Concentric Interim Report January – June 2021

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SKÅNES FAGERHULT, Sweden, July 21, 2021 / PRNewswire / – SECOND QUARTER

  • Net sales: MSEK 473 (342) – Reported sales increased + 38% year over year. After adjusting for currency effects (–14%) and Allied Enterprises (+ 7%), sales at constant exchange rates year over year were up + 45%.

  • Operating result: 107 MSEK (28), generating an operating margin of 22.7% (8.3), the operating margin before items affecting comparability was 22.7% (14.2).

  • Net income for the period: 85 MEK (17); Basic EPS of SEK 2.25 (0.44).

  • Cash flow from operating activities: 76 MSEK (87); cash generation was affected by increased working capital to support increased sales.

FIRST SIX MONTHS

  • Net sales: MSEK 905 (798) – Reported sales increased + 13% year over year. After adjusting for currency effects (–13%) and Allied Enterprises (+ 6%), sales at constant exchange rates were up + 20%.

  • Operating result: The operating profit was 202 MSEK (115), generating an operating margin of 22.3% (14.5), the operating margin before items affecting comparability was 22.3% (17, 0).

  • Net income for the period: 157 MSEK (77); Basic EPS of 4.15 SEK (2.04).

  • Cash flow from operating activities: 148 MSEK (168); cash generation was affected by increased working capital to support increased sales.

  • Group net debt: MSEK –22 (–67); debt ratio of –2% (–6). A reduction in pension commitments compared to december 2020 continues to fuel negative net debt.

President and CEO, David Woolley, comments on the interim report for the second quarter of 2021.

Market and sales developmentGroup sales at constant exchange rates and excluding recent acquisitions were up + 45% year-on-year for the second quarter and + 20% for the first six months of the year. Reported sales continue to be affected by the strength of the Swedish krona against most major currencies, particularly the US dollar. As a result, reported sales for the second quarter and first six months of the year increased by +38 from the previous year. % and + 13% respectively.

Published market indices combined with Concentric’s combination of applications and end-market locations suggest that all geographies continue to recover from the global pandemic with Europe and the rest of the world outperforms the Americas. Market indices suggest 79% market growth for the first half of 2021, which is higher than Concentric’s sales growth. However, it should be noted that the comparative period 2020 was strongly impacted by the pandemic. During the first half of 2020, market indices suggested a decline of -45%, compared to a decline of only -30% in sales of Concentric, contributing to the larger rebound of the indices in 2021. There also appears to be some volatility in published market indices. data, much more important than one would normally expect.

Our reported sales this quarter are 41 MSEK or + 10% higher than in Q1 2021 and demand for our end-market applications remained strong throughout Q2. Strong sales performance, despite the industry’s general supply chain difficulties in meeting this new level of demand, resulted in a further increase in our backlog. We have continued to manage short-term product demands from our customers and expect to catch up on the backlog in the second half of the year.

Concentric Business Excellence – management of operating margins and cash flow

As demand for our products continues to increase, our Concentric Business Excellence program has enabled us to meet increased customer demand while controlling the cost of capacity. This program, as well as the resilience and ability of our employees to adapt to a constantly changing environment, made it possible to guarantee an operating margin before items affecting comparability of 22.7% (14.2) for the second quarter and 22.7% , 3% (17.0%) for the first six months of the year.

The operating cash flow for the period was 76 MSEK (87) which represents a high level of cash conversion from operating profit. As sales increase our investment in working capital also increases, in the second quarter there was a 14 MSEK quarter-over-quarter increase in working capital, driven by a increase in stocks. Cash and cash equivalents also decreased to 498 MSEK (631) after the payment of a dividend of 133 MSEK in the second quarter.

Q2 press releases a story of progress

During the second quarter, six more press releases announced significant new commercial contracts:

  • e-Pumps in the truck sector, both for coolant and electro-hydraulic steering;

  • a development contract awarded for e-Pumps on a fuel cell application;

  • the first e-Separator appointment for Alfdex, our joint venture with Alfa Laval; and

  • two important contracts in China to supply sophisticated hydraulic fan motors and Alfdex crankcase gas separators to meet China VI legislation.

These new business appointments continue to demonstrate our ability to win a strategically important e-Pump market in the electrification sector. The total contract value over a five-year period of all published electrification customer nominations now stands at MSEK 900.

Outlook

Market indices suggest that production volumes blended into Concentric end markets and regions will increase + 16% year-on-year for 2021, up + 7% from previous forecasts and our customers’ demand for our engines. and our hydraulic products keep improving. quarter after quarter.

The availability of critical raw materials will continue to influence our sales through the second half of the year as our industry supply chain stabilizes to meet new market demand. The continued shortage of raw materials and components is having an inflationary effect, both due to the metal indices and the economic price increases from general suppliers, which will have to be passed on to our customers in the second half of the year.

Orders received, and expected to be fulfilled in the third quarter of 2021, were significantly higher than sales levels in the second quarter of 2021. We also expect the majority of the backlog, mainly related to our North American operations, to be supplied. to our customers during the second half of the year.

Concentric remains well positioned both financially and operationally to take full advantage of our market opportunities.

CONTACT:
David Woolley (President and CEO) or Marcus White House (CFO) at Tel: +44 121 445 6545 or E-mail: info@concentricab.com

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SOURCE Concentric AB

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