Slide 1: Fourth Quarter Earnings Presentation
FOURTH QUARTER Earnings Presentation 26 January 2023
Slide 2: A stable fourth quarter concluded a record year
A stable fourth quarter concluded a record year ○ Stable sales volume of 110 ktonnes (112) – Continued stable demand in Americas – Strong post-covid recovery in China – Significant slowdown in Europe ○ Adjusted operating profit up 10% in quarter to SEK 153 million (139) despite challenges ○ Strong c
Slide 3: Stable sales volume in the fourth quarter
Stable sales volume in the fourth quarter Q4 2022 sales volume growth year-on-year by business area and end-customer market Gränges Americas Gränges Eurasia Gränges Group HVAC -5% Automotive +17% Automotive +15% Speciality Other packaging +12% niches -43% HVAC -5% Other Speciality Other niches -9% p
Slide 4: Record operating profit in 2022 despite challenges
Record operating profit in 2022 despite challenges Sales volume and adjusted operating profit 600 1 150 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 4
Slide 5: Continued year-over-year margin improvement
Continued year-over-year margin improvement Sales volume and adjusted operating profit per tonne 120 5.0 Adjusted operating profit per tonne (kSEK) 100 2.5 Sales volume (ktonnes) 1.3 1.7 80 1.2 1.4 0.8 0.9 60 0.0 40 -2.5 20 57 59 64 68 64 66 63 62 58 58 0 -5.0 Q4 Q1 Q2 Q3 Q4 2021 2022 Gränges Americ
Slide 6: Financial overview – fourth quarter 2022
Financial overview – fourth quarter 2022 SEK million Q4 January – December 2022 2021 Change 2022 2021 Change Sales volume (ktonnes) 110.3 112.3 -1.8% 479.3 488.9 -2.0% Net sales 5,366 4,857 11% 24,492 18,130 35% Adjusted operating profit1 153 139 10% 1,150 1,008 14% Adjusted operating profit per ton
Slide 7: Reduced net debt and leverage in the fourth quarter
Reduced net debt and leverage in the fourth quarter Change in financial net debt -2 000 2.1x Adjusted cash flow before financing 1.9x -2 500 SEK 679 million -3 000 SEK million -3 500 -240 -4 000 -163 -56 -3 882 575 -4 500 -4 342 344 -5 000 Financial Adjusted Other operating Maintenance Expansion FX
Slide 8: Gränges Americas – fourth quarter 2022
Gränges Americas – fourth quarter 2022 Sales volume ○ Continued good demand from most end- 80 +1% customer markets 60 – Constrained production capacity in ktonnes 40 Salisbury facility limiting sales 20 – Normalization of seasonal mix 57 64 64 63 58 0 Q4 Q1 Q2 Q3 Q4 Adjusted operating profit ○ Incre
Slide 9: Gränges Eurasia – fourth quarter 2022
Gränges Eurasia – fourth quarter 2022 Sales volume ○ Asia sales volume increased by 15% 80 -2% – Strong China post-COVID recovery 60 ktonnes 40 ○ Europe sales volume decreased by -10% 20 – Continued weak demand in many 0 59 68 66 62 58 end-customer markets Q4 Q1 Q2 Q3 Q4 – High downstream inventory
Slide 10: A year of challenge…
A year of challenge… ○ Lockdown in China ○ War and energy crisis in Europe Cost ○ Supply chain constraints ○ All-time-high aluminum price ○ Inflation and interest rates ○ Dramatic demand swings 2021 10
Slide 11: A year of challenge and achievement
A year of challenge and achievement ○ Steady supply and satisfied customers ○ Financing secured ○ Strong sustainability progress Cost Price & ○ New long-term plan and increased targets Pro- ○ Expansion and new investments ductivity ○ Productivity and price increases 2021 11
Slide 12: A year of challenge and achievement
A year of challenge and achievement Stable volume Best-ever profit Cost Price & Strengthened team, Pro- footprint and ductivity partnerships 2021 Volume 2022 and other 12
Slide 13: Continued good sustainability performance
Continued good sustainability performance Carbon emissions intensity1 ○ Record levels for recycling and carbon -9% 12 11.4 emissions intensity for full year 2022 9.3 9.1 9.6 8.8 8.0 tCO2e/tonne 8 ○ Decrease in carbon emissions intensity 4 in the fourth quarter driven by higher Scope 1+2 Scope 3 recy
Slide 14: Our Navigate plan
Our Navigate plan Sustainable Growth o World’s best aluminium 3 Invest technology company 2 Build o 15% ROCE o 10% EBIT growth 1 Restore o Continue toward 2040 carbon neutrality 14 22 30 14
Slide 15: Good start on Navigate execution—some examples
Good start on Navigate execution—some examples 1 Restore 2 Build 3 Invest Finalize • Utilize • Optimize Improve • Innovate & Grow Recycling • Optimization Source Green & Recycle New markets • M&A&P ○ Global footprint being ○ Always Safe ○ Large expansion completed ○ Progress in electrification remel
Slide 16: Aluminium is a key material in the electrification revolution
Aluminium is a key material in the electrification revolution Battery cell Li-ion battery demand by application GWh 4 000 3 000 Cathode foil Casing Pouch foil 2 000 Battery system 1 000 0 2015 2017 2019 2021 2023 2025 2027 2029 Cooling plate Battery module and box Automotive & transport Energy stora
Slide 17: New battery supply chains being established – Gränges the only roller with global footprint
New battery supply chains being established – Gränges the only roller with global footprint by 2024 North Europe Asia America Li-ion battery production capacity (2021, GWh) 66 146 1,099 CAGR (2021-2025, %) 65% 52% 26% Gränges BCF production capacity online 2024 2023 2022 Source: IHS Markit, Gränges
Slide 18: Gränges doubles European battery foil capacity to meet growing demand
Gränges doubles European battery foil capacity to meet growing demand ○ Investments in battery components since 2021 ○ Strong and growing interest from leading global players ○ Agreement with global battery manufacturer triggers further expansion need 2025 ○ SEK 600 million investment in Finspång 20
Slide 19: Positive development towards financial targets in 2022
Positive development towards financial targets in 2022 Profitability Profit growth Capital structure Dividend 20% 30% 3 50% 20% 40% 15% 2 10% 30% 10% 0% 20% 1 5% -10% 10% 0% -20% 0 0% 2014 2022 2014 2022 2014 2022 2014 2022 Return on capital Average operating Financial net debt Dividend as per cent
Slide 20: Outlook – first quarter 2023
Outlook – first quarter 2023 ○ Uncertainty remains – Automotive backlogs and recovery in China likely to support demand – Customer focus in other sectors expected to shift from securing supply to managing inventories ○ Expect first-quarter 2023 sales volume to increase about 10 per cent sequentially
Slide 21: Summary
Summary 21
Slide 22: Q&A
Q&A Jörgen Rosengren, CEO Oskar Hellström, CFO
Slide 23: Slide 23