Second Quarter 2012 * Revenue for Period: SEK 11.3 million (SEK 12.1 million) * Operating Result: SEK 0.0 million (SEK 3.6 million) * Earnings per Share: SEK 0.0 per share (SEK 0.9 per share) * Cashflow from Operations: SEK 0.3 million (SEK 2.1 million) * Annualised Production at End of Period*: 1.30 million Engine Equivalents (1.35 million) * YTO Group, China, orders Mini-System 3000. Installation planned for September 2012 * New SinterCast company established in Korea, increasing technical and commercial presence in Asia 2012 Year-to-Date * Revenue: SEK 23.0 million (SEK 21.2 million) * Operating Result: SEK 1.3 million (SEK 4.3 million) * Earnings per Share: SEK 0.3 per share (SEK 1.0 per share) * Cashflow from Operations: SEK 0.0 million (SEK 6.7 million) * Installed Base: 18 fully automated systems and 12 Mini-Systems in Europe, Asia and the Americas Series Production* For graph, see Press Release PDF Series production decreased to 1.3 million Engine Equivalents in June, resulting in the first quarterly decline since 2008. Series production in May and July was 1.5 million Engine Equivalents. Despite the interruption in the production of one high volume OEM engine programme, the remaining series production programmes provided net growth in each of May, June and July. * Annualised production of Engine Equivalents (1 Engine Equivalent = 50 Kg) CEO Comments Series production declines, but outlook remains positive Series production declined during June, resulting in the first quarterly reduction since 2008. The reduction was due to interrupted shipment of the high volume Navistar Big Bore commercial vehicle cylinder block in North America, following an EPA ruling that the engine does not fully comply with 2010 emissions requirements. In comparison to March 2012, when the first quarter series production was reported as 1.60 million Engine Equivalents, the interrupted production at both the Tupy foundry in Brazil and the Pure Power foundry in the USA resulted in an annualised reduction of approximately 325,000 Engine Equivalents during June. The total annualised production in June was 1.30 million Engine Equivalents, indicating a net growth of approximately 25,000 Engine Equivalents in the remaining series production programmes. Series production recovered in July to 1.5 million Engine Equivalents, despite that the Navistar production remained more than 275,000 Engine Equivalents below the March 2012 level, corresponding to a net growth of approximately 190,000 Engine Equivalents in the remaining programmes. Navistar has stated that it is developing a technical solution to the non-compliance and that a compliant version of the Big Bore engine will be available during early 2013. In the meantime, Navistar has said that it will continue to build and sell the engines by using a combination of earned emissions credits and paying non-compliance penalties. SinterCast's series production has not yet seen any negative influence from the global economy or the Eurozone crisis. Although overall commercial vehicle sales in Europe are down, SinterCast's year-on-year European commercial vehicle sales have increased by approximately 50,000 Engine Equivalents due to increased production from SinterCast foundries for programmes that are dual sourced. V- diesel sales for passenger vehicles also continue to sell well in Europe. Series production for American engine applications continues to grow, as the Ford 6.7 litre V8, SinterCast's largest programme, has been applied to additional vehicles and as production for the Jeep Grand Cherokee ramps up in preparation for the showroom launch in January 2013. Volumes have also increased in Asia as Hyundai has begun to apply the CGI versions of three commercial vehicle cylinder heads to additional engines throughout the available power range. As presented at the 2012 AGM, the near term outlook for series production remains stable with the potential for future increases as new programmes come on stream. SinterCast continues to support product development programmes for passenger vehicle, commercial vehicle and industrial power applications in Europe, Asia and the Americas, including some high volume applications beyond the current high volume domains of passenger vehicle V-diesel cylinder blocks and commercial vehicle cylinder blocks and heads. It is estimated that the combined potential of the current series production programmes and the programmes under development represents a market opportunity of approximately 4.6 million Engine Equivalents per year within SinterCast's five year planning horizon. Positive installation outlook During the period, YTO Group Corporation, also known as China First Tractor Works, the leading supplier of tractors and harvesters in China with more than 75% of the Chinese market share for large tractors, signed a technology supply agreement, encompassing the installation of a Mini-System 3000 process control system with related hardware, treatment materials and consumables. The agreement also includes up to two years of extended technical support to establish a robust foundry process and to support CGI product development. The