Demand conditions were worse than in the corresponding period of the previous year in all regions apart from South America, and excluding the one-off deliveries to Hoeganaes Corporation (GKN) in the third quarter 2011, Höganäs' sales volumes were down 5% year on year. Operating income was MSEK 205 (275) and income after tax was MSEK 148 (185). Lower sales volumes, reduced production volumes and a stronger Swedish krona had a negative impact on income, while price increases and savings measures had a positive effect.
The report said that the short-term outlook has deteriorated compared to the assessment made in the second-quarter interim report, and the market was weaker than expected in the third quarter. Staff downsizing affecting 115 people is being implemented to adapt production capacity and organisational resources to weakening demand, and work on identifying further savings for 2013 has begun.
“Market conditions are deteriorating,” commented Höganäs CEO Alrik Danielson. “There are some bright spots in the quarter, such as South America and Russia, but generally we are seeing clear deterioration, with Europe at the forefront. This outlook means that first and foremost, we are now safeguarding our cash flow. We are adapting production and inventory levels, which will affect income negatively in the short term, and preparing to take further measures if necessary.
At the same time, Danielson noted that Höganäs must think long term. For instance, its acquisition of Fcubic AB in the additive manufacturing or “3D printing” segment, and the creation of the Digital Metal product segment are strategically important. "Additive manufacturing will strengthen the metal powder market because it is expected to be a key technology for component and system manufacture in the future," Danielson explained. "Digital Metal will create substantial values for customers who require superior performance, minimal development lead-times and customer-tailored components produced on a large scale. And in this transaction, Höganäs is acquiring the best available technology in the segment.”