Strong start for series production
First Quarter 2022
· Revenue for Period: SEK 28.1 million (SEK 24.3 million)
· Operating Result: SEK 7.6 million (SEK 8.5 million)
· Earnings per Share: SEK 1.1 per share (SEK 1.0 per share)
· Cashflow from Operations: SEK -1.4 million (SEK 6.7 million)
· Scania begins series production of new commercial vehicle engine
· Ford starts new production of 3.0 litre V6 diesel for Ford Ranger and Volkswagen Amarok
· Highest first quarter production on record; 3.2 million Engine Equivalents
· March equals third-highest month on record; 3.6 million Engine Equivalents
· Installed Base: 54 installations in 14 countries(24 (25) fully automated systems, 24 (25) mini-systems and six (six) tracking systems)
Strong start; positive outlook
Following short months in January due to new year shutdowns and in February due to the 28-day calendar coupled with holiday periods for some of our key foundry partners, annualised series production in March increased to 3.6 million Engine Equivalents, marking the third highest month on record. The strong production in March boosted the first-quarter volume to 3.2 million Engine Equivalents, providing the highest first quarter on record. In perspective, the first quarter production was 10% above the first quarters of 2021 and 2020, and significantly, 3% higher than the corresponding pre-Covid volume in the first quarter of 2019. Together, the increase in production, combined with an increase in Sampling Cup shipments and favourable exchange rates, increased year-on-year first quarter revenue by 16% to SEK 28.1 million.
The first quarter marked the start of series production of a new 13 litre commercial vehicle engine at the new Scania foundry in Sweden, with both the cylinder block and the cylinder head produced in SinterCast-CGI. The Scania production will continue to ramp up during 2022 – and beyond – eventually providing one million incremental Engine Equivalents per year when full volume is reached. While the new Scania engine has begun to make a contribution, the anticipated production of a new 16 litre cylinder block for First Automobile Works (FAW) has not yet started, due to renewed Covid lockdowns in China. Overall, the outlook for series production is positive, with the continued ramp of the Scania engine; the pending start of production of the FAW cylinder block; the return to series production for the Ford 3.0 litre V6 diesel with a SinterCast-CGI cylinder block for Ford Ranger and Volkswagen Amarok in Europe; and, the anticipated global improvement of semiconductor availability. Building on these positive indicators, we maintain our ambition to reach the monthly four million Engine Equivalent milestone this year.
Together, the increase in production, combined with an increase in Sampling Cup shipments and favourable exchange rates, increased year-on-year first quarter revenue by 16% to SEK 28.1 million.
The first quarter also obviously introduced new challenges for the global economy with the onset of war in Ukraine. SinterCast has not yet received any revenue from Russia nor does it have any installations in Russia or any Tier II supply of SinterCast-CGI castings into Russia. As such, SinterCast has no direct exposure to Russia. However, Western OEMs have suspended sales of finished vehicles into Russia and this may have an indirect, although limited, impact on SinterCast. Over the last few years, SinterCast has had market development contacts with two Russian commercial vehicle manufacturers, supported by a local ad-hoc consultant. At the outset of the war, SinterCast indefinitely suspended the contact with these parties. SinterCast is not immune to the overall effects of the geopolitical uncertainty caused by the war, but with more than 80% of our foundry production and more than 50% of our engine assembly based in the Americas, we judge that there is no immediate or significant threat to the supply chains that could affect the current series production outlook.
Overall, the outlook for series production is positive, with the continued ramp of the Scania engine; the pending start of production of the FAW cylinder block; the return to series production for the Ford 3.0 litre V6 diesel for Ford Ranger and Volkswagen Amarok in Europe; and, the anticipated global improvement semiconductor availability.
During April, the WHB foundry in Brazil, as part of its insolvency restructuring plan, served notice of termination of the Agreement for the deferred purchase of a System 4000. The System 4000 was initially installed at WHB in November 2019 and the purchase option was exercised in May 2020. However, due to the ongoing restructuring of the company, WHB has decided to return the System 4000 to SinterCast. The termination of the deferred purchase agreement will result in a one-time impact on the result by approximately SEK 4.5 million, to be recognised in the second quarter of 2022. There is no current CGI production at WHB and none of the programmes in the anticipated growth to reach the monthly five million Engine Equivalents milestone by 2024 were attributed to WHB.
Following three strong years for installation revenue, with consecutive records in 2019 and 2020 and a strong finish in 2021, many of the opportunities in the installation pipeline have been realised. This, together with the Covid-induced reduction in capital expenditure planning in the foundry industry leads toward a more modest expectation for installation revenue in 2022. Nonetheless, installation discussions are ongoing for CGI process control systems, capacity upgrades, and Tracking Technologies installations. In addition to these current installation opportunities, 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.
Following strong production of 3.6 million Engine Equivalents in March, annualised series production for the first quarter finished at 3.2 million Engine Equivalents, providing the highest first quarter production on record and the first full quarter with higher volume than the corresponding pre-Covid quarter.
SinterCast is the world’s leading supplier of process control technology for the reliable high volume production of Compacted Graphite Iron (CGI). The properties of CGI enable improved transport solutions, increasing efficiency and reducing carbon emissions in passenger vehicle, commercial vehicle and industrial power applications. 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 production efficiency and Industry 4.0 traceability in a variety of applications. With 54 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
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 27 April 2022.
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