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Gränges — Interim / Quarterly Report 2017
Oct 26, 2017
3055_10-q_2017-10-26_e7b25fea-cb7f-438e-9db6-c64de98668ba.pdf
Interim / Quarterly Report
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INTERIM REPORT JANUARY-SEPTEMBER 2017
Strong demand in the third quarter - investing in future growth
Third quarter 2017
- Sales volume increased to 93.0 ktonnes (62.8). Organic growth was 4.8 per cent. Net sales were SEK 2,728 million (1,859). Sales volume for the business acquired in 2016 increased to 48.9 ktonnes (21.8).1
- Adjusted operating profit increased by 25.1 per cent to SEK 227 million (181), which corresponds to an adjusted operating margin of 8.3 per cent (9.7). The business acquired in 2016 is included with SEK 70 million (50).
- Profit for the period decreased to SEK 151 million (189). Third quarter last year includes a release of a tax provision of SEK 139 million.
- Diluted earnings per share decreased to SEK 2.00 (2.52).
- Cash flow before financing activities increased to SEK 148 million (–2,285).
January-September 2017
- Sales volume increased to 286.5 ktonnes (154.4). Organic growth was 5.9 per cent. Net sales were SEK 8,701 million (4,662). Sales volume for the business acquired in 2016 increased to 144.7 ktonnes (21.8).1
- Adjusted operating profit increased by 46.1 per cent to SEK 754 million (516), corresponding to an adjusted operating margin of 8.7 per cent (11.1). The business acquired in 2016 is included with SEK 232 million (50).
- Profit for the period increased to SEK 500 million (397).
- Diluted earnings per share rose to SEK 6.62 (5.30).
- Cash flow before financing activities increased to SEK 530 million (–2,150).
- Net debt decreased to SEK 2,280 million at 30 September 2017 (SEK 2,722 million at 31 December 2016), corresponding to 1.7 times adjusted EBITDA (2.1 times at 31 December 2016).
| Financial summary | Q3 | Jan - Sep | 12 months rolling |
Full year | |||||
|---|---|---|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | Oct 2016- Sep 2017 |
2016 | |||
| Sales volume, ktonnes | 93.0 | 62.8 | 48.0% | 286.5 | 154.4 | 85.5% | 371.2 | 239.1 | 55.2% |
| Net sales | 2,728 | 1,859 | 46.7% | 8,701 | 4,662 | 86.7% | 11,247 | 7,207 | 56.1% |
| Adjusted operating profit2 | 227 | 181 | 25.1% | 754 | 516 | 46.1% | 925 | 687 | 34.6% |
| Adjusted operating margin, % | 8.3 | 9.7 | –1.4 ppt | 8.7 | 11.1 | –2.4 ppt | 8.2 | 9.5 | –1.3 ppt |
| Adjusted operating profit per tonne, kSEK | 2.4 | 2.9 | –0.4 | 2.6 | 3.3 | –0.7 | 2.5 | 2.9 | –0.4 |
| Operating profit | 227 | 88 | 158.5% | 754 | 397 | 89.9% | 916 | 559 | 63.8% |
| Operating margin, % | 8.3 | 4.7 | 3.6 ppt | 8.7 | 8.5 | 0.1 ppt | 8.1 | 7.8 | 0.4 ppt |
| Profit for the period | 151 | 189 | –20.2% | 500 | 397 | 26.0% | 601 | 498 | 20.7% |
| Earnings per share basic, SEK | 2.00 | 2.53 | –0.53 | 6.63 | 5.31 | 1.32 | 7.99 | 6.66 | 1.32 |
| Earnings per share diluted, SEK | 2.00 | 2.52 | –0.53 | 6.62 | 5.30 | 1.32 | 7.96 | 6.64 | 1.32 |
| Cash flow before financing activities | 148 | –2,285 | n/a | 530 | –2,150 | n/a | 634 | –2,046 | n/a |
| Equity to assets, % | – | – | – | 40.3 | 35.8 | 4.5 ppt | 40.33 | 37.0 | 3.3 ppt |
| Net debt | – | – | – | 2,280 | 2,823 | –543 | 2,2803 | 2,722 | –442 |
| Return on capital employed, % | – | – | – | – | – | – | 16.6 | 17.5 | –0.9 ppt |
1 The acquired business has been consolidated into Gränges accounts as from 22 August 2016.
2 Adjusted for items affecting comparability.
3 Balances per 30 September 2017.
COMMENTS BY THE CEO
Several important steps taken in our strategic growth plan during third quarter
STRONG DEMAND ACROSS REGIONS
We have seen continued strong demand in all regions in the third quarter. Sales volume increased by 48 per cent to 93 ktonnes and the adjusted operating profit improved to SEK 227 million. Exchange rate fluctuations, primarily a weaker dollar, had a negative impact on earnings of SEK 2 million in the quarter.
A strong market in China helped sales in Asia increase by 9 per cent in the third quarter. The increase is explained by good volumes, both to local and global customers, and is partly related to early deliveries of some orders for the fourth quarter. Sales to commercial vehicles in China have also been strong. In Europe sales volume rose by just over 3 per cent in the third quarter. In the Americas, sales volume continued to increase, but is still limited by the fact that the US plants currently produce close to maximum capacity. Sales of heat exchanger materials to automotive customers in the Americas were 11 per cent higher than in the third quarter last year.
INVESTMENT IN NEW CAPACITY
In September, we decided to take the next step in our strategic growth plan for North America. This includes an expansion of the Huntingdon facility to meet increased demand within the current product portfolio. In total, the investment amounts to USD 110 million over two years. When it comes to multi-layer aluminium products for brazed heat exchangers, we plan to enter into a joint venture with Japanese Mitsubishi Aluminum in North America.
NEXT GENERATION MATERIALS TO DRIVE FUTURE GROWTH
We have also taken an important step in terms of next generation heat exchanger materials. The investment in German GETEK, which manufactures aluminium billets utilizing advanced spray forming technology, means that we can address a larger market with innovative materials within Active Brazing. It is expected to be an important product category for Gränges in coming years.
OUTLOOK
The market for heat exchangers to the automotive industry is expected to grow in 2017. The market research firm IHS estimates that production of light vehicles will be unchanged in the fourth quarter compared to last year, which would sum up growth for the full year to 2 per cent.
Overall, Gränges expects a somewhat lower growth rate than the market in the fourth quarter due to lower sales volume of automotive heat exchanger materials in Asia and the Americas. In Europe, we expect a growth rate in line with the market. The US operations Gränges acquired in 2016 is expected to continue to grow in the fourth quarter. The impact of changes in foreign exchange rates on operating profit is expected to be negative in the fourth quarter compared to last year.
