Good morning, ladies and gentlemen. I'd like to welcome all of you to this presentation of Gränges' fourth quarter and full year results for 2025. My name is Jörgen Rosengren, and I have the honor and pleasure to be Gränges' President and CEO since 2021, and I am here together today with our Deputy CEO and CFO, Oskar Hellström, and our Director of Investor Relations, Anna Edenberg. During this call, I'll start with some general comments about the development and then hand over to Oskar for a more detailed run-through of our results. At the end of the call, there will be a summary, of course, and also ample time for questions. Let's get started here. The fourth quarter of 2025 was very good, and we felt to a good year.
So let me speak first about volume. As we've done now for seven or eight quarters, we continue to take market share in all of our regions, and these share gains more than offset a very weak HVAC manufacturing activity in the period and generally hesitant demand. And as a result of all these things, sales volume in the quarter was up 17% and 22% for the full year. If we then turn to earnings, the strong volume growth, combined with price and productivity improvements, helped us grow our operating profit in the quarter to SEK 373 million, which is up quite a bit, around 15% from last year's fourth quarter.
This result is our best result in the fourth quarter ever, and we reached it despite quite a bit of headwind, especially in higher aluminum scrap costs and significant negative currency effects. For the full year, we reached a new all-time high EBIT, so also record, and this is, in fact, the fifth year in a row that we post an all-time high EBIT result. Our cash flow, of course, was helped by the strong profit, and also boosted by significantly lower capital expenditure. But on the other hand, it was negatively influenced by a significant increase in the aluminum price. And finally, as we have done consistently now for many, many years, we achieved record sustainability results.
So in summary, a very good quarter, ending a good year with many new records for Gränges, and we have to say, in quite a volatile environment. If we then turn to the sales volume development and look a little bit more in detail at it, I've already mentioned that overall market demand was generally hesitant in all regions and markets, and especially in HVAC, demand was quite weak. On the other hand, we continued to take market share in all regions and in most markets, including HVAC. Also, we had good manufacturing performance in this quarter, which feels very good because it helped us reduce backlogs throughout the quarter, maybe not least in Europe.
As you can see on this graph, the net result of all this was respectable growth in Gränges Americas, despite the HVAC weakness, and quite strong growth in Gränges Europe and Gränges Asia. If we take the individual markets, we had good growth in all markets, then again, except HVAC. But I guess we should point out also that we, in fact, outgrew what we believe is the manufacturing activity in HVAC by quite a bit, thanks to market share also in that market segment. In summary then, and as already mentioned, share gains and backlog reduction more than offset the weak demand, allowing then all of our regions to contribute to this 17% sales volume growth for the group.
I think I should mention also that a key driver behind this result is the way we're set up in regions, where we have very strong regional management teams and quick decision-making that is happening very close to our customers. We call this our customer-centric organization, and it has really proved its worth in the challenging conditions that we've seen in the last two quarters. Regarding sustainability, it's really a pleasure to report a very good continued trend of our sustainability performance throughout last year, 2025. And this is especially important, of course, because, as you know, sustainability is a key part of our strategy and also of our customer offering and what we promise investors.
And in particular, we, of course, need to highlight the record low carbon intensity we achieved in 2025 of 6.6 tons carbon dioxide equivalents per ton aluminum sold. And this is driven both by increased recycling, but also by a much higher use of low-carbon primary aluminum. And also that we reached a record high recycling volume of 300,000 tons for the full year, and both these figures, taken together, represent a dramatic improvement from our reference year and from last year, or the year before last, I guess I should say, and also put us well on track or even ahead of plan for our 2030 targets.
Now, as we've talked about before on these calls, Gränges has finalized a multi-year expansion phase, which has lasted for many years, in fact, since 2018 or so. And during this phase, we've invested in capacity expansion in all of our regions and also new capabilities, which make it possible for us to grow into new segments. And as a result, we now have a global manufacturing capacity of 800,000 tons, which we feel is very well-balanced across our three regions, with about one-third each, you can say. Now, though, we're entering a new phase, where we will focus more than expansion. We will focus on utilization of the capacity we have and on optimizing price, mix, and productivity within this capacity.
This is a decision we made years ago in 2022, in fact, but since the earlier projects have taken about three years to finalize, we're starting to see the results now. And in particular, this change will influence our CapEx and cash flow profile. And as we can see on this slide, our CapEx peaked in 2019, and more recently in 2024, but after that, we've had some payment outflows from earlier projects. But for 2026 and 2027, we do not foresee any significant capacity expansion CapEx. And as a result of that, we're guiding for total CapEx in 2026, this year, of approximately SEK 600 million, which is the lowest we've had for many years, and we then hope will correspondingly support our cash flow.
