Gränges AB (publ)

Good morning, ladies and gentlemen, and welcome to Grenges' first quarter results presentation for 2026. My name is Jørgen Rosengren, and I'm president and CEO at Grenges, and today I'm joined here in this conference by Oskar Hellström, our CFO and deputy CEO, and Anna Heddenberg, our investor relations director. I'm going to give you a short summary of the first quarter, after which Oskar will present our results more fully, and then I will round off with some comments on the outlook. Today, we'll try to go through the presentation rather quickly, which means that there is going to be ample room for questions and answers after the presentation is done. Now, to summarize the first quarter, we'd like to first point out the good volume growth that we've enjoyed. We grew our sales volume by 5% and all that organic, of course, since it's now a while since we made our latest acquisition. Despite actually quite weak demand, unstable demand, but also quite weak demand in many of our markets. So we grew quite a bit faster than the market. An encouraging sign was that this growth actually speeded up during the quarter and March was a very strong month, which gives us, of course, momentum going forward. The driver behind the growth that we did realize is that we took market share in all of our regions in this quarter, as we have been doing for some time now. And in fact, the first quarter of 2026 was the ninth consecutive quarter, if we counted that correctly, of year-on-year sales growth in Grenges. And that's a very good trend and one we'd like to, of course, to keep up going forward. A little less positive, of course, is the pressure that the higher aluminum price which again rose during the quarter, exerts on our working capital and our cash flow. And we believe that this trend will persist at least into the second quarter. On the other hand, we had quite strong operational performance in all regions in the quarter, especially towards the end of the quarter. And this was a key factor behind the strong volume growth and also the good results. And that's of course because, as you realize, all of you, of course, good operational performance that enables us to flexibly capture market share opportunities that emerge during the quarter in a speedy way. But it's also, of course, so that good operational performance also drives productivity. Now then, as a result of this good commercial performance and operational performance, we were able to offset cost increases as well as large negative currency effects around 85 million SEK or so with share gains, price and productivity in the quarter. And in doing so, we realized an EBIT increase of 12% to 459 million SEK, which is the best ever EBIT in the first quarter for Grengis. And if you'd count in constant currencies, of course, you'd see that the underlying performance improvement is much higher still, probably around or above maybe even 30%. It's also great to see that our sustainability performance speeded up in the quarter, resulting in both an even lower carbon footprint for our business and also increased recycling, something that's a strategic priority for Grengis. Now, as I mentioned, we took significant market share in the first quarter in all of our regions, in fact. And here you can see how that plays out across the regions and across our end customer markets. But let me just touch on some highlights here. In HVAC, we saw a very weak market, a trend that started, I guess, in July or so last year and persisted during the autumn and also during the first quarter of 2026. But nevertheless, we were able to keep sales volume roughly flat thanks to significant market share gains. So we very strongly outperformed the market in this segment. which secured then a volume growth of 3% for Grengis Americas. In Asia too, we took market share gains and we did outperform the market. So the share gains almost offset weak market demand and the market demand of course was due to low vehicle production in Asia in general and in China specifically. and the growth ended up just slightly below zero, then slightly negative. In this chart, I think Europe deserves a special mention. We had a very strong share gain in automotive and other niches, which created a very healthy growth around 15%, which of course far outstrips any growth that the market provided us with. And also we believe all competitors. Now, for several years in a row, experienced large volatility around us, geopolitical volatility, macroeconomic volatility, also practicalities that have been quite volatile, for instance, in the supply chain. And for our business, of course, that means that the landscape we're playing in, the conditions we have to accept change rather rapidly, both commercially, operationally, and also financially. This, in turn, means that we have to react fast and flexibly together with our partners to offset those effects. We've done this, we feel, in a good way, and this latest quarter was certainly no exception. Now, the outbreak of the war in the Middle East added, I guess you could say, to an already complicated situation in many ways, besides being, of course, from a human angle a really terrible thing. We did see higher market prices for energy, for freight and other factors that are important in our P&L. But thankfully the impact on our profit at least in the first quarter was rather limited. And that's thanks to timing effects because some of these things take time before they work themselves into the P&L. It's also thanks to our hedging and other risk management policies and other various actions that we've taken. And this, of course, is something that we've had quite a lot of practice with over the past years. And it's, I think, no exaggeration to say that we've significantly strengthened our ability to withstand such external shock effects, such external shocks, by way of strengthening our risk management, our processes internally, and also our commercial contracts, both upstream in the value chain and downstream. We also saw significant aluminum supply chain disruption, which further fueled already existing trend towards higher aluminum prices. And these, as you know, will do and will impact our cash flow and working capital. Like I said, we've gotten quite used to handling turbulence like this over the past years. And in the first quarter, as has been the case in the past and will be the case also going forward, our focus is on things we can control or at least influence. And top of that list, I guess, is market share gains and then to optimize price and mix and also to improve our productivity, all things that we did in a good way, I think, in the first quarter. Now, if the cash flow took a bit of a hit in the first quarter from the higher aluminum price, but was also influenced by our seasonal working capital buildup, which takes place every year, it was, however, helped by lower capex than we've had before. And that's because we're now fully out of the years long and rather Intensive Investment Phase, which lasted from 2018 to 2025. And you can see this on this chart in the dark blue bars that we had quite a lot of expansion capex in those years on average and in total. But as you can see on this picture also, and maybe reiterating a message from the last several quarterly reports, we now project very limited capacity expansion capex in the next two years. and that, we hope, will make a meaningful difference to our balance sheet, strengthening it, and also, of course, provide for a better cash flow going forward. That said, the cash flow in the first quarter was weak, and we want to be clear about that. And with that, I'd like to thank you for your attention and turn over to Oskar, who is going to take us through a little bit more fully how the first quarter played out.

