Slide 1: Third Quarter 2018 Earnings Conference
Third Quarter 2018 Earnings Conference 25 October, 2018
Slide 2: Today’s presenters
Today’s presenters JOHAN OSKAR MENCKEL HELLSTRÖM CEO CFO Since: 2012 Since: 2011 Gränges since: 2004 2
Slide 3: Gränges today
Gränges today ○ 1,600 employees ○ Listed on Nasdaq Stockholm ○ Net sales of SEK 11 billion ○ Production capacity of 420,000 20% Global market share in rolled products for brazed aluminium metric tonnes heat exchangers ○ Adjusted operating profit of SEK 933 million 3
Slide 4: Third quarter 2018 – stable sales volume and operating profit
Third quarter 2018 – stable sales volume and operating profit ○ Sales volume increased by 0.4% to 93.4 ktonnes ○ Adjusted operating profit increased by 1.6% to SEK 230 million ○ Production disturbances had a negative impact of SEK 22 million ○ Profit for the period rose to SEK 158 million ○ Cash flo
Slide 5: Negative market growth in third quarter, full-year estimates revised down to 1%
Negative market growth in third quarter, full-year estimates revised down to 1% Light vehicle production growth (YoY) Region Q3 2018 Q4 2018 outlook FY 2018 outlook Asia -2% +2% +2% Europe -3% ±0% +1% Americas +4% +3% +1% Global -1% +2% +1% Source: IHS Automotive, 14 September 2018 5
Slide 6: Stable sales volume for Gränges in the third quarter
Stable sales volume for Gränges in the third quarter Gränges sales volume (ktonnes) Asia Europe Americas +1% ±0% -3% 23,0 56,8 54,8 58,8 57,5 20,7 22,5 20,8 50,6 20,6 17,2 17,8 15,5 15,4 15,1 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2017 2018 2017 2018 2017 2018 ○ Growth driven by sales to ○ Dec
Slide 7: Investment of SEK 400 million to expand and improve efficiency in the Finspång facility
Investment of SEK 400 million to expand and improve efficiency in the Finspång facility ○ Significant improvement of on site logistics and environmental footprint ○ Capacity increase with 20 ktonnes to 120 ktonnes ○ Investment includes acquisition of land and buildings, upgrade of rolling mills and
Slide 8: Increasing demand for electric and hybrid vehicles to drive growth for liquid cooling solutions
Increasing demand for electric and hybrid vehicles to drive growth for liquid cooling solutions ○ Liquid cooling now expected to be the dominant technology for battery cooling in EV and HEV ○ Demand for advanced heat exchanger materials to EV is expected to grow significantly ○ TRILLIUM® provides a
Slide 9: Offshore wind power a growing market where Gränges has set the standard for oil cooler material
Offshore wind power a growing market where Gränges has set the standard for oil cooler material ○ Highly corrosive environment requires premium materials ○ Material standard for the industry established together with leading wind turbine OEMs ○ Gränges awarded sole supplier for several offshore proj
Slide 10: US expansion projects proceeding according to plan
US Summary expansion of third projects quarter proceeding 2018 according to plan ○ Sales volume increased by 0.4% to 93.4 ktonnes ○ Adjusted operating profit increased to SEK 230 million ○ Profit for the period rose to SEK 158 million ○ Cash flow before financing was SEK 81 million ○ Net debt of 1.9
Slide 11: Earnings trend remains positive after third quarter
Earnings trend remains positive after third quarter Rolling 12 months sales volume and adjusted operating profit 450 1100 977 989 992 925 933 Adjusted operating profit (SEK million) 400 879 900 769 350 687 Sales volume (ktonnes) 632 700 528 541 541 563 300 494 521 437 444 463 500 401 250 374 348 372
Slide 12: Stable sales volume and operating profit in the third quarter
Stable sales volume and operating profit in the third quarter Financial overview SEK million Q3 January – September 2018 2017 Change 2018 2017 Change Sales volume (ktonnes) 93.4 93.0 0.4% 287.5 286.5 0.4% Net sales 3,322 2,728 21.8% 9,836 8,701 13.0% Adjusted operating profit1 230 227 1.6% 813 754 7
Slide 13: Net debt was SEK 2.6 billion at the end of third quarter
Net debt was SEK 2.6 billion at the end of third quarter Change in net debt -1 800 2.0 Cash flow before financing SEK 81 million 1.9 -2 000 -2 200 SEK million 15 -19 -2 400 -2 600 -236 -24 -2 565 -2 621 320 -2 800 Net debt Adjusted Change in Other operating Investments FX & Net debt 30 Jun EBITDA wo
Slide 14: US trade tariffs and sanctions
US trade tariffs and sanctions Antidumping duties Section 232 tariffs Sanctions against Rusal ○ Antidumping and ○ Additional tariffs of 10% ○ Sanctions prohibiting US countervailing duties on all aluminium imports persons and limiting non- (AD/CVD) on foil and into the US in effect as of US persons
Slide 15: Outlook
Outlook ○ IHS estimate Global Light Vehicle Production to increase 2% during fourth quarter ○ Gränges sales volume to increase with low single digits in the fourth quarter, comprising a stable volume for Automotive and a low single digit growth for HVAC & Other ○ Growth initiatives to support higher
Slide 16: Summary of third quarter 2018
Summary of third quarter 2018 ○ Sales volume increased by 0.4% to 93.4 ktonnes ○ Adjusted operating profit increased to SEK 230 million ○ Profit for the period rose to SEK 158 million ○ Cash flow before financing was SEK 81 million ○ Net debt of 1.9 x adjusted EBITDA 16
Slide 17: Q&A
Q&A Johan Menckel, CEO Oskar Hellström, CFO
Slide 18: Gränges