Gränges AB (publ) (STO:GRNG)

CMD 2018

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Mar 21, 2018

Name is Panila Grenfelt, and I'm heading Communications and IR at Granges. It has been two years since we had our last Capital Markets Day. Since then, Granges has become a significantly larger company with a more balanced product portfolio. The purpose of today's presentation is to provide you with an insight into Granges businesses, a strategic work and some areas that will drive our business going forward. It is also a good opportunity for you to get to know our senior management. As we have a busy schedule this morning, we will have our first three speakers presenting before we open up for questions. With that, I welcome our first speaker on stage, Johan Thank you, Panilla, and very welcome to Granges Capital Market Day twenty eighteen. I'm Johan Menkel. I'm the CEO of Granges. It was actually, as Peniela said, it was almost two years ago since we had our last Capital Market Day in 2016. And at that time, we were a much smaller company. We had a sales revenue of around SEK 5,500,000,000.0. We were around 900 employees and we had 200,000 tonnes of production capacity. And at that time, we also had operations in Sweden and in China. So of course, happy to one point five year later present a different Granges. Today, we are a much larger company. We have a sales revenue of around SEK11 billion. We are 1,600 employees. We have a production capacity of around 400,000 tonne and an adjusted operating profit of SEK $933,000,000. And we are still the leader in our core market, rolled aluminum products for brazed heat exchanger, where we have around 20% market share. If we look upon our growth story, I've been with this company since 02/2004. That's why I decided to chose to start from 2005 here. No but honestly, we have had a very good growth and growth development for Granges the past twelve years. If we look at into our organic growth, we have had around 7% of organic growth and that you should compare with the underlying markets light vehicle production of 3%, basically double the growth rate in our underlying markets. And if you add to that the acquisition we did in U. S. One point five years ago, the growth has been around 13% per year. And if you look upon our share price development, we have increased the share price since the IPO in 2014 with 111%. And if we're including the dividend to the shareholders, it's actually 125 percent return to the shareholders. This is something that we are proud of. And of course, we, as the management team and the whole organization, are truly committed to continue this growth path going forward. So this was just a small introduction. And as Pernilla said, also introducing the agenda. Before I start to introduce the agenda, I would like to say that 2018 has started well for Granges. We see a strong demand in all our regions. And we work with our strategy and we are very committed to continue to deliver value to our shareholders. And we will work harder on sustainability, expansion plans and innovation. And this day is very important for us because it's a possibility for us to present to you our company, our position, our strategy, but it's also an opportunity for many of you who meet other members from Granges' executive team. So I'm very happy that we have collected also not only me and Oskar, who is the normal people you meet, but today we'll also have other members from Granges that can give you their view of their position on their markets, their strategy and their activities. So I will start with giving you an update about our goals and the strategy, but also what we have achieved since the last Capital Market Day two years ago. Then Ken Sjolin, our Senior Vice President and Head of Research and Innovation, will give his view on innovation. Innovation is a very, very important vehicle to continue to develop Granges. And then Torbjorn Stancor, who is heading our Technology and Business Development, he will give you his presentation about electrical vehicles, what's happening in this very dynamic automotive market that Granges are in today and what are Granges doing in order to capture the growth opportunities. And then after the three first presentation, we will have a Q and A session followed by a coffee break. And then after the coffee break, we will continue with the presentation from Sofia Hirdevold, our Vice President, Sustainability, and how Granges aims to create value from sustainability. And then Colin Shih, our President for Asia, is here and will present our strategy for Asia and what we are doing right there right now. And Patrick Lawler, our President for Americas, will give his view of Granges America. And finally, Oskar will conclude this session with a financial update. After all these presentations, we are open up for questions. I think it's a good opportunity to ask questions to Sofia, to Colin and to Patrick. And after this presentation, there will be a Q and A session as well. And then we will serve a lunch outside here. So I'm very much looking forward to an exciting day. And once again, I'm very happy that all of you are here. And we hope this will be a very informative day and that you will learn more about Granges and our growth plans. So I will then take you through our strategy and our goals and also give examples of what we have achieved the last one point five years since the Capital Market Day in 2016. To start with, Granges is today a truly global company. We are acting in all regions around the world. Through our operation in Sweden, we serve customers in Europe. Through our production facility in Shanghai, we serve all customers in Asia, but we also have important sales network to our companies in Korea, Japan and India, where we have commercial and technical expertise to serve the customers in that region. We also have, since one point five years, three operations in North America that we will come back to and give you more insight of. We also have R and D capabilities. We have our main R and D capability in Finspang, but we also have since 2006 an R and D facility in Shanghai and we're also strengthening our R and D capability in The Americas. And what you cannot see here is actually that we also have two small joint venture in Europe as well, in France and in Germany. We last year, we invested and took a majority share in spray forming technology production in France and in Germany. We will come back to that today, but you don't see these dots here on the map. So today, Granges is acting on basically these main markets. The automotive market represents 46%. We have a leading position here. We are delivering to all the producers of braced aluminum heat exchanger. We claim that in every second car out there in the world, there are some products or some materials from Granges. We also have a very large market share in the market for stationary heat exchanger, what we call the HVAC and R, basically air conditioning system to houses. And then we are within several other niches among one interesting niches is the transformer winding power generation applications, but also packaging and other industrial applications. We also do product to the agricultural equipment. In Granges today, we have a strong position in our part of the value chain. We are a material producer, but all the products that we do produce are customized and specifically made for a specific purpose for our customers. We don't have any on the shelf product to our customers. We do work a lot with product development. This is a very essential integrated process together with our customers. We can work up to two years with several of the automotive customers in order to come up with the right product specification for that specific heat exchanger for that specific car model. We do source all the needed raw material, basically aluminum, but we also do source a lot of other, what we call, alloying elements, could be manganese, copper and zinc. The cost for the metal is a pass through to our customers, and we do earn money on our value add, what we call the fabrication. Today, in the car, there are basically two main purposes for the heat exchanger. One is to establish a good climate in the car through the air conditioning system. You have evaporator, you have a condenser, you have heater. And the second purpose is really to improve the performance of the engine where you find radiators, engine cooling, you have also transmission oil cooling, etcetera. This is a hybrid car, Volvo, which is good for Granges. We have two sets of engines, the battery engine and the combustion engine. We will come back after my presentation here with Turbine's presentation, going a little bit more into depth what is happening with the EV development and what is what are the opportunity for Granges to capture. I think you're quite familiar to Granges. You know that our products are very unique. They are very technical advanced. We have divided our product group into four main categories: tube, plate, unclad fin and fin. But we do what we call multilayer product, where we produce different layers of aluminum alloy, where every layer has a specific purpose, either in the production process for our customers, enabling the bracing process or function for the heat exchanger out on the field, a corrosion protective layer. These different layers, you can see that we have I mean, in the thin foil like this, you can have up to five different layers and with a very, very thin layer, which has through this coil of several kilometers long, you have to be very consistent in the percentage of the layer. And this is very difficult to produce. So that's why we have achieved this unique position in this market, and it has turned out that a lot of competitors has a lot of challenges really to produce and to enable the quality needed from their customers. So where are we today? We are a global player. We are acting on the global market. We have a clear target to be number one in all our regions. And in terms of the automotive, we are actually number one in Europe and in Asia for braced aluminum heat exchanger. In Americas, we are number two. We were number three before the acquisition. But through the acquisition, we actually also gained more volume. And since then, we have also grown substantially in Americas due to the fact that we are now also in that market. But still, we have a number two position in Americas. And of course, our clear target is to be number one even in Americas. In the HVAC and oil industry, we have a number one position in Americas. And for braced aluminum heat exchanger, we have a number one position in Europe and in Asia. And the other niche applications, we are number one or number two, and that is the clear ambition for Granges. If we look upon our end customer markets, and now I'm focusing on the two largest, the two core markets, which is the automotive industry. The characteristic of this market is that there are high barriers to entry, high technical requirements, customized product, long term relation and they are truly a global business. There is a value of being global for our large customers. If we have a more of a deeper look into the HVAC in our industry, we see that it's an industry that have high demands and operational efficiency, delivery precision, strong customer relations and the geographical proximity is of importance. And we also believe that the global macro trend that we see in the world right now with urbanization, People are moving into cities. There are today 29 megacities in the world with more than 10,000,000 inhabitants. We also see that digitalization is disrupting many, many industries and of course, the limited resources. All of these drivers actually is good for Granges because our business model do support and address the challenges that you have from these drivers. In terms of digitalization, of course, specifically in the automotive industry today, where you have a clear trend and shift from combustion engine to electrical vehicles, Granges has a unique position to basically address the challenges in this very dynamic market through our lightweight material, just also to the fact that we produce product that enable an energy efficient solution. But also when it comes to limited resources, the megacities I was talking about before, it's predicted that in the future that the cities will consume 75% of all resources and 80% of all green gas emission will be produced in these cities. And of course, by helping cities to provide more energy efficient cooling, for instance, is of great value for many of our customers on the global market. So we think that our business model does really serve and support these drivers and addresses the challenges that the world are facing. And if we look a bit more into Granges and what has been the main success factors for Granges as a company, we have had a very solid business model for more than twenty years and we've been able to remain as a leader in this market. And we also been able to grow our business. And it's of course, it's difficult to say exactly what it is. It's about all the people that works for Granges, of course. But if I would like to say something, it really comes down to these three areas: attention to customer needs. We have a company culture that do really care about our customers. We spend a lot of time out at the customers and we put a lot of effort into understanding what are really the customer needs. The second dimension is our leading technology. We have put a lot of effort into new development and new materials, but we also believe that continue to focus on technology, continue to focus on material development is the best way to remain the leader in this industry. But we have found a good model to combine our technology know how with a close cooperation with our customers. And the third area is really the operational efficiency. These products are extremely difficult to produce. It's a very complex supply chain. It's very complex planning. We have several 100 of different product specification to handle this in an efficient way and as well to enable the quality needed and the tolerances is very, very difficult and that Granges has proved to be doing very well. So these are basically the three main areas that has been the success factor for Granges the past twenty years. And these will continue to be very important for Granges going forward. Our vision is that we want to transform the world through innovative aluminum engineering. We have a quite broad view here. We would like to capture different opportunities within the aluminum sphere, not only heat exchanger, we are open also to new segments, but we still believe that our core is within the aluminum material and that's where we will stay. But we see a lot of interesting, exciting opportunities within the aluminum sphere. And the business concept of Granges is that we want to support our customers with the research and innovation and product development and thereby helping them to address their challenges in order to achieve more energy efficient, more cost efficient solutions to their customers. So this was just a short reminder of our business concept, our vision. And if I go into our 2020 goals and strategy, I would like to present the target we have. This we presented actually one point five year ago. And today, the purpose is, of course, to present where we are in this journey and what we have achieved so far. But the three main targets for Granges is that we want to grow better than our underlying market. We should be number one in all geographical regions that we serve and we should do this by maintaining a good and healthy profitability. In order to achieve these goals, we have identified four very important areas for Granges to work on. The first one is the innovation, drive growth through innovation. That's also why we have this as a specific presentation today. That's the only way to stay as a leader, to continue to develop better solution, better products than your competitors, adding more value to your customers, improving the features. We also put a lot of effort the last two years into sustainability. And this is nothing new to Granges. We are a very sustainable company. Our business model has always worked with energy efficiency, but we believe that we can do more here. And we also believe that this area will give us a competitive advantage going forward, especially on the global market. The third area is the increased efficiency through continuous improvements. This is part of our DNA. It's part of our everyday work to improve our productivity, take out costs and do things smarter and more efficient. But we have a very solid program to drive this activity. And the fourth area is that we want to grow through structural expansion. And that was a fairly new area for Granges two years ago because up until two years ago, we have basically grown organically. But we decided also that we need to look into different opportunities when it comes to acquisitions and also to take advantage of our position when we see good business opportunities. So I would like to highlight a few areas into several of these areas. Drive growth through innovation, what we have done the past year. We have established a global organization and we have also increased the number of development projects. And we have today 165 patents and we have 73 patents pending. We also launched our Trillium material, which Kent will come back to in his presentation, but this is a very much of a breakthrough technology in our industry. And now we've been able to produce that in a more cost efficient way and we now are basically starting to launch that product in a broader scale. The second area was to create value from sustainability. What we have done, we have had a carbon footprint study to provide our baseline of our understanding, what is our footprint. And from there, we have started to develop a strategy and define actions that we need to take to improve our sustainability. And we will also continue this journey by, of course, developing products that are more sustainable. And this is for sure something that is really taking place now. Some industries has come further here, but the automotive industry is very keen on also becoming more sustainable. BMW recently announced that they will have their data center up in Lulio since that data center consumes a lot of energy and there you can find green hydrogen power energy. So I mean, for the car producer to be sustainable, we become much more important in the future. And that goes through the whole value chain. So we believe that we have a very good opportunity to also create value in order to be more sustainable. And the third area is to increase operational efficiency. We have achieved one example here is actually even though the operation we acquired in U. S. Was a very fully loaded operation with a strong demand, we've been able to our continuous improvement efforts to increase the output of 5% actually the last year. We have also improved the quality and reduced the number of clay by 25% the last year. Sounds a lot, but we still have a very good quality. So we started from very tough position, but developed that further. But I think this was also an area where Granges contributed positively to the acquired company. We have, in general, a higher focus on the quality dimension, and we have actually achieved a large improvement in The U. S. Operation. We have reduced energy consumption by 2%, and we have also increased the share of internal recycled aluminum, which is, of course, very important for our cost position, but it's also a great value for our customers. And when it comes to the structural growth and expansion, of course, you're very aware upon the acquisition we did of the Noranda business one point five year ago. We have also announced recently that we will expand our production capacity in one of the plants in U. S. In Huntington. We signed a letter of intent with Mitsubishi Aluminum to form a joint venture in U. S. To produce cladded aluminum product. And we invested in the spray forming facilities in France and in Germany, as I presented earlier. So we have been very active here as well. And then so just recap a bit. We started 2014 with a company basically serving Asia and Europe, where the America was a small business for us. And during this 1.5, we have doubled the size of the company. We are now serving all three regions. Of course, the consequence of the acquisition is that America is now our largest market. Just to say that if you look into our end markets, Asia is still the largest market for Granges. Half of the car today are produced in Asia and it's also in Asia where you have the fastest growth. So of course, we're also looking into business opportunity to balance this picture going forward. If we look into our product portfolio, we are also very happy that we have a more balanced product portfolio today. We had 92% exposure to the automotive industry in 2014. Today, we have around half of the business