Yeah, thank you, Jørgen. I will certainly try to do that. And as we just heard here, the first quarter of 2026 was in fact the best quarter we've had so far. We continued to experience a solid sales growth despite the continued softness across most of our markets. And as you can see on the left here, the sales volume grew by 5% year on year to 160,000 tonnes. Also on the earnings side, we saw a positive development with the adjusted operating profit increasing by 12% or 50 million SEK to 459 million SEK. Looking at the margin or the adjusted operating profit per ton, this improved by 200 SEK from 2.7 thousand SEK in Q1 2025 to 2.9 thousand SEK in Q1 this year. I think this is a very good development, taking into account the strengthening of the SEC against primarily the US dollar, which led to a negative year-over-year currency effect of 85 million SEC in the quarter. In constant currency, the operating profit increased 33% and would then have reached 544 million SEC, with a 3.4 thousand SEC per ton margin in the first quarter. And this, I think, is a good indication of the momentum that we have in the underlying business right now. If we look at some of the earnings drivers, we note increasingly inflationary pressure for several cost items, not the least in Americas. But on the positive side, we also see a continued sequential improvement of the market scrap spreads. And also from a year-on-year perspective, we saw a slightly positive impact on profits from the improved scrap spreads in the first quarter. Here we should also say that provided that these scrap spreads remain on the current level, we expect to see increasingly positive year-on-year effects from this over the next two quarters. Looking at the things we can control ourselves, we continue to see positive effects from volume growth, improved pricing and continued productivity improvements. Let's continue with some more details of the group financials then before we go on to the operating segments. And here I think it's worth to highlight that the profit-product period increased by close to 24% to 322 million SEK for the quarter. And this is, of course, driven by the improved operating profit, but we also see positive effects from a lower financial net, primarily from lower market interest rates. And thanks to this, earnings per share attributable to Grange's parent company shareholders increased to 2.93 SEK for the first quarter. The return on capital employed reached 11.1% in the quarter. This represents a sequential improvement of 0.3 percentage points compared to the fourth quarter, but a decrease of 0.6 percentage points compared to a year before. And the year-on-year decrease is primarily attributable to two things. First, the additional capital we've added in Asia. to the acquisition and ramp up of the facility in Shandong. And second then, of course, to the higher market price for aluminium. And the development of the aluminium price, I think, is something we should comment a little bit more on before we look into the cash flow and leverage development for the quarter. Now, as most of you probably know well by now, Grengis makes money on the value that we add on top of the raw material, and the aluminium price is to be considered as a pass-through to our customers. This means that the impact from the aluminium price on the operating profit in absolute terms is limited. The aluminium price does, however, impact the value of our working capital. When the market price for aluminium increases, this has a negative impact on the change in working capital and consequently on our operating cash flow. Understandably, the reverse is true when the market price declines. On the back of the US introduction on tariffs on primary aluminium from Canada, the Midwest transaction price for aluminium has close to doubled since the beginning of 2025. Driven by this, the average aluminium price for Grenges on the global level then, has increased by about US$1,500 per tonne in the same period. And we continue to see a further increase of the aluminium price in Q1 in all three regions where we operate. This is then largely fuelled and driven by the war in the Middle East. In the first quarter, the increasing aluminium price had a negative impact on our working capital and cash flow with some SEK 550 million. And provided that the aluminium price remains on the current level, we expect that the increase to date will impact the operating cash flow negatively with about 500 million SEK in the second quarter. With this in mind, let's now look at the cash flow for the first quarter. Startinging with the operating cash flow. This amounted to negative 333 million SEK in Q1. As you can see on this chart, the strong EBITDA could not fully compensate for the buildup of networking capital that totaled 877 million SEK. As I mentioned earlier, 550 of this is related to the increased aluminium price and the remainder is a volume driven seasonal increase from the fourth to the first quarter. Capital expenditure amounted to 123 million SEK in Q1. Including taxes and interest paid as well as changes in currency rates, this led to that the financial net debt increased by 517 million SEK to close to 4.6 billion SEK during the first quarter. The net debt to EBITDA ratio increased to 1.8 times. So still within our target range of between one to two times. Now let's continue with the operating segments and starting with Grengis Americas that made a record quarter. and reached a new all-time high for both sales volume and operating profit. And as you heard from Jørgen earlier, the sales volume in Americas increased by 3% year over year in Q1, despite a continued weak HVAC demand, despite impact from a rescheduled maintenance stop and some adverse weather that we experienced there in the beginning of the quarter. But if the start of the quarter was a bit slow, that was compensated by a very strong finish and driven primarily by share gains. The sales volume in Americas came in just about 62,000 tons for the quarter. In terms of earnings, we see increasing negative year-on-year currency translation effects from the