When looking into 2018, we foresee a positive development in all our regions. We will continue to focus on innovation and customer offering, sustainability and ensuring that we have both the capacity and capability of our facilities to meet future demand. That includes increased focus on product development for electrical vehicles, where we see a very good growth potential. We are determined to continue to grow with a sustainable profitability in the coming years.
Johan Menckel CEO Gränges
Third quarter 2017
- Sales volume 93.0 ktonnes
- Net sales SEK 2,728 million
- Adjusted operating profit SEK 227 million
Sales volume increased organically by 4.8 per cent in the third quarter primarily driven by strong sales in Asia
MARKET DEVELOPMENT
According to the international research firm IHS, global light vehicle production increased by 2.2 per cent in the third quarter of 20171 , compared to the corresponding quarter 2016. In Asia, light vehicle production increased by 3.1 per cent during the third quarter. A flat development in China was compensated by a growth of 7.2 per cent in other Asian markets. In the fourth quarter of 2017, a decrease of 1.8 per cent is expected in Asia. In Europe, light vehicle production increased by 5.4 per cent in the third quarter, while an increase of 5.9 per cent is expected for the fourth quarter of 2017. Light vehicle production in the Americas decreased by 3.6 per cent in the third quarter, whereas a decrease of 0.9 per cent is anticipated in the fourth quarter of 2017. For the full year 2017, IHS forecasts an increase in global light vehicle production of 1.9 per cent.
Demand for aluminium products for automotive heat exchangers, which is Gränges' largest market and accounts for about half of the group's sales volume, is correlated to the number of produced light vehicles. A higher share of hybrid vehicles, electrical vehicles and advanced features such as autonomous driving is also positive for the demand of heat exchanger materials. Due to lead times in the supply chain there is, however,a time lag between growth in demand for Gränges' products and vehicle production.
In the Americas, materials for stationary heat exchangers is the dominant product category. The growth in this market is mainly driven by energy efficiency requirements, construction of new houses and buildings, and population growth.
SALES DEVELOPMENT
The sales volume in the third quarter of 2017 increased by 48.0 per cent to 93.0 ktonnes (62.8) compared to the same quarter previous year. The organic growth during the quarter was 4.8 per cent. Net sales increased to SEK 2,728 million (1,859). For the business acquired in 2016, sales volume increased to 48.9 ktonnes (21.8) while net sales were SEK 1,254 million (525). The net effect from
Quarterly sales volume per region
changes in foreign exchange rates was negative with SEK 73 million in the quarter. Higher sales volume and the effect from the increased aluminium price was partly offset by lower average conversion price.
During January–September 2017 sales volume increased by 85.5 per cent to 286.5 ktonnes (154.4). The organic growth during the nine month period was 5.9 per cent. Net sales totalled SEK 8,701 million (4,662). For the business acquired in 2016, sales volume increased to 144.7 ktonnes (21.8) while net sales were SEK 3,891 million (525). The net effect of changes in foreign exchange rates was positive and amounted to SEK 46 million during January–September 2017.
ASIA
In the third quarter of 2017, sales volume in Asia increased by 9.4 per cent to 20.7 ktonnes (19.0). The growth was primarily driven by sales to Chinese automotive customers. During January– September 2017, sales volume in Asia increased by 9.3 per cent to 65.7 ktonnes (60.1).
EUROPE
In the third quarter of 2017, sales volume in Europe increased by 3.3 per cent to 15.5 ktonnes (15.0). Both sales of heat exchanger material and sales of material for non-heat exchanger applications increased during the quarter. During January–September 2017, sales volume in Europe reached 50.2 ktonnes (48.5), which represents an increase of 3.6 per cent compared to previous year.
AMERICAS
In the third quarter of 2017, sales volume in the Americas increased by 96.6 per cent to 56.8 ktonnes (28.9). Of this, 48.9 ktonnes (21.8) relates to the business acquired in 2016. During January–September 2017, sales volume in Americas reached 170.5 ktonnes (45.8), out of which 144.7 ktonnes (21.8) relates to the business acquired in 2016.
Quarterly adjusted operating profit
¹ Source: IHS, 18 September 2017.
OPERATING PROFIT
Adjusted operating profit for the third quarter of 2017 increased to SEK 227 million (181), corresponding to an adjusted operating margin of 8.3 per cent (9.7). The business acquired in 2016 is included with SEK 70 million (50). The positive effects from higher sales volume and improved metal management were partly offset by lower average conversion price. Further, costs for strategic projects and the implementation of a new ERP system had a negative impact of SEK –11 million . Net changes in foreign exchange rates had a negative impact of SEK –2 million in the quarter.
Operating profit for the third quarter of 2017 rose to SEK 227 million (88). Items affecting comparability during the quarter was SEK 0 million (–94). The third quarter last year includes costs of SEK 94 million related to the acquisition of Noranda's downstream operations in the US.
During the period January–September 2017, adjusted operating profit increased to SEK 754 million (516), corresponding to an adjusted operating margin of 8.7 per cent (11.1). The net effect of changes in foreign exchange rates was positive and amounted to SEK 34 million for the first three quarters of 2017.
Operating profit during January-September 2017 increased to SEK 754 million (397), including items affecting comparability of SEK 0 million (–119).
Revised assessment of useful life of property, plant and equipment
During the third quarter, the useful life of Gränges' tangible fixed assets have been reviewed and revised to better reflect the actual useful life of the assets. The revised assessment has an impact on the depreciation periods applied in Gränges and the new useful life assumptions are now more in line with assumptions applied by peers. The net positive effect on adjusted operating profit due to changed depreciation periods amounts to SEK 7 million in the third quarter. For more information refer to Note 1.
PROFIT FOR THE PERIOD AND EARNINGS PER SHARE
During the third quarter, finance income and costs was SEK –24 million (–26) and includes interest expenses of SEK –24 million, interest income of SEK 2 million and foreign exchange effects of SEK –2 million. Profit before tax increased to SEK 203 million (62). Income tax for the third quarter of 2017 amounted to SEK –52 million (127) which corresponds to an effective tax rate of 26 per cent. Income tax for the third quarter of last year includes a release of a provision for corporate income tax in China with a positive effect of SEK 139 million. Excluding the released tax provision, the effective tax rate was 20 per cent in the third quarter of 2016. The profit for the period was SEK 151 million (189) during the third quarter of 2017 and diluted earnings per share was SEK 2.00 (2.52).
During the period January–September 2017, finance income and costs amounted to SEK –85 million (–33). Profit before tax increased to SEK 671 million (365). Income tax for the first three quarters of 2017 was SEK –172 million (31), which corresponds to an effective tax rate of 26 per cent. Income tax for January– September 2016 includes the release of a provision for corporate income tax in China with a positive effect of SEK 139 million, as well as withholding tax of SEK –20 million paid on a dividend from the Chinese subsidiary. Excluding these effects, the effective tax rate for the first three quarters of 2016 was 24 per cent. During January–September 2017, the profit for the period increased to SEK 500 million (397) and diluted earnings per share rose to SEK 6.62 (5.30).
