25% increase in year-on-year series production
Series production continued to grow in the second quarter, reaching an annualised record of 3.4 million Engine Equivalents for the quarter and providing 25% year-on-year growth. Series production reached the new all-time high of 3.5 million Engine Equivalents in May.
* Annualised average production of Engine Equivalents during the quarter (1 Engine Equivalent = 50 kg)
Record production in first half; positive outlook for second half
Benefitting from record series production of 3.5 million Engine Equivalents in May, annualised series production reached 3.4 million Engine Equivalents in the second quarter of 2019, setting a new quarterly record and providing 25% year-on-year growth. In total, four of the last six quarters have established new records for series production, resulting in first-half series production being almost 30% above full-year 2018 and 55% above full-year 2017. The series production outlook remains positive, with strong demand for SinterCast-CGI diesel engines used in Ford and Ram pick-up applications; continued strong demand for commercial vehicle production; and, new programmes coming on-stream throughout the five-year planning horizon.
With revenue derived from both CGI process control and Tracking Technologies, installation revenue for the first half of the year reached SEK 7.1 million, surpassing the historical full-year average of approximately SEK 6.5 million. Together, the increased series production and the strong installation activity resulted in a 30% increase in revenue and a 37% increase in the operating result for the first half of the year. The positive outlook for series production also resulted in an additional SEK 5.3 million of the total carried forward tax losses being taken into the deferred tax asset calculation, resulting in an additional SEK 1.0 million being capitalised as a deferred tax asset.
Positive outlook for installation revenue
The 2019 installation campaign benefitted from a strong second quarter, with five new installations in the field, including the first full installation of the Cast Tracker technology at the Tupy foundry in Mexico and the first Ladle Tracker installation for ductile iron production at the Poitras foundry in Canada. Additional revenue was derived from Mini-System 3000 installations at the China Shipbuilding Industries Corporation foundry for industrial power components and at the Kimura rapid prototyping foundry in the United States; and, from capacity and functionality upgrades of existing System 3000 installations. A Mini-System 3000 was also installed at Jönköping Technical University in Sweden during the second quarter, as part of an in-kind contribution to a long-term university-industry project for the development of Compacted Graphite Iron (CGI), funded in part by the Swedish government. During June, the Motor Castings foundry in the United States ceased operation. The vast majority of the SinterCast-CGI production was transferred to SinterCast foundry partners in the US, Mexico and China, with no adverse effect for SinterCast. Critical components of the SinterCast equipment were recovered and will be refurbished for resale.
With ongoing installation discussions, and new leads established at the GIFA World Foundry Trade Fair in June, the outlook for full-year installation revenue is positive, with the opportunity to challenge the previous record of SEK 10.1 million set in 2013. Building on the System 4000 Plus installation at the new Scania foundry in Sweden, scheduled for mid-2020, the outlook for full-year 2020 installation revenue is equally positive.
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
July-September 2019 13 November 2019
October-December 2019 and Full Year Results 2019 19 February 2020
January-March 2020 22 April 2020
April-June 2020 19 August 2020
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 2019
Jan Åke Jonsson Robert Dover Caroline Sundewall
Chairman of the Board Member of the Board Member of the Board
Jun Arimoto Lars Hellberg Steve Dawson
Member of the Board Member of the Board President & CEO
Member of the Board
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