Höganäs Year-End Report 2012

Focus on cash flow and adapting our organisation to a weaker market

“As expected, market conditions were fairly unfavourable in the quarter. Good sales were achieved on most Asian markets apart from Japan and India, but conditions were harsher elsewhere. The staff reductions we announced in our previous Interim Report have been executed. We adapted production and stock levels in the quarter, which affected income negatively, but contributed to record-high cash flow for the full year 2012. This strengthens Höganäs for 2013.

Other bright spots in the quarter included our notable success in the surface coating segment, where the sales increase was really positive worldwide. Sales volumes grew significantly in the fourth quarter also on a relatively weak European market, not least thanks to the new business we started with TRW, one of the world’s largest Tier 1 suppliers to the automotive industry. This is another good example of a case where Höganäs’ focus on high-quality products and superior technical support is paying off.”

Fourth quarter 2012 (compared to corresponding period of previous year)

• Net sales were MSEK 1,489 (1,632), down 9% year on year. Demand conditions were better than in the corresponding period of the previous year in Asia and South America, but worse in Europe and North America. Sales volumes were down 2% year on year.
• Operating income was MSEK 131 (212) and income after tax was MSEK 145 (152). Lower sales volumes, reduced production volumes and non-recurring expenses of MSEK 44 for staff reductions had a negative effect on income. The stronger Swedish currency also had a negative income effect, while price increases and savings measures had a positive effect. The tax expense was positively affected by a restatement of deferred tax due to a new lower corporate tax rate in Sweden, effective 2013.
• Earnings per share before and after dilution for the quarter were SEK 4.16 (4.37).
• Cash flow from operating activities was MSEK 320 (267). Extensive destocking resulted in very strong cash flow despite lower operating income.

1 January – 31 December 2012 (compared to corresponding period of previous year)

• Net sales were MSEK 6,712 (7,081), down 5% year on year. Excluding the one-off deliveries to Hoeganaes Corporation (GKN) in 2011, sales volumes were down 3% year on year. Including these one-off deliveries, sales volumes were down 6%.
• Operating income was MSEK 903 (1,071) and income after tax was MSEK 698 (762).
• Earnings per share before and after dilution for the period were SEK 20.04 (21.90).
• Cash flow from operating activities was MSEK 1,122 (803).
• The net debt/equity ratio was 13% at the end of the period, compared to 25% at the beginning of the financial year.
• The Board of Directors is proposing a cash dividend of SEK 10.00 per share (10.00).
• Essentially, the outlook is unchanged compared to the assessment made in the Third-quarter Interim Report. The extent to which the debt crisis will affect global industrial activity in 2013 remains uncertain. However, underlying long-term demand conditions appear relatively favourable, apart from Europe.

Höganäs, Sweden, 6 February 2013

Höganäs AB (publ)

Alrik Danielson

CEO and President

Streamed press conference

Alrik Danielson, CEO and President, and Sven Lindskog, Chief Financial Officer, will present this Report in a conference call at 10:30 a.m. on 6 February 2013.

The press conference will be streamed at: www.hoganas.com / Investor Relations / Conference Call. It is open to journalists, analysts and investors. Participants are welcome to call on +46 (0)8 505 56474, +44 (0)203 364 5371 or +1 877 679 2993.

NB:

The information in this Report is mandatory for Höganäs AB (publ) to publish pursuant to the Swedish Securities Markets Act. This Report has not been reviewed by the company’s auditors. The information was submitted for publication at 9:00 a.m. on 6 February 2013.

For more information

For more information, please contact:
Alrik Danielson, CEO and President, +46 (0)42 33 80 00

Sven Lindskog, Chief Financial Officer, +46 (0)42 33 80 00

Höganäs AB (publ) is the world’s leading producer of iron and metal powders. Building on its clear vision of the possibilities of powder to improve efficiency, the consumption of resources and environmental impact across a raft of segments, the company has developed in-depth application skills. Thus Höganäs can help create the automotive components, white goods, water and exhaust treatment products of the future in collaboration with its customers. Founded in 1797, the company had sales of MSEK 6,700 in 2012, and is quoted on NASDAQ OMX Stockholm’s Mid Cap List.
For more information, please visit our website: www.hoganas.com.