Arcam cites major investments and challenging market situation in 2016

February 9, 2017

February 9, 2017

Following a strong fourth quarter, Arcam AB, Mölndal, Sweden, has reported that it 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 the company received 48 orders for its Electron Beam Melting (EBM) Additive Manufacturing machines, compared with the previous year’s total of 58 systems. Arcam stated that it enters 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,” stated Magnus René, Arcam’s President and CEO.

“We continue to pursue and develop our long-term strategy to industrialise 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.”

During the fourth quarter 2016 Arcam delivered 15 EBM systems to customers in the implant and the aerospace industry. In that period it received 24 new orders and the order book by the end of the quarter amounted 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,” added René.

During the period Arcam Q10plus and Arcam Q20plus were launched. The new systems are an enhanced 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 introduced its Arcam xQam™, an X-ray based function for high precision auto-calibration and improved beam control.

It was reported that Arcam’s contract manufacturer, DiSanto, continued to be burdened by weak sales for implants made with traditional technology. In the period several new customer projects for EBM manufactured implants were added. Revenues from this part of the business is increasing but is still not compensating for the weak sales within traditionally manufactured implants, it was stated.

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

“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 expansion

To meet the growing demand for AP&C’s titanium powder for Additive Manufacturing, Arcam  added significant capacity by building a new powder manufacturing plant. At the end of 2016 the company had eight reactors in operation at the existing facility in Montreal, Canada.

“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,” explained René.


Strengthened organisation

During the year Arcam expanded its sales and support organisation in Germany, Italy and in the USA with new sales people and a strengthened sales management. A new sales office in Stuttgart was established to drive sales in the German market.

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


Ownership structure

On September 6, 2016, GE made a public offer to acquire all shares of Arcam AB. GE’s offer was completed on November 29 and GE currently owns 76.15% of all shares of Arcam.

“For us at Arcam, GE’s interest is 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,” concluded René.

February 9, 2017

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