Slide 1: Third Quarter 2020 Earnings Conference
Third Quarter 2020 Earnings Conference 22 October, 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: Increased operating profit and strong cash flow supported by improved market conditions
Increased operating profit and strong cash flow supported by improved market conditions ○ Sequentially improved market conditions in all regions ○ Continued focus on mitigating actions ○ Increased sales volume and operating profit – Sales volume increased by 1% – Adjusted operating profit SEK 203 mi
Slide 4: Light vehicle production decreased by 3% while HVAC production increased by 16% in the third quarter
Light vehicle production decreased by 3% while HVAC production increased by 16% in the third quarter End market production growth (YoY) End market Automotive HVAC Region Global Asia Europe Americas Americas Q3 2020 -3% -1% -8% -3% +16% Q4 2020 -3% -4% -1% +1% - Full year 2020 -18% -14% -23% -22% - S
Slide 5: Strong development of HVAC & Other sales balanced the decline for Automotive sales in the third quarter
Strong development of HVAC & Other sales balanced the decline for Automotive sales in the third quarter Gränges sales volume (ktonnes) Asia Europe Americas Gränges Group -5% -27% +10% +1% 54.0 59.6 86.7 47.1 85.8 17.7 16.8 70.8 15.1 14.1 10.3 45.2 51.8 45.2 51.8 8.6 43.4 43.4 40.6 27.3 34.9 8.8 3.7
Slide 6: As of October all facilities are back to normal operations
As of October all facilities are back to normal operations Status of current operations and expansion initiatives Finspång Huntingdon Salisbury Shanghai Newport Americas Europe Asia ○ Huntingdon and Newport ○ Finspång back to normal ○ Shanghai operating as operating as normal operation in October no
Slide 7: Successful ramp-up of new capacity in Newport contributed to the best quarter so far in Americas
Successful ramp-up of new capacity in Newport contributed to the best quarter so far in Americas ○ Newport is producing high quality light gauge Food foil for speciality packaging applications ○ Strong demand development due to changes in consumer behaviour following COVID-19 Healthcare ○ Third quar
Slide 8: Gränges Powder Metallurgy will focus on advanced aluminium powder for additive manufacturing
Gränges Powder Metallurgy will focus on advanced aluminium powder for additive manufacturing ○ Gränges Powder Metallurgy established Current Dispal® applications in October 2020 through the acquisition of Getek and Dispal® ○ Focus on two primary product areas: – Powder for additive manufacturing Ind
Slide 9: The acquisition of Aluminium Konin is expected to be completed in the fourth quarter
The acquisition of Aluminium Konin is expected to be completed in the fourth quarter ○ Final EU commission approval obtained in September ○ New structure for payment agreed with the seller where about 10% or SEK 200 million of the EV will be a non cash issue Aluminium Konin ○ The rights issue intend
Slide 10: Key strategic rationales for Aluminium Konin acquisition
Key strategic rationales for Aluminium Konin acquisition 1 2 3 Additional capabilities New attractive Stronger market and capacity for solutions niche markets presence in Europe for future vehicles Gränges will get capacity for Gränges will get a stronger Gränges will get a more growth and additiona
Slide 11: The acquisition of Aluminium Konin is an important next step on Gränges’ growth path
The acquisition of Aluminium Konin is an important next step on Gränges’ growth path Production capacity and EBITDA growth 640 1,357 1 327 1,303 580 570 Gränges capacity (ktonnes) 140 100 100 Aluminium Konin capacity (ktonnes) 952 Adjusted EBITDA1 (SEK million) 749 664 526 558 357 170 170 200 210 22
Slide 12: Sequential sales volume growth allowed for margin recovery in the third quarter
Sequential sales volume growth allowed for margin recovery in the third quarter Sales volume and adjusted operating profit per tonne 100 4.0 Adjusted operating profit per tonne (kSEK) 2.7 2.3 80 2.0 1.9 Sales volume (ktonnes) 60 0.0 40 -2.0 20 -4.0 45.0 45.9 46.2 46.6 40.6 45.2 38.8 39.1 38.2 51.7 2
Slide 13: Financial overview – third quarter 2020
Financial overview – third quarter 2020 SEK million Q3 January - September 2020 2019 Change 2020 2019 Change Sales volume (ktonnes) 86.7 85.8 1.1% 247.4 269.5 -8.2% Net sales 2,575 2,998 -14.1% 7,858 9,295 -15.5% Adjusted operating profit1 203 190 7.1% 455 721 -36.9% Adjusted operating margin (%) 7.
Slide 14: Significant reduction in net debt driven by strong cash flow from operations
Significant reduction in net debt driven by strong cash flow from operations Change in net debt -2,000 2.9 Adjusted cash flow before financing 2.5 SEK 380 million -2,500 SEK million -12 -45 -2,812 105 -15 70 -3,000 -3,247 332 -3,500 Net debt Adjusted Change in Other Maintenance Expansion FX & Net de
Slide 15: Outlook - fourth quarter 2020
Outlook - fourth quarter 2020 ○ The uncertainty around the COVID-19 pandemic makes reliable forecasting very difficult ○ IHS estimates a continued recovery of the global light vehicle production in the fourth quarter ○ Gränges currently expects an organic year over year sales volume increase by low
Slide 16: Summary - third quarter 2020
Summary - third quarter 2020 ○ Sequentially improved market conditions ○ Continued focus on mitigating actions ○ Increased sales volume and operating profit ○ Continued strong cash generation ○ Establishment of Gränges Powder Metallurgy ○ Closing of Aluminium Konin acquisition expected in fourth qua
Slide 17: Q&A
Q&A Johan Menckel, CEO Oskar Hellström, CFO
Slide 18: Slide 18