SinterCast Results October-December 2013
First high volume petrol engine begins series production
Full-year record revenue and installation performance
Fourth Quarter 2013
* Revenue for Period: SEK 14.4 million (SEK 14.4 million)
* Operating Result: SEK 2.1 million (SEK 2.0 million)
* Earnings per Share: SEK 0.3 per share (SEK -0.5 per share)
* Cashflow from Operations: SEK 7.6 million (SEK 1.8 million)
* Accolades for SinterCast-CGI engines in year-end automotive awards
* Ford 2.7L V6 petrol engine with SinterCast-CGI block declared "game
changer"
* Ram 1500 wins Motor Trend Truck of the Year award with SinterCast-CGI VM
Motori 3.0L V6 diesel
* Ram 1500 3.0L V6 diesel engine captures a coveted Wards 10 Best Engine
award
* Navistar Terrastar wins ATD medium-duty Truck of the Year award with
SinterCast-CGI 6.4L V8
Full year 2013
* Revenue: SEK 51.9 million (SEK 45.9 million)
* Operating Result: SEK 7.3 million (SEK 1.0 million)
* Earnings per Share: SEK 1.2 per share (SEK -0.5 per share)
* Cashflow from Operations: SEK 14.4 million (SEK 1.3 million)
* Dividend: Proposed ordinary dividend of SEK 1.2 per share (SEK 1.0)
* Installed Base: 23 fully automated systems and 16 mini-systems in Europe,
Asia and the Americas
Series Production*
For graph see PDF
Series production remained stable at 1.6 million Engine Equivalents (1.2
million) during the fourth quarter, with record production of 1.8 million Engine
Equivalents in October being offset by traditionally low December shipments.
* Annualised average production of Engine Equivalents during the quarter (1
Engine Equivalent = 50 kg)
CEO Comments
Series production increases 33%, led by commercial vehicle gains
Annualised series production during the fourth quarter was 1.60 million Engine
Equivalents, providing a 33% year-on-year increase. The production was led by a
100% increase in commercial vehicle volume compared to the fourth quarter of
2012, benefitting from resumed production of the Navistar 13L cylinder block and
the start of series production in the second quarter of 2013 of new high volume
cylinder block programmes for Scania and one other European OEM. Gains were also
realised in the passenger vehicle sector as the front-running Ford 6.7L V8 used
in Super Duty pick-up applications continued to increase and as the VM Motori
3.0L V6 diesel became SinterCast's fifth engine programme to crack the
annualised 100,000 Engine Equivalent barrier early in the year.
During the fourth quarter, SinterCast began series production of the world's
first high volume CGI petrol engine at the Tupy foundry in Saltillo, Mexico.
The engine was revealed by Ford at the 2014 North American International Auto
Show on 13 January, as an integral component of the 2015 F150 pick-up truck, and
a key contributor to the saving of up to 700 pounds (318 kg) compared to the
2014 model. The 2.7L CGI V6 was heralded as a "game changer" in the industry
and, with application in North America's best-selling vehicle, provides a high
profile first reference for CGI in petrol applications. The industry's year-end
awards provided further accolades for SinterCast-CGI engines, with the Ram 1500
becoming the first pick-up truck to win back-to-back Motor Trend Truck of the
Year Awards following the introduction of the 3.0L V6 SinterCast-CGI diesel
engine, while the engine itself received a coveted Wards 10 Best Engine award.
After earning a best-in-class 28 mpg highway (8.4 litres/100 km) rating from
the EPA on 4 February, sales of the Ram diesel pic-up began on 7 February. In
the commercial vehicle sector, the American Truck Dealers association awarded
its medium-duty commercial vehicle Truck of the Year award to the Navistar
Terrastar 4x4 equipped with a SinterCast-CGI 6.4L V8 engine.
Record installation revenue
With the order of a new System 3000 Plus in October, SinterCast achieved a third
consecutive record year for new installation commitments. The installation,
undisclosed at the time due to a customer blackout period, is destined for
Tupy's recently commissioned Foundry C production line in Joinville, Brazil.
The installation was ordered to accommodate increased demand for CGI cylinder
blocks and becomes Tupy's fifth SinterCast installation, extending its global
lead for CGI production capability. The Tupy installation was the third full
System 3000 installation commitment during 2013, following installations at the
Halberg foundry in Germany and at the Scania foundry in Sweden. Combined with
Mini-System 3000 installations at the University of Alabama in the US and at
Jiangling Motors Corporation (JMC) in China, and the installation of an
automatic base treatment station to upgrade an existing System 3000 installation
at Tupy to the full System 3000 Plus capability, 2013 provided six new
installations and surpassed the previous installation revenue record set in
2012.
The positive installation activity continued in January 2014 with a new order
for a System 3000 Plus from one of China's largest automotive component
conglomerates. The installation is planned to be commissioned at the company's
new purpose-built CGI foundry in China during the second quarter of 2014.
SinterCast will also supply the mechanical infrastructure for the cored-wire
base treatment and correction operations and will provide technical support
during the installation and start of production. Series production of CGI
engine components for commercial vehicle, off-road and stationary power
applications is planned to begin before the end of 2014.
