Year-end report January-December 2019

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Strong growth platform established - weaker fourth quarter concluded the year

Fourth quarter 2019

  • Sales volume decreased by 10.9 per cent to 77.9 ktonnes (87.4). Net sales decreased to SEK 2,682 million (3,074).
  • Adjusted operating profit was SEK 144 million (191) and adjusted operating profit per tonne was 1.9 kSEK (2.2).
  • Profit for the period decreased to SEK 47 million (149) and includes items affecting comparability of SEK –30 million (–).
  • Basic and diluted earnings per share decreased to SEK 0.63 (1.97).
  • Cash flow before financing activities decreased to SEK 68 million (133) and includes capital expenditure of SEK 221 million (319). Adjusted cash flow before financing activities was SEK 191 million (316), representing a cash conversion of 132 per cent.
  • Gränges has signed an agreement to acquire the Polish flat rolled aluminium producer Aluminium Konin. The transaction is subject to regulatory approval from relevant competition authorities and closing is expected in the second quarter of 2020.
  • The Board of Directors proposes a dividend of SEK 3.40 (3.20) per share, corresponding to 43 per cent (35) of profit for the year.

January-December 2019

  • Sales volume decreased by 7.4 per cent to 347.3 ktonnes (375.0). Net sales decreased to SEK 11,978 million (12,910).
  • Adjusted operating profit was SEK 866 million (1,005) and adjusted operating profit per tonne was 2.5 kSEK (2.7).
  • Profit for the period decreased to SEK 600 million (688) and includes items affecting comparability of SEK –30 million (–64).
  • Basic and diluted earnings per share decreased to SEK 7.95 (9.11).
  • Cash flow before financing activities was SEK –148 million (531) and includes capital expenditure of SEK 1,590 million (843) of which SEK 1,103 million refers to expansion investments. Adjusted cash flow before financing activities was SEK 1,048 million (977), corresponding to a cash conversion of 121 per cent.
  • Net debt increased to SEK 3,465 million at 31 December 2019 (SEK 2,494 million at 31 December 2018), corresponding to 2.6 times adjusted EBITDA (1.8 times at 31 December 2018). Net debt at 31 December 2019 includes lease liabilities of SEK 259 million due to IFRS 16 Leases1.

1 See Note 1 for further information on IFRS 16 Leases.


Comments by Gränges’ CEO Johan Menckel:

Important actions taken creating a solid foundation for growth

Continued soft market conditions
The fourth quarter concluded a challenging year for Gränges where the weak market conditions experienced in the first three quarters of the year continued. Lower end-market demand in combination with continued destocking in Europe and Americas resulted in a sales volume decline of 11 per cent to 77.9 ktonnes. The adjusted operating profit declined by SEK 47 million to SEK 144 million and included costs for the US expansion projects of SEK 12 million. Additional efficiency measures, including a general savings program and capacity adjustments, helped to reduce the cost base in the quarter. Exchange rate fluctuations had a positive impact on adjusted operating profit of SEK 20 million. The cash generation continued to be strong also in the fourth quarter. Cash flow before financing adjusted for expansion investments and acquisitions amounted to SEK 191 million, which represents a cash conversion of above 130 per cent.

During the fourth quarter market conditions were especially challenging in Europe and Americas, where the sales volume to automotive customers declined by 25 and 19 per cent respectively. This was driven by a continued significant slowdown of the light vehicle production in combination with further destocking in the supply chain. In Asia, the automotive sales volume increased by 2 per cent in the quarter. With regards to the HVAC & Other business in Americas, sales volume decreased with 11 per cent in the quarter primarily due to significant destocking activities at customer level.

Executing on our growth strategy
In the fourth quarter we announced the acquisition of Aluminium Konin, which will strengthen our product offering and presence in Europe and contribute with strong positions in new attractive niche markets. Aluminium Konin will add new capabilities and capacity to expand our offering for future transportation solutions, such as electric vehicles. In conjunction with the transaction we intend to undertake a rights issue, with preferential rights for existing shareholders, to a total amount of approximately SEK 2 billion, to finance the acquisition and future growth investment. During the year the expansion of the Huntingdon facility in the US was also completed and we have re-opened the production facility in Newport to enter the US light gauge foil market. In Europe we are running an investment program to increase efficiency and capacity in our Finspång facility. The acquisition of Aluminium Konin and the expansion projects will once fully finalized add new capabilities and a total annual capacity of 220 ktonnes. The actions we have taken in 2019 positions Gränges very well and creates a strong platform for continued profitable growth.

Strong cash generation financing growth
Despite challenging market conditions, 2019 has been a productive and successful year in many ways with strong focus on expansion, combined with cost reductions and efficiency improvements in all regions. We also continued to implement Gränges’ sustainability framework and we raised our ambition further by launching clear long-term sustainability targets. For the full year 2019 sales volume decreased by 7 per cent to 347 ktonnes and the adjusted operating profit decreased to SEK 866 million. On the positive side, cash generation was very strong in the year with a cash conversion of 121 per cent and adjusted cash flow before financing of SEK 1,048 million. This means that the expansion investments of in total SEK 1,103 million were financed with cash generated in the operations and that we ended the year with a net debt equivalent to 2.6 times EBITDA. In view of the financial results, and our outlook into account, the Board of Directors proposes that the dividend for 2019 will be increased by 6 per cent to 3.40 SEK per share.

The global automotive market is expected to be relatively stable in 2020 compared with 2019, but for the first quarter the research firm IHS estimates a decline of 5 per cent in global light vehicle production. For the first quarter Gränges expects a decrease in sales volume by low single digits compared with last year. This includes a low double digit decline for Automotive materials, driven by lower light vehicle production and continued destocking, and a mid to high single digit growth for the HVAC and Other business, as new production capacity is being ramped up in Americas. The change in mix between the Automotive and the HVAC and Other business is expected to have a negative impact on profitability in the first quarter. Potential further consequences of the outbreak of coronavirus in China pose a downside risk to this outlook.

As we look into 2020, 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 economic cycles.

Johan Menckel, CEO

Webcasted telephone conference
CEO Johan Menckel and CFO Oskar Hellström will present Gränges’ year-end report for January–December 2019 at a webcasted conference call at 10.00 CET, Thursday 30 January, 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 January, 2020 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 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