Slide 1: Fourth Quarter 2018 Earnings Conference
Fourth Quarter 2018 Earnings Conference 31 January, 2019
Slide 2: Today’s presenters
Today’s presenters JOHAN OSKAR MENCKEL HELLSTRÖM CEO CFO Since: 2012 Since: 2011 Gränges since: 2004 2
Slide 3: Stable fourth quarter concluded a new record year
Stable fourth quarter concluded a new record year ○ Sales volume increased by 1.1% to 87.4 ktonnes ○ Adjusted operating profit increased by 6.8% to SEK 191 million ○ Profit for the period was SEK 149 million ○ Cash flow before financing was SEK 133 million ○ Net debt of 1.8x adjusted EBITDA ○ Divide
Slide 4: Market contraction in fourth quarter expected to continue in first quarter 2019
Market contraction in fourth quarter expected to continue in first quarter 2019 Light vehicle production growth (YoY) Region Q4 2018 Q1 2019 outlook FY 2019 outlook Asia -4% ±0% +2% Europe -4% -3% +1% Americas +2% +2% +1% Global -3% -1% +1% Source: IHS Automotive, December 2018 4
Slide 5: Stable sales volume for Gränges in the fourth quarter
Stable sales volume for Gränges in the fourth quarter Gränges sales volume (ktonnes) Asia Europe Americas +3% -3% ±0% 23.0 54.8 58.8 57.5 52.2 20.6 22.5 20.8 50.6 19.9 17.8 15.4 17.2 15.1 15.3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2017 2018 2017 2018 2017 2018 ○ Decreased sales to Chinese ○ S
Slide 6: US expansion projects proceeding according to plan
US expansion projects proceeding according to plan ○ Expansion of Huntingdon facility and re-start of Newport facility are progressing according to plan ○ First shipment of commercial orders planned for Q3 2019 from both locations ○ Start-up costs of approximately SEK 15 million per quarter expected
Slide 7: Strong performance against targets in 2018
Strong performance against targets in 2018 Net debt over Growth ROCE adjusted EBITDA Dividend SEK +0.5% 1 16.5% 1.8 3.20 2 35% Target: Target: Target: Target: 30–50% above market 15–20% 1.0–2.0 times of net profit (1) Sales volume growth in 2018 (2) The Board of Director’s proposal for the 2019 Annu
Slide 8: The positive earnings trend continued in 2018
The positive earnings trend continued in 2018 Sales volume and adjusted operating profit Adjusted operating profit per tonne 500 1 250 4 3.7 Adjusted operating profit per tonne (kSEK) Adjusted operating profit (SEK million) 1 005 400 933 1 000 Sales volume (ktonnes) 3 2.7 300 687 750 541 2 1.7 463 2
Slide 9: Stable sales volume and improved operating profit in fourth quarter
Stable sales volume and improved operating profit in fourth quarter Financial overview SEK million Q4 January - December 2018 2017 Change 2018 2017 Change Sales volume (ktonnes) 87.4 86.5 1.1% 375.0 373.0 0.5% Net sales 3,074 2,734 12.5% 12,910 11,435 12.9% Adjusted operating profit1 191 179 6.8% 1,
Slide 10: Continued strong cash generation in 2018
Continued strong cash generation in 2018 Adjusted operating profit to cash flow before financing conversion1 1250 150% 129% Adjusted operating profit and cash flow 121% 111% 112% 1000 before financing (SEK million) 100% 100% Cash conversion (%) 81% 750 70% 500 50% 250 0% 0 -250 -50% 2011 2012 2013 2
Slide 11: Net debt was SEK 2.5 billion at the end of fourth quarter
Net debt was SEK 2.5 billion at the end of fourth quarter Change in net debt -1 800 1.9 Cash flow before financing SEK 133 million 1.8 -2 000 -54 -2 200 SEK million 220 -2 400 -316 -62 -2 494 -2 600 -2 565 283 -2 800 Net debt Adjusted Change in Other operating Investments FX & Net debt 30 Sep EBITDA
Slide 12: 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 13: Outlook
Outlook ○ IHS estimate Global Light Vehicle Production to decrease 1% during first quarter ○ Gränges sales volume to decrease with low single digits in the first quarter, comprising a mid single digit decline for Automotive and a low single digit growth for HVAC & Other ○ US expansion projects to su
Slide 14: Summary of fourth quarter 2018
Summary of fourth quarter 2018 ○ Sales volume increased by 1.1% to 87.4 ktonnes ○ Adjusted operating profit increased by 6.8% to SEK 191 million ○ Profit for the period was SEK 149 million ○ Cash flow before financing was SEK 133 million ○ Net debt of 1.8x adjusted EBITDA ○ Dividend of 3.20 SEK per
Slide 15: Q&A
Q&A Johan Menckel, CEO Oskar Hellström, CFO
Slide 16: Slide 16