CASH FLOW
Cash flow from operating activities decreased to SEK 222 million (344) in the third quarter of 2017 and was negatively impacted by increased working capital due to the increased aluminium price. Cash flow from investing activities was SEK –74 million (–2,629) and was mainly related to investments to maintain and improve efficiency in current production facilities. Cash flow from investing activities in the third quarter of 2016 includes cash consideration for the US acquisition of SEK –2,598 million. Cash flow before financing activities amounted to SEK 148 million (–2,285). Cash flow from financing activities was SEK –133 million (2,660) and includes amortisation of loans of SEK –128 million.
During January–September 2017, cash flow from operating activities increased to SEK 710 million (514) and cash flow from investing activities was SEK –180 million (–2,664). Cash flow before financing activities increased to SEK 530 million (–2,150). Cash flow from financing activities was SEK –641 million (–2,265) and includes a dividend payment of SEK –180 million as resolved by Gränges' 2017 Annual General Meeting, new loans of SEK 357 million and amortisation of loans of SEK –744 million.
Cash and cash equivalents amounted to SEK 703 million at 30 September 2017 (SEK 851 million at 31 December 2016).
FINANCIAL POSITION
Gränges' total assets amounted to SEK 7,714 million at 30 September 2017 (SEK 7,950 million at 31 December 2016). The equity to assets ratio was 40.3 per cent at 30 September 2017 (37.0 per cent at 31 December 2016).
Consolidated net debt including pension liabilities was SEK 2,280 million at 30 September 2017 (SEK 2,722 million at 31 December 2016). At 30 September 2017, the Group's net debt corresponds to 1.7 times adjusted EBITDA.
EMPLOYEES
The average number of employees in the Gränges Group was 1,633 (1,145) in the third quarter of 2017 and 1,602 (1,023) during the period January–September 2017.
Capacity expansion to support future growth
PARENT COMPANY
Gränges AB is the parent company of the Gränges Group. The operations include Group Management and Group functions such as finance, treasury, legal, business development and communications. For the period January-September 2017, net sales in the parent company were SEK 100 million (70) and the result for the period was SEK –58 million (292). Previous year net profit included dividends from the Chinese subsidiary of SEK 403 million. Previous year income tax included withholding tax of SEK 20 million related to the dividends.
SIGNIFICANT EVENTS DURING THE PERIOD Gränges invests in US capacity expansion
Gränges will invest USD 110 million to expand the aluminium rolling operation in Huntingdon, Tennessee, meeting growing demand for light gauge foil, automotive heat exchanger materials, and heating, ventilation and air conditioning (HVAC) applications. The expansion marks the next step in Gränges' strategic growth plan for North America, and includes investments in buildings, casters, cold rolling mills, annealing furnaces and slitters. The project, that is financed using available credit facilities and operational cash flows, is estimated to take about two years to complete and will contribute positively to Gränges operating profit in 2019.
Gränges and Mitsubishi Aluminum to form a joint venture in North America
Gränges has signed a letter of intent with Japanese Mitsubishi Aluminum Co., Ltd to form a joint venture in North America for manufacturing of advanced aluminium materials for brazed automotive heat exchangers. Once formed, the joint venture will combine the high expertise of Gränges and Mitsubishi Aluminum within aluminium rolling for the establishment of a new production facility in North America. The joint venture is expected to be established in 2018.
SIGNIFICANT EVENTS AFTER THE PERIOD Jörgen Abrahamsson new President Europe
Jörgen Abrahamsson, who has been Acting President for Gränges Europe since May 2017, has assumed a permanent position as President Europe. Furthermore, Fredrik Spens has been recruited as Deputy President Gränges Europe with responsibility for regional marketing and sales. Fredrik Spens starts his new position in January 2018.
Gränges invests in advanced spray-forming technology
Gränges invests in a production company together with German Erbslöh Aluminium GmbH to produce billets using advanced spray-forming technology. Gränges invests EUR 4.4 million in cash for 51 per cent of the joint company, GETEK GmbH. Erbslöh, contributing production assets and know-how, will own 49 per cent of GETEK. In October, Gränges' investment received approval from the competition authorities. The investment secures competence and the supply chain within advanced spray-forming technology, that will enable growth in next generation materials for heat exchangers.
Gränges establishes a commercial paper program
Gränges has established a commercial paper program with a frame amount of SEK 1,500 million. The program is a complement to the Group's other sources of funding.
Gränges production facility in Huntingdon, Tennessee, USA.
THE SHARE
From October 2016, it has been possible to redeem options in the employee stock option program LTI 2014, which targets senior executives and other key employees in Gränges. The exercise price is SEK 51 per option reduced by paid dividend during the period. The share capital in Gränges amounts to SEK 101 million split on 75,512,386 shares, each with a quota value of 1.339775. Gränges has only one class of shares. The number of outstanding employee stock options in LTI 2014 amounts to 127,000 at 30 September 2017. The option program expires in November 2017.
OWNERSHIP STRUCTURE
Largest shareholders in Gränges at 30 September 2017¹.
| Number of | Share of capital | |
|---|---|---|
| Shareholder | shares | and votes % |
| Fjärde AP-fonden | 7,111,207 | 9.4 |
| AFA Försäkring | 5,090,890 | 6.7 |
| SEB Fonder | 3,828,379 | 5.1 |
| Allianz Global Investors | 2,885,224 | 3.8 |
| Copper Rock Capital Partners | 2,227,526 | 2.9 |
| Dimensional Fund Advisors | 1,660,333 | 2.2 |
| Fidelity | 1,416,571 | 1.9 |
| Acadian Asset Management | 1,261,569 | 1.7 |
| Catella Fonder | 1,217,454 | 1.6 |
| Columbia Threadneedle | 1,121,049 | 1.5 |
| Handelsbanken Fonder | 1,100,000 | 1.5 |
| Norges Bank | 1,079,786 | 1.4 |
| Avanza Pension | 873,279 | 1.2 |
| Paradice Fonder | 824,041 | 1.1 |
| Alliance Bernstein | 776,945 | 1.0 |
| Total 15 largest shareholders | 32,474,253 | 43.0 |
| Other | 43,038,133 | 57.0 |
| Total | 75,512,386 | 100.0 |
¹ Source: Modular Finance Holdings.
The number of shareholders in Gränges was 9,747 at 30 September 2017, according to Euroclear.
