Record series production; positive outlook for 2019
Building on the start of production of the Cummins 6.7 litre in-line diesel engine used in Ram Super Duty pick up applications, series production increased to the record level of 3.1 million Engine Equivalents in the first quarter of 2019, providing 24% year-on-year growth.
* Annualised average production of Engine Equivalents during the quarter (1 Engine Equivalent = 50 kg)
Second consecutive year with strong start for series production
Following 25% year-on-year growth in the first quarter of 2018, series production took another significant step forward in the first quarter of 2019, posting 24% year-on-year growth and finishing at the new quarterly record level of 3.1 million Engine Equivalents. The increase in the first-quarter production was primarily due to the ramp-up of the Cummins 6.7 litre in-line diesel engine that started production at the Tupy Mexico foundry during the fourth quarter of 2018. From the foundation of 2.6 million Engine Equivalents in the fourth quarter of 2018, series production reached the 3.0 million Engine Equivalent milestone in February and increased further to the new monthly record level of 3.4 million Engine Equivalents in March. The first quarter volume also benefitted from increased production of V-type diesel engines for passenger vehicles and from heavy-duty diesel engine cylinder blocks and heads for commercial vehicles, particularly in March.
The increased series production, plus a 13% increase in year-on-year Sampling Cup shipments, resulted in a 38% increase in first quarter revenue to SEK 22.9 million and an 82% increase in the first quarter operating result, to SEK 8.9 million. The full-year outlook remains positive, with stable contribution from the established series production base and opportunities for new installations for both the core CGI technology and for the new Tracking Technologies.
Positive outlook for installation revenue
The 2019 installation campaign also benefitted from a strong start, with two new installations secured in January. The first was a Mini-System 3000 installation for industrial power production at the China Shipbuilding Industry Corporation (CSIC) foundry in Shaanxi, China. The CSIC installation and training are underway and the system is expected to be fully commissioned before the end of the second quarter. The second installation commitment was for a full System 4000 Plus to be installed at the new Scania foundry during 2020. With an initial order value of approximately SEK 5 million, and with the start of series production beginning in 2021 and potentially ramping to provide approximately SEK 20 million of incremental running revenue per year before 2025, the Scania order represents a significant step in our long term growth plans and provides the opportunity for SinterCast to continue to deliver double-digit growth. Together with two Tracking Technologies installations that were ordered in 2018 but will be commissioned in 2019, the CSIC and Scania installations provide the opportunity for above average installation revenue in 2019 and 2020.
The 2019 installation activity was augmented in early-April by the installation of a Mini-System 3000 at the Department of Materials and Manufacturing at the School of Engineering at Jönköping Technical University in Sweden. The installation is part of the SinterCast contribution to a long-term university-industry project involving multiple industrial partners for the development of Compacted Graphite Iron (CGI), funded in part by the Swedish government. As part of the in-kind contribution, SinterCast will provide the Mini-System 3000 hardware and consumables, together with technical support for the use of the system and technical input to the project. The objective of the project is to develop new technologies and applications for CGI that further strengthen the position of Swedish industry.
Several other installation discussions are ongoing for CGI process control systems, capacity upgrades, and Tracking Technologies installations in grey iron, CGI and ductile iron foundries. 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.
Interim Reports Publication Date
April-June 2019 22 August 2019
July-September 2019 13 November 2019
October-December 2019 and Full Year Results 2019 19 February 2020
January-March 2020 22 April 2020
This report has not been reviewed by the company's Auditors.
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