Slide 1: Gränges Capital Markets Day 2016
Gränges Capital Markets Day 2016 1
Slide 2: Transforming the world through innovative aluminium engineering
Transforming the world through innovative aluminium engineering Stockholm, 15 March 2016 Johan Menckel, CEO
Slide 3: Today’s agenda
Today’s agenda 1. Introduction 5. Growth opportunities in stationary HEX Claudi Martin Callizo, HVAC&R Manager 2. Group strategy and outlook 6. Leveraging a strong presence in China Johan Menckel, CEO Colin Xu, President Gränges Asia 3. Strong financial performance 7. Customer case – TitanX Oskar He
Slide 4: Today’s agenda
Today’s agenda 1. Introduction 5. Growth opportunities in stationary HEX Claudi Martin Callizo, HVAC&R Manager 2. Group strategy and outlook 6. Leveraging a strong presence in China Johan Menckel, CEO Colin Xu, President Gränges Asia 3. Strong financial performance 7. Customer case – TitanX Oskar He
Slide 5: Gränges vision and business concept
Gränges vision and business concept Vision • Transforming the world through innovative aluminium engineering Business concept • Gränges is a global aluminium company and the market leader in advanced materials for heat exchangers. We provide lighter and more designable solutions that increase econom
Slide 6: Gränges is a global aluminium company specializing in rolled products for the heat exchanger industry
Gränges is a global aluminium company specializing in rolled products for the heat exchanger industry Heat exchanger value chain Aluminium producers Material producers Heat exchanger producers Automotive and HVAC&R 6
Slide 7: A modern car can have more than ten different heat exchangers
A modern car can have more than ten different heat exchangers 7
Slide 8: Multi-layer cladding adds unique properties and enables tailored solutions
Multi-layer cladding adds unique properties and enables Gränges to offer tailored solutions ~150 active alloy combinations ~1,500 active articles 8
Slide 9: Gränges success factors
Gränges success factors Attention to customer needs Leading-edge technology Industrial craftsmanship We work closely with with our We do not sell off-the-shelf Consistent high quality is our customers. Knowing and solutions. top priority. understanding them enables us We are a development partner
Slide 10: 2020 goal and strategy
2020 goal and strategy • Grow significantly above the market rate • Become the market leader in all geographical regions • Maintain good and sustainable profitability Increase efficiency Grow presence Drive growth through Create value from through continuous through structural innovation sustainabil
Slide 11: Global production of light vehicles is expected to grow annually from 2016 to 2020
Global production of light vehicles is expected to grow by 3% annually from 2016 to 2020 Production of light vehicles by region 120 Actual Forecast Light vehicle production (million units) 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 12: Drive growth through innovation
Drive growth through innovation • Shift to aluminium and brazed technology Accelerated • Aluminium is used in less than 5% of global expansion HVAC&R in HVAC&R • Increased focus on energy efficiency and lower CO2 emissions • Significant potential for brazed aluminium Heat exchangers heat exchangers
Slide 13: Create value from sustainability
Create value from sustainability Focus areas Aluminium life cycle • Safety first - zero accidents target • Recycling of aluminium • Life cycle perspective • Energy-optimised processes • Diversity 13
Slide 14: Increase efficiency through continous improvements
Increase efficiency through continous improvements Focus areas Productivity development • Process stability Tonnes per F TE 180 • Productivity • Energy efficiency 170 • Metal management 160 150 140 2011 2012 2013 2014 2015 14
Slide 15: Grow presence through structural expansion
Grow presence through structural expansion North America China • The North American market is • China is expected to be a fast growing supplied from Sweden and China market in the coming years and is a today. good base for expansion in Asia. • A foothold by adding our own • China is one region where
Slide 16: Key achievements in 2015
