Fourth Quarter 2024
- Revenue for Period: SEK 35.8 million (SEK 36.0 million). Recurring revenue accounted for 80.4% (92.5%) of the revenue, influenced by lower volume and strong installation revenue
- Operating Result: SEK 9.5 million (SEK 15.6 million), yielding 26.7% (43.4%) operating margin. The decline is primarily due to currency revaluation losses of SEK 2.5 million in 4Q24, compared to gains of SEK 4.1 million in 4Q23, which improved the year-ago result. Excluding currency revaluation effects, primarily related to hedge contracts, the Operating Result would have been SEK 12.0 million (SEK 11.6 million), yielding a 33.6% (32.2%) operating margin
- Earnings per Share: SEK 1.04 per share (SEK 2.18 per share)
- Cashflow from Operations: SEK 13.4 million (SEK 10.7 million), up 25%
- New CGI and Ladle Tracker installations drive installation revenue to SEK 6.8 million (SEK 2.1 million)
- Intensified pre-production at FAW in China in advance of formal start of production in January 2025
- First installation in India secured at Saroj Group; installation to be commissioned during second quarter 2025
Full Year 2024
- Revenue for Period: SEK 135.6 million (SEK 134.4 million). Recurring revenue accounted for 90.7% (94.5%) of the revenue as installation revenue increased to SEK 11.4 million (SEK 6.0 million)
- Operating Result: SEK 43.2 million (SEK 42.7 million), yielding 31.9% (31.8%) operating margin. The slight increase was impacted by currency revaluation losses of SEK 4.7 million in 2024, compared to gains of SEK 1.2 million in 2023. Excluding currency revaluation effects, primarily related to hedge contracts, the Operating Result would have been SEK 47.9 million (SEK 41.5 million), yielding a 35.3% (30.9%) operating margin
- Result after Tax: SEK 34.3 million (SEK 42.1 million) decreased primarily due to onset of tax accounting in the amount of SEK 9.0 million (SEK 0.4 million)
- Earnings per Share: SEK 4.85 per share (SEK 5.94 per share), decreased primarily due to the onset of tax accounting in 2024
- Cashflow from Operations: SEK 59.6 million (SEK 45.5 million), up 31% following improved operating results and reduced accounts receivables
- Dividend: Proposed ordinary dividend of SEK 6.00 per share (SEK 5.50 per share) and extraordinary dividend of SEK 1.00 per share (SEK 0.60 per share), equivalent to SEK 49.5 million (SEK 43.1 million), to be paid in two equal instalments
- Installed Base: 58 (57) installations, 26 (25) fully automated systems, 24 (25) mini-systems and eight (seven) tracking systems in 13 (13) countries
CEO Message
Strong installation revenue offsets lower series production
Fourth quarter revenue finished at SEK 35.8 million (SEK 36.0 million), benefitting from strong installation performance of SEK 6.8 million (SEK 2.1 million) to offset a 16% decrease in year-on-year series production. Annualised series production in the fourth quarter finished at 3.1 million Engine Equivalents (3.7 million) while full-year series production finished down 2.7% at 3.6 million Engine Equivalents (3.7 million). The year-end decrease in series production was caused by the combined effects of the stoppage of a high volume programme in September 2024 and the softening of commercial vehicle sales in Europe and North America through the second half of 2024. These factors have temporarily reset the series production baseline from approximately 3.8 million Engine Equivalents to approximately 3.2 million Engine Equivalents, but we remain positive in our outlook for series production, market development, new installations and financial results, as outlined in the following sections:
Series Production: The new year began with the start of production of a new 13 litre engine at First Automobile Works (FAW) in China. The 13 litre version entered the year at an annualised run-rate of approximately 75,000 Engine Equivalents while the 11 litre and 16 litre versions of the engine are expected to start production during 2025. Together, the three engines provide the potential for 500,000 Engine Equivalents per year at mature volume, representing 15% growth relative to the current baseline. The 13 litre engine for the Traton Group will also continue to ramp during 2025 and 2026 as the production extends from Scania and Navistar to encompass MAN. The remaining ramp for the Traton 13 litre cylinder block and cylinder head is also expected to provide approximately 500,000 additional Engine Equivalents per year. Regarding the programme that stopped production in September 2024, it is important to note that the stoppage was not related to CGI production or engine performance. The consideration that led to the stoppage in this one case has not been a factor for SinterCast since high volume series production started in 2003 and it is not expected to be a factor in the future. With the strong development pipeline and the global trend toward CGI for commercial vehicles, SinterCast maintains its double-digit growth outlook and its targets to reach the five million Engine Equivalent milestone in 2026 and the seven million milestone in 2029.
