INTERIM REPORT FOR THE PERIOD JANUARY-JUNE 2009 NOVACAST TECHNOLOGIES LTD. (publ) 556211-0790 April - June 2009 • Net sales for the period were at 30,1 MSEK (25,1) • Loss after tax was -8,5 MSEK (0,3) • Operating loss for the period was -7,7 MSEK (0,7) • Earnings per share -0,62 SEK (0,02) • Reduced loss rate as result of savings program • Cash flow from operating activities improved with 4,8 MSEK to - 6,4 MSEK January - June 2009 • Net sales for the quarter were at 59,3 MSEK (40,4) • Loss after tax was -22,3 MSEK (-3,5) • Operating loss for the period was -20,0 MSEK (-3,1) • Earnings per share before and after dilution -1,64 SEK (-0,27) • Order intake was 46,2 MSEK (44,4) and order backlog was 45,1 MSEK (13,4) • Improved cash flow from operating activities during second quarter • Turnover and result were affected negatively by transformer breakdown at Camito Technology Center • Several new Camito orders during reporting period Events after reporting period • Large Camito order of 28 MSEK from Magna • Kotek foundry in Korea (current ownership 9%) opens 12 September Group development during reporting period Net sales Net sales for the group for the first six months of 2009 increased to 59,3 MSEK (40,4). Delivery of casting details to Enercon commenced during the period but is slower than expected. Result after tax Result after tax for the period was -22,3 MSEK (-3,5). The rationalization and cost reduction programs that were decided on during the fall of 2008, combined with the effects of personnel reductions, have reduced the loss pace compared to the first quarter of 2009 from -13,8 MSEK to -8,5 MSEK. The full effect of personnel reductions is expected during the end of the third quarter 2009. Approximately -13,4 MSEK of the loss is related to SwePart Verktyg AB. Over 100% of the loss is related to the order backlog that was taken over with the acquisition in 2008. The final deliveries of the backlog are expected to take place during the third quarter of 2009. SwePart has also charged the result with a cost of a single nature of 1,2 MSEK. The result reduction within CTC that was related to the transformer breakdown is calculated at approximately 3 MSEK of which 1,8 MSEK has been reported as compensation from the insurance company and is included in the result for the period. Cash Cash and cash equivalents at end of accounting period were 8,4 MSEK (14,4) including unutilized check credit of 6,8 MSEK. Accounts receivable for the group were at 36,0 MSEK (21,0). Of the total accounts receivable 15 MSEK is related to one customer and was paid after reporting period. During the period the group was granted new credit of 24 MSEK in a combination of bank loan, 12 MSEK and loan from ALMI Skåne, 12 MSEK. Order intake and order backlog Order intake during the period was 46,2 MSEK (44,4) of which 36,5 MSEK (33,1) applies to the Automotive business area and 9,7 MSEK (11,3) applies to activities within foundry technology. Outgoing order backlog was 45,1 MSEK (13,4) of which the Automotive business area reached 44,0 MSEK (13,1) and Foundry Technology reached 1,1 MSEK (0,3). Investments Reported investments during the period amounted to 1,2 MSEK (18,0). Development per business area and market during reporting period Automotive Net sales for this business area were 50,7 MSEK (29,4) during the period. Operating loss was -19,4 MSEK (-2,5). Order intake during the period was 36,5 MSEK (33,1) and outgoing order book was 44,0 MSEK (13,1). Camito AB Camito marketing activities were high during the period. Over ten smaller deals were made. A large order of 28 MSEK, containing several Camito die castings, was finalized after the reporting period. On the whole we note growing interest in Camito technology. In large projects the tendency still prevails, due to the market situation, to change and delay final decisions about production and orders. Camito received an order during the period for the first Camito die shoe casting from August Läpple GmbH & Co KG in Heilbronn, Germany, that will be used for the production of car body parts for an international automotive group. August Läpple GmbH & Co KG in Heilbronn is one of Europe's leading manufacturers of stamping tools, production systems and car body parts, with customers like BMW, Mercedes, Porsche, Volkswagen, Volvo, Ford and Jaguar. Camito has also received orders for stamping die shoe castings and complete dies from Schweikert GmbH, Germany. The orders are for trim and flange dies and stamping die shoe castings for delivery to one of the world's leading international automotive groups. Schweikert is one of Europe's leading system suppliers of stamping dies and car body parts, with customers like VW, Audi, Porsche, BMW and Mercedes. The large order after the reporting period is from Magna Heavy Stamping in Austria for a number of sets for the production of car body parts. The dies will be used in the company's production of details for two new car models from one of the world's leading automotive groups. Of a total of 35 dies in the order more than ten will be produced using the patented Camito technology. This is the largest order so far for Camito produced dies. Magna Heavy Stamping in Austria is one of Magna International's over 80 production sites in Europe. Magna International, part of Cosma International Group of Magna with headquarters in Canada, employs over 27 000 of the group's total 70 000 employees. The group is considered one the world's leading suppliers to the global automotive industry and it has grown considerably over a ten-year period. Their turnover in 1997 was 5 billion USD and in 2008 it was close to 24 billion USD. The group has a total 240 manufacturing operations in 25 countries. In order to further support the market introduction of Camito technology, Camito has formed Camito Financial Services. The company has developed a unique financing model for stamping dies and negotiations regarding powerful financial solutions to the market are under way with several interested parties. The aim is to conduct the first deal during 2009. Camito Technology Center AB (CTC) A serious production stop due to transformer breakdown took place at the beginning of the period and caused reductions in volume and result. Our claim for compensation for the result loss is approx. 