installation, which will become SinterCast's fourth installation in the important Chinese market, is planned to be commissioned during September 2012. The YTO installation is the first of the three installations targeted for 2012, as announced at the 2012 AGM. Several installation discussions are ongoing, in Europe, Asia and the Americas. Continued progress in new product development The successful recruitment over the past year has increased the intensity of the development of new functionality in the core CGI technology and for the ongoing development of the thermal analysis process control technology for ductile iron. The advances in the core CGI technology have already resulted in the implementation of fully automated base treatment control and a process database at one customer foundry and base treatment automation upgrades are under discussion at other customer sites. New installations of the turn-key System 3000 Plus, introduced at the 2012 AGM, are also under discussion with existing and new customers that require high volume production solutions. The ductile iron product development has continued throughout the period, both with in-house development and external trials, to further define the technical correlations and potential benefits, and customer discussions have been initiated in anticipation of the potential market launch. The proposed ductile iron thermal analysis control technology is intended to provide a net cost- benefit in ductile iron production by reducing magnesium consumption, improving mould yield and reducing casting defects in the foundry, and by improving machinability for the end-users. Financial Summary Revenue The revenue for the SinterCast Group relates primarily to income from equipment, series production and engineering service. Revenue Breakdown April-June January-June (Amounts in SEK million if not 2012 2011 2012 2011 otherwise stated) ------------------------------------------------------------------------------- Number of Sampling Cups shipped 32,000 36,000 68,800 63,400 Equipment (1) 0.1 1.5 0.4 2.4 Series Production (2) 10.9 9.7 22.1 17.8 Engineering Service( 3) 0.2 0.8 0.4 0.9 Other 0.1 0.1 0.1 0.1 ------------------------------------------------------------------------------- Total 11.3 12.1 23.0 21.2 ------------------------------------------------------------------------------- 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 April-June 2012 revenue amounted to SEK 11.3 million (SEK 12.1 million). The revenue decrease of 7% is due to the fact that no installations were invoiced during the period, in comparison to one invoiced installation during the second quarter of 2011. Equipment revenue amounted to SEK 0.1 million (SEK 1.5 million). The revenue from series production increased by 12% to SEK 10.9 million (SEK 9.7 million), due to the higher production rate during the quarter compared to last year and price increases that took effect as of 1 January 2012. The January-June 2012 revenue amounted to SEK 23.0 million (SEK 21.2 million). The revenue increase of 8% is a result of continued increases in series production, Sampling Cup shipments and price increases. 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 April-June January-June (Amounts in SEK million if not otherwise stated) 2012 2011 2012 2011 ------------------------------------------------------------------------- Operating Result 0.0 3.6 1.3 4.3 Result for the period after tax 0.1 6.2 1.8 7.3 Earnings per Share (SEK) 0.0 0.9 0.3 1.0 ------------------------------------------------------------------------- The April-June 2012 Operating Result of SEK 0.0 million (SEK 3.6 million), decreased as a result of lower gross results of SEK 0.8 million, higher operational expenses of SEK 1.9 million and by reduced operational exchange gains in the amount of SEK 0.9 million, reported as other operating income. The Result for the period after tax amounted to SEK 0.1 million (SEK 6.2 million million). SEK 3.6 million of the decrease is related to the operating result and the remaining SEK 2.5 million is primarily related to last year's revaluation of the deferred tax asset, as described in the section entitled "Deferred Tax Asset". The January-June 2012 Operating Result of SEK 1.3 million (SEK 4.3 million), increased as a result of higher gross results of SEK 1.4 million, decreased by higher operational expenses of SEK 3.5 million and by reduced operational exchange gains in the amount of SEK 0.9 million, reported as other operating income. The higher operational expenses are related to recruiting and salary expenses incurred in order to position the Company for further growth, as outlined at the 2012 AGM. The Result after tax for January-June 2012 amounted to SEK 1.8 million (SEK 7.3 million). Deferred Tax Asset The estimated future taxable profit and deferred tax asset calculation is reassessed every quarter. As of 30 June 2012, SEK 125.1 million (SEK 128.8 million) of SinterCast's total carried-forward tax losses have been used as the basis of the updated calculation, resulting in SEK 32.9 million (SEK 32.8 million) being capitalised as a deferred tax asset, unchanged since 31 December 