Key achievements in 2015 Sales volume and adjusted operating profit • A higher growth than the market 250 600 541 • Earnings and cash flow at new Adjusted operating profit (SEK million) 463 500 record levels 200 Sales volume (ktonnes) 159 160 164 400 • Improved metal management 149 152 150 362 371 •
Slide 17: Strong performance against targets in 2015
Strong performance against targets in 2015 Growth ROCE Net debt over EBITDA Dividend1 +2.5% 18.1% 0.4 SEK 2.00 39% of Net Profit Target: Target: Target: Target: above market 15–20% 1–2 30–50% of net profit 1) The B oard o f Director’s p roposal for the 2 016 A nnual General Meeting 17
Slide 18: Trends set to drive Gränges’ development
Trends set to drive Gränges’ development Higher living standards • Increased demand for vehicles among first-time buyers in developing countries • Many functions are becoming standard, like air-conditioning systems • Safety is a driving trend that has increased demand for larger cars and SUVs Redu
Slide 19: Well positioned for future growth
Well positioned for future growth Our industry Our customers Our business • A few large customers • The automotive industry • Market-leading position • Global market • The HVAC&R industry • Strong presence in Asia • High technical demands • Technical leadership • Niche in the aluminium • Well-inve
Slide 20: GRANGES
GRANGES
Slide 21: Today’s agenda
Today’s agenda 1. Introduction 5. Growth opportunities in stationary HEX Claudi Martin Callizo, HVAC&R Manager 2. Group strategy and outlook 6. Leverage on a strong presence in China Johan Menckel, CEO Colin Xu, President Gränges Asia 3. Strong financial performance 7. Customer case – TitanX Oskar H
Slide 22: Strong financial performance
Strong financial performance Stockholm, 15 March 2016 Oskar Hellström, CFO
Slide 23: Strong track record of growth and earnings improvement
Strong track record of growth and earnings improvement Sales volume and adjusted operating profit 250 600 541 Adjusted operating profit (SEK million) 463 500 200 Sales volume (ktonnes) 159 160 164 149 152 400 150 132 371 362 300 105 106 93 96 100 85 84 200 209 50 100 0 0 2004 2005 2006 2007 2008 200
Slide 24: Earnings improvement driven by volume growth, price and productivity increase and FX tailwind
Earnings improvement driven by volume growth, price and productivity increase and FX tailwind Adjusted operating profit 2011 vs 2015 700 58 -39 Adjusted operating profit (SEK million) -59 600 88 541 142 500 400 143 300 209 200 100 4.3% 9.8% 1.4 3.3 0 Adjusted Volume FX Price Cost Deprec Metal Adju
Slide 25: Improved earnings have successfully been converted into cash
Improved earnings have successfully been converted into cash – cash conversion 118% from 2012 to 2015 Adjusted operating profit to cash flow before financing conversion 750 150% 129% 121% 111% Adjusted operating profit and cash 111% flow before financing (SEK million) 500 100% Cash conversion (%) 25
Slide 26: Strong financial position with net debt reduced from 1.5 to 0.4 times EBITDA since the IPO
Strong financial position with net debt reduced from 1.5 to 0.4 times EBITDA since the IPO Change in net interest-bearing debt September 2014 to December 2015 Cash flow before financing SEK 788 million Net interest-bearing debt (SEK million) 200 133 -88 -164 0 906 1.5 -112 0.4 -200 -275 -400
Slide 27: The strong financial position provides flexibility while balancing business risk
The strong financial position provides flexibility while balancing business risk Solid balance sheet for shareholder value Risk management Sustaining capex Dividend Capacity for growth Exposure to auto- Sustaining capital Reliable and pre- Reinvestment in motive industry expenditure to
Slide 28: Working capital management remains a priority but fluctuations are inevitable
Working capital management remains a priority but fluctuations are inevitable due to metal price movements Working capital and LME aluminium price 1,750 17.5 LME aluminium price (SEK per tonne) 1,500 15 Working capital (SEK million) 1,250 12.5 114 1,000 10 750 92 7.5 500 5 250 2.5 0 0 Q4 Q1 Q2 Q3 Q4
Slide 29: Little need for reinvestment in current facilities
Little need for reinvestment in current facilities following the completion of a major investment programme Capital expenditure 500 250% Capital expenditure over depreciation (%) Capital expenditure (SEK million) 400 200% 323 293 300 150% 200 100% 125 134 94 100 50% 0 0% 2011 2012 2013 2014 2015 Cap
