SinterCast Results July-September 2013
Third consecutive year of record installation commitments
Strong series production continues
Third Quarter 2013
* Revenue for Period: SEK 14.0 million (SEK 8.5 million)
* Operating Result: SEK 2.3 million (SEK -2.3 million)
* Earnings per Share: SEK 0.3 per share (SEK -0.3 per share)
* Cashflow from Operations: SEK 1.3 million (SEK -0.5 million)
* New record for installation revenues with further opportunities before year-
end
* Commercial vehicle production increases by 95% since start of year
* Growing diesel awareness in North America as Jeep Grand Cherokee diesel
sales begin
* First high-volume petrol engine on schedule for start of series production
before year-end
Year-to-Date 2013
* Revenue: SEK 37.5 million (SEK 31.5 million)
* Operating Result: SEK 5.2 million (SEK -1.0 million)
* Earnings per Share: SEK 0.9 per share (SEK 0.0 per share)
* Cashflow from Operations: SEK 6.8 million (SEK -0.5 million)
* Installed Base: 22 fully automated systems and 16 mini-systems in Europe,
Asia and the Americas
Series Production*
See PDF for graph
Annualised series production remained stable at 1.6 million Engine Equivalents
in the third quarter 2013, despite the traditional summer shutdowns in July and
August, representing a 23% year-on-year increase.
* Annualised average production of Engine Equivalents during the quarter (1
Engine Equivalent = 50 kg)
CEO Comments
Series production stable
Following record series production of 1.65 million Engine Equivalents in the
second quarter, growth was reinforced with stable production of 1.60 million
Engine Equivalents in the third quarter, despite the traditional summer
shutdowns in July and August. The series production was led by a 95% increase
in heavy duty commercial vehicle volume since the beginning of the year,
following the start of series production of two new undisclosed commercial
vehicle engines during the second quarter. Series production was also buoyed by
increased pipe filling for the first high volume CGI petrol engine and by
increased diesel demand in North America. During the period, Ford announced the
production of the 500,000(th) 6.7 litre V8 diesel, stating that approximately
two-thirds of its super duty pick-ups are ordered with the diesel option. The
diesel momentum in the critical US pick-up sector was further reinforced by
Nissan's announcement of the Cummins 5.0 litre V8 diesel with a SinterCast-CGI
cylinder block for the Titan pick-up, and by the start of sales of the Jeep
Grand Cherokee with the VM Motori 3.0 litre V6 diesel with a SinterCast-CGI
cylinder block and bedplate. Sales of the Ram 1500 pick-up with the VM Motori
V6 remain on schedule for the first quarter of 2014. Product development in the
industrial power sector also increased during the quarter, with new development
in each of the agricultural, construction and stationary power sectors. At
present, the split between the three main series production sectors is
approximately 55% automotive engines, 35% commercial vehicles, and 10% for
industrial power and automotive components other than cylinder blocks and heads.
Record installations
With the announcement of a new order for a System 3000 Plus installation on 31
October, SinterCast achieved a third consecutive record year for new
installation commitments. Combined with two System 3000 installation
commitments earlier in 2013, two Mini-System 3000 installations and one
automatic base treatment upgrade of an existing System 3000 installation to the
full System 3000 Plus capability, the new System 3000 Plus order marks the sixth
installation of the year and surpasses the previous installation revenue record
set in 2012. SinterCast is engaged in ongoing discussions for further
installations in Europe, Asia and the Americas, and these discussions provide
opportunities for additional installation commitments and revenue before year-
end.
SinterCast continues to provide technical support for 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
SinterCast's process control technology for the production of ductile iron was
presented at the international Millis Symposium on Ductile Iron on 15 October,
one of the world's leading ductile iron conferences, held every five years. The
presentation was well received and the published paper was posted on the
SinterCast website on 16 October. Field trials also continued through the
quarter, and two foundry reference programmes are currently being negotiated.
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 July-September January-September
(Amounts in SEK million if not 2013 2012 2013 2012
otherwise stated)
-------------------------------------------------------------------------------
Number of Sampling Cups 27,800 12,100 89,900 80,900
shipped
Equipment (1) 3.2 1.6 5.9 2.0
Series Production (2) 10.5 6.5 30.2 28.6
Engineering Service( 3) 0.3 0.4 1.2 0.8
Other 0.0 0.0 0.2 0.1
-------------------------------------------------------------------------------
Total 14.0 8.5 37.5 31.5
-------------------------------------------------------------------------------
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 July-September 2013 revenue amounted to SEK 14.0 million (SEK 8.5 million).
The revenue increase of 65% is primarily a result of the increases in series
production, Sampling Cup shipments and new Equipment orders. The revenue from
series production increased by 62% to SEK 10.5 million (SEK 6.5 million), due to
the production of approximately 1.6 million (1.3 million) annualised Engine
Equivalents and the shipment of 27,800 (12,100) Sampling Cups. Equipment revenue
amounted to SEK 3.2 million (SEK 1.6 million), primarily related to the Mini-
System 3000 that was shipped to Jiangling Motors Corporation (JMC) in China, the
automated base treatment control system (System 3000 Plus upgrade) at Tupy,
Brazil and the new System 3000 installation and system upgrade at Halberg Guss,
Germany. Engineering Service amounted to SEK 0.3 million (SEK 0.4 million)
following the support provided primarily to US and German customers.
The January-September 2013 revenue amounted to SEK 37.5 million (SEK 31.5
million) as a result of increased series production and equipment sales.
Equipment revenue amounted to SEK 5.9 million (SEK 2.0 million), related to the
JMC and University of Alabama Mini-System 3000 installations, the System 3000
installations at Scania and Halberg, and the automated base treatment control
system (System 3000 Plus upgrade) at Tupy. The revenue from the leased
installations is accrued over the lease period.