OTHER
Nomination Committee appointed
Gränges Nomination Committee for the 2018 Annual General Meeting has been appointed. The committee constitutes representatives from Gränges three largest shareholders and the Chairman of Gränges Board of Directors, Anders G. Carlberg. Fjärde AP-fonden is represented by Jannis Kitsakis, AFA Försäkring is represented by Anders Algotsson, and SEB Fonder by Rikard Andersson.
Annual General Meeting 2018
Gränges' 2018 Annual General Meeting will be held Thursday, 3 May, 2018 at 16.00 CEST at Näringslivets Hus, Stockholm. Shareholders wishing to have matters considered at the Annual General Meeting should submit such requests seven (7) weeks before the meeting.
RISKS AND UNCERTAINTY FACTORS
As a global group with operations in many parts of the world, Gränges is exposed to various risks and uncertainties such as raw material price risk, market risk, operational and legal risk, as well as financial risk related to foreign exchange rates, interest rates, liquidity and funding opportunities. In its risk management, Gränges seeks to identify, evaluate, and reduce risks related to the Group's business and operations. More information about risk management is available on pages 27–29 in Gränges' 2016 annual report.
SEASONAL VARIATIONS
Gränges' operations are subject to seasonal variations. Following the acquisition in North America which was completed in August 2016, the second quarter of the year is considered to be the strongest and the fourth quarter the weakest.
Stockholm, 26 October 2017
Johan Menckel Chief Executive Officer
REVIEW REPORT
Gränges AB, corporate identity number 556001-6122
Introduction
We have reviewed the condensed interim report for Gränges AB as at September 30, 2017 and for the nine months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
Scope of review
We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.
Stockholm, 26 October, 2017 Ernst & Young AB
Erik Sandström Authorized Public Accountant
For additional information, please contact:
Pernilla Grennfelt SVP Communications and Investor Relations [email protected] Telephone +46 (0) 702 90 99 55
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 26 October 2017 at 07.30 CEST.
Webcasted telephone conference
CEO Johan Menckel and CFO Oskar Hellström will present Gränges' interim report for January–September 2017 at a webcasted conference call at CEST 10.00, Thursday 26 October, 2017.
The webcast can be viewed on www.granges.com/investors. To participate in the telephone conference, please call +46 856 642 661 (Sweden), +44 203 194 0544 (UK) or +1 855 269 2604 (USA). Please call a few minutes before the telephone conference starts. The presentation will be in English.
Financial calendar
| 1 February 2018 | Year-end Report 2017 |
|---|---|
| 26 April 2018 | Interim Report January–March 2018 |
| 13 March 2018 | Annual Report 2017 |
| 3 May 2018 | Annual General Meeting |
| 19 July 2018 | Half-year Report 2018 |
| 25 October 2018 | Interim Report January–September 2018 |
CONSOLIDATED INCOME STATEMENT (CONDENSED)
| SEK million | Note | Jul-Sep 2017 |
Jul-Sep 2016 |
Jan-Sep 2017 |
Jan -Sep 2016 |
Jan-Dec 2016 |
|---|---|---|---|---|---|---|
| Net sales | 3 | 2,728 | 1,859 | 8,701 | 4,662 | 7,207 |
| Cost of materials | –1,770 | –1,122 | –5,622 | –2,750 | –4,374 | |
| Payroll and other operating expenses | –649 | –487 | –2,038 | –1,226 | –1,882 | |
| Depreciation, amortization and impairment charges | –83 | –70 | –287 | –169 | –265 | |
| Items affecting comparability | – | –94 | – | –119 | –128 | |
| Operating profit | 227 | 88 | 754 | 397 | 559 | |
| Profit from joint ventures | 1 | 1 | 2 | 2 | 2 | |
| Finance income and costs | –24 | –26 | –85 | –33 | –61 | |
| Profit before tax | 203 | 62 | 671 | 365 | 500 | |
| Income tax | 4 | –52 | 127 | –172 | 31 | –2 |
| Profit for the period | 151 | 189 | 500 | 397 | 498 | |
| Earnings per share | ||||||
| Earnings per share basic, SEK | 2.00 | 2.53 | 6.63 | 5.31 | 6.66 | |
| Earnings per share diluted, SEK | 2.00 | 2.52 | 6.62 | 5.30 | 6.64 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONDENSED)
| Jul-Sep 2017 |
Jul-Sep 2016 |
Jan-Sep 2017 |
Jan -Sep 2016 |
Jan-Dec 2016 |
|---|---|---|---|---|
| 151 | 189 | 500 | 397 | 498 |
| 6 | –7 | 6 | –24 | 16 |
| 11 | –7 | 44 | –15 | –26 |
| –63 | 47 | –222 | 3 | 69 |
| 557 | ||||
| 104 | 222 | 328 | 361 |
CONSOLIDATED BALANCE SHEET (CONDENSED)
| SEK million | Note | 30 Sep 2017 | 30 Sep 2016 | 31 Dec 2016 |
|---|---|---|---|---|
| ASSETS | ||||
| Property, plant and equipment | 2,955 | 3,303 | 3,347 | |
| Intangible assets | 591 | 454 | 584 | |
| Deferred tax assets | 50 | 114 | 64 | |
| Investments in joint ventures | 29 | 33 | 30 | |
| Interest–bearing receivables | 33 | 34 | 36 | |
| Other non–current receivables | 2 | 17 | 13 | 10 |
| Non–current assets | 3,674 | 3,951 | 4,071 | |
| Inventories | 1,525 | 1,229 | 1,428 | |
| Receivables | 2 | 1,812 | 1,652 | 1,598 |
| Interest-bearing receivables | 2 | 0 | 4 | 2 |
| Cash and cash equivalents | 703 | 746 | 851 | |
| Current assets | 4,040 | 3,631 | 3,878 | |
| TOTAL ASSETS | 7,714 | 7,582 | 7,950 | |
| EQUITY AND LIABILITIES | ||||
| Share capital | 101 | 100 | 101 | |
| Retained earnings | 3,005 | 2,612 | 2,841 | |
| Equity | 3,106 | 2,712 | 2,942 | |
| Interest–bearing liabilities | 2,401 | 3,016 | 2,888 | |
