first quarter 2015 earnings conference · pinnacle award. 7 modest market growth expected for...
TRANSCRIPT
First Quarter 2015 Earnings ConferenceMay 4, 2015
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Today’s presenters
JOHAN MENCKEL
CEO
Since: 2012Gränges since: 2004
OSKAR HELLSTRÖM
CFO
Since: 2011
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3
Gränges is a global aluminium company focused on rolled products for brazed heat exchangers
Heat exchanger value chain
Aluminium producers Material producers Heat exchanger producers Automotive and HVAC&R
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Modern vehicles have up to ten different heat exchangers, sometimes even more
Engine radiatorCharge air coolerHybrid system radiatorAir condition condenser
Engine oil cooler
Air condition evaporatorCabin heater
Transmission oil cooler
Chiller (for active battery cooling)
Battery radiator(for passive battery cooling)
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Improved earnings and higher volume in first quarter
Sales volume +3.3%, partly due to stock building by a number of customers in Asia
Adjusted operating profit increased by 25% to SEK 155 million
Support from favorable exchange rates offset by higher costs and slightly lower conversion prices
Earnings per share of SEK 1.49
Net cash flow before financing activities of SEK -1 million
Solid financial position
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Intensified investments in new products
Increased production capacity for TRILLIUM® in second quarter
– Simplifies the brazing process for our customers
– Enables a more compact heat exchanger design
Good potential for products within MULTICLAD®
Gränges was recognized for its leading edge in new products and quality by receiving a Delphi 2014 Pinnacle Award
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Modest market growth expected for full-year 2015
Q1 2015
Light vehicle production growth (YoY)
Source: IHS Automotive, April 16, 2015
Region Q2 2015 outlook FY 2015 outlook
Asia
Europe
Americas
+1%
Global
+2% +3%
-1% +1%
+1% +1% +2%
+2% -2% ±0%
±0%
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Continued good volume growth in Asia
Asia Europe Americas
Continued growth for light vehicle production in China
Inventory build-up at some customers
Increased sales of heat exchanger material
Lower sales of scrap based products in line with plan
Reduction of inventory at some customers
Lower demand in South America
Gränges sales volume (ktonnes)
19,4 21,1 19,1 18,8 20,7
Q1 Q2 Q3 Q4 Q1
16,0 15,0 14,0 13,616,0
Q1 Q2 Q3 Q4 Q1
6,0 5,7 6,2 5,2 5,9
Q1 Q2 Q3 Q4 Q1
+7%+1%
-2%
20152014 20152014 20152014
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Positive earnings trend continued in first quarter
Rolling 12 months sales volume and adjusted operating profit
147 149 148152 154 155
158 159 160 160 160 160 161286
362 374348
372 371401
437 444463
494
245199
100
120
140
160
180
200
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q10
100
200
300
400
500
Adjusted operating profit (S
EK
million)
Sal
es v
olum
e (k
tonn
es)
Sales Volume Adjusted Operating Profit
2012 2013 2014 2015
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Increased volume and earnings
SEK million Q1
Financial overview
1. Adjusted for items affecting comparability.2. Basic and diluted, historical earnings per share has been calculated on the same number of shares as of today.
Rolling 12 months
2015 2014 Change Mar 2015 Dec 2014 Change
Sales volume (ktonnes) 42.7 41.3 3.3% 161.4 160.0 0.9%
Net sales 1,456 1,157 25.8% 5,047 4,748 6.3%
Adjusted operating profit1 155 124 24.7% 494 463 6.6%
Adjusted operating margin (%) 10.6 10.7 -0.1 ppt 9.8 9.7 0.0 ppt
Adjusted operating profit per tonne (kSEK) 3.6 3.0 0.6 3.1 2.9 0.2
Operating profit 155 120 29.0% 457 422 8.2%
Profit for the period 111 85 30.8% 345 319 8.2%
Earnings per share2 (SEK) 1.49 1.14 0.35 4.62 4.27 0.35
Net cash flow before financing -1 362 n/a 233 597 -60.9%
Return on capital employed, R12 (%) 17.1 13.4 3.7 ppt 17.1 16.3 0.7 ppt
Net debt / adjusted EBITDA, R12 1.1 -0.8 1.9 1.1 1.2 -0.1
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-765 -775-29 -9-46
-132
206
-1 000
-900
-800
-700
-600
-500
-400
-300
-200
-100
0
Net cash flow before financing SEK -1 million
Net debt was SEK 775 million at the end of Q1 2015
Change in net debt
Net
deb
t pos
ition
(SE
K m
illion
)
Netdebt
Q4 2014
AdjustedEBITDA
Change in working capital
Other operating
items
Investments FX & other Netdebt
Q1 2015
1.2 1.1
Net debt over adjusted EBITDA (rolling 12 months)
12
97 93101
93 95 94102 99
84 86 9095
89
0
25
50
75
100
125
150
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Working capital increased by 5 days year over year
Average working capital days
2015
Aver
age
wor
king
cap
ital (
days
)
2012
+5
2013 2014
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Outlook
Aims to further strengthen our position and continue to grow with good profitability
Global light vehicle production is expected to grow by 1% in Q2 2015
For the full year 2015 IHS forecasts a 2% growth in global light vehicle production
Gränges’ growth in Asia is expected to be in line with the market during first half of 2015. Europe and the Americas are expected to grow in line with, or betterthan the than the market
Positive effects of favorable foreign exchange rates
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A positive start to 2015– Q1 the best quarter so far
Sales volume +3.3%
Adjusted operating profit increased by 25% to SEK 155 million
Solid financial position
Well positioned forprofitable growth
Summary of first quarter
Q&AJohan Menckel, CEO
Oskar Hellström, CFO