SinterCast Results January-March 2010
* Revenue for period: SEK 8.0 million (SEK 4.0 million)
* Operating Result: SEK 0.7 million (SEK -2.7 million)
* Earning/share: SEK 0.2 per share (SEK -2.5 per share)
* Cashflow: SEK -2.1 million (SEK 0.4 million)
* Ford F-Series pick-up trucks go on sale in North America with SinterCast-CGI
diesel engine
* Navistar launches SinterCast-CGI V8 diesel engine - series production begins
at Cifunsa in Mexico
* Mini-System 3000 shipped to First Automobile Works in China - installation
to be commissioned in May
Building on the ramp-up of the Ford 6.7 litre V8, and the start of production of
the Navistar 6.4 litre V8, series production reached an all-time annualised high
of 900,000 Engine Equivalents (45,000 tonnes) during the quarter, surpassing the
previous mark of 750,000 Engine Equivalents set in September 2008
Current Production and Outlook
Following Ford's announcement of its all-new 6.7 litre V8 diesel engine during
September 2009, sales of the 2011 F-Series Super Duty(®) pick-up trucks have
begun in North America. The F-250, F-350, F-450 and F-550 vehicles establish a
new benchmark as the first application of a Compacted Graphite Iron (CGI)
cylinder block in the high volume North American pick-up truck sector. Series
production of the SinterCast-CGI cylinder block began at the Tupy foundry in
Brazil during mid-2009, with a rapid ramp-up during late 2009 and early 2010 to
enable a seamless transition from the Model Year 2010 engine. The rapid ramp-up
of the Ford engine has resulted in record production during the first quarter,
at an annualised rate of approximately 900,000 Engine Equivalents (45,000
tonnes), surpassing the previous annualised high of 750,000 Engine Equivalents
set in September 2008, prior to the onset of the economic downturn. Sampling
Cup shipments also reached an all-time high of 23,250 units shipped during the
quarter.
On 10 March 2010, Navistar International Corporation launched its new
MaxxForce(® )7 diesel engine at the National Truck Equipment Association (NTEA)
Work Truck Show in St. Louis. The state-of-the-art 6.4 litre V8 diesel engine,
based on a SinterCast-CGI cylinder block, began series production at the Cifunsa
foundry in Mexico during January 2010. The Navistar MaxxForce(® )7 cylinder
block is the first CGI series production component at Cifunsa and provides an
important CGI production reference as Cifunsa supports ongoing product
development of other CGI components in the passenger vehicle and commercial
vehicle sectors. The MaxxForce(® )7 is available for use in a variety of
mid-size commercial vehicle applications.
First Automobile Works (FAW), the largest vehicle manufacturer in China,
completed its training at the SinterCast Technical Centre in Sweden on 5
February 2010 and the Mini-System 3000 was thereafter shipped to the FAW Foundry
Co., Ltd., R&D foundry located in Changchun, China. The Mini-System will be
commissioned during May 2010. The Mini-System 3000 will be used to support CGI
product development activities for FAW passenger vehicles, light-duty and
heavy-duty commercial vehicles, and busses.
Also during the period, SinterCast joined the U.S. Coalition for Advanced Diesel
Cars, a Washington-based advocacy group established in February 2009 by a group
of leading automotive suppliers to generate awareness among consumers,
legislators and regulators of the benefits of clean diesel technology. The
coalition, which is committed to promoting technology-neutral regulatory
policies, energy efficiency and the environmental benefits of advanced clean
diesel technology for passenger vehicles, provides a further opportunity for
SinterCast to convey its belief in the diesel engine as an important part of the
solution for fuel independence and CO(2) reduction in North America.
Based on the current production programmes and the potential market recovery
during SinterCast's five year planning horizon, the five year outlook is
summarised as follows:
Approximate Annual Production Potential and
Revenue
31 March 2010 31 December 2009
Activity KEQVS* MSEK/yr** KEQVS* MSEK/yr**
Current Series 900 21 550 13
Production[1]
Potential Mature 1,200 28 1,200 27
Volume[2]
Production Orders 400 9 400 9
Secured[3]
Development Pipeline[4] 2,500 57 2,700 62
Near-term Market 4,100 94 4,300 99
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 2010 and 23 SEK/Engine
Equivalent on 31 December 2009
Financial Summary
Revenue
The revenue for the SinterCast Group relates primarily to income from equipment
(sales and leases), series production and engineering service.
