Good morning ladies and gentlemen and welcome to this webcast and presentation of Gränges' fourth quarter results which conclude a year when we had record high sales volume and earnings. I'm here, my name is Jörgen Rosengren, I'm Gränges CEO and President and I'm here together with Oskar Hellström, our CFO and Sara Lander Hyléen, our VP of Communications and Investor Relations. As I alluded to, we saw an accelerating growth in the fourth quarter and in fact recorded a sales volume increase of 21% to 130 tonnes compared to 108 in the same quarter of 2023. We saw stable markets generally speaking, but we also recorded a lot of market share gains in fact in all of our geographies and in many customer segments which underpinned this very good growth.
As many of you know, we made an acquisition in October of a factory in the Shandong province in northeastern China, and we completed that acquisition and very quickly integrated it and were also able to quickly ramp up sourcing and production and sales to reach our first communicated milestone which is to reach break even with additional volume. This acquisition helps us be able to make really strong market share gains in Asia, but these market share gains and the buildup of inventory and other working capital components to enable them of course impacts cash flow.
In the fourth quarter we saw a continued tendency to price pressure in the market but were able, as we were in the beginning of the year also and the year before to offset those tendencies to price pressure with sales volume growth, with cost savings and also with a continued improvement of our operating productivity, and this all enabled us to reach a really good operating result which increased from SEK 245 million in the fourth quarter of 2023 to SEK 324 million in the fourth quarter of 2024, an increase of over 30%. And like I said, starting out here, this concludes the year when we recorded the best ever full year volume earnings and also the best ever sustainability results which I will comment a little bit more on in just a bit talking about our markets and regions, then we saw generally speaking stable markets.
Even automotive which has been maybe not too great in the past quarters, in the past years was stable, I guess you could say in the quarter, but even more gratifying of course is that we saw really good market share gains in all of our geographies and in both of our operating segments, and taken together this led to good growth in Gränges Americas of 17% year-over-year and also very good growth in Gränges Eurasia of 24%, netting out to a growth for the whole group of 21% of sales volume in the fourth quarter of 2024, year-over-year. The growth in Eurasia was helped to some extent by our acquisition that we concluded in the fourth quarter, and it adds production capacity of 160,000 tons in this facility that I've talked about already in Shandong in China.
This acquisition is a very transformational one for Gränges Asia and a very important one for Gränges. It provides the scale and the cost and also the partnerships for things like metal and energy that we need for continued competitiveness in Asia. And as you know, Asia is a very competitive market, but also a very important market, maybe not the least for the global automotive industry. And therefore we're very happy to have been able to take this step. Our first milestone was to reach break even. And we reached this milestone with very quick ramp up of sales to a full year volume of 90,000 tons on an annual basis already in December, which was our first real invoicing month.
The new business that we've gained this 90,000 tons is relatively low margin, but still it is super gratifying and a really good achievement to have achieved a break even in such a short time in a completely new factory. The growth of course impacts working capital, as already alluded to. Our focus going forward then for Gränges Eurasia is to retain this volume that we've acquired, this 90,000 tons, or that we have built up now this 90,000 tonnes, but over time during 2025, rather than grow it further, instead optimize price and optimize mix and also optimize the cost position for these products so that we can gradually improve its profitability, and with these actions we aim to reach our ambition, our stated ambition to reach to contribute positively to EPS for the full year of 2025.
As a result of this acquisition, we had in 2024 a really good sustainability performance. It's not the first time either. It's in fact a very long-term and a very successful trend for Gränges. We continued our decarbonization progress and reached an all-time low carbon footprint for the full year. That level is now 35%, no less, below the level when we started out measuring this, our reference year, which is 2017, and maybe an even better performance in recycling, where we have in fact five times higher recycling volume now in 2024 than we did in 2017. Also in the quarter we published new frameworks for our green and sustainability-linked finance vehicles. To summarize then, we had in 2024 a record volume. For the full year we had a record adjusted operating profit and we also [had a] record earnings per share.
As you can see in this long term trend curve here, this corrects, I guess, sort of a slump that we had between 2018ish and 2020 or so. We now feel that we're back on a good growth trajectory for Gränges both when it comes to volume and when it comes to profit. With that I would like to turn the word over to Oskar Hellström, our CFO. Go ahead, Oskar.