| Provisions and other liabilities | 2 | 361 | 354 | 321 |
| Non–current liabilities | 2,762 | 3,370 | 3,209 | |
| Interest–bearing liabilities | 345 | 258 | 436 | |
| Provisions and other liabilities | 2, 4 | 1,502 | 1,242 | 1,363 |
| Current liabilities | 1,847 | 1,500 | 1,799 | |
| TOTAL EQUITY AND LIABILITIES | 7,714 | 7,582 | 7,950 |
CONSOLIDATED CHANGES IN EQUITY (CONDENSED)
| SEK million | 30 Sep 2017 | 30 Sep 2016 | 31 Dec 2016 |
|---|---|---|---|
| Opening balance as at 1 January | 2,942 | 2,499 | 2,499 |
| Profit for the period | 500 | 397 | 498 |
| Items in other comprehensive income for the period | –172 | –36 | 59 |
| Group comprehensive income for the period | 328 | 361 | 557 |
| Employee stock option scheme | – | 1 | 1 |
| Dividend | –180 | –149 | –149 |
| Rights issue | 16 | – | 34 |
| Total transactions with owners, recognized directly in equity | –164 | –148 | –115 |
| Closing balance | 3,106 | 2,712 | 2,942 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| SEK million | Jul-Sep 2017 |
Jul-Sep 2016 |
Jan-Sep 2017 |
Jan -Sep 2016 |
Jan-Dec 2016 |
|---|---|---|---|---|---|
| Operating profit | 227 | 88 | 754 | 397 | 559 |
| Depreciation and amortization | 83 | 70 | 287 | 169 | 265 |
| Change in working capital etc. | –42 | 237 | –268 | 109 | 43 |
| Income taxes paid | –46 | –50 | –62 | –160 | –181 |
| Cash flow from operating activities | 222 | 344 | 710 | 514 | 686 |
| Acquisitions | – | –2,598 | – | –2,598 | –2,581 |
| Investments in property, plant, equipment and | |||||
| intangible assets | –74 | –31 | –180 | –66 | –155 |
| Other capital transactions | – | – | – | – | 4 |
| Cash flow from investing activities | –74 | –2,629 | –180 | –2,664 | –2,732 |
| Dividend | – | – | –180 | –149 | –149 |
| Rights issue | – | – | 16 | – | 34 |
| Interest paid and received | –4 | –28 | –90 | –33 | –35 |
| New loan | – | 3,258 | 357 | 3,258 | 3,620 |
| Amortization | –128 | –570 | –744 | –810 | –1,224 |
| Cash flow from financing activities | –133 | 2,660 | –641 | 2,265 | 2,245 |
| Cash flow for the period | 16 | 375 | –111 | 115 | 198 |
| Cash and cash equivalents at beginning of period | 702 | 361 | 851 | 634 | 634 |
| Cash flow for the period | 16 | 375 | –111 | 115 | 198 |
| Exchange rate differences in cash and cash | |||||
| equivalents | –15 | 10 | –37 | –2 | 19 |
| Cash and cash equivalents at end of period | 703 | 746 | 703 | 746 | 851 |
PARENT COMPANY INCOME STATEMENT (CONDENSED)
| SEK million | Jul-Sep 2017 |
Jul-Sep 2016 |
Jan-Sep 2017 |
Jan -Sep 2016 |
Jan-Dec 2016 |
|---|---|---|---|---|---|
| Net sales | 35 | 25 | 100 | 70 | 119 |
| Payroll and other operating expenses | –59 | –46 | –168 | –134 | –178 |
| Depreciation and amortization | –6 | –5 | –20 | –12 | –18 |
| Operating profit/loss | –30 | –26 | –89 | –77 | –77 |
| Dividends from subsidiaries | – | – | – | 403 | 757 |
| Finance income and costs | 5 | –10 | 16 | –12 | –6 |
| Profit/loss after financial items | –26 | –36 | –73 | 314 | 674 |
| Change in accelerated depreciation | – | – | – | – | –46 |
| Group contributions | – | – | – | – | 132 |
| Income tax | 16 | –1 | 15 | –22 | –42 |
| Profit/loss for the period | –10 | –36 | –58 | 292 | 718 |
The Parent Company has no items which are accounted for as other comprehensive income. Total comprehensive income is therefore the same as profit/loss for the period.
PARENT COMPANY BALANCE SHEET (CONDENSED)
| SEK million | 30 Sep 2017 | 30 Sep 2016 | 31 Dec 2016 |
|---|---|---|---|
| ASSETS | |||
| Property, plant and equipment | 212 | 213 | 214 |
| Intangible assets | 162 | – | 170 |
| Investments related to Group companies | 1,093 | 1,271 | 1,093 |
| Receivables from Group companies | 2,040 | 2,105 | 2,204 |
| Interest–bearing receivables | 33 | 34 | 36 |
| Other non–current receivables | 30 | 10 | 11 |
| Non–current assets | 3,569 | 3,633 | 3,728 |
| Receivables from Group companies | – | 281 | 573 |
| Other receivables | 127 | 96 | 73 |
| Cash and cash equivalents | 131 | 30 | 182 |
| Current assets | 258 | 407 | 828 |
| TOTAL ASSETS | 3,827 | 4,040 | 4,557 |
| EQUITY, PROVISIONS AND LIABILITIES | |||
| Restricted equity | 107 | 100 | 106 |
| Non–restricted equity | 723 | 490 | 946 |
| Equity | 830 | 590 | 1,052 |
| Untaxed reserves | 55 | 9 | 55 |
| Provisions and other liabilities | 22 | 22 | 22 |
| Interest–bearing liabilities | 2,401 | 3,016 | 2,888 |
| Other non-current liabilities | 2 | 6 | 5 |
| Non–current liabilities | 2,424 | 3,044 | 2,915 |
| Liabilities to Group companies | 40 | – | – |
| Interest-bearing liabilities | 345 | 258 | 375 |
| Other liabilities | 134 | 139 | 161 |
| Current liabilities | 519 | 397 | 536 |
| TOTAL EQUITY, PROVISIONS AND LIABILITIES | 3,827 | 4,040 | 4,557 |
NOTES
NOTE 1 ACCOUNTING PRINCIPLES
The Gränges Group applies International Financial Reporting Standards (IFRS) as endorsed by the EU. The accounting principles adopted are consistent with those described in the Annual Report for Gränges AB (publ) 2016, which is available at www.granges.com. There are no new accounting principles applicable from 2017 that significantly affect the Gränges Group. This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act.
The Parent Company applies the Swedish Annual Accounts Act and RFR 2 Reporting for Legal Entities.
The interim information on pages 2–13 is an integrated part of these financial statements.
