SinterCast Results January-March 2013
Series production increases as new engine announcements
and new installations provide opportunities for further growth
First Quarter 2013
* Revenue for Period: SEK 11.7 million (SEK 11.7 million)
* Operating Result: SEK 1.5 million (SEK 1.3 million)
* Earnings per Share: SEK 0.33 per share (SEK 0.24 per share)
* Cashflow from Operations: SEK 0.2 million (SEK -0.3 million)
* Installed Base: 20 fully automated systems and 15 Mini-Systems in Europe,
Asia and the Americas
* New installation successfully commissioned at European commercial vehicle
OEM captive foundry
* Commissioning underway in Mexico for most comprehensive System 3000
installation to date
* New installation secured at the University of Alabama for research funded by
US Department of Energy
* Pre.production continues for first high-volume petrol engine, with series
production starting this year
Series Production*
For graph, see press release PDF
Series production increased during the quarter, building on resumed production
of the Navistar Big Bore cylinder block and ramp-up of the VM Motori 3.0 litre
V6 cylinder block and bedplate in advance of showroom sales of the Jeep Grand
Cherokee SUV and the Ram 1500 light duty pick-up truck in North America.
* Annualised average production of Engine Equivalents during the quarter (1
Engine Equivalent = 50 kg)
CEO Comments
Series production increases following North American diesel announcements
Annualised series production during the quarter increased to 1.30 million Engine
Equivalents, representing growth of approximately 8% relative to the fourth
quarter of 2012. The increase is primarily due to the ramp-up of VM Motori 3.0
litre V6 cylinder block and bedplate and resumed production of the Navistar 13
litre Big Bore commercial vehicle cylinder block.
Following Chrysler's announcements of the VM Motori diesel engine in the Jeep
Grand Cherokee SUV in January and the Ram 1500 light duty pick-up in February,
foundry production of the SinterCast-CGI cylinder block and bedplate increased,
resulting in the VM Motori engine becoming the second largest production
programme in March, and SinterCast's fifth engine to crack the annualised
100,000 Engine Equivalent barrier. The diesel Grand Cherokee is scheduled to be
available in US dealer showrooms during the second quarter of 2013 while the Ram
1500 diesel is scheduled to begin sales during the third quarter of 2013.
Chrysler's diesel commitments provide incremental volume in the near term, but
also establish important benchmarks and challenges to the other OEMs for the
increased use of diesel engines in high volume SUV and light duty pick up
applications. Beyond the VM Motori engine, series production in the high volume
passenger vehicle V-diesel wave continued at a strong pace throughout the
quarter, with stable contributions from the Audi, Ford and Hyundai engines.
Foundry production of the Navistar cylinder block resumed at both the Tupy
foundry in Brazil and at the Pure Power foundry in the USA in early January, in
order to fill the supply chain in advance of the resumed sales of Navistar Pro
Star trucks with the MaxxForce Big Bore engine. While the resumption provided
incremental volume in the first quarter, it is expected that the steady-state
run rate will not be established until later this year, as Navistar's 13 litre
truck sales recover. Also in the commercial vehicle wave, the System 3000
series production installation announced on 11 February for an undisclosed major
European commercial vehicle OEM, was successfully commissioned during the
quarter. Series production volumes are expected to begin to contribute during
the second quarter. Together, the resumption of the Navistar production and the
new European installation provide the opportunity for increased commercial
vehicle volumes in 2013.
The commissioning of SinterCast's most comprehensive installation to date, at
the Tupy foundry in Saltillo, Mexico, began during early April and is ongoing.
The installation is designed to support the production of a new passenger
vehicle cylinder block with a planned mature volume of more than 300,000 blocks
per year, potentially the highest volume CGI engine in the world. Following the
commissioning of the new System 3000 Plus, the existing SinterCast equipment on
the passenger vehicle production line at the Saltillo foundry will be moved to
the commercial vehicle production line to support ongoing product development
for heavy duty engine applications.