Thank you, Jörgen. We're now going to look a bit more detail into the fourth quarter, but before doing that it may be worth commenting a little bit more on the full year because it is after all a new record year for Gränges. As you can see on this slide and that you also saw on the long-term chart that Jörgen just showed, in 2024 we generated our highest sales volume and our highest operating profit so far. 506,000 tonnes of sales volume, SEK 1,571,000,000 of adjusted operating profit. And the theme of the year has been to offset price decreases with growth and productivity, which I would say that we have succeeded with.
As a consequence of this, however, we see a slightly lower margin in 2024 than in 2023 and the 2024 full year adjusted operating profit per tonne reached 3.1 thousand SEK compared to 3.3 in the year before, as you can see on the right hand side here, but if you remember, we did get some tailwind in 2023 from energy cost compensation and positive timing effects on energy surcharge clauses in customer contracts, and this totaled 107 million SEK, and we did not enjoy this in 2024, so if we adjust for this, we actually see a slight improvement also in the EBIT per ton in 2024 compared to 2023, and that I think is a more true representation of our underlying performance.
Now leaving the full year perspective and looking more at the fourth quarter, which also happened to be a record quarter with the highest sales volume and highest adjusted operating profit that we've ever had in a fourth quarter. So in Q4 we continued to experience a solid sales growth despite the continued softness in many of our markets. And the sales volume grew by 21% year-over-year, albeit against rather weak comparables in terms of earnings. We see a normal seasonal decline of both the operating profit and the operating profit per tonne in the quarter.
Looking from a year-over-year perspective, we do however have a very positive development both in terms of adjusted operating profit that reached SEK 324 million in the fourth quarter and in the adjusted operating profit per tonne that increased by SEK 200 from SEK 2.3 thousand in Q4 2023 to SEK 2.5 thousand in 2024. Excluding the new business in Shandong that is currently at break even as Jörgen described earlier and the energy cost compensation that we received in Q4 2020, the operating profit per tonne improved by about SEK 400 year-over-year on a like for like basis. If we look at the drivers behind this development, we can see that we continued to manage to fully offset the market price pressure as well as the wage inflation in the fourth quarter.
The main contributors to this are the increased sales volume fueled by the market share gains or new business gains, its increased utilization of our casting and recycling centers, which together with good metal management had a positive impact on our raw material costs and last but not least, generally good and improved cost productivity. If we look at capacity utilization, which you know is an important driver for Gränges, this increased by close to 10 percentage points year-over-year in the fourth quarter to about 80% on a like for like basis excluding the impact of the facility in Shandong. I think this is a very good improvement over prior year, but we need to remember that we still operate below the optimal level.
I will come back and comment more on the individual business areas shortly, but we'll first look at some more highlights of the group financials for the fourth quarter. Starting with the sales volume, this increased by 21% to 130,000 tonnes while net sales increased a little bit more than 24% to 6.2 billion SEK. And the higher increase in net sales compared to the increase in sales volume is primarily explained by higher aluminum price and currency effects. Looking at the earnings, the adjusted operating profit reached 324 million SEK. That's 91 million SEK better than in Q4 last year. When excluding the 12 million SEK of energy cost compensation in 2023 that I mentioned earlier, depreciation increased like for like excluding Shandong with 16 million SEK year over year and this is fully related to completed expansion projects.
The net effect of foreign exchange rates was slightly positive at plus 4 million SEK compared with last year. The operating profit or reported operating profit for the fourth quarter was 276 million SEK, and that includes items affecting comparability of 48 million SEK, of this 31 million SEK are related to the acquisition, integration and startup costs for Gränges Shandong and 17 million SEK are write-downs of production assets that have been taken out of use. The profit for the period increased to 175 million SEK for the quarter and reached above 1 billion SEK for the full year. For the second year in a row, earnings per share increased to 1.67 SEK for the fourth quarter and to a new record level of 9.51 SEK for the full year.