strengthening of the Swedish krona against the US dollar. And in the first quarter, the net change in foreign exchange rates was negative 57 million SEK compared with the same period last year. Further, we continue to experience increased inflationary pressure on wages and other input costs. Still, we managed to compensate for all of this with volume growth, increased average fabrication price, and improved productivity. And as a consequence, the adjusted operating profit increased by 17% to 378 million SEK. And in terms of the margin, this represents an operating profit per ton increase from 5.3 thousand SEK to 6.1 thousand SEK. And needless to say, I think our Americas team has done an outstanding job here. Leaving Gränges Amerikas, moving on to Gränges Asia, where the market slowdown that we saw toward the end of last year remained in quarter one. We continued to gain market share with primarily automotive customers and this compensated for some of the lower demand. And in total, the sales volume decreased by 2% to slightly below 48,000 tons. When it comes to earnings, the effects from lower demand and market price pressure were only partly offset by the share gains and by productivity increases. And as a consequence, the operating profit decreased to 51 million SEK and the operating profit per ton came in at 1.1 thousand SEK. Changes in currency rates had a close to neutral impact compared to the first quarter last year. Moving on to grains Europe. And here we continue to experience weak demand across all markets. We did, however, successfully compensate for this with market share gains, especially within automotive and other niches. In total, the sales volume in Europe increased by 7,500 tons or 16% to 54,000 tons in Q1. And against the backdrop of today's European market, I think this is truly an impressive achievement. Despite negative effects from foreign exchange rates of 27 million SEK compared to last year, the operating profit increased by 55% to 73 million SEK. This is driven by the volume growth together with improved pricing and cost productivity. The operating profit per tonne reached 1.3 thousand SEK, up 300 SEK per tonne compared with last year. Finally then some words on our sustainability performance which remained strong in the quarter. We continued to reduce our carbon emissions intensity which is down 15% and to increase our share of recycled aluminium or sourced recycled aluminium which is up 9% compared to first quarter last year. During the quarter we also issued a new 600 million sec green bond for which we experienced quite large investor interest despite the market turmoil. And this, I think, reflects the confidence in our strategic direction and sustainability ambitions, which I think is great to see. And last, but certainly not least, we have achieved the highest MSCI ESG rating of AAA, recognizing our leading ESG performance and resilience within our industry. And this we are, of course, also very happy with. With that, I hand over back to Jörgen, who will provide you with an outlook for the second quarter.

Thank you, Oskar. Yeah, now we're getting near to the end of our prepared remarks here, but let me first give you a flavor of what we're expecting for the second quarter of 2026. And then I think first we need to say and acknowledge also that we do see a lot of uncertainty around us and larger uncertainty maybe than ever, although We have been saying that now for quite some time, every quarter almost. And as a result of that, of course, market demand is weak, I want to say, generally, and also quite difficult to predict. But having said that, though, our ambition is to continue to take market share in all of our regions. And that's also the reason we feel confident in being able to forecast a mid to high single-digit volume growth . . . offset those negative effects with pricing and with productivity. A little bit on the negative side, however, we do expect that the increased all-in aluminum price will continue to weigh on operating cash flow and working capital also in the second quarter, despite the fact that we expect lower capacity expansion capex going in the second quarter and also going forward. And then to try to summarize today's presentation before I hand it back to the operator, We realized market share gains across all our regions, all our markets, which drove a 5% volume growth despite weak demand. And we also had very strong operational performance and that helped us both get the volume out the door and also helped our financial results greatly by providing good flexibility to take opportunities that show up and also good productivity. So I have to say that all of the regional teams really in Americas, in Europe and in Asia have done a fantastic job creating these results. And the result of that work, we did indeed have strong financial performance in the quarter on almost all lines, except for our cashflow then, which was weak. We delivered some excellent sustainability results that Oskar just spoke about. And we continued to focus as we've done in the past and will do in the future also on things we can influence or even control, the market share, the price mix, and also our own productivity. And in all these areas, we have high ambitions also going forward. The outlook for the second quarter is for more growth, good growth in fact, and we aim to try to get the full financial benefit of that growth. And all in all, I guess we could say we had a record first quarter and feel that we have strong momentum going into the second quarter of 2026, and therefore also strong confidence. Now, before we move on to the Q&A session, I'd like to invite all of you to participate in our Capital Markets Day, which takes place on June 2 in Stockholm. And we hope to see many of you there. And there are more details, including a registration form available on our website for you to go there. I suggest immediately after this call and sign up. And that really concludes our prepared remarks for today. So operator, now we're ready to take questions if there are any and we will try to answer them as best as we can, please.