2021

Annual and sustainability report 2021

2021 in brief

2021 in Brief

Sales volume

0 ktonnes

Net sales

0 SEK billion

Adjusted operating profit

0 SEK million

Carbon intensity (scope 1+2)

0 tonnes CO2e/tonne

Carbon intensity (scope 3)

0 tonnes CO2e/tonnes

Share of sourced aluminium scrap

0 %

CEO Statement

CEO statement

A year of recovery and investment for the future

A commitment to close cooperation with customers and suppliers. Fast action in the face of dramatic swings in demand, supply chain challenges, and cost increases. Innovation. Teamwork. A good contribution from Gränges Konin. All these things helped to make 2021 a year of strong recovery as well as record volumes and profit, despite a challenging environment. In sustainability, we made good progress against our very ambitious targets. We also kept investing in capacity, operational improvement, and future growth. We’re proud of these achievements, but we’re not content. We have taken action to increase growth and profitability during 2022. In parallel, we’re making a plan for the future.

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Targets

Long-term targets

SUSTAINABILITY

Gränges has a group-wide sustainability framework which covers 13 material topics grouped into five sustainability pillars. Each pillar has an accompanying long-term commitment and targets for 2025. The targets below represent a subset of the 2025 sustainability targets.

Emissions and climate impact

Reduce carbon emissions intensity from own operations and purchased energy (scope 1+2) by 25 per cent. Reduce carbon emissions intensity from sourced metal inputs (scope 3) by 30 per cent.

Product stewardship

100 per cent of Gränges products to have third-party verified sustainability information available.

Sourced aluminium scrap

Increase the share of sourced aluminium scrap to at least 30 per cent of total sourced metal input.

Workplace safety

Reduce Total Recordable Rate to <3.0 recordable accidents per million hours worked.

Responsible sourcing and production

All sites to achieve certifications in accordance with the Aluminium Stewardship Initiative (ASI) Performance Standard and Chain of Custody (CoC) Standard.

FINANCIAL

Gränges should grow at least in line with the market, generate a return on capital employed of 15–20 per cent, have a net debt of 1–2 times adjusted EBITDA, and pay a dividend of 30–50 per cent of the profit for the year.

Growth

Increase sales volume at least in line with the company’s end markets.

Return on capital employed

Generate a return on capital employed of 15–20 per cent over time.

Capital structure

Have a net debt which should normally be 1–2 times adjusted EBITDA over the last 12 months period.

Dividend policy

Pay a dividend of 30–50 per cent of the profit for the year. Decisions on dividends will reflect the company’s financial position, cash flow and outlook.

This is Gränges

This is Gränges

Gränges is an aluminium technology company that drives the development of lighter, smarter, and more sustainable aluminium products and solutions. The company offers advanced materials that enhance efficiency in the customers’ manufacturing process and the performance of the final products. Gränges’ innovative engineering has transformed the industry for more than 125 years, and the company holds leading positions in rolled products for thermal management systems, speciality packaging and selected niche applications.

Strategy
Product areas
Global presence
Aluminium
Value chain

STRATEGY

Gränges’ purpose is to develop lighter, smarter and more sustainable aluminium products and solutions. Four key business drivers, together with people and culture, guide the way of working to increase Gränges’ competitiveness and realize the strategy and the long-term business targets. Growth is a central part of Gränges’ strategy, and the aim is to strengthen and grow Gränges’ position in core markets as well as expand into adjacent and new areas of aluminium, organically as well as by acquisitions.

PURPOSE AND PROMISE

Gränges’ purpose is to develop lighter, smarter and more sustainable aluminium products and solutions. The company’s promise is to use expertise, flexibility and speed to deliver the needs of today and tomorrow. Gränges strives to constantly develop and to become more competitive when meeting the customers’ needs, as well as to benefit society in large.

PEOPLE MAKE THE DIFFERENCE

People and culture are the foundation of Gränges’ operations. The way Gränges’ committed employees act in their daily work makes the difference for Gränges’ success.

PRODUCT AREAS

Gränges’ products are used inside some of the world’s most demanding applications. The properties of the products, such as for example low weight and recyclability, support the transition to a more sustainable economy.

