Q2 2023 highlights
— Organic order intake growth for the rolling 12-month period was -4% and the backlog remains solid.
— Order intake in the quarter decreased by -14% to SEK 5,526 million (6,440), with organic growth of -15%, against high comparables in the corresponding period last year and due to softer market conditions in some customer segments.
— Revenues increased by 19% to SEK 5,638 million (4,757), with organic growth of 18%, driven by growth in all three divisions.
— Adjusted operating profit (EBIT), increased to SEK 642 million (547), driven by higher revenues, corresponding to a margin of 11.4% (11.5).
— Operating profit (EBIT) amounted to SEK 350 million (1,106), corresponding to a margin of 6.2% (23.3), and included metal price effects of SEK -293 million (649) and items affecting comparability of SEK 0 million (-89).
— Adjusted earnings per share, diluted, was SEK 1.79 (0.91). Earnings per share, diluted was SEK 0.87 (2.67).
— Cash flow from operating activities increased to SEK 111 million (1).
— Free operating cash flow decreased to SEK 72 million (81).
— To expand the offering in the Medical and Aerospace segments, Alleima acquired Söderfors Steel Operations AB.
In the quarter, our performance was solid, and we noted double-digit growth both for our revenues and earnings, despite a softening market environment. The strong organic revenue growth of 18% was driven by all three divisions. We are maintaining focus on executing our strategy to build an even stronger and more resilient company.
In the quarter, order intake declined -15% organically against high comparables in the corresponding period last year. However, at an absolute level our order intake remained high, with high book-to-bill and a maintained solid backlog. We saw high demand in the Oil and Gas segment, and received three major orders for umbilicals and OCTG (Oil Country Tubular Goods) tubes. Demand in our Industrial Heating, Transportation (mainly Aerospace) and Medical segments remained solid, and our view of the development in these segments in the near future is positive. In addition, the demand in Asia is continued solid.
The subdued demand noted for the low-refined Industrial and Consumer related segments persisted. This could mainly be seen in North America and Europe, where we also noted a dampened demand for our application tubing products for the Chemical and Petrochemical segment. Some of this is related to customer and distributor destocking, while some is related to overall softer market conditions.
We delivered an adjusted EBIT margin of 11.4% compared with 11.5% last year, despite lower production volumes that follow from declining orders in some segments. We are focusing on continuous improvements for more cost-effective production, and we are continuing to drive price management to offset the significant cost inflation. We have a solid backlog to deliver from and we have an advantage from our diversified exposure to various customer segments. With this, we have good visibility ahead, and we are confident about our near-term deliveries.
It is gratifying to see our industrial heating solutions in targeted applications such as solar, lithium-ion battery manufacturing and steel production, continuing to grow through significant project orders. The Kanthal division posted another strong quarter, with an adjusted EBIT margin of 19.3% driven by broad-based revenue growth and a positive revenue mix across the division. The Medical business noted record high revenues, and the outlook is solid.
We have completed the acquisition of Söderfors Steel, and we are starting to integrate the company into our Group and value chain. Though this, we are expanding into several new product applications in the attractive niches of Medical and Aerospace. We are also showing progress in the Medical segment in other parts of the company, and as an example, we received orders for precision strip to be used in two new applications.
Our industry is constantly evolving, and the need for carbon neutral energy solutions is increasing. During the quarter, we made an important break-through with the receipt of an order for 200 kilometers steam generator tubes for Small Modular Reactors (SMRs). I am pleased that this business is taking off and that we are playing an important role in enabling the sustainable energy solutions of the future. This order proves that we are a front-runner when it comes to advancing a more sustainable energy landscape.
We took action to reverse the negative trend in the total recordable injury frequency rate (TRIFR), and intensified focus on our safety principles and defined key activities in each division. The improved quarterly TRIFR outcome was a step in the right direction, and safety will remain at the top of our agenda.
Please save the date for our Capital Markets Day update on November 14, when we will elaborate on how we aim to improve our company further and strengthen our position as the leader in our niches.
Göran Björkman, President and CEO
Conference call and webcast 13:00 CEST
A webcast and conference call will be hosted on July 21, 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, July 21, 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 and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 11:30 AM CEST on July 21, 2023.