Alleima interim report Q2 2024

A well-executed quarter

Q2 2024 highlights

—    Order intake for the rolling 12-month period decreased by 7% to SEK 20,135 million (21,636), with organic growth of -4%. The backlog remained solid with a good product mix.

—    Revenues decreased by 5% to SEK 5,359 million (5,638), with organic growth of 0%.

—    Adjusted operating profit (EBIT) amounted to SEK 592 million (642), corresponding to a margin of 11.1% (11.4).

—    Operating profit (EBIT) amounted to SEK 689 million (350), corresponding to a margin of 12.8% (6.2), and included metal price effects of SEK 96 million (-293).

—    Adjusted earnings per share, diluted, was SEK 2.23 (1.79).

—    Earnings per share, diluted, was SEK 2.54 (0.87).

—    Free operating cash flow amounted to SEK 486 million (72).

CEO’s comment

Cautiously improved market conditions

The market conditions improved in several of our customer segments during the quarter. Demand in the short-cycle business, mainly in the Industrial and Consumer segments, continued to strengthen and we noted a continued positive development for our Nuclear segment. The activity level in the Oil and Gas segment is high and the project list remains strong, even if order intake decreased in the period. In the Chemical and Petrochemical segment, demand increased. The Kanthal division’s medical business has a favorable tailwind and we are constantly seeing new business opportunities. At the same time, we noted a continued caution among Kanthal’s customers in Industrial Heating. This resulted in an organic order intake growth for the rolling 12-month period of -4%, from high absolute levels. Overall, we see slightly improved market conditions, although somewhat cautious, especially in North America. Book-to-bill is positive at 102% for the rolling 12-month period and we continue to strengthen our backlog.

Broad exposure increases resilience

Through our diversified exposure to customer segments at different stages of the business cycle, and our strategy to grow in more profitable and less cyclical niches, we have successfully navigated the generally softer industrial cycle. We are also benefiting from standing firm on our price leadership. Our adjusted EBIT margin of 11.1% is a result of constant improvements and consistent strategy execution. It is clear that more areas, such as Kanthal’s medical business as an example, contribute to our increasingly resilient margin, with a generally stronger product mix for the Group as a whole.

Free operating cash flow amounted to SEK 486 million and our financial position remains strong. We are continuing our efforts across the entire organization to further improve net working capital, with particular focus on optimizing inventory.

Sustainability drives innovation and business

As the green transition progresses, sustainability demands on the manufacturing industry are also increasing. This benefits our product offering, and our strong expertise in research and development is a clear competitive advantage. During the quarter, the Strip division launched the new compressor valve steel, Freeflex® Versa. The new material enables design of smaller compressors and contributes to making the end-products, in most cases white goods and air conditioning units, more energy efficient. Additionally, the Tube division received several orders in all regions related to tubes for use in applications for the production of biofuel. We have also entered into a strategic partnership with Danieli, a major global supplier of technology for the production of direct reduced iron (DRI), relating to Kanthal’s electric process gas direct-heating solution, Prothal® DH. The partnership aims to continue to jointly develop and scale up the process gas technology with the ambition that it can be used in sustainable steel production in DRI plants within a few years. These orders and initiatives are examples of how our strong customer relationships and platforms for joint development create organic growth opportunities in emerging segments that constitute an increasingly significant share of our business.

Continued long-term value creation

After the first six months, I still have a positive view on the full year 2024. If we look beyond this year, we are well-positioned to further strengthen our product mix and continue to execute our strategic priorities as well as ongoing growth investments for continued long-term value creation.

Göran Björkman, President and CEO

Conference call and webcast 13:00 CEST

A webcast and conference call will be hosted on July 19, 2024 at 13:00 pm CEST. More information and a presentation will be available at www.alleima.com/investors

Dial-in details for the conference call

—    Sweden: +46 (0) 8 5051 0031

—    UK: +44 (0) 207 107 06 13

—    US: +1 (1) 631 570 56 13

Link to webcast

—    Webcast

Sandviken, July 19, 2024

Alleima AB (publ)

Contact details

Emelie Alm, Head of Investor Relations
Emelie.alm@alleima.com
Phone: +46 (0) 79 060 87 17

Yvonne Edenholm, Press and Media Relations Manager
Yvonne.edenholm@alleima.com
Phone: +46 (0) 72 145 23 42

About Alleima
Alleima, is a global manufacturer of high value-added products in advanced stainless steels and special alloys as well as solutions for industrial heating. Based on long-term customer partnerships and leading materials technology, we develop products for the most demanding applications and industries. Our offering includes products like seamless steel tubes for the energy, chemical and aerospace industries, precision strip steel for white goods compressors, air conditioners and knife applications, based on more than 900 active alloy recipes. It also includes ultra-fine wires for medical and micro-electronic devices, industrial electric heating technology and coated strip steel for fuel cell technology for cars, trucks, and hydrogen production. Our fully integrated value chain, from R&D to end-product, ensures industry-leading technology, quality, sustainability, and circularity. Alleima, with headquarter in Sandviken, Sweden, had approximately 6,500 employees and revenues of about 21 billion SEK in about 80 countries in 2023. The Alleima share was listed on Nasdaq Stockholm’s Large Cap list on August 31, 2022 under the ticker ‘ALLEI’. Learn more at www.alleima.com.

This information is information that Alleima AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 11.30 AM CET on July 19, 2024.