serving the automotive industry and as I said before, 26% HVAC and 28% other. We think this is a more healthy business portfolio for Granges as well. And if you summarize our financial target and what we are committed to deliver to our shareholders, We can confirm that on the growth, we have grown by 4.6% during 2017, actually better than the underlying market in the automotive industry. We have a target that we should be between 15% to 20% of return on capital employed. We ended the year by 16.7%, basically within that range, even though we did a large acquisition. We also have a debt target that we should be between one to two times net debt over EBITDA, and we are now at 1.8. And bear in mind that when we did the acquisition, we were actually up until 2.7 So we have been able to reduce the debt substantially in a very short time frame. But this is very significant for Granges business model. We have a very strong underlying cash flow in our operation. And that, of course, allow us to continue to grow this business and to do acquisition of the size that we did in Americas. And the dividend that we propose is to have a dividend of 35% of the net profit to per share. That, of course, needs to be approved under Annual General Meeting in May. Focus area, we will continue to focus on the growth opportunities in all regions. We will increase our efforts into the research and innovation and business development. We have implemented a group wide sustainability framework. We will continue to implement and communicate our model for operational excellence and continue to develop our leaders and build diverse and high performing teams. So to conclude my presentation here, we have delivered our goals. We are very proud for that. We have a strong position in our niche markets that serves as a foundation for our future growth. Research and innovation plays a very important role for Granges going forward. We will continue to put effort into research and innovation. We have now a very solid strategy for how Granges should work even more focused with sustainability and create value from sustainability. And we have several interesting projects that we are working on right now, and we have a very ambitious team in Granges that want to continue to develop this company. Thank you. This was my introduction part. And I'm here, of course, open to answer any questions, but not right now. Yes. Thank you, Johan. I would like to welcome our next speaker up on stage. It's Kent Hueli, our Senior Vice President, Research and Innovation, who oversees our R and D activities globally. Welcome, Kent. Thank you very much, and good morning. As Johan mentioned, my task is to introduce all the details in our product innovation, all the secrets, and that will take about twenty minutes. So I hope you will follow. Innovation is, as Johan said, a part of the strategy for Granges, and it was added as one pillar in the 2016 strategy. And product innovation and product development has always been an important part of our operations. But doing this, we said that we need to strengthen the long term and customized development we're doing in our strategic areas, and that is basically the Heat Exchange Materials, but also adding capabilities in new products, new innovation, new exciting markets. To do that, we need also to extend the resources we have. And that has been done and is being done in the Global Research Center in Finspang. And as well, my role, the Senior Vice President role within the group management team was added as a consequence of this new pillar in the strategy. So the setup we have here then on research and innovation today is that all the Granges R and I competence we need are situated in these competence centers we have. And it's complete to cover the metallurgy knowledge needed in aluminum to really do proper product development. And this also includes some customer processes because if we don't have that competence, we will not be able to deliver the right products to the customers. We do perform these development regionally, but it's coordinated globally. We have today our global R and I center in Finspang, where we do the development for global customers. But we also serve the regional customers in Europe from this center. And there is and I will come back to that a little bit later, we have added a function here on new technologies, and I will describe a little bit of what we are doing in that area. In Shanghai, we have had the R and I center since 02/2006, basically serving the Asian market, the Asian customers. But they also have an important role in working with solutions for electric vehicles and related new applications, which Torbjorn will come back to later on in his presentation. There is also a plan to have an R and I center in U. S. It's not established yet, but we are planning to establish that center, of course, to serve the American customers in an efficient way with research and development. Just to give you an idea on the size of the research and innovation, we are in total about 60 people working in research and innovation today, including the competence areas that are needed to really develop advanced heat exchanging materials. Competence in metallurgy, chemistry, metallography, etcetera, etcetera, all of them needed. But they can always also obviously be used for development of new products outside the heat exchanger material industry. The pace of innovation is very rapid and has been very rapid over the years. We have a big portfolio of IP. We have 52 patent families, 165 patents and 73 patent applications pending. By that, we are actually the second biggest in our industry, only beaten in this competition by UACJ, which is a Japanese aluminum giant, who is very active in this area as well. But this is an important platform to have. But it's also needed to mention that we don't protect everything. There is always a comparison in value between protecting and keeping secret. So that's always a valuation done before we do any patent applications and so on. All innovations are not patented. How do we spread the word about our innovation? Well, we do it in many different ways in customer meetings and so on, of course. But these are two examples of how we are sort of presenting this our innovation to our customers. We have each year annually a technical seminar in Asia. And we have every second year in China and every second year in India. In 2016, we had this seminar in Nanying in China with 400 participants from all the different industrial players. And in 2017, we have it had it in Pune in India, where we also have our sales office for Indian market. And this is sort of a great possibility and platform for presenting what we are doing, presented the advanced solutions we have for various parts of the market and as well, of course, have the possibility to discuss the current and future trends in this area with both suppliers, customers and end users, that is the OEMs, the car manufacturers. Now I would like to mention a few, give you some examples of the innovative products that we are working with. And it's partly the ones that are related to heat exchanger applications, but I will also come into the next slide the new technologies that we are looking at. First, Trillium. I will come back to Trillium. We will have some specific slides about Trillium and you will even be seeing a film about Trillium, Very exciting, I promise. It's a truly disruptive technology, but I will come back to that. Multilay products, which was mentioned by Johan earlier. We develop specific layers that we combine in specific ways to reach specific properties of the material. And that could be for corrosion, it could be for brazability, it could be for strength, etcetera. But this is a key technology for us to really improve materials and make sure that we can further that we can offer further downgauging to our customers. Strong sagging resistant fins, it's the same thinking here. By having stronger and sagging resistant fins, we will offer downgauging to our customers. But the difference in this case is that it's done through advanced processing. And as a comment, I'd say that this is definitely something we would not patent because processing is a key thing that we would like to keep secret how we do things. Strong temperature resistant tubes for combustion engines, least, the service temperatures are increasing. We need higher strength tubes. And this is actually a tube material that can increase its strength through the service. And this is really something that is important in certain applications. Corrosion resistant tubes and fins for EGR, that's the exhaust gas recirculation heat exchangers. Those are mainly today made by steel, and this is an effort to transfer that from steel to aluminum and to basically increase the market for aluminum heat exchangers. So these are some examples on this side. On the new technology side, we have also some examples of what we are doing. And here, the investment that Johan mentioned previously in Geartech, the spray forming facility, is very, very important because that gives some really fascinating possibilities when it comes to product development and performance materials. Examples are we could introduce much more alloying elements in aluminum than you can do in conventional processing. You can mix aluminum with nonmetallic materials, so called metal matrix composites. And this is due to the very quick cooling rate that you have in this process. And you can produce functional claddings that are very interesting in terms of product performance. So there is a lot of interesting stuff to be done in new technologies, but also basically for heat transfer materials. So I promised you film, now will you see it. It's an exciting and disruptive technology, as I was discussing earlier. And I will try to, during the film, explain some of the features with Trillium to see if I can make them understandable. The materials you are entering together. Normally, you do a degreasing process to be able to get bracing. Here, no degreasing. Just put it into the furnace. You're heating to bracing temperature. And there, you see the melting of this braze layer. You see excellent formation of fillets between the bottom plate and the top plate. And this is done without any fluxing, which is also a key issue here. Normally, you add flux to the material. Here, you don't need that. It's already into the material. This material, Trillium, as we call it, is well suited for most components that we are working with. Specifically, you can say that it opens up for heat exchanger designs that were difficult or maybe even impossible to reach before. So this is something really good for our customers when it comes to design freedom. Normally, you will have a bracing process looking like this. You have the degreasing, as I mentioned. You have the fluxing. You have to dry the flux before bracing and then it goes into the long bracing chamber, the stepwise increasing the temperature. In this case, with Trillium, you can remove a large part of the processing that the customer has to do, which of course is beneficial in many, many respects for the customer in terms of costs, in terms of floor space, etcetera, etcetera. But you all only need the bracing stage in the furnace. And there are a lot of added values related to this. You have the design freedom, as I mentioned before, you can make more complex heat exchangers that you could compare to what you could before. The process optimization, simpler, faster and the cost savings we are talking about. No flux additions, lower nitrogen cost, energy, labor costs, etcetera, etcetera. But there are some other additions also, which you actually can use. You can get some performance improvements regarding strength, regarding corrosion resistance, etcetera. And last but not least, environment, health and safety, where we use less energy, for example, in the production of heat exchangers using this method. And when it comes to health and safety, flux is not a very nice thing to deal with, and we completely take this away from the customer site. So this is also one thing which is very important. This is an electric vehicle. Am I going to kidnap Torbjorn's presentation? No, not really. He will talk a lot about this. But what I would like to mention here is that the Trillium material is really well suited for the electric vehicles. Electric vehicles will require quite different heat exchangers compared to what is used for the combustion engines. There will be more compact heat exchangers because they will need liquid cooling instead of air cooling. And these will make more compact units, more difficult to brace units and Trillium will be very, very powerful in this respect. We have a very sort of concrete case in terms of Raal. We introduced this material in 2012 already, something called Trillium Solid. We have now, last year, 2017, introduced Trillium Lean, which is a leaner, more cost effective variant of Trillium. And we have worked a lot with this customer, Raal, and they are actually planning to build a totally new fabrication area for dedicated to Trillium material, which is very exciting for us. We believe a lot in this product and this we are the only one on the market today supplying it. Conclusion, we are increasing the efforts in the research and innovation. We have done it. We are doing it. We will continue to do it for some more time, especially then to establish research and innovation in The Americas. We are one of the leading companies in the development of heat exchanging materials in the world. And there is a large potential to actually use our knowledge that we've gained over the years in other products, complementing products and especially products related to this to the spray forming process that we have acquired. And as we have mentioned earlier, development always in close cooperation with our customers because that's the best way to really commercialize the products that we are producing and the products that we are developing. Thank you very much. Thank you, Kent. Our next speaker is Torbjorn Stancor, Senior Vice President, Technology and Business Development at Granges. Today, Torbjorn will focus on electrical vehicles and the opportunities we see from the rapid change in this market. Please, Trojan? Thank you, Tanila. Good morning, everybody. Nice to be here. We'll today talk a little bit about the electric vehicle and how what's happening in this industry. And as you all know, no one in the automotive industry today is unaffected by this development. And of course, I will elaborate on how this is affecting Granges and what impact it has on Granges and how we are also meeting this new development. So there are quite a lot of forecasts today of the development of electric vehicles, and you can find a lot of different scenarios on this. We are using IHS to do our forecasts. I think one thing all of these forecasts have in common is that everybody believe now that there will be a very rapid development of electric vehicles. That's something everybody have in common. Then there can be different growth rates on this. As you can see here, it's especially coming years now, we can see a very rapid volume growth of EV. And moving ahead from 2020 forward, it will flatten out a little bit, but still considerably higher compared with the internal combustion engines. And what is affecting this? Yes, the consumer behavior, I would like to mention. People today are more and more all over the world, more and more thinking about environmental friendly products and the sustainability environment is, of course, affecting everybody. Policies and regulations, certainly here, China, all of you know about this, China has is doing a lot in this area, really pushing the industry forward to move into the electrification really. And this is something which is happening not only in China, also other countries with big mega sectors. For instance, India, I would like to mention, is such kind of market where you see these kind of things is happening really. Technical innovation, certainly, there are a lot of interest in electrification, not only of the traditional OEMs. I'll talk a little bit more about this. There's also new actors coming in here. There's a kind of lot of risk capital also. Everybody see that this is the right moment now when the industry is taking off. If you're putting betting on the right thing, then you have a quite good chance at this moment, really. The last item here is also very important. There is a lot of uncertainty in this forecast, especially in terms of technology. So we can see today, and which is something I will talk more about here, that there are lots of different kind of solutions. So certainly, there no one is for sure how exactly this will go. But once again, that electrification will take off, that is pretty clear. If we then look into the different regions and development in the different regions, Asia is a very important market when it comes to electrification and then especially China. There is a lot of things happening right now in China. We'll come back to that. This is definitely a very important market. The other important market when it comes to electrification is Europe as well. So you can see here, if we look into 2025, we believe that more than 30% of the market, both in Asia and in Europe will have EVs. So how about Granges? This suits Granges quite well. We have, as Kent already mentioned, our R and I center in Sweden for material development located in Europe, and we have the R and I center in Shanghai, as Kent mentioned. That center is more focusing on the application of new application coming up, how to use the material development for new heat exchange applications. So the electrification, what does it mean for us and especially for the heat exchange and thermal management? There will be new requirements coming and of course, system designs for thermal management. So all of you know that for the internal combustion engines, you have quite a lot of different heat exchangers. Hybrid electric vehicles is a combination then of electric vehicle and ICE, which then means that you have even more actually heat exchange than that. What is interesting is, of course, to look into the battery electric vehicles. There you see especially the cooling plate as a very important heat exchangers moving forward, and I will explain and talk more about that part. Also, have others like Schiller, which is cooling cooling plate basically, which is also a new type of heat exchangers. And as well, you have also heat exchangers in a battery electric vehicle as you have today really, like the condenser, vapourite and so on. So looking in then to the electric vehicles, there is a significant need then for thermal management. If you look into ICE, you have quite a lot of heat loss in internal combustion engine. That's for sure that you don't have the same for an electric vehicles. But there is still a lot of need for thermal management. The first part here is the battery in itself. The battery definitely need cooling. You have to control the battery in a very good way because it's affecting the lifetime and the performance of the battery. You see here that the temperature range that the battery has to stay in is quite narrow range really. You also need thermal management solution for power electronics and e motors. So quite a lot in this part, you have inverters and converters and onboard chargers, for instance, which all of them need heat or thermal management solutions really. The cabin, of course, everybody who are driving an electric vehicle, of course, wants to drive in the same environment, it has to do with ICE. So there is no difference. The difference there is that you don't have the for instance, the waste heat. So when you're heating up in the it's cold outside, you have to take this from the battery, which is the kind of difference, which is also affecting the battery lifetime battery performance really and as well with when you need cool air into your cabin. The fourth item is certainly an interesting area. This is all onboard electronics. And you know that with the new technology coming with driverless technology and so on, you will have more and more electronics in the cars. And with this increase of CPUs, basically, you need to have more thermal management solutions or more cooling of this really. So that's also quite an interesting development area, I would say. It's not only about electrification, also autonomous driving is something which is happening right now, which has an impact on this. There are today three different types of liquid cooling for the batteries. And the as I said, the cooling for the batteries is a kind of important part when we talk about EVs. The first type of solutions is air cooling. It's a pretty simple solution in a way. Basically, you're blowing air on the battery, simple as such. Nissan Leaf, shown here, is one example, which is using air cooling. You can also use an air condition to cool the air before you are basically