Gränges’ interim report January–March 2020

30 Apr 2020 | GROUP RELEASE, Regulatory - MAR

Successful expansion in the US balanced slowing market demand

First quarter 2020

  • Sales volume decreased by 1.1 per cent to 89.9 ktonnes (90.8). Ramp-up of new US capacity partly offset COVID-19 related demand reduction in Asia and Europe. Net sales decreased to SEK 3,063 million (3,109).
  • Adjusted operating profit was SEK 210 million (275) and adjusted operating profit per tonne was 2.3 kSEK (3.0). The decrease in operating profit was mainly driven by negative mix effects as lower automotive volumes could not be compensated by increasing HVAC & Other volumes.
  • Profit for the period decreased to SEK 133 million (184) and includes items affecting comparability of SEK –6 million (–).
  • Basic and diluted earnings per share decreased to SEK 1.76 (2.44).
  • Cash flow before financing activities increased to SEK 181 million (–173) and includes capital expenditure of SEK 207 million (451). Adjusted cash flow before financing activities was SEK 329 million (166), representing a cash conversion of 157 per cent.
  • Net debt increased to SEK 3,559 million at 31 March 2020 (SEK 3,465 million at 31 December 2019), corresponding to 2.8 times adjusted EBITDA1 (2.6 times at 31 December 2019).
  • Due to the outbreak of COVID-19 and the potential impact on Gränges’ operations and financials, the Board of Directors has decided to withdraw the previously communicated dividend proposal of SEK 3.40 per share.

1 Adjusted for items affecting comparability, see Note 5 for further information.


Comments by Gränges’ CEO Johan Menckel:

Continued strong cash generation and focus on measures to mitigate the effects of COVID-19

Challenging market conditions
The COVID-19 pandemic and the extraordinary measures taken by governments and authorities to limit the spread of the virus, significantly slowed down the market demand for Gränges’ products in the first quarter of 2020. Still, the successful ramp-up of the new production capacity in the US, partly offset the COVID-19 related demand reduction in Asia and Europe. Sales volume in the first quarter reached 89.9 ktonnes, which represents a 1.1 per cent reduction over last year. The adjusted operating profit declined by SEK 65 million to SEK 210 million, mainly driven by negative mix effects as lower volumes to automotive customers could not be compensated by increasing HVAC & Other volumes. Exchange rate fluctuations had a positive impact on adjusted operating profit of SEK 45 million. The cash generation continued to be strong in the first quarter. Cash flow before financing adjusted for expansion investments and acquisitions amounted to SEK 329 million, which represents a cash conversion of 157 per cent. The cash flow further improved Gränges liquidity. At the end of March Gränges had cash and available credit lines amounting to more than SEK 2 billion.

Market conditions in the first quarter were particularly challenging in Asia and Europe, where the sales volume to automotive customers declined by 17 per cent respectively. This was driven by a significant slowdown of the light vehicle production as several car producers closed their production facilities during the quarter due to the COVID-19 outbreak. In Americas, the automotive sales volume decreased by 8 per cent. For the HVAC & Other business we experienced the best individual quarter so far and the sales volume increased by 13 per cent driven by increased contracted market share and the successful ramp-up of the new production capacity at our sites in Huntingdon and Newport.

Measures taken to mitigate COVID-19 impact
Gränges’ highest priority is to ensure the health and safety of our employees, customers and other stakeholders while maintaining continuity and developing the business. During the quarter we have taken measures to mitigate the negative impact of COVID-19 and to adapt the operations to the new market situation, first in Asia and thereafter in Europe and Americas. Contingency plans have been activated to secure business continuity, protect cash flow and reduce cost. This includes postponed capital expenditure, a reinforced general savings program and capacity adjustments through temporary site closures. Temporary layoffs and reduced working hours have been implemented across our operations in accordance with local regulations and temporary employments and contracted workers have been terminated. Due to the increased market uncertainty and to ensure that Gränges remains well-positioned for the future Gränges’ Board of Directors also decided to withdraw the dividend proposal for 2019.

Given the rapid development of the spread of COVID-19, the prevailing global climate and the high level of uncertainty in the markets, it is currently very difficult to provide a forecast even for the short term. The automotive industry is expected to be significantly impacted by COVID-19 in the second quarter and the research firm IHS currently estimates that the global light vehicle production will decline by 47 per cent compared with last year. The HVAC & Other business in Americas is more diverse and less cyclical than the Automotive business and the demand for these products are expected to follow the development of the general economy. A change in product mix following a larger decline in automotive products compared with HVAC products is expected to have a negative impact on profitability in the second quarter.

Despite the short term challenges we remain positive of the future and as we look further ahead, we will continue to work actively with innovation, efficiency improvements, and develop our sustainable customer offering even more, 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.

With a strong commitment to constantly improve and develop, Gränges is well positioned to deliver sustainable and profitable growth throughout the economic cycle.

Johan Menckel, CEO


Webcasted telephone conference
CEO Johan Menckel and CFO Oskar Hellström will present Gränges’ interim report for January–March 2020 at a webcasted conference call at 10.00 CEST, Thursday 30 April, 2020. The webcast is available on To participate in the conference call, please call +46 8 566 426 51 (Sweden), +44 3333000804 (United Kingdom) or +1 6319131422 (United States). PIN code: 69788601#. Please call a few minutes before the conference call begins. The presentation will be in English.

For additional information, please contact:
Johan Dufvenmark, VP Group Treasury & Investor Relations
Telephone +46 (0) 705 97 43 75

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 30 April, 2020 at 07.30 CEST.

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 460,000 metric tonnes. Gränges has some 1,800 employees and net sales of SEK 12 billion. The share is listed on Nasdaq Stockholm. More information on Gränges is available at