Year-end report January-December 2018

31 Jan 2019 | GROUP RELEASE, Regulatory - MAR

Stable fourth quarter concluded a new record year

Fourth quarter 2018

  • Sales volume increased by 1.1 per cent to 87.4 ktonnes (86.5). Net sales rose to SEK 3,074 million (2,734).
  • Adjusted operating profit increased by 6.8 per cent to SEK 191 million (179), while adjusted operating profit per tonne increased to 2.2 kSEK (2.1).
  • Profit for the period amounted to SEK 149 million (152).
  • Diluted earnings per share decreased to SEK 1.97 (2.02).
  • Cash flow before financing activities increased to SEK 133 million (41) and includes capital expenditure of SEK 319 million (178). Of the total capital expenditure SEK 182 million relates to the expansion of the US production facilities.
  • The Board of Directors proposes a dividend of SEK 3.20 (3.00) per share, corresponding to 35 per cent (35) of profit for the year.

January-December 2018

  • Sales volume increased by 0.5 per cent to 375.0 ktonnes (373.0). Net sales rose to SEK 12,910 million (11,435).
  • Adjusted operating profit increased by 7.7 per cent to SEK 1,005 million (933), while adjusted operating profit per tonne increased to 2.7 kSEK (2.5).
  • Profit for the period increased to SEK 688 million (652) and includes SEK –64 million of items affecting comparability and profit from joint ventures of SEK 22 million.
  • Diluted earnings per share increased to SEK 9.11 (8.64).
  • Cash flow before financing activities decreased to SEK 531 million (572) and includes capital expenditure of SEK 843 million (358) and an increase in working capital of SEK 165 million due to US sanctions against one of Gränges’ aluminium suppliers.
  • Net debt increased to SEK 2,494 million at 31 December 2018 (SEK 2,292 million at 31 December 2017), corresponding to 1.8 times adjusted EBITDA1.

1 Adjusted for items affecting comparability.

Comments by Gränges’ CEO Johan Menckel:

Stable quarter despite softening market conditions
During the fourth quarter, sales volume, profitability and cash flow continued to improve, which contributed to the full year 2018 becoming a new record year for Gränges. Sales volume increased by 1 per cent to 87.4 ktonnes during the quarter and the adjusted operating profit increased to SEK 191 million. The result includes costs for the US expansion projects of SEK 12 million and costs related to the production disturbance in Finspång in the third quarter of SEK 13 million. Exchange rate fluctuations had a positive impact on adjusted operating profit of SEK 32 million during the quarter. The cash flow before financing activities was very strong with SEK 133 million including expansion investments of SEK 182 million.

Although Gränges’ sales volume development was stable, we continued to experience softening market conditions in the fourth quarter. Especially in Asia, where the sales volume to automotive customers declined by 3 per cent. This is, however, a better development than the underlying market where the light vehicle production in China slowed down significantly in the quarter causing inventory to build up in the supply chain. In Europe the automotive sales volume remained stable in the quarter whereas a growth of 7 per cent was recorded in Americas. For the HVAC & Other business, the demand in Americas continued to be strong in the quarter and the sales volume increased by 3 per cent over prior year.

Executing on our strategy
In 2018, we took several important decisions supporting our strategy execution. This includes our plans to re-open the production facility in Newport to serve the attractive US light gauge aluminium foil market, and investing in increased efficiency and capacity in our Finspång facility. We have in recent years increased our focus on research and innovation, with specific attention to the development of electric vehicles, and during 2018 we started to see the results from our efforts with the patent portfolio increasing by 20 per cent during the year. In addition, we saw the sales of TRILLIUM®, our most innovative and advanced product, starting to take off. In 2018 we also continued to develop our sustainability platform and I am very pleased that Gränges is now a member of Aluminium Stewardship Initiative (ASI). We look forward to collaborating with the industry to improve the overall footprint of the aluminium value chain and we support ASI’s commitment to promote greater sustainability and transparency.

Delivering on financial targets
We continued to deliver on our financial targets in 2018. For the full year 2018, sales volume increased by 1 per cent to 375 ktonnes and the adjusted operating profit increased to SEK 1 005 million and cash conversion increased to 100 per cent before expansion investments. The sales volume in materials for the automotive industry was stable during the year despite a declining market. Return on capital employed was 16.5 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 2018 will be increased by 7 per cent to 3.20 SEK per share.

The global automotive market is expected to continue to slow down in the beginning of 2019. The research firm IHS estimates that light vehicle production will decrease by 1 per cent globally in the first quarter but turn to a 1 per cent growth for the full year.

For the first quarter Gränges expects a decline in sales volume by low single digits. For automotive materials we foresee a mid-single digit reduction driven by destocking in the supply chain in primarily Asia but also partly in Europe. In Americas we expect a low single digit growth for both the automotive and the HVAC & Other business in the first quarter.

As we look further into 2019, we will continue to work actively with innovation and a more sustainable customer offering, which includes an increased focus on product development for electric vehicles. Demand for advanced heat exchanger materials for electric vehicles is expected to increase significantly in the coming years, as more car manufacturers choose liquid cooling solutions for batteries. In the US, the expansion of the facility in Huntingdon is expected to be finalized in mid-2019 and the capacity at the facility in Newport will gradually become available during the year. Altogether, we are determined to continue to grow with sustainable profitability in the coming years.

Johan Menckel, CEO

Webcasted telephone conference
CEO Johan Menckel and CFO Oskar Hellström will present Gränges’ year-end report for January–December 2018 at a webcasted conference call at 10.00 CET, Thursday 31 January, 2019.

The webcast is available on To participate in the conference call, please call +46 8 5199 9355 (Sweden), +44 203 194 0550 (UK) or +1 855 269 2605 (USA). Please call a few minutes before the conference call starts. The presentation is in English.

For additional information, please contact:
Oskar Hellström, CFO
Telephone +46 8 459 59 00

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 31 January, 2019 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. 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 1,800 employees and net sales of SEK 13 billion. The share is listed on Nasdaq Stockholm. More information on Gränges is available at