Slide 1: Fourth Quarter Earnings Presentation
FOURTH QUARTER Earnings Presentation 27 January 2022
Slide 2: Challenging fourth quarter concluded a year of recovery and investments
Challenging fourth quarter concluded a year of recovery and investments ○ Generally good market conditions but continued slow-down in automotive – Sales volume +9% of which +2% organic ○ Increased inflationary cost pressure only partly offset by price increases – Adj. operating profit SEK 139 millio
Slide 3: Leading positions in four key end-customer markets
Leading positions in four key end-customer markets Full-year 2021 sales volume by end-customer market Other niches Automotive 21% 40% 17% Speciality packaging HVAC 22% 3
Slide 4: Strong market in general, but weak in Automotive
Strong market in general, but weak in Automotive Q4 2021 sales volume growth by region and end-customer market1 Speciality YoY (%) Automotive HVAC Other niches Total Packaging Europe -13% - +42% +43% -6% Asia Pacific -6% - - +106% +4% North & South -13% +14% +9% ±0% +4% America Global -11% +14% +9%
Slide 5: Significant cost increases continued into the fourth quarter
Significant cost increases continued into the fourth quarter Examples of operational costs1 Examples of additives costs2 800 15 000 12 500 January 1, 2021 = index 100 600 10 000 EUR / tonne 400 Natural gas 7 500 Magnesium Electricity Manganese Silicon 5 000 200 Zinc Freight 2 500 Aluminium 0 0 Q1 Q2
Slide 6: Action program gradually taking effect
Action program gradually taking effect ○ Strong focus on actions to: – Increase sales to non-automotive markets – Achieve cost savings and increase productivity – Secure price increases ○ Expected weakness in automotive in Q1 largely compensated by growth in non-automotive markets ○ A large part of
Slide 7: Record sales volume and operating profit in 2021
Record sales volume and operating profit in 2021 Sales volume and adjusted operating profit 600 1 250 Adjusted operating profit (SEK million) 1 005 1 008 500 933 1 000 866 Sales volume (ktonnes) 400 687 648 750 300 541 463 500 200 362 371 209 250 100 149 152 159 160 164 239 373 375 347 351 489 0 0 2
Slide 8: Margin reduction in the fourth quarter due to lower sales volume and higher cost
Margin reduction in the fourth quarter due to lower sales volume and higher cost Sales volume and Adjusted operating profit per tonne 100 4.0 Adjusted operating profit per tonne (kSEK) 2.3 80 2.0 1.4 2.0 Sales volume (ktonnes) 1.9 1.3 60 1.1 1.2 0.4 0.0 40 -2.0 20 14.6 24.0 24.3 22.2 22.0 54.9 40.9
Slide 9: Financial overview – fourth quarter 2021
Financial overview – fourth quarter 2021 SEK million Q4 January-December 2021 2020 Change 2021 2020 Change Sales volume (ktonnes) 112.3 103.3 8.7% 488.9 350.6 39% Net sales 4,857 3,149 54% 18,130 11,008 65% Adjusted operating profit1 139 193 -28% 1,008 648 56% Adjusted operating margin (%) 2.9 6.1 -
Slide 10: Reduced net debt and stable leverage in fourth quarter
Reduced net debt and stable leverage in fourth quarter Change in net debt -2 000 2.2 Adjusted cash flow before financing 2.2 SEK 463 million -2 500 SEK million -3 000 -11 -166 -3 500 341 -171 -125 -3 643 -3 810 299 -4 000 Net debt Adjusted Change in Other Maintenance Expansion FX & Net debt 30 Sep E
Slide 11: Gränges Americas – fourth quarter 2021
Gränges Americas – fourth quarter 2021 Sales volume ○ Sales volume increased by 4% 80 +4% – Continued strong market conditions 60 ktonnes 40 ○ Extended planned maintenance 20 – 8 ktonnes capacity reduction 55 63 69 64 57 0 Q4 Q1 Q2 Q3 Q4 ○ Reduced operating profit and margin Adjusted operating profi
Slide 12: Gränges Eurasia – fourth quarter 2021
Gränges Eurasia – fourth quarter 2021 Sales volume ○ Organic sales volume decline of -9%1 80 +6% – Europe -8% and Asia -11% 60 ktonnes – Continued slow-down in automotive 40 20 55 73 70 61 59 ○ Reduced operating profit and margin 0 Q4 Q1 Q2 Q3 Q4 – Increasing cost inflation Adjusted operating profit
Slide 13: Summary – fourth quarter 2021
Summary – fourth quarter 2021 ○ Generally good market conditions but continued slow-down in automotive ○ Increased inflationary cost pressure only partly offset by price increases ○ Continued strong cash generation and increased dividend ○ Strong focus on price and cost productivity will drive gradu
Slide 14: 2021 – a year of recovery and investment for the future
2021 – a year of recovery and investment for the future ○ COVID, supply chain disruptions, demand and cost swings ○ Record sales and earnings ○ Strong contribution from Konin ○ Very good progress on sustainability ○ Growth investments in all regions ○ New solutions for electric vehicles and batterie
Slide 15: Good progress on sustainability
Good progress on sustainability Carbon emissions Verified product Sourced recycled ASI intensity sustainability info aluminium certifications Performance Scope 1+2 Standard -8% 2 Scope 3 35% 28% Chain of Custody Standard -20% 2 2025 targets1: 2025 target: 2025 target: 2025 target: Scope 1+2: -25% 10
Slide 16: Gränges' sustainability efforts recognized externally
Gränges’ sustainability efforts recognized externally EcoVadis Sustainalytics1 MSCI2 CDP Platinum AA B Top 1% Top 1% Top 8% Benchmark: Manufacture of basic Benchmark: Aluminium industry Benchmark: Metals and Mining Benchmark: Not available precious and other non-ferrous metals – Non-Precious Metals
Slide 17: In 2021 the financial performance reflects challenging market conditions and investment for the future
In 2021 the financial performance reflects challenging market conditions and investment for the future Net debt over Growth ROCE adjusted EBITDA Dividend SEK +11% 1 10% 2.2 2.252 40% Target: Target: Target: Target: 30–50% above market 15–20% 1.0–2.0 times of net profit 1. Gränges sales volume growth
Slide 18: Growth plan in the making
Growth plan in the making ○ Good starting point ○ However: 2021 profitability unsatisfactory ○ Positive factors gaining influence going forward ○ Short-term focus: Sales volume, price increases, and cost productivity ○ But in parallel, plans being made to restore ROCE to 15-20% target... …and to bui
Slide 19: Outlook – first quarter 2022
Outlook – first quarter 2022 ○ Sales volume expected to increase sequentially to about the same level as in Q1 2021 – Demand from automotive customers expected to remain low… – …but will be offset by volume efforts and strong demand from other markets ○ A large part of net cost increases expected to
Slide 20: Q&A
Q&A Jörgen Rosengren, CEO Oskar Hellström, CFO
Slide 21: Slide 21