blowing it on the battery pack. The advantage with this one is a quite simple solution, lower cost, but there is also a disadvantage when it comes to performance, a life lifetime of the batteries. Liquid cooling, the one in the middle is the one which is we know for sure will have a larger bigger share of this market when it comes to cooling system solution for batteries. Liquid cooling is, in a way, similar to like you're cooling motor, an IC, internal combustion engine. You need coolant basically to cool the batteries. It's water and glycol, so on. So it's a kind of similar situation really. And also here, you have two different type of solutions. You can just use the liquid or you cool the liquid with the air condition system as well. And for that, you need also the chiller, as I talked about before. The third type of solution is refrigerant cooling. And this is basically that you're changing them from gas to liquid. It's like an air conditioning system. This is not so common today, slightly increased, and this has the best technical performance when it comes to cooling the batteries really. But especially the liquid cooling, which we see right now is gaining the big shares really of these three different thermal solutions. Here, you have a slide showing three newcomers. I would say at least two of them are really newcomers. This is Chinese. And of course, we want to show here that a lot of things happening in China. We have, for many years, a very strong position in China. You have number one here is BYD, and all three of them are using then the liquid cooling. The BYD has been on the market for many years, a kind of pioneer, started actually to produce batteries and then moved over to cars. They have even now a joint venture with Daimler. The car in the middle is a very interesting one and also got a lot of recognition, I think it's of new EV OEMs, at least up to 80 different type of OEMs in China really. NIO is the one which got most recognition, I would say. And also this car is using the liquid cooling. The third one is a very new one, Beiten, it's executives from Nissan and BMW, who has established this company, but still in China actually. And they showed the first concept car, the CES in Las Vegas here in January. The consumer electronics shows today is taking more and more of the place when you are coming out new automotive news. This is quite interesting. The Bayton, by the way, is very much focusing on onboard electronics. If you look at that currency, the dashboard is like a big computer game basically, especially for the Asian market. China, for instance, is emphasizing a lot on onboard electronics. So this one is very important for us. It shows the value chain, and you're all familiar with the different tiers. We are in the Tier three area, parts and material. We have the component suppliers, system suppliers and then the vehicle assembly, the OEMs basically. What is interesting here is that the battery manufacturers is moving more and more upstream downstream, I mean. So when it comes to battery manufacturers, they are, of course, having battery cells, that's kind of core technology, but they are moving into battery modules and the battery packs, so basically downstream. And for the automotive OEMs, this is a kind of big, of course, thing, a big challenge, I would say. If you look to ICE, historically, for over one hundred years, the motor is basically the heart of the car. All big OEMs today have their own manufacturing of the engine. And several of them now are in this kind of process here to enter into the battery manufacturing and then thereby upstream of the value chain. Tesla is a good example. Tesla, as all of you know, put a lot of efforts in developing the batteries, battery packs and so on. And with the Gigafactory, they are definitely very much upstream in this value chain. So we see here a kind of interesting thing is happening on the market where it's not so sure who will be the winner or who what will happen in this kind of situation. And this can be for many a threat, but there is also opportunities in this kind of situation, which I would like to mention. If you take the same slightly picture then on the thermal management situation. Also there, you can see that we are, of course, affected. And you have this then situation between the battery manufacturing and the OEMs. And both of these groups, the battery companies and the OEMs are interested in this area. For the thermal management solutions, there is different kind of solutions. And this is one of the kind of challenges right now. Would say there are a lot of different ways of actually manage this thermal management of this different battery. It depends, for instance, on the type of cells you're using. You can have different kind of solutions. So then how this is affecting the market we are into, and this is kind of one of the most important slides I will be showing in this presentation. This shows how we are looking upon the brazed material market because Granges is, of course, we are a material company or aluminum company. And certainly, this will be very important for us, how is the braced material developing really. Here, we are showing this like we have an index of the ICE. So the ICE more or less have the same demand of braced material moving forward, so the index one. So if you then look into if you're starting with the battery electric vehicle, you can see then that we believe that the demand the volume of raised material will increase actually over the years for the battery electric vehicles. And this is, of course, very important. Why is it then increasing? There are three factors into this. We see that the density of the batteries will increase, one important factor in this. The number two is that the capacity of the batteries will also increase. The batteries has to serve not only the motor and the cabin, as I mentioned, also the onboard electronics and so on. So that's the number two. And number three, we also see that there is an increase of so called fast charging coming in. And with fast charging, you are putting higher requirements on the thermal management solutions. And there, we definitely see that the brazed solutions have a kind of big advantage also. Once again, today, you have a lot of different solution. You can hear a lot of people are talking about extrusion extruded solutions, people talking about brazed and so on. But brazed aluminum solution, major advantage with that, as you see it, is that it has been on this market for a long time. We believe that this is also have its advantage when it comes to higher volumes as well really. When it comes to then hybrid electric vehicles, here I have two types mild hybrids, which is kind of small electric motor, a system basically, the IC. And then you have a full hybrid electric. And once again, there you have basically double setup of heat exchanger, which is driving. So as you can see here, the growth of brazed aluminum will as we see it, increase actually over the years, even though the electric vehicles also will grow. Kent has already been talking about this, so I will not go into too much details. We see that we are well prepared for this development. We Kent talked already about Trillium Lean and as he mentioned, the importance of flux residues, we think, have an impact on this, the well design and the well heat exchanger. And with Trillium, we have very, very low flux residues really, which is a great advantage. Further downgauging, yes, the weight of these solutions will still be important as this has been for the IC. We don't see any difference in this aspect really. It will continue to be important to further work with down gauge and to reduce the weight. And we have also new stamping and tube designs, and this is to meet these new needs from the market really. And how is then Granges meeting all this? Yes, we are building very much upon our core strengths. And as I said, it's already been mentioned here by Johan and Kent. The core strength is the material development that we materials basically. We have also a very good knowledge of application know how, and so on. And global footprint as well is kind of an important thing. Right now, we are working intensely here to take these opportunities. We are positive to this development actually. We are not looking upon it as a threat. We are looking upon it as an opportunity to do something. And what we see here is, of course, that it's a kind of a little bit turbulent situation in the what's happening in the value chain. So we are actively here working with partners, external collaborations, for instance. Also internally, we are looking into strengthening our resources when it comes to development. The number three item is, I just want to mention that we are investigating possibilities to do some structural changes as well, especially looking into the possibilities to enter into technology companies assisting us here. We do see that the bracing is will be an important part. And there, we think that there could be good opportunities for us to do something here when we have all these changes really. And also the last one, that to work with the battery value chain is, as you all understand, very important for us. So as a conclusion here, the heat exchanger demand, we are positive on this. We still believe that there will be a growth in for brazed aluminum. The technology shift is difficult today. There is a lot of different kind of technologies. But we see also moving ahead that this will be high volume business really, a high volume industry, which is very important in this. We do believe that there will be more and more of mainstream technologies into this. And the value chain here as well, as I said, There are changes going on, and there will be winners and losers in this. And it's, of course, very important for us to be a part of this and to take these opportunities, as I mentioned. I think that's all. Thank you. Okay. Thank you, Torbjorn. Now it's time for a Q and A session. So I would like to welcome Johan and Kempt back on stage. Yes, so we would like to see if we have any questions regarding this first part. You. Max Verdian from Danske. I just have a question on the electrical vehicles. What is your total selling price today to a fully electric vehicle compared to internal combustion engine car? I mean, the total, we don't have that figure on top. I mean you took Or the ratio, it's fine. But as we presented here on that in a full vehicle, you have, of course, slightly lower demand on material side. But then, of course, adding the battery cooling dimension, it's a positive impact on the total sales value for Granges. So but we haven't quantified that in the number as of today, but that's our strong belief that this increase for our products specifically for the battery, will have a positive impact for Granges in terms of the value. So the sales value is higher? That's I mean, that's what we believe, yes. But of course, as Torben mentioned, it's very early days here in terms of development. So there is no really standard set out there. So it's difficult to have a clear view on that today. But according to our know how, our insight, that is the prediction we have, that it's a positive impact for Grims. Thank you. Olof Laushammer from the NREL Markets. One question from my side. On thrillium, would it be possible to quantify the potential cost savings for the customer in terms of their production process and also the benefit for Granges in terms of profitability on Trilium volumes, let's say, long term versus normal Granges volumes? Will you take it? Yes. The first part of question, the quantification of cost savings, we have a hypothesis on what that looks like today. That needs to be verified, obviously. We think we hopefully will have a good possibility to do that with this customer we have, which is actually planning to make a separate plant for Trilium production. If that happens, which I hope it will, then we will have a very good chance of actually doing this comparison in a good way. We have a very good hypothesis with a lot of data on it today, but we need verification, obviously. We are actually working with the value models for this. Mean we've been doing that for quite many years, really. We have a quite good understanding for the values that we bring to the customers. And to add to that, Olaf, also, I mean the fact that we are selling trillion material today to car models and we price this product differently. And that is a clear proof that we bring value to the customer. How long looking on the total market for Granges today, how large of that market is addressable for Trillium long term? 30%, 40%, I would say, something We're like talking about long term. Have Ken with us. Yes. Keneth Hall from Carnegie. I have a question on I mean, in the automotive industry, you have had you have very long customer relationships. The OEMs knows about you. The Tier one supplier knows about you. Everything is good. But now when you move more into the battery manufacturer, it's a totally new customer group. So is that an opportunity to strengthen your positions even more? Or is it a threat that other players are coming in and claiming that they are much better and so on? I mean we have to we see this as an opportunity. But as Torben also ended your presentation, we need to be very active here and be more active than competitors, of course. But I think we have an advantage through our experience and the know how we have here. So we are confident that we will if we are active and really focusing on this opportunity, we'll have a better opportunity than many of our competitors actually. But it's actually so that it's a very big change right now. And it's actually important that we are working with the right customers and also the potential new customers. But I think Colin might come back to that in your presentation because you're doing quite a lot of these activities actually in China today, working with battery producers, also with the OEMs, new OEMs. So I think it's also in China where you see this change going. And you don't see that you are late into this game that someone else have been supplying the Tesla battery manufacturing and have a head start and more credibility? No. I think it's what you have seen the last couple of years is kind of a little bit pioneering market here. As I mentioned, there's quite a lot of different technology. Tesla is a fantastic company. I mean and they have definitely changed the whole automotive industry, but it's not necessarily so that it will be the kind of the winner here moving ahead really. So what we see right now is that it's changing the industry when it goes into more higher volumes and so on. And that will, of course, affect the whole industry. I think timing wise, it's a very good now is the right timing to jump on this trade, I would say really. Okay. Maybe another question, if I'm allowed, for Kent maybe. I mean, as I see Granges, especially in Asia, you have been very successful in staying with the business where you have been strong. There should have been many opportunities to expand into many rolled aluminum products over the years, but you have stayed with those brazed heat exchanger material. And now you see more opportunities after the Noranda acquisition. You talk about new material for new applications and so on. So how do you make sure that you stay in highly profitable areas and don't dilute yourself into many, many, many different applications? Well, that's basically why we have not spread ourselves to all the standard applications that are available in the market with CanStock and many other things that we understand that these are not high value or high profitability areas. As I mentioned, one very interesting area is our combination of material knowledge and the investment we have done in the Giatek spray forming activity. Spray forming is fairly unique. There are not that many operations around the world using that technology. And you find quite fantastic material properties using that technology. And it's about to find the right applications for them. And if we do that, I think we can be fairly sure that those will be high margin products. I think what makes Granges unique is that we have, I would say, very good knowledge and confidence about the brazing process. The brazing process is not what we are not doing brazing, it's our customers doing that way. And there, I would say that we have been into this for many years, and this is something we will see that we still have possibilities to develop this on doing something with this know how, I would say. But just to add to that, I mean, in our strategy for innovation, we're talking about adjacent technologies. So we are absolutely so that we value our history and our competence. We won't go too far out from that core competence, but we think there's a possibility to add value in closest closer market or adjacent market. And that spray forming is a typically good example where we can add our know how and complement somehow. So that is the way forward. It's not trying to capture larger other totally new markets for Unless we are talking about U. S. Yes, Mats? Yes. Can you hear me? Yes. Mats Luiz, Kepler Cheuvreux. Just coming back to electric vehicles. And you mentioned, well, there are three different technologies of cooling a car. And could you say if some of them are more preferable to you? No. As I mentioned, there were three of them, air cooling, liquid cooling, refrigerant. And liquid cooling is definitely something which suits our products really. We do see that for the liquid cooling, you have a so called battery cooling plate. You're putting the basically the battery models on that plate, really. And that battery cooling plate is produced by bracing technology. That's a quite big plate where this better model is standing on really. So yes, liquid cooling is the winning the solution that will have the highest share. And there, you can use then braced aluminum solutions for that. And coming back to the Trillium technology there, and I just wondered what kind of investments is it necessary for the customer to make to sort of make the changeover? No investments at all, really. I mean what they have to do to use Trillium as a material is to remove some of their equipment that they have today, the fluxing, the degreasing and then some other areas. That, they don't need anymore. And again, if I think if you should have the full benefit of Trillium, next time they make the investment in a new furnace, they will build it slightly differently and get even better sort of payback on using Trillium than what they do with the current setup. But they don't need any more investments. Mean they can use it as it is. Adding to that, once again, going back to the battery cooling place, that will require a new furnace system basically because there's a kind of bigger heat exchangers, different type of heat exchangers compared with what you see today in terms of size and so on. So then you need to invest and then the trillium is coming in, but you can do a smaller less of investment and the CapEx can be reduced by using trillium material for this solution. Johannes Grunsellis here, Handelsbanken. I have a couple of questions. My first one is on the full R and D budget. Can you help us explaining what is the R and D budget for 2017? And how does that compare to previous R and D budgets? And then what do you think is a good balance going forward? Yes. We say that we have around 1% to 2% of our sales revenue in terms of R and D spending, SEK 50,000,000, 60,000,000 then has been the spending historically. And that and then we are basically defining the R and D, basically the department that Kent was talking about with the research and innovation people. Then of course, we also have several more closer activities with the customer with what we call product development engineers, and that is not included, but that's more part of the normal sales activities. So I mean, we're not we will increase that slightly, but we also have a new approach for how to work more efficiently. We have, I mean, implemented a way to work more with KPIs and benchmarks. So it's very much about R and I efficiency actually going forward and connecting that to the market even better. We as I said, our target is also to add resources in North America, where we don't have R and I resources today. So that will obviously be sort of a cost increase or a spend increase on R and I. Then on the Trillium product, do you have a lot of available capacity for that? Or does that require any investment on your side to ramp it up to you mentioned a very high number that potentially could be 30%, 40% of our volumes going forward long term? We don't need to make big investments to do that. We might choose to make some investments to reduce the cost of the production of trillium. But we have plenty of capacity through the process chain really to do it for quite some time more. But of course, that will require that you will do a mix change in your