SinterCast Results January-March 2009
* Revenue for period: SEK 4.0 million (SEK 5.4 million)
* Operating Result: SEK -2.7 million (SEK -2.2 million)
* Earning/share: SEK -2.5 per share (SEK 3.4 per share)
* Cashflow: SEK 0.4 million (SEK -3.1 million), including bank loan
of SEK 3.0 million
Increased field activities, with ongoing trials in Europe, Asia and
the Americas
provide opportunities for new foundry installations during 2009
Current Production and Outlook
The global economic crisis had a significant influence on series
production activities during the first quarter of 2009. All of
SinterCast's foundry customers observed extended Christmas and/or New
Year shutdowns to align production volume with demand, while many
automotive end-users preferentially consumed product from stock
rather than issuing new production orders. The combined effect of
these two factors resulted in a 35% reduction in annualised series
production volume from December 2008 (625,000 Engine Equivalents) to
March 2009 (400,000 Engine Equivalents). Although the volume of the
existing series production programmes has decreased in line with the
overall market decline, the Company does anticipate the launch of new
SinterCast-CGI series production programmes during 2009, including
the start of series production in the North American V-diesel
sector. These new programmes will provide incremental volumes,
contributing to the overall recovery.
Despite the economic downturn, the fourth quarter of 2008 and the
first quarter of 2009 have been the busiest periods in SinterCast's
history for new field trials. Foundry production trials were
successfully conducted in Europe, Asia and North America during the
first quarter, both in the core cylinder block and head sector and
for other automotive and non-automotive applications. These trials
provide opportunities for new installations and represent a primary
focus for the Company during 2009. New foundry installations provide
near-term revenue to reinforce the liquidity and contribute to the
overall growth by providing new series production sites and product
applications.
SinterCast's five year outlook has been updated to reflect the
changes in the market resulting from the global economic crisis.
Specifically, the annualised Current Series Production has been
reduced from 625,000 Engine Equivalents, reported in the 31 December
2008 compilation, to 400,000 Engine Equivalents, as discussed above.
However, the Potential Mature Volume of these programmes has only
been decreased by 10%, from 1.1 million Engine Equivalents (31
December 2008) to 1.0 million Engine Equivalents. This lesser
reduction reflects the anticipated recovery of the market during the
five year horizon of the outlook.
The most significant reduction in the five year outlook is in the
volume of Production Orders Secured. During the period, some North
American OEMs announced indefinite delays in some of the V-diesel
programmes that had previously been approved for series production,
and were destined to use SinterCast-CGI cylinder blocks. Although
these programmes had not yet been specifically announced by
SinterCast, they were approved by the OEMs and therefore included in
SinterCast's secured order base. As a rule, when a new engine
programme has been "approved" by an OEM, the programme has passed the
point-of-no-return, and will proceed to series production. However,
the current exceptional market conditions have resulted in the
indefinite delay of some approved programmes, and the volume of
Production Orders Secured has been revised accordingly from 1.0
million Engine Equivalents (31 December 2008) to the current value of
500,000 Engine Equivalents.
As it is considered that the market will experience recovery during
the five year horizon of the outlook, the Development Pipeline
volumes have not been significantly affected by the current economic
downturn. In total, the near-term market opportunity, as summarised
in the following table, has decreased from 4.9 million Engine
Equivalents in the 31 December compilation to 4.1 million Engine
Equivalents per year in the 31 March compilation. This reduction,
particularly in the Current Series Production and Production Orders
Secured categories has resulted in a revaluation of the near term
future taxable profit, affecting the after tax result by SEK -10.5
million for the period.
Approximate Annual Production Potential and
Revenue
31 March 2009 31 December 2008
Activity KEQVS* MSEK/yr** KEQVS* MSEK/yr**
Current Series 400 9 625 17
Production[1]
Potential Mature 1,000 23 1,100 25
Volume[2]
Production Orders 500 12 1,000 23
Secured[3]
Development Pipeline[4] 2,600 60 2,800 64
Near-term Market 4,100 94 4,900 112
Opportunity[5]
Notes: 1. Current annualised production rate
2. Annualised potential mature volume of Current Series
Production (Item 1 above) when fully ramped-up
3. Annualised mature volume of programmes for which
SinterCast's foundry customers have received production
orders, but have not yet started series production
4. Annualised mature volume of development programmes that SinterCast is currently supporting, but have not yet been
awarded as series production orders
5. Total Near-term Market Opportunity (sum of items 2, 3 and
4)
* KEQVS: Thousands of Engine Equivalents
** Assumes 23 SEK/Engine Equivalent on 31 March 2009 and 23
SEK/Engine Equivalent on 31 Dec 2008
Financial Summary
Revenue
The revenue for the SinterCast Group relates primarily to income from
equipment (sales and leases), series production, and engineering
service. During January-March 2009, series production revenue
amounted to SEK 3.3 million, representing an 11% decrease compared to
the same period during 2008. The decreased revenue for the period
results from the combined effect of a 35% decrease in Engine
Equivalents, offset by an increase in consumable sales. Equipment
revenue for the period was SEK 0.3 million (SEK 1.2 million),
primarily from leased equipment.