Slide 30: Track record of increasing value creation since 2012
Track record of increasing value creation since 2012 Return on capital employed vs weighted average cost of capital1) 20% 15% ROCE & WACC (%) 10% 5% 0% 2011 2012 2013 2014 2015 ROCE WACC 1) WACC pre-tax, 2011-2014 Orkla Group WACC for Gränges 10.7%, 2015 Gränges Group WACC 8.9% 30
Slide 31: GRANGES
GRANGES
Slide 32: Today’s agenda
Today’s agenda 1. Introduction 5. Growth opportunities in stationary HEX Claudi Martin Callizo, HVAC&R Manager 2. Group strategy and outlook 6. Leveraging a strong presence in China Johan Menckel, CEO Colin Xu, President Gränges Asia 3. Strong financial performance 7. Customer case – TitanX Oskar He
Slide 33: Extending our lead in automotive
Extending our lead in automotive Stockholm, 15 March 2016 Dr Sampath Desikan, Managing Director Gränges India
Slide 34: Agenda
Agenda DRIVING VEHICLES THERMAL HEAT EXCHANGER FORCES MANAGMENT MATERIALS • Emission • Low carbon liquid • Engine cooling • Thinner regulation fuels and HVAC • Stronger • Urbanisation • Efficient and • Power electronics • More corrosion • Digitalisation downsized internal cooling resistant etc • Cus
Slide 35: Trends set to drive demand for advanced heat exchanger materials in automobiles
Trends set to drive demand for advanced heat exchanger materials in automobiles Improved internal combustion engine, Emission regulation powertrain electrification Growing city population and small cars, Urbanisation policies to discourage private vehicles Internet connected vehicles, vehicle Digita
Slide 36: Digitalisation and urbanisation
Digitalisation and urbanisation Small cars with Strong growth of small Internet connected cars on the rise significant share cars in emerging markets Source: Carpark;; McKinsey Source: Carpark;; McKinsey 36
Slide 37: Approaches to low carbon vehicles
Approaches to low carbon vehicles Reduce carbon in fuel • Battery electric • Natural gas/biogas • Plug-in-hybrid • Hydrogen fuel cells • 2nd and 3rd generation biofuels Conventional Low carbon vehicle vehicle Improved vehicle energy efficiency • Next generation combustion engine + heat recovery •
Slide 38: Emerging technologies for low carbon vehicles
Emerging technologies for low carbon vehicles Fuel injection optimisation Improve thermal Low NOx combustion efficiency Reduce combustion heat losses Combustion Improve system Engine downsizing engines efficiency Energy recovery technologies Conventional vehicles Low carbon Bio fuels fuels Natural g
Slide 39: Powertrain options – gasoline and diesel engines will continue to dominate
Powertrain options – gasoline and diesel engines will continue to dominate the automotive market Source: P wc a nalyst n otes A utofacts Nov 2 015 Source: www.press.bmwgroup.com 39
Slide 40: Heat exchangers in a conventional vehicle
Heat exchangers in a conventional vehicle 40
Slide 41: A modern car can have more than ten different heat exchangers
A modern car can have more than ten different heat exchangers 41
Slide 42: Power electronics thermal management
Power electronics thermal management Power electronics components have to be maintained below 125°C for optimum performance Extruded profile Air cooling Tube-Fin based system solutions Power Extruded frame + Brazed clad fin Outside air Radiator Electronics cooling Liquid Coolant plates cooling solu
Slide 43: Battery thermal management
Battery thermal management Battery temperature need to be maintained in the range 30–40°C with a maximum temperature non-uniformity 3–4°C for optimal performance Heating Passive Liquid Outside air ventilation cooling Air Cabin air ventilation Battery thermal management Outside air Cooling Cabin air
Slide 44: Electric traction motor cooling
Electric traction motor cooling Outside air Radiator Battery pack Direct air cooling Electric motor Oil cooling via cooling transmission oil coller Coolant/liquid cooling Electric motor and its housing for cooling Coolant heater Heat core 44
Slide 45: Fuel cells and thermal management
Fuel cells and thermal management PEMFC need to be maintained in the range 60–80°C small temperature difference between the stacks and ambient challenges design of thermal management system Cooling with heat spreaders Example heat pipes PEMFC1) Cooling with air flow thermal management Cooling with w