normal production, of course. So yes. Then my final question, maybe you elaborate on this later on. But you mentioned in the press release also today going out that it was a good start of the year. Has there been any changes over since you reported the fourth quarter and gave us a market outlook? And also if you can say if this impacts anything on the pricing outlook for the coming quarters? I mean, the same message as we gave during our quarter for Reporter. And we have seen a strong demand in all regions actually for Granges. So there's no change in that message actually. Yes. We have no more questions? Yes. Regarding Noranda and investment there, you are changing the production from Noranda's more traditional casting technology in your production to your more layered technology. And of course, this, of course, some disturbances, I understand. How long time can we expect the change over to your technology to take? And also, are you planning a full change into the layered technology you have and no more casting at all as Noranda had? It's we haven't I mean, the company we bought, Noranda, can only do what we call one layer product as of today. So what we have increased in U. S. Today is that we increased what we call the unclad fin, which is representing some 25% of the demand for aluminum braced heat exchanger in the automotive industry. So we are increasing the automotive product. But we haven't the capability today in Noranda to produce the multilayer product. And to address that is actually most likely what we're trying to do now is to work with Mitsubishi. That's why we created this joint venture and had a letter of intent. So it's through that production company that we then right now believe is the best way to address the full capability in America. Patrick will come back to that as well later on. But I think also saying that, of course, the business we acquired in North America is very good. And there is also very, I would say, high level and technical advanced product that we do serve today. So we don't see this as a non prioritized market. It's actually the opposite. It's a very interesting market that we did acquire actually. That's why we will continue to develop that market even further. And we are not actually thinking of replacing the current production method, you call continuous casting, with the direct chill casting. That will be an add on. Yes. Just a clarification on the battery cooling and the EV market. Did that require an investment or a capacity investment for you in order to supply those components to the battery cooling plate? No. We're talking about brazed aluminum materials. It's the same type of product as we are supplying today, but of course, different alloy composition and so on. The investment that Torbjorn was referring to was bracing furnaces with our customers. Some of them would need to invest in bigger or wider bracing furnaces to be able to brace these steel exchangers. Perfect. Thank you. Yes. Do we have any more questions or okay, that's it. Yes. Our next speaker is Sophia Heerdevok, Vice President, Sustainability at Granges. Sophia will give an update on Granges' important work within sustainability and how we can create value in this field. Please, Sophia. Right. Hope you had hope all of you had a good coffee break. So I will spend the next twenty minutes talking about how to create value from sustainability, and this is also one of our strategic pillars. You've seen this slide before in Ken's presentation. And I will also introduce you to our new sustainability framework that we have been developing during the past three months together with group management team. And I will start by taking an outside and in perspective. Today's world is, in many respects, a challenging one and there is a strong global push for sustainable development. And as you all probably are aware, United Nations, two point five years ago, developed a set of global sustainable development goals, the STGs, which aim to both benefit our planet and also our citizens. And we believe that this also creates a competitive edge as it encourages new business models and also innovative solutions to environmental and social challenges. And we believe that the global push for sustainable development brings opportunities for Granges. We also believe that aluminum will play an important role in transforming the economy towards a resource efficient and a circular one. Aluminum is often called the green metal, thanks to its unique properties. It has a low weight and also a high ratio of strength to weight. It also has great corrosion resistance, which Kent was talking a bit about earlier today. Furthermore, aluminum has a low melting point, is easy to work with and easy to shape. It's also impermeable to light, odor and contamination, even if rolled extremely thinly. And from a sustainable development point of view, this last point here, energy saving and highly recyclable, is very important. Because even if aluminum requires quite a lot of energy in the initial production phase, which takes place upstream our value chain, it can allow for significant savings downstream our value chain in the use phases. And aluminum also has the potential to be recycled without losing its inherent properties. And when you use recycled aluminum instead of primary aluminum, it only takes about 5% of the total energy used to produce primary aluminum. Aluminum is also, in chemical compounds, the world's most abundant metal. And we believe that this abundance, together with these properties, makes aluminum a good candidate to be the material of choice going forward. And I will now talk a bit about why and how we work to create value from sustainability. Our main objective is very simple. We want to create maximum value from sustainability. And we believe that by running our business in a responsible and sustainable way, we can contribute positively to society in large and thus contributing to those SDGs that I showed you on the other slide. We believe that this leads to an improved trust and relevancy among our key stakeholder groups, which in turn helps to increase our long term competitiveness and growth. And our sustainability efforts aim to drive long term value creation and contributes to both bottom line and top line improvements. And the connection to bottom line is fairly simple because there's often a high correlation between resource management and operating costs. The connection to top line is, of course, that if you market sustainable and resource efficient attributes, you can create a competitive advantage and thereby either increasing your volumes or your price, so thus contributing to the revenue side. And the loop here is just illustrating that there is the interconnections between the different drivers. So moving on to the how we work with sustainability. Sustainability entails a wide spectrum of topics. And in order to identify and prioritize those topics that matter most to our business, to our value chain and where we have the highest impact, we have conducted a thorough materiality analysis. And in this matrix here, I have plotted our most important sustainability topics based on input from four forty respondents, both internal and external stakeholders. And we've also had qualitative discussions with the group management as part of this work. And on the Y axis, you can then see the importance that the stakeholders have given to each respective topic. And on the x axis, you can see the impact both on society, environment and economy in large, but also the impact assessed for our long term competitiveness and success. And as you can see, most of our prioritized topics are plotted in the dark green field here, which means then that it's either high importance or high impact or both. And then we have another additional four topics, which can be found in this middle field here, and those are also topics that we have deemed to be critical for our long term success. And thus, we've added those to the list of material topics. And based on these results, we have clustered and combined the topics into smaller groups, and we've also signed internal ownership. And this is our new and updated sustainability framework. As you can see, the pillars stretch from supply chain on the left hand side through our operations in the middle to the product and customer side on the right hand side. And for maximum effect and with the aim to integrate sustainability, both across the value chain and in our business, we have decided to assign internal ownership to five senior executives who are all representatives of the group management team. Some of them you've heard earlier today. So for ensuring responsible and sustainable sourcing, we have Torbjorn St. Hoa, who is working with the procurement organization to ensure both responsible sourcing and also sustainable sourcing. We have Niklas Nelsen, who works to secure ethical business practices in our operations and in all our business relations. Then we have Paul Neuchens, who is leading our work to run sustainable operations, meaning he works mainly to improve operational efficiency and also workplace safety in our production facilities. We have Magnus Carlstrom, who is working to build diverse and high performing teams, and he works to make sure that our employees are motivated, that Granges offers an open and nondiscriminatory workplace and that we can enable every employee to realize their full potential. And then we have Kent Hrolin, who you also heard earlier today, who is leading our work to develop sustainable product offerings by both integrating sustainability aspects into our research and innovation process and also working to better quantify and communicate our sustainability performance. And with this new updated framework at hand, we are currently working to finalize our key performance indicators and targets. And I will now share with you some examples of current initiatives within each pillar. So to ensure a responsible and sustainable supply chain, we have a supplier declaration that we urge our strategic suppliers to sign. We also, on a regular basis, conduct supplier audits to make sure that these suppliers adhere to our standards and share our values. We have, during the past few months, initiated a new project together with Torbjorn and the procurement teams across our regions to both work to set better common and group wide processes to continue to ensure compliance and also to make sure that we work more actively to improve the environmental performance of our supply base. And here, we focus, for example, on promoting using electricity from renewable sources as well as the higher use of recycled aluminum. With regard to securing ethical business practices, we never accept corruption and we always act vigorously and rapidly if discovering unethical behavior. We are a signatory to UN Global Compact since October 2016, and we're continuously working to integrate those 10 principles into our strategy and our operations. And during the past year, we have focused quite a lot on training efforts, both related to the code of conduct, but also specifically to anticorruption, which is an important topic for us. And it's positive to see that over 90% of our targeted employees have now completed an online training in anti corruption. And by targeted employees, I mean people working with procurement in the sales organization or senior managers who have a lot of external contacts. And then we also initiated a project just a month ago to update and modernize our code of conduct. And as part of this project, we're also working to improve our process of how to report potential concerns with regards to the code of conduct or ethical behaviors. And with regard to running sustainable operations, of course, we will continue to work with improving our efficiency, both related to energy usage and materials. And we will also try to reduce emissions to air and water, which I will come back to soon as well as, of course, to improve the workplace safety in our production facilities. If we start by talking about energy, we have set energy efficiency goals for all our production facilities, and it's positive to see that we, on a group level, have managed to increase our energy efficiency by 2% during 2017 when comparing with prior year. And with regard to material and recycled aluminum, we've also managed to increase the share of internal recycled aluminum by 3% on a group level in prior year. And in parallel, we've also been managing to increase the total share of recycled content in our products, and this is mainly due to higher volumes of purchased scrap. And of course, both these measures, energy and material, have a high correlation, as I said before, with operating costs and is at the same time beneficial for the environmental impact. With regard to workplace safety, we have a clear vision of CRO accidents. And we have, during the past year, continued to focus on our cross audits or cross inspections in in which our staff visit each other's sites, share best practice experiences and help each other to improve safety. And then I brought with me a brief example of a project that we have been working on in Finspang during the past year. It's a great initiative where we've managed to feed heat waste heat from our furnaces to the local district heating network. And this will basically allow the whole Finspang site to be independent of external heat supplies, except for on really cold winter days. And this project, which is, of course, good then both for environment and for costs, is expected to be operational and running by next winter. With regard to building diverse and high performing teams, we have, during the year, focused on establishing a common corporate culture. We call it One Granges, which, of course, is extra important when we acquired The U. S. Operations and grew our company. We have also established a global HR council, which aims to harmonize global procedures and processes. And we promote an increased diversity in our workforce since we believe that it's important to embrace all types of skills, all types of expertise, all types of backgrounds. And as part of this work, we strive to increase the share of females in our workforce. And we're far from being satisfied from the current level of 14%, but it's positive to see that among new recruits, we have a higher share of females. And in 2017, it ended at 18%. And I would also like to share with you a brief example of a social initiative. So this is Family Days, which is an annual event that we conduct in Shanghai. Here, our employees can bring their families to our site for a fun day together. And we closed down two shifts to enable all employees to join. And last year, we had about 1,000 participants, which was great. And a recurring theme is safety awareness, which is, of course, important both for our employees but also for families. I think it's a great initiative. And with regard to developing sustainable product offerings. Here, we want to leverage our sustainability performance, and we want to market our these attributes to our customers as a competitive advantage. And we have started to discuss how to integrate sustainability aspects into the research and innovation process. And we have also more actively had efforts to improve our understanding and also how to quantify our environmental impact. And we have conducted a carbon footprint study recently, which maps our direct and indirect climate impacts across our value chain. And the study was made in accordance with greenhouse gas protocol and involves both direct emissions from our sites, but also indirect emissions from other parts of the value chain. And this study then includes everything from production of bauxite or extraction of bauxite to delivery of our products to our customers. But due to difficulties to get relevant data, we have excluded the use phase and end of life from this study. The results of this carbon footprint study show that our total CO2 emissions for 2017 amounted to 4,600,000 tonnes. And as you can see clearly on this chart to the left, the bulk of these emissions occur in the production of primary aluminum, meaning upstream our value chain. And if you sum up Scope one and Scope two from this pie chart here, you can see that our operations account for 7% of the total climate impact. And on the right graph, you can then see the carbon intensity, meaning the both the Scope one and Scope two emissions in relation to the tonnes produced product. And for Sweden, our production mainly uses induction melters. And this, in combination with using electricity from low carbon technologies, leads to a lower carbon intensity. While in China and U. S, we use natural gas in our production, which is a fossil fuel and, of course, increases the carbon intensity. And we will, in 2018, focus on reducing the natural gas consumption. And in The U. S, in our Huntington plant, we will rebuild our melter to improve efficiency. And with these results, we now, as Johan said earlier, we have a baseline from which we can set clear targets. And our aim is, of course, to continue to reduce the emissions across the value chain and especially with these results at hand, especially in the supply base, where we now plan to integrate carbon performance in our sourcing procedures. And those were some key initiatives and focus areas during the past year. When mapping our sustainability efforts across our five pillars and 13 material topics with the Sustainable Development Goals. We believe that we have a positive contribution to eight of these 17 goals. And in summary, we believe that the global push for sustainable development brings opportunities for us. We also believe that aluminum will play an important role in transforming the society and economy into a circular one. And for maximum effect and with the aim to integrate sustainability across our value chain and in our own operations, we have developed a new sustainability framework, which we aim to implement later this year. And also, long term, our sustainability efforts aim to create long term business value, both for our business and for stakeholders. And we believe that this will secure our competitiveness and growth, increase our trust and relevancy among our key stakeholder groups and also then have a positive contribution to the society in large. Thank you. Okay. Thank you, Sofia. We will have a Q and A session at the end of this day, but we'll also take the opportunity to see if we have any immediate question for Sofia right now before we proceed. Okay, great. Okay, if not, we will okay, sorry, with that. Yes. Just a short one here. Could you say something how you sort of well, your work compared to competition there? Yes. I mean we have different types of competitors. I would say that compared to many of the multinational global companies working with aluminum, we're a bit behind. But I would say with our direct competitors and more in niche markets, we're not at all behind. We're I would rather say it's the other way around that we're in the forefront. And we think or we think that our customers currently are not as involved and not setting the right requirements on sustainability on us. So we think that we need to work proactively as well because we believe that this will come with the global push for sustainable development. And I know that the car manufacturers, for example, they're focusing a lot on sustainability. But our customers, the component manufacturers or the OEMs are at least currently less mature. And if you compare the sustainability importance in your three major areas, China, Europe and The U. S? Yes. I mean, most of our competitors have a global footprint as we do. So I think it's difficult to compare between the regions. I don't know if you have anything I think to be more specific, I think in China, we have, of course, advantage of being more sustainable than some of the more regional competitors in that sense. And also what's happening in China now that the government and the awareness of these kind of questions is becoming more and more important actually. So I would say that there you have a little bit of a difference actually. And as Sofia said, if you look upon our larger competitors, like the really big companies, Novelis, Iconic, of course, they also have a very serious approach to sustainability. But so it's a different picture. Okay. Thank you. Okay. Then it's time to welcome up our next speaker, Colin Su, who is President for Genghis Operations in Asia. Colin will give an update of our Asian business and our market position today. So please, Colin. Thank you, Panila. Good morning, everybody. Yes, today I'm going to talk about Asia. I guess you're very interested about what's the operations going on and maybe I heard many questions around whether we could really maintain our profitability or keep a healthy growth in that region. I tried to answer these questions today. Yes, about the operation in Asia, it's the major facilities was actually established in Shanghai in 1996. And also