Gränges' interim report January-September 2016

Successful acquisition in US and strong performance in existing business
Third quarter 2016

  · The acquisition of Noranda’s rolled aluminium business in the US have been
consolidated into Gränges’ accounts as of 22 August 2016.
  · Sales volume increased to 62.8 ktonnes (38.9) and net sales was SEK 1,859
million (1,281). Excluding the acquired business, sales volume increased by 5.6%
to 41.1 ktonnes and net sales was SEK 1,334 million.
  · Adjusted operating profit increased by 61.2% to SEK 181 million (112),
corresponding to an adjusted operating margin of 9.7% (8.8). Excluding the
acquired business, adjusted operating profit rose 17.0% to SEK 132 million.
  · Operating profit amounted to SEK 88 million (97), including items affecting
comparability of SEK –94 million related to the US acquisition.
  · Profit for the period increased to SEK 189 million (69) and includes a tax
provision release of SEK 139 million.
  · Diluted earnings per share was SEK 2.52 (0.93).
  · Cash flow before financing activities was SEK –2,285 million (267) including
the cash consideration for the US acquisition.

January-September 2016

  · Sales volume increased to 154.4 ktonnes (125.0) and net sales was SEK 4,662
million (4,243). Excluding the acquired business, sales volume increased by 6,1%
to 132.7 ktonnes and net sales was SEK 4,136 million.
  · Adjusted operating profit increased by 21.4% to SEK 516 million (425),
corresponding to an adjusted operating margin of 11.1% (10.0). Excluding the
acquired business, adjusted operating profit rose 9.8% to SEK 467 million.
  · Operating profit amounted to SEK 397 million (410).
  · Profit for the period was SEK 397 million (295).
  · Diluted earnings per share was SEK 5.30 (3.95).
  · At 30 September 2016, the equity to assets ratio amounted to 35.8% and net
debt corresponded to 2.2 times adjusted EBITDA1.

Comments from CEO Johan Menckel:

We have continued to see strong positive trends in the third quarter in terms of
sales and earnings development. Especially encouraging was that our recently
acquired business in the US performed very well. Overall, sales volumes
increased over 60% during the quarter; and by 6% when excluding the acquisition.
Continued increase in volume in the Americas, together with recovery in Asia
contributed positively to sales of automotive heat exchanger materials. In
Europe, sales volume increased and we continued to gain market share. Adjusted
operating profit increased to SEK 181 million (112). Excluding the acquisition,
adjusted operating profit increased to SEK 132 million.

US acquisition strengthens Gränges
The acquisition of Noranda’s aluminium rolling business was completed in August,
and work to integrate the business with the Group is currently proceeding very
well. To date, this process has surpassed expectations, and we feel confident in
our view of future opportunities and potential in the North American market. It
is of the utmost importance that the acquisition is welcomed by our customers.
The move also gives us a clearer focus on stationary heat exchangers, primarily
for air conditioning systems. This end-customer market now accounts for around
half of all sales in North America, and more than 20 % cent of our total overall
sales volume. We had a positive lift to operations in the weeks following the
acquisition due to unusually warm weather that fuelled demand for material for
stationary heat exchangers. Capacity utilization is currently high in our US
facilities.

To ease production bottlenecks, we plan to make modest maintenance investments
during the coming year. These will form part of our existing maintenance budget.
We are also investing possible future investments in production of multi-layer
products.

Well-attended seminar in China
Gränges’ technical seminar in China was held at the end of September, and it
attracted more than 400 customers and other industry representatives. The
seminar – the largest of its kind in our industry – is an important meeting
place to discuss future challenges related to emissions, powertrains, and
digitalisation, where advanced heat exchanger materials play a key role. As a
market leader, Gränges is determined to continue to invest and expand operations
in Asia in the years ahead and together with our customers develop new,
innovative products.

Gränges joins the UN Global Compact
Sustainability is an important area for Gränges, and a fully integrated element
of our business strategy. From 2016, we will conduct sustainability reporting
according to GRI guidelines. As part of this work, we adopted the UN Global
Compact and its ten principles in October.

Outlook
In terms of heat exchanger material for the automotive industry, we expect
growth in the underlying market during the last quarter of the year. According
to industry analysts IHS, global production of light vehicles is expected to
increase by 2% in the fourth quarter. In Asia and Americas, Gränges sales
volumes are expected to increase at a higher rate than the market, while in
Europe we expect growth in line with the market.

As for our recently acquired business in the US, we expect stable growth in the
fourth quarter. Sales volume is forecasted to increase of 1-2% compared to the
same period last year. The acquired business is expected to positively
contribute to earnings per share for Gränges from 2017.

We continue to follow our strategy and work towards our goals that we have set
for 2020. This means that we will maintain focus on new, innovative products,
expand our business in niche areas of the aluminium sector, and ensure that we
create sustainable profit. This is work from which our customers, employees and
shareholders will benefit. The acquisition in the US provides an excellent
platform from which we will be able to continue to expand in the region, while
at the same time broaden the business into a greater number of markets and
customers. We feel positive about 2017, and our ambition is to continue to grow
and strengthen our presence and position globally.

Johan Menckel, CEO Gränges

Webcasted conference call

CEO Johan Menckel and CFO Oskar Hellström will present Gränges’ interim report
for January-September 2016 at a webcasted conference call at CET 10.00, Thursday
27 October, 2016. The webcast can be accessed on www.granges.com/investors. To
participate in the telephone conference, please call +46 856 642 661 (Sweden),
+44 203 194 0544 (UK) or +1 855 269 2604 (USA). Please call a few minutes before
the telephone conference starts. The presentation will be held in English.

For additional information, please contact:

Pernilla Grennfelt Director 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 27 October 2016 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.