Slide 46: Low pressure EGR systems
Low pressure EGR systems Aluminium heat exchangers in low pressure exhaust gas recirculation (EGR) systems require advanced heat exchanger materials – an illustrative example • Indirect or water-cooled charge air coolers in combination with low-temperature radiator • For both gasoline and diesel p
Slide 47: Gränges core competencies
Gränges core competencies Gränges develops, produces and • Hot rolling of clad • Efficient and markets advanced materials that materials effective enhance both production economy • Precision slitting supply chain • Continuous • Customer during the customer manufacturing improvement intimacy process
Slide 48: Gränges’ products – heat exchanger materials
Gränges’ products – heat exchanger materials CORE COMPETENCIES CORE PRODUCTS END PRODUCTS Build leadership in Embed Gränges’ core Through value selling R&D – thinner gauge competencies in product and customer intimacy, and advanced tube + process designs & build Gränges’ brand & fin products manufac
Slide 49: Summary
Summary 1. Many advanced automotive technologies are being developed. 2. Advanced technologies often require complex thermal management systems which, in turn, demand advanced heat exchanger materials. 3. Gränges, with its core competence, is well positioned to develop advanced heat exchanger materi
Slide 50: GRANGES
GRANGES
Slide 51: Today’s agenda
Today’s agenda 1. Introduction 5. Growth opportunities in stationary HEX Claudi Martin Callizo, HVAC&R Manager 2. Group strategy and outlook 6. Leveraging a strong presence in China Johan Menckel, CEO Colin Xu, President Gränges Asia 3. Strong financial performance 7. Customer case – TitanX Oskar He
Slide 52: Growth opportunities in the HVAC&R market
Growth opportunities in the HVAC&R market Stockholm, 15 March 2016 Dr Claudi Martin Callizo, HVAC&R Technical Manager
Slide 53: Agenda
Agenda • Global HVAC&R market overview • Conversion to aluminium heat exchangers • Challenges and opportunities • Outlook for rolled products in HVAC&R • Gränges’ offering in HVAC&R 53
Slide 54: HVAC&R definition
HVAC&R definition Heating, Ventilation and Air Conditioning Comprises equipment and systems for & Refrigeration Comprises equipment and systems for the the creation and distribution of creation and distribution of cooling for environmental comfort other purposes than human comfort. – heating and coo
Slide 55: HVAC market segments
HVAC market segments HVAC Markets served Residential Commercial Product segments Room A/C (RAC) Packaged A/C (PAC) Central A/C (CAC) Example equipment/systems Areas of use Bedroom, small office < 18 kW (5 tons): homes, small shops Offices, s tores, factories, > 18 kW: smaller to medium-sized hospit
Slide 56: World air-conditioning market is dominated by China and Asia-Pacific
World air-conditioning market is dominated by China and Asia-Pacific China • China is by far the largest AC market with 36% of global demand and 44% of world production. • The biggest contributors to growth are the North America market, South East Asia and India, while Europe is still struggling t
Slide 57: Global HVAC market is expected to grow steadily 2015–2020
Global HVAC market is expected to grow steadily at CAGR of 4.4% 2015–2020 CAGR 140 4.4% Market growth drivers 120 CAGR • Growing population and industrialisation Global HVAC market (USD 2.4% 100 • Increase in global construction expenditure 80 • Rising incomes of an expanding middle class, billion)
Slide 58: Potential for cost reduction and efficiency gains are the major drivers in HVAC&R
Potential for cost reduction and efficiency gains are the major drivers in HVAC&R Automotive market HVAC&R market top impacting factors top impacting factors 1 Compactness 1 Cost Cost 5 2 Weight 4 2 Thermal performance (COP) 3 3 Corrosion resistance Weight COP 3 Corrosion resistance 2 1 4 Cost 0 4 R
Slide 59: Traditional AC HEXs consist of copper tubes mechanically assembled into aluminium fins
Traditional AC HEXs consist of copper tubes mechanically assembled into aluminium fins Evaporator Condenser Manufacturing cost breakdown (For 10–15 SEER 10.5 kW residential split system) Compressor 30% Heat exchangers 25% Electronics and wiring 15% Others ( cabinet, fans, controls etc) 20% Freight 1
Slide 60: High and unstable price of copper triggered interest in all aluminium heat exchangers