The Gränges Board of Directors proposes an increase of dividend to SEK 3.20 per share for the year and provided that this is approved by the annual general meeting, this means that almost 34% of the profit is distributed back to our shareholders. In line with our policy, the return on capital employed decreased to 11.9% by the end of the fourth quarter. That's down 0.3 percentage points compared to the year before and the decrease in ROCE is fully attributable to the additional capital that we've added in Asia through the acquisition and ramp up of the facility in Shandong. Continuing on that theme and looking at the balance sheet where we as expected saw an increase of the net debt and leverage during the fourth quarter.
As we talked about already in our Q3 presentation, we have a couple of different drivers behind the leverage increase in Q4. First, the strong sequential sales development did not allow for a seasonal working capital release. On the contrary, we built inventory to manage longer than normal year-end maintenance stops and to prepare for the expected sales increase in Q1. Moreover, higher aluminum price increased the working capital by about 100 million SEK in Q4 and in addition to this, as Jörgen said earlier, we have ramped up a 90,000 ton annual business in Shandong in just two months time. This adds a significant amount of working capital since metal suppliers in China are typically paid cash and this is then also the main driver of the 1.2 billion SEK working capital increase in Q4.
On a positive note though, we have now built up a large part of the working capital that we need to operate the Shandong facility on a 90,000 tons per year level. Second, we completed several large expansion projects at the same time as we conducted year-end maintenance. As a consequence of that, we had higher than normal capital expenditure in the fourth quarter. In total, we invested SEK 399 million in our operations of which SEK 224 million in expansion. And lastly, we distributed SEK 159 million to our shareholders in the second of the two dividend payments in 2024.
Combined with some unfavorable developments of currency rates, mainly the US dollar appreciating against the SEK, this led to that the financial net debt increased to 4.3 billion SEK or 1.8 times EBITDA by year end and this means that the net debt to EBITDA ratio remains within our target range of between one to two times. Before leaving this page, I would also briefly like to touch upon how we currently view the capital expenditure for 2025 and we currently expect this to be some 700-800 million SEK for the full year.
About a quarter of this is related to the final payments for the expansion investments and the rest is normal maintenance capex. Moving on to the business areas and starting with Gränges Americas, as you heard from Jörgen earlier, we had a customer demand in Americas that was pretty good in the fourth quarter or higher than last year, especially for the HVAC market where an upcoming change of legislation prolonged the season throughout Q4. In addition to this, we saw increasing effects from actions taken to further grow sales by capturing new business in both specialty packaging and other niches and in total the sales volume in Americas increased by 17% year-over-year to 55,000 tonnes. In terms of earnings, we managed to offset the continued market price pressure with increased sales volume, generally improved cost productivity and good utilization of our casting and recycling centers.
Net changes in foreign exchange rates were fairly neutral in the quarter, so in total the Q4 operating profit increased by 27 million SEK to 193 million SEK and that corresponds to margin of 3.5 thousand SEK/t. Although this is slightly lower than in last year, we need to keep in mind that this is still a very good margin level in a seasonally weak fourth quarter leaving Gränges Americas and moving to Eurasia and maybe starting then with the most exciting development in the quarter, the successful ramp up of our new production facility in Shandong. We already heard from Jörgen that we managed to ramp up both production and sales for a business of about 90,000 tonnes of annual run rate in just two months and I think that is certainly an achievement.
The new business is relatively low margin still, with the favorable cost structure of the Shandong facility. The volume is enough to reach break-even profitability already in Q4, and as I mentioned earlier, this required a buildup of working capital, but it also allowed for a significant volume growth of 41% compared to last year for Asia. During 2025 we will shift focus to optimizing price mix and cost of the business in the Shandong plant, and we have the target to make the acquisition accretive to EPS after a minority interest. During this year in Europe we experienced an increased demand on the back of normalization of downstream inventory levels within packaging, general engineering and distribution markets, and in combination with largely stable sales to automotive customers.
This led to an 8% year-on-year sales volume growth in Europe, and Gränges Eurasia recorded a 24% growth in Q4. The adjusted operating profit reached 170 million SEK in the fourth quarter, and this represents an increase by 79 million SEK compared with the same quarter last year. When adjusting for these one-off energy cost compensations in 2023, the lower average fabrication price was more than offset by the higher sales volume by improved metal management, lower energy unit costs in especially Europe then, and improved cost productivity, and the EBIT per tonne improved by 500 SEK to 2.1 thousand SEK per tonne in Q4. Generally a very good development in Eurasia in the fourth quarter as well as for the full year.
