Arcam AB Releases 2016 Financial Results, Looks Towards Future With GE

We may be almost halfway through February, unbelievably, but we’re still not that far removed from 2016, which means that the 2016 financial reports are still rolling in. We’ve heard from several major companies in the 3D industry lately about how the past year went for them on a financial level, and today it’s Arcam AB’s turn. Like most of the other companies we’ve heard from so far, Arcam had a mostly positive year – and that’s good news for the 3D industry in general.

Overall, net sales increased by 12.5 percent to 648.3 MSEK, with an especially strong fourth quarter contributing to the success of 2016 – again, something we’ve heard from several companies. In the fourth quarter, sales increased by 18 percent to 208.1 MSEK. Arcam took 48 new orders for Electron Beam Melting (EBM) systems, in 2016 – which doesn’t sound like much, until you consider how absolutely massive and expensive the machines are. Still, it was a decrease from 2015, in which the company took orders for 58 EBM systems.

The biggest event for Arcam in 2016, of course, came in September when GE began the process of acquiring the company. At this point, GE holds 76.1 percent of all shares in Arcam, while Elliott Management is the second largest shareholder with 11 percent; Elliott Management had a hand in the shape of the GE deal as well.

“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,” Arcam states.

“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.”

In the fourth quarter, Arcam delivered 15 EBM systems to customers in the orthopedic implant and aerospace industries and received 24 new orders; demand is heavily dependent on those two industries and how quickly they’re moving toward production. During that period, Arcam also launched the new Arcam Q10plus and Q20plus, enhanced versions of their EBM Q-series additive manufacturing machines, along with Arcam xQam, an X-ray based function for better beam control and high precision auto-calibration.

“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,” Arcam continues. “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.”

To compensate for slow growth in EBM and traditional manufacturing, Arcam has been focusing more on metal powder manufacturing, which brings us to AP&C. Arcam’s powder manufacturing subsidiary has been thriving, with demand for their titanium metal powder increasing so much that they decided to build an additional production plant in October. According to Arcam, with the present build-out AP&C should reach a capacity of at least 750 tons per year by the end of 2017. The new plant is being built in modules and can be extended so that AP&C can reach a combined capacity of more than 1,200 tons per year in both production plants.

Additional highlights of 2016 included strengthened sales and support in Germany, Italy and the United States with new salespeople and additional management. A new sales office will be opening in Stuttgart, while local management has been added to the sales office in Turin. On the North American front, Alain Dupont was named president of AP&C in January, while Tom Barrett was named president of contract manufacturer DiSanto in February.

Earlier this week, Arcam held an Extraordinary General Meeting with about 40 people representing about 87% of the company’s shareholders. A few important decisions were made:

• GE Sweden Holdings AB’s proposal was accepted that the Board of Directors will consist of five people and no deputy Board member for the period until the end of the next Annual General Meeting
• Also approved was GE Sweden Holdings AB’s proposal that Board members employed within GE companies will not be entitled to any remuneration by the company.
• Board members Jan-Olof Brüer, Henrik Hedlund, Anna Malm Bernsten, Malin Ruijsenaars and Joakim Westh were dismissed, and Carlos Härtel, Riccardo Procacci and Vandana Sriram were elected as new Board members.

Discuss in the Arcam forum at 3DPB.com.