High and unstable price of copper triggered the interest in all aluminium heat exchangers Historical aluminium and copper prices 8.87 $10,00 $9,00 8.67 Aluminium $8,00 Copper USD/kg $7,00 Metal prices 98-05 avg 2008 2010 2012 2014 $6,00 Cu: $2.09 $6.86 $7.63 $8.01 $6.79 $5,00 Al: $1.53 $2.57 $2.19
Slide 61: HVAC&R conversion to all aluminium HEX
HVAC&R conversion to all aluminium HEX Mechanically assembled Round Al tube / Al plate fin heat exchanger Indoor unit (A-coil) in a US ducted system + Lower cost of materials + Almost drop-in solution ─ No benefit on performance Commercial refrigeration evaporator 61
Slide 62: HVAC&R conversion to all aluminium HEX
HVAC&R conversion to all aluminium HEX Brazed aluminium technology Round Al tube / Al plate fin Brazed ’microchannel’ heat exchanger heat exchanger + Lower cost of materials + Lower cost of materials + Almost drop-in solution + Total system cost savings + Increased efficiency – No benefit on perfor
Slide 63: More stringent energy conservation policies and regulatory measures for HVAC&R systems
More stringent energy conservation policies and regulatory measures for HVAC&R systems Labelling Minimum Energy Performance Standards, MEPS (for residential air conditioning and heat-pump appliances) 30 No 260/2012 Jan 2013 Jan 2014 EU SEER (SI) 3.6 4.6 Average condenser weigth (kg) 25 SCOP 3.4 3.8
Slide 64: Phase out of harmful refrigerants affects HVAC&R equipment
Phase out of harmful refrigerants affects HVAC&R equipment and component development • The current generation of refrigerants and hydrofluorocarbons (HFC) have significant global warming potential (GWP) when released to the atmosphere. • National refrigerant regulations limit the choice of refrigera
Slide 65: Brazed aluminium HEX offer many other advantages compared with traditional coils
Brazed aluminium HEX offer many other advantages compared with traditional RTPF coils • Improved heat transfer performance – Provides higher capacity with same frontal area • Lower pressure drop – Reduced energy consumption from the fan(s) – Less noise • Refrigerant charge reduction – Reduced enviro
Slide 66: HVAC&R systems are commercially available with brazed aluminum HEX
HVAC&R systems are commercially available with brazed aluminum HEX for most applications Residental room AC (single-split) Packaged residential AC Packaged commercial AC (rooftop) Packaged commercial AC (liquid chiller) Transport refrigeration Commercial refrigeration 66
Slide 67: Global potential for brazed aluminium in HVAC&R
Global potential for brazed aluminium Market segments (2015) in HVAC&R Windows and portables 1 000 Small split 365,000 MT 800 '000 METRIC TONNES Medium split 600 155,000 MT 400 Residential PAC 82,000 MT 200 Commercial PAC 108,000 MT 0 2012 2013 2014 2015 FC2016 FC2017 FC2018 FC2019 FC2020 Good poten
Slide 68: Conversion is estimated at less than 5%
Conversion is estimated at less than 5% 5% 4% 1% Brazing conversion 68
Slide 69: Rolled products for brazed aluminium HEX in HVAC&R expected to grow
Rolled products for brazed aluminium HEX in the HVAC&R expected to grow at CAGR of 15% 2016–2020 70 CAGR 15% 60 '000 METRIC T ONNES 50 40 30 20 10 0 2012 2013 2014 2015 FC2016 FC2017 FC2018 FC2019 FC2020 69
Slide 70: Capital investment and technology knowledge gap are the main barriers to conversion
Capital investment and technology knowledge gap are the main barriers to conversion Materials Heat exchangers HVAC systems Traditional HEX A/C OEMs with in-house HEX manufacturing Tubing (Cu) Finstock HEX manufacturers Niche A/C OEMs Brazed AI HEX HEX manufacturers A/C OEMs Microchannel tubes Finst
Slide 71: Two technology barriers being addressed
Two technology barriers being addressed 1) Evaporator design and lack of heat pump functionality Due to the flat tube configuration and compact fin design, condensate tends to accumulate, leading to: • Blockage of the air-flow passage • Water-spray discharge (blow-outs) • Unpleasant smell • In fr
Slide 72: Two technology barriers being addressed
Two technology barriers being addressed 2) Corrosion • All-aluminium construction eliminates formicary corrosion concerns and severe galvanic corrosion of the fin. • However, a poor choice of materials or highly corrosive environment lead to premature failure by leakage. • To extend the service lif
