- Continued double-digit CAGR through 2030
- Gross margins beyond current level of 70%
- Operating margin from 30% to more than 40%
- Extend increasing dividend from current string of 13 years to 25 years
Building on a track record of 11% compounded annual growth rate over the last ten years, SinterCast forecasts continued double-digit CAGR of its series production volume and its revenue through 2030. More than 95% of the current SinterCast production volume is derived from commercial vehicles, pickup trucks and off-road equipment. These applications will continue to rely predominantly on the internal combustion engine and the opportunities for SinterCast-CGI will increase as global demands for performance, fuel efficiency and CO2 reduction become more stringent. SinterCast forecasts continued growth with high volume series production well beyond 2035 in the current western markets and further growth opportunities in the developing world.
The SinterCast business model is based on recurring revenue derived from a license fee applied to each casting shipped by the customer. SinterCast also receives recurring revenue from the sale of bespoke sampling consumables and software licence fees. Recurring revenue from series production accounts for more than 90% of the revenue with the balance coming from new installations, upgrades and engineering service. Gross margins are consistently above 70% and SinterCast maintains the ambition to continuously improve the gross margins.
As a software and service provider, with no in-house manufacturing, the SinterCast business is highly scalable. Historical operating margins have revolved around 30%, depending upon OPEX investments in future growth and R&D. Benefitting from the mature technology, SinterCast foresees reductions in operating costs in parallel with the continued double-digit growth of the series production and the revenue. Operating costs are targeted to decrease by approximately 5% in 2024. Adjusted for inflation, the annual expense level at the end of the current five-year planning horizon is forecast to be less than 2023. SinterCast targets to increase the operating margin from the current level of approximately 30% to more than 40% within the five-year planning horizon. SinterCast will continuously be among the most profitable companies on the Stockholm stock exchange.
Since the first dividend was approved for the financial year 2010, SinterCast has delivered thirteen consecutive years of increasing dividend. The dividend yield in 2023 was more than 5%. In total, SinterCast has provided SEK 282.4 million in dividends, representing 111% of the operating result during the same period. With its strong balance sheet, SinterCast is committed to its pro-dividend strategy and has the goal to attain “dividend aristocrat” status by delivering twenty-five consecutive years of increasing dividend to its shareholders.