3,0 MSEK. Of this amount 1,8 MSEK has been reported as compensation from the insurance company and is included in the result for the period. Production of the order valued in excess of 30 MSEK signed with Enercon for wind power castings, commenced during March 2009. As a result of delayed blanket purchase orders production pace has not achieved the planned level. The wind power industry has also been affected by the general low business climate and is experiencing difficulties in financing some of its wind park projects. Two of the staff members that had received notice of dismissal have been rehired to help fill the increased orders for die shoe castings that were received during the previous month. The net effect of notices resulted in a reduction of 5 staff members and in combination with certain other cost reductions, approximately 2,8 MSEK on an annual basis. Janni Dimovski assumed duties as new CEO for CTC during the period. Janni is also CEO for SwePart Verktyg, which facilitates the coordination of our production units management-wise, as a lead in SwePart's changeover to Camito technology. SwePart Verktyg AB SwePart has continued to experience losses due to too low price levels in the old order book that was taken over with the acquisition in 2008. The losses amount to -15,0 MSEK. Old projects are expected to be totally completed during the third quarter of 2009. The effects of earlier notices of dismissal have so far had a positive result effect of only 0,5 MSEK. A total of 43 persons have been given notice of dismissal. After trade union negotiations 17 persons left the company at the end of the first six months and a further 6 will leave during the coming six-month period. Seven persons have been rehired to cope with the increased order intake that occurred during the last months. The full effect of personnel reductions is expected to be approx. 7 MSEK on a yearly basis. Sandvik's Production Improvement Program (PIP), aimed at optimizing efficiency mainly in time-consuming machining phases is currently being conducted within SwePart. Training and adjustment towards becoming a distinct specialist at producing Camito-based dies is taking place at the same time in accordance with the strategy that was set down at acquisition. Foundry Technology (incl. Graphyte product area) Net sales for the business area during the period were 8,6 MSEK (11,0). Operating loss was -0,6 MSEK (-0,6). Demand weakened during the latter part of the period after a relatively strong first quarter. NovaCast Foundry Solutions AB NovaCast Foundry Solutions received orders among others for its NovaFlow&Solid simulation software from three customers during the period, Columbus Steel Castings (USA), ERCO Leuchten GmbH, (Germany) and Omen (Israel). The total customer base increased to 430 customers (409) and the installed licence base increased to 654 (627). The number of Technology Partner Agreements, TPA, decreased to 203 (222) as a natural result of the difficult situation that foundries are experiencing. A subsidiary was started in the USA during the period and is starting low-scale business activities. Please note that Graphyte is now included in NovaCast Foundry Solutions' results. Graphyte's turnover in the period corresponding to last year was approx. 1 MSEK and had a negative result of approx. 2,0 MSEK. Despite the decrease in volume NovaCast Foundry Solutions has managed to reduce its losses to 0,6 MSEK, the effect of cost reduction and maintained high gross profit. Since the turn of the year Peter Vomacka is the new CEO at NovaCast Foundry Solutions. Peter was previously sales manager at Graphyte AB. Graphyte Business activities within Graphyte were merged with those at NovaCast Foundry Solutions during the period, within the framework for a larger strategic approach where the “new” NovaCast Foundry Solutions broadens and adjusts its total product range to the global foundry industry. Graphyte will thereby be an important product area within the new company. Customer tests with the new Graphyte ® technology are proceeding according to plan and we are looking forward to the possibility of installation orders during 2009. Parent company Net sales for the parent company were 5,1 MSEK (7,0) during the period, of which intragroup sales were 5,1 MSEK (6,9). Operating profit was 0,2 MSEK (0,3). Risks and uncertainty factors By far the largest risk for 2009 is the prevailing industrial and financial crisis in many parts of the world. At present it is difficult to say how this will affect the NovaCast group. We are focusing on measures that will increase our preparedness for a difficult 2009. For further information about the group's operational and financial risks, risk management and risk exposure please see NovaCast Technologies´ annual report on www.novacast.se. Events after reporting period A large deal including several Camito die castings and valued at 28 MSEK was completed after the end of the period. On the whole, we are observing increased interest in Camito technology. During August our cooperation partner in Korea, Kotek, completed the foundry investment that commenced during 2008. The foundry will officially be opened on 12 September 2009. The investments total approx. 11 MUSD of which 3,5 MUSD is in buildings of an area of 4.287 m2. The total capacity in shifts is 15.000 tonnes per year and a highest casting weight of 22 tonnes. NovaCast's share in the Kotek foundry is currently 9% reported as 3,0 MSEK. Future developments As in previous years, NovaCast Technologies AB does not give any prognoses, mainly since business activities are still in the construction phase, where individual orders or business deals can create significant swings in these activities. The general market development combined with the prevailing global financial crisis render it irrelevant to make any prognoses of our own this year. The Board and management will focus on adapting business activities according to market conditions, on liquidity and cash flow, as well as on creating a new business platform for expansion. Our marketing department has recently noticed increased interest mainly in Camito technology and the rationalization gains that can be reached. The latest order from Magna gives evidence of this fact. When SwePart has worked through its old, unprofitable order backlog during the current quarter there may therefore be hope for improved future developments. However, this demands continued positive order intake. Tyringe 12 August 2009 Hans Svensson CEO For further information contact Hans Svensson, CEO at NovaCast Technologies AB, +46 457 38 63 02 or +46 705 652 250. This report has not been audited by company auditor. See full report in attached file.
INTERIM REPORT FOR THE PERIOD JANUARY-JUNE 2009 NOVACAST TECHNOLOGIES LTD. (publ) 556211-0790
| Quelle: NovaCast Technologies AB
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