Slide 1: Fourth Quarter 2019 Earnings Conference
Fourth Quarter 2019 Earnings Conference 30 January, 2020
Slide 2: Today’s presenters
Today’s presenters JOHAN OSKAR MENCKEL HELLSTRÖM CEO CFO Since: 2012 Since: 2011 Gränges since: 2004 2
Slide 3: Fourth quarter 2019: Strong growth platform established in a weaker quarter
Fourth quarter 2019 Strong growth platform established in a weaker quarter ○ Execution on growth strategy – Acquisition of Aluminium Konin – Expansion of Huntingdon facility completed ○ Continued soft market conditions ○ Reduced sales volume and operating profit – Sales volume declined by 11% – Adju
Slide 4: The acquisition of Aluminium Konin will add capabilities and strengthen positions
The acquisition of Aluminium Konin will add capabilities and strengthen Gränges’ positions in new niche markets ○ Acquisition of Aluminium Konin for SEK 2.3 billion, or 6.9x EBITDA ○ New capabilities, new market niches, and realization of synergies ○ 100 ktonnes capacity available as of closing and
Slide 5: Expansion of Huntingdon facility completed – good progress for Newport and Finspång projects
Expansion of Huntingdon facility completed – good progress for Newport and Finspång projects Finspång, Sweden Huntingdon, TN Newport, AR Newport Huntingdon Finspång ○ To be completed in 2020 ○ Completed in Q4 2019 ○ To be completed in 2021 ○ Investment of USD 26 ○ Investment of USD 110 ○ Investment
Slide 6: Light vehicle production decreased by 5% while HVAC shipments increased by 2%
Light vehicle production decreased by 5% while HVAC shipments increased by 2% in the fourth quarter End market production growth (YoY) End market Automotive HVAC Region Global Asia Europe Americas Americas Q4 2019 -5% -3% -6% -8% +2% Q1 2020 -5% -8% -6% +4% Full year ±0% -1% -2% +3% ±0% 2020 Source:
Slide 7: Sales volume decreased by 11% in the fourth quarter due to lower market demand
Sales volume decreased by 11% in the fourth quarter due to lower market demand and customer destocking Gränges sales volume (ktonnes) Asia Europe Americas Gränges Group -25% -12% -11% +2% 52.2 87.4 19.9 20.4 46.0 77.9 15.3 11.5 43.8 43.8 39.1 39.1 43.7 38.8 8.5 6.9 2018 2019 2018 2019 2018 2019 2018
Slide 8: Full year 2019 performance reflects challenging market conditions and material expansion investments
Full year 2019 performance reflects challenging market conditions and material expansion investments Net debt over Growth ROCE adjusted EBITDA Dividend SEK -7% 1 11.7% 2.6 3.402 43% Target: Target: Target: Target: 30–50% above market 15–20% 1.0–2.0 times of net profit (1) Sales volume growth in 2019
Slide 9: Good progress within sustainability in 2019
Good progress within sustainability in 2019 ○ Implementation of Gränges’ sustainability framework, with clear long-term targets ○ Member of the Aluminium Stewardship Initiative (ASI) and certification of the Shanghai site ○ Good progress on sustainability priorities: – Improved safety accident rate
Slide 10: Lower sales volume and adjusted operating profit for fourth quarter and full year 2019
Lower sales volume and adjusted operating profit for fourth quarter and full year 2019 Sales volume and adjusted operating profit Adjusted operating profit per tonne 500 1,250 4 Adjusted operating profit per tonne (kSEK) 1005 Adjusted operating profit (SEK million) 400 933 1,000 866 3 Sales volume (
Slide 11: Financial overview – fourth quarter 2019
Financial overview – fourth quarter 2019 SEK million Q4 January - December 2019 2018 Change 2019 2018 Change Sales volume (ktonnes) 77.9 87.4 -10.9% 347.3 375.0 -7.4% Net sales 2,682 3,074 -12.7% 11,978 12,910 -7.2% Adjusted operating profit1 144 191 -24.5% 866 1,005 -13.8% Adjusted operating margin
Slide 12: Net debt reduced to SEK 3.5 billion in the fourth quarter
Net debt reduced to SEK 3.5 billion in the fourth quarter Change in net debt -2,000 2.7 2.6 Adjusted cash flow before financing SEK 191 million -2,500 SEK million -3,000 84 -64 -3,500 -98 -3,465 -123 73 -3,606 269 -4,000 Net debt Adjusted Change in Other Maintenance Expansion FX & Net debt 30 Sep EB
Slide 13: Continued strong cash generation in 2019
Continued strong cash generation in 2019 Adjusted operating profit to cash flow before financing conversion1 1500 150% 129% Adjusted operating profit and cash flow 121% 121% before financing (SEK million) 111% 112% Cash conversion (%) 100% 1000 100% 81% 70% 500 50% 0 0% 2012 2013 2014 2015 2016 2017
Slide 14: Outlook - first quarter 2020
Outlook - first quarter 2020 ○ IHS estimates that global light vehicle production will decrease by 5% in the first quarter ○ Gränges expects the sales volume to decline by low single digits in the first quarter – Low-double digit decline for automotive materials on global level – Mid to high-single
Slide 15: Summary - fourth quarter 2019
Summary - fourth quarter 2019 ○ Execution on growth strategy ○ Continued soft market conditions ○ Reduced sales volume and operating profit ○ Strong cash generation ○ Increased dividend 15
Slide 16: Q&A
Q&A Johan Menckel, CEO Oskar Hellström, CFO
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