Year-end report January-December 2017

01 Feb 2018 | GROUP RELEASE, Regulatory - MAR

Strong fourth quarter contributed to a new record year 2017

Fourth quarter 2017

  • Sales volume increased by 2.1 per cent to 86.5 ktonnes (84.7)and net sales were SEK 2,734 million (2,546). Sales volume for the business acquired in 2016 increased to 42.7 ktonnes (41.0).1
  • Adjusted operating profit increased by 4.8 per cent to SEK 179 million (171), which corresponds to an adjusted operating margin of 6.6 per cent (6.7). The business acquired in 2016 is included with SEK 37 million (37).
  • Profit for the period increased to SEK 152 million (101) and includes a release of a tax provision of SEK 53 mil­lion and withholding tax of SEK –19 million on a divi­dend paid from the Chinese subsidiary.
  • Diluted earnings per share increased to SEK 2.02 (1.35).
  • Cash flow before financing activities decreased to SEK 41 million (104) and includes capital expenditure of SEK –178 million (–89) and SEK –42 million related to the acquisition of 51 per cent of the shares in Getek GmbH.

January – December 2017

  • Sales volume increased to 373.0 ktonnes (239.1) and net sales were SEK 11,435 million (7,207). Sales volume for the business acquired in 2016 increased to 187.4 ktonnes (62.8).1
  • Adjusted operating profit increased by 35.8 per cent to SEK 933 million (687), corresponding to an adjusted operating margin of 8.2 per cent (9.5). The business acquired in 2016 is included with SEK 268 million (87).
  • Profit for the period increased to SEK 652 million (498).
  • Diluted earnings per share rose to SEK 8.64 (6.64).
  • Cash flow before financing activities increased to SEK 572 million (–2,046).
  • Net debt decreased to SEK 2,292 million at 31 Decem­ber 2017 (SEK 2,722 million at 31 December 2016), corresponding to 1.8 times adjusted EBITDA (2.1 times at 31 December 2016).
  • The Board of Directors proposes a dividend of SEK 3.00 (2.40) per share, corresponding to 35 per cent (36) of profit for the year.

 1) The acquired business has been consolidated into Gränges accounts as from 22 August 2016. 

Comments by Gränges’ CEO Johan Menckel:

Strong fourth quarter contributed to a new  record year
During the fourth quarter, both sales and profitability continued to improve, which contributed to the full year 2017 becoming a new record year for Gränges. Sales volume increased by 2.1 per cent to 86.5 ktonnes during the quarter and the adjusted operating profit increased to SEK 179 million. Exchange rate fluctuations, primarily a weaker dollar, had a negative impact on adjusted operating profit of SEK 2 million during the quarter.

We continued to perform very well in Asia during the fourth quarter. However, sales volume was somewhat lower than the year before, when the tax rebate on light vehicles in China contributed to a very strong ending of the year 2016. In full year 2017, sales volume rose 6.8 per cent in Asia, which is a significantly better growth rate than the market. In Europe, sales of heat exchanger materials increased by almost 3 per cent both during the fourth quarter of the year and the whole of 2017. In the Americas, we continue to see a very good demand, which has been even more evident in the fall when the US imposed import duties on certain aluminium products from China. Gränges’ sales of heat exchanger materials to the automotive industry in the Americas increased 1 per cent in the fourth quarter while the overall market was down a few percent. Sale of materials to HVAC customers increased in the quarter.

To summarize 2017, sales volume increased by 56 per cent to 373 ktonnes and the adjusted operating profit increased to SEK 933 million.

We have taken a number of important decisions in 2017. Among other things, the expansion of the Huntingdon facility that started in the fall and will be completed in the second half of 2019. In total, we will add nearly 40 ktonnes in new capacity. We have also announced plans to form a joint venture with Mitsubishi Aluminum in the United States to establish a joint manufacturing of advanced materials for the automotive industry, which is in line with our growth plan.

During the year, we have continued to develop our sustainability efforts. Among other things, we have been working to establish a global sustainability strategy which will form the foundation for our sustainability work in the next few years. We have also conducted a group-wide study of Gränges’ carbon footprint to better understand our climate impacts. Based on the results from the study, Gränges will continue its current focus on reducing impacts along the value chain.

Delivering on financial targets
We have continued to deliver on our financial targets in 2017. Sales volume increased by 56 per cent, of which the increase in materials for the automotive industry was about 5 per cent. This means a higher growth rate than the market. Return on capital employed was 16.7 per cent and we ended the year with a net debt equivalent to 1.8 times EBITDA. In view of the financial results, and taking into account our outlook, the Board of Directors proposes that the dividend for 2017 will be increased by 25 per cent to 3.00 SEK per share.

The automotive heat exchanger market is expected to continue to grow in 2018. The IHS analyst estimates that light vehicle production will increase by 2 per cent globally during the year, of which growth in the first quarter is expected to be 1 per cent.

We expect a better sales trend than the market in Asia during the first quarter, while we foresee a decline in Europe. In the Americas, sales volume to automotive customers is expected to be lower as we have changed distribution method of imported volume from January 2018, which will have a onetime effect during first quarter. For the locally produced material in the Americas, sales volume is expected to be on par with last year’s. Overall, Gränges sales volume is expected to develop slightly better than the market during the first quarter.

Looking further ahead into 2018, we expect a positive development in all our regions. We will continue to work actively with innovation and customer offering, which includes increased focus on product development for electric vehicles where we see a good growth potential. Sustainability is another important area, as well as ensuring that we have both the capacity and capability of our facilities to meet future demand. We are currently working actively to establish new capacity in the US, but also addressing the capacity needs in Asia and Europe. Here we evaluate different ways going forward. We are determined to continue to grow with a sustainable profitability in the coming years.

Johan Menckel
CEO Gränges

Webcasted telephone conference
CEO Johan Menckel and CFO Oskar Hellström will present Gränges’ year-end report for January–December 2017 at a webcasted conference call at CEST 10.00, Thursday 1 February, 2018.

The webcast can be viewed on To participate in the telephone conference, please call +46 856 642 661 (Sweden), +44 203 194 0544 (UK) or +1 855 269 2604 (USA). Please call a few minutes before the telephone conference starts. The presentation will be in English.

For additional information, please contact:
Pernilla Grennfelt
SVP Communications and Investor Relations
Telephone +46 (0) 702 90 99 55

The information in this report is such that Gränges must disclose pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, on Thursday 1 February 2018 at 07.30 CET.

About Gränges
Gränges is a leading global supplier of rolled aluminium products for heat exchanger applications and other niche markets. In materials for brazed heat exchangers Gränges is the global leader with a market share of approximately 20 per cent. The company develops, produces and markets advanced materials that enhance efficiency in the customer manufacturing process and the performance of the final products; brazed heat exchangers. The company’s geographical markets are Europe, Asia and the Americas. Its production facilities are located in Sweden, China and the United States, and have a combined annual capacity of 420,000 metric tonnes. Gränges has some 1,600 employees and net sales of more than SEK 11 billion. The share is listed on Nasdaq Stockholm. More information on Gränges is available at