So in summary, our expansion program is finalized, and our focus is now on utilization and optimization, and we hope for lower CapEx ahead. If we take a look at the volume and earnings trend over a longer time, we can see that we had some years of less impressive organic growth following a previous record in 2017 and 2018. We had a bump, of course, to the total growth in 2021, following our acquisition of Gränges Konin. But since some time now, we've returned to strong organic growth, which, in turn is driven by significant market share gains in all of our three regions: Asia, Europe, and the Americas.
As a result, we reached last year's sales volume of 617,000 tons, an all-time high volume for Gränges, and the first time we break 600,000 tons. This increased growth has also been a really important factor in driving our strong earnings trend in the past years. As you can see in the graph, we've improved our operating profit every year now for five years in a row, and we reached an all-time high of SEK 1,614 million, apparently in 2025. We should perhaps also emphasize that this operating profit also drops down to the bottom line, as 2025 also saw our best-ever net profit and earnings per share.
Now, if you reflect a bit on this development, we're perhaps especially proud of having shown good volume growth and very stable earnings growth, in what we think is a very turbulent industry and geopolitical environment around us, that we've had to face now for several years. We, of course, have the ambition to continue this way of dealing with external developments also going forward. With that, I'd like to hand over to you, Oskar, and hope that you can take us through the financial and sustainability results in more detail.
Yeah. Thank you, Jörgen. I will certainly do my best to guide you through the fourth quarter results, but before we do that, I think it's worth commenting a little bit more on the full year, because this is, after all, a new record year for Gränges. As you can see on this slide and also on the long-term chart that Jörgen just showed, in 2025, we generated our highest sales volume and highest operating profit so far. And I think, as Jörgen also alluded to, the theme of the year has really been to mitigate the effects of several external pressures. And to do this, we have focused on, not the least, flexibility, but primarily on the things we can control.
So growing the sales volume through market share gains, optimizing pricing where we can, improving our cost productivity. Given the fact that the operating profit is increasing year-on-year, I think it's fair to say that we have been successful here. That being said, as you can see on the right-hand side here, our full year margin declined in 2025 from SEK 3,100 per ton in 2024 to SEK 2,600 ton for 2025. If we exclude the new business in Shandong that is currently operating at a lower-than-average margin and the SEK 161 million negative currency effect, the operating profit per ton would have been SEK 3,400 per ton on a like-for-like basis, so about SEK 300 per ton better than last year.
And I think that's, that's a more true representation of our underlying performance in 2025. Now, leaving the full year perspective and looking at the fourth quarter, which also happens then to be a record quarter, with the highest sales volume and highest adjusted operating profit that we've had in quarter four. We continued to experience a solid sales growth despite the continued weak demand in many of our markets, and the sales volume grew by 17% year-on-year to 152,000 tons. About 14,000 tons of the growth, or about 10 percentage points of the increase, was enabled by the new facility in Shandong and the capacity we now have there.
On the earnings side, we see a slight seasonal decline of both the operating profit and of the operating profit per ton in the quarter. But looking from a year-on-year perspective, we do see a very positive development of the operating profit, with an increase of close to 15% to SEK 373 million. And this is a very good development, I think, especially taking into account the strengthening of the SEK against primarily the U.S. dollar and the Chinese yuan, which led to negative year-over-year currency effects of SEK 74 million in the quarter. And we also continued to experience pressure on the scrap spreads, although we did see a sequential improvement compared to the third quarter. Compared with Q4 last year, the lower scrap spreads had a negative impact on the operating profit with about SEK 30 million.
As you probably know, this is an indirect result of the increased U.S. import tariffs on aluminum, creating imbalances in the aluminum market. On the positive side, we continue to see good effects from volume growth, price increases, and continued productivity improvements. Here we can also mention that we, this year, had to postpone a maintenance stop in Americas from Q4 to Q1. This had a positive impact on Q4 earnings with about SEK 20 million, but we obviously have the reverse effect of this in the first quarter of 2026. Looking at the adjusted operating profit per ton, this decreased by SEK 100 , from SEK 2,500 in Q4 2024 to SEK 2,400 in Q4 2025.
If we exclude the currency effects, the operating profit per ton would have been SEK 2,900 per ton on a like-for-like basis, so about SEK 400 per ton higher than last year. If we then continue with some more details on, from the fourth quarter, I already commented on several of the numbers on this slide, I think, but we can note, or similar net sales growth as for the sales volume, about 17% year-over-year, and net sales reached SEK 7.2 billion. And the adjusted operating profit was, as we said, SEK 373 million.
Here I've highlighted already, but I should mention it again, that in this number, we absorbed negative currency effects of SEK 74 million compared to the last year, so quite substantial. The profit for the period increased to SEK 251 million for the quarter, and at SEK 1.058 billion for the full year, it reached above SEK 1 billion for the third year in a row. Earnings per share attributable to Gränges parent company shareholders increased to SEK 2.31 for the quarter and to a new record level of SEK 9.54 for the full year.