Slide 73: Gränges HVAC&R product portfolio
Gränges HVAC&R product portfolio Standard system: Multiport extruded tube (MPE) Fin Tube Header Alloy and material solutions for the HVAC&R market are similar to those for the automotive industry. Gränges is well positioned to capture growth oportunities in this segment. 73
Slide 74: Folded tubes replace extruded tubes for improved performance and cost efficiency
Folded tubes replace extruded tubes for improved performance and cost efficiency Condenser with folded tube A folded tube is a multi-channel flat tube produced by precise rolled forming of an aluminium tube stock material. Compared to MPE solutions, folded tube technology offers: • Better performan
Slide 75: MULTICLAD tube material
MULTICLAD® tube material Gränges’ patented solution for the most demanding applications, with high requirements on corrosion resistance and strength, is achieved by: • A tailored interlayer which minimises any negative interaction between core and molten filler. • An adequate corrosion potential dif
Slide 76: Summary
Summary • The HVAC&R market is expected to grow, mainly driven by the increase in global construction expenditure.Higher demand for rolled products for brazed heat exchangers in the HVAC&R industry, however, is driven mainly by the increasing adoption of brazing technology. • Potential for energy ef
Slide 77: GRANGES
GRANGES
Slide 78: Today’s agenda
Today’s agenda 1. Introduction 5. Growth opportunities in stationary HEX Claudi Martin Callizo, HVAC&R Manager 2. Group strategy and outlook 6. Leveraging a strong presence in China Johan Menckel, CEO Colin Xu, President Gränges Asia 3. Strong financial performance 7. Customer case – TitanX Oskar He
Slide 79: Leveraging a strong presence in China
Leveraging a strong presence in China Stockholm, 15 March 2016 Colin Xu, President Gränges Asia
Slide 80: Agenda
Agenda • Gränges Asia • The automotive market in Asia • Drivers for the Chinese automotive market • New products and solutions 80
Slide 81: Gränges Shanghai – a modern, well-invested and well-maintained plant
Gränges Shanghai – a modern, well-invested and well-maintained plant 81
Slide 82: Gränges has successfully established its position in Asia by growing with the Chinese automotive market
Gränges has successfully established its position in Asia by growing with the Chinese automotive market Gränges sales volume in Asia and China vehicle production China vehicle production (million units) Asia sales v olume (ktonnes) Gränges sales volume A sia China vehicle p roduction 82
Slide 83: China will continue to be the most important market for Gränges
China will continue to be the most important market for Gränges due to its size and growth potential Units Vehicle production in China and Asia China 2013-2020 ‘000 CAGR = 5% 60 000 Asia 2013-2020 New car sales worldwide 2007 and 2014 (m units) CAGR = 3% 50 000 EU China 40 000 USA 1 -1.9% CAGR CA
Slide 84: China’s growing aftermarket is expected to spur sales of heat exchanger materials
China’s growing aftermarket is expected to spur sales of heat exchanger materials • Competitive Chinese aftermarket Total material consumption (import and export) ktonnes producers of heat exchanger materials 18,36% compared with rest of Asia 120000 12,59% 7,94% 7,11% 6,62% 7,65% 6,87% 16,46% • A mo
Slide 85: China’s new vehicle market development is positive long term
China’s new vehicle market development is positive long term, even with uncertainties Optimistic growth outlook driven by: Uncertainties and restrictions • Car restriction policies in big cities for worsening • Country GDP growth ~7% traffic and environments • Increasing urbanization boosting mobili
Slide 86: Growth drivers in China’s light vehicle market
Growth drivers in China’s light vehicle market Real GDP growth (%) Total population (millions) Potential auto consumers Vehicle penetration path (2001–2021) 65% 29% Source: IHS 86
Slide 87: Highlights of future Chinese auto market growth
Highlights of future Chinese auto market growth o Battery o Air condition evaporator radiator o Cabin heater o Engine radiator o Chiller o Charge air cooler (CAC) o Hybrid system r adiator o Air condition condenser o Engine oil cooler o Transmission oil cooler • CAC equipped volume growing quickly i
Slide 88: China is becoming a more competitive market