Market Outlook: Since mid-2024, the commercial vehicle market has softened in Europe and North America. Most analysts expect improved sales from the second half of 2025 followed by strong sales in the US in 2026 and in Europe in 2028 in advance of new emissions legislation, providing prolonged upside for the commercial vehicle sector. These trends, together with the continued ramp of current series production programmes and the start of production of new programmes that have been announced - and others that have not yet been announced - provide the basis for the double digit growth outlook through the SinterCast five-year planning horizon.
Installation Outlook: With order intake of more than SEK 9 million during the July to October 2024 period, the outlook for new installation revenue is near an all-time high. Installation revenue finished at SEK 11.4 million in full-year 2024 (SEK 6.0 million in 2023), marking the third highest year on record. With the 10 February announcement of our first installation in India at the Saroj Group, and other ongoing discussions, the expectation is that installation revenue in 2025 will exceed 2024.
Financial Outlook: Benefitting from the maturity and efficiency of the organisation, SinterCast has proactively implemented headcount reductions. Further reductions will be realised with two upcoming retirements where the appointed successors are already in-house. With more than 70% of the costs allocated to personnel, the combined effects of these changes together with the growth in series production will drive the operating margin above 40%. The year-on-year tax comparables will also improve in 2025, as 2024 was the first full year since SinterCast came into a tax position in the fourth quarter of 2023. During 2024, the result for the period after tax decreased to SEK 34.3 million (SEK 42.1 million), primarily due to the accounted increase in income tax from SEK 0.4 million in 2023 to SEK 9.0 million in 2024.
Following a prolonged run with thirteen consecutive quarters of year-on-year series production growth spanning from the first quarter of 2021 until the second quarter of 2024, our series production baseline has been reset. However, the market indicators are positive and we are confident in meeting the five financial targets that were published in September 2023. Specifically:
- Series Production: the series production pipeline is robust and we expect double-digit series production CAGR through 2030. The five million Engine Equivalent milestone is targeted for 2026.
- Gross Margin: With 72.5% gross margin in 2024, SinterCast has posted 13 consecutive years with >70% gross margin. Even with the strong near-term installation outlook, we expect to post >70% gross margin again in 2025. Recurring revenue from series production consistently accounts for >90% of the total revenue. Together with the strong series production growth, the recurring revenue will drive continuous improvement of the gross margin.
- Operating Margin: with 31.9% in 2024 and a strong outlook for increased production with stable costs, we are confident to exceed 40% by 2028, making SinterCast one of the most profitable companies on NASDAQ Stockholm.
- CO2 Reduction: with more than 95% of our series production accounted for by commercial vehicles, pick-up trucks and off-road equipment, the improved fuel efficiency of SinterCast-CGI engines has contributed to the reduction of 69 million tonnes of CO2, putting us ahead of schedule to reach our target of 100 million tonnes in 2028.
- Dividend Growth: the Board's proposal for an ordinary dividend of SEK 6.00 per share (and an extraordinary dividend of SEK 1.00 per share) marks our fifteenth consecutive year with an increasing ordinary dividend. Including the Board's dividend proposal, the cumulative dividend will reach SEK 53.00 per share and we will have returned SEK 375 million to our shareholders since 2010, on route to our goal of 25 consecutive years of increasing ordinary dividend!
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
Corporate Identity Number: 556233-6494
SinterCast is the world's leading supplier of process control technology for the reliable high volume production of Compacted Graphite Iron (CGI). Stronger, stiffer and more durable than conventional iron, CGI enables the development of smaller, lighter and more fuel efficient engines in passenger vehicle, commercial vehicle and industrial power applications. The use of SinterCast-CGI currently contributes to the reduction of approximately ten million tonnes of CO2 per year. With 58 installations in 13 countries, SinterCast provides sustainable solutions for manufacturing and transportation to the global foundry and automotive industries. 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
