quarter report 2013, of the amendment in IAS 1
(Presentation of Financial Statements), the accounting policies that have been
applied for the Group and the Parent Company are in agreement with the
accounting policies used in preparation of the Company's latest annual report.
No material transactions have taken place between SinterCast and the Board or
the Management during the period.
Events after the Balance Sheet Date
There have been no significant events since the balance sheet date of 30 June
2013 that could materially change these financial statements. The following
press release has been issued:
10 July 2013 - SinterCast posts record series production in second quarter
Information
The Interim Report July-September 2013 will be published on 6 November 2013
The Interim Report October-December and Full Year Results 2013 will be published
on 26 February 2014
The Interim Report January-March 2014 will be published on 23 April 2014
The Interim Report April-June 2014 will be published on 20 August 2014
This report has not been reviewed by the Company's Auditors.
The Board of Directors and the CEO certify that the half-yearly financial report
provides a true and fair overview of the operations, outlook, financial position
and results of the Company and the Group, and describes the material risks and
uncertainties that the Company and the companies in the Group face.
Stockholm 21 August 2013
Ulla-Britt Fräjdin-Hellqvist Aage Figenschou Robert
Dover
Chairman of the Board Vice Chairman of the Board Member of the
Board
Laurence Vine-Chatterton Hans-Erik Andersson Steve Dawson
Member of the Board Member of the Board President
& CEO
Member of the Board
For further information please contact:
Dr. Steve Dawson
President & CEO
SinterCast AB (publ)
Office: +46 8 660 7750
Mobile: +44 771 002 6342
e-mail: steve.dawson@sintercast.com
website: www.sintercast.com
SinterCast is the world's leading supplier of process control technology for the
reliable high volume production of Compacted Graphite Iron (CGI). With at least
75% higher tensile strength, 45% higher stiffness and approximately double the
fatigue strength of conventional grey cast iron and aluminium, CGI allows engine
designers to improve performance, fuel economy and durability while reducing
engine weight, noise and emissions. The SinterCast technology is used for the
production of more than 50 CGI components, ranging from 2 kg to 17 tonnes, all
using the same proven process control technology. The end-users of SinterCast-
CGI components include Allen Diesels, Aston Martin, Audi, Cameron Compression,
Caterpillar, Chrysler, DAF Trucks, Ford, Ford-Otosan, General Electric
Transportation Systems, General Motors, Hyundai, Jaguar, Jeep, Kia, Lancia, Land
Rover, MAN, Maserati, Navistar, Porsche, PSA Peugeot-Citroën, Renault, Scania,
Toyota, VM Motori, Volkswagen, Volvo and Waukesha Engine. The SinterCast share
is quoted on the Small Cap segment of the NASDAQ OMX stock exchange
(Stockholmsbörsen: SINT). For more information: www.sintercast.com
END