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 4.7 million Engine Equivalents per year within SinterCast's five
year planning horizon. It is further estimated that the programmes that are
currently in series production have the potential to provide more than 2.5
million Engine Equivalents when they reach mature volume.
Ductile iron technology
Internal development and field trials of the ductile iron technology continued
through the quarter, and market opportunities remain under discussion. The
SinterCast ductile iron technology is expected to provide an additional benefit
to customers 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 October-December January-December
(Amounts in SEK million if not 2013 2012 2013 2012
otherwise stated)
--------------------------------------------------------------------------------
Number of Sampling Cups shipped 28,600 21,500 118,500 102,400
Equipment (1) 4.2 7.0 10.1 9.0
Series Production (2) 10.0 7.2 40.2 35.8
Engineering Service( 3) 0.2 0.2 1.4 1.0
Other 0.0 0.0 0.2 0.1
--------------------------------------------------------------------------------
Total 14.4 14.4 51.9 45.9
--------------------------------------------------------------------------------
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 October-December 2013 revenue amounted to SEK 14.4 million (SEK 14.4
million). The revenue is the same as the fourth quarter of 2012, despite that
the installation revenue was SEK 2.8 million lower. The revenue from series
production increased by 39% to SEK 10.0 million (SEK 7.2 million), due to the
production of approximately 1.6 million (1.2 million) annualised Engine
Equivalents and the shipment of 28,600 (21,500) Sampling Cups. Equipment revenue
amounted to SEK 4.2 million (SEK 7.0 million), following the shipment of a
complete System 3000 Plus to Tupy, Brazil. Engineering Service amounted to SEK
0.2 million (SEK 0.2 million) following support provided primarily to Chinese
customers and to various other customers globally.
The January-December 2013 revenue amounted to SEK 51.9 million (SEK 45.9
million). The revenue from series production increased by 12% to SEK 40.2
million (SEK 35.8 million), due higher series production and the shipment of
118,500 (102,400) Sampling Cups. Equipment revenue amounted to SEK 10.1 million
(SEK 9.0 million), primarily related to the new System 3000 installations at
Tupy Foundry C in Brazil, Halberg in Germany and Scania in Sweden; the Mini-
System 3000 shipments to the University of Alabama in the US and to JMC in
China; and, the automated base treatment control system (System 3000 Plus
upgrade) at Tupy, Brazil. 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 October-December January- December
(Amounts in SEK million if not otherwise 2013 2012 2013 2012
stated)
--------------------------------------------------------------------------------
Operating Result 2.1 2.0 7.3 1.0
Result for the period after tax 2.1 -3.6 8.1 -3.7
Earnings per Share (SEK) 0.3 -0.5 1.2 -0.5
--------------------------------------------------------------------------------
The October-December 2013 Operating Result of SEK 2.1 million (SEK 2.0 million)
increased as a result of higher gross results of SEK 0.6 million derived from
higher revenue, higher operational expenses of SEK 0.4 million, and lower
exchange gains from operating receivables and liabilities of SEK 0.1 million.
The Result for the period after tax amounted to SEK 2.1 million (SEK -3.6
million), primarily related to an increase in the Operating Result of SEK 0.1
million, the increased financial net of SEK 0.3 million and decreased tax net
expense of SEK 5.3 million.
The January-December 2013 Operating Result of SEK 7.3 million (SEK 1.0 million),
increased as a result of higher gross results of SEK 5.1 million derived from
higher revenue and lower operational expenses of SEK 1.3 million and lower
exchange gains from operating receivables and liabilities of SEK 0.1 million.
The Result for the period after tax amounted to SEK 8.1 million (SEK -3.7
million), primarily related to an increase in the Operating Result of SEK 6.3
million, the decreased financial net of SEK 0.8 million and decreased tax net
expense of SEK 6.3 million.
Deferred Tax Asset
Tax amounted to SEK 0.6 million (SEK -5.7 million) during the January-December
2013 period, of which SEK 5.4 million of the difference is explained by the
change in the Swedish corporate tax rate from 26.3% to 22% as of 1 January
2013, SEK 0.8 million is explained by the increase of the deferred tax asset
that was made during the first quarter 2013 and SEK 0.1 million is tax in China.
The estimated future taxable profit and deferred tax asset calculation is
reassessed every quarter. As of 31 December 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 27.5
million) being capitalised as a deferred tax asset. The main uncertainty factor
for SinterCast continues to be the timing of the CGI market ramp-up. This is
the main reason not to increase the estimated carried-forward tax at this time.
Employee Stock Option Programme
As of 31 December 2013, the total cost of the employee stock option programme
2009-2013 was SEK 3.5 million (SEK 2.9 million). During 2013, SEK 0.8 million
(SEK 0.4 million) was accounted for as IFRS-2 and social costs related to the
option programme. The final tranche of the options in the employee stock option
programme 2009-2013 was exercised during the fourth quarter. The employees
exercised 114,480 warrants at the subscription price of SEK 50.34 and a total
amount of SEK 5.8 million was paid to the Company. The increase of the equity
and cash was SEK 5.6 million, after expenses and fees related to the exercise of
the options.