The Gränges Board of Directors proposes an increase of dividend to SEK 3.40 per share for the year, and provided that this is approved by the annual general meeting, this means that almost 36% of the profit is distributed back to our shareholders in line with our policy. The return on capital employed decreased to 10.8% by the end of the fourth quarter. That's down 1.1 percentage points compared to the year before. And the decrease in ROCE is primarily attributable to the additional capital that we've added in Asia through the acquisition and ramp-up of the facility in Shandong, but also, of course, through, from increasing metal prices that impact working capital through the year.
Before I comment on the cash flow and leverage, I think it's worth to spend a little bit time on one of the key themes, really, for the aluminum industry in 2025, which is then the increasing market price for aluminum. Now, as most of you probably know well by now, Gränges makes the money on the value that we add on top of the raw material, and the aluminum price is to be considered as a pass-through to customers. This means that the impact of the aluminum price on the operating profit in absolute terms is limited. The aluminum price does, however, impact the value of our working capital, and when the market price for aluminum increases, this has a negative impact on the change in working capital and consequently on our operating cash flow.
Understandably, the reverse is true when the market price declines. Now, on the back of the U.S. introduction of tariffs on primary aluminum from Canada, the Midwest Transaction Price for aluminum has increased by more than 75% or $2,300 per ton to around the current level of $5,300 per ton. And driven by this, the average aluminum price for Gränges has increased with about $1,200 per ton in the same period, and we continue to see further increasing aluminum price now in the beginning of 2026 in all three regions where we operate. Now, for the full year 2025, the increasing aluminum price had a negative impact on working capital and cash flow, with about SEK 500 million, SEK 200 million of this impacted the fourth quarter for us.
Provided that the aluminum price remains on the current level, we expect that the increase to date will drive an operating cash flow impact, negatively impact, with about SEK 300 million-SEK 400 million in the first quarter. So with this in mind, let's now look at the cash flow for the fourth quarter in more detail. And starting with the operating cash flow, this totaled SEK 58 million in Q4. As you can see on this chart, the key driver is the strong EBITDA. Since we had a very strong Q4 from a volume perspective, we did not see a volume-driven sequential reduction in working capital from the first to the fourth quarter, which we typically see. And we also built some inventory in Europe to prepare for the sales in the first quarter.
But in addition to this, the increasing aluminum prices added over SEK 200 million to the working capital in Q4, as I just mentioned. And during the quarter, we continued to invest, and the capital expenditure amounted to SEK 224 million, and SEK 27 million of those is related to the completion of the expansion projects. We distributed SEK 170 million to our shareholders in the second of the two dividend payments for 2025. And including taxes paid and changes in currency rates, this led to that the financial net debt increased by SEK 240 million to slightly short of SEK 4.1 billion after the fourth quarter.
But thanks to the improved EBITDA, the net debt to EBITDA ratio remains stable at 1.6 times, so well within our target range of between 1x-2x . Let's now leave the cash flow and balance sheet and look at the operating segments. Then we can start with Gränges Americas, that also made a record fourth quarter and a record full year. As you heard from Jörgen earlier, the sales volume in Americas increased by 7% year-on-year in the fourth quarter, despite the significant drop in HVAC demand. But here, we managed to compensate this with share gains in basically all market segments, as Jörgen said.
But we also need to mention here that that part of the growth was enabled by the fact that we had to move a planned maintenance stop from the fourth quarter to the first quarter due to issues with the supplier, and this moved about 2,000 tons of sales volume and some SEK 20 million of operating profit from Q1 back to Q4. In total, the sales volume in Americas came in just above 58,000 tons for the quarter. In terms of earnings, we see increasing negative currency translation effects from the strengthening of the Swedish krona against the U.S. dollar. In the fourth quarter, these changes in foreign exchanges were -SEK 43 million compared with the same period last year.
We also continued to experience some external pressure from wage inflation and increasing market prices for aluminum scrap, but we managed to compensate for all this with volume growth and pricing and cost productivity. As a consequence, the adjusted operating profit increased by 44% to SEK 278 million . In terms of the margin, this represents an operating profit per ton increase from SEK 3,500 to SEK 4,800 , and I think this is quite an achievement by our Americas team. Leaving Americas, moving on to Gränges Asia, where we also continued to see a significant sales volume growth, primarily driven by the successful ramp-up of our new facility in Shandong. That was now included then for the full quarter.
