Annual and Sustainability Report
Gränges AB (publ)
We also worked systematically to execute our Navigate plan for sustainable growth. Our approach in 2023 remain the same: to stay focused on the long term while meeting any short-term challenges with flexibility. I have strong faith that this will lead to continued improved performance and a positive development for Gränges overall.
At the Capital Markets Day on 21 June 2022, Gränges presented a new long-term plan for sustainable growth. As a result of the new strategy, Gränges also updated its financial targets for profit growth, profitability, capital structure and dividend.
To drive the development of sustainable solutions, Gränges has adopted sustainability targets for 2025 and has set an ambitious climate target to reach net-zero by 2040 as well as to tenfold the recycling volumes by 2030 versus baseline 2017.
Gränges has had many years of strong value creation. However, the positive trend was broken in 2019, and following the COVID-19 pandemic in 2020 the return on capital employed declined below the cost of capital. This called for action and a new strategy that would bring the company back to a solid long-term performance. And thus, the Navigate plan was born. The Navigate strategy is based on three parts – restore, build and invest – where the long-term target is sustainable growth.
The Navigate plan is about continuing to build the company based on Gränges’ business model – improve, innovate and grow, and source green and recycle. People and sustainability, areas where Gränges believes it outperforms most other companies in the industry, are at the core of the strategy.
The aim of the Navigate strategy is to get back to a stable return on capital employed (ROCE) above 15 per cent. Gränges’ financial targets were updated and the sustainability targets were supplemented in conjunction with the launch of the strategy.
Sustainability is a strong driver and enabler of long-term competitiveness and value creation for Gränges. To stay ahead of customers’ requirements and policy changes, Gränges updated its sustainability strategy to better support Navigate. The strategy shifts the focus from a period of organizing and integrating sustainability into the business to a period of investments, partnerships, and decarbonization to drive sustainable growth. The strategy includes an ambitious commitment to climate neutrality by 2040 as well as raised circularity ambition.
Gränges has a strong position to make a difference through its commitment to sustainability. The company works actively to reduce the climate impact along the aluminium value chain, to increase circularity through collaboration and partnerships upstream and downstream, and to promote responsible business practices among the company’s business partners.
In 2022, Gränges launched a product brand for sustainable and circular solutions, Gränges Endure. The brand makes it easier for customers to select sustainable aluminium products and solutions of the highest quality at the lowest sustainability impact. Gränges Endure products are based on low-carbon and recycled input materials.
The global component shortages and supply chain constraints continued to impact our customers’ business, especially in the first half of the year. The war in Ukraine and the difficult geopolitical situation put stress on European industry. We also saw extraordinary price increases on metal, energy, as well as the highest interest rates and inflation since decades. The Board worked closely with Gränges’ management team to navigate these circumstances. With high professionalism and flexibility, the short-term issues were tackled one by one. At the same time Gränges kept focus on the long term, driving improvement programmes, accelerating its sustainability work, and building a stronger team. It’s pleasing to see that, in the end, 2022 was yet another record year for Gränges in terms of operating profit and sustainability, and that we have a new long-term strategy in place.
I would like to thank Gränges’ management and dedicated employees for their great efforts during an exceptionally challenging year. It’s our firm belief that Gränges is very well positioned for an exciting future.
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