Recovery to record volumes
In 2021, the market for our products recovered after the sharp decline caused by the COVID-19 pandemic in 2020. It’s true that demand from automotive customers was weaker toward the end of the year, as a result of the global shortage of semiconductors and other components. Nevertheless, strong demand from other customers, the additional volume contributed by Gränges Konin, and increased production capacity boosted full-year sales volume to 489 ktonnes. That is our highest sales volume ever, and almost 40 per cent more than in 2020. Our net sales and operating profit also reached all-time-high levels. This represents a return to our long-term trend of profitable growth. Since our introduction on the stock market in 2014, sales volume has tripled, and operating profit has more than doubled.

Gränges Konin: good contribution, high hopes
2021 was also the first full year for Gränges Konin as a member of the Gränges Group. It was a very intense and productive first year. As with any acquisition, it brought with it some new challenges and a lot of hard work for everyone involved, but also new opportunities. Thanks to good teamwork, the first phase of the integration is now complete. Both the team in Gränges Konin and everyone else in Gränges have learned a lot during this year, and the learning has gone in both directions.

The acquisition of Gränges Konin contributed significantly to volume and profit already during 2021. Looking ahead, we’re certain that this latest addition to our Group creates large opportunities to grow our European market share and increase productivity for many years to come.

Investment for the future
During the year, we have continued our very ambitious investment in capacity, operational improvement and future growth.

To meet the continuously increasing demand from North American customers, we decided to invest USD 33 million in a new recycling and casting centre. The project is progressing well. When complete, it will improve our productivity and capacity utilization, reduce our carbon footprint, and lower our cost. And we have soon fully recovered from the unfortunate mill fire before the summer, giving increased rolling capacity from 2022 and on.

Gränges Finspång completed an important milestone in its ongoing capacity expansion and logistics improvement programme by successfully rolling the first coil in the new mill, and the automated logistics solution already shows good promise. The programme will significantly improve production flow, reduce cost and improve our environmental footprint. The large expansion programme in Konin is nearing its completion, and both the new recycling and casting centre and rolling mill are ramping up as planned. Together, these two programmes will increase our total capacity in Europe by almost 30 per cent with full effect from 2023.

Even more important for the future are the large efforts to develop customer relations, technology, and manufacturing capabilities for the fast-growing market for electric vehicles and batteries. The first commercial deliveries to battery customers are taking place in 2022, albeit at low volumes. It is encouraging to see a very strong interest from global customers in our capabilities in this area. These investments help build a solid platform for future growth.

A strong commitment to sustainability
Sustainability is a strong driver and enabler of Gränges’ long-term competitiveness and value creation. We are committed to developing lighter, smarter, and more sustainable aluminium products and solutions to our customers. Since 2016 we are a signatory to and support the principles of the UN Global Compact and we are also committed to helping fulfil the 2030 Agenda and Sustainable Development Goals.

We made good progress against ambitious targets in 2021. In fact, we even upgraded the targets during the year to reflect a stronger sustainability performance than anticipated. We also want to meet the increased interest and expectations from customers and other stakeholders. Highlights of our sustainability work during the year include reducing our total carbon emissions, increasing our aluminium recycling, emitting our first Sustainability-Linked Bond, and having more products with third-party verified sustainability information.

I’m also very proud that Gränges achieved a Platinum rating from the independent sustainability rating company EcoVadis, which placed us among the leading 1 per cent of companies assessed globally in our industry. Further, Gränges Finspång achieved Gränges’ first certification against the Aluminium Stewardship Initiative (ASI) Chain of Custody Standard, closely followed by Gränges Shanghai in the beginning of 2022. This means that we can now offer customers verified sustainability credentials demonstrating that our products are responsibly sourced and produced. We write about these actions and many more in more detail in the sustainability section of this report.

Volume and margin pressure required fast action
The financial performance during the second half of 2021 was not satisfactory. There were two main reasons for this: a sharp decline of automotive volume, and dramatic cost increases in energy, freight, alloying elements and other items. Our focus during the end of 2021 was therefore on securing volumes, price increases and cost productivity. These activities were largely successful: we have found volumes in new segments, and we have agreed with most customers on significant price increases and surcharges. We hope that by these actions we can secure a good start to 2022.

A growth plan in the making
In parallel, we have also started to develop plans for the future.

The large investments made in the last few years are now beginning to bear fruit and will contribute fully from 2023. The timing is good, as the market outlook especially in the Americas and in Europe is favorable. Gränges also has a global footprint, strong technical capabilities, solid long-term customer relations, industry leading sustainability performance, and a strong team. That puts us in an excellent position to take advantage of three dominant trends in our industry: the regionalization of supply chains, the electric vehicle revolution, and customer demands for more sustainable solutions.

We are committed to making 2022 a year of growth and improved profitability. We will also present a new plan for Gränges. In it, we’re planning to use our strengths and the promising market trends to restore our return on capital employed to its target range of 15–20 per cent. We’re planning for profitable and sustainable growth. And we intend to build an even stronger and more sustainable company for the future.

I would like to take this opportunity to thank all of my 2,600 colleagues for an outstanding effort in 2021.

Jörgen Rosengren
President and CEO