ASIA PACIFIC

Gränges has a leading position in rolled products for brazed aluminium heat exchangers in Asia Pacific. China is the main market and other key markets include India, Thailand, South Korea and Japan. In 2021, the automotive business accounted for 85 per cent (86) of Gränges’ sales in Asia Pacific.

EUROPE

Gränges has a strong position in rolled products for brazed aluminium heat exchangers in Europe. The Czech Republic, Sweden, Germany and Poland are the largest markets. In 2021, the automotive business accounted for 51 per cent (74) of Gränges’ sales in Europe. The acquisition of Gränges Konin in 2020 has created a significantly larger and more diversified presence for Gränges in Europe, and reduced dependency on the automotive market and global accounts.

NORTH AND SOUTH AMERICA

Gränges has a leading position in rolled aluminium products for HVAC and is the second largest supplier of rolled aluminium for brazed heat exchangers to the automotive industry. The company also has leading positions in niche markets such as transformers and food packaging. Main markets are the US and Mexico. In 2021, HVAC & other business accounted for 80 per cent (81) of Gränges’ sales in North and South America, and the automotive business accounted for 20 per cent (19).

ALUMINIUM - THE GREEN METAL
  • • Light and strong
  • • Energy saving and infinitely recyclable
  • • Corrosion resistant and durable
  • • Versatile and can be used in different applications
  • • Impermeable to light and odours

Aluminium’s unique properties support the transition towards a circular and sustainable economy. Gränges works to leverage these unique properties to design and manufacture sustainable products which have a low carbon impact, are circular and resource-efficient and are responsibly sourced and produced. This can improve customers’ and end-users’ sustainability performance from both an operational and product perspective. The company’s products are for example used to produce lightweight vehicles, energy-efficient buildings and resource-efficient packaging which are all vital applications for the future.

PRIMARY ALUMINIUM PRODUCTION

Extraction, refining and smelting of primary aluminium: Bauxite is extracted from mines and refined into pure aluminium oxide, called alumina. Molten aluminium is extracted from the alumina through an electrolytic process called smelting. Gränges sources primary aluminium through commodity traders and directly from smelters.

ALUMINIUM RECYCLING 

Collecting, sorting and recycling of aluminium:Aluminium scrap is collected and sorted. Efficient systems are critical to help retain the value of the alloy elements in the loop. Gränges sources aluminium scrap from customers and recycling companies and strives to recirculate all scrap from its own production process. Scrap from products after usage (end-of-life) is also sourced, which is a clear positive contributor to a circular aluminium value chain.

SEMI-FABRICATION

Re-melting and casting, rolling and slitting:Gränges creates customized alloys by adding other metals to the molten aluminium in a re-melting process. The molten alloys are solidified into slabs in a casting process, and the alloyed slabs are transformed into coils and sheets in the rolling and slitting process.

PRODUCT MANUFACTURING

Customers use the coils and sheets sourced from Gränges to produce a range of products for improved efficiency and sustainability performance in different applications, including automotive heat exchangers, HVAC and speciality packaging.

PRODUCT USE

End-users use the applications containing Gränges’ materials. Key uses include vehicles, systems for heating, ventilation and air-conditioning in buildings, speciality packaging, as well as aluminium foil in food packaging.

Sustainability

Sustainability

A STRONG COMMITMENT TO SUSTAINABILITY

By managing its business in a sustainable and responsible way, Gränges strengthens its long-term competitiveness and creates financial and operational value for the company and its stakeholders. Sustainable business value is achieved by reducing undesired impacts of the company’s operations and at the same time enforcing positive contributions and opportunities that emerge from integrating sustainability aspects into the business and value chain.

Gränges is committed to combatting climate change and reducing the climate impact from its business and along the value chain. Managing the climate topic therefore runs throughout the company’s sustainability framework and value chain.

Learn more about the climate strategy and the performance 2021 here >

Gränges is committed to developing and selling products and solutions which can improve customers’ and products’ sustainability performance as well as contribute positively to a more circular industry approach to aluminium. A sustainable aluminium offering is characterized by having a low climate impact, being circular and resource-efficient and being responsibly sourced and produced.