On 19 April, SinterCast announced the installation of a Mini-System 3000 at the
University of Alabama at Birmingham (UAB) as part of a new USD 3.5 million
dollar project awarded to Caterpillar by the US Department of Energy (DoE). The
objective of the project is to develop cost-effective high-strength cast
materials that can enable future increases in specific power density
(horsepower/weight) and increased thermal efficiency in heavy-duty diesel
engines. As part of the three year project, UAB and Caterpillar will use the
SinterCast Mini-System 3000 to produce and develop new Compacted Graphite Iron
(CGI) alloys. The Mini-System 3000 will be installed during the summer of
2013. SinterCast will also provide technical support throughout the duration of
the project. The DoE funding reinforces the need for continuous advances in
engine performance and efficiency, and the need for advanced materials such as
CGI to enable these objectives while ensuring durability and emissions
compliance.
SinterCast continues to support product development programmes for passenger
vehicle, commercial vehicle and industrial power applications in Europe, Asia
and the Americas. This development includes SinterCast's first high volume CGI
petrol engine commitment, which remains on schedule for the start of series
production this year. Pre-production of the petrol engine cylinder block began
during January. 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 development of the ductile iron technology continues, with new field trials
planned in Asia during the second quarter to further define the technical
correlations, the process control applications and the magnitude of the cost-
benefit opportunity. The ductile iron technology will be introduced in a
presentation at the Ductile Iron Society annual meeting in the USA in June.
Following the introduction, SinterCast will seek reference installations to
further develop and demonstrate the technology and to explore the market
opportunity. 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 January-March January-December
(Amounts in SEK million if not 2013 2012 2012 2011
otherwise stated)
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Number of Sampling Cups 28,900 36,800 102,400 138,200
shipped
Equipment (1) 2.3 0.3 9.0 7.9
Series Production (2) 9.0 11.2 35.8 39.0
Engineering Service( 3) 0.3 0.2 1.0 2.0
Other 0.1 0.0 0.1 0.1
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Total 11.7 11.7 45.9 49.0
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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 January-March 2013 revenue amounted to SEK 11.7 million (SEK 11.7 million).
Equipment revenue amounted to SEK 2.3 million (SEK 0.3 million), primarily
related to a System 3000 process control system installed at an undisclosed
major European commercial vehicle OEM. The revenue from the leased installations
is accrued over the lease period. The revenue from series production decreased
due to lower Sampling Cup shipments and reduced series production, primarily
related to decreased year-on-year production of the Navistar Big Bore commercial
vehicle cylinder block in North America and to lower commercial vehicle demand
in Europe.
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 January-March January-December
(Amounts in SEK million if not otherwise 2013 2012 2012 2011
stated)
-------------------------------------------------------------------------------
Operating Result 1.5 1.3 1.0 11.6
Result for the period after tax 2.4 1.7 -3.7 14.5
Earnings per Share (SEK) 0.3 0.2 -0.5 2.1
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The January-March 2013 Operating Result of SEK 1.5 million (SEK 1.3 million),
increased as a result of higher gross results of SEK 0.3 million and higher
operational expenses of SEK 0.1 million. The higher gross result is due to
changes in product mix, with a higher proportion of the 2013 revenue being
derived from equipment revenue rather than series production.
The Result for the period after tax amounted to SEK 2.4 million (SEK 1.7
million), primarily related to the revaluation of the deferred tax asset, as
described in the section entitled "Deferred Tax Asset".
Deferred Tax Asset
Tax amounted to SEK 0.7 million (SEK -0.1 million) during the period, of which
SEK 0.8 million was due to the change in deferred tax asset.
The estimated future taxable profit and deferred tax asset calculation is
reassessed every quarter. As of 31 March 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 is
included in the financial assets in the balance sheet.
Cashflow, Liquidity and Investments
Cashflow Summary January-March January-December
(Amounts in SEK million if not otherwise 2013 2012 2012 2011
stated)
-------------------------------------------------------------------------------
Cashflow from operations 0.2 -0.3 1.3 14.5
Cashflow from investment activities 0.0 -0.1 -1.6 -0.4
Cashflow from financing activities - - -11.9 -6.8
-------------------------------------------------------------------------------
Cashflow total 0.2 -0.4 -12.2 7.3
Liquidity 35.6 47.2 35.4 47.6
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The January-March 2013 cashflow from operations was SEK 0.2 million (SEK -0.3
million). The increased cashflow from operations during the period was primarily
affected by the positive operating result of SEK 1.5 million (SEK 1.3 million)
and by the increase in working capital (including accounts receivables, accounts
payables and stock) of SEK -1.7 million (SEK -1.9 million). Since year-end, the
accounts receivables have increased by SEK 2.5 million to SEK 10.3 million,
primarily due to payment timing related to the System 3000 sale to the
undisclosed European commercial vehicle OEM.
