Gränges, a global leader in aluminium engineering and manufacturing, has reported a strong performance in its third-quarter 2024 interim results, driven by increased market share and strategic sustainability efforts. Despite some pressures on profitability, the company delivered robust growth in sales volume and demonstrated continued progress toward its environmental targets.
Jörgen Rosengren, Gränges' CEO, stated, "In the third quarter, we saw good demand in HVAC, speciality packaging and other niches, markets affected last year by excess inventory. On the other hand, demand from automotive customers weakened noticeably after the summer. Against that background, we are happy to see that the stronger sales focus we have had since 2023 has continued to drive growth. We increased our share in all markets, boosting our year-over-year sales volume growth to 7 per cent."
Q3 2024 performance highlights
Sales volume for the third quarter increased by 6.7 per cent to 122.7 ktonnes, up from 114.9 ktonnes in Q3 2023, while net sales rose to SEK 5,750 million, a 3.1 per cent increase from SEK 5,575 million the previous year. However, adjusted operating profit declined slightly to SEK 420 million, down from SEK 439 million in the same period last year. This translated to an adjusted operating profit per tonne of 3.4 kSEK, compared to 3.8 kSEK in Q3 2023.
The CEO said, "We compensated customer price pressure with cost productivity and improved metal management. Combined with volume growth, this resulted in an adjusted operating profit of SEK 420 million, roughly in line with last year.”
“Cash flow remained strong in the quarter despite the ongoing capacity expansion projects, which we intend to finalise by the end of this year. The good cash flow reduced our net debt. Our financial leverage improved and remained well within our target range. Taken together, this creates stability and flexibility to finance further growth."
The company’s net profit for the period also saw a dip, falling to SEK 285 million from SEK 332 million a year ago. Diluted earnings per share (EPS) followed this trend, declining to SEK 2.67 from SEK 3.12. Additionally, adjusted cash flow before financing activities dropped to SEK 474 million, down sharply from SEK 1,067 million in Q3 2023.
Sustainability and recycling initiatives
Gränges continued to make significant strides in reducing its carbon footprint. The company’s total carbon emissions intensity (encompassing Scope 1, 2, and 3 emissions) decreased to 7.6 tonnes of CO2e per tonne, an improvement from 8.0 tonnes in the same quarter last year. A critical driver of this reduction has been the company’s increased use of recycled aluminium, which now accounts for 47.4 per cent of its sourced materials, up from 44.4 per cent in Q3 2023.
"Our long-term focus on sustainability continued to deliver. Carbon intensity remained ahead of our 2025 climate goals thanks to record-high recycling. Circularity is also a strategic objective on its own. Together with customers, suppliers, and the broader industry, we’re working on further opportunities. For instance, we recently joined the First Movers Coalition, a group of leading companies committed to decarbonising hard-to-abate sectors", Jörgen Rosengren said.
January-September 2024 performance
For the first nine months of 2024, Gränges reported a 5.6 per cent rise in sales volume to 375.5 ktonnes, compared to 355.5 ktonnes during the same period in 2023. However, net sales for this period fell marginally to SEK 17,322 million from SEK 17,551 million last year. Adjusted operating profit also saw a modest decline to SEK 1,247 million, compared to SEK 1,290 million in 2023, with profit per tonne falling to 3.3 kSEK from 3.6 kSEK.
Despite these challenges, Gränges prioritised sustainability, reducing total carbon emissions intensity to 7.4 tonnes of CO2e per tonne, down from 8.4 tonnes in the same period last year. The use of recycled aluminium also increased to 46.5 per cent, compared to 41.0 per cent in the previous year.
Financial position and outlook
Gränges’ financial net debt stood at SEK 2,839 million as of September 30, 2024, up from SEK 2,741 million at the end of 2023. This represents 1.2 times adjusted EBITDA (compared to 1.1 times at the close of 2023).
“Market demand remains hard to predict. An apparent weakness in automotive is partly compensated by recovery in other markets. Thanks to our focus on new business, we expect a high-single-digit percentage sales volume growth in the fourth quarter compared to 2023. This excludes any potential effects from the acquisition of the production facility in China. We aim to continue to offset price pressure and wage inflation with cost reduction and productivity improvement but expect currency exchange rates to be unfavourable compared to the fourth quarter last year", the CEO said.
“The preparations for acquiring a large production facility in China from our partner, Shandong Innovation Group, are progressing well. We anticipate closing the transaction in the near future. New production capacity and deepened partnerships will strengthen our competitiveness and enable further market share gain in the Asian market. However, these benefits will take some time to realize. In the first months, we expect the new facility to operate at breakeven profitability and, in 2025, to contribute marginally to earnings per share after minority interests.”
Looking ahead, Gränges remains focused on leveraging its increased market share and deepening its commitment to sustainability. The company’s strategic shift toward higher recycled aluminium content is expected to play a vital role in balancing growth with environmental responsibility in the quarters to come.
Conclusion
Despite a slight softening in profitability, Gränges’ ability to grow its market share and reduce carbon emissions underscores its resilience and forward-thinking strategy. The company’s focus on sustainable aluminium production positions it well to navigate both the economic and environmental challenges ahead.
*SEK - Swedish Kronor (1SEK = 0.09 USD)
*KSEK- Means thousand Swedish kronor
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