With that, I hand over back to Jörgen who will provide you with a summary of 2024 and outlook for the first quarter this year.
Thank you, Oskar. Summarizing 2024 then, I think it's also important to say that this year marked the completion of the first phase of our Navigate plan and we feel that in the three years that we've been working on this since 2021, we have created a very solid foundation for sustainable growth. But we also feel that we've achieved good results. The net profit since the year of starting this plan has increased by over 70%. But also sustainability numbers are very good. Our recycling is up 400% and our carbon intensity is down, as I already think I said in this call, over 35% since our reference year 2017. And this puts us right on track for reaching our targets that we set also as a part of this new Navigate strategy to reach carbon neutrality, net zero in 2040.
2024 also marks the end of the construction phase of a very long multi year expansion program which is intended to take us to 800,000 tons of capacity and to get full availability of that capacity from the second half of this year 2025 and that's a 40% capacity increase since 2021. To utilize this capacity, we've also worked hard to achieve a significant diversification of our sales volume over different geographies and segments, and we believe that that diversification has already helped to stabilize volumes and earnings over time as the different markets and geographies vary in terms of their demand.
Most important of all, of course we have built a strong team of 3,500 people now and then I count the 600 new colleagues that we have employed in Gränges Shandong starting in the fourth quarter in Americas and in Europe and in Asia for the next phase of the Navigate plan. We aim to build a leader in our industry and we aim to build a leader partly with focusing on, as Oskar already alluded to, increased utilization, but also an optimization of the price structure, the cost structure and also the business mix that we use this new capacity for. We don't at the time at least have any new large capacity expansion programs in our plans and this gives us also an opportunity for a better cash conversion in 2025 out.
We communicate also new long-term targets in 2021 and we see good progress against those targets in most cases. In the case of our profitability target which is return on capital employed, we're aiming to get to above 15% and there we have improved but we still have a ways to go with approximately 12% full year, full year profitability in 2024. Our profit growth however has been very good and we're now solidly in the range that we have communicated which is to have an average operating profit growth over time over 10% per year. Our capital structure took a step up in leverage in the fourth quarter of 2024 as we've already talked about, but it's now for some time been solidly within our target range of 1-2 times EBITDA net debt to EBITDA and we aim to keep it in that range also going forward.
Our dividend, our target is to have over 30% of dividend as a result in proportion to the net earnings for the full year. The Board of Directors have proposed to the annual general meeting a dividend for the full year of 2024 of SEK 3.20 which is slightly over 30% of net earnings for 2024. Turning to 2025 then, the outlook for the first quarter is that first of all we aim to retain the new business that we have gained in the fourth quarter and which was enabled by the Shandong acquisition. This new business is then something like 90,000 tonnes on a full year basis. We aim in the first quarter to retain also a breakeven profitability of this new business and after that we intend to improve it with price actions and cost mix actions.
This is done instead of trying to grow the volume aggressively further, but rather to try to optimize its profitability during the year of 2025. The objective with all these actions is to reach the target of making the acquisition in Shandong EPS accretive after minority interest during 2025 for the full year. Looking at the like for like basis then instead we expect muted demand generally speaking, but also continued market share gains. As a result of those two things we expect mid single digit sales volume growth in the first quarter. On the margin side we do expect continued negative effects. There are always negative effects to take into account when you're in business, right? We see negative effects from price pressure, labor cost inflation, scrap prices and also a development in the Chinese export taxation.
But we intend to continue to offset those effects as we have done very successfully in 2024 and as we did also in 2024 and 2023 and in 2022 with actions of our own in areas that we can control. And particularly we intend to focus on volume growth, on cost reduction and on productivity improvement. And for the full year of 2025 we also target an improved cash flow on the strength of having concluded our capacity investments and also because we do not intend to build working capital at the same rate as we did at the tail end of 2024. All in all, we have good confidence for 2025 and we base that confidence on the foundation for growth we've created in the first years of the Navigate plan, but also on the good performance that we've had now for three years in a row.