China is becoming a more competitive market New vehicle JV • Complete offering and also Global HEX • Diversify c ustomer base go down to low-price models producers • Leverage technologies production brands • Prioritise cost improvement • More M&A to consolidate • Develop mega-platforms the market
Slide 89: Major brands and competition landscape in the Chinese passenger vehicle industry
Major brands and competition landscape in the Chinese passenger vehicle industry International OEMs/brands Local OEMs/brands Partial list 2008, 2 014 Partial list 2008, 2 014 China P V sales 2 008-2014 (incl. imports, million units) Source: CAAM, L MC, Gao Feng a nalysis 89
Slide 90: Purchasing criteria in Chinese passenger vehicle industry
Purchasing criteria in Chinese passenger vehicle industry Importance and maturity of lever categories Supply chain targets Average: 1 n ot important/mature, 5 very important/mature Importance 1 Reliable (on time in full) -0.2 -0.7 -0.3 -0.6 -0.5 2 Cost 3 Flexibility 4 Lead time Transparency a n
Slide 91: Technological evolution driven by greater competition and tougher environment standards
Technological evolution driven by greater competition and tougher demanding environment standards Smaller engine + turbo • Gauge ↓ CAC and EGR ↑ • Strength ↑ Charge air pressure ↑ • Formability ↑ Cooling efficiency ↑ • Brazeability ↑ Performance Coolant pressure ↑ • Property consistency ↑ • Corrosio
Slide 92: New offerings in the pipeline
New offerings in the pipeline Gränges development Design change Challenges areas Corrosion test std ↑ Low-cost solutions ~15-30% down Radiator Cleanness after brazing ↑ Multi-layer cladding (MLC) B/W tube → ? Strengthen requirement ↑ Flux-free or TRILLIUM® MPE → Folded tube Corrosion test std ↑
Slide 93: Exhaust gas recirculation and charge-air cooler system helps reduce NOx
Exhaust gas recirculation and charge-air cooler system helps reduce NOx • Example turbocharged engine • The combination of turbo, charge-air cooler and exhaust gas recirculation will induce ambient air and the engine’s exhaust gas back to the Intake combustion cycle Charge-air – Reducing the amou
Slide 94: MULTICLAD folded tube solution
MULTICLAD® folded tube solution 94
Slide 95: Gränges has a leading position in China and will continue its competitive strategy
Gränges has a leading position in China and will continue its competitive strategy to pursue growth Gränges Asia’s Gränges China competitor competitive strategy Full range portfolio Highly standardised • Improve cost management Offering Customisation Copy portfolios and operational efficiency • Cust
Slide 96: Gränges is well positioned to capture growth opportunities in Asia
Gränges is well positioned to capture growth opportunities in Asia Gränges Asia’s business development relies on the growth of: • Vehicle production in Asia and specifically growth in China • The heat exchanger aftermarket • Stationary heat exchangers and other industrial applications Gränges still
Slide 97: GRANGES
GRANGES
Slide 98: Today’s agenda
Today’s agenda 1. Introduction 5. Growth opportunities in stationary HEX Claudi Martin Callizo, HVAC&R Manager 2. Group strategy and outlook 6. Leveraging a strong presence in China Johan Menckel, CEO Colin Xu, President Gränges Asia 3. Strong financial performance 7. Customer case – TitanX Oskar He
Slide 99: Partnership with Gränges
Partnership with Gränges Matt Moore Vice President RD&E Gränges kapitalmarknadsdag 2016-03-15 99
Slide 100: Leading powertrain cooling solutions supplier
Leading powertrain cooling solutions supplier TitanX a t a g lance Global p resence § Leading global supplier of engine cooling systems Asia − Tailored product portfolio serving the CV segment, mainly serving heavy duty (HD) and medium North America duty (MD) trucks Jamestown Kunshan Göteborg Linkö
Slide 101: Our roots
Our roots TitanX 2008 Valeo 1989-2008 All together since1979 Armstrong 1984-88 Volvo AlfaLaval Mjällby 1952 JW Torell, c ooling to Penta Blackstone Jamestown Metal Equipment Jamestown Car Parts JW Torell Blacksmith Jamestown 1914 Gabrielson Linköping 1895 Gränges kapitalmarknadsdag 2016-03-15 10
Slide 102: Keeping the powertrain cool – TitanX heat exchangers