In total, sales volume increased by 33% to just about 51,000 tons. In terms of individual markets, the main growth come from sales of standard products in relatively low-margin segments. But we also see some positive development from battery materials and the automotive business, despite some signs of a slowdown in the market there. The two facilities in Shanghai and Shandong are now operating fully as one system, and this contributed to the 28% operating profit increase, to SEK 62 million in the quarter. Higher sales volume and improved productivity offset the lower prices, increased wage inflation, and the higher depreciation. Further on the negative side, also here, we had changes in currency rates with a net impact of -SEK 15 million compared to last year.
So impacted by the currency, the adjusted operating profit per ton decreased from SEK 1,300 -SEK 1,200 , but at constant currency, the profit per ton increased by SEK 200 to SEK 1,500 . And continuing then finally with Europe, and this is, I think, where we have our most challenging environment right now. And we continued to experience weak demand in all markets in the fourth quarter. We did, however, successfully compensate for this with a strong sales focus that resulted in market share gains, especially with the automotive and packaging. And then this, in combination with the reduction of the order backlog from the third quarter, with about 4,000 tons.
So in total, the sales volume in Europe increased by 7,000 tons, or 17%, to 48,000 tons in Q4. In the current European market, I think this is quite an accomplishment. Despite the increased sales volume, the adjusted operating profit declined by SEK 32 million to SEK 89 million in the fourth quarter. This decline is primarily driven by increased costs for aluminum scrap and negative effects from foreign exchange rates of SEK 16 million compared to last year. But on the positive side, we noted improved pricing and cost productivity. When we make a year-on-year comparison for Gränges Europe in Q4, we should also point out that Q4 2024 includes a positive effect from energy cost compensation. So in 2024, the full year amount was recognized in the fourth quarter, but in 2025, this has been allocated evenly across quarters.
This results in a negative year-on-year effect of SEK 34 million when we compare Q4 to last year, but for the full year, this is neutral. The operating profit per ton reached SEK 1,900 or SEK 2,200 at constant currencies, and this represent a continued sequential margin improvement from earlier quarters in the year, which I think is good to see. With that, I hand over back to Jörgen, who will provide a summary for 2025 and an outlook for the first quarter of this year.
Thank you, Oskar. I think I'll be able to summarize this pretty quickly, and then I'll turn over to the operator for any questions that you and the audience may have. But first, as a reminder, then let's take a look at our long-term financial targets. And as you can see on this picture, we still have some work left to do on our profitability before we reach our 15% return on capital employed target. On the other hand, it's quite good, we find to see that we've now returned to strong profit growth and have been within our target range of 10% or more average operating profit growth for some years now. We think our balance sheet is also in good shape.
Despite what we said earlier on this call about the aluminum price, our financial leverage expressed as net debt divided by earnings before interest tax, depreciation, and amortization, or EBITDA, we think is at a good place, right in the middle of our target range of 1-2 turns. And finally, we should mention that the board of directors has recommended an increased dividend to SEK 3.40 per share, which then corresponds to approximately 35% of earnings per share. And that then is also in line with our dividend policy. To then turn to the outlook, we have to start by noting that demand remains very hard to predict due to the large geopolitical and also economic uncertainty that surrounds us.
But, also not forget to say that end consumer demand appears hesitant in, in, markets that are quite important to us, like HVAC and also automotive. Having said all that, we still predict growth in a low to mid-high, low to mid, I should say, single-digit range in the first quarter, mainly fueled down by market share gains. And I would like to stress that this outlook applies to the first quarter of 2026. Now, we aim, of course, to continue to offset negative external effects through pricing actions and productivity improvements, but we do not expect to compensate for negative currency effects in the first quarter. And these are currently forecast to be around SEK 80 million negative. And that then assumes the currency rates we're having today, and that they stay there.
We will see what happens in reality, when we see. And finally, we do need to note that the increased aluminum price, if it stays where it is today, is expected to weigh on operating cash flow in the first quarter. So to summarize, then, 2025 was a record year, which we achieved thanks to the strong foundation that we built in 2022, 2023, and 2024. And it must be said that this strong performance came despite, I think, quite astounding volatility in the world around us. And against that background, we are proud to be able to report strong volume growth in all our regions, driven by market share gains, and, to also be able to report that the volume growth has resulted in a record operating profit.
We've also consistently continued to deliver strong sustainability results for many years now. To round it off, our cash flow improved in 2025, partly since we've now finalized a multi-year capacity expansion program. Going forward now, we will gradually shift our focus to increased utilization and the optimization of mix, price, and cost, and productivity. Finally, then, I'd like to issue an invitation to everyone on this call. We intend then to continue the dialogue about Gränges and our strategy going forward, and we plan, therefore, to host a Capital Markets Day in Stockholm on the 2nd of June this year. Please save the date. We look forward to meeting many of you there, and we will share more details, of course, about the time and place when we get closer to that event.
That really concludes our prepared remarks for today's call, and therefore, I'd like to thank you for your attention so far and turn it over to the operator, because now we're ready to take any questions from the audience.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Kaleb Solomon from SEB. Please go ahead.
