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2017-02-02

Gränges AB: Year-end report January-December 2016

Solid performance in fourth quarter concluded a record year

Fourth quarter 2016

· Sales volume increased to 84.7 ktonnes (38.9) and net sales was
SEK 2,546 million (1,252). Excluding the acquired business in US,
sales volume increased by 12.3%.Adjusted operating profit increased
by 47.6% to SEK 171 million (116), corresponding to an adjusted
operating margin of 6.7% (9.2). Excluding the acquired business,
adjusted operating profit rose 15.2% to SEK 133 million.

· Operating profit amounted to SEK 162 million (128), including
items affecting comparability of SEK -9 million related to the US
acquisition.

· Profit for the period increased to SEK 101 million (83).
· Diluted earnings per share rose to SEK 1.35 (1.11).
· Cash flow before financing activities decreased to SEK 104 million
(159).

January-September 2016

· The acquisition of Noranda's rolled aluminium business in the US has been consolidated into Gränges' accounts as of 22 August 2016.
· Sales volume increased to 239.1 ktonnes (163.9) and net sales was
SEK 7,207 million (5,494). Excluding the acquired business, sales
volume increased by 7.6%.

· Adjusted operating profit increased by 27.0% to SEK 687 million
(541), corresponding to an adjusted operating margin of 9.5% (9.8).
Excluding the acquired business, adjusted operating profit rose 10.9%
to SEK 600 million.

· Operating profit amounted to SEK 559 million (538).
· Profit for the period rose to SEK 498 million (379).
· Diluted earnings per share increased to SEK 6.64 (5.07).
· At 31 December 2016, the equity to assets ratio amounted to 37.0%
(56.8%) and net debt corresponded to 2.1 (0.4) times adjusted EBITDA.

· The Board of Directors proposes a dividend of 2.40 SEK per share
(2.00), corresponding to 36% (39%) of profit for the year.

·
Comments from CEO Johan Menckel:

The fourth quarter was another strong quarter for Gränges, and overall
2016 was a new record year for the company. Sales volume increased
118% in the fourth quarter. Excluding the acquisition, sales volume
increased 12%, driven by continued strong demand for heat exchanger
materials in Asia and the Americas. Adjusted operating profit
increased to SEK 171 million (116) in the fourth quarter. Excluding
the acquisition, adjusted operating profit rose to SEK 133 million.

Increased sales volume in Americas and Asia

During the fourth quarter, we continued to experience strong demand
growth in Asia, on the back of a positive trend for light vehicles in
China. The tax incentive on smaller vehicles, which is being phased
out from 2017, has continued to have a positive effect. Further,
stricter regulations on maximum loads have contributed to an increase
in demand for new commercial vehicles in China. In all, sales volume
increased 18% in Asia in the fourth quarter. In Europe, sales of heat
exchanger materials were somewhat weaker in the fourth quarter
compared to the same period previous year. This is primarily due to
strong sales to some of our larger customers during the fourth
quarter previous year. In the Americas, demand remained strong. For
the recently acquired business in the US, sales volume increased 8%
in the fourth quarter. Demand for stationary heat exchanger material
remained high during the final months of the year, which seasonally
tend to be the weakest of the year.

Delivered on financial targets

Looking at the overall picture for 2016, we have delivered on our
targets. We successfully completed a major acquisition in the US,
gaining the platform in the region we have sought for. Meanwhile, we
are increasing sales volume and generating improved profitability
elsewhere in the Group. We ended the year with solid financials. The
return on capital employed was 17.5% in 2016, well within target
range. We have a robus long-term funding and net debt is down to 2.1
times EBITDA. In view of this, our Board of Directors proposes a
dividend of SEK 2.40 per share, which represents an increase of 20%
over previous year.

Outlook

The market for automotive heat exchanger material is expected to
continue to grow in 2017. According to IHS, global production of
light vehicles is projected to grow by 1% for the full year 2017, of
which an increase of 3% is expected in the first quarter.

Gränges expects above market growth in Asia and Americas in the first
quarter. In Europe, sales of heat exchanger materials are expected to
grow in line with the market, while sales of non-heat exchanger
materials are forecast to be lower. Overall, growth is expected to be
above market rate in the first quarter.

For the recently acquired business in the US, sales volumes are
expected to remain unchanged in the first quarter compared to first
quarter last year.

We will continue to work according to our strategic plan in 2017. This
entails increased focus on our customer offering, innovation and
sustainability, and to ensure that we have the capacity and
capability in our plants to meet customer demand. This is work that
supports our customers, employees and shareholders. We are optimistic
about 2017, and are determined to continue to grow with sustainable
profitability in the years ahead.

Johan Menckel, CEO Gränges

Webcasted conference call

Investors, analysts and media are invited to a webcasted conference
call on Thursday 2 February, 2017, at 10.00 CET. CEO Johan Menckel
and CFO Oskar Hellström will present the report.

The webcast will be available on http://investors.granges.com/en . To
participate in the conference call, please call +46 856642661
(Sweden), +44 2031940544 (United Kingdom) or +1 8552692604 (USA).
Call a few minutes before the conference call begins.

A presentation will be available on the Company's web site before the
webcast begins.

For additional information, please contact:

Pernilla Grennfelt, SVP 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 2
February 2017 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/year-end-report-january-december-201...
http://mb.cision.com/Main/10545/2178922/622589.pdf

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