SinterCast - A record year - ABG

Revenue in line, EBIT deviation nothing to worry about
SinterCast delivered Q4 revenues of SEK 32.9m, up 11% y-o-y, with annualised engine equivalents coming in at 3.5m, up 13% y-o-y. This was in line with our estimates. Higher-than-anticipated equipment sales of SEK 2.1m contributed to a lower gross margin of 68%, compared to recent quarters. EBIT amounted to SEK 8m, resulting in a margin of 24% (26%). This fell short of our estimate of SEK 10.7m for three reasons: firstly, the lower gross margin (SEK -1.6m), secondly, higher than provisioned for employee incentive payments as a result of higher revenue (SEK -1.6m) and finally, FX revaluations of customer receivables and forward contracts (SEK 0.5m). Starting in Q4 an accounting change was made, causing revaluation of forward contracts to now be reported under other operating income/expenses instead of under net financials. This will reduce EBIT volatility in case of a continued volatile USD/SEK rate. Management highlighted the year-end upturn in installation activity, citing the commissioning of a new Ladle Tracker at the Teksid foundry, as well as a mini-system installation at the Dongya foundry.