Hi, guys. Thank you, and congratulations on a great quarter. Just a few questions from me. Automotive in the U.S. grew 19%, compared to being down 2% last quarter, and that's despite sort of overall production numbers in the U.S. being flat in Q4. So is that all due to your sort of ability to gain market share, or are there other sort of market dynamics I'm missing here?
Morning, Kaleb. That's a very valid question, I think. It really stands out, that number, doesn't it? It has a quite simple explanation. I mean, with the HVAC market being down, we are, of course, doing our very best to compensate for this. And there are parts of the automotive market where you can move in and out of slightly less sophisticated products. So the growth we see in automotive this quarter is not so much connected to the traditional heat exchanger materials that Gränges supplies to the automotive industry, but rather to slightly less sophisticated materials used primarily for heat shields. And that's really what explains that significant growth in the quarter.
We have a little bit of growth from the HEX material as well, but the primary part is other types of products.
Is it reasonable then to sort of extrapolate some sort of growth within automotive moving forward, as long as HVAC remains a bit weaker?
This is a part of the type of products that we try to supply then to compensate for the lower HVAC demand. And again, these are our product categories where you can move in and out on a little bit short, more short-term basis. So we are constantly evaluating basically where we wanna play in some of those more flexible market segments to optimize the capacity utilization and the profitability for, in this case, Gränges Americas then.
Okay, that's clear. Thank you. And growth in Europe was very strong as well, and I guess a lot of that is due to your normal sort of ability to gain market share and new business. But can you perhaps give us a rough figure of how much of that was due to the sort of backlog reduction spilling over from previous quarters? I think I heard you say 4,000 tons, Oskar, and that would equate to 8%-9% of EBIT maybe. Is that a fair way to look at it?
I think if you look at the volume growth in Europe, I think we grew some 7,000 tons or so year-over-year in quarter four. And four thousand tons of that is a little bit more than half. Let's say 55% of the year-over-year growth is driven by the backlog reduction. So in terms of EBIT driver, half of the volume-driven EBIT increase is due to the backlog reduction.
We're now down to more normal levels of backlogs in Europe, and I think this is very positive because it means that we have actually been able to sort out the most parts of the challenges we had on the operational side in Europe earlier in the year.
Okay, that's clear. Thank you. And just one last question here. You mentioned you had a one-off of SEK 20 million this quarter, but you also had a negative or a one-off last year related to the sort of energy compensation. You said that was roughly SEK 34 million, if I heard you correctly. So is it fair to say that the sort of one-offs in total was on the negative side in Q4?
So I'm not sure I fully understand your question. We had some positive impact in Q4 last year, or Q4 2024, right? Due to energy cost compensation that was not distributed evenly across the year, as it has been from 2025 and going forward. So that was, of course, impacting comparison with prior year there. When we talk about 2025, the one-off for Q4 2025, do you refer to the impact of the moved maintenance stop there or?
Yes. I guess my question is, if you had a positive effect of SEK 34 last year and SEK 20 this year, is it fair to say that, on the total, one-offs were rather a negative contributor this quarter?
Well, this quarter you had a positive impact from the fact that we've switched a maintenance stop from Q1 2026 back to Q4 2024, right? So that's a positive impact in Q4 this year. You could also say you had a positive impact in Q4 2024 from one-off energy cost compensation, and you could argue that they are more or less on the same level, right? And that it evens out from that perspective.
But I think the important thing to point out when you bring up these things is that the fact that we moved the maintenance stop from December to January, we've already done the maintenance stop, means that, of course, that our sales volume and earnings in the first quarter 2026 will be negatively impacted by a corresponding amount that was positively impacting quarter four. That has been taken into account into the volume guidance that Jörgen just provided some minutes ago.
Okay. That's clear. That's all from me. Thank you.
The next question comes from Gustaf Schwerin from Handelsbanken. Please go ahead.
Yes, good morning. Hope you are well. I have two, starting with Europe, another quarter of very nice, output growt h, even if we adjust for that, backlog catch up. I mean, we know, we know there are two drivers here, your market shares, and then the structural effect on the drivelines. If we think about 2026 here, if we were to get sort of flattish automotive production in Europe, and we wouldn't see any growth for BEV and hybrids, do you still think that you can grow this business simply on the, on the higher market shares?
Yeah, look, that's... Good morning, Gustaf, and hope you're doing well, too. That's a difficult question. I think, the way we look at it is, we report the market shares once we've taken them, not before we take them, so to speak. Right? So of course, if you take out the effect of the backlog and, then you will see that there is a positive trend in the sales in Europe, right? So and, and most of that trend then is due to market share, because as you point out, we haven't had a lot of help from any of the end market growing very strongly, right?
