Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Granges AB (FRA:9GR, Financial) reported a 7% increase in sales volume, reaching 123,000 tonnes, despite weak automotive demand.
- The company achieved stable operating profit at SEK420 million, largely offsetting price pressure and wage inflation through productivity improvements and effective metals management.
- Granges AB (FRA:9GR) demonstrated significant sustainability progress, with a 33% reduction in carbon emissions intensity compared to 2017 and record aluminum recycling levels.
- The company announced a strategic partnership with Shandong Innovation Group, aimed at strengthening competitiveness and market share growth in Asia.
- Granges Eurasia showed strong growth, with a 10% year-on-year increase in sales volume, driven by recovery in Europe and Asia.
Negative Points
- The automotive market remains weak, posing challenges for Granges AB (FRA:9GR) despite their efforts to offset this with market share gains.
- Sequentially, sales volume declined by 6%, reflecting a return to more normal seasonality, which also impacted operating profit.
- The EBIT per tonne decreased from SEK380 in Q3 last year to SEK340 this year, indicating some pressure on profitability.
- Depreciation increased by SEK8 million year-over-year due to completed expansion projects, impacting financial results.
- The company anticipates a potential increase in leverage in Q4 due to higher capital expenditure and dividend payments.
Q & A Highlights
Q: Can you elaborate on the weaker demand from automotive customers and whether you expect a downturn in those volumes?
A: Joergen Rosengren, CEO: While there is noticeable weakness in the automotive sector, we continue to gain market share in an uncertain market. Automotive is important but not our only segment, and our 7% growth despite weak automotive demand shows our diversified customer base.
Q: With the new battery cathode foil line in FinspĂĄng coming online soon, are you concerned about low utilization rates due to struggles in the battery sector?
A: Joergen Rosengren, CEO: Many electrification projects have been delayed, impacting our business. However, we see growth in battery-related products. There will be a ramp-up period for the new line, but we have strong customer interest.
Q: Can you provide more details on the financials of the Shandong plant over time?
A: Oskar Hellstrom, CFO: The Shandong facility is a low-cost operation, enabling us to capture market share in Asia. It will likely have lower EBIT per tonne than the group average but should contribute positively to earnings over time.
Q: What products are driving market share gains in HVAC and other niches, and is it due to supply-demand dynamics or winning over customers?
A: Joergen Rosengren, CEO: We've proactively targeted various niches, resulting in diverse customer gains. It's challenging but rewarding, and we aim to maintain these market shares long-term.
Q: Can you discuss automotive demand across Asia, Europe, and America, and the impact of content per vehicle?
A: Joergen Rosengren, CEO: Eurasia is our primary automotive market. We anticipate increased aluminum content per vehicle, especially with hybrids and electric vehicles, as a growth driver. However, market conditions and share are more critical in the short term.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
