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2016-10-27

Gränges AB: Gränges' interim report January-September 2016

Successful acquisition in US and strong performance in existing
business

Third quarter 2016

· The acquisition of Noranda's rolled aluminium business in the US
have been consolidated into Gränges' accounts as of 22 August 2016.

· Sales volume increased to 62.8 ktonnes (38.9) and net sales was
SEK 1,859 million (1,281). Excluding the acquired business, sales
volume increased by 5.6% to 41.1 ktonnes and net sales was SEK 1,334
million.

· Adjusted operating profit increased by 61.2% to SEK 181 million
(112), corresponding to an adjusted operating margin of 9.7% (8.8).
Excluding the acquired business, adjusted operating profit rose 17.0%
to SEK 132 million.

· Operating profit amounted to SEK 88 million (97), including items
affecting comparability of SEK -94 million related to the US
acquisition.

· Profit for the period increased to SEK 189 million (69) and
includes a tax provision release of SEK 139 million.

· Diluted earnings per share was SEK 2.52 (0.93).
· Cash flow before financing activities was SEK -2,285 million (267)
including the cash consideration for the US acquisition.

January-September 2016

· Sales volume increased to 154.4 ktonnes (125.0) and net sales was
SEK 4,662 million (4,243). Excluding the acquired business, sales
volume increased by 6,1% to 132.7 ktonnes and net sales was SEK 4,136
million.

· Adjusted operating profit increased by 21.4% to SEK 516 million
(425), corresponding to an adjusted operating margin of 11.1% (10.0).
Excluding the acquired business, adjusted operating profit rose 9.8%
to SEK 467 million.

· Operating profit amounted to SEK 397 million (410).
· Profit for the period was SEK 397 million (295).
· Diluted earnings per share was SEK 5.30 (3.95).
· At 30 September 2016, the equity to assets ratio amounted to 35.8%
and net debt corresponded to 2.2 times adjusted EBITDA1.

Comments from CEO Johan Menckel:

We have continued to see strong positive trends in the third quarter
in terms of sales and earnings development. Especially encouraging
was that our recently acquired business in the US performed very
well. Overall, sales volumes increased over 60% during the quarter;
and by 6% when excluding the acquisition. Continued increase in
volume in the Americas, together with recovery in Asia contributed
positively to sales of automotive heat exchanger materials. In
Europe, sales volume increased and we continued to gain market share.
Adjusted operating profit increased to SEK 181 million (112).
Excluding the acquisition, adjusted operating profit increased to SEK
132 million.

US acquisition strengthens Gränges
The acquisition of Noranda's aluminium rolling business was completed
in August, and work to integrate the business with the Group is
currently proceeding very well. To date, this process has surpassed
expectations, and we feel confident in our view of future
opportunities and potential in the North American market. It is of
the utmost importance that the acquisition is welcomed by our
customers. The move also gives us a clearer focus on stationary heat
exchangers, primarily for air conditioning systems. This end-customer
market now accounts for around half of all sales in North America,
and more than 20 % cent of our total overall sales volume. We had a
positive lift to operations in the weeks following the acquisition
due to unusually warm weather that fuelled demand for material for
stationary heat exchangers. Capacity utilization is currently high in
our US facilities.

To ease production bottlenecks, we plan to make modest maintenance
investments during the coming year. These will form part of our
existing maintenance budget. We are also investing possible future
investments in production of multi-layer products.

Well-attended seminar in China
Gränges' technical seminar in China was held at the end of September,
and it attracted more than 400 customers and other industry
representatives. The seminar - the largest of its kind in our
industry - is an important meeting place to discuss future challenges
related to emissions, powertrains, and digitalisation, where advanced
heat exchanger materials play a key role. As a market leader, Gränges
is determined to continue to invest and expand operations in Asia in
the years ahead and together with our customers develop new,
innovative products.

Gränges joins the UN Global Compact
Sustainability is an important area for Gränges, and a fully
integrated element of our business strategy. From 2016, we will
conduct sustainability reporting according to GRI guidelines. As part
of this work, we adopted the UN Global Compact and its ten principles
in October.

Outlook
In terms of heat exchanger material for the automotive industry, we
expect growth in the underlying market during the last quarter of the
year. According to industry analysts IHS, global production of light
vehicles is expected to increase by 2% in the fourth quarter. In Asia
and Americas, Gränges sales volumes are expected to increase at a
higher rate than the market, while in Europe we expect growth in line
with the market.

As for our recently acquired business in the US, we expect stable
growth in the fourth quarter. Sales volume is forecasted to increase
of 1-2% compared to the same period last year. The acquired business
is expected to positively contribute to earnings per share for
Gränges from 2017.

We continue to follow our strategy and work towards our goals that we
have set for 2020. This means that we will maintain focus on new,
innovative products, expand our business in niche areas of the
aluminium sector, and ensure that we create sustainable profit. This
is work from which our customers, employees and shareholders will
benefit. The acquisition in the US provides an excellent platform
from which we will be able to continue to expand in the region, while
at the same time broaden the business into a greater number of
markets and customers. We feel positive about 2017, and our ambition
is to continue to grow and strengthen our presence and position
globally.

Johan Menckel, CEO Gränges

Webcasted conference call

CEO Johan Menckel and CFO Oskar Hellström will present Gränges'
interim report for January-September 2016 at a webcasted conference
call at CET 10.00, Thursday 27 October, 2016. The webcast can be
accessed 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 held
in English.

For additional information, please contact:

Pernilla Grennfelt Director Communications and Investor Relations
pernilla.grennfelt@granges.com

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 27
October 2016 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%. The company develops, produces and
markets advanced materials that enhance efficiency in the customer
manufacturing process and the performance of the final products;
brazed heat exchangers. 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 400,000 metric tonnes. Gränges has some 1,500 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.

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http://news.cision.com/granges-ab/r/granges--interim-report-january-sept...
http://mb.cision.com/Main/10545/2109619/580928.pdf

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