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2017-02-07

Arcam: Year-end report 2016

Major investments and challenging market situation

Major investments and challenging market situation

· Net sales increased by 12,5% to 648.3 (576.1) MSEK
· Operating income amounted to -29.8 (50.2) MSEK
· Net income amounted to -10.8 (24.3) MSEK
(the operating income and net sales for the period includes
non-recurring costs of 44.8 (0) MSEK)

· Earnings per share amounted to -0.52 (1.18) SEK
· 50 (50) EBM systems were delivered during the period
· Order intake amounted to 48 (58) EBM systems
· GE has acquired 76.1% of all shares in Arcam
For the fourth quarter:

· Sales increased by 18% to 208.1 (176.0) MSEK
· Operating income amounted to -29.1 (14.0) MSEK
· Net income amounted to -17.5 (2.7) MSEK
(the operating income and net sales for the period includes
non-recurring costs of 44.8 (0) MSEK)

· Order intake amounted to 24 (29) systems
· 15 (16) EBM systems were delivered in the fourth quarter
Significant events after the end of the period:

· The company has called for an extraordinary general meeting on
February 7, 2017 at 4 pm (CET).

· The company has received an unconditional shareholder contribution
of 16.9 MSEK.

Major investments and challenging market situation

After a strong fourth quarter, we closed the year with net sales of
648.3 MSEK and an operating profit of -29.8 MSEK. The underlying
operating income amounted to 15.0 MSEK after adjustments for
non-recurring costs.

During the year we booked 48 new EBM orders, a decrease compared with
the previous year when we reached 58 orders. We enter 2017 with an
order book of 25 systems.

The second half of the year was dominated by GE's tender which for us
is a strong confirmation that the business that we have built
together now becomes a major player in the additive manufacturing
industry. The bidding process had an impact on our operations since
management had less time to act in the market. Our EBM customers took
a somewhat cautious position and we see that it takes longer to close
new orders.

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 businesses. 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 fourth quarter we delivered 15 EBM systems to customers in
the implant and the aerospace industry. In the period we received 24
new orders and the order book by the end of the quarter amounts to 25
systems. 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.

During the period Arcam Q10plus and Arcam Q20plus were launched. The
new systems are anenhanced version of the Arcam Q-series EBM systems
for Additive Manufacturing. Arcam Qplus offers up to 25 % higher
productivity with 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.

Our contract manufacturer DiSanto 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.

The EBM business and contract manufacturing have been characterized by
slow growth, while in metal powder manufacturing we have grown
significantly.

We have continued to develop synergies between EBM® systems, metal
powders and contract manufacturing and we now see that our broad
offering is well received by the market. We have also made
significant investments in capacity expansion to continue to meet the
demand for our customers' growing needs.

AP&C expands

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. By the end of 2016 we had
8 reactors in operation in the existing facility in Montreal.

In May we decided to increase further by building a new powder
manufacturing plant outside Montreal, Canada. The new facility will
provide manufacturing redundancy, short term capacity increase and
long term expansion capability. With the present build-out AP&C will
reach a capacity by the end of 2017 of at least 750 tons per year.
The new plant will be built in modules and can be extended so that we
reach a combined total capacity of over 1,200 tons per year in both
production plants.

Arcam's strategy is to offer cost-effective production solutions that
simplify and accelerate the transition from traditional manufacturing
to additive manufacturing. A prerequisite for this is to offer the
highest quality powder at a competitive price.

Strengthened organization

During the year we strengthened our sales and support organization in
Germany, Italy and in the USA with new sales people and a
strengthened sales management. A new sales office in Stuttgart will
drive sales on the German market. On the important Italian market, we
have strengthened the organization with local management. The office
in Turin is responsible for sales and service and is working close to
our important customers in Italy.

In the beginning of January 2016 Alain Dupont was appointed president
of powder manufacturer AP&C in Canada. In February 2016 Tom Barrett
was appointed president of contract manufacturer DiSanto in the USA.

Ownership structure

On 6 September GE made a public offer to acquire all shares of Arcam
AB. GE's offer was completed on 29 November and GE currently owns
76.15% of all shares of Arcam.

For us at Arcam GE's interest in a strong confirmation that the
company we have built together for many years is a major player in
the additive manufacturing industry. In connection with the offer the
fund Elliott acquired over 11% of the shares and thus became the
second largest shareholder.

With some of the world's largest companies as customers, a strong cash
position and, most important, a team of dedicated and driven
employees, we are well positioned to take advantage of our
opportunities in the fast growing market for Additive Manufacturing.

Mölndal, February 7, 2017

Magnus René, President & CEO

The information has been made public in accordance with the Securities
Market Act and/or the Financial Instruments Trading Act. The
information was published on February 7, 2017 at 14:00 (CET).

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/year-end-report-2016,c2182329
http://mb.cision.com/Main/5885/2182329/624914.pdf

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