Revised assessment of useful life of property, plant and equipment
The value of property, plant and equipment is based on cost and is depreciated over the estimated useful life. In connection with the acquisition of the US operation in 2016 an extensive study was performed to determine the value of the tangible fixed assets and their remaining useful live. The preliminary study showed that life expectancy was different from the assessments applied by Gränges in terms of useful lives, mainly related to machinery and installations. In connection with the determination of the acquisition balance in the third quarter 2017, a study was carried out on Gränges entire operation regarding machinery and installations and based on this study a new assessment of the useful lives has been made as from 1 July 2017. Previous depreciation periods for machinery and installations of between 5 and 20 years depending on type of component have now been updated to between 5 and 30 years. The change in assessment has decreased the costs on the line depreciation, amortization and impairment charges in the consolidated income statement for Q3 2017 by SEK 12 million. Of the SEK 12 million, SEK 17 million are decreased costs due to extended remaining useful life and SEK –5 million are increased costs due to reduced remaining useful life. In addition, the line cost of materials has been affected by increased costs of SEK –5 million during Q3 2017 as a result of the revised assumptions. In total, the revised assumptions have affected the operating profit positively by SEK 7 million in Q3 2017. No further effect is expected on cost of material for the coming quarters. Based on the current foreign exchange rates the revised assumptions are expected to reduce depreciation, amortization and impairment charges by about SEK 16 million per quarter going forward.
New standards which have not yet become effective but will be applied in future periods
IFRS 15 Revenues from contracts with customers replace existing revenue standards and interpretations. The standard is endorsed by the EU and is effective 1 January, 2018. Gränges' analysis of the new standard has been completed during the third quarter 2017 and no significant effects are expected on the Group's financial statements. Gränges Group intends to adopt IFRS 15 using the full retrospective approach from January 1, 2018. IFRS 15 contains increased disclosures requirements and those requirements will need to be analyzed further.
IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement. The standard is endorsed by the EU and is effective 1 January, 2018. Gränges' analysis of the new standard is ongoing and based on the work so far, Gränges does not expect any impact on the Group's financial statements from the new principles regarding classification of financial assets. The new principles regarding calculation of credit loss will impact the impairment process, however preliminary analysis indicate that the impact on the Group's financial statements is limited. Finally Gränges is also currently analysing the impact of changing principles of hedge accounting to the principles in IFRS 9. The work on identifying possible effects from transition to IFRS 9 continues and is expected to be completed during the autumn 2017.
NOTE 2 FINANCIAL INSTRUMENTS
Financial instruments measured at fair value consist of derivative instruments (currency forwards and aluminium futures). The table below shows the fair value of the derivatives included in the balance sheet.
| SEK million | 30 Sep 2017 |
30 Sep 2016 |
31 Dec 2016 |
|---|---|---|---|
| Other non–current receivables | 6 | 0 | 1 |
| Receivables | 68 | 24 | 31 |
| Provisions and other liabilities | 2 | 7 | 8 |
| Other liabilities | 59 | 74 | 91 |
All derivatives are measured at fair value and are classified according to level 2, i.e., all significant inputs required for measurement of the instruments are observable. Fair value of currency forward contracts is calculated by discounting the difference between the contracted forward rate and the forward rate that can be contracted on the balance sheet date for the remaining contract period. Aluminium futures are measured at observable quoted prices on LME (London Metal Exchange) and SHFE (Shanghai Futures Exchange) for similar assets and liabilities.
Gränges' interest bearing debt consists mainly of a USD term loan of USD 195 million and SEK term loans of SEK 800 million. The USD term loan is amortized with USD 30 million per year. Gränges also has a revolving credit facility of SEK 1,200 million, available in several currencies, with a remaining maturity of three years. The revolving credit facility was utilized with SEK 270 million at 30 September 2017. Other interest-bearing debt, which was short term, amounted to SEK 100 million. The loan facilities are subject to covenants, which are Net Debt/EBITDA and Interest coverage ratio.
Borrowings are measured at amortized cost and the carrying amount at 30 September 2017 is SEK 2,746 million (SEK 3,321 million at 31 December 2016). The fair value of borrowings amounted at 30 September 2017 to SEK 2,761 million (SEK 3,339 million at 31 December 2016). For other receivables and liabilities, which are short-term, the carrying amount is considered to reflect the fair value.
NOTE 3 RELATED PARTY TRANSACTIONS
Gränges has a share of 50 per cent in two joint ventures, Norca Heat Transfer LLC and Shanghai Gränges Moriyasu Aluminium Co Ltd. Gränges reports these two joint ventures based on the equity method and transactions with them are specified in the table below.
| SEK million | Jul-Sep 2017 |
Jul-Sep 2016 |
Jan-Sep 2017 |
Jan -Sep 2016 |
Jan-Dec 2016 |
|---|---|---|---|---|---|
| Sales to joint ventures | 120 | 229 | 603 | 715 | 961 |
| Other income and expenses to joint ventures | 0 | –24 | 4 | –41 | –53 |
| SEK million | 30 Sep 2017 |
30 Sep 2016 |
31 Dec 2016 |
|---|---|---|---|
| Interest–bearing receivables (non–current) from joint ventures | 33 | 34 | 36 |
| Non–interest–bearing receivables from joint ventures | 245 | 164 | 179 |
| Non–interest–bearing liabilities to joint ventures | 1 | 12 | 4 |
NOTE 4 TAX
Gränges' Chinese subsidiary has obtained a pre-qualification as a High and New-Technology Enterprise for the three years period 2016 to 2018. The pre-qualification means that the company preliminary pays 15 per cent in tax instead of the ordinary tax of 25 per cent for the period. However, in order to finally obtain the lower tax rate, the company must meet special requirements established by the authorities in China for the entire three years period 2016 to 2018. Local authorities will subsequently, and for each of the years in question, check whether the company has met these requirements. In view of the difficulties to currently estimate whether these special requirements will be met for the entire period, income tax in the Chinese operation has been based on the standard rate of 25 per cent for 2016 and for the first three quarters of 2017. At 30 September 2017, the provision for the higher tax rate amounts to SEK 97 million.
NOTE 5 ACQUISITION
The acquisition balance from the acquisition of Noranda Aluminum Holding Corporation's downstream rolling business in the US, which was presented in the annual report for 2016, has been determined without adjustments during the third quarter 2017.
NOTE 6 CONTINGENT LIABILITIES
| SEK million | 2017 | 2016 |
|---|---|---|
| Guarantee commitment PRI Pensionsgaranti | 2 | 2 |
| Guarantee for workers' compensation | 6 | 7 |
| Guarantee for bank loan at Norca Heat Transfer LLC | 166 | – |
During the third quarter 2017 Gränges has issued an guarantee for a bank loan at the joint venture company Norca Heat Transfer LLC.