That trend, of course, if you look at quarter-over-quarter, I guess you can calculate how much is, so to speak, market share that we took at the end of 2025, which has not yet had a full year of run with it, right? So I guess, against that background, if we don't see automotive growth and also not hybrid growth and also not EV manufacturing growth, I still think we should be able to outgrow the market a bit, if that's what you were asking for.
That's exactly what I was asking for. Very good. Secondly, can I ask on the earnings in Asia? You have volumes up a little bit quarter-over-quarter. You have a slightly higher negative FX effect than you had in Q3, but you have a larger drop in earnings than that. We, of course, don't have very much history on Asia being reported separately, but we had a similar effect sequentially last year. And I mean, there shouldn't be a seasonality effect here, so I'm trying to understand what's driving this, sequential decrease in earnings. Thank you.
Very good, catch there, Gustaf. No, it's true that we don't have a seasonality effect from a volume perspective in there, or a little bit typically in Asia, but not as much maybe as in some other regions. So volume-wise, limited seasonality from a mix and cost perspective, though, there is a little bit of seasonality, and you see the same thing this year, as you saw last year, that we ran with a little bit higher cost in the fourth quarter compared to earlier quarters of the year. So, that's really the seasonality you have, an earnings seasonality a little bit in Asia from that perspective, mix and cost driven.
Okay. Very clear. Thank you.
The next question comes from Adrian Gilani from ABG Sundal Collier. Please go ahead.
Yes, hello. Starting off with a question on Asia, where, I mean, you typically like about the Shandong and Shanghai facilities as a joint unit. So for the two assets together, do you expect to mainly drive earnings growth in 2026 by increasing the overall utilization, or mainly by maintaining the utilization and improving the mix effect, as you've been sort of doing in the past few quarters?
That too is a good question, but a difficult one to answer because we don't have such outlook on all these things so far out in time. Because in Asia, as we are now doing also in Europe and in Americas, we do have a mix of longer-term contracts and longer-term businesses, which in themselves can be difficult to predict, but at least provide that kind of, let's say, contract visibility. But we also have businesses that are more short-term, spot-like and more, therefore, also more volatile in their demand, and where we can also choose to play or not to play, depending on how the price develops, for instance.
Having said that, I think what we said from the start of this journey with Shandong and Shanghai still applies, and that is that we have had the chance to quickly grow our volume to level that is acceptable at least, right? And that we still see opportunities within that same volume to optimize price, mix, and cost, and that that is the prime priority for Gränges Asia, and as indeed it is also for Gränges Europe and for Gränges Americas. But that does not mean that given the right market conditions, we may not grow a little bit yet because... But exactly how much is difficult to say now with what we know today about the outlook for the full year of 2026.
I understand that. And then regarding some of the other expansion investments that have now been completed for a few quarters, at least, I'm thinking about the Konin expansion and the cathode foil line in Finspång. Can you say a few words on the status of those, and whether they are starting to generate the returns that you had been hoping for?
Yeah. So, if both those expansion investment that you speak about are in, Europe, of course, right? And, starting on that level, then I would say that Europe, as a whole, is not yet generating the returns that we're hoping for. In fact, far from it, right? So we still need to, increase utilization, generally speaking, in Europe, and we also need to, operate the utilization that we have at a higher return, by, like I said before, optimizing price, and mixing cost, and so on. And there is, there are a lot of activities ongoing to, to try to make that happen. Now, an individual machine like this, newly ramped-up, cold rolling mill in, Konin, does not in itself have a return, right? So that's, that's hard to say.
But, it is developing as we hoped for when it comes to its ability to manufacture and as it goes for the ability to also for its utilization and so on, right? So that, that's good. When it comes to battery cathode foil, I think everybody knows that the whole market for battery manufacturing in Europe is rather severely delayed from what we thought when we made this investment two or three years ago. The investment itself is working well. We have good customers. We're working through the technical and commercial ramp-up problems, right? So we think that overall, the business has a good future, but it is not yet generating the returns that we hoped for when we made the investment in 2022.
Okay. That's helpful. Thank you. And a final one from my end. You mentioned the working capital effect on, from prices was SEK 200 million in the quarter, and that means that even excluding the price effect, you still built more working capital in the quarter. Why was that the case, since Q4 is typically a quarter where you should release working capital?
We are a little bit disappointed there as well, I must admit. But there are, of course, some explanations there. Typically, the seasonality of the business is such, right, that you see a little bit of sales volume decline sequentially from third to fourth quarter, and on the back of that, you will see a release of working capital. Now, we had a very good sales volume in Q4 this year, on par with the third quarter, of course, which means that you did not see this typical working capital decline because we didn't have a sequential volume decline. But on top of that, we actually built some additional inventory in Europe, preparing for first quarter sales.
