Record production; positive growth outlook
Second Quarter 2022
· Revenue for Period: SEK 27.9 million (SEK 28.2 million)
· Operating Result: SEK 5.5 million (SEK 7.2 million), affected by the termination of the WHB deferred purchase agreement, in the amount of SEK 4.9 million
· Earnings per Share: SEK 0.9 per share (SEK 1.6 per share)
· Cashflow from Operations: SEK 4.0 million (SEK 8.7 million)
· 3.6 million Engine Equivalents in second quarter: new quarterly record
· 3.9 million Engine Equivalents in June: equals all-time monthly high
· Start of series production of 16 litre commercial vehicle cylinder block at FAW in China
· Teksid orders SinterCast Ladle Tracker® technology
· Revenue for Period: SEK 56.0 million (SEK 52.5 million)
· Operating Result: SEK 13.1 million (SEK 15.7 million), affected by the termination of the WHB deferred purchase agreement, in the amount of SEK 4.9 million
· Earnings per Share: SEK 2.0 per share (SEK 2.6 per share)
· Cashflow from Operations: SEK 2.6 million (SEK 15.4 million)
· Dividend: Ordinary dividend of SEK 4.50 per share (SEK 4.00 per share) and extraordinary dividend of SEK 0.50 per share (SEK 0.00 per share), equivalent to SEK 35.5 million (SEK 28.4 million), to be paid in two equal instalments
· Installed Base: 55 (55) installations in 14 Countries(24 (25) fully automated systems, 24 (24) mini-systems and seven (six) tracking systems)
Record production provides foundation growth
With strong pent-up demand, new programmes coming on stream and improving supply chains, annualised series production established a new record of 3.6 million Engine Equivalents in the second quarter, surpassing the previous quarterly record of 3.5 million Engine Equivalents set in the third quarter of 2019. The second quarter benefitted from strong production at the Tupy foundries in Brazil and Mexico, plus the continued ramp of the new 13 litre commercial vehicle engine for the Traton group at the Scania foundry in Sweden. Ultimately, the strong growth culminated in annualised production of 3.9 million Engine Equivalents in June, equalling the all-time monthly high set in September 2019.
In comparison to the previous year, production volume for the first half of 2022 was up by 13%. The increased volume, combined with a 13% increase in the US dollar exchange rate, provided a 26% increase in production fee revenue for the first half of the year. The increases in series production and exchange rates were partially offset by a 20% decrease in Sampling Cup shipments as customers reduced inventory levels in response to improving global supply chains. Ultimately, the revenue for the first half of the year finished at SEK 56.0 million, providing a 7% year-on-year increase.
In comparison to the previous year, production volume for the first half of 2022 was up by 13%. The increased volume, combined with a 13% increase in the US dollar exchange rate, provided a 26% increase in production fee revenue for the first half of the year.
Commercial vehicles accounted for 47% of the production volume during the second quarter, providing the largest contribution, and the largest growth opportunity. Following the start of production of the Scania 13 litre commercial vehicle engine during the first quarter, the initial ramp continued through the second quarter. The production will continue to ramp during the second half of the year – and beyond – eventually providing one million incremental Engine Equivalents per year when full volume is reached. The second quarter also marked the start of production of a new 16 litre commercial vehicle engine at First Automobile Works (FAW) in China, with the cylinder block produced in SinterCast-CGI. Conceived in response to improving road infrastructure and increasing demand for increased payload, the engine enters the market as the first on-road 16 litre engine in China. It is likely that the initial volume will be modest as the new entry becomes established in the market and as truck sales begin to improve following a 64% slump in commercial vehicle sales in the first half of the year due to Covid restrictions in China.
Overall, the market outlook is positive. Semiconductor supply has started to improve and this recovery is expected to span well into 2023, fuelling recovery momentum for the automotive and foundry industries. While the onset of war in Ukraine disrupted the supply of some subcomponents, particularly for European OEMs, this challenge has been largely overcome and has not had any significant impact on the SinterCast production. At the half-year point, we have posted quarterly production records in both the first and second quarters, providing a strong foundation for further growth in the second half of the year and beyond. We maintain our targets of reaching the monthly four million Engine Equivalent milestone this year, and reaching the monthly five million Engine Equivalent milestone in 2024, continuing our track record of delivering double-digit compounded annual growth rates.
At the half-year point, we have posted quarterly production records in both the first and second quarters, providing a strong foundation for further growth in the second half of the year and beyond.
Gap year for installations
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 in the foundry industry has resulted in a below average outlook for installation revenue in 2022. Installation revenue in the first half of the year finished at SEK 1.0 million, primarily from the sale of spare parts. The outlook for the second half of the year is similarly modest, despite the planned installation of a Ladle Tracker system at the Teksid foundry in Monclova, Mexico during the fourth quarter. With ongoing discussions for CGI process control systems, capacity upgrades, and Tracking installations we expect installation activities to return to historical levels in 2023.
Series production continued to grow in the second quarter, reaching an annualised record of 3.6 million Engine Equivalents for the quarter, providing 13% year-on-year growth. Series production equalled the all-time monthly high of 3.9 million Engine Equivalents in June, corresponding to an 18% year-on-year increase.
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 55 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 and the Swedish Securities Markets Act. This information was submitted for publication, through the agency of the President & CEO Dr. Steve Dawson, at 08:00 CET on 17 August 2022.
This information was distributed by MFN https://www.mfn.se/