Keeping the powertrain cool – TitanX heat exchangers TitanX Sales Engine Oil Engine Cooling Cooling coolers Modules Engine & Transmission Oil Coolers Retarder Oil Coolers Gränges kapitalmarknadsdag 2016-03-15 102
Slide 103: Some of our biggest customers
Some of our biggest customers Volvo Mercedes Scania Freightliner Navistar Renault Iveco since since since since since since since 1950s 1980s 1950s 1980s 2010s 1990s 1980s Gränges kapitalmarknadsdag 2016-03-15 103
Slide 104: Why customers choose TitanX
Why customers choose TitanX Market share gains driven by secured contracts Estimated market share in 2018E1) ► Focused CV product range enables us to work closely with customers +4 pp. +34 pp. - +33 pp. Customer intimacy ► Close customer proximity with global footprint 44% 40% ► Feedback also indic
Slide 105: Strong growth based on order-book and new initiatives
Strong growth based on order-book and new initiatives CAGR ∼11% Strengthenin Acceleration g position of of TitanXtend oil c ooler ∼70% of growth is – Aftermarket sales based on c urrent Strengthenin g of position and Genset order-book in MD truck Ramp-up of segment ∼1,600 MSEK existing contracts
Slide 106: Global presence and facilities
Global presence and facilities Göteborg Headquarters Mjällby Engine Cooling Jamestown Linköping Oil coolers Engine Cooling Krakow TitanXtend Biella TitanXtend Kunshan 2016 Oil coolers Saltillo 2015 Engine Cooling Jaguariúna 2014 Engine Cooling Gränges kapitalmarknadsdag 2016-03-15 106
Slide 107: TitanX is a tier one development partner
TitanX is a tier one development partner POWERTRAIN COOLING COMPONENTS TO CUSTOMER NEED TITANX’ VALUE CHAIN Commercial Vehicles Manages significant part of the industry value chain Advanced engineering (focus 5-10 years before initiation of RFQ) Concept Design Engineering Manufacturing Assembly dev
Slide 108: TitanX demands on key suppliers
TitanX demands on key suppliers Certified to the Automotive Industry S tandards ISO 14001, OHSAS 18001, ISO TS 16949, Zero defects mindset Truck c ompatible Terms a nd Condistions Consignement stock on all raw material, EDI, MOQ meeting truck v olume, LME regulation matching OEM principles Continous
Slide 109: Gränges and TitanX enter global partnership
Gränges and TitanX enter global partnership § Aim to improve profitability and competitiveness for both § Identify new value creation opportunities § Improve Total Cost of Ownership § Addressing multiple areas ü material price ü design ü innovation ü global expansion Gränges kapitalmarknadsd
Slide 110: Interaction with Gränges on many levels
Interaction with Gränges on many levels Research • Fin forming Standardizati • Single alloy for all structural on Aluminum parts in the heat exchanger Application • Heat exchangers without engineering internal fluxing - world wide Gränges kapitalmarknadsdag 2016-03-15 110
Slide 111: Emission changes drive innovation
Emission changes drive innovation Euro II – Mainstream Charge Air Cooling Euro III – EGR Euro IV – Cooled EGR Euro V – High volume Cooled EGR Euro VI – EGR & SCR systems The Greenhouse gas emissions laws will drive the technology development Gränges kapitalmarknadsdag 2016-03-15 111
Slide 112: Key research areas at TitanX
Key research areas at TitanX § Waste heat recovery with both organic § Numerical methods Rankine cycle and thermal electrics − Multi physics s imulations § Short loop EGR − Virtual data collection § Process innovation − Flux free internal brazing § Space and weight projects;; − Reduced copper b
Slide 113: Going forward
Going forward Legislation driven technology development Developing Cost driven markets go for continuous advanced improvements technologies Fuel efficiency Tougher centered new demands on technology parts 2020-2023 1-3 more heat exchangers per vehicle Gränges kapitalmarknadsdag 2016-03-15 113
Slide 114: A well positioned partnership must be able to innovate and supply globally
A well positioned partnership must be able to § innovate products and process in Europe § supply the right level of technology and be present in all major global markets § launch timely step by step improvements to protect margins Together we must be focused on creating value for the end customer
Slide 115: Thank you
Thank you WE HAVE YET TO SEE AN ENGINE WE CAN´T COOL Gränges kapitalmarknadsdag 2016-03-15 115
Slide 116: Today’s agenda
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