Revenue Breakdown January-March January-December
2009 2008 2008 2007
Number of Sampling Cups shipped 11,300 11,000 57,600 50,170
Equipment [1] 0.3 1.2 5.7 6.9
Series Production [2] 3.3 3.7 17.2 13.9
Engineering Service [3] 0.4 0.5 1.8 1.9
Other 0.0 0.0 0.1 0.1
Total 4.0 5.4 24.8 22.8
(Amounts in SEK million if not
otherwise stated)
Notes: 1. includes revenue from System 2000 sales and leases, and
sales of the Mini-System 2000 and 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
Result
The January-March 2009 operating result of SEK -2.7 million is SEK
0.5 million lower than the same period 2008, primarily affected by
reduced margins (SEK -1.3 Million) and reduced costs (SEK 0.8
million). The cost reduction is primarily related to salaries, IFRS-2
costs, travel and external consultants, stemming from the Company's
pro-active liquidity protection plan.
Result Summary January-March January-December
2009 2008 2008 2007
Operating Result -2.7 -2.2 -5.7 -5.1
Result after calculated tax -13.7 18.8 13.1 -4.5
Result after tax per share (SEK) -2.5 -3.4 2.4 -0.8
(Amounts in SEK million if not
otherwise stated)
Deferred Tax Asset
SinterCast calculates its estimated near-term future taxable profit
on a quarterly basis, in order to determine the valuation of its
deferred tax asset. As of 31 December 2008, this calculation
resulted in SEK 70.1 million, representing 11.8% of the Company's
total carried-forward tax losses, being utilised. However, the onset
of the global economic crisis has resulted in a reduced forecast of
secured production orders. Accordingly, the revised calculation of
the near-term future taxable profit has resulted in a reduction of
SEK 39.8 million during the first quarter, resulting in SEK 30.3
million (5.1%) of SinterCast's total carried-forward tax losses being
utilised. The Company will continue to review its near-term forecast
on a quarterly basis, and to capitalise additional tax assets as new
production orders are confirmed and as the Company's five-year tax
planning horizon rolls forward.
Deferred Tax Asset January-March January-December
2009 2008 2008 2007
Estimated near-term future taxable 30.3 75.0 70.1 0.0
profit
Carried-forward tax losses taken into -39.8 75.0 70.1 0.0
consideration
Deferred tax asset 8.0 21.0 18.5 0.0
Tax result -10.5 21.0 18.5 0.0
(Amounts in SEK million if not
otherwise stated)
Employee Stock Option Programme
As of 31 March 2009, the cost of the employee stock option programme
was calculated at a total amount of SEK 3.2 million (SEK 4.6 million
as of 31 March 2008), based on a closing share price of SEK 30.4 on
31 March 2009 (SEK 131). During 2009, SEK 0.2 million
(SEK 0.5 million) was accounted for as costs related to the option
programme.
Cashflow, Liquidity and Investments
The January-March 2009 cashflow result was SEK 0.4 million (SEK -3.1
million), providing a Group liquidity of SEK 9.4 million on 31 March
2009 (SEK 13.2 million). The liquidity was primarily affected by a
bank loan received from Sörmlands Sparbank in the amount of 3.0 MSEK
million, an operational loss of SEK -1.6 million (SEK -1.7 Million)
and an increase in working capital of SEK -1.0 million (SEK -1.4
Million). The bank loan is conditional and will need to be renewed
during December 2009. Investments by the Group during the period
amounted to SEK 0.0 million (SEK 0.0 million).
Cashflow Summary January-March January-December
2009 2008 2008 2007
Cashflow from operating activities -1.6 -1.7 -3.3 -2.2
Cashflow from working capital -1.0 -1.4 -3.7 4.4
Cashflow from investment activities -0.0 0.0 -0.3 -1.4
Cashflow from financing activities 3.0 - - -
Cashflow total 0.4 -3.1 -7.3 0.8
Liquidity 9.4 13.2 9.0 16.3
Investments 0.0 0.0 0.3 0.4
(Amounts in SEK million if not otherwise stated)
Risks and Uncertainty Factors; Global Economic Crisis
Market Development
The main uncertainty factor for SinterCast is the timing of the CGI
market ramp-up, which primarily depends on the global economy for new
vehicle sales and on the individual sales success of the vehicles
equipped with SinterCast-CGI components. The economic conditions
facing the global foundry and automotive industries have resulted in
significant reductions in demand in both the passenger vehicle and
commercial vehicle sectors, causing automotive OEMs to reduce
production and, in some cases, delay production launches. The
overall decline in the automotive market has resulted in a reduction
of SinterCast's near-term market opportunity calculation from a peak
of 5.7 million Engine Equivalents on 30 June 2008 to the current
value of 4.1 million Engine Equivalents. This reduction of
approximately 28% is less than the overall automotive market decline
of 40~50% during the same period, primarily because many of
SinterCast's series production programmes are still in the ramp-up
phase, and because the launch of new SinterCast-CGI components have
provided incremental volumes. While SinterCast continues to support
new product development activities, and anticipates new production
launches and installations during 2009, the ultimate effect of the
global economic recession cannot yet be fully quantified.