we joined the Prosperous Growth together with China Acordmi. It's really fantastic growth in the past years as you know. We are actually the first mover among all the Western or even the Japanese rolling mills into the industry in China, focusing on the heat exchange market. Also from very beginning, we transferred knowledge and also the competence from Sweden to China. And today, the team, the operation team has grown very matured, very well developed and also competent. So today, we don't have any big number of experts anymore. So it's always running based on the local competence, which is good. Also as mentioned, we still remain the number one position in terms of the volume. All this was supported by really several factors I will mention later on. But just to make it short, we have very experienced team, very loyal local team, the people is really everything behind that. But also the team has really the motivation to continuously improve the company, improve the business and always have the sense of crisis really, yes, working harder to achieve better result. Yes, this is the map of Asia. If you see on the left side, we have the Asia head office together with the production facility located in Shanghai in Jia Ding, on the skirt of Shanghai. Also, have integrated the R and I and the sales functions together in the same location, which make everything very efficient and also important that people working together. And then in the major markets in Japan, in Korea and in India, we have the sales office. There we mainly have the sales forces and also the technical service people working closely with the customer, really serving the important customer base in this region. If we talk about distribution of the sales volume, China definitely is the most important market and that the share of the sales in China has been increasing in the past years because the market is the greatest growth momentum and we follow that trend. So today, the sales into China reached almost more than 60% among all the sales. Korea and India are also very important market. We have several big accounts in Korea with quite stable business. And India is a small country, but also with great growth momentum. And going forward, it will become the important market. And today, it stands for roughly 10% to yes, 12% in our sales. Then the rest of Asia, there are some OEMs, but mainly in Thailand that composite of mainly the Japanese customers and then some aftermarket business in rest of Asia. The only thing the only country we have not penetrated very much that is Japan because this market is very closed and also dominated by the Japan's rolling mills and who has really possessed the strong relationship, which is of course for historical reason in that country. Okay. So that's the general sales of sales development of Granges Asia. As you see from very beginning to now, the sales growth really is strong. There may be two stages, especially after the crisis February 02/2009, the sales was not really impacted a lot by the economy issue because China has really launched the incentive program and during that year almost 30% on average growth in these two years. And then going forward, China stepped into a kind of moderate growth pattern. So our sales also then followed market trend But over these years, in our calculation, we are still outperforming the market. If you see a little bit in detail, since more than 90% of our sales goes into the automotive industry, so very important that we have to follow the automotive industry's growth. Since 2010, the average growth rate reached 4.4% according to IHS data. And we try to convert that data into also the road aluminum consumption. Basically, you see the average growth rate is slightly lower because of the down gauging trend in our industry. So that will reduce the consumption of the material. But still, it's quite close to 4%. Then our sales into automotive industry, see the volume growth reached 5.4%. So I think we should be quite proud that we keep a good pace following the market. There's a kind of setback in 2015 by the way, just a small point that, yes, because of the market setup, especially in the Q4, it's a big drop in the demand. Also many of the customers, are doing the stock clearance activities. So it's kind of a wave effect during that time. But then afterward, it recovered quite quickly. Then beyond the 2017, we don't show figures here. But according to the data, we think it should be on average 3% to 4% average growth in Asia. And China will maintain a similar level of growth like 4%. There yes, we are outperforming the market, but also at the same time, we believe that we are outperforming our competitors. This is just provide the generic picture of how we compare with our competitors. The picture to the left that we just tried to illustrate, the price premium versus our major competitors in Asia and also the down the X axis actually stands for the sales volume of the clad products. So there you see, we have very we really enjoyed great price premium over many years up to now. And still we have very strong volume or wide coverage of the market. But the reason behind that, if we go to the right picture, we just try to make the benchmark on the value proposition compared with the major competitors. There you see, we are actually in this red circle, basically five deliverables that we try to emphasize in our market. Very important that we provide a good technical service to the customers. It's not just in development cycle, but also in the production, the mass production cycle. We have to keep following up the performance of the material, support the customer to solve the daily issues. Quite the resource should be dedicated in that kind of service. And then the solution provide very important that to envision the future and also help the customer to develop next generation of the projects and help them to gain the business. So there, it plays an important role. And the customer interaction, that is also important that we following up the changes at the customer side and quickly react to the changes. And very important is the quality. In the automotive industry, the quality repetition is always the most important metrics And this is also one of the major source for the price premium. Then the deliverable delivers performance is important as well, especially to shorten lead time at a very stable consistent performance is important. But just in general, we have positioned ourselves that we don't want to be excellent or be the best in all the aspects, but we really picked the most important metrics like the quality and the solution provider and also the good technical service to our customers. So they're really generate a strong position in our market. Also, as mentioned, one of our local competitor, actually they try to copy us. They have, of course, much less price premium, but also they tried business model wise, tried to copy the value proposition. Kind of threaten they grow quite fast, but really to have a complete same value proposition, we require high cost investment in that kind of pattern. So especially to improve the R and D competence and to dedicate more technical service resource and also they have to be capable. It's not just the fresh people, also to reach the same quality level that a lot of investment needed in the process capability improvements. So to really, yes, reach the new standard, we doubt actually it's a quite big challenge for our competitors, at least in China. So it's just a proof on the previous slides that we have our of course, based on our own market intelligence, we just try to understand our market share for the clad products. We just mentioned, especially for the unclad products, that's a single layer material. So it's less competitive or less complicated. But for clad, there's still quite high technical barrier and also quality barrier to reach the customers' requirements. There we still have quite great advantage for the moment. And market share wise, we still remain number one position. So also additional point here is that over the past years, what else we've done is try to optimize our product mix of portfolio. So we're trying to drive more sales volume into the cloud products and also adding the innovative features into the products. So that help us to remain stay beyond our competitors and also try to protect the price premium over time. Okay. Yes, just after decades of efforts, we still I mean have a successful in development and remain in strong position in that market. Several success factors that we could summarize here: quality reputation, customer tailored solution, market driven innovation, technical support, operational excellence and strong culture. All these factors actually work together to create the strengths. I later on, I will just try to raise several cases just to illustrate how these works. One of the example, yes, among many awards we've gained from customer, this is from last year that one of most important global customer, actually Hano Group, they have awarded us the best performance supplier, yes, on their any supplier venue, which is of course a great recognition of our persistent service and of course very reliable service over long business relationship. It's very important for us. Okay. So now we talk about outperforming the market, outperforming our competitors. So especially several aspects we have to emphasize. One thing is that we try to grab the fast growing new development in the market. For example, in the heat exchanger markets, we see like the charger cooler, We see the conversion from the common welder tube into the folded tube solution. And also in the passenger vehicle actually, many of the passenger vehicle has installed charger coolers as a standard. So actually, it's becoming a fast growing and also quite big demand products for our customers. And we estimate the average growth rate is about 15%. And this product has very high requirement on the corrosion resistance. So yes, actually back few years, we have worked a lot on the technical solution together with our leading customers. And also, we are still in quite several development projects. This help us to gain the market share with through the early involvement in the development, but also in the local business base, we also help the customer to apply this new type of solution. Another example is the FortiTube. Actually, it became a mainstream for most of our global customers. Actually, we have already gained quite big share with several global accounts in recent years. But also we see big potential that many domestic customers, they are trying to embrace this technology, but they feel they really face the barriers to apply that, especially with this technology, it's extremely difficult to process. The forming process is very important. And also it's very challenging to brace the components because of the complicated design here. So we have invested in house for the tube line. Also, we have developed the design capability jointly together with customer, improve the design and help the customer to validate the new design as well as applying the material solution that provide the needed brazing performance and also in the field the needed corrosion resistance performance. So this is still ongoing, but with this kind of development, we are very sure that for the tube condenser design that we will have great chance to get the good market share. Yes, another example is the chiller. In China, the electrical vehicle is very, very hot topic and also many of our customer they invest in the electric vehicle solutions. And also referring to Tobin's presentation, Chiller basically supplied in all kinds of electric vehicles either in the hybrid models or in the pure battery driven models. So already several customers, it's a very small volume for the moment, but already many customers they start to, yes, work on the design and also engineering of the manufacturing process. So we have actually worked quite tightly with several key customers in the region already. And also, we have secured quite good share already at this stage. At least with several customer, we have quite exclusive match share in the early phase of these platforms. So yes, through working with all these in a more advanced development with customer and also this actually has quite high growth rate we estimate. We can have basically we believe that we could try to relieve the price pressure, but also at the same time, yes, grow with market, yes, not always fight on the low end of products. Another example, that is the cooling plate just talking also talking about in his presentation. It's kind of new type of heat exchanger on top of the bed, other kind of heat exchanger traditional heat exchangers. And also potentially, we believe the market can be very big by 2020 when China has more than 3,000,000 unit new EV production. We asked that there could be maybe even 14,000 ton consumption. But still it's very early stage in the development. There's no standard. Also we see quite many low end solutions with very poor or standard material. So for us, we have developed a local team, especially technical team working on the new design together with the customers. And also for the moment, we believe that the stamping plus the bracing solution could provide a light weighted design for the customer compared with other ongoing designs there it should have the advantage. So this will give us the opportunity to drive the development trend in this new market. Also worth to mention that since EV has new type of the supply chain or the value chain, It's great opportunity for us to get closer to our customers' customer. In the EV sector, there's some new OEMs, newcomers in the industry. Also the battery pack suppliers, they can be the new force in that value chain. So through doing this project, we have made a lot of new contacts with these new players as well. So that will facilitate a strong position going forward. And by developing this, we have extended our actually application center in Shanghai. That's extension of our research and development capability. So we are now stepping into a little bit downstream like the design capability simulation and the engineering of the manufacturing and even also the component test. So these kind of capabilities very exciting to have going forward. Yes. One more example. This is the example that we also try to leverage the current knowledge, material know how into other applications into the adjacent market. So I'm going to talk about the windmill market in China. It's a fast growing market. Even though the application itself is kind of conventional solution, it's a vacuum based material with very stable demand. But when the wind power market is growing significantly in China recent years, we know that last year it grew by 30%. That is really the premium market that we could work with. Now we have a dedicated small team working on that. It's R and I engineer together with the sales, working with even the OEM supply those customers. We developed the new solutions, especially for the offshore application with when the operating environment of the windmill is very tough and also the maintenance cost is very high. It really require good material to extend the lifetime. So there we actually also have the leading OEM to set material standard and also they were awarded exclusive material supply in their offshore applications. So that's really good, yes, innovating points. On the other side, in the commercial side, we also have a kind of innovative business model that we cooperate with the downstream distributors in that market. And that helped to address the challenge especially in terms of the delivery flexibility. Many of the customers, are small sized, they cannot really afford big in a minimum volume quantity. So with this solution, we quickly grow the sales together with the good solution. So in the past four years' time, we've tripled sales in that market too. So, yes, all in all, think it's for us, for Asia, actually it's very important that it's not just a low cost production base. It's very important that we have competence and competitive competence in research and innovation to follow the market, to develop the market. And today organization wise, we have integrated the online department into the sales and marketing function, so that we these key resources could work. Yes, we say seamlessly to attack the market opportunity. And also they're involved in the product optimization. Also a lot of customer interactions like the Techno Forum just Kent mentioned about. And on the other side is application center that I just mentioned to help the customer apply the new technology to only have the material know how is not enough. You have to help the customer in their process and in their design. So that is kind of trend in our industry. So yes, several customer cases and also we could mention here, but also worth to mention is that the competency in China today is very compatible to what we have in Europe already. It was established in 02/2006. This is purely composed of the local engineers and now they really grow fast and become the senior engineers. One of the case that we have the customer, they have extremely high and tough requirements on the corrosion performance. And most of the solution were failed even from our competitors. So they asked for the support at the same time they don't want to increase the cost to reach that goals. So the team they were really dedicated to look for the new solution. And we know on alloy side, there's not so much space or room to make innovation because that will raise the cost. We actually look into the process. We did a lot of simulation and verification in our production. Actually finally through a very precise process control, we could achieve that property and still maintain on the good cost level. So with this development, have really gained new business also very quickly leverage this kind of process know how to other applications. So that's also a good case to confirm that the innovation is really crucial for our Asia operation. Yes, then moving away from the top side top line developments, now we have to talk a little bit about our operation because in China, are facing the tough competition all the time. In the past ten years, we actually we see many newcomers from the industry. They supply extremely low price and also, of course, they are very attractive to our customers. Even many customers help our competitors to develop their competence. So to address the cost challenge is really the main theme in our operation. Just on left side, you can see that we have reduced cost by 16% in the past few years. This has actually has included the big inflation, especially in China, we have to face high salary inflation every year up to 10%. So I think that's very good achievement. Behind that, we've done a lot of work. First of all, we have to continue working with productivity. The down left picture you will see, actually we have the headcount freezing policy for many years with the business growth that we don't increase people. So that help us to really keep a good efficiency and the lean organization. Meanwhile, we are still, yes, aiming for growth. Then several major cost items we have spent a lot of efforts on. Metal is one big item I can mention later and also let the process yield as well. How much the material could be saved becoming the final product, it will significantly impact the processing cost in our cost structure. So that is another part. Sourcing optimization as well and the headcount fees I have mentioned just now. But I will try to cover some of them. Yes, metal management. Yes, the metal cost is a big part. It composed of several different KPIs. In our production process, we know we have the casting process, of course, very important that we should reduce the burn loss. But generally speaking, the recycle rate of our internal process scrap is extremely important because in our industry, if you cannot recycle, you have to sell at a big discount then it becomes a big cost. So in the past five years, we have achieved 50% compared to the base and we still believe that there's significant room that we could continue working on this matter. What we've done, for example, actually requires very precise, very good operation system. We need to sort the scrap in a good way. We need to do a dynamic casting planning so that we could easily get all the scrap back to the right alloys. And also we have to well manage the in house and outsourcing mix, so that we can maximize the capacity in house to utilize the scrap based alloys. So all these activities help us to push up the recycle rate. And now we have done the full simulation on the alloy mix. So we believe there would be the room to continue improve. Quality also, just we mentioned to stay high priced premium, it's very important that we are we have the best quality reputation in the market. So in the past four years, we have achieved 72% quality claim reduction from the base. That is