Gränges (GRNG) Q3 2024 earnings summary

Executive summary

• Sales volume grew 7% year-over-year to 123,000 tons in Q3, driven by market share gains and strong performance in HVAC, packaging, and other niches, despite weak automotive demand.

• Operating profit remained stable at SEK 420 million, with strong cash flow and improved carbon footprint, as productivity and metal management offset price and wage pressures.

• Significant progress in sustainability, with carbon emissions intensity down 33% from 2017, record aluminum recycling volumes, and new commitments to low-carbon sourcing.

• Announced strategic partnership to acquire a production facility in Shandong, China, expected to operate at breakeven initially and contribute marginally to EPS from 2025.

• Ongoing capacity expansion and investments in battery foil and recycling centers support future growth.

Financial highlights

• Net sales increased 3.1% year-over-year to SEK 5,750 million, lagging volume growth due to lower average fabrication prices.

• Adjusted operating profit was SEK 420 million, down 4.5% year-over-year; profit for the period was SEK 285 million, with EPS at SEK 2.67.

• Return on capital employed improved to 11.9% from 11.2% year-over-year.

• Financial net debt reduced to SEK 2.8 billion; net debt/EBITDA ratio improved to 1.2x.

• Adjusted cash flow before financing was SEK 474 million, down 55.6% year-over-year.

Outlook and guidance

• Expects high single-digit percentage sales volume growth in Q4 2024 compared to Q4 2023, excluding Shandong acquisition effects.

• Market demand remains unpredictable, with continued weakness in automotive but recovery in other markets.

• Focus on offsetting price pressure and wage inflation through cost and productivity improvements; currency expected to be unfavorable in Q4.

• Leverage expected to increase in Q4 due to higher capex and dividend payment, but from a low base.