INTERIM REPORT JANUARY - SEPTEMBER 2011

INTERIM REPORT JANUARY - SEPTEMBER 2011

January - September 2011

  · Sales increased by 17% to SEK 1,706 m (1,456) during the first nine
months of 2011 compared to the same period 2010. In constant currencies,
sales increased by 30% compared with the corresponding period in the
preceding year.
  · Earnings before interest and taxation (“EBIT” or “Operating Income”)
and EBIT margin amounted to SEK 201 m (56) and 11.8% (3.8%)
respectively. One-time costs totalling SEK 24 m associated with the
de-merger were included in the first half result. Adjusting for these
costs, the EBIT and EBIT margin was SEK 225 m and 13.0%.
  · Earnings after tax amounted to SEK 116 m (loss: 13). Earnings per
share amounted to SEK 2.63 (minus: 0.30).
  · Cash flow from operating activities remained strong and amounted to
SEK 122 m (139).
  · The Group's net debt was SEK 220 m (361), a year-on-year reduction
of SEK 141 m derived primarily from operating cash flows.
  · The Group's gearing (debt/equity ratio) was 25% (55%) at September
30th.

Third quarter 2011

  · Sales increased by 10% to SEK 593 m (537) during the third quarter
2011 compared to the same quarter 2010. In constant currencies, sales
increased by 20% compared with the corresponding period in the preceding
year.
  · During the third quarter, the Group experienced strong demand across
all end sectors and regions. In constant currencies, sales were 4% ahead
of the second quarter 2011.
  · EBIT and EBIT margin amounted to SEK 83 m (48) and 14.1% (9.0%)
respectively.
  · Earnings after tax amounted to SEK 52 m (15). Earnings per share
amounted to SEK 1.19 (0.34).
  · Cash flow from operating activities remained strong and amounted to
SEK 55 m (43).
  · As of August 1, 2011, David Woolley, previously the regional head of
Europe and the Rest of the World, succeeded Ian Dugan as President and
CEO of Concentric AB.

President and Chief Executive Officer David Woolley comments on the
third quarter 2011:

“Concentric delivered strong results during the third quarter of 2011.
Robust market demand from the first half was sustained. Sales in
constant currencies increased by a further 4% compared to the second
quarter 2011. The strong sales and operating performance have both
contributed to a continued improvement in the EBIT margin to 14.1%, up
from the adjusted margin of 13.6% in the second quarter of 2011.

The Group maintains robust working capital disciplines and generated an
operating cash flow of SEK 55 million despite the pressures of strong
sales growth.

Orders received during the third quarter indicate that the underlying
sales activity during the quarter will be sustained during the fourth
quarter. However, fourth quarter sales will be affected by fewer working
days and the pre-buy and order catch up effects wearing off.

We continue to see great opportunities for long-term growth arising from
forthcoming changes in emissions legislation and increased focus on
reducing fuel consumption.”

 
Key business events - first nine months of 2011

  · The positive trend in Concentric's market segments and regions
experienced in the first half continued into the third quarter of 2011.
Inventory replenishment has been completed. Sales for the first nine
months of 2011 were supported by a pre-buy from the introduction of new
off-highway emissions programs in North America and Europe.
  · Hire fleets replacing aging construction machinery overdue in the
replacement cycle and increasing demand in the US heavy truck sector
have both helped to drive demand during the first nine months of 2011.
  · Market share growth experienced in the first half for both India and
China continued into the third quarter of 2011.
  · The Group continues to be successful with passing through raw
material increases to its customers through existing material escalator
agreements.
  · A number of initiatives were successfully launched in the second
quarter to increase capacity, both internally and externally, and
additional supplier capacity has supported a catch up in order backlog
and further sales growth.
  · New financing agreements have been put in place and are operational.
  · The reorganization of Haldex was completed and Concentric AB became
an independently listed company on the NASDAQ OMX on June 16th.
  · Advisor costs associated with the de-merger totalling SEK 17 m were
charged in the first half 2011. These costs consisted mainly of expenses
incurred in conjunction with tax advisory services and accounting, legal
expenses and other listing costs. In addition, double corporate costs of
SEK 7 m were also absorbed in the first half 2011 prior to the
separation.

 

For further information, please contact

David Woolley, President and CEO,
David Bessant, CFO, or
Lena Olofsdotter, SVP Corporate Communications,
at Tel: +44 121 445 6545
E-mail: info@concentricab.com (info@concentricab.com)
Corporate Registration Number 556828-4995