very much dependent on all the activity we've done here. Just to brief that, it's kind of a risk oriented system, quality management system. Also we developed the IT system. It's mistake proof to prove all kind of leakage and also it's kind of smart system to compare the customer requirement original requirement to the final delivered feature of the products. So by handling the complexity of the products at the same time to have such a kind of control, it's quite challenge, but we've managed to improve a lot. Yes. Then going forward, what is important for us is that we have to address the cost competitiveness sustainably. One of the directions that we have to leverage our employee our experienced employees, our competence, our great engineers to contribute to the cost reduction over long term. So to embrace the digitalization is one way and we have actually been working with that for several years. Maybe it looks quite complicated, but I think the simple way to explain is that from the in the production from the field device including the logistic devices and also the process machining up to really the ERP level, the business process level that all the systems should be integrated and synchronized. And also in the key process, all the process control point should be developed or automated and also all the data should be really managed essentially so that we have the chance on the macro scale we are able to do the optimization and all these work in a dynamic way. So we have a group of engineer team working on that. And in several pioneer projects, we have done successfully implement this type of system at least on the process level. So this program will really enable us to continue improve our operational efficiency and drive down the cost. Yes. So as I said, all about people. This operation has run-in China for more than twenty years. It's actually most of employee work in this operation from very beginning. In the recent ten years, we have extremely low turnover rate, always below 5% and actually in extreme years, we have even less than 2%. So this stable team really help us to really build up to the confidence and experience so our customer better, but also they are loyal and motivated and they are willing to work with all the improvement as I mentioned in the previous slides that they are all involved in these developments. And also you can see that even from our production we have the improvement ideas actually from the employees every year. That's more than 1,500 cases. Quite a lot about what we have achieved and what is what are the successful factors behind. Also a little bit about the environment we are in today and also a little bit look forward to what we shall do. In China, we operate in China, the macro trend which is important. The government, they have the supply side policy, the strategy that the Chinese government has to deal with overcapacity, basically many policies released against how to filter out the bad players so China could have a good capacity left and the industry could go healthy. Also, it's very much focused on the environment side. Last year, we called it environment storm. Several plants manufacturing plants were closed by the government just because of the emissions over the standard. So we first time we see the government really have the tough attitude against that. So this is really something imply for us implication for us what we should do. Then on competition side, in our industry, still the overcapacity issues there. Many of the major competitor they have less than 80% utilization for the moment. Also with The U. S. Eddy dumping, we know that there could be some more capacity dumping back in China. And at the customer side, since our customer they are generated the hex producers in Tier one segment, this market is a very segment or very yes, I would say non concentrated. So the price pressure from value chain is always there and deliver to the supply side. So over quite many years, we have to address that. But at the same time, many of the customer they spend a lot of CapEx in the new development, especially in the falling EV trend. So there are a lot of aggressive customers. They have invested a lot there. That's also quite interesting. It's threatened also the opportunities together at the same time. Supply side, following the China economy development also the big more stringent environmental requirements, we see that for example, prime metal production, they seem to move a little bit more closer to the downstream process industries. So that the liquid metal could direct that goes to the process industry that you could see a better cost structure by doing so. And there's some alumina cluster basically is in the process to be developed for this reason. And also when we just talk about the scrap value chain as well, many of the suppliers or the dealers, they don't have the qualification. When they try to recycle these scraps, they don't have the right yes, environment qualification, I would say, following the national standard. So we also see there potentially could be a lot of change that the transaction model will be changed. So we also have a lot of opportunities there to optimize our cost structure. And then we talk about the new entrants. We don't think there's any competitive new entrants actually for the moment, but just worth to mention here. So all in all, facing the dynamic environment that we have always we have to always address the cost pressure. At the same time, we have to hardly working with innovation. That is really the main thing for us. So we will continue the current strategy, as I just mentioned, to focus on the target, the fast growing heat exchanger components and also to follow the electrical vehicle development trend, at the same time, do our optimization in our product portfolio to optimize the price structure. And sustainability, I just mentioned China, the environmental requirement is getting much more stringent. So to perform even beyond that national standard is extremely important and we believe that will create extra competitive advantage for us in future. Then the efficiency improvement that's in our DNA, we're always working with that. And also we said, I just mentioned this digitalization is one of the main track that we have to continue. The last one growth with structure expansion. Some of the case I've shown that we try to leverage our technology into adjacent segments. Also we try to go a little bit downstream like Folder Tube that will support our customers and create new market demands. And also today it's kind of overcapacity situation in China. So we also keep active looking for the good opportunities to expand ourselves. But of course, it's more important to do that at the right timing. Okay. So I think that's all for me as a conclusion that we have I have presented several successful factors, which, of course, are very important to achieve former success. But also, we believe it's very important to keep these factors that will support our future success. Okay. Thank you. Thank you, Colin. We would like to see if there are any immediate questions for Colin right now. Yes, we have someone here. Torsten? You will get the mic. Okay. Jean Charles. Listen, I know that there is a former colleague of yours that is now working for the company called Huafon, And he walks around the streets of Stockholm and I suppose other European capitals also trying to get some orders. And he's telling us I haven't got this in written, so I don't know whether he actually, in the end of the day, would accept that. But he tells us he's going to build a factory for these kind of cladded products you sell with a capacity of 150,000 to 200,000 tonnes. And indirectly, again, I haven't got this in written, he says that he's able to offer us a price that gives him a margin of 5%. I do admit that what you showed here in the hexagon that you are better probably better when it comes to quality, to R and D, to service towards the customer. But still, can you please elaborate how you can match these kind of offers, although I haven't got it in written yet? But I mean, how is it possible for you to keep your price level given these kind of offers that at least are out there although not in written out in the market? I think first of all, I think it doesn't matter if they build the new capacity or not. They are of course, they Huawei is of course one of our major competitors today. And I think going forward, they are what they are doing, they are trying to build more confidence, try to keep up the standard similar to our level and that definitely will increase cost and we know they have increased a lot of cost there. But to build a capacity in the new location, I think one of the reasons that their current plant is full and also they could not really expand due to the government reason. And they have to have a kind of business security by having that facility in a new location, for example. So I at least for the moment, I don't see that they will significantly change the competitive pattern, I would say, for the moment. And I think we just continue what we are doing now. But you're thinking in the end, would they accept like a 5% margin? Or is that just something he tells us today? I mean, who is willing to invest into an industry where you get to 5% margin? I don't but in China, it's hard to say. Maybe some of the owner of the business, they say, I don't want to make margin. But over time, it must be. Even the financing cost in China is more than 5%. So But if you have a market in China where you have overcapacity and there is price pressure and you have to fight a lot to stay competitive, Should you really add more capacity to Granges by buying another plant or so? Shouldn't you instead go for more and more specialization to go up, up, up in the sort of value of the products you sell and sort of reduce the more simpler products that you sell instead? We have to work on both track for a moment. I think first of all, we have to keep certain position otherwise we are marginalized, so which is important that we have to keep certain business flow. And also of course, margin could be relatively lower than the high end application, but still yes, that at least have to stay on certain scale. And then at the same time, we have done a lot, as I said, on the innovation side to try to pick more high premium products. That's right. Okay. And the second question, with these import duties to unrolled aluminum products from China to The U. S. Now, do you expect even more price pressure or customers converting plants to the Grainless product range in a tougher environment, so to say? I think it's not likely because the competition is already very tough in China. So it will not change the story. And actually, when you see the price index, many of the prices are already on the bottom. Many of the players, they just have the pricing just cover the variable cost maybe merely. So actually in recent two years, we have seen two local competitors, they've exited the competition. Okay. So you think there could be more bankruptcies and so on for aluminum rolling companies in China now due to the duties in The U. S? No, I don't think it's more bankruptcy. It's, of course, in the North because of the overcapacity. Definitely, some players will die out. But in our industry, since relatively high margin, there will always be some newcomers, but also some old players could not sustain there. Johannes? Okay. I have two questions. So on prices, how does it work? Do you work a lot with long term yearly contracts? Or is it more monthly or quarterly contracts? So that's my first question. We most of cases, especially with the global accounts, have the multiyear contracts. And in the region, we at least signed one year contract. That's the shortest contract period we have. Okay. Is there a special time over the year when there is a lot of contracts being replaced with new price levels? Or is they coming gradually through the years? Or how is it working? Regarding the global big accounts, they have their own global plan. So that's not so fixed timing. But in the regional business, normally, it's Q4, Q1. Okay. And then I also have a question about, I mean, your high priced products in Asia versus the low priced products in Asia? Is it a big span? Or are your products very similar priced in the ones being produced in Shanghai? We have some big spend, but not for in general, we try to keep quite aligned price structure in the market. But of course, for some new application, we have quite differentiated pricing. And just a final question also. I mean, if I think about the OpEx side in your business, is that mainly set by the local Chinese currency? Or is it a lot of the OpEx base? Is that also dollars? Or how is it working? Cost base is very much Chinese. Okay. Just to add to this, I mean, good questions. Of course, there is a lot of interest and questions about China. But I think, hopefully, what Colin illustrated today that this is a very complex operation. It's a very complex product. And you need a system of competencies to actually produce and serve this market. And of course, there is a lot of capacity in China, but that's the general capacity. That's not capacity that can produce this product. But also bear in mind that the Chinese market is the most dynamic. It's also the market where you have the fastest development growth with new vehicles, new type of products. So it's also there where you have the vehicle to capture these opportunities is the greatest. So it's also, I mean, in very still the most I mean, exciting markets for the automotive industry to be where you really have high priced product and good margin business, cost of the development. So I think it's important to take that into account. And what you illustrate today is really all the activities that we're working on in different aspects in order to achieve this also strong growth. Okay. Yes. Thank you, and thank you, It's time to move on to our next speaker, Patrick Lawler, President for Granges Operations in Americas. Patrick joined Granges in 2016 after heading Sarpa's Extrusion business in Americas for many years. We are very happy to welcome Patrick up on stage today. But first, we will just spend a few minutes seeing a video. Okay. Granges can be found in half of the world's cars. It's in the superconductors that bring power to light our homes and in the systems that keep us cool. It's everywhere we work, live, and play. For more than one hundred and twenty years, of the largest growth regions in the world. We've expanded our footprint across The U. S. With three rolled product facilities in three states. We are increasing production capacity by 20% and equipping plants with the latest and leading edge technology. Our U. S. Rolling facilities are world class and we will continue to invest and expand significantly into the future. Our focus is the reason we lead the automotive heat exchanger market and are number one in both transformer and HVAC markets. It's the reason most of our customers have been with us for over twenty years and why our Huntington plant just celebrated their fifty year anniversary. Our focus is the reason we have the best thinkers, visionaries, scientists, engineers and technicians focused on research and innovation. We work to exceed our customers' expectations by delivering the highest performing products used in the world's most demanding applications. At Granges, we are dedicated to sustainability and committed to safety. We believe people are our greatest asset. For our employees, that means an injury free, healthy workplace and long fulfilling careers. For our customers, it means using fewer resources recycled aluminum as possible to maintain a cleaner environment. We recycle customer scrap as well as 100% of our own with the process that uses only 5% of the energy required to produce primary aluminum materials. Because when we take responsibility and create trusted partnerships with employees, customers and stakeholders, we contribute to a more sustainable society. At Granges, we know who we are and we have a clear strategy to invest and grow with our customers. As our story continues to unfold and we shape our path together, we see a bright and bold future. Granges, transforming the world through innovative aluminum engineering. Okay. Thank you. So good morning, everybody. Extremely happy to be here. And hopefully, you enjoyed the video, which gives you some insights into our operations and the markets we serve in The U. S. So today, I'm going to talk about who we are in Granges Americas, our operations and the markets we serve and of course, the expansion plans and activities we have going on in the organization right now. Starting a bit on just a macroeconomic outlook in The U. S. Economy, generally extremely strong. We're in the ninth year of recovery after the Great Recession in 02/2009. If you look at unemployment rates at 4.1% are at the lowest rates in forty years. Light vehicle sales forecasts are extremely strong and have grown 70% since 02/2009, and although flattened out, still remain at historically extremely high levels. Housing starts, which really is one of the leading indicators in terms of our HVAC consumption and usage, have doubled since 02/2009. And economic forecast and housing starts is also extremely strong going forward. Stock market in The U. S, as everybody knows, has gone up 300% since 02/2009. And since the new administration is in place, has grown 25%. So generally, a very strong outlook in terms of the macroeconomic outlook in The U. S. So moving on a bit to more specifically on the aluminum industry and legislation over the past year or so. Extremely interesting, of course, and lots of people talking about what's going on both in the rolled product industry in The U. S. As well as the aluminum industry generally. So three specific cases. The first case is the foil case. Foil on the classification represents products less than 0.2 millimeter. And that case was initiated originally almost a year ago, in fact. And the final determination on this was made in the last week or so with very high antidumping ranges in the 49% to 106%. So that is now in place, and that ruling is in place for the next five years, at which point in time the case will be reviewed again. So that's number one. Sheet case has been initiated a few months ago as well. And no margins have been determined yet. But in April and June this year, as you see there, some case will follow. And most recommendations are it will tend to follow the recommendations of the foil case. And the foil industry for us is extremely important, of course, from a Granges perspective. But in terms of market size, foil represents probably 10% of the rolled product industry in The U. S. Sheet represents 70% or 80%. And then the final classification is plate, which is very heavy gauge material, and there's no ruling on that as of yet at least. Point number three on this, of course, as everybody, I'm sure, in the last few weeks all over the world, Section two thirty two on national security, President Trump, of course, has announced tariffs on both steel and aluminum to be put in place, in fact, on Friday this week. So remains to be seen. The impact, of course, right now, both Mexico and Canada are exempt for a period of time at least until NAFTA agreements are signed up. Is in that bracket as well regarding an exemption. So again, I'll talk about it a bit afterwards, but it's 10% on all the imports coming in from every country except Mexico and Canada and Australia to come in place on Friday this week. Just the interesting chart in terms of the foil case at least. Obviously, this is from imports from China on foil specific products into The U. S. You see from 2014 a pretty heavy growth in foil imports. And at a peak level, just before the first ruling was announced, of course, extremely strong imports as all the customers in anticipation of a foil case imported extra volume. As soon as the first margins were announced some months ago, there was a dramatic drop, of course, in imports from China, and final rulings were made last week. So moving a bit on to more what we do in Granges and who we are. We have three locations, of course, as you heard or saw in the video. Huntington is our main location, consisting of two plants. Within that location, there's a West plant, which was only built in the last fifteen years at a very heavy investment cost of GBP $240,000,000. There's the East plant, which is 50 years old and was the original plant in Huntington. We have a plant in Salisbury, and we also have a plant in Newport, Arkansas. The mills in Newport, Arkansas were idled back in 2015. They operated in the extremely light gauge market. And due to imports and general market pricing, it was made a decision back then from Noranda to exit that business and the mills remain idled as we speak today. And I'll talk more specifically about the Newport location a bit later in the presentation. In terms of capacity, 200,000 tonnes capacity