Q1 2023 highlights
— Organic order intake growth for the rolling 12-months period was 6%. Order intake in the quarter increased by 7% to SEK 6,416 million (5,996), with organic growth of -5%, due to high comparables resulting from major orders in the corresponding period of the preceding year. Organic order intake growth excluding major orders was 6%.
— Revenues increased by 27% to SEK 5,376 million (4,219), with organic growth of 12%, driven by growth in all three divisions.
— Adjusted operating profit (EBIT), amounted to SEK 567 million (384), corresponding to a margin of 10.5% (9.1), supported by higher revenues, a favorable product mix and price increases which offset cost inflation.
— Operating profit (EBIT) amounted to SEK 1,045 million (635), corresponding to a margin of 19.4% (15.1), and included metal price effects of SEK 479 million (327) and items affecting comparability of SEK 0 million (-75).
— Adjusted earnings per share was SEK 1.75 (1.37). Earnings per share was SEK 3.25 (2.16).
— Cash flow from operating activities increased to SEK 377 million (-123).
— Free operating cash flow increased to SEK 404 million (-53).
— After the quarter, Alleima signed an agreement to acquire a production facility for small diameter bars (Söderfors Steel Operations AB).
2023 got off to a solid start and we continued to consistently execute on our strategy. The first quarter demonstrated strong order intake and we reported double digit revenue growth, higher earnings and an improved adjusted EBIT margin.
Demand for our products remained high, driven by the Oil and Gas segment in particular, where we received several umbilical orders and two major orders for OCTG (Oil Country Tubular Goods) tubes. Another strong contributor to the order intake was application tubing products for the Chemical and Petrochemical segment. During the quarter, we opened a new production line in our factory in Mehsana, India, to meet this growing demand. As of the second half of last year, we have noted a subdued demand in low-refined products for the Industrial segment as well as in the Consumer segment. Despite a decline in order intake for these segments year on year, there was a slight improvement on a sequential basis for the Group in total. Organic order intake growth in the quarter was -5%, and positive at 6% excluding major orders.
Uncertainties remain in the macroeconomic environment, with noticeable effects of inflationary pressures and high energy prices, and we need to continue to proactively mitigate increased costs. For some time now, we have seen a decline in demand for the Strip division's products to the Consumer segment. Despite this is not having a significant impact on the Group in total, we need to protect the division's profitability going forward. Hence, we are now taking swift actions to adjust capacity and reduce cost, by using the flexibility in our workforce.
Revenues in the quarter increased organically by 12% with an improved product mix. We improved the adjusted EBIT margin to 10.5%, compared to 9.1% for the corresponding quarter last year, and we successfully offset significant cost inflation through price increases.
An important driver of our profitable growth strategy is to expand our portfolio of products that enable the green transition. We received several orders for industrial heating solutions in targeted applications such as solar, lithium-ion battery manufacturing and downstream steel. These solutions are contributing to reducing our customers' and their products' CO2 emissions. In April, the Kanthal division also entered a strategic partnership with Rath, a leading manufacturer of insulation and refractory products, which will enable us to jointly go to market with a unique combined offering for our customers' industrial heating needs.
In addition, the small but fast-growing Hydrogen and Renewable Energy segment continued to show strong momentum. Gerling, an acquisition that was made last year, secured yet another order for high-pressure tubes that will be used to support the build-out of vital infrastructure for hydrogen gas refueling stations in Europe. Our Surface Technology business also continued its positive development, and deliveries for pre-coated strip steel to be used in stationary power projects were ramped up during the quarter. I am pleased about this progress and I strongly believe in the potential for this segment.
As mentioned before, we have a good momentum in our Medical business in Kanthal. We are also aiming to increase our market shares in the Medical and Aerospace segments in our Tube division. In April, we announced the acquisition of Söderfors Steel, that allows us to further broaden our offering in these segments through adding complementary capabilities that enable expansion to many new product applications in these attractive niches.
I am proud of our consistent strategy execution with a focus on profitable growth, as well as our actionable mindset to improve stability in the organization. With some caution regarding the impact from cost inflation, we have a tailwind in most of our customer segments, and a backlog that grew in the quarter. The Oil and Gas prospect list remains solid and we are well positioned to capitalize on the global trends that play in our favor.
Göran Björkman, President and CEO
Conference call and webcast 13:00 CEST
A webcast and conference call will be hosted on April 26, 2023 at 13:00 pm CEST. More information and a presentation will be available at www.alleima.com/investors
Dial-in details for the conference call
— Sweden: +46 (0) 8 5051 0031
— UK: +44 (0) 207 107 06 13
— US: +1 (1) 631 570 56 13
Link to webcast
Sandviken, April 26, 2023
Alleima AB (publ)
Emelie Alm, Head of Investor Relations
Phone: +46 (0) 79 060 87 17
Yvonne Edenholm, Press and Media Relations Manager
Phone: +46 (0) 72 145 23 42
Alleima AB, is a global manufacturer of high value-added products in advanced stainless steels and special alloys as well as solutions for industrial heating. Based on long-term customer partnerships and leading materials technology, we develop products for the most demanding applications and industries. Our offering includes products like seamless steel tubes for the energy, chemical and aerospace industries, precision strip steel for white goods compressors, air conditioners and knife applications, based on more than 900 active alloy recipes. It also includes ultra-fine wires for medical and micro-electronic devices, industrial electric heating technology and coated strip steel for fuel cell technology for cars, trucks, and hydrogen production. Our fully integrated value chain, from R&D to end-product, ensures industry-leading technology, quality, sustainability, and circularity. Alleima, with headquarter in Sandviken, Sweden and revenues of SEK 18.4 billion in 2022, has approximately 5,900 employees and customers in approximately 90 countries. Alleima was listed on Nasdaq Stockholm on August 31, 2022 under the ticker ‘ALLEI’. Learn more at www.alleima.com.
This information is information that Alleima AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 11:30 AM CET on April 26, 2023.