2011. The deferred tax asset is included in the financial assets in the balance sheet. Employee Stock Option Program As of 30 June 2012, the total cost of the employee stock option program 2009-2013 was calculated to be SEK 3.1 million (SEK 3.1 million), based on a closing share price of SEK 52.0 (SEK 50.5). Thus far during 2012, SEK 0.3 million (SEK 0.4 million) has been accounted for as costs related to the option program. Cashflow, Liquidity and Investments Cashflow Summary April-June January-June (Amounts in SEK million if not otherwise stated) 2012 2011 2012 2011 ------------------------------------------------------------------------- Cashflow from operations 0.3 2.1 0.0 6.7 Cashflow from investment activities -0.1 -0.1 -0.2 -0.2 Cashflow from financing activities -11.9 -3.5 -11.9 -6.5 ------------------------------------------------------------------------- Cashflow total -11.7 -1.5 -12.1 0.0 Liquidity 35.5 40.3 35.5 40.3 ------------------------------------------------------------------------- The April-June 2012 cashflow from operations was SEK 0.3 million (SEK 2.1 million). During the period, a dividend in the amount of SEK 11.9 million (SEK 3.5 million) was paid to the shareholders, resulting in a negative total cashflow result of SEK -11.7 million. The January-June 2012 cashflow from operations was SEK 0.0 million (SEK 6.7 million). The lower cashflow result during the period, compared to 2011, is primarily explained by higher installation payments received during the first half of 2011 and increased working capital during 2012, including paid out accrued expenses of a one-time character. Investments amounted to SEK 0.2 million (SEK 0.2 million) during the period. The total cashflow result for the period is SEK -12.1 million resulting in SEK 35.5 million (SEK 40.3 million) in liquidity on 30 June 2012. Risks and Uncertainty Factors The main uncertainty factor for SinterCast continues to be the overall timing of the CGI market ramp-up. This primarily depends on OEM decisions for new CGI engines and other components, the global economy for new vehicle sales and the individual sales success of vehicles equipped with SinterCast-CGI components. 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 (hybrids 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.39 in SinterCast's Annual Report 2011 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 representatives in Sweden, the United Kingdom, the United States, China, Korea, Japan, India and Australia. During the second quarter, a new subsidiary was established in Korea, As of 30 June 2012, the Group had 20 (16) employees, three (three) of whom were female. Following the planned recruitment over the past 18 months, the Company is now well positioned to support global market activities and to drive the next phase of SinterCast's growth. No further recruitments are currently planned. 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 16 (14) employees. The majority of the operations are managed by the Parent Company, including responsibility for the representative office in China and sales representatives in Australia, India and Japan. Operations in the UK, USA and Korea 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. The accounting policies that have been applied for the Group and for the Parent Company are in agreement with the accounting policies used in the 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 With the exception of the YTO Group press release issued on 2 July 2012, there have been no significant events since the balance sheet date of 30 June 2012 that could materially change these financial statements. Information The Interim Report July-September 2012 will be published on 7 November 2012 The Interim Report October- December and Full Year Results 2012 will be published on 20 February 2013 The Interim Report January-March 2013 will be published on 23 April 2013 The Interim Report April-June 2013 will be published on 21 August 2013 This report has not been reviewed by the Company's Auditors. The Board of Directors and the CEO certify that the half-yearly financial report provides a true and fair overview of the operations, outlook, financial position and results of the Company and the Group, and describes the material risks and uncertainties that the Company and the companies in the Group face. Stockholm 22 August 2012 Ulla Britt Fräjdin Hellqvist Aage Figenschou Andrea Fessler Chairman of the Board Vice Chairman of the Board Member of the Board Robert Dover Laurence Vine Chatterton Steve Dawson Member of the Board Member of the Board President & CEO Member of the Board 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 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 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, Navistar, Porsche, PSA Peugeot-Citroën, Renault, Rolls-Royce Power Engineering, 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 [HUG#1635282]
The outlook for series production and new installations remains positive, despite a decrease to 1.3 million Engine Equivalents in June. Annualised series production recovered to 1.5 million in July.
| Source: SinterCast AB