The total cashflow result for the period is SEK 0.2 million (SEK -0.4 million)
resulting in SEK 35.6 million (SEK 47.2 million) in cash on 31 March 2013.
Investments amounted to SEK 0.0 million (SEK 0.2 million) during the period.
Employee Stock Option Program
As of 31 March 2013, the total cost of the employee stock option program
2009-2013 was calculated at SEK 2.9 million (SEK 3.2 million), based on a
closing share price of SEK 43.6 (SEK 57.5). Thus far during 2013, SEK 0.0
million (SEK 0.2 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 overall 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 global economy
has recently become more uncertain and this has begun to influence consumer
confidence and automotive sales, particularly in Europe. 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 representatives in Sweden, the United Kingdom, the United States,
China, Korea, Japan, India and Australia. As of 31 March 2013, the Group had 19
(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 13 (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,
including responsibility for the sales representatives in Australia, India and
Japan. Operations in the UK, USA, Korea and China are managed by the local
companies. 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. According to the
amendment in IAS 1 - Presentation of Financial Statements, SinterCast has
changed the heading "Statement of comprehensive income" to "Statement of profit
or loss and other comprehensive income". There is one change in IAS 1, meaning
that items presented in "other comprehensive income" shall be divided into two
categories, based on if the items will be reversed over the income statement or
not. In accordance with the amendment, SinterCast has added one new line item
"items that may be reclassified subsequently to the profit and loss." SinterCast
judges that this change not will result in any material effect on the
presentation of the other comprehensive income. Except for this change, 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
The following press release has been issued:
19 April 2013 - University of Alabama to install SinterCast technology for
project awarded by the US Department of Energy.
There have been no other significant events since the balance sheet date of 31
March 2013 that could materially change these financial statements.
Annual Report 2012
The Annual Report 2012 was published on the SinterCast website on 5 April 2013.
In consideration of cost efficiency and environmental concern, the Annual Report
2012 was only issued in electronic format, as a PDF file.
Annual General Meeting
The Annual General Meeting 2013 of SinterCast AB (publ) will be held at 15:00 on
Wednesday 15 May 2013, at The Royal Swedish Academy of Engineering Sciences
(IVA), Grev Turegatan 16, Stockholm. The notice to the Annual General Meeting
was published on 10 April 2013 and is available on the SinterCast website.
The Board of Directors propose the following dates for the Annual General
Meeting and for entitlement to receive dividends:
8 May 2013 Shareholders who wish to participate in the AGM must be
recorded in the share register maintained by Euroclear
on this date, in their own names, and notify SinterCast
of their attendance.
15 May 2013 Shares traded on this date are eligible for dividend.
15 May 2013 AGM: The Annual Meeting is held at 15:00.
16 May 2013 Shares traded on this date are not eligible for
dividend.
20 May 2013 Record Date: The record date for entitlement to receive
dividends is three bank days after the AGM.
23 May 2013 Payment: Anticipated payment of dividend via Euroclear
Sweden AB, three bank days after the record date for
entitlement to receive dividends.
Proposed Dividend
SEK 51,744,744 are at the disposal of the Annual General Meeting and the Board
of Directors proposes that there shall be a total dividend of SEK 1.0 per share
(totally SEK 6,975,653) for the financial year 2012 and that the parent company
shall retain the remaining part of non-restricted equity of SEK 44,769,091. The
Board of Directors proposes Monday 20 May 2013 as the record date for
entitlement to receive dividends. If the Annual General Meeting decides in
accordance with the proposal, it is estimated that the dividend will be
distributed by Euroclear Sweden AB on Thursday 23 May 2013.
Information
The Interim Report April-June 2013 will be published on 21 August 2013
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
This report has not been reviewed by the Company's Auditors.
Stockholm 23 April 2013
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 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,
Navistar, Porsche, PSA Peugeot-Citroën, Renault, Rolls-Royce Power Engineering,
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
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