Revenue Breakdown January-March January-December
2010 2009 2009 2008
-------------------------------------------------------------------------------
Number of Sampling Cups shipped 23,250 11,300 54,600 57,600
Equipment[1] 0.9 0.3 2.6 5.7
Series Production[2] 7.0 3.3 15.6 17.2
Engineering Service[3] 0.1 0.4 1.7 1.8
Other( ) 0.0 0.0 0.1 0.1
-------------------------------------------------------------------------------
Total 8.0 4.0 20.0 24.8
-------------------------------------------------------------------------------
(Amounts in SEK million if not otherwise stated)
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 January-March 2010 revenue amounted to SEK 8.0 million (SEK 4.0 million).
The revenue increase of 100% is because of the significant increases in series
production and Sampling Cup shipments and the invoicing of the Mini-System 3000
to First Automobile Works in China, which was shipped during the period. The
revenue from series production increased by 112% to SEK 7.0 million (SEK 3.3
million), due to the record production at an annualised rate of approximately
900,000 (400,000) Engine Equivalents and the shipment of 23,250 (11,300)
Sampling Cups. Additional contractual revenue for the FAW Mini-System 3000 will
be accounted for when the installation is completed and as engineering service
is performed.
Results
Results Summary January-March January-December
2010 2009 2009 2008
-------------------------------------------------------------------------------
Operating Result 0.7 -2.7 -6.3 -5.7
Result for the period 1.0 -13.7 -2.7 13.1
Result after tax per share (SEK) 0.2 -2.5 -0.5 2.4
-------------------------------------------------------------------------------
(Amounts in SEK million if not otherwise stated)
The January-March 2010 operating result of SEK 0.7 million (SEK -2.7) million
was primarily affected by higher gross result of SEK 3.4 million, compared to
the same period 2009. The costs have not increased in comparison to the same
period last year, as a result of the overall cost control focus within the
Company. The result after tax for the January-March 2010 period amounted to SEK
1.0 million (SEK -13.7 million), primarily related to the revaluation during
2009 of the deferred tax asset, as described in the section entitled "Deferred
Tax Asset".
Tax
The tax accounted for during the period is SEK 0.0 million (SEK -10.5 million).
Employee Stock Option Programme
As of 31 March 2010, the cost of the employee stock option programme 2009-2013
was calculated at a total amount of SEK 3.2 million (SEK 3.3 million as of 31
December 2009), based on a closing share price of SEK 48.1 on 31 December 2009
(SEK 50.5). Thus far during 2010, SEK 0.3 million (SEK 0.2 million) has been
accounted for as costs related to the option programme.
Cashflow, Liquidity and Investments
The January-March 2010 cashflow result was SEK -2.1 million (SEK 0.4 million),
providing a Group liquidity of SEK 22.7 million (SEK 9.4 million) on 31 March
2010. It is noted that the cashflow result from operating activities was
positive during the period, however, the time delay between invoicing and
payment has resulted in a significant increase in working capital required
during the period. Investments during the period amounted to SEK 0.1 million
(SEK 0.0 million), relating to the activation of the Pressurised Pouring Furnace
development project.
Cashflow Summary January-March January-December
2010 2009 2009 2008
------------------------------------------------------------------
Cashflow from operating activities 1.3 -1.6 -3.2 -3.3
Cashflow from working capital -3.3 -1.0 -1.7 -3.7
Cashflow from investment activities -0.1 0.0 -0.6 -0.3
Cashflow from financing activities -0.0 3.0 21.3 -
------------------------------------------------------------------
Cashflow total -2.1 0.4 15.8 -7.3
Liquidity 22.7 9.4 24.8 9.0
Investments 0.1 0.0 1.3 0.3
------------------------------------------------------------------
(Amounts in SEK million if not otherwise stated)
Current liquidity is SEK 22.7 million, with the prospect of an additional SEK
11.6 million being raised during September 2010 from the warrants related to the
rights issue conducted during September 2009.
