SinterCast Results January - March 2011

4 mei 2011 * Revenue for period: SEK 9.1 million (SEK 8.0 million) * Operating Result: SEK 0.7 million (SEK 0.7 million) * Earning/share: SEK 0.2 per share (SEK 0.2 per share) * Cashflow: SEK 1.5 million (SEK -2.1 million) * Dividend: The Board of Directors proposes an ordinary dividend of SEK 0.5 per share (SEK 0.0 per share) * Scania 16.4 litre V8 cylinder block awarded Casting of the Year honours * Field trial activities continue to increase, with five trials scheduled during May Full-year outlook remains optimistic, building on recordseries production of 1.3 million Engine Equivalents and positive installation outlook Current Production and Outlook Series production established a new all-time high during March, with an annualised production rate of 1.3 million Engine Equivalents.  The current series production programmes have the potential to grow to an annual volume of approximately 1.55 million Engine Equivalents when all programmes reach mature volume.  Further growth requires the launch of new series production programmes.  SinterCast continues to support product development programmes for passenger vehicle, commercial vehicle and industrial power applications and it is estimated that these programmes could provide approximately 2.8 million additional Engine Equivalents per year within SinterCast's five year planning horizon, providing a current market opportunity of approximately 4.35 million Engine Equivalents per year. During the period, the CGI cylinder block of the Scania 16.4 litre V8 commercial vehicle engine was awarded Casting of the Year honours by the Swedish Foundry Association.  The CGI cylinder block began production during 2010 at the Halberg foundry in Leipzig, Germany, using the SinterCast process control technology.  The CGI cylinder block forms the basis of the most powerful commercial vehicle engine on the road today, with 730 horsepower (537 kW) and 3,500 Nm of torque, further reinforcing the trend toward CGI for commercial vehicle engines.  The 16.4 litre engine satisfies Euro 5 emissions, is 100% biodiesel compatible, and meets EEV (Enhanced Environmentally Friendly Vehicle) standards. The demand for field trials has begun to increase and SinterCast has committed to conduct five trials during May.  In addition to the increased trial activities, installation discussions are also at an advanced stage and the outlook for new installations during the remainder of 2011 remains optimistic.  While the current series production and development activities provide the basis for a positive outlook for the full-year result, the availability of components required for the production of some SinterCast vehicles may be affected by the Japanese earthquake and tsunami, potentially resulting in reduced growth during the second half of 2011.  It is not yet possible to quantify the effect that this may have on SinterCast volumes. Financial Summary Revenue The January-March 2011 revenue amounted to SEK 9.1 million (SEK 8.0 million).  The revenue increase of 14% represents the combined effect of a 40% increase in Engine Equivalent production, an 18% increase in the number of Sampling Cups shipped, and a 10% depreciation of both the US dollar and the Euro against the Swedish krona, compared to the same period last year. The revenue for the SinterCast Group relates primarily to income from equipment (sales and leases), series production and engineering service, as shown in the following table: Revenue Breakdown January-March January-December   2011 2010 2010 2009 ------------------------------------------------------------------------------- Number of Sampling Cups shipped 27,400 23,250 102,650 54,600 Equipment[1] 0.9 0.9 6.8 2.6 Series Production[2] 8.1 7.0 30.9 15.6 Engineering Service[3] 0.1 0.1 1.3 1.7 Other 0.0 0.0 0.4 0.1 ------------------------------------------------------------------------------- Total 9.1 8.0 39.4 20.0 ------------------------------------------------------------------------------- (Amounts in SEK million if not otherwise stated) 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 Results The January-March 2011 operating result was SEK 0.7 million (SEK 0.7 million). The cost of goods sold increased by approximately SEK 0.6 million compared to the same period 2010 and the operating costs increased similarly by approximately SEK 0.6 million compared to the same period 2010 due to increased R&D activity and additional personnel costs. The result after tax for the January-March 2011 period amounted to SEK 1.1 million (SEK 1.0 million). The deferred tax asset was unchanged during the period. Results Summary January-March January-December   2011 2010 2010 2009 ------------------------------------------------------------------------------- Operating Result 0.7 0.7 7.2 -6.3 Result for the period 1.1 1.0 16.5 -2.7 Result after tax per share (SEK) 0.2 0.2 2.5 -0.5 ------------------------------------------------------------------------------- (Amounts in SEK million if not otherwise stated) Employee Stock Option Programme As of 31 March 2011, the cost of the employee stock option programme 2009-2013 was calculated at a total amount of SEK 3.2 million (SEK 3.2 million), based on a closing share price of SEK 56.5 (SEK 48.1). Thus far during 2011, SEK 0.3 million (SEK 0.3 million) has been accounted for as costs related to the option programme. Cashflow, Liquidity and Investments The January-March 2011 cashflow result was SEK 1.5 million (SEK -2.1 million). The improved cashflow reflects payment received for the December 2010 System 2000 activation at the Dashiang foundry in China and the January 2011 System 3000 installation at the Daedong foundry in Korea. The increased liquidity from SEK 40.3 million on 31 December 2010 to SEK 41.8 million on 31 March 2011 is a combined result of the positive cashflow less the repayment of the Sörmland Sparbank loan in the amount of SEK 3.0 million.  