CONSOLIDATED QUARTERLY DATA
| 2017 | 2015 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK million | Q3 | Q2 | Q1 | Q4 | Q3 | 2016 Q2 |
Q1 | Q4 |
| Sales volume, ktonnes | 93.0 | 98.7 | 94.8 | 84.7 | 62.8 | 46.5 | 45.1 | 38.9 |
| Income statement | ||||||||
| Net sales | 2,728 | 3,081 | 2,892 | 2,546 | 1,859 | 1,442 | 1,360 | 1,252 |
| Adjusted EBITDA1 | 309 | 392 | 339 | 267 | 251 | 228 | 206 | 168 |
| Adjusted operating profit1 | 227 | 290 | 237 | 171 | 181 | 179 | 155 | 116 |
| Operating profit | 227 | 290 | 237 | 162 | 88 | 154 | 155 | 128 |
| Profit for the period | 151 | 192 | 157 | 101 | 189 | 114 | 94 | 83 |
| Adjusted EBITDA margin, % | 11.3 | 12.7 | 11.7 | 10.5 | 13.5 | 15.8 | 15.1 | 13.4 |
| Adjusted operating margin, % | 8.3 | 9.4 | 8.2 | 6.7 | 9.7 | 12.4 | 11.4 | 9.2 |
| Adjusted operating profit per tonne, kSEK | 2.4 | 2.9 | 2.5 | 2.0 | 2.9 | 3.9 | 3.4 | 3.0 |
| Operating margin, % | 8.3 | 9.4 | 8.2 | 6.4 | 4.7 | 10.7 | 11.4 | 10.2 |
| Net margin, % | 5.5 | 6.2 | 5.4 | 4.0 | 10.2 | 7.9 | 6.9 | 6.7 |
| Balance sheet Non–current assets |
3,674 | 3,769 | 3,969 | 4,071 | 3,951 | 1,712 | 1,725 | 1,800 |
| Current assets | 4,040 | 3,957 | 3,822 | 3,878 | 3,631 | 2,578 | 2,279 | 2,601 |
| Equity | 3,106 | 3,001 | 3,096 | 2,942 | 2,712 | 2,489 | 2,537 | 2,499 |
| Non–current liabilities | 2,762 | 2,802 | 2,712 | 3,209 | 3,370 | 775 | 593 | 989 |
| Current liabilities | 1,847 | 1,923 | 1,983 | 1,799 | 1,500 | 1,025 | 874 | 914 |
| Cash flow | ||||||||
| Operating activities | 222 | 368 | 120 | 171 | 344 | 178 | –8 | 184 |
| Investing activities | –74 | –61 | –45 | –68 | –2,629 | –21 | –14 | –25 |
| Cash flow before financing activities | 148 | 307 | 75 | 104 | –2,285 | 157 | –22 | 159 |
| Financing activities | –133 | –45 | –464 | –21 | 2,660 | 8 | –402 | –282 |
| Cash flow for the period | 16 | 263 | –389 | 83 | 375 | 165 | –424 | –123 |
| Capital structure | ||||||||
| Net debt | 2,280 | 2,481 | 2,665 | 2,722 | 2,823 | 335 | 316 | 275 |
| Equity to assets, % | 40.3 | 38.8 | 39.7 | 37.0 | 35.8 | 58.0 | 63.3 | 56.8 |
| Data per share, SEK | ||||||||
| Earnings per share basic | 2.00 | 2.55 | 2.09 | 1.35 | 2.53 | 1.53 | 1.25 | 1.12 |
| Earnings per share diluted | 2.00 | 2.55 | 2.08 | 1.35 | 2.52 | 1.52 | 1.25 | 1.11 |
| Equity2 | 41.13 | 39.81 | 41.10 | 39.17 | 36.21 | 33.29 | 33.93 | 33.45 |
| Cash flow from operating activities2 | 2.94 | 4.89 | 1.60 | 2.28 | 4.51 | 2.38 | –0.10 | 2.46 |
| Share price at the end of the period | 93.25 | 77.50 | 82.00 | 86.00 | 87.50 | 73.00 | 70.50 | 70.00 |
| Weighted outstanding ordinary shares, basic in thousands |
75,512.4 | 75,295.0 | 75,155.4 | 74,897.4 | 74,639.4 | 74,639.4 | 74,639.4 | 74,639.4 |
| Weighted outstanding ordinary shares, diluted in thousands |
75,514.8 | 75,398.0 | 75,320.6 | 75,106.6 | 74,898.5 | 74,767.3 | 74,764.6 | 74,719.4 |
1 Adjusted for items affecting comparability.
2 Calculated on weighted outstanding ordinary shares, diluted.
CONSOLIDATED QUARTERLY DATA
| 2017 | 2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK million | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | 2015 Q4 |
| Sales volume by region, ktonnes | ||||||||
| Asia | 20.7 | 22.3 | 22.7 | 20.7 | 19.0 | 20.4 | 20.8 | 17.5 |
| Europe | 15.5 | 17.9 | 16.9 | 15.2 | 15.0 | 16.9 | 16.6 | 15.4 |
| Americas | 56.8 | 58.5 | 55.3 | 48.8 | 28.9 | 9.2 | 7.8 | 6.0 |
| Total | 93.0 | 98.7 | 94.8 | 84.7 | 62.8 | 46.5 | 45.1 | 38.9 |
| Net sales by region | ||||||||
| Asia | 676 | 759 | 767 | 719 | 619 | 639 | 646 | 569 |
| Europe | 516 | 612 | 545 | 497 | 465 | 498 | 473 | 477 |
| Americas | 1,536 | 1,710 | 1,580 | 1,330 | 775 | 306 | 241 | 206 |
| Total | 2,728 | 3,081 | 2,892 | 2,546 | 1,859 | 1,442 | 1,360 | 1,252 |
| Employees | ||||||||
| Average number of employees | 1,633 | 1,610 | 1,564 | 1,545 | 1,145 | 961 | 962 | 949 |
CONSOLIDATED 12-MONTHS ROLLING DATA
| SEK million | Oct 2016 - Sep 2017 |
Jul 2016 - Jun 2017 |
Apr 2016- Mar 2017 |
Jan 2016- dec 2016 |
Oct 2015 - Sep 2016 |
Jul 2015 - Jun 2016 |
Apr 2015 - Mar 2016 |
Jan 2015 - Dec 2015 |
|---|---|---|---|---|---|---|---|---|
| Sales volume, ktonnes | 371.2 | 341.0 | 288.8 | 239.1 | 193.4 | 169.4 | 166.4 | 163.9 |
| Income statement | ||||||||
| Net sales | 11,247 | 10,379 | 8,740 | 7,207 | 5,913 | 5,335 | 5,398 | 5,494 |
| Adjusted EBITDA1 | 1,308 | 1,249 | 1,085 | 952 | 853 | 768 | 749 | 749 |
| Adjusted operating profit1 | 925 | 879 | 769 | 687 | 632 | 563 | 541 | 541 |
| Operating profit | 916 | 777 | 641 | 559 | 525 | 535 | 539 | 538 |
| Adjusted EBITDA margin, % | 11.6 | 12.0 | 12.4 | 13.2 | 14.4 | 14.4 | 13.9 | 13.6 |
| Adjusted operating margin, % | 8.2 | 8.5 | 8.8 | 9.5 | 10.7 | 10.6 | 10.0 | 9.8 |
| Adjusted operating profit per tonne, kSEK |
2.5 | 2.6 | 2.7 | 2.9 | 3.3 | 3.3 | 3.3 | 3.3 |
| Operating margin, % | 8.1 | 7.5 | 7.3 | 7.8 | 8.9 | 10.0 | 10.0 | 9.8 |
| Capital structure and return indicators | ||||||||
| Capital employed | 5,565 | 5,053 | 4,527 | 3,930 | 3,372 | 2,886 | 2,972 | 2,982 |
| Return on capital employed, % | 16.6 | 17.4 | 17.0 | 17.5 | 18.7 | 19.5 | 18.2 | 18.1 |