Learn more about sustainable innovation and sales and the performance 2021 here >

Gränges is committed to promoting responsible and sustainable practices in the company’s supply chain and incorporating sustainability criteria into its sourcing agreements and partnerships. Sourcing activities are mainly managed by the local procurement organization and the supplier base is generally geographically close to the respective markets.

Learn more about responsible and sustainable sourcing and the performance 2021 here >

Gränges is committed to strengthening its operational efficiency and enforcing continuous improvements to improve material and energy efficiency and reduce emissions to air and water, while at the same time provide a safe and secure workplace for Gränges’ employees. Thereby, Gränges minimizes the negative impacts of its business and manufacturing.

Learn more about resource-efficient operations and the performance 2021 here >

Gränges is committed to ensuring that employees are motivated and engaged. By being an open and inclusive employer, with zero tolerance of discrimination, Gränges strives to provide a diverse workplace where employees can realize their full potentials and contribute to developing a high-performing organization. In 2021, Gränges had on average 2,648 employees (1,647) of which 13 per cent were women.

Learn more about diverse and high-performing teams and the performance 2021 here >

Gränges is committed to running its business in an ethical and responsible way and being an ethically sound partner in all its relations and in the societies in which the company conduct business. Gränges never accepts corruption and will always act rapidly, stringently, and vigorously if discovering corruption or unethical behaviour.

Learn more about ethical business practices and the performance 2021 here >

Cases

A selection of events and progress within Gränges in 2021.

In September 2021, Gränges successfully issued a five-year SEK 600 million senior unsecured Sustainability-Linked Bond under the company’s updated MTN programme. The new bond is due in 2026. Gränges has tied the Sustainability-Linked Bond to the achievement of three defined sustainability performance targets (SPTs), which all play a central role in Gränges’ sustainability strategy:

SPT 1: Reduce carbon emissions intensity from own operations and purchased energy (scope 1+2) by 25 per cent by 2025 compared to 2017 measures in tonnes CO2e/tonne. 

SPT 2: Reduce carbon emissions intensity from sourced metal inputs (scope 3) by 30 per cent by 2025 compared to 2017 measured in tonnes CO2e/tonne.

SPT 3: At least 30 per cent of total sourced metal inputs to be aluminium scrap by 2025. 

Gränges Konin is a producer of aluminium alloy flat-rolled products for various applications and has a strong market position in the packaging, automotive, construction and building industries. Gränges Konin conducts specialized research and innovation projects for the mentioned markets. Its R&I centre has a well-equipped laboratory and well qualified specialists for development of new materials. Since the acquisition, the team in Gränges Konin cooperates with the other R&I centres in Gränges to reach Group sustainability targets, to share know-how and to establish new joint R&I projects.

Main R&I projects
In recent years, Gränges Konin increased the production of sheet for the packaging and building industries and developed new aluminium-magnesium alloys. Several projects have been co-financed by the EU. Examples of projects:

  • Development of technology for the production of open and closed shape profiles based on alloy entirely from the recycling of aluminium car parts.
  • Implementation of innovative technology for the production of high magnesium containing aluminium alloy sheets and strips designed for stamping parts of car bodies and construction elements.
  • Development and implementation of production technology for an innovative aluminium alloy for the production of high-pressure resistant closures in the packaging industry.
  • Development of innovative and competitive materials based on a high amount of recycled content.

In 2021, Gränges and the aluminium and energy company Hydro joined forces to provide low-carbon and circular aluminium offerings to the automotive market. Through the partnership, Gränges sources low-carbon primary aluminium from Hydro. An increased use of aluminium in transport applications reduces the weight, energy consumption and carbon footprint of the vehicle as well as the range of electric vehicles when in use. It also contributes to improved resource efficiency in the product manufacturing process. Gränges and Hydro are both committed to pushing the boundaries for low-carbon and circular aluminium products and supporting the automotive industry to become more sustainable.

To promote responsible production, sourcing, and stewardship of aluminium across the aluminium industry, Gränges is a member of Aluminium Stewardship Initiative (ASI) which is a global non-profit standards setting organization which works to maximize the contribution of aluminium to a sustainable society. ASI offers two independent certification standards: the Performance Standard and the Chain of Custody (CoC) Standard, and Gränges’ target is that all sites by 2025 should have such ASI certifications in place. 