And personally, although we don't see any real signs of a fantastic improvement of end consumer demand, I feel rather more optimistic for 2025 than I did at the beginning of 2024. And we look forward to this year with confidence and with, well, I won't say happiness, but at least with a lot of confidence. So with that, that concludes also the prepared comments that we had for the fourth quarter result and I would like then to turn over to the operator for any questions that the audience may have. So operator please. Q & A.
If you wish to ask a question, please dial on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 5 on your telephone keypad. The next question comes from Gustaf Schwerin from Handelsbanken. Please go ahead.
Yes, hello, Gustaf, Handelsbanken. I have a few. First, if we start with the HVAC business in the U.S. growing at 7%, obviously the inventory buildup you are mentioning here, would you say that that is explaining the full growth year over year? And second part of that question is when we look at official shipment data from the U.S. this has rather been growing at say +50% for October and November you guys should be earlier in the cycle. I'm wondering here if there's an element of this, a pre-buy effect also in Q2, Q3. Q3 was quite good. Right. And if that is the case, do you think this is going to reverse in 2025? Yeah, that's the first. I'll stop there.
Gustav, good morning. Jörgen speaking here. Hope you're doing fine. The question about the HVAC market going forward and historical also is a very good one, but it's a hard one to parse or to unravel. I think we did see effects of the upcoming change of legislation which has now taken effect then concerning refrigerants and it's no doubt so that that is the main factor behind this very good growth that we saw in the fourth quarter. Usually the fourth quarter is very weak one. This year the fourth quarter was a very strong one for HVAC in North America and the majority of that effect is due to this change of legislation. What does that tell us about the market going forward? I think that's a really hard question to answer because it gets drowned out in these very big effects.
But we're, I guess, not negative at least about the HVAC market for 2025, and then we'll have to wait and see what the weather does.
I think to add to that what Jörgen says, I think we have a positive view of the underlying development for HVAC for 2025. But that said, I think there was a lot of pre production in the HVAC industry in the U.S., and I mean provided that the end customer demand has not changed, the HVAC industry will need to destock a little bit at some point. Right.
But maybe to push a bit further on that because when you guys reported Q3 numbers, we had not seen the October data which was the first month with a big uptick year over year in the U.S. And I guess you agree with me that you must have sold products before those units were shipped. I can't remember that we spoke at all about this effect in Q3. Was that something you reflected on when we saw I think 16% or 17% growth in HVAC for you guys in third quarter, or am I reading too much into this?
HVAC has been quite strong in general in 2024. Maybe with the exception of Q1 that wasn't particularly strong. But I mean Gustav, from our perspective, we don't have a fantastic visibility into the customer and our customers' demand except for the forecast that they give us. That's what we deliver on.
Right.
So we are not experts on this industry. So it's difficult to comment in detail except for what we see from our customers forecast that we do receive. Right.
But structurally I think it is an industry like you also said, Oscar, that we're positive about. We think it has good structural growth trends and also we think that the customer base that we have is a very strong one with some of the real leaders in this industry. So we're super optimistic about the forecast or the outlook for this industry in the longer term. But when it comes to quarterly data, it is really hard to predict.
Okay, yeah, I hear you then. Yeah, I'll take one Shandong then. Just to be very clear here, when you're talking about the 90k run rate, basically we should see that from Q1 and throughout the year, and then of course the plan is to lift mix and margins. Is that how we should read Shandong volume contribution in Q1 going forward?
It's the volume contribution of new business that we have gained already and which we intend to keep and which was enabled by the Shandong acquisition. You have to remember we acquired a factory, not a business. And this factory together with our existing production facilities in Asia have a production capacity that enables this buildup. Right. So but to give you a shorter answer to your question, the answer is yes.
Okay. All right, thank you.
The next question comes from Albin Nordmark from Nordea. Please go ahead.
Hi Jörgen. Oskar, Albin from Nordea here. Just a few questions from my side. Firstly, you guys for mid single did it organically here. Can you give us some flavor? Is it both geographies and also flavor between end markets? Yeah, first one.
Yeah, I can start here and Jörgen can add to it. But I think first of all, right, the mid single digit growth guidance that excludes any impact now from this 90,000 tons annual run rate and the business that we have built up in Shandong. So this is a guidance for sort of the, on a like, for like basis excluding Shandong. Right. That's maybe important to point out but that said, I think we, as Jörgen said, we don't expect any fantastic market or underlying market growth in any of the regions. But we do see good impact from the work we've done on the sales side basically capturing new business and market share gains.
