Interim report January – September 2016 Hesitant market

Hesitant market Hesitant market · Net sales increased by 10 % to 440.2 (400.1) MSEK · Operating income amounted to -0.7 (36.2) MSEK · Net income amounted to 6.7 (21.6) MSEK · Earnings per share amounted to 0.32 (1.11) SEK · 35 (34) systems were delivered in the period · Order intake amounted to 24 (29) systems For the third quarter: · Net sales amounted to 132.6 (138.1) MSEK · Operating income amounted to -4.8 (12.6) MSEK · Net income amounted to -3.1 (4.9) MSEK · Order intake amounted to 9 (12) systems · 7 (11) EBM systems were delivered in the third quarter · Public tender by GE to acquire all shares in Arcam Significant events after the end of September: · On October 18 GE Sweden extended the acceptance period of the tender until November 1, 2016 Hesitant market Sales for the period increased to 440.2 (400.1) MSEK and trailing twelve month sales increased to 616.2 (537.3) MSEK. The Arcam Group continues to grow and the growth in the period was 10%. Operating income for the first 9 months was -0.7 (36.2) MSEK and trailing twelve months, operating income amounts to 13.3 (51.5) MSEK. In the first 9 months we delivered 35 (34) EBM systems and we received 24 (29) new EBM orders, whereof 9 (12) for the third quarter. The order book by the end of the period was 16 EBM systems. Our metal powder manufacturer AP&C more than doubled its order intake compared to the same period 2015. In May we decided to add significant capacity by building a new powder manufacturing plant in Montreal. The ground breaking ceremony was held on October 17. The market is currently slightly hesitant and as a result we see that it takes longer to close new orders. This is partly a result of the uncertainty over the company’s future ownership structure. 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. Public offer by GE As announced on September 6, GE made a public tender to acquire all shares in Arcam. The initial acceptance period of the Offer expired on October 14. GE has extended the acceptance period until November 1, 2016. For us at Arcam the tender from GE is a strong confirmation that the company we have built, our team together with you and other partners, is a major player in the additive manufacturing industry and an attractive partner to GE. We share with GE the belief that Additive Manufacturing is a fast growing, strategically important industry. GE plans to retain and expand Arcam’s current customer base, in aerospace as well as in orthopedics. GE also intends to keep current locations of Arcam’s operations and to retain current management and employees. The Board of Arcam has unanimously recommended the shareholders to accept the offer and the statement by the Board can be found as a press release on the company website. Information about the public tender from GE can be found on our website and can be ordered from GE or from Handelsbanken. Business status During the third quarter we delivered 7 EBM systems to customers in the implant or in the aerospace industry. 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. In the period we received 9 new orders and the order book by the end of the quarter amounts to 16 systems. During the period Arcam Q10plus and Arcam Q20plus were launched. The new systems are a significantly enhanced generation of the Arcam Q-series EBM systems for Additive Manufacturing. Arcam Qplus offers up to 25 % higher productivity with significantly 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. 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. In May we decided to increase further the capacity 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. Since February our contract manufacturer DiSanto has new management. The business 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. Strengthened organization During the period we strengthened our sales and support organization in Germany, Italy and in the USA with new sales people in the field and a strengthened sales management. A new sales office in Stuttgart will initially drive sales and in the future also serve as a local support office. 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. With 16 machines in order and a fast growing AM metal powder market we are well positioned for a positive sales development in 2016. Considering the hesitant market and our extensive investments in technology and capacity, it will be a challenge to achieve a result in line with last year. Mölndal, October 21, 2016 Magnus René, President and CEO This report contains information that Arcam AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication at 08.30 CEST on October 21, 2016. Telephone conference Telephone conference with CEO Magnus René and CFO Johan Brandt on October 21, 2016 at 12.00 p.m. (CEST) Phone number to the conference: SE: +46 8 5664 2666 UK: +44 2030 0898 19 US: +1 8557 5322 35 Link to presentation: Arcam Q3 conference call (http://event.onlineseminarsolutions.com/r.htm?e=1282048&s=1&k=F3DB94FDC4DF F A91C8560DED03E53655) 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