And then together with the impact from increasing metal prices of SEK 200 million, that led to a SEK 300 million working capital buildup in the quarter. So a little bit unusual compared to what you would typically see in quarter four in Gränges. So good catch there, Adrian.
Okay, I understand. In that case, that's all from me, so thank you.
The next question comes from Oskar Lindström from Danske Bank. Please go ahead.
Yes, good morning. Three questions from my side. Number one is a follow-up, I guess, a little bit of what was asked earlier about the mix, product mix and sort of price mix of your volume growth that you expect in Q1. What should we expect in terms of sort of EBIT per ton development going forward?
Yeah, maybe I can start a little bit with some more fact-based stuff maybe, and then Jörgen can add some flavor to that. But I think we are in Q1, right, we're guiding for a low to mid-single-digit growth on Gränges level. But then, of course, that takes into account the shift of volumes from first to fourth quarter in Americas, which we know are pretty profitable volumes, right? And then that means that for Americas, we would expect lower than average year-over-year growth compared to the group guidance in Q1.
For Europe, on the other hand, we think that's probably the area where we will see the higher than average growth, and whereas Asia is probably around the growth for the group average. That's at least the feeling we have now looking into to the first quarter. But to your question then, of course, a lower growth in Americas relative to the other regions, of course, has a negative mix effect on the earnings, just from the fact that Americas right now is a more profitable or the most profitable region for Gränges.
Right. And within the geographies, are there any sort of product mix changes which we could expect sort of changes to go on sequentially?
I don't think we can give any detailed guidance on that, Oskar, and good morning also to you, by the way. Other than to say that is, of course, a priority and an ambition also for us to gradually improve cost mix and price, or price, mix, and cost, I guess, I should say, going forward, as we previously indicated.
All right. Yeah, thanks. My second question, if I may, you mentioned that there's signs of a slowdown in the Asian automotive segment where you operate. What do you believe is going on there? And, you know, is this something that's worrying you, or is it not so worrying? What's your judgment?
Yeah, that's, that's a really good question. Of course, we, we should start maybe by saying that we're very happy to have been in the Asian automotive market now for decades, and we've been especially happy the last couple of years, getting close to very interesting and very exciting customers, also very demanding customers, it's true. But, it's, it's a good market for Gränges to be in, to really feel the pulse of the automotive market, and it has rewarded us amply in the last couple of years with growth, in fact, right? Not the least from EV platforms and new contracts with new tier ones and new OEMs and so on, right? So generally, a good market.
And also, as you know very well, of course, the growth in 2025 in the automotive industry was very much only dependent on Asia, on exports from Asia, and that then makes our presence there really important for Gränges also, right? Looking ahead, of course, a lot of automotive manufacturing in Asia takes place in China. And in China, the New Year it gets celebrated in two weeks or so. And usually at the end of the year, before the New Year , there is some uncertainty about how the manufacturing will start up after that, right? And also some policy uncertainty generally related to the New Year .
I guess, we are not privy to any information, other than to say that there is a bit of a softening in the market towards the end of the Chinese Lunar Year then. I hope that answers your question, Oskar.
Yes. Thank you. If I may, my third and final question is on capital allocation, and your thinking here. I mean, you're clearly guiding for lower CapEx, which you've been guiding for some time. Yeah, you're, although you raise your dividend, you know, still have a strong balance sheet. Is the higher aluminum price and the working capital impact that is having something that is impacting your thoughts around capital allocation, that, you know, perhaps the higher aluminum price is gonna take away some of that, you know, available capital?
Well, I mean, I wouldn't say the higher aluminum price influences our capital allocation plans or thoughts in any way, but of course, the higher aluminum price does influence our balance sheet, right? We are actually rather happy about our leverage level, where we're at, smack in the middle then of our target range, right, of 1-2, you know, debt turns. And we're, of course, not super thrilled that the aluminum price has surged recently, but we're rather proud of having been able to accommodate that within, with, with such a stable leverage, right? And that is something that Gränges needs to be able to do, because the aluminum price is difficult to predict.
If our leverage edged down towards, let's say, one or even below one, then we would start to think that we're holding on to a little bit too much money with too low returns. Then we would, of course, have to look into what to do with that money. If, on the other hand, it edges up to two or above two, then we would think those same thoughts, but in reverse, right? So we have rather clear thoughts, we think, about capital allocation, and those have not been influenced by the aluminum price. But of course, we watch that and many other factors as we make the day-to-day decisions.
Maybe though I could say also that one of the topics, of course, that is likely to be touched on the Capital Markets Day that we're planning for the 2nd of June is again to go through our whole package, so to speak, around capital allocation, and be able to then maybe shed some more light on that for new and old investors.