| Equity | 2,971 | 2,848 | 2,755 | 2,636 | 2,534 | 2,468 | 2,465 | 2,385 |
| Return on equity, % | 20.2 | 22.4 | 20.4 | 18.9 | 18.9 | 14.6 | 14.6 | 15.9 |
| Net debt / Adjusted EBITDA | 1.7 | 1.9 | 2.1 | 2.1 | 2.2 | 0.4 | 0.4 | 0.4 |
1 Adjusted for items affecting comparability.
Alternative Performance Measures
Gränges makes use of the alternative performance measures Return on capital employed, Net debt and Equity to assets ratio. Gränges believes that these performance measures are useful for readers of the financial reports as a complement to other performance measures when assessing the possibility of dividends, the implementation of strategic investments, and the Group's ability to meet financial commitments. Further, Gränges uses the alternative performance measures Adjusted operating profit and Adjusted EBITDA, which are measures that Gränges considers to be relevant for investors who want to understand the profit generation excluding items affecting comparability. For definitions of the measures see page 17.
| Q3 | Jan - Sep | 12 months rolling |
Full year 2016 |
|||
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | Oct 2016- Sep 2017 |
|
| Adjusted operating profit | ||||||
| Operating profit | 227 | 88 | 754 | 397 | 916 | 559 |
| Items affecting comparability | – | 94 | – | 119 | 9 | 128 |
| Adjusted operating profit | 227 | 181 | 754 | 516 | 925 | 687 |
| Adjusted EBITDA | ||||||
| Adjusted operating profit | 227 | 181 | 754 | 516 | 925 | 687 |
| Depreciation and amortization | 83 | 70 | 287 | 169 | 383 | 265 |
| Adjusted EBITDA | 309 | 251 | 1,041 | 685 | 1,308 | 952 |
| Return on capital employed Total assets less cash and cash equivalents and interest–bearing receivables Non–interest–bearing liabilities Pensions Capital employed |
– – – – |
– – – – |
– – – – |
– – – – |
7,025 –1,751 291 5,565 |
5,054 –1,335 212 3,930 |
| Adjusted operating profit | – | – | – | – | 925 | 687 |
| Return on capital employed, % Net debt |
– | – | – | – | 16.6 | 17.5 |
| Cash and cash equivalents and interest–bearing receivables | – | – | –736 | –784 | –7361 | –889 |
| Interest bearing liabilities | – | – | 2,746 | 3,274 | 2,7461 | 3,324 |
| Pensions | – | – | 270 | 333 | 2701 | 288 |
| Net debt | – | – | 2,280 | 2,823 | 2,2801 | 2,722 |
| Equity to assets | ||||||
| Equity | – | – | 3,106 | 2,712 | 3,1061 | 2,942 |
| Total assets | – | – | 7,714 | 7,582 | 7,7141 | 7,950 |
Equity to assets, % – – 40.3 35.8 40.31 37.0
1 Balances at 30 September 2017.
Definitions
Adjusted EBITDA Adjusted operating profit before depreciation and impairment charges.
Adjusted operating profit Operating profit excluding items affecting comparability.
Average number of employees The average number of employees converted to full-time positions.
Capital employed
Total assets less cash and cash equivalents and interest-bearing receivables, minus non-interest-bearing liabilities, excluding pensions.
Earnings per share Profit for the period divided by the total number of shares.
Equity to Assets Equity divided by total assets.
Items affecting comparability Non-recurring income and expenses.
ktonnes Volume expressed in thousands of metric tonnes.
Glossary
Alloy Material consisting of several metals.
Aluminium strip Rolled aluminium in coils.
Brazing Joining of metals through melting.
Cladding Surface layer.
Heat exchanger A device for transferring heat from one medium to another.
HVAC Heating, Ventilation and Air Conditioning.
Cash flow before financing activities
Cash flow from operating activities plus cash flow from investing activities.
Net debt
Cash and cash equivalents and interest-bearing receivables minus interest-bearing liabilities, including pensions.
Operating profit Profit before net financial items and tax.
Return on capital employed
Adjusted operating profit divided by average capital employed during the past 12-month period.
Return on equity
Profit for the period divided by average equity during the past 12-month period.
Sales volume Volumes sold in metric tonnes.
SEK Swedish kronor.
LME London Metal Exchange.
MPE tube Multi-Port Extrusion tube used in brazed aluminium heat exchangers.
Rolled aluminium Aluminium that has been down gauged, passing through two or more rollers.
Scrap Residual aluminium that can be re-melted.
SHFE Shanghai Futures Exchange.
Head office
Gränges AB (publ) Box 5505 SE-114 85 Stockholm Sweden
Visiting address
Humlegårdsgatan 19A 114 46 Stockholm
Tel: +46 8 459 59 00 www.granges.com Reg. no. 556001-6122
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 420,000 metric tonnes. Gränges has some 1,600 employees and net sales of more than SEK 10 billion. The share is listed on Nasdaq Stockholm. More information on Gränges is available at granges.com.
BUSINESS CONCEPT
Gränges vision is to transform the world through innovative, aluminium engineering. We support our customers with Research & Innovation, product development, and technical support during the product's lifecycle. Thereby, Gränges helps create smaller, lighter and more designable materials that increase economic efficiency and reduce environmental impact.
BUSINESS MODEL
Gränges business model is based on long-term customer relationships. Revenue is generated through sale of material that is produced for a certain customer and application. Prices are expressed in metric tonnes and based on the added value Gränges offers in terms of material properties and production complexity, and the price of the raw material; aluminium. The cost for the material is passed on to customer.
STRATEGY
Gränges have a clear strategy for coming years. By offering customized products with a high technical content, Gränges aims to grow significantly above market rate. By 2020, Gränges shall be the market leader in all geographical regions within rolled aluminium heat exchanger materials. That goal is based on four strategic pillars: drive growth through innovations, create value from sustainability, increase efficiency through continuous improvements, and grow presence through structural expansion.