Gränges’ Q3 interim report 2024: Increased market share drives profitable growth

Third quarter 2024

• Sales volume increased by 6.7 percent to 122.7 ktonnes (114.9) and net sales increased to SEK 5,750 million (5,575).
• Adjusted operating profit amounted to SEK 420 million (439).
• Adjusted operating profit per tonne amounted to 3.4 kSEK (3.8).
• Operating profit was SEK 420 million (479) and included no items affecting comparability (40).
• Profit for the period amounted to SEK 285 million (332).
• Diluted earnings per share amounted to SEK 2.67 (3.12).
• Adjusted cash flow before financing activities was SEK 474 million (1,067).
• Total carbon emissions intensity (scope 1+2+3) decreased to 7.6 tonnes CO2e/tonne (8.0).
• The share of sourced recycled aluminium increased to 47.4 percent (44.4).

January – September 2024

• Sales volume increased by 5.6 percent to 375.5 ktonnes (355.5) and net sales decreased to SEK 17,322 million (17,551).
• Adjusted operating profit amounted to SEK 1,247 million (1,290).
• Adjusted operating profit per tonne amounted to 3.3 kSEK (3.6).
• Operating profit was SEK 1,247 million (1,330) and included no items affecting comparability (40).
• Profit for the period amounted to SEK 835 million (902).
• Diluted earnings per share amounted to SEK 7.84 (8.47).
• Adjusted cash flow before financing activities was SEK 968 million (2,133).
• Financial net debt was SEK 2,839 million on September 30, 2024 (SEK 2,741 million on December 31, 2023), corresponding to 1.2 times adjusted EBITDA (1.1 times on December 31, 2023).
• Total carbon emissions intensity (scope 1+2+3) decreased to 7.4 tonnes CO2e/tonne (8.4).
• The share of sourced recycled aluminium increased to 46.5 percent (41.0).

Comments by Gränges’ CEO Jörgen Rosengren: Another growth quarter in a slow market
In the third quarter, we saw good demand in HVAC, speciality packaging and other niches, markets which last year were affected by excess inventory. On the other hand, demand from automotive customers weakened noticeably after the summer. Against that background, we are happy to see that the stronger sales focus we have had since 2023 continued to drive growth. We increased our share in all markets, boosting our year-over-year sales volume growth to 7 percent.

Strong operating profit and cash flow
We compensated customer price pressure with cost productivity and improved metal management. Combined with volume growth, this resulted in an adjusted operating profit of SEK 420 million, roughly in line with last year.
Cash flow remained strong in the quarter, despite the ongoing capacity expansion projects which we intend to finalize toward the end of this year. The good cash flow reduced our net debt. Our financial leverage improved and remained well within our target range. Taken together, this creates stability and flexibility to finance further growth.

Record recycling
Our long-term focus on sustainability continued to deliver. Carbon intensity remained ahead of our 2025 climate goals thanks to record-high recycling. Circularity is also a strategic objective on its own. Together with customers, suppliers and the broader industry, we’re working on further opportunities. For instance, we recently joined the First Movers Coalition, a group of leading companies committed to decarbonize hard-to-abate sectors.

Shandong partnership close to completion
The preparations for acquiring a large production facility in China from our partner Shandong Innovation Group are progressing well. We anticipate to close the transaction in the near future. New production capacity and a deepened partnerships will strengthen our competitiveness and enable further market share gain in the Asian market. These benefits will however take some time to realize. In the first months, we expect the new facility to operate at breakeven profitability, and in 2025, to contribute marginally to earnings per share after minority interests.

Stable outlook for the fourth quarter
Market demand remains hard to predict. An apparent weakness in automotive is partly compensated by recovery in other markets. Thanks to our focus on new business, we expect a high-single-digit percentage sales volume growth in the fourth quarter compared to 2023. This excludes any potential effects from the acquisition of the production facility in China. We aim to continue to offset price pressure and wage inflation with cost reduction and productivity improvement, but expect currency exchange rates to be unfavourable compared to the fourth quarter last year.

Good foundation for growth
Our stable performance in a slow market builds confidence, especially as it is a direct result of systematic work on our Navigate plan. This highlights the value of diversification, which creates both flexibility and new opportunities.
Behind this is a fantastic team of skilled and dedicated colleagues in all parts of Gränges. We now have a good foundation for further growth and for building a truly leading company. I would like to thank all my colleagues once again for outstanding work.

Jörgen Rosengren, President and CEO

Webcasted presentation
CEO Jörgen Rosengren and CFO Oskar Hellström will present Gränges’ Q3 report 2024 at a webcasted conference call Thursday October 24, 2024, at 10.00 CEST.
Join the live webcast here. To participate in the Q&A following the presentation, please register here. Upon registration, phone numbers and a conference ID to access the call will be provided. Please dial in a few minutes before the start of the webcast. The presentation will be in English.