Mm-hmm. If I make just a quick follow-up on the sort of aluminum price and impact that it has or doesn't have, is your understanding... I mean, does a higher aluminum price, and I realize it's a cost-plus type of situation for you, but are producers such as yourself, sort of the entire, that part of the value chain, generally compensated in terms of higher EBIT per ton, if you will, for being forced to hold on to more working capital because of the higher aluminum price?
That's a great question, I think, Oskar. And I would say something like this, that we, when we set our prices, we do not want to set our prices with the detailed list of all the ills and goods that can happen to Gränges in a particular year and say, to be compensated up or down for all those, because then you provide, we feel, in general, too much price transparency to our customers, and open up for a lot of negotiations all the time, right? And therefore, generally speaking, the cost of capital for holding on to our working capital is part of the added value that we provide to our customer, and as such, is factored into the fabrication price, generally speaking, right?
Now, of course, if the aluminum price rises, and stays up for a protected period of time, that, of course, increases our cost of capital. And of course, that represents an upward pressure on prices that we then ask of customers, right? And it's also maybe important to note that the same is true for all of our competitors. But it's not so that we go to the customers and say, "Look here, last week, the aluminum price is up $200. Now, please give us this," right? Because then they would come back to us when the price is down $200 and demand the money back. So generally speaking, managing this is part of our value add that we give to our customers, and they appreciate that and like that business model, and we're thinking to hold on to it.
All right. Thank you very much. I understand that it's not an easy one to know exactly how it's gonna impact, but it's something I was thinking about. Thank you.
Thank you, Oskar.
The next question comes from Mats Liss from Kepler Cheuvreux. Please go ahead.
Yeah, hi. Thank you. A couple of questions. First, I had a question here regarding what happens in the U.S. I guess you have this, as I understand it, yearly contracts and price negotiations are taking place at, well, these times year end and so on. Could you give some sort of indication there how the negotiation have progressed and finished?
Okay, so, in Americas and also in the other regions, we try, of course, to not have every single contract become due at the same time. So instead, we're striving for portfolio of our contract so that some of them come due every year and every quarter in a more regular way, so that we don't have an exposure to the market conditions in any one period. And that's certainly true also in the last year in Gränges Americas and elsewhere.
Generally, I can say that in Americas, of course, we have experienced quite significant increased cost over the last many years, and also in 2025, and also experienced the need to raise salaries quite a bit to compensate partly for Consumer Price Index increases, also in Americas, right? And to some extent, also in other markets. And of course, that translates into a discussion with the customer saying that our cost is up, it is because of this, and here we need to now have this price, right? So, so that is a factor that is taken into account in all customer price negotiations, and has been taken into account in customer price negotiations during the fall also.
Apart from that, we have a policy to not comment on the pricing of individual contracts, and also, we feel that we have a good track record of managing the contribution margin in Gränges Americas and elsewhere in a stable way over time, and that's certainly our ambition also going forward.
Good. Sounds reassuring. And just coming back to what... Well, you have this slowdown in the HVAC segment, and is it sort of due to, well, limited demand, of course, construction and so on, but is it also due to supply chain issues that, I mean, there are inventories in the supply chain that needs to be sold out first or are there any such things that affect you?
Well, it's certainly due to that. There is little doubt that there was a significant supply chain inventory buildup starting maybe from Q4 or so in 2024, and then throughout the first two quarters of 2025. But then in the July, August timeframe, that became evident to the market participants downstream from us, and then there was a correction which resulted in a very sharp decrease in HVAC manufacturing and third and fourth quarter, right? And also shipments of HVAC units, right? So, now, exactly what is the status of this supply chain inventory downstream from us? We don't know.
Many of the market participants seem to indicate that the worst of the pain is behind us, and we certainly hope that's the case, but we'll see. Anyway, the season starts up for production of HVAC, starts up at the tail end of this existing quarter or this first quarter. And then depends also a lot on the weather, right? So it is a hard industry to predict. But we... Personally, I'm of course not happy that we had a weak demand situation in HVAC in the second half of last year. But I'm really happy that we're able to show such flexibility in the face of that demand fluctuation, because that is very much our strategy, right? To have the resilience to shift our weight from one foot to the other as the market shifts around us.
Because also next year and the year after, and the year after that, the HVAC market will continue to be hard to predict, and then it's important that we continue to be flexible.
Well, it sounds like you're keeping your market share anyway, so it's more,
Not only keeping it, but growing it, and that is the reason also why we're actually in 2025, down significantly less than the HVAC shipments in the same year, right? And, yeah, we're rather happy with our position in HVAC, now and in the past and going forward also.
Okay, great. Thank you very much.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the President and CEO, Jörgen Rosengren, for any closing comments.
Thank you, operator. So then, ladies and gentlemen, I'd like to thank you for calling in to this, fourth quarter result presentation and for your attention and good questions also, and I hope that all of you have a good day. Goodbye.