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2008 Year-end Report. Highlights 2008 - 4th Quarter . Drastic global volume decline in automotive industry with other industries following Temporary plant closures and inventory adjustments Unprecedented volume decline having a very big impact on Höganäs results

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2008 Year-end Report


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    Presentation Transcript
    1. 2008 Year-end Report

    2. Highlights 2008 - 4th Quarter • Drastic global volume decline in automotive industry with other industries following • Temporary plant closures and inventory adjustments • Unprecedented volume decline having a very big impact on Höganäs results • Restructuring - personnel reduction • Cash-flow focus • Fuel cells R&D grant

    3. Highlights 2008 - Full Year • All time high 1st half year - volumes and results • Automatic redemption programme - 740 MSEK distributed to shareholders • Kobelco NA iron powder acquisition • Consolidation of operations in Brazil • Weakening markets in Q3 • Unprecedented pace and magnitude of decline in Q4

    4. Key Numbers 2008

    5. Variance analysisestimate

    6. Metal price development

    7. Market development Global sales and production of Cars, HCVs and LCVsQuartely rolling 12 months • Q4 2008 unprecedented fall in production of cars and LCVs: • WE big 5 -26% • US -28% • Japan -15% • Inventory adjustments • Other industries following Production Sales Source: Global Insight UK

    8. Group Sales 2008

    9. Sales 2008 - Europe • Europe: Net Sales -7% • Increasingly weaker 2nd half year in line with the market - not only automotive • Inventory reductions • Growth in Russia • Short-term outlook bleak • Restructuring • Investing for the future - Power of Powder Centre (Components Prototype Centre) HöganäsPrototypeCentre

    10. Sales 2008 - Asia • Asia: Net Sales +13% • Volume growth in China/Taiwan/SEA • Weak Q4 in Components across the region in line with the market • Q4 growth in Consumables driven primarily by welding, oxygen absorbers and hot-bags • Restructuring • Customer R&D project activity extremely high - very positive prospects for conversion once the market turns

    11. Sales 2008 - Americas • Americas: Net Sales +14% • Volume growth in NA as well as SA • Höganäs market share in North America 30% + • Q4 very weak • Short-term outlook bleak • Restructuring • Kobelco NA acquisition progressing well

    12. Results 2008 - Components • Net sales 4 465 MSEK +5% • Very strong 1st half year - very weak 4th quarter • Customer temporary plant closures and inventory adjustments • Volume decline -5% in line with the market, except share gain in North America • Operating Income 402 MSEK +14% • Very strong up to end Q3 • Price increases • Losing on metals up to end Q3 - gaining in Q4 • Currency gains in Q4 • Q4 -33% sales volume decline • Energy costs • Restructuring costs Components • ~70% of group sales • 75% of this segment is for the automotive industry • Customers: • Suppliers of components to equipment manufacturers. • These producers supply components to Automotive, Power Tool, Compressors, Electrical motors and others.

    13. Results 2008 - Consumables • Net Sales 1 638 MSEK +4% • Strong growth trend coming to temporary stop in Q4 • Customer temporary plant closures and inventory adjustments • Asia still growing in Q4 - welding segment remaining stable • Operating Income 159 MSEK -27% • Metals impact: • abnormal metal inventory gains in 1st half 2007 • inventory write-down in Q4 2008 • Currency gains in Q4 • Restructuring costs • Falling nickel prices give positive metal hedge results, then subsequently inventory losses, and vice versa Consumables • ~30% of group sales • major part of this segment is non-automotive applications • Customers: • Metallurgical and Chemical process industry, producers of Welding, Filter and Friction consumables, users of Fusion, Cutting and Coating technology, food & feed enrichment and others.

    14. 2008 CEO summary • Geared up for a good year • Changes to senior leadership • Pricing • Cost leadership • Lean alloys launch to eliminate alloy metal price escalation problem • Strategic acquisition • Prototype Centre investment to shorten speed-to-market • Nov-Dec decline - new priorities

    15. Outlook 2009 • Q4 decline continuing into early 2009 • Recovery will come, but timing uncertain • Asia is likely to recuperate first • Metal prices and currency volatility seen through 2007-2008 is likely to continue • Short term results impact

    16. Managing through the downturn • Restructuring • Prices • Cash-flow focus • Invest in R&D for the future

    17. Important Events

    18. Fuel cells - faster commercialization • Grant obtained from Vinnova for project partners Höganäs - GETT - KTH (Stockholm University of Technology) • Innovative membrane (electrolyte) enables substantially lower working temperature in fuel cell • Eliminating the major disadvantage of current solid oxide fuel cells • Membrane using Höganäs powder based filter technology • Gas diffusion layers on both sides of the core are Höganäs powder based stainless steel filters • Platform for business in the area of environmentally friendly energy systems

    19. Innovative electrical motors • Launch of innovative motor family based on Höganäs Soft Magnetic Composites (Somaloy®) by world leading electrical motor manufacturer, Hitachi • Competing with conventional motors: • Small - half the size. • Efficient • Competitive cost • Easy assembly • Easy recycling • Targeted for application areas where direct drive & high torque is required: • Home appliances • Industrial • Automotive • Production start mid 2009 • Platform for further big scale R&D partnerships

    20. Q&A