Cashflow, Liquidity and Investments
Cashflow Summary October-December January- December
(Amounts in SEK million if not otherwise 2013 2012 2013 2012
stated)
--------------------------------------------------------------------------------
Cashflow from operations 7.6 1.8 14.4 1.3
Cashflow from investment activities -0.1 -1.4 -0.6 -1.6
Cashflow from financing activities 5.6 - -1.4 -11.9
--------------------------------------------------------------------------------
Cashflow total 13.1 0.4 12.4 -12.2
Liquidity 47.8 35.4 47.8 35.4
--------------------------------------------------------------------------------
The October-December 2013 cashflow from operations was SEK 7.6 million (SEK 1.8
million). The SEK 5.8 million increase in cashflow was primarily related to
increased operating liabilities (SEK 4.6 million) linked to accrued social tax
and income tax cost (SEK 2.1 million), payable in January 2014, related to the
employee stock option programme 2009-2013 and to other accrued personnel
expenses.
Cashflow from financing activities increased by SEK 5.6 million calculated from
net contribution from the new share issue in conjunction with the exercise of
the employee stock option programme 2009-2013, resulting in a total cashflow
result of SEK 13.1 million (SEK 0.4 million), after investments of SEK 0.1
million (SEK 1.4 million).
The January-December 2013 cashflow from operations was SEK 14.4 million (SEK
1.3 million). The increased cashflow of SEK 13.1 million was primarily linked to
the operations before change in working capital (SEK 4.6 million) and due to
change in working capital (SEK 8.5 million), of which SEK 6.9 million was
related to increased operating liabilities.
Cashflow from financial activities was SEK -1.4 million, as a result of the new
share issue in the amount of SEK 5.6 million, less the dividend that was paid to
shareholders in the amount of SEK 7.0 million (SEK 11.9 million). The total
cashflow result for the period was SEK 12.4 million (SEK -12.2 million),
resulting in SEK 47.8 million (SEK 35.4 million) in liquidity on 31 December
2013. Investments amounted to SEK 0.6 million (SEK 1.6 million).
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 engines, exhaust components,
industrial power engines and most recently, the first high volume CGI petrol
engine launch, 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 31 December 2013, the Group had 17 (19) 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 (15)
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.
Patents
SinterCast currently holds 13 (11) patents, granted or pending, and maintains
44 (43) individual national phase patents worldwide. These patents address
SinterCast's metallurgical technology, thermal analysis, the Sampling Cup,
product applications and machining.
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, except for the exercise of the final tranche
of the employee stock option programme 2009-2013.
Events after the Balance Sheet Date
There have been no significant events since the balance sheet date of 31
December 2013 that could materially change these financial statements. The
following press releases have been issued:
14 January 2014 - SinterCast technology features at North American International
Auto Show
16 January 2014 - SinterCast secures process control contract for new purpose-
built Compacted Graphite Iron foundry in China
29 January 2014 - Tupy begins series production of CGI cylinder head for MTU
industrial power engine
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 before 1 March 2014 at the
following e-mail address: nomination.committee@sintercast.com).
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.
Dividend 2013
The Annual General Meeting of SinterCast AB (publ) held on 15 May 2013 approved
an ordinary dividend for 2013 amounting to SEK 1.0 per share. A total amount of
SEK 7.0 million was transferred to the shareholders.
Proposed Dividend 2014
The Board's intention is to continue to provide an ordinary dividend to the
shareholders, based primarily on the cashflow from operations. In the event that
the Board considers that the liquidity exceeds the amount needed to support the
operational requirements and strategic objectives, the Board has the option to
propose an extraordinary dividend or a share buy-back to further adjust the
liquidity.
The Board of Directors propose an ordinary dividend of SEK 1.2 per share (SEK
1.0), representing a transfer of SEK 8.4 million (SEK 7.0 million) to the
shareholders of SinterCast AB (publ). The Board proposes 23 May, 2014 as the
record date for entitlement to receive dividends. In deciding the amount of the
ordinary dividend to be proposed to the AGM 2014, the Board considered cashflow
from operations, the financial position, investment requirements and other
factors, such as market outlook, growth strategy and the internal financial
forecast for the Company and for the Group.
Information
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
The Interim Report October-December and Full Year Results 2014 will be published
on 11 February 2015
Annual Report 2013
The Annual Report 2013 will be published on 3 April 2014.
This report has not been reviewed by the Company's Auditors.
Stockholm 26 February 2014
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 size, weight, noise and emissions. The SinterCast technology, installed
in 39 foundries in 12 countries, is used for the high volume production of
petrol and diesel engine cylinder blocks and exhaust components for passenger
vehicles, medium-duty and heavy-duty cylinder blocks and heads for commercial
vehicles, and industrial power engine components for marine, rail, off-road and
stationary engine applications. SinterCast's series production components range
from 2 kg to 9 tonnes, all using the same proven process control technology.
The SinterCast share is quoted on the Small Cap segment of the Stockholm NASDAQ
OMX stock exchange (Stockholmsbörsen: SINT). For more information:
www.sintercast.com
END
