Slide 1: Third Quarter Earnings Presentation
THIRD QUARTER Earnings Presentation 21 October 2021
Slide 2: Growth and increased profit in third quarter, but challenging near-term outlook
Growth and increased profit in third quarter, but challenging near-term outlook ○ Generally good market conditions but severe slow-down in automotive ○ Increased sales volume and improved profit – Sales volume increased by 37% – Adjusted operating profit SEK 219 million ○ Increased inflationary cost
Slide 3: Leading positions in four key end-customer markets
Leading positions in four key end-customer markets January – September 2021 sales volume by end-customer market Other niches Automotive 20% 40% 17% Speciality packaging HVAC 23% 3
Slide 4: Generally good demand across all regions and end-customer markets relative to third quarter 2020
Generally good demand across all regions and end- customer markets relative to third quarter 2020 Q3 2021 sales volume growth by region and end-customer market1 Speciality YoY (%) Automotive HVAC Other niches Total Packaging Europe +29% - +11%1 +40% +31% Asia Pacific +2% - - +18% +4% North & South -
Slide 5: Reduction in automotive demand contributed to a sequential volume decline
However, a reduction in automotive demand contributed to a sequential volume decline ○ Significant decrease in automotive Sales volume industry demand in Q3 – LVP down -10% 20% YoY and 12% sequentially1 150 131 125 119 ○ However, continued good demand in all other end-customer markets, 100 especiall
Slide 6: Good progress on strategic initiatives
Good progress on strategic initiatives Important milestones First part of logistics Ground broken for new reached for Konin improvement project in casting centre in capacity expansion Finspång completed Huntingdon 6
Slide 7: First sustainability-linked bond successfully issued
First sustainability-linked bond successfully issued ○ Gränges is the first Swedish company to list a Sustainability-Linked Bond on Nasdaq ○ Bond of SEK 600 million under new green and sustainability linked finance framework ○ Interest rate tied to achievement of 2025 sustainability targets ○ Bond o
Slide 8: Volume and profit per tonne improvement year over year, but sequential decline in third quarter
Volume and profit per tonne improvement year over year, but sequential decline in third quarter Sales volume and Adjusted operating profit per tonne 100 4.0 Adjusted operating profit per tonne (kSEK) 2.6 2.7 80 2.3 1.8 2.0 Sales volume (ktonnes) 1.2 60 1.1 0.5 0.0 40 -2.0 20 14.6 24.0 24.3 22.2 59.1
Slide 9: Financial overview – third quarter 2021
Financial overview – third quarter 2021 SEK million Q3 January-September 2021 2020 Change 2021 2020 Change Sales volume (ktonnes) 118.5 86.7 37% 376.6 247.4 52% Net sales 4,621 2,575 79% 13,272 7,858 69% Adjusted operating profit1 219 203 7.6% 870 455 91% Adjusted operating margin (%) 4.7 7.9 -3.2 p
Slide 10: Net debt and leverage increased in third quarter primarily driven by the higher aluminium price
Net debt and leverage increased in third quarter primarily driven by the higher aluminium price Change in net debt -2 000 2.0 Adjusted cash flow before financing 2.2 SEK -135 million -2 500 SEK million -3 000 -3 500 -3 532 -421 -33 420 -101 -85 -57 -3 810 -4 000 Net debt Adjusted Change in Other Mai
Slide 11: Gränges Americas – third quarter 2021
Gränges Americas – third quarter 2021 Sales volume ○ Sales volume increased by 8% 80 +8% – Continued strong market conditions 60 ktonnes – Temporary production disturbances 40 20 59 55 63 69 64 ○ Increased operating profit and margin 0 Q3 Q4 Q1 Q2 Q3 – Higher average conversion price Adjusted operat
Slide 12: Gränges Eurasia – third quarter 2021
Gränges Eurasia – third quarter 2021 Sales volume ○ Organic sales volume increase of 22% 80 +92%1 – Europe +41% and Asia +7% 60 ktonnes – Sequential slow-down in automotive 40 20 32 55 73 70 61 ○ Increased operating profit and margin 0 Q3 Q4 Q1 Q2 Q3 – Increasing inflationary pressure Adjusted opera
Slide 13: During the third and fourth quarter Gränges is facing challenging external conditions
During the third and fourth quarter Gränges is facing challenging external conditions Continued negative growth in Very sharp cost increases automotive production Examples2 50% 48% 500 Light vehicle production YoY growth1 Natural gas January 1, 2021 = index 100 400 Freight 25% 16% 300 200 Electricit
Slide 14: Outlook – fourth quarter 2021
Outlook – fourth quarter 2021 ○ Sales volume in the fourth quarter is currently expected to be about 10% lower than in the third quarter – Continued good demand from many end-customer markets – Very low demand from automotive customers – Reduced capacity due to extensive year-end maintenance in Amer
Slide 15: Reduced supply of important additives may have a significant impact on the aluminium industry in 2022
Reduced supply of important additives may have a significant impact on the aluminium industry in 2022 Dramatic price increases for some ○ Significant supply contractions for aluminium rolling additives important additives creates an Examples1 uncertain market environment 15 000 Magnesium 12 500 ○ Ma
Slide 16: Summary – third quarter 2021
Summary – third quarter 2021 ○ Generally good market conditions but severe slow-down in automotive ○ Increased sales volume and improved profit ○ Increased inflationary cost pressure only partly offset by price increases ○ Good progress on strategic initiatives ○ Challenging near term outlook ○ Acti
Slide 17: Q&A
Q&A Jörgen Rosengren, CEO Oskar Hellström, CFO
Slide 18: Slide 18