Liquidity
SinterCast regularly monitors its cash position with reference to
market forecasts and expense budgets. While the Company believes
that new installations during 2009 will provide cash injections to
reinforce the liquidity, a bank loan in the amount of SEK 3.0 million
was secured during the period to offset the anticipated low
production volume in the first quarter. In addition, a pro-active
liquidity protection plan has been initiated. The cost reductions,
implemented during late-2008 and early-2009, and including personnel
reductions, have begun to provide positive contributions. The Board
and Management continuously monitor the status of the current and
future SinterCast-CGI programmes, as well as the overall market
development, to navigate the Company through the economic crisis.
There have been no significant events since the balance sheet date of
31 March 2009 that could materially change these financial
statements.
Market Penetration and Competition
SinterCast enjoys the respect of the industry as the market leader
for CGI process control technology and CGI know-how, and is welcomed
as a reliable and trustworthy technology partner. As the market
demand for CGI continues to grow, and production demand begins to
exceed the capability of in-house techniques, it is likely that
competitive pressures will increase in the supply community. Based
on its proven technology and engineering service, SinterCast will
continue to support new CGI development activities to further
increase its share of the world CGI cylinder block and head
production capacity.
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. As of 1 January 2009,
several amendments to existing standards, new interpretations and one
new standard (IFRS 8) came into effect. In accordance with IAS 1,
SinterCast has opted to present the Group's total earnings divided
into two statements: a separate income statement and a statement of
comprehensive income. Furthermore, the consolidated statement of
changes in shareholders' equity only includes transactions with the
Group's owners. The reporting for the Parent Company has been
prepared in accordance with Sweden's Annual Accounts Act. The
accounting policies that have been applied for the Group and for the
Parent Company are in agreement with the accounting policies used in
the preparation of the Company's latest annual report. During the
period, no material transactions have taken place between SinterCast
and the Board or the Management.
Parent Company
SinterCast AB (publ) is the Parent Company of the SinterCast Group,
with registered office located in Stockholm, Sweden. The Parent
Company has 10 (12) employees. The majority of the operations are
conducted by the Parent Company, including responsibility for the
representative office in China and sales representatives in
Australia, India, Japan and Korea. Operations in the UK and the USA
are managed by the local companies. The information given for the
Group in this report corresponds in all material respects to the
Parent Company.
Personnel
As of 31 March 2009, the Group had 13 (16) employees, two (three) of
which were female. The core technical staff has the necessary skills
and resources to support ongoing customer activities and to support
the current intensified market development. Further recruitment will
be phased with the development of field activities, particularly the
need to support new installations.
Nomination Committee
The Board of Directors has proposed to the Annual General Meeting
that Ulla-Britt Fräjdin-Hellqvist, Chairman of the Board of
Directors, and Lars Ahlström, representing large shareholders, be
re-appointed as members of the Nomination Committee. At this time,
the Board further proposes that Torbjörn Nordberg be appointed as the
third member of the Nomination Committee, with the responsibility to
represent the interests of small shareholders. Mr Nordberg, a
Swedish citizen born in 1962, holds a law degree from the University
of Lund and currently specialises in transaction law, Swedish tax law
and economics, particularly for small and medium sized companies. Mr
Nordberg has been a SinterCast shareholder since 2000 and has closely
followed the development of the Company and its business activities.
The Nomination Committee can be contacted at:
nomination.committee@sintercast.com
Annual Report 2008
The Annual Report 2008 will be published on the SinterCast website on
23 April 2009. In consideration of cost-efficiency and environmental
concern, the Annual Report 2008 will be issued in electronic format,
as a PDF file, and will not be generally distributed as a printed
document.
Annual General Meeting 2009
The Annual General Meeting 2009 will be held at 15:00 on 7 May 2009
at The Royal Swedish Academy of Engineering Sciences (IVA), Grev
Turegatan 16, Stockholm.
Information
The Interim Report April-June 2009 will be published on 19 August
2009
The Interim Report July-September 2009 will be published on 4
November 2009
The Interim Report October-December and Full Year Results 2009 will
be published on 10 February 2010
The Interim Report January-March 2010 will be published on 28 April
2010
This report has not been reviewed by the Company's auditors.
Stockholm, 22 April 2009
For further information please contact:
Dr. Steve Dawson
President & CEO
SinterCast AB (publ)
Tel: +46 8 660 7750
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. SinterCast produces a
variety of CGI components ranging from 2 kg to 17 tonnes, all using
the same process control technology. The end-users of SinterCast-CGI
components include Aston Martin, Audi, Caterpillar, Chrysler, DAF
Trucks, Ford, Ford-Otosan, General Electric Transportation Systems,
General Motors, Hyundai, Navistar, Jaguar, Kia, Land Rover, MAN, MAN
B&W Diesel, Porsche, PSA Peugeot-Citroën, Renault, Rolls-Royce Power
Engineering, Toyota, Volkswagen, Volvo and Waukesha Engine. The
SinterCast share is quoted on the Small Cap segment of the Nordic
Exchange, Stockholm (Stockholmsbörsen: SINT).
END
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