in the locations today, of which Huntington, of course, represents the major share in that capacity, Salisbury having 40,000 tonnes. Capacity utilization, as everybody knows and realizes, extremely high. We operate three fifty five days a year, seven days a week, twenty four hours a day. Moving on a bit to the markets and the products we serve. We operate really in niche market segments of the rolled product industry. The rolled product industry in The U. S. Is an extremely large industry, of course. So the market segments that we serve represent 12% of the rolled product industry in The U. S. And North America. HVAC represents almost 50% of all the products we make, and our market position within that industry is number one. Automotive heat exchangers, although the piece of the pie from a Granges Americas perspective, is quite low at 3%, but combined with imports from Shanghai and from Finspang, we're the number two player within the automotive heat exchanger market. We also play heavily in the container market, where our market share is number two. Transformer windings, we have a number one market share. And we also deal in other niche market segments such as automotive heat shields. Moving on a bit to the rolled product markets in North America. As I said already, a very large market with over 5,000,000,000 tonnes of volume in that marketplace. Can and sheet and common alloy represent almost 50% of the entire marketplace. The automotive body and white market is a rapidly growing market as vehicle platforms such as the Ford F-one 150 have converted from steel to aluminum over the past years. That's a rapidly growing market. But the markets that we play in today, of course, are more the niche smaller market segments of foil, where we have a 28% market share and the automotive heat exchanger markets, where we have a 17% market share. Of that 17%, 14% of that share comes from imports from Shanghai and from Finspang. In terms of Chinese imports, again, within those market segments, extremely high, as you see from sheet side up, and has been historically, at least, also very high in foil and automotive heat exchangers. And for the reasons I explained earlier, those imports now have declined as a result of the foil place very rapidly as all the customers who were sourcing from China have found alternative sourcing either in The U. S, if there's capacity availability, or elsewhere around the world. So that picture has changed, as we saw from the foil sheet, a lot over the past few months. In terms of market growth, quite optimistic about the view of the market in North America for 2018. Automotive, 4% growth. HVAC, which has been strong the last few years. Last year was a 7% growth. Anticipated market growth in HVAC this year, 6%. And container packaging generally follows consumer demand and has been quite steady for a large number of years. In terms of operational performance and financial performance, we acquired a company that was fairly strong already even though the Noranda organization was bankrupt and filed bankruptcy, and this is where we acquired the business. The downstream side of the business, which is the Rolled Products, was quite strong from an operational standpoint and a profitability standpoint as well. We've continued that performance, I think, in 2016 and 2017, both from an operating profit standpoint and cash standpoint, experienced extremely strong results over the past sixteen or eighteen months since we acquired the business. Looking at the cash flow from operations is, in fact, much higher than operating profit as we've extracted some initiatives and working capital management to optimize our operational cash flow as well. Moving on to the markets. Most of our relationships with our customers are have been long term in nature and fairly strategic. So you'll see a number of brand names there that we've dealt with for many, many years in the organization. Customer contracts in at least certain parts of the segments tend to be long term. And in fact, when we acquired the business, approximately 50% of our volume at that point in time was contracted until 2019. On the remaining 50%, which wasn't contracted long term, we have implemented price increases on that remaining part of the business in 2018, and those price increases have been quite successful. Sales volume, though, as you heard Oscar and Johan speak in the conference calls every quarter, is limited by the output we can make on capacity, of course. And for 2018, we expect single digit growth. Last year, as Johan also said, we had 5% growth in terms of volume as we continue to make operational improvements and debottleneck our plants and facilities. Moving on a bit to the HVAC markets, obviously, important market for us, with almost 50% of our volume in that market space. Our market share within that market is 58. And again, it's for the aluminium fin. We don't make extruder products. We don't make tube. It's the aluminum fin basically is that market share. As I stated already, quite optimistic view on the HVAC market projected a 6% growth in 2018. And major drivers of this marketplace are housing starts, which I referred to already already. It's quite optimistic. And the confidence of the consumer, who basically, if he has more cash, will tend to replace HVAC units at a shorter space and time than the last eight or nine years or so. Unlike the European market, as most people know, but almost every home built after 2000 in The U. S. Has AC. So a very different marketplace and very different market environment than the use of HVAC units on a residential basis in Europe, for example. And very high units that go into replacement units. So approximately eight in every 10 units are from a replacement viewpoint in The U. S. Okay. So I think what I described is a very strong market environment, strong macroeconomic viewpoints, combined with legislation, of course, in the last twelve months or so, has made a very strong demand for our products and the capabilities we have in the company on a go forward level. So since day one of acquisition, really, we focused very heavily on future strategic growth, having plants that are full and running around the clock. And we'll talk about three of those initiatives today. Number one is the plant expansion in Hanthita, which has been announced already, of course, back in September and has been approved. Number two, which was also referred to earlier on in the presentation, is the LOI with the Mitsubishi Group, which I'll give a status on as well. That is not approved. It's an LOI only. And point number three is quite interesting. In the light gauge market, we are seriously evaluating reopening up the idle mills in the Newport location to penetrate and to get into that marketplace over the coming months. So each one in detail. Huntington, of course, as was announced last September, major investment for us, dollars 100,000,000 plus, will increase capacity from 160,000 tonnes to 200,000 tonnes. And in terms of market strategy, it's both for existing markets such as HVAC and container, but it's also to penetrate the automotive heat exchanger market to a larger degree than we're in today. And going back to an earlier point, it's for unclad only. We don't have clad capabilities in North America. That's the point of the potential JV with the Mitsubishi Group. Another 85 jobs or so, so we'll go from four forty employees to over 500. And in terms of return, looks very good in terms of profitability in future as well. So fairly exciting developments, both from employee standpoint in Huntington, which that announcement was made almost a year only So from an ownership viewpoint, our employees are obviously very happy from an ownership viewpoint. And from a customer viewpoint as well, of course, running around the clock as we are today, most customers want more volume from us, which we're unable to give, unfortunately. So from the market viewpoint, obviously, our customers are very excited about this expansion and can't wait to get this in place, obviously. Number two is the JV, of course, a potential JV. We signed an LOI last September as well with the Mitsubishi Group. Lots of meetings, very positive meetings, lots of very good developments. And basically, more information will be forthcoming over the coming months. Point number three, we feel is a very interesting opportunity for us. This is the light gauge market segment that I spoke about earlier. And just to give you an idea of what light gauge really is, the average human hair in thickness is 0.1 millimeter or 100 microns. The average gauge in this marketplace is 10 microns or less than oneten the thickness of a human hair. So extremely specialty market. It's a niche marketplace that really, in terms of the graph there, you'll see major developments and major imports from China over the last years. Some local manufacturing, but that only represents a small portion of this marketplace, but is mainly imports from China. And obviously, with the foil case, those imports from China now have basically gone almost to zero in the last six months. And obviously, our customers have replaced those Chinese imports with imports either from North or imports from any other country in the world and some production locally in The U. S. So market segments include pharma applications, beverage, food applications and potentially some industrial applications as well. So our concept here really is to restart the idle mills in the Newport location and potentially one or two idle mills in the Salisbury location in addition to this and start mass manufacturing early next year. So this is not approved yet, but it's a very interesting opportunity for us, and we'll come back with further information as and when relevant as well. So a very quick summary. I think the acquisition is now one years. Point It's gone extremely well. We have a very good organization in The U. S, very good integration activities with Granges overall and have a very strong foundation for growth from both an operational standpoint and a market standpoint as well. Our strategy is high growth strategy. It supports group strategy. And really, it's a niche market as well. All the markets we operate in are niche, and we do want to be number one in all the niche market segments that we operate in. And from a timing viewpoint, of course, with these rapid changes in the market environment due to rapid legislation, we feel that speed of implementation and execution is extremely important to our success going forward as well. So with that, thank you for your time and attention. And back to you, Pernella. Yes. Thank you so much, Patrick. Now we make some time for anyone have some questions for Patrick, yes? Yes. So what are you seeing your competitors doing? I mean it seems like a good decision to add capacity. So are your competitors also adding and at what rate and so on? Sure. Well, I think it depends on the definition of who the competitors are. So you'll see and you have seen some announcements in the rolled product industry already in the last six months of expansions and capacity, but they tend to be in the market segments that we do not play in now. So there's a lot of announcement directed towards ABS, auto body sheet, of course. So we've seen some announcements in the last six months where our competitors are adding capacity within the auto body sheet, which is obviously not one of our market segments. Our direct competitors really in the markets we play, but there aren't that many, of course, because as you see from some of the graphs, there's been a lot of imports over the years, of course. And there have been some not that specific announcements of adding capacity, but nothing really has been decided yet, at least in the niche market segments that we play in. So we're probably the only company that have announced this very specific growth in the market segments that we service today at least. And can you also indicate a bit on the price increases? In what range? Are they sort of 1%, 2%, five ish, 10 ish, 20%? Yes, I can give a range. And it's important to remember, it's in our pricing, of course, there's a metal component. And that metal component is a pass through to all the customers. So the LME plus the Midwest is a base price. So that's a pass through. But on the fabrication margin that we have control over, price increases for 2018 are in the 5% to 10% range. Thank you. Yes. Think I have the mic, I I'm just want to follow-up on the light gauge foil and the opportunity from Chinese tariffs, etcetera. So if I understand this correctly, those customers are securing this from other suppliers today, right? And then when you potentially get this upstream maybe in one year, one years, you will substitute those suppliers once again. That's how I understand it. Yes, that's right, Matt. So what's happened is most of these customers have resourced elsewhere to many different sources around the world. And some are still buying from China, but they obviously have to pay the huge extra duties, of course, associated with that. So it's really dependent on what customer. But the concept is that they have short term supply for 2018. And if we go back into that marketplace, of course, we would envision supplying from 2019 onwards in that marketplace. And it would change because the short term supply is not sustainable for long term for certain reasons. Is that how we should Yes. I think if and when they change, it's more having a domestic supplier is a huge advantage of having 15 suppliers from all over the world. So I think there's a huge advantage from having a domestic supplier in this industry from North America. There's really only one supplier today within the North American industry within this market segment. So we feel there's a huge void in the marketplace right now for a strategic player like ourselves to come in and enter that marketplace. When the supply chain is highly complex right now, it mainly came from China, but now that's gone, now the supply chain is highly complex coming from all over the world. So it's ease of doing business. It's local domestic supply. It is service. That's where we feel we have the advantage, Matt, in this potentially in this marketplace. And it seems like that facility is also pretty fairly in good shape, so it doesn't need any significant investment or sort of cost. Is that correct interpretation? Yes. I think that's a good statement. It's a plant that has been well managed and run over the years. It's been idle since 2015, so there's some costs associated with the start up, of course. And we have to invest somewhat in the mills as well to make them more efficient going forward so we make sure we have a fully sustainable operation as well. And what was the capacity for that plant? That's very hard to say on past capacity because future capacity, but put it like this, our future capacity will be much higher than past capacity because we will invest heavily in the mill in terms of optimization. So our future capacity will be higher than past. Okay. Thanks. So on the Mitsubishi Metals agreement, what are you thinking there? How much how big is this potentially on venture in terms of capacity? And what do you think about investments? And is it so that you take a fifty-fifty share of the investment together with them? Or how is it working? Yes. I can talk a little bit and then pass it over to Johan. But I think it's really still under discussion. At this point in time, can't really state. I don't think that specifically, of course, but just to say that ongoing discussions are taking place. We really haven't decided totally yet on what the capacity will be, but obviously playing with a lot of different models and business assumptions, of course, which are ongoing as we speak. So it's a bit early, I think, to say what the capacity will be, but obviously heavily focused within the automotive heat exchanger market for cloud products and some niche industrial applications on top of that as well. Yes, to comment on that. I mean, the reason to discuss with Mitsubishi Aluminum are basically three I mean, one is they're a very capable player. They have we've been knowing them for many years. They have good relations with many of the Japanese customers. And also they are into other interesting segments. And of course, you also see a need. If we do this, there's a great benefit to share this investment with a partner. And what we have discussed so far with them is that Granges should take a majority share and also management position. And of course, now we're also into discussion with them how to commercially agree upon this because we have a major business today in The U. S. And they have not that big business. So but we still see this as an attractive opportunity, and that's why we continue to pursue this project basically. I mean, just as an example of what they are into, for instance, battery foil. In the battery now, the basic delivering to Tesla, the cathode in the battery is a very thin foil product, which are good margin product as well. This is a very interesting and potentially very large market. So of course, referring to the other discussion recently, we also see that in the long term, this Newport facility could be also very relevant to go into that market of battery foil. Yes. Yes. Just about I mean, mentioned you have increased volumes in The U. S. By 5% last year and now you're producing at a high level. But do you still expect to be able to sort out certain bottlenecks and increase volumes by the same amount in twelve months forward? Yes. I think our intent is, of course, to continue this trail, of course. But as I said earlier, we are full and we're running three fifty five days a year already, of course. So our full intention is to increase every year. As I gave guidance on the earlier slide, we expect our growth this year to be in the low single digit amount. Then about the capacity upcoming capacity here you have, could you sell it already today? I mean, are there contracts available for you to negotiate? If we could set it today, yes, absolutely. We are most of the contracts we go into are longer term contracts. But already, as I said, there's a huge interest level from especially our larger accounts and customers in the marketplace to look into the expansion in Huntington and lock in a portion of that capacity as fast as they can because there is a general shortage of supply in the marketplace, and Granges coming to market first. Of course, our customers are very interested in securing longer term supply, not just for one year or two years from 2019, but from 2020, 2021, 2022 as well. So I think it's a very interesting opportunity that we can fill our capacity, we feel, quite quickly in terms of that expansion. Thanks. Hi. Sorry, just wanted to follow-up on Kenneth's question before on price. You said that the price increases for half of your contracts were up some 5% to 10%. I guess that's on a gross level. How is that received by customers? And what do you feel the net number is going to be? How was it received by I don't think any customer is happy with the price increase, Matt, but Of course, that's why but I think customers know what the market is, of course, and we know what the market is. And so it's never an easy discussion having to go to one of our customers saying they have a price increase. But generally, I think there's an acceptance of the marketplace and demand and supply. And as I said earlier, the price increases generally have gone very well. And you think that's going be a net positive to profitability in or margin, which is the same? Well, yes, if you get price increases, it will positive, of course. It will be added to the bottom line. Yes, perfect. Thanks. Okay, great. Thank you so much, Patrick. Last but not least, it's time to welcome Granges' CFO, Oskar Hellstrup, up on stage. Oskar will give an update of Granges' earnings performance and financial status. So please, Roscar. Thank you. So I will do that, but I will also try to connect back to some of the messages that have been given to you by some of my colleagues earlier today and try to set that in the context then of our financials. If we start with looking back a little bit, we can fairly easily say that we've had a very good track record of growth. If you look back over the last twelve years, we have grown on average 7% or so per year, 120% in total organically. On top of that, we have, in addition, doubled the business through the acquisition that we made in 2016 of Noranda's rolling business. So in total, a strong growth. Also a decent development of the earnings. We don't have comparable financials for earlier years than 2011. But if you look at from 2011 to 2017, we have improved our operating profit by 350%, translating also to profit per tonne increased from SEK 1,400.0 to 2,500. If you look at the slight dip that we see in the profit per tonne there in 2016 and 2017, that's fully attributable to the fact that the Noranda business that we acquired has a slightly lower margin at this