In terms of how this mid single digit growth is spread, we do expect that to be fairly evenly spread across the geographies, maybe with a little bit of a stronger growth in Asia rather than in Europe and Americas, but fairly evenly distributed.
And when it comes to the market segments, I guess you could say also regarding the earlier questions that we got in HVAC that there is uncertainty there and there is uncertainty in all the other segments also. But our experience has been that these forecasts we tend to end up in a good place, relatively speaking. There are some positive surprises, negative surprises, but it's not so that everything here depends on a single segment.
Regarding the Shandong facility, what's the main end market, end product categories currently in the new facility? What end markets and products are you aiming for with the improved mix? And also how long do you think it will take for you to have an optimal mix and start to be able to focus on increasing volumes?
Again, I don't think we'll ever get an optimal mix. But I'll answer the second part of your question first. We've said as an ambition level then that we should make sure that this acquisition and the sales it enables accretes to Gränges EPS after minority interest in 2025. So that means, I guess that we feel that we have this year and its full four quarters to optimize the mix to a level where we reach that kind of profitability. Right. Regarding a question about the end markets, we built up this volume very quickly and that means that we've taken some business which we like and intend to keep for long term, for instance in automotive, but also in general engineering segments and other segments.
We've also taken some business which we intend to maybe not keep forever because its profitability and its, let's say its characteristics are not so that it's a long term business, but nevertheless helps us reach break even. Right? That can be for instance again in distribution segments. Speaking of relatively low end, relatively undifferentiated products, for instance thick plate business, which is something that we have in Gränges now with this acquisition and haven't had before. Also it's a learning, it's a learning process, right? We're learning these new end markets that we can address. We're learning to use the equipment that we've acquired in a good way.
We're also working to build up a strong organization, strong systems, strong processes, and all these things will be ongoing for the balance of this year for sure and will hopefully then help to contribute to an improved profitability of this business that we have built up.
Okay, that's very clear. That's all for me also. Thank you.
The next question comes from Adrian Gilani from ABG Sundal Collier. Please go ahead.
Yes, hello. I'd also like to ask some questions about Shandong. I guess first of all, you want to retain the 90,000 ton run rate. How long do you want to be sort of at that 90,000 ton run rate before taking the next step up in volumes?
As you know, we don't give any volume forecast so far out in time. So this is more like a declaration of intent. Right. But we've said that we're very happy to have been able to build up such a large volume in such a short time in the fourth quarter. And we think therefore that it's time to take a breather and not first and foremost, at least focus on new business gains in the next coming quarters, but rather to try to optimize the business we have at the run rates we have. And this phase will continue until we feel that the profitability is good enough to then, so to speak, have earned the right to grow further. And if you want a ballpark number, I guess you could count on 2025 being the time that it will take to reach that level. Right.
If we're then successful as we aim to be to make it more profitable, then maybe 2026 is a good time to continue to grow this business further.
Okay, thank you, that's very clear. And then on what's actually going to drive the earnings growth in Shandong? Is it mainly an effect of improving the product mix, or is it mainly an effect of making the facility more cost efficient?
It's an effect of the two things that you mentioned, but also an effect of price. When you take business quickly, it's not always possible to get the price that you wish for, and you have to understand also that this business that we've taken, this 90,000 tons, that's a really large volume for Gränges. It corresponds in size to our facility in Finspång, where we've been for many decades producing flat rolled aluminum. Right, and to have done it in such a short time, it's reasonable to assume that price is not optimal. It's reasonable to assume that mix is not optimal.
And it's also reasonable to assume, very reasonable to assume that our cost productivity is not optimal, that we don't have the perfect processes, that we don't have the perfect sources, that we don't have the perfect production techniques, systems and so on, and also not the perfect skills yet. So all those two things that you mentioned, plus price are the three factors and exactly what will contribute what we'll see in the end, it's the whole portfolio profitability that matters.
Right.
So all three factors.
Is it currently a lot of volumes going to distributors and is that the part that you don't want to keep?
