This was primarily due to a demand slowdown, mainly in Europe, and destocking at the customer level, Höganäs said. Consolidated net sales in 2011 were SEK7,081 million.

Operating income in 2012 was SEK903 million (SEK1,071 million in 2011) and income after tax was SEK698 million (SEK762 million). 

In 2012 Höganäs said that it made significant advances in materials for metal injection moulded (MIM) components, and began sales of inductors used in solar and wind power, and to utilise the energy from industrial motors more effectively.

From 1 November, Höganäs acquired 100% of Fcubic AB (now called Digital Metal AB). This acquisition means Höganäs is taking its first step towards shaping the future market for additive manufacturing (3D printing). 

In autumn 2012, Höganäs started collaborating with TRW Engine Components, an important player in engine valves, expected to generate a 5-10% increase in Höganäs’ sales volumes of surface coating powder.

“Just like every other company in 2012, we were affected by the global economic downturn in the second half-year," said CEO Alrik Danielson. "This resulted in somewhat lower sales.”

According to Danielson, Höganäs achieved good sales performance and market acceptance of new powder products in surface coating, and component manufacture was positive. Then, in the spring, the company saw a clear demand slowdown as its our customers, and their customers, were affected by a weak business cycle.

Höganäs' Components business area consists of powder manufacture and sale to component manufacturers. Its customers are mainly in the powder metallurgy industry, which often produce large batches. It reported a lower turnover in 2012 of SEK 5,119 million (SEK5,378 million) compared to the previous year. Operating income remained at a good level, with a profit margin of 13.3% (14.2). “Decreasing car production, especially in Europe, combined with generally lower industrial production, negatively affected the business area’s progress. [...] However, the launch of the latest generation of metal powder solutions for component manufacturers was successful in many markets,” Danielson said. 

The Consumables business area reported turnover of SEK1,593 million (SEK1,703 million) for 2012 compared to the previous year, down by 6%. Operating income remained at SEK223 million (SEK305 million), with an operating margin of 14.0% (17.9), despite a volatile market with currency and price fluctuations. “The Consumables business area [...] turnover was down somewhat year on year. Demand from manufacturers, mainly in Europe, deteriorated in the year. Brazing and surface coating were especially strong performers as individual product groups, and posted sales records compared to previous years."

According to Danielson, Höganäs’ performance on its geographical markets was mixed. Sales in Europe decreased in the year due to the economic slowdown. The European car industry had overcapacity, with the estimated capacity surplus in 2012 being 2-3 million cars, or 15-20%. Sales in Asia progressed positively, especially in the first half-year, with sales recovering after the Japanese tsunami and flooding in Thailand. Sales in most Asian countries were fairly good in the year, while progress in India slowed due to factors including the country’s economic problems. Underlying sales in North America were positive, while the South American market started poorly, but improved in the year.

Plans for 2013

Danielson set out his forecast for 2013. “Economic conditions in 2013 are highly uncertain, which is also affecting Höganäs’ markets,” he said. “In 2012, we witnessed how the debt and liquidity crisis affected the global manufacturing market. We are convinced that this trend will continue in 2013, although the extent remains unclear. Against the background of uncertain market conditions, the rationalisation measures we decided in autumn 2012 become more important. In 2013, we will be focusing on adapting our organisation and capacity to market demand and ensuring the necessary cost savings [...] achieving our profitability target of a 15% operating margin and maintaining a strong cash flow will also remain central issues for us in 2013.

With regard to the cash offer for the company by Lindéngruppen AB and Foundation Asset Management Sweden AB (FAM), the report stated that the scheduled acceptance period for this offer would end 24 May 2013. In the event of the shareholders accepting H Intressenter’s cash offer, the Höganäs share would be de-listed from NASDAQ OMX.

The complete report can be found here (pdf).

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