Gränges interim Report January-March 2017
Strong sales and operating profit in the first quarter
First quarter 2017
- Sales volume increased to 94.8 ktonnes (45.1) and net sales was SEK 2,892 million (1,360). Excluding the acquired business in the US, sales volume increased by 7.0%.
- Adjusted operating profit increased by 52.7% to SEK 237 million (155), corresponding to an adjusted operating margin of 8.2% (11.4). Excluding the acquired business, adjusted operating profit rose 10.6% to SEK 172 million.
- Operating profit rose to SEK 237 million (155).
- Profit for the period increased to SEK 157 million (94).
- Diluted earnings per share rose to SEK 2.08 (1.25).
- Cash flow before financing activities increased to SEK 75 million (–22).
- Net debt amounted to SEK 2,665 million at 31 March 2017, corresponding to 2.1 times adjusted EBITDA.
Comments from Gränges CEO Johan Menckel:
During the first quarter, sales volumes rose to 94.8 ktonnes (45.1), mainly due to a strong development in Asia and the Americas. Excluding the acquired operations in the US, sales volume rose by 7.0%. Adjusted operating profit increased to SEK 237 million (155). Excluding the acquired operations, operating profit rose by 11%.
Good demand in Asia
We have continued to see very good demand in Asia during the first months of the year. In the first quarter sales volume increased by 9.1%. This is explained by a strong development in China driven by increased demand from both local and global customers. The tax rebate on smaller vehicles, which was reduced this year, has continued to have a positive effect. Sales to commercial vehicles have also increased as a result of a strong market in the wake of the stricter loading rules introduced in the end of 2016. In Europe, sales volume of heat exchanger materials increased by 5.8% in the first quarter, while sales volume of non-core industrial products were lower. In the Americas, demand continues to be strong. For the business acquired last year, sales volumes increased by 2.7% during the quarter due to higher sales to stationary exchangers. Sales of heat exchanger materials to the automotive industry rose by 13.3% in the first quarter compared with the previous year.
Strengthening the organization within research and innovation
We are now taking the next step in the strategy work and increasing focus on research and innovation. As a result, Kent Schölin, current President Europe, will assume the role SVP Research & Innovation. This means that we strengthen this function at management level to best utilize the deep technical skills we possess, both in terms of current markets and customers, but also to better utilize opportunities in adjacent areas.
The market for heat exchanger materials to the automotive industry is expected to continue to grow in 2017. According to IHS, production of light vehicles is expected to grow by 2% throughout the year. For the second quarter, an increase of 3% is expected. Gränges expects a better growth rate than the market in the Americas during second quarter, while we foresee a growth in line with or slightly lower than the market in Asia. In Europe we expect less decrease than the market. Expectations according to IHS are that Asia will grow by 9% and the Americas by 1%. In Europe, a decline of 5% is anticipated in second quarter. For the recently acquired business in the US, sales volume is expected to be in line with the second quarter last year. During 2017, we will continue to work according to our strategic plan. It includes increased focus on customer offerings and innovations, sustainability, and ensuring that we have both the capacity and capability of our facilities to meet the demand of our customers. We are optimistic about 2017 and are determined to continue to grow with sustainable profitability in the coming years.
Johan Menckel, CEO Gränges
Webcasted telephone conference
Gränges CEO Johan Menckel and CFO Oskar Hellström will present Gränges’ interim report for January-March 2017 at a webcasted conference call at CET 10.00, Thursday 27 April, 2017.
The webcast is available on www.granges.com/investors. 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:
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 27 April 2017 at 07.30 CET.
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%. 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 400,000 metric tonnes. Gränges has some 1,500 employees and net sales of more than SEK 10 billion. The share is listed on Nasdaq Stockholm. More information on Gränges is available at granges.com.