In 2021, Gränges had achieved two Performance Standard certifications (Shanghai and Finspång) and one CoC Standard certification (Finspång) and in January 2022, also Gränges Shanghai achieved certification in accordance with the CoC Standard.

The CoC Standard forms the basis for selling ASI-certified aluminium, which assures that Gränges’ products are responsibly sourced and produced across the entire supply chain, from extraction of raw materials to the finished product. Gränges uses the ASI certifications to provide assurance to its customers and other business partners that Gränges is committed to meeting their increased sustainability requirements and demand for sustainable aluminium. 

In 2021, Gränges’ plant in Huntingdon implemented a digital tool with the goal to maximize the utilization of assets leading to increased volumes at lower cost. It optimizes widths, thereby increasing metal recovery. The tool compiles the hundreds of different orders received and matches similar specifications together automatically. The algorithm decides how many coils for similar orders to produce to fulfill the order based on certain tolerances.

In Finspång, a tool using artificial intelligence was developed and implemented to predict the energy consumption in the facility’s two oxyfuel furnaces where aluminium is melted through combustion using propane and oxygen as fuel. The use of fossil fuels in the furnaces is the largest internal contributor to carbon emissions and Gränges Finspång has set a target to reduce energy consumption in these furnaces. The tool can in the future suggest the optimal settings to the operator to get the highest energy efficiency possible.

The tool will simulate the energy consumption in each of the two oxyfuel melting furnaces with the help of machine learning algorithm, which was trained on historical data from the melting furnaces to predict the 

energy efficiency based on a few input features such as weight, type of scrap, furnace temperatures, hatch opening time and other sensor data. The simulation tool is used to quantify how each parameter affects the energy efficiency. It will predict the energy consumption but also give feedback on the most important features, that is what parameter change will give the biggest energy saving.

One of the major benefits of using machine learning is that the model improves over time as it learns from the data – the more data, the better the model becomes. A traditional rule-based model would not learn and adapt over time in the same way as the machine learning model does. 

Knowing the profitability of the products is a cornerstone of any successful business strategy. Gränges Americas has developed a customer margin tool to gain insight into per-specification level profitability. This data-driven tool enables optimum pricing by product and increased response time to new customer specifications. It is updated monthly and combines 20 different data sources into one cohesive model to give the most accurate profitability information. The tool has been a key factor in transforming both how to understand the business and how to go to market. 

In 2021, Gränges Americas expanded its closed loop recycling programs with local foil and HVAC customers. In these programmes, customers’ process scrap from manufacturing is brought back and remelted into alloys sold back to the same customer. The materials are either transported back by Gränges or through a third-party recycling or freight company. Replacing volumes of primary aluminium with aluminium scrap has a clear positive effect on Gränges’ climate impact from sourced metal inputs (scope 3). Gränges Americas have been running such programmes since 2017 and in 2021, approximately 7,000 tons of aluminium scrap was recycled back from customers. 

In 2021, Gränges Konin conducted an inventory of heating and steam fittings to improve energy efficiency in its operations. Steam and heating installations are usually insulated only on straight sections of pipelines, elbows, or tees, and due to its surface, uninsulated fittings generate significant losses of heat energy. The inventory resulted in installation of insulating covers for elements of heating fittings, bringing expected energy saving of 700 MWh per year. 

In 2021, Gränges’ site in Huntingdon initiated a new programme focusing on improving machine guarding. Supervisors, engineers, and employees who work on the machines everyday conduct behavioral based audits that focus on machine guarding and to observe the work-stations. The purpose is to identify high-risk areas and address a solution and design that allows efficient work and at the same time eliminating risk of injuries. The facility has completed one slitter machine in 2021, and the plan is to complete all finishing equipment by 2022 and then progress on through the plant.

125 years

125 years

A young company with a long history

The name Gränges is an old and well-established company name. In 2021, it was 125 years since Gränges was founded. In fact, Gränges still has the same corporate identity number as when it was founded in 1896. When the company was formed, it had its roots in railways and mines, but Gränges’ history is a story of constant development and transformation based on society’s changing needs. 

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