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2016-07-21

Arcam: Interim report January - June 2016

Significant investments in technology and capacity

Significant investments in technology and capacity

· Net sales increased by 17 % to 307.6 (262.0) MSEK
· Operating income amounted to 4.1 (23.5) MSEK
· Net income amounted to 9.8 (16.7) MSEK
· Earnings per share amounted to 0.47 (0.82) SEK
· 28 (23) systems were delivered in the period
· Order intake amounted to 15 (17) EBM systems

For the second quarter:

· Net sales amounted to 147.7 (150.6) MSEK
· Operating income amounted to -4.8 (19.7) MSEK
· Net income amounted to 1.5 (12.4) MSEK
· 14 (14) EBM systems were delivered in the second quarter
· Order intake amounted to 9 (7) systems

Significant investments in technology and capacity

The Arcam Group continues to grow and during the first six months the
increase in sales was 17%. Sales for the period increased to 307.6
(262.0) MSEK and trailing twelve month sales amounts to 621.7 (490.0)
MSEK. Operating income for the period was 4.1 (23.5) MSEK and
trailing twelve month operating income amounts to 30.7 (49.0) MSEK.

In the first 6 months we increased our delivery pace and we delivered
28 (23) EBM systems. The last twelve months we thus delivered 56
systems. Our metal powder manufacturer AP&C more than doubled its
order intake compared to the same period 2015. In May we decided to
add significant capacity by building a new powder manufacturing plant
in Montreal.

We continue to pursue and develop our long-term strategy to
industrialize the EBM technology and simultaneously developing the
metal powder manufacturing and contract manufacturing business. We
invest significantly in technology, marketing and manufacturing
capacity to meet our customers' demands and growing expectations on
productivity and reliability.

Business status

During the second quarter we delivered 14 EBM systems and the majority
went to customers in the implant or the aerospace industry. The
demand for EBM systems is driven by how quickly our customers in the
aerospace and implant industry are moving towards production, a
process that is dependent on both technical and commercial factors.
In the period we received 9 new orders and the order book by the end
of the quarter amounts to 14 systems. One of our new clients is the
US based implant manufacturer Exactech. They produce EBM implants via
a contract manufacturer since 2010 and they have decided to build its
own manufacturing operation and placed an order of 2 EBM systems.

During the quarter Arcam Q10plus and Arcam Q20plus were launched. The
new systems are a significantly enhanced generation of the Arcam
Q-series EBM systems for Additive Manufacturing. Arcam Qplus offers
up to 25% higher productivity with significantly improved surface
finish and precision. With Qplus Arcam also introduces Arcam xQam™,
an X-ray based function for high precision auto-calibration and
improved beam control.

To meet the growing demand for AP&C's high quality titanium powder for
Additive Manufacturing, we continue to add significant capacity by
building a new powder manufacturing plant. During the second quarter
a new powder reactor was taken into account. Thus AP&C now has 6
reactors in operation, and we plan to have 8 reactors operating in
our present plant Montreal by the end of this year. In May we also
decided to increase further the capacity by building a new powder
manufacturing plant outside Montreal, Canada. The investment is
initially for 23 MCAD and we have through an agreement with
Investissement Quebec received a total of 11.5 MCAD in loans and
grants, of which 10 MCAD in interest-free loans and 1.5 MCAD in
grants. The new facility will provide manufacturing redundancy, short
term capacity increase and long term expansion capability. The new
capacity increase follows on significant growth in 2015 and 2016 and
a surge in demand for AP&C's high quality titanium powders for
additive manufacturing. With the present build-out AP&C will reach a
capacity of at least 750 tons per year. The new plant will be built
in modules and can in the long run be extended so that we reach a
combined total capacity of over 1,200 tons per year in both
production plants.

Since February our contract manufacturer DiSanto has a new management.
The business continues to be burdened by weak sales for implants made
with traditional technology. In the period several new customer
projects for EBM manufactured implants have been added. Revenues from
this part of the business is increasing but is still not compensating
for the weak sales within traditionally manufactured implants. Hence,
we have in the period written down the parent company holding in
DiSanto with 28 MSEK. This has no effect on the consolidated numbers
for the group.

Strengthened organization

During the first half of the year, we strengthened our sales and
support organization in Germany, Italy and in the USA with new sales
people in the field and a strengthened sales management.

A new sales office in Stuttgart will initially drive sales in Germany
and in the future also serve as a local support office. The operation
is led by Peter Jain, who has a solid background in the machine tool
industry.

On the important Italian market, we have strengthened the organization
with local management where our former agent Fausto Asvisio now works
full time for us. The office in Turin is responsible for sales and
service and is working close to our important customers in Italy.

With 14 machines in order, a stable aftermarket and a fast growing
market for AM metal powders we are well positioned for a positive
development in 2016.

Mölndal, July 21, 2016

Magnus René, President and CEO

This report contains information that Arcam AB is obliged to make
public pursuant to the EU Market Abuse Regulation. The information
was submitted for publication at 08.30 CEST on July 21, 2016.

Telephone conference with CEO Magnus René and CFO Johan Brandt

July 21, 2016 at 2.00 p.m. (CEST)

Phone number to the conference:

SE: +46 8 566 426 90
UK: +44 203 008 98 19
US: +1 855 753 22 35

Link to presentation:

Arcam Q2 conference call
(http://event.onlineseminarsolutions.com/r.htm?e=1210170&s=1&k=C8B472C5FF...)

For further information:

Magnus René, CEO and President, Arcam
Cell: 46 702 79 89 99 or 1 781 266 6957
E-mail: magnus.rene@arcam.com

Arcam Group provides cost-efficient Additive Manufacturing solutions
for production of metal components. Arcam's Electron Beam Melting
(EBM®) technology offers design freedom combined with excellent
material properties and high productivity. Arcam is, through its
solution orientation and comprehensive product offering, an
innovative partner for advanced manufacturing, primarily for the
aerospace and medical industries. Arcam offers EBM systems through
Arcam AB in Sweden, powder metals through AP&C in Canada and implant
contract manufacturing through DiSanto in the U.S.The company is
listed on Nasdaq Stockholm and the Head Office is located in Mölndal,
Sweden.

________________________________________________________________________________________

Arcam AB · Krokslätts Fabriker 27A · SE-431 37 Mölndal, Sweden ·
46-31-710 32 00 · www.arcam.com

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http://news.cision.com/arcam/r/interim-report-january---june-2016,c2049266
http://mb.cision.com/Main/5885/2049266/542456.pdf

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