Series production improves to 85% of full-year 2019 volume - Record installation outlook
Third Quarter 2020
Annualised series production recovered to 2.8 million Engine Equivalents in the third quarter, corresponding to approximately 85% of the full-year 2019 volume of 3.3 million Engine Equivalents.
* Annualised average production of Engine Equivalents during the quarter (1 Engine Equivalent = 50 kg)
Series production improves and begins to stabilise
Following annualised production of 1.6 million Engine Equivalents in the second quarter, series production improved to 2.8 million Engine Equivalents in the third quarter, corresponding to approximately 85% of the full-year 2019 run-rate of 3.3 million Engine Equivalents. With constant production of 2.7 million Engine Equivalents in July and August, followed by 2.9 million Engine Equivalents in September, the third quarter showed the first signs of stable production since the onset of foundry shutdowns in March. The production in the third quarter was notable for the second highest July and the second-highest 3Q in our history, as many foundries bypassed the traditional summer shutdown to rebuild inventory and to meet the market demand for new vehicle sales. In our core markets of pick-up trucks and commercial vehicles, there is a clear mix of inventory rebuild and new sales demand. This demand is expected to continue to stimulate the production through the fourth quarter. While some uncertainty remains, we maintain our confidence in the long-term growth potential of CGI and in our ability to reach and exceed the five million Engine Equivalent milestone.
Positive outlook for installation revenue; new series production planned
Following the System 4000 sale at the WHB foundry in Brazil in May, and with the System 4000 Plus installations underway at the First Automobile Works foundry in China and at the Scania foundry in Sweden, the outlook remains for SinterCast to post a second consecutive year of record installation revenue, exceeding the 2019 revenue of SEK 11.9 million. The installations at both foundries are expected to be completed during the fourth quarter, with heavy-duty commercial vehicle engine production beginning at both facilities during 2021. The FAW installation has been ordered to support the production of a SinterCast-CGI cylinder block for a new 16 litre commercial vehicle engine, with initial production planned to exceed 100,000 Engine Equivalents per year. The Scania installation was installed to support the production of a SinterCast-CGI cylinder block and head for a new 13 litre engine, destined for Volkswagen group applications including MAN, Navistar, Scania and Volkswagen, with the mature volume planned to provide incremental production of one million Engine Equivalents per year.
During September, the Gusswerke Leipzig (formerly Halberg) foundry ceased operation. There is no negative impact on the SinterCast series production or revenue, as all of the Gusswerke CGI production was transferred to other SinterCast foundries. A provision for anticipated credit losses associated with the insolvency declaration of the Gusswerke Leipzig foundry (SEK -1.1 million) was included in the 4Q 2019 results.
Discussions are ongoing for CGI process control systems, capacity upgrades, and Tracking Technologies installations in grey iron, CGI and ductile iron foundries. However, many foundries are currently deferring or restricting investment commitments and on-site engineering service. SinterCast is also investigating the development of other unique technologies – within and beyond the scope of thermal analysis – to improve quality and production efficiency in the metals industry, and to broaden our product portfolio and our production base.
For further information please contact:
Dr. Steve Dawson
President & CEO
SinterCast AB (publ)
Office: +46 150 794 40
Mobile: +44 771 002 6342
This press release contains information SinterCast AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication, through the agency of the President & CEO Dr. Steve Dawson, at 08:00 CET on 28 October 2020.
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 is used for the 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 agriculture, marine, rail, off-road and stationary engine applications. SinterCast supports the series production of components ranging from 2.7 kg to 9 tonnes, all using the same proven process control technology. As a specialist supplier of precision measurement and process control solutions to the metals industry, SinterCast also supplies the SinterCast Ladle Tracker® and SinterCast Cast Tracker® technologies, to improve process control, productivity and traceability in a variety of applications. With 57 installations in 14 countries, SinterCast is a publicly traded company, quoted on the Small Cap segment of the Nasdaq Stockholm stock exchange (SINT). For more information: www.sintercast.com
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