For those of us who put on the SinterCast shirt to go to work, 2019 was a year of extraordinary pace, progress and pride.
Operationally, we set new records across the board. Series production increased by 30%, revenue increased by 33%, the operating result increased by 36%, earnings per share increased by 48%, and cashflow from operations increased by 52%. Beyond the financial results, we fielded our busiest year ever with ten new installations and upgrades. We also surpassed the three million Engine Equivalent milestone; commissioned our first full Cast Tracker installation; achieved high-volume production in the last of the Five Waves, fulfilling a vision that we first presented in 2002; and, we launched the fourth generation of our CGI process control technology, System 4000. It was an exceptional year.
With the positive momentum of the last two years, we entered 2020 full of optimism. But the COVID-19 pandemic quickly eclipsed our ambitions. Containment actions implemented by governments resulted in shutdowns at several of our foundry customers and automotive end-users in March and April. While the market started to show signs of recovery in May, it is still too early to quantify the full impact of the virus or the evolution of the recovery ramp. This uncertainty led the Board to withdraw the original dividend proposal and to announce the ambition to convene an Extraordinary General Meeting in the autumn. We share the frustration and we trust that our shareholders will understand and embrace this change.
While the series production may be temporarily influenced by the COVID-19 virus, we remain confident in our long-term growth. The market demand for improved fuel efficiency and reduced emissions is irreversible. This demand will continue to drive our market opportunity. During 2019, every one of our Five Waves grew by at least 15%, providing a production split of 60% passenger vehicle, 35% commercial vehicle and 5% for industrial power plus automotive components other than cylinder blocks and heads. With only one petrol engine in our line-up, SinterCast remains closely linked to the diesel engine. But we don’t feel exposed. In total, 36% of our engine castings are used in commercial vehicles and 3% are used in off-road industrial power applications. These are the domain of diesel. Another 39% are used in Super Duty pick-up applications in North America, where the diesel take rate is more than 75%, and 10% of our engine castings are used in petrol and hybrid applications. That leaves 12%, and these are primarily used in SUV and pick-up applications, where diesel demand has remained stable in Europe and increased in the US. Indeed, in the US – our largest end-user market – the opportunity for SinterCast has increased, as SUVs and pick-ups have grown from 50% of the market in 2013 to 72% in 2019, and as each of the top-three best-selling vehicles have introduced new diesel engine options.
We continue to regard commercial vehicles as our largest growth opportunity. During 2019, our commercial vehicle production grew by 20% to become our largest individual wave and our largest contribution to the environment. Since the start of our commercial vehicle production in 2007, the renewal of the commercial vehicle fleet in the US with clean diesel engines has resulted in the elimination of 126 million tonnes of CO2, 18 million tonnes of nitrogen oxides, one tonne of particulate matter, 47 million litres of diesel fuel and 296 million barrels of crude oil. In perspective, these reductions are equivalent to producing 26 million electric cars or building 27,000 wind turbines. The increasing demand for CGI in the commercial vehicle sector provides the basis for our long-term growth and our continued contribution to the environment.
Commercial vehicles also provide the genesis for our positive installation outlook. During 2019, we received new System 4000 orders from Scania in Sweden, from First Automobile Works (FAW) in China and WHB in Brazil. The Scania and FAW orders are for commercial vehicle engine components, with start of production planned before year-end. We entered 2020 poised for a second consecutive year of record installation revenue, but the COVID-19 virus has made the timing of new installations less clear, as foundries reduce their spending plans to preserve liquidity. Regardless of the timing, we remain confident in our installation pipeline and the continued growth of our manufacturing base.
Another important milestone of 2019 was the commissioning of our first full Cast Tracker system at the Tupy foundry in Mexico. This exciting new technology brings Industry 4.0 traceability and process control to the foundry industry. Together with the display of our Tracking Technologies at the GIFA World Foundry Trade Fair in June, this first installation has provided a powerful production reference. We are – and will continue to be – primarily a CGI company, but the Tracking Technologies provides an interesting supplemental business opportunity. As I have told the employees, I grew up on the CGI side of the business, but I really love the Tracking Technologies.
And for me, 2020 brings a personal milestone. After joining the company as Technical Director in 1991, I will celebrate half a lifetime in SinterCast this year. It is a testimony to the fascination of our technology and the industry that we work in; to the sense of satisfaction of each new achievement; to the camaraderie of customers who have become friends; and, to the support and loyalty of colleagues who selflessly keep the wheels turning. I am honoured to be a part of the SinterCast story.
Dr Steve Dawson
President & CEO
* Originally published in the 2019 Annual Report