Q1 sales were SEK 28.1m (-7% vs. ABGSCe SEK 30.2m), up 16% y-o-y and EBIT was SEK 7.6m (-12% vs. ABGSCe SEK 8.6m), for a margin of 27.0% (ABGSCe was 28.6%). The new Swedish Scania foundry produced its first volumes during the quarter, however the Chinese FAW foundry did not commence production as expected due to pandemic lockdowns. Also, the WHB foundry in Brazil gave notice that it will return its leased System 4000 in Q2, but this foundry has never produced any CGI volumes and as such the returned system does not result in any lost sales. The opex base was smaller than expected, but margins were still a bit below our estimates, which can be attributed to the sales miss in Series Production as there is a natural operating leverage to these sales. Finally, cash flow was negatively affected by NWC build-up, coming from an extension of payment terms for a major customer (from 60 to 90 days). Unfortunately, we do not see this negative NWC effect reversing.
’22e adj. EBIT down 2%, series production targets reiterated
Management states a positive outlook for series production on 1) production ramp-up in existing foundries from the new systems installed in H2’21, and 2) pent-up demand among customers that will materialise once semiconductor availability improves. Due to these factors, the company reiterates its ’22 and ’24 targets of 4.0m and 5.0m annualised engine equivalents, respectively. Since SinterCast delivered on its system installation pipeline in ’21, ’22e looks to be a more modest year for equipment sales. We lower ’22e adj. EBIT by 2%, but also add a one-off expense of SEK 4.5m in Q2 as the System 4000 returned by WHB will lead to a receivables write-down (since it contained a deferred purchase agreement). We make no changes to ’23e-’24e estimates.
21x ’22e E ...
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