Alleima interim report Q3 2024

Solid profitability and decisions to increase capacity

Q3 2024 highlights

—    Order intake for the rolling 12-month period decreased by 12% to SEK 19,646 million (22,362), with organic growth of -8%. The backlog remained solid with a good product mix.

—    Revenues decreased by 3% to SEK 4,498 million (4,617), with organic growth of 3%.

—    Adjusted operating profit (EBIT) amounted to SEK 314 million (350), corresponding to a margin of 7.0% (7.6).

—    Operating profit (EBIT) amounted to SEK 290 million (206), corresponding to a margin of 6.5% (4.5), and included metal price effects of SEK -24 million (-144).

—    Adjusted earnings per share, diluted, was SEK 1.02 (0.99).

—    Earnings per share, diluted, was SEK 0.95 (0.55).

—    Free operating cash flow amounted to SEK 411 million (812).

CEO’s comment

Market conditions

In the Tube division, we noted a high activity level in segments such as Oil and Gas, Nuclear and Transportation. For several other segments, the market conditions were more difficult to assess during the third quarter. In the Kanthal division, our Medical business continued its favorable performance, while we noted caution among our Industrial Heating customers. The market conditions for the Strip division improved during the quarter, and we are seeing signs that the market has stabilized at levels that are better, although somewhat low.

Order intake for the rolling 12-month period amounted to SEK 19,646 million (22,362), with organic growth of -8%. The development was primarily attributable to lower order intake in the Oil and Gas segment in the Tube division, compared with the strong build-up in the backlog in the year-earlier period. However, demand remained at high levels and the backlog is solid. Book-to-bill was 100% for the rolling 12-month period.

A solid performance in a seasonally weak quarter

Our revenues grew 3% organically in the quarter to SEK 4,498 million (4,617), with organic growth in all segments, except for Industrial and Industrial Heating.

Our diversified exposure to customer segments at different stages of the business cycle, and our strategy to grow in more profitable and less cyclical segments, have proven to be successful. The adjusted EBIT margin of 7.0% (7.6), which included a significant currency headwind, is a strong performance for a third quarter, which are seasonally weak due to scheduled summer and maintenance stoppages. This demonstrates how we have driven a positive product mix over the long term and kept our discipline in order bookings during weaker market conditions, thereby enabling profitability to be maintained.

Free operating cash flow amounted to SEK 411 million (812), which is a solid level, although it is compared against high cash flow in the third quarter of last year. Overall, our financial position remains strong, and we have plenty of flexibility to continue executing our strategy.

Strong position in energy

We have a leading position in the energy sector, which includes nuclear, oil and gas, electrification and emerging technologies in hydrogen and renewable energy. Demand within nuclear is growing globally, and to leverage growth opportunities we have now decided to increase our capacity by reopening a tube mill for steam generator tubes. This is a unique opportunity to relatively quickly meet the demand from our customers in the Nuclear segment. Through this facility, we will be able to deliver to both conventional nuclear power plants and emerging technologies such as small modular reactors (SMR).

Profitable growth in Medical

We are constantly seeing new opportunities in our profitable and rapidly growing Medical segment within Kanthal. We have now decided to establish a new production footprint for ultra-fine medical wire in Penang, Malaysia. This is an important and growing hub for medtech companies, and our local presence and expanded production capacity will allow us to serve both existing and new customers in Asia.

Focus on scaling up capacity for selected segments

Our focus is now on completing our capacity increases and scaling up our production for selected segments to drive profitable growth. In addition, we are continuing to adapt to the prevailing market conditions and it is satisfying to see how we have, over time, built a more agile and resilient organization. I want to extend my sincere thanks to all employees for their commitment, as they are a key part of this development.

Göran Björkman, President and CEO

Conference call and webcast 13:00 CEST

A webcast and conference call will be hosted on October 22, 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, October 22, 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. The information was submitted for publication, through the agency of the contact person set out above, at 11.30 AM CET on October 22, 2024.