Risks and Uncertainty Factors
Market Development
Despite the positive increase in series production since mid-2009, the main
uncertainty factor for SinterCast continues to be the overall 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 caused automotive OEMs to reduce production and,
in some cases, delay production launches. In parallel, foundries have delayed
plans for new investment in CGI production capacity. 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. Some signs of
recovery have appeared in the automotive sector, but volumes are still
significantly below pre-downturn levels, particularly in the commercial vehicle
sector. While SinterCast continues to support new product development
activities, and anticipates new production launches and new opportunities for
installation revenue, the Board believes that it is still not possible to
determine the ultimate effect of the global economic recession or the timing and
rate of the overall market recovery.
Liquidity
SinterCast regularly monitors its cash position with reference to market
forecasts and internal expense budgets. In consideration of current expense and
revenue forecasts, the Board judges that the Company's financial position is
secure. The current liquidity is SEK 22.7 million, with the prospect of an
additional SEK 11.6 million being raised during September 2010 from the warrants
related to the 2009 rights issue. The Company will continue its prudent approach
toward expenses and new recruitment as the overall market recovery evolves.
Market Penetration and Competition
SinterCast has played a leading role in the development and application of CGI
since the early 1990's. 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. As the CGI market has developed, some foundry
supply companies have proposed alternative CGI technologies. To SinterCast's
knowledge, these have included Hereaus-Electronite, OxyCast, OCC and NovaCast.
It is also possible that some foundries may opt to produce CGI using in-house
control and discipline, but this is generally judged to become less likely as
product complexity and production volumes increase, and as specification
requirements become more rigidly enforced by the end-users. SinterCast judges
that its technology and engineering know-how provides the most reliable and
cost-effective solution for the production of high quality CGI. Based on its
proven technology, production experience and engineering service, SinterCast
will continue to support new CGI development activities to further increase its
share of the world CGI production capacity. With respect to the development of
alternative automotive technologies such as biofuels, hybrids and fuel cells,
SinterCast does not expect these to have a significant effect on the Company's
competitive position for the foreseeable future.
Personnel
As of 31 March 2010, the Group had 13 (13) employees, two (two) 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.
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) have come 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. As of 1 April 2009, development costs that can be directly attributed
to the design and testing of identifiable and unique new products controlled by
the Group are recognised as intangible assets when the criteria of IAS38 are
met. Beginning with the 3Q09 report, SinterCast has reassessed the estimated
future taxable profit and deferred tax asset calculation to reflect the typical
lifecycle of an engine programme in the automotive industry. In compliance with
IFRS 8, beginning with the 4Q09 report, the Geographical Market presentation
summary has been removed from the financial statements, to better correspond
with the internal reporting within the Group. 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.
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 31 March
2010 that could materially change these financial statements.
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.
Annual General Meeting 2010
The Annual General Meeting 2010 will be held at 15:00 on 20 May 2010 at The
Royal Swedish Academy of Engineering Sciences (IVA), Grev Turegatan 16,
Stockholm.
The notice to the Annual General Meeting was published on 20 April 2010 and is
available on the Company's website.
Annual Report 2009
The Annual Report 2009 was published on the SinterCast website on 20 April
2010. In consideration of cost efficiency and environmental concern, the Annual
Report 2009 will be issued in electronic format, as a PDF file, and will not be
generally distributed as a printed document.
Information
The Interim Report April-June 2010 will be published on 25 August 2010
The Interim Report July-September 2010 will be published on 3 November 2010
The Interim Report January-March and Full Year Results 2010 will be published on
18 February 2011
The Interim Report January-March 2011 will be published on 4 May 2011
This report has not been reviewed by the Company's Auditors.
Stockholm, 28 April 2010
For further information please contact:
Dr. Steve Dawson
President & CEO
SinterCast AB (publ)
Tel: +46 8 660 7750
Mobile: +44 771 002 6342
e-mail: steve.dawson@sintercast.com <mailto:steve.dawson@sintercast.com>
Website: www.sintercast.com <http://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, 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
The full report with tables can be downloaded from the following link:
