Volumes expanded by 5% year-on-year and volume growth was positive compared to the previous year in all markets apart from Japan. Volumes in Japan were adversely affected by customers’ operations being relocated to other Asian countries, and reduced volumes of low-price product.  Höganäs said that where jobs are relocated, it often still generates the sales volumes, but from other Asian countries.
In North America, sales volumes were positive overall despite car sales and car production declining year on year. The European market made positive progress.
Höganäs has two business area; Components and Consumables. Components takes in areas where value is added to create components. Consumables covers those powders used in chemical processes, as food additives or as metal coatings.
Operating income was SEK 607 million (SEK 602 million). Excluding earnings from currency forward contracts, earnings were SEK 573 million (SEK 529 million), an 8% increase. Gross profit was positively affected by increased sales volumes. There were sharp margin gains in the Consumables business area in the first half year because this business area’s pricing models imply metal price increases feeding through to customer prices quickly. Prices of all Höganäs’ important metals rose sharply in the first half-year.
Gross profit was adversely affected by sharp metal price downturns that occurred early in the third quarter, which then resulted in reduced margins for Consumables in the July - October period. Backwardation (when forward prices are lower than spot prices) on metal markets in spring 2007 precluded forward hedging of metal prices. Additionally, US Dollar and Japanese Yen depreciation had a pronounced negative effect on profit in the year. While much of the dollar exposure was hedged, this was not at the same level as the previous year, and negotiated price increases will start to exert an impact in 2008. Yen exposure was only hedged to a limited extent.
The group’s earnings from the sales of emissions rights were sharply down in 2007 at SEK 3 million as against SEK 26 million in 2006.
Looking at prospects for 2008, the Höganäs end of year statement said that the continuing financial turbulence rendered forecasts “highly uncertain”.
“One likely scenario is that weaker market progress in North America will persist in 2008. The trend towards smaller and more fuel-efficient cars will continue to restrain growth of press powder.”
However, it went on, improvements in the European and South American powder markets will slow somewhat, while growth in Asia will continue.

• Höganäs Brasil Ltda will consolidate all activities at its site in Mogi das Cruzes, São Paulo during 2008 to improve efficiency and to reduce cost and capital employed.