So to say we have distributor volume in all of our regions, especially in Europe. We've had distributor volume for quite some time and it's not bad volume to have because it's a market that helps you optimize the mix in a different way, namely to be able to keep a reasonably high utilization even when the other market segments swing. So it's not so that we want to never have distributors in Asia or that we want to lose all that volume, but like I said, we want to optimize its price, its mix and its cost productivity. So distributors are good customers, but they're good customers only if you make good money selling to them. And that's what we intend to do also in Asia, as we have done rather successfully we feel in Europe over the past three, four years since we made the acquisition in Konin.
Okay, understood. And then also just on the working capital build, considering you are now going to be on flat absolute volumes in Shandong for a while, does this mean you've also taken the full working capital build for the Shandong factory in Q4?
That's a very good question, Adrian. And I would say to a large extent, yes. But it also ties a little bit to the discussion you and Jörgen just had here because it's also mix related. Right. And typically when you have these distribution business that's short lead times and quick payments and so forth. So that tends to be quite efficient from a working capital perspective if you gradually move into more sophisticated products that tend to lead to longer lead times which tend to lead to higher inventories levels and so forth. Right. So I would say that the bulk of the working capital that is needed to sort of operate a 90,000 tonnes annual run rate business is there already after Q4. But as we optimize the mix and so going forward we might see some additional buildup.
But if you compare sort of this, the working capital level now in Shandong compared to sort of the Gränges average in terms of working capital efficiency, you will see that it's quite on the Gränges' average already, whereas it's much, much more efficient compared to our Eurasia business and certainly to our Asia China business, that is where we typically have very, very sophisticated products. Right. So long answer to short question, the bulk of the capital is there. There might be some more increases, but not at all close to what we've seen in quarter four to add to.
What Oskar is saying. Adrian, I think it's good that you ask this question because you point in a polite way, I guess, to one of the weaker spots of the 2024 for Gränges.
Right.
We're happy with almost everything that we did in 2024, but we're not happy about the cash flow. And that has to do with the fact that we continued and also wrapped up most of our expansion projects in 2024. But it also has to do with the fact that we built for this new business a lot and also had good growth in 2024. And those two things then led in the end of 2024 to working capital buildup. Overall, it's definitely our ambition to have a better operating cash flow in 2025, in fact, much better operating cash flow in 2025 than we did in 2024. And it's also our ambition to drastically improve the conversion from, for instance, EBITDA to operating cash flow in 2025 relative to 2024.
Working capital is a moving target and there are many factors up and down, but the big picture is our ambition to improve the operating cash flow and the cash conversion in the year that we're now in.
Okay, perfect. I appreciate the thorough answer. That was all for me, so thank you.
They got on.
As a reminder, if you wish to ask a question, please dial 5 on your telephone keypad. The next question comes from Oskar Lindström from Danske Bank. Please go ahead.
Good morning and congratulations on a very successful 2024 despite difficult market conditions, as you mentioned. I have three questions just first, a very quick one on the very impressive ramp up of the Shandong facility. Are all those volumes new volumes or have you sort of transferred volumes from your Shanghai facility as part of that sort of increase to 90,000 tons on a yearly basis?
From a Gränges perspective, Oskar, and good morning. Also there are new volumes which are incremental, so to speak, to our business that we had before. And they're also to a large extent new customers that we have not worked with before and also new products that we have not worked with before. So it's large incremental step in our ability to sell products in the Asian market.
Just out of curiosity, what was the sort of run rate, full year volume when you acquired the facility?
Do you mean with the previous owners or what do you mean with the question?
Yes, yes. I mean what was. Did you increase to 90,000 tons on an annual basis or was it sort of already at 30,000 tons when you came in and took over the facility?
It's a really good question, but also a difficult one to answer because we did not in fact acquire any customers, so to speak. We did not acquire any working capital, we did not acquire any business in that sense. So in one way of thinking about it, of course you can say that we really built up the volume from zero to this level and that's certainly also what the finances reflect. That is also why there was such a large working capital buildup, because we did not acquire any working capital. That said, it was not so that the factory stood still before.
