Second Quarter 2016 Earnings Conference 21 July, 2016 Todays - - PowerPoint PPT Presentation

Second Quarter 2016 Earnings Conference

21 July, 2016

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Today’s presenters

JOHAN MENCKEL CEO

Since: 2012 Gränges since: 2004

OSKAR HELLSTRÖM CFO

Since: 2011

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Gränges is the global leader with a market share of 20%

Sales and Technical support Sales destinations Percentage of sales volume FY 2015

FINSPÅNG, SWEDEN SHANGHAI, CHINA

38%

16%

New York Sao Paolo Pune Seoul Tokyo

46%

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 Sales volume increased by 7.0%  Adjusted operating profit rose to SEK 179 million  Higher sales volume and improved productivity contributed to higher adjusted operating profit  Earnings per share of SEK 1.53  Cash flow before financing activities of SEK 157 million  Strong financial position

Summary second quarter 2016 – Best quarter so far

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Source: IHS Automotive, June 15, 2016

Market growth of 3% expected for full year 2016

Light vehicle production growth (YoY) Region Asia Europe Americas Global Q2 2016 H2 2016 outlook FY 2016 outlook

+3% +7% +2% 0% +4% +2% +4% +3% +3% +3% +3% +1%

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Recovery in Asia and continued strong development in Europe and North America

Asia Europe Americas  Strong sales to Chinese and Indian automotive customers  Continued growth for heat exchanger materials  Decreased sales of scrap based products  Higher contracted volumes with several customers

16.4 14.9 15.4 16.6 16.9 Q2 Q3 Q4 Q1 Q2 7.4 6.5 6.0 7.8 9.2 Q2 Q3 Q4 Q1 Q2

Gränges sales volume (ktonnes)

+3% +23% 2016 2015 2016 2015

19.6 17.6 17.5 20.8 20.4 Q2 Q3 Q4 Q1 Q2

2016 2015 +4%

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 Gränges in process to acquire Noranda’s downstream division  Assets and business valued to USD 324.2 million on cash and debt free basis  US bankruptcy court hearing to approve Gränges as buyer now scheduled for 28 July, 2016  Closing expected during third quarter

US acquisition still pending, approval expected late July

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Positive trend continues in second quarter

Rolling 12 months sales volume and adjusted operating profit

160 160 160 160 161 163 163 164 166 169 152 154 155 159 158 147 149 148 362 374 348 372 371 401 437 444 463 521 528 541 541 563 494 245 199 286 100 120 140 160 180 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 100 200 300 400 500 600

Adjusted operating profit (SEK million) Sales volume (ktonnes)

Sales Volume Adjusted Operating Profit

2012 2013 2014 2015 2016

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• 1. Adjusted for items affecting comparability.
• 2. Basic, historical earnings per share has been calculated on the same number of shares as of today.

Strong sales volume and earnings in the second quarter

SEK million Q2 Financial overview January - June 2016 2015 Change 2016 2015 Change Sales volume (ktonnes) 46.5 43.4 7.0% 91.6 86.1 6.4% Net sales 1,442 1,506

• 4.2%

2,802 2,962

• 5.4%

Adjusted operating profit1 179 158 13.6% 335 313 7.0% Adjusted operating margin (%) 12.4 10.5 2.0 ppt 11.9 10.6 1.4 ppt Adjusted operating profit per tonne (kSEK) 3.9 3.6 0.2 3.7 3.6 0.0 Operating profit 154 158

• 2.4%

309 313

• 1.1%

Profit for the period 114 115

• 1.0%

208 226

• 8.3%

Earnings per share2 (SEK) 1.53 1.54

• 0.02

2.78 3.03

• 0.25

Cash flow before financing activities 157 175

• 10.2%

135 174

• 22.3%

Return on capital employed, R12 (%) 19.5 18.1 1.4 Net debt / adjusted EBITDA, R12 0.4 1.0

• 0.6

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228 26

• 75
• 149
• 21
• 335
• 27
• 316
• 400
• 300
• 200
• 100

Cash flow before financing SEK 157 million

Net debt was SEK 335 million at the end of second quarter

Change in net debt

Net debt position (SEK million) Net debt Q1 2016 Adjusted EBITDA Change in working capital Other

• perating

items Investments & divestments

• f fixed

assets FY15 dividend FX &

• ther

Net debt Q2 2016 0.4 0.4

Net debt over adjusted EBITDA (rolling 12 months)

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 Global Light Vehicle Production is expected to grow by 4%1 in the second half of 2016  Gränges’ sales volume is expected to show a higher growth than the market

• but not as high growth as in second quarter - during second half of 2016

 Higher than market growth is expected in Europe and the Americas, while a growth in line with the market is anticipated in Asia  For the full year 2016 Global Light Vehicle Production is expected to grow by 3%1 with growth in all geographical regions  Acquisition in the US in process

• a major step towards our target for 2020

Outlook

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 Best quarter for Gränges so far  Sales volume increased by 7.0% and reached new all-time-high at 46.5 ktonnes  Adjusted operating profit rose to SEK 179 million  Solid financial position  US acquisition in process

Summary of second quarter

Q&A

Johan Menckel, CEO Oskar Hellström, CFO