point in time, which means that, of course, the combined margin is coming down a bit. As you can see on the right hand side here also, the legacy Granges business, there we continue to improve the operating profit per ton also in 2016 and 2017. If we then look at what is behind and driving this earnings increase, we can see that, that volume is, of course, a big contributor here, three seventeen out of earnings increase comes from that. As most of you probably know, we also are a company with quite a large exposure to foreign exchange rates. And the net impact of the foreign exchange rate in this time period is $258,000,000. The majority of this positive impact relates to 2015, but we also saw some positive impact in 2016 and 2017. Looking earlier in the period, the impact from the FX was actually negative. Coming back a little bit then to the price and mix question that we have discussed. We are, as you've heard today, working a lot with product development, launching new products, optimizing pricing and so forth for these, that has allowed us to increase the prices in mature markets like Europe and Americas over time. And that has done, to some extent, helped offsetting the slight reduction in conversion price that we see in Asia. Worth pointing out though and tying back to what Colin said earlier today, we have managed this very well and we are still the price leader in Asia. And we also need to remember that prices in Asia are from a global perspective at a relatively high level. If you look on price and mix for this period of time, it's impacting the conversion revenue negatively with around 1% or so per year. That's the order of magnitude of this. Looking then at productivity, positive impact of 56,000,000 there coming from the cost side. That might not seem much, but if we again tie back to what Colin said earlier, during this time period, we'll have more than half of our operation in China. And in China, we have been exposed to double digit wage inflation for this time. And this is, of course, the improvement that we see on top inflation. So first, we offset the inflation and then we have an additional benefit of 56,000,000 on top of that. The changes in depreciation, it's primarily related to the investment program that we ran in Sweden and China from 2008 to 2012. And then finally, the acquired business is adding SEK268 million to the profit improvement here as well. With this profit improvement, we've actually established ourselves as one of the most profitable companies in the aluminum rolling industry. If you look a little bit on the characteristics of these and also relating back to some of the questions we heard earlier today on competition, the most profitable players here are the specialists, the ones serving the niche segments, Granges, AMAG and Kaiser, as you can see. And if you look at Kaiser and AMAG, they are also, for instance, serving some of the really high margin segments like aerospace, for instance. If you look more on the right hand side on this chart, you will find the more generalist rollers, the ones that are serving many different segments, serving the large product segments and so forth. We have also been quite good at translating our earnings into cash. If we exclude 2011, which was a year with quite large CapEx and also working capital buildup, we've actually had an average cash conversion of 102% per year from 2012 to 2017. And that's I think it's a pretty good ratio for our industry. The slightly lower conversion that we see in 2016 and 2017, that's to a very large extent driven by the fact that increasing LME metal prices had an impact on our working capital buildup. If you exclude that effect and look at stable LME prices instead, you will actually see a cash conversion of close to 100% also in 2017. If we want to look at our working capital performance from a more operational perspective and exclude the impact of metal price fluctuations, one way of doing that is to look at working capital days. That's a metric where you basically put the working capital in relation to your net sales in a certain time period, and we used to do that on a rolling three months. And here, you can really see that we have been very successful in our working capital management in this time period. We have almost cut that in half from one hundred and twelve days in 2011 down to sixty three days in 2017. And although many of the low hanging fruits have certainly been picked in this area, this will continue to be a focus area for us going forward. The strong cash flow has also allowed for a significant reduction on net debt. If you look over the last five years, we've actually managed to pay down the debt three times and this rapid deleveraging was also a key enabler for the acquisition of Miranda, so closely after the IPO. And since the second quarter of twenty seventeen, we are again back in our target range of one to two times net debt to EBITDA. And that means that we have a strong financial position, which we believe are beneficial both for Granges as well as for our shareholders in several ways. First, a strong financial position is the way for us to manage our business risk. If you remember, 50% of our sales goes to the automotive industry, which we know is cyclical. And therefore, we need to be able to have the capacity to navigate those cycles and manage demand fluctuations. We touched upon it earlier today, but we pass our metal price on to our customers. So metal price fluctuations doesn't impact our bottom line, but it does impact the level of working capital tied up in the business as we just talked about. And we therefore also need to have a balance sheet that have the capacity to absorb the metal price fluctuations. Second, we need to have capital available to make investments to sustain and make smaller upgrades to our production assets and secure that productivity remains at efficient levels. Third, our shareholders expect us to pay a predictable and reliable dividend, and we need to have the capacity for that as well. Finally, as you also heard today, we have a clear growth agenda and a strong financial position creates a good base for future growth, whether it's organic growth or through acquisitions. With a strong financial position, we are able to balance these four items and thereby drive shareholder value. You could for sure argue that in the short term, could easily bear a higher dividend ratio than what has been proposed for 2017. But looking a little bit longer term, we need to secure our position and we need to make sure to take advantage of the opportunities that we have to grow the business. And we are convinced that, that will create an even higher value over time. So for the moment, the strong financial position is needed for expansion. As I mentioned earlier, we were through a major investment program in our Swedish and Chinese facilities from 2008 to 2012. In 2013, we went into a little bit of a consolidation phase and we switched mode to maintenance type of investments primarily. In 2017, we initiated expansion of the Huntington facilities, as Patrick talked about, involving then USD 110,000,000 investment program that will be finalized in 2019. And spend for this project is expected to be $50,000,000 per year or so in 2018 and 2019. In addition to that, it's our belief that we, over time, will need about to spend about 80% to 90% of our depreciation level to make sustaining investments into our business. For 2018, we believe that the investment level, excluding the Huntington project, will be around 100% or so of the depreciation level, so a base investment level of around $350,000,000 plus an additional SEK 400,000,000 for the Huntington project, assuming then the current FX rates. That's the sort of level we expect for 2018. Finally, I think we can conclude that Granges has a business model that has proved to allow for solid value creation, followed the improvements we've made in the business to increase the earnings and reduce the capital, the value creation has continuously increased since 2012. And it's the clear ambition from us in the Granges management to continue to deliver value going forward. By continuing to leveraging our strong position and implementing the strategy that Johan presented earlier today. The value created in Granges has also been to the benefit of our shareholders. Since 2014, we have increased the we doubled the dividend from SEK 1.5 to SEK 3 per share and distributed in total SEK $668,000,000 back to our shareholders if we include the proposed dividend for 2017. If we also take into account the positive development of the share price in this time period, the total shareholder return for Granges from our IPO up until February year would have been 125%. If we compare that with the six return index, it's almost 2.5 times better. And if we compare it with our peers, it's almost four times better than what they have performed in this time period. And I think that's something that is probably appreciated by our shareholders. Summing this all up, I think that it's fair to say that Granges has a very strong track of growth, a very strong track of earnings improvement. This has led to that we are today among the most profitable players in the aluminum rolling industry. Effective capital management has supported cash conversion and debt repayment, which has led to that we have a solid balance sheet, allowing both for dividends as well as for investments in future growth. And what we are growing is a business with solid value creation and returns. Thank you. Great. Thank you, Oscar. Now it's time for some final questions before I let Johan conclude on this day. So do we have any final questions? Yes. So I understand it's of extremely difficult to answer this, but with the new aluminum trade tariffs highlighting in your presentation package how much imports you have into The U. S. From Asia. And then we understand it's a huge positive for the pricing in The U. S. And you will also restart volumes, etcetera. But how do you think about the impact over the next twelve months? Do you see this as a net positive for your business or near neutral or more negative? Yes. I mean, based on how you see the EBITDA impact Yes. Or But I mean, there are certainly different aspects here, right? And there are different tariffs hitting the market in different ways. If you start with the antidumping duties from China and that Patrick also mentioned, I mean, that's a clear positive for us, right? I mean, is certainly benefiting our U. S. Business. At the same time, as it has a relatively limited impact on the business where we have import flows into The U. S. Because we have directed what was previously produced in China going to U. S, now being produced in Sweden going to The U. S. And so on. So that's certainly a positive for us. If you look at the flat sort of 10% rate going across all the markets, that is, of course, impacting the imports that we have from Sweden into The U. S. As well. Exactly to what extent that will impact, it's something that we are looking into. But we know for sure that, of course, many of our contracts are either selling duty unpaid, in which case the customer is fully responsible for any duties or has clauses in them allowing us to make price adjustments for these type of events. So we expect a fairly limited impact, but some impact still in 2018. But the exact amount is something that we have to see over time. So it sounds that's a net positive on the year? That's how we see it if you take into account the anti dumping parts as well. Yes, yes. Hi. So I just wanted to ask, is there a risk sort of that you invest a lot now because of the political situation? And then sort of I mean, it's a process industry. Right? So it takes takes a few years to get it up and running. And then by then, it was sort of the political climate would have all changed. Or how do you address that risk? I mean, it's a very good and fair question. Of course, the decision we took on the new expansion in North America was truly based on the market condition at that time, of course, and there was no duties there. So we should not be that speculative. But of course, the fact that the duties came in place, of course, just improved the case. But the fact is in U. S, the market has been undersupplied for years and it's been a very strong demand from customer side to expand capacity in U. S. So that's a clear case in our view. And that's also back to the questions regarding China. I mean, Colin mentioned that, of course. We see a need to expand capacity in China over time, but we're also very careful on how to do that, of course, due to the fact that there is a lot of capacity, of course. So we should do this in clever way. Okay. Thank you. Thank you. So no questions on Europe yet. So I was just going to get an update maybe on the production facility in Finspang. You mentioned already many, many years ago that you need to do some investment and upgrades due to how it's built in the location, etcetera. And now you announced in the Q4 report also that you had some CapEx need for that during this year. Can you maybe just update that short term and also long term, your view for the capacity expansion in Finnzburg? Absolutely. And thanks for asking, Max. I was actually about to say something about Europe as well. We have the President for Europe here. It's a very important market for Granges for sure. And we have actually seen a very positive development in our European operations for the past four or five years. And of course, we also see that the market now is actually fairly good in Europe and a strong, strong demand. So that's why we have looked into recently, of course, how to optimize our operation in as well to make that more cost efficient, but also to add additional capacity in a clever way. So we are currently right now looking into how to optimize the production flow in Finspang to make it more cost efficient, but also to enable us to grow the business with additional capacity, not a lot, but also additional capabilities. So there's no decision, but that's a clear prioritized activity for Granges because we still see that Zinspong operation is a very good base for serving the European market going forward. And correct me if I'm wrong, but when I was there, seems like the actual layout of the production facility was a problem for the workflow in the plant. Is that something that's going to sort of put a cap on how much you can expand the capacity? I mean one of the main advantages if we should redesign is to optimize the production flow. And there's a lot of available land, so to say, to optimize that. So that's, of course, that's a clear, mean, area where we will improve is the flow of production. I think we should bear in mind that all competitors in Europe also has a very long legacy. It's not like that Granges has a unique or a disadvantage compared to other rolling mills in Europe in terms of a not optimal production flow. I mean, we have to go to China basically to find the optimal production flow peers. Okay. But you don't want to take this opportunity to flag for some of the big investment need going forward or? No, don't want to take this. We haven't decided, so I cannot take that opportunity of course. But just to give a comment on that, I mean, course, when we look into improving Finspang, we're not talking about very large we're not talking about large investment either. We think that we can do this in a cost efficient, clever way to improve that operation. That's okay. Thanks. So just for the CapEx guidance you gave for this year and into next, are the FinSpong potential projects included in those? Or does it come on top? We have as you can see there, a slight increase in what we call the sustainable type of investments. So instead it's not 80% to 90%, it's supposed to be 100%. That includes some smaller upgrades, of course, of the Finspang facility as well. But if we are talking a little bit of a larger revamp or something like that, that is not included in the 2018 guidance and would not come in 2018 as well, right, because such things would have a longer lead time should we make a decision to do anything. And then I maybe missed it, but in The U. S, if you restart this plant that is down right now, what kind of CapEx levels are we talking? What we have seen, I mean, under investigation, but the range between USD 20,000,000 to USD 30,000,000 then to is kind of the range to restart that whole production. Restart and upgrade, we should say. It's more than just turning the key there. It's making some improvements to make sure it's a competitive operation in the years to come. Just coming back to gearing there, Oscar, you mentioned when you bought Noranda, gearing sort of increased somewhat. And now going forward, I guess you have seen what Noranda could sort of add to your operation. And maybe you could sort of, if opportunities appear, gear up a bit more? Or is it the level you got when you acquired Noranda, is that the peak level, so to speak? Very good question there. And of course, if you look at how the financial target is phrased there, saying that we should typically be between one and two times EBITDA in terms of net debt, which we are right now. But it doesn't mean that we have to be there at every single point in time, right? From one time to another, we can be outside of that range, either below the range, maybe preparing for a larger investment like the Noranda case or above that range consolidating a larger investment. So I mean, it's clearly so that the Board gave us this target as a directive. But from time to time, we can also be allowed to be outside. Okay. Thanks. Okay. Then I think it's time for Johan to just a few words to conclude the before we are having lunch upstairs. And we hope that as many of you as possible can join us for that lunch. Okay. Yes. No, first of all, I really want to thank all of you for participating today. I think it's very inspiring for us that you have this great interest in our company. And of course, this was our second Capital Market Day since we came into the market again. I mean, many of you know Granges from before, but when we came into the market IPO twenty fourteen, it was a different Granges. And think today, we've been able to present for you what we have done and also what is our ambitions going forward, how we want to continue to develop Granges in this new phase. And you've been listening to me, of course, we have discussed strategy, our targets, our operations. Kent had a good presentation and gave you a view on our research and innovation and why is this such an important vehicle to grow growth and grow profitability. And then Torbjorn had a presentation about electric vehicles and impact for Granges. For sure, we see that in the up until 2025, where the hybrid car will increase in numbers. It's a stronger demand for our markets. And we also foresee that going forward after 2025, with the EV cars coming into more numbers, that will most likely have a positive impact for Granges as well because the total demand will if we manage this opportunity right, if we can capture the right opportunities in designing the good products for batteries. And then we had a presentation from Sofia about sustainability and how we look upon that. We have a very holistic approach to sustainability. I think we also have a very business minded approach to this. We think clearly that this can create value for Granges, especially since we are a global player. And I mean, many Swedish companies in that respect are in the forefront. And we think by being better and being more sustainable, we can also create value for our customers. And then we had a presentation from Colin, hopefully to give you a bit of a more insight into our Chinese operation, a little bit of a dig or deep dive into what we are doing there. And I think, as you clearly see, it's really a system of competencies working very close to the market, very close to our customers, but also are actually a rule model when it comes to operational efficiency. And this autonomous automation product that Colin is talking about is actually very, very impressive. And then Patrick, we're very happy to actually have Patrick in our family. And then the whole acquisition of Noranda has been very, very good for Granges. We have got a very competent organization, reach a platform in The U. S. And as you can see, we have clearly a lot of plans for our U. S. Operations and a lot of interesting projects in the pipeline. And then finally, Oskar, of course, concluded, of course, what we have achieved during these years in terms of financial stability, good profitability, but also a good return to all the shareholders. So we are committed to continue this journey and I'm happy to have a new Capital Market Day here in two years' time or something, where we have hopefully more exciting news to present. So with this, thanks a lot for coming today, and we are here for lunch if you want to stay and have more questions. Thank you.

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