I don't think we have a number for exactly what the run rate was, but of course we are trying to target the same kinds of customers and the same kind of business that was there before, in addition to targeted businesses that was not there before and that we have. So it's a good question, but difficult one to answer. But we built up this volume, we feel, under our own steam, but with a good Rolodex, I guess, of customers during the fourth quarter of 2024.
Thank you.
Thank you.
I mean, very impressive. You mentioned here during your presentation that you've been taking market share throughout 2024 and you seem to sort of aim for continuing to do this and take market share also in 2025. I mean, first off, if it's possible for you to quantify this, I mean, I realize, you know, there's different market segments and many such things, but I mean, is there a number that you've taken, you know, X% market share in the, you know, segments where you are during 2024? And also, I mean, given that you are global leader, I mean, is it feasible for you to continue to take market share at this pace in 2025?
I think the second part of your question, Oskar, is maybe a little bit easier to answer. I mean, we are a leader, but we are a leader which plays only in certain very selected niches. So if you take our market share in the global market for flat rolled aluminum product, it is very small. In the niches where we play, we have, generally speaking, higher market share. But firstly we have the opportunity to grow in niches where our market share is still very low. And secondly, we have also the opportunity to open up new niches, which is, for instance, what we did in the fourth quarter, also going into the plate business, which is a completely new niche for Gränges Konin.
I think the biggest market share gain that we intend to take in 2025, of course, relates to these 90,000 tons of full year volume that we did not have in 2024, or at least only a very small portion of which maybe around eight or so thousand tonnes was reflected in sales volume in 2024. So that's of course the biggest step. But it is in fact so that all of our regions, all of our facilities and also all of our market-share segments, customer segments or what have you have plans to grow the market share in 2025, then quantifying it, you know, automotive, you know what the growth rate is, HVAC, you know what the growth rate is, the general economy, you know what the growth rate is a bit.
And segments where we serve that we work only opportunistically in, like building and construction and so on, you know what they are. So generally our ambition is to try to grow for a while, at least until we have fully utilized this large capacity that we now have faster than the economy. And if we can grow faster than GDP, then that is not necessarily equal to, but at least reflective of market share gains. Right. So run your numbers.
A final question. I mean the acquisition and ramp up of the Shandong facility sort of was in the spotlight here in this quarter, but I believe you've also completed two other investments. I mean the second casting line in Huntingdon, was that completed now also in this quarter and then the expansion of Konin. And in both of these cases, you know, can we expect any meaningful sort of visible in terms of earnings volumes effect from these in Q1 or H1?
Anyway, speak about the project and then maybe Oskar can comment on the earnings. So about the projects, yes, the construction of both those projects is more or less finished and we're now in a phase which is called commissioning, which means then making sure that all the technology works as it should and trying it out and so on, and then gradually growing the volumes. And we expect both these, both these investments that you speak about, the recycling and casting center in Huntingdon and the new rolling mill in Konin to be fully available capacity from the second half of this year, 2025. And regarding the profitability of that, maybe Oskar, you can comment.
Yeah, it's a good question there, Oskar. I think for the first quarter this year, I think you should basically expect no additional profits from either the recycling center in the U.S. or the new cold rolling capacity in Konin. I mean the assets are in place, but they are currently being commissioned, as Jörgen said. Right. And I don't think foresee any commercial volumes to speak of in Q1 for any of these two assets. Maybe a little bit in second quarter. It depends a little also on the commissioning phase here and how quickly it can be finalized. But I think the potential for 2025 primarily lies within the second half of the year.
Also, it's important that, I mean, just because you have no new cold rolling mill that doesn't add to profit. You need to actually sell something to make a profit. Right. So this is the same volume we're talking about when we're saying that we intend to grow, and it's the same profit that we're talking about when we say that we intend to improve productivity and margins and so on. Right. So all of this cannot be counted twice. Only once.
Yeah, yeah. I'm just trying to look here a little bit about the phasing of the impact. Thank you. Those were the three questions that I had.
Good questions, Oskar, thank you very much.
There are no more questions at this time. So I hand the conference back to the President and CEO Jörgen Rosengren for any closing comments.
Thank you, operator. And thank you, all of you who have dialed into this conference call for Gränges' fourth quarter earnings and for the very good questions. And I wish all of you a very good day. Goodbye.