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 July-September January- September
(Amounts in SEK million if not otherwise 2013 2012 2013 2012
stated)
-------------------------------------------------------------------------------
Operating Result 2.3 -2.3 5.2 -1.0
Result for the period after tax 2.4 -1.9 6.0 -0.1
Earnings per Share (SEK) 0.3 -0.3 0.9 0.0
-------------------------------------------------------------------------------
The July-September 2013 Operating Result of SEK 2.3 million (SEK -2.3 million)
increased as a result of higher gross results of SEK 3.9 million derived from
higher revenue, lower operational expenses of SEK 0.9 million, and higher
exchange losses from operating receivables and liabilities of SEK 0.2 million.
The Result for the period after tax amounted to SEK 2.4 million (SEK -1.9
million), primarily related to the increased Operating Result of SEK 4.6
million, the decreased financial net of SEK 0.5 million and increased tax income
of SEK 0.2 million.
The January-September 2013 Operating Result of SEK 5.2 million (SEK -1.0
million), increased as a result of higher gross results of SEK 4.5 million
derived from higher revenue and lower operational expenses of SEK 1.7 million.
The Result for the period after tax amounted to SEK 6.0 million (SEK -0.1
million), primarily related to the increased Operating Result of SEK 6.2
million, the decreased financial net of SEK 1.1 million and increased tax income
of SEK 1.0 million.
Deferred Tax Asset
Tax amounted to SEK 0.7 million (SEK -0.3 million) during the January-September
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 September 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 decreased deferred tax asset compared
to last year is primarily explained by the change in the Swedish corporate tax
rate from 26.3% to 22% as of 1 January 2013. The deferred tax asset is included
in the financial assets in the balance sheet.
Cashflow, Liquidity and Investments
Cashflow Summary July-September January- September
(Amounts in SEK million if not otherwise 2013 2012 2013 2012
stated)
-------------------------------------------------------------------------------
Cashflow from operations 1.3 -0.5 6.8 -0.5
Cashflow from investment activities -0.2 0.0 -0.5 -0.2
Cashflow from financing activities - - -7.0 -11.9
(dividend)
-------------------------------------------------------------------------------
Cashflow total 1.1 -0.5 -0.7 -12.6
Liquidity 34.7 35.0 34.7 35.0
-------------------------------------------------------------------------------
The July-September 2013 cashflow from operations was SEK 1.3 million (SEK -0.5
million). The increased cashflow was primarily due to series production payments
and to installation payments received from customers, resulting in a total
cashflow result of SEK 1.1 million (SEK -0.5 million), after investments of SEK
0.2 million.
The January-September 2013 cashflow from operations was SEK 6.8 million (SEK
-0.5 million). The increased cashflow was due to the series production increase,
installation payments 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 -0.7 million (SEK -12.6 million),
resulting in SEK 34.7 million (SEK 35.0 million) in liquidity on 30 September
2013. Investments amounted to SEK 0.6 million (SEK 0.2 million) during the
period, of which SEK 0.5 million resulted in cash outflow.
Employee Stock Option Program
As of 30 September 2013, the total cost of the employee stock option program
2009-2013 was calculated to be SEK 2.9 million (SEK 2.9 million), based on a
closing share price of SEK 58.8 (SEK 46.0). Thus far during 2013, SEK 0.2
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 September 2013, the Group had 17 (20) employees, following
the reassignment of two individuals from employees to retained consultants.
Three (three) of the employees are 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 (16)
employees, due in part to reassignment of Chinese personnel 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. 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
September 2013 that could materially change these financial statements. The
following press releases have been issued:
14 October 2013 - Erik Penser Bankaktiebolag to publish SinterCast analyst
reports
31 October 2013 - Third consecutive year of record installations for SinterCast
Nomination Committee
The Nomination Committee, elected by the Annual General Meeting 2013, consists
of Karl-Arne Henriksson, Chairman, Ulla-Britt Fräjdin-Hellqvist and Andrea
Fessler. Shareholders wishing to provide input or proposals should provide
written submissions to the Nomination Committee (e-mail:
nomination.committee@sintercast.com) before 1 March 2014.
Annual General Meeting
The Annual General Meeting 2014 of SinterCast AB (publ) will be held on Tuesday
20 May 2014.
Shareholders wishing to have a matter considered at the Annual General Meeting
should provide written submissions to agm.registration@sintercast.com or to the
Company: SinterCast AB (publ), P.O. Box 10203, SE-100 55 Stockholm, Sweden, at
least seven weeks prior to the Annual General Meeting for the proposal to be
included in the notice to the meeting. Further details on how and when to
register will be published in advance of the Annual General Meeting.
Information
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
The Interim Report July-September 2014 will be published on 5 November 2014
Stockholm 6 November 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
Report of Review of Interim Financial Information
Introduction
We have reviewed this report for the 1 of January 2013 to 30 of September 2013
for SinterCast AB (publ). The board of directors and the CEO are responsible for
the preparation and presentation of this interim report in accordance with IAS
34 and the Swedish Annual Accounts Act. Our responsibility is to express a
conclusion on this interim report based on our review.
Scope of Review
We conducted our review in accordance with the Swedish Standard on Review
Engagements SÖG 2410, Review of Interim Report Performed by the Independent
Auditor of the Entity. A review consists of making inquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope
than an audit conducted in accordance with International Standards on Auditing,
ISA, and other generally accepted auditing standards in Sweden. The procedures
performed in a review do not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the interim report is not prepared, in all material respects, in accordance
with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with
the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, 6 of November 2013
Öhrlings PricewaterhouseCoopers
Tobias Stråhle
Authorised Public Accountant
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-Nissan,
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