Investments during the period amounted to SEK 0.6 million (SEK 0.1 million). Cashflow Summary January-March January-December   2011 2010 2010 2009 ------------------------------------------------------------------ Cashflow from operating activities 1.5 1.3 10.4 -3.2 Cashflow from working capital 3.1 -3.3 -7.4 -1.7 Cashflow from investment activities -0.1 -0.1 -0.5 -0.6 Cashflow from financing activities -3.0 0.0 13.0 21.3 ------------------------------------------------------------------ Cashflow total 1.5 -2.1 15.5 15.8 Liquidity 41.8 22.7 40.3 24.8 Investments 0.6 0.1 0.7 1.3 ------------------------------------------------------------------ (Amounts in SEK million if not otherwise stated) SinterCast has historically been financed by risk capital provided by its shareholders and has managed its expenses according to market forecasts, resource requirements, and regular reviews of expenditures in relation to the annual budget. Following positive cashflow from operations during 2010, the Board judges that the long-term financing of the Company is secure, allowing the Company to be more pro-active in its operations. Risks and Uncertainty Factors Despite the positive increase in series production, and the renewed opportunities for installations, 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. The global economic downturn caused some automotive OEMs to delay production launches and this has directly affected SinterCast.  Although the automotive market is enjoying a recovery, volumes in SinterCast's core markets are still significantly below pre-downturn levels and the SinterCast-CGI programmes that started production before 3Q08 have still not fully recovered.  While SinterCast continues to support new product development activities, and anticipates new production launches and new opportunities for installation revenue, the Board believes that it is still not possible to determine the ultimate effect of the economic downturn.  More recently, the earthquake and tsunami in Japan may affect the supply of components to vehicle manufacturers around the world, and this could also affect the near-term development of SinterCast's production volumes. Business Model SinterCast sells or leases the System 3000 hardware, leases the process control software, sells the sampling consumables, and charges a running Production Fee for each tonne of CGI castings produced using the SinterCast technology.  Revenue is also derived from spare parts, customer service, field trials and sales of test pieces.  The total running fees (sampling consumables plus Production Fee) depend on the ladle size and the casting yield for each foundry and each product. For a typical cylinder block production, the running fees provide a revenue of approximately EUR 40~50 per tonne of castings, equivalently, EUR 2.00~2.50 for each 50 kg Engine Equivalent.  The SinterCast business model is highly scalable and gross margins are high, allowing profitability to rise as the installed base grows and as more products enter series production. Market Penetration and Competition 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.  As the CGI market has developed, some foundry supply companies have proposed alternative CGI technologies.  To SinterCast's knowledge, these have included Hereaus-Electronite, OxyCast, OCC and NovaCast.  It is also possible that some foundries may opt to produce CGI using in-house control and discipline, but it is generally judged that this will become less likely as product complexity and production volumes increase, and as specification requirements become more rigidly enforced by the end-users.  SinterCast judges that its technology and engineering know-how provides the most reliable and cost-effective solution for the production of high quality CGI.  Based on its proven technology, production experience and engineering service, SinterCast will continue to support new CGI development activities to further increase its share of the world CGI production capacity.  With respect to the development of alternative automotive technologies such as biofuels, hybrids and fuel cells, SinterCast does not expect these to have a significant effect on the Company's competitive position for the foreseeable future. Personnel As of 31 March 2011, the Group had 15 (13) employees, three (two) of which were female. The core technical staff has the necessary skills and resources to support ongoing customer activities and to support the market development. Further recruitment will be phased with the development of field activities, particularly the need to support new installations and series production activities. 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 There have been no significant events since the balance sheet date of 31 March 2011 that could materially change these financial statements. Parent Company SinterCast AB (publ) is the Parent Company of the SinterCast Group, with registered office located in Stockholm, Sweden.  The Parent Company has 11 (10) employees.  The majority of the operations are conducted by the Parent Company, including responsibility for the representative office in China and sales representatives in Australia, India, Japan and Korea. Operations in the UK and the USA are managed by the local companies.  The information given for the Group in this report corresponds in all material respects to the Parent Company. Information The Interim Report April-June 2011 will be published on 24 August 2011 The Interim Report July-September 2011 will be published on 2 November 2011 The Interim Report October- December and Full Year Results 2011 will be published on 22 February 2012 The Interim Report January-March 2012 will be published on 25 April 2012 Annual General Meeting The Annual General Meeting 2011 will be held at 15:00 on 19 May 2011 at The Royal Swedish Academy of Engineering Sciences (IVA), Grev Turegatan 16, Stockholm.  The notice to the Annual General Meeting was published on 18 April 2011 and is available on the Company's website. Annual Report 2010 The Annual Report 2010 was published on the SinterCast website on 20 April 2011. In consideration of cost efficiency and environmental concern, the Annual Report 2010 will be issued in electronic format, as a PDF file, and will not be generally distributed as a printed document. This report has not been reviewed by the Company's Auditors. 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 46 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, Caterpillar, Chrysler, DAF Trucks, Ford, Ford-Otosan, General Electric Transportation Systems, General Motors, Hyundai, Jaguar, Kia, Land Rover, MAN, Navistar, Porsche, PSA Peugeot-Citroën, Renault, Rolls-Royce Power Engineering, 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). - END- The full report with tables can be downloaded from the following link: SinterCast Results January – March 2011: http://hugin.info/1205/R/1512090/447547.pdf This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: SinterCast via Thomson Reuters ONE [HUG#1512090]