SinterCast

Four million Engine Equivalent milestone surpassed

Second Quarter 2023
· Revenue for Period: SEK 31.7 million (SEK 27.9 million)
· Operating Result: SEK 6.3 million (SEK 3.5 million)
· Earnings per Share: SEK 0.87 per share (SEK 0.90 per share)
· Cashflow from Operations: SEK 13.8 million (SEK 4.0 million), following improved payment terms from a major customer
· Dividend Payment: first instalment of SEK 2.75 per share (SEK 19.5 million) paid on 19 May 2023
· All-time high of 4.1 million Engine Equivalents in June
· Record production of 3.7 million Engine Equivalents in second quarter
· Nine consecutive quarters of year-on-year production increase
· Temporary decrease in volume expected 2H24; five million Engine Equivalents targeted for end-2025
· Investor Open House to be held at the SinterCast Technical Centre in Katrineholm, 21 September 2023

Year-to-Date 2023
· Revenue for Period: SEK 58.1 million (SEK 56.0 million)
· Operating Result: SEK 12.7 million (SEK 11.5 million)
· Earnings per Share: SEK 1.76 per share (SEK 2.02 per share)
· Cashflow from Operations: SEK 22.6 million (SEK 2.6 million)
· Dividend: Ordinary dividend of SEK 5.00 per share (SEK 4.50 per share) and extraordinary dividend of SEK 0.50 per share (SEK 0.50 per share), equivalent to SEK 39.0 million (SEK 35.5 million), to be paid in two equal instalments
· Installed Base: 57 (55) installations, (25 (24) fully automated systems, 25 (24) mini-systems and seven (seven) tracking systems) in 13 (14) countries

CEO Message
 
New benchmarks for series production
The second quarter delivered significant growth in series production, benefitting from stable volume from all of the main programmes and improving ramps from some of the new programmes. The quarter culminated with 4.1 million annualised Engine Equivalents (205,000 tonnes of shipped castings) in June to surpass the four million Engine Equivalent milestone for the first time. The second quarter finished at 3.7 million Engine Equivalents, providing 12% growth compared to the first quarter, setting a new record for quarterly volume, and extending the SinterCast streak to nine consecutive quarters of year-on-year series production increases. Sampling Cup volume also improved during the quarter with 49,500 units shipped, representing a 50% increase over the first quarter and indicating that customers have largely concluded their efforts to re-establish minimum stock levels following the normalisation of global supply chains. Together, the increases in series production, consumables shipments and favourable exchange rates resulted in a 14% increase in year-on-year revenue.
 
Despite that July is traditionally a slower month for series production due to summer shutdowns at some of our key customers, the recent strong series production was reinforced in July with annualised production of 3.8 million Engine Equivalents, and the shipment of 23,800 Sampling Cups. The July production marks a 7% increase compared to the previous high for July set in 2022, and a positive start to the second half of the year.

With new product development activities in each of the passenger vehicle, commercial vehicle and off-road industrial power sectors, the outlook for series production is positive. In our home market in Sweden, the ramp-up of the new Traton Group 13 litre cylinder block and head accelerated during the second quarter as deliveries increased for both Scania and Navistar. Further increases are expected during the second half of the year and particularly in 2024 and 2025 following the onset of deliveries to MAN in Germany. Together with the 11 litre derivative of the engine, the Traton Group volume will provide one million incremental Engine Equivalents when full volume is reached. Although production of the new 11, 13 and 16 litre engines at First Automobile Works (FAW) in China has not yet started, the FAW programmes also represent a significant growth opportunity, also with the potential to provide more than one million incremental Engine Equivalents. 
 
While the overall outlook remains positive, it is now expected that one of our high volume programmes will reach its end-of-life stage during the second half of 2024. The expected conclusion of this programme will result in a temporary decrease in volume and a consequent delay with respect to our previous target to reach the five million milestone in 2024. As a result of this stoppage, we now expect to reach the five million milestone toward the end of 2025. Despite the temporary decrease, the production stop does not change our ability to reach the five million Engine Equivalent milestone or our ambition to reach the seven million Engine Equivalent target, with continued growth through 2030.
 
During the period, in-house activities intensified to strengthen the supply base to support the future market growth. The activities are related to the ordering of tooling for the production of the patented Sampling Cup, including new tooling at the current sole supplier in Sweden and the ongoing development of a second source for Sampling Cup production in Slovakia. The total investments for these proactive expansions amount to approximately SEK 2.0 million, of which SEK 0.5 million was allocated to the second quarter. The developments are expected to be completed before year-end.
 
Upturn in installation activities
The near-term outlook for installation revenue continues to improve, as several discussions for new CGI process control systems and capacity and functionality upgrades are ongoing. The current opportunities include the previously announced System 4000 installation at the Dongfeng Auto foundry in China which is now expected to be commissioned during the third quarter. One other extended trial of a CGI Mini-System has also been initiated in the industrial power sector, with the potential to result in a system sale before year-end. The GIFA World Foundry Trade Fair, held from 12 to 16 June 2023 has also resulted in a handful of new discussions for trials and potential installations for both CGI process control and for the SinterCast Ladle Tracker®. Although the outcome of the trials and the timing of the ongoing installation discussions is not yet defined, it is expected that the current opportunities will enable the average installation revenue during the 2024 to 2025 period to return to the historical level of approximately SEK 8 million per year.

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 57 installations in 13 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 more information:

Dr. Steve Dawson
President & CEO
SinterCast AB (publ)
Office: +46 150 794 40
Mobile: +44 771 002 6342
e-mail: steve.dawson@sintercast.com
website: www.sintercast.com
CIN: 556233-6494

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 16 August 2023