Gränges : Report (PDF)

Annual and

Sustainability

Report 2021

Gränges is a global leader in aluminium engineering, manufacturing and innovation.

Gränges 125 years

Gränges of today is a young company with a long history. In 2021, it was exactly 125 years since Gränges was founded. Gränges' history is a story of constant development and transformation. During its long history, Gränges has developed and adapted based on society's changing needs, and has been associated with railways, mining, shipping operations, ore exports, car safety - and not the least aluminium. At the beginning of the twentieth century, Gränges was the highest valued company at the Stockholm Stock Exchange, in the middle of the century Gränges was the world's largest ore supplier and towards the end of the century the company was a subsidiary of the Electrolux Group. Today, Gränges is an aluminium technology company that drives the development of lighter, smarter and more sustainable aluminium products and solutions. The common factors throughout the years have been adaptation and innovation; to adapt the business to new conditions and to constantly create new innovations that drive development further.

Read more about Gränges' history on pages 141-142 and on the website, www.granges.com.

• ANNIVERSARY BOOK ABOUT GRÄNGES' HISTORY

Gränges' long and exciting history is described in the book "Gränges - since 1896", which was published as part of the 125th anniversary celebration of Gränges in 2021. The book is written by the business journalist and author Ronald Fagerfjäll and ­ published by Förlaget Näringslivshistoria.

GRÄNGES ANNUAL AND SUSTAINABILITY REPORT 2021

PURPOSE

To develop lighter, smarter and more sustainable aluminium products and solutions.

CONTENTS

ABOUT GRÄNGES

1. 2021 in brief

1. CEO statement

1. This is Gränges

1. Gränges' products
2. Business model
3. A strong position in the value chain
4. Global trends

1. Markets

1. Gränges Eurasia

1. Gränges Americas

1. Strategy

1. Innovation for profitable growth

1. Operational excellence through continuous improvement

1. Long-termtargets

SUSTAINABILITY

1. A strong commitment to sustainability
2. Sustainability framework and 2025 targets
3. Climate strategy

33 Sustainable innovation and sales

1. Responsible and sustainable sourcing

1. Resource-efficientoperations

1. Diverse and high-performing teams

1. Ethical business practices

1. REASONS TO INVEST IN GRÄNGES
2. THE SHARE AND OWNERS

47 RISK MANAGEMENT

1. BOARD OF DIRECTORS' REPORT

1. CORPORATE GOVERNANCE REPORT

FINANCIAL STATEMENTS

1. Financial statements content
2. Consolidated financial statements

1. Notes to the consolidated financial statements

1. Alternative performance measures
2. Definitions
3. Five-yearsummary
4. Parent company financial statements

1. Notes to the parent company financial statements

1. Proposed appropriation of retained earnings
2. Auditor's report

1. SUSTAINABILITY NOTES

1. GRI CONTENT INDEX

1. GLOSSARY
2. GRÄNGES 125 YEARS

1. ANNUAL GENERAL MEETING 2022

Gränges' formal annual report according to the Swedish Annual Accounts Act comprises pages 47-113. The statutory sustainability report according to the Swedish Annual Accounts Act is found on pages 29-43, 55 and 118-138.

GRÄNGES ANNUAL AND SUSTAINABILITY REPORT 2021

ABOUT GRÄNGES

SUSTAINABILITY

THE SHARE

RISK

BOARD OF DIRECTORS REPORT

CORPORATE GOVERNANCE REPORT

FINANCIAL STATEMENTS

SUSTAINABILITY NOTES

2021 in brief

• KEY EVENTS

Strong recovery: Gränges developed new ways of working with suppliers and customers to create value during the continuing pandemic. Despite dramatic swings in demand and supply, sales volume in 2021 grew by almost 40 per cent to 489 ktonnes, a new all-time-high record. Adjusted operating profit rebounded to SEK 1,008 million (648), also a record, mainly driven by improved sales volume.

A slowdown of demand from the automotive customers due to continued shortage of semiconductors caused severe supply chain problems for the customers, which had a neg­ ative effect on Gränges' sales volume. However, most of the other markets showed a continued strong demand throughout the year.

First full year with Gränges Konin, and integration proceeded as planned. Good development in the business unit Gränges Powder Metallurgy.

Continued ambitious investments in all regions.

First steps towards battery applications: Gränges moved actively to support the green transition and the electrification of the transportation industry.

Good progress in sustainability: Gränges upgraded its sustainability targets and issued a Sustainability-Linked Bond.

125-year celebration: Gränges celebrated its 125th anniversary.

New President and CEO: Jörgen Rosengren assumed his position as President and CEO of Gränges on 1 October 2021.

• PERFORMANCE SUMMARY

Financial summary	2021	2020	Change
Sales volume, ktonnes	488.9	350.6	39%
Net sales, SEK million	18,130	11,008	65%
Adjusted operating profit 1) 2),
SEK million	1,008	648	56%
Adjusted operating margin, %	5.6	5.9	-0.3 ppt
Adjusted operating profit per tonne,
kSEK	2.1	1.8	0.2
Operating profit, SEK million	833	584	43%
Operating margin, %	4.6	5.3	-0.7 ppt
Profit for the year, SEK million	595	363	64%
Earnings per share basic	5.60	4.21	1.39
Earnings per share diluted	5.58	4.21	1.37
Cash flow before financing activities,­
SEK million	62	-322	n/a
Equity/assets, %	44.0	43.7	0.2 ppt
Net debt, SEK million	3,643	3,292	351
Return on capital employed, %	10.0	8.1	1.9 ppt
Sustainability summary3)	2021	2020	Change
Total Recordable Rate4)	6.5	5.5	1.0
Carbon emissions intensity
(scope 1+2), tonnes CO2e/tonne	0.88	0.83	6%
Carbon emissions intensity
(scope 3), tonnes CO2e/tonne	8.4	9.6	-12%
Sourced aluminium scrap, %	28.5	22.5	6 ppt

1. Adjusted for items affecting comparability. Read more on page 87.
2. Read more about alternative performance measures on page 101.
3. 2020 excludes Gränges Konin and Gränges Powder Metallurgy.
4. Number of recordable accidents per million hours worked. Read more on page 130.

• GRÄNGES ANNUAL AND SUSTAINABILITY REPORT 2021

ABOUT GRÄNGES

SUSTAINABILITY

THE SHARE

RISK

BOARD OF DIRECTORS REPORT

CORPORATE GOVERNANCE REPORT

FINANCIAL STATEMENTS

SUSTAINABILITY NOTES

>> PERFORMANCE

• Sales volume increased by 39 per cent to 488.9 ktonnes	• Adjusted cash flow before financing activities was	• The share of sourced aluminium scrap increased to
(350.6). Net sales increased to SEK 18,130 million	SEK 607 million (1,180), representing a cash conversion	28.5 per cent, which corresponds to 25.0 (22.5) excluding
(11,008).	of 60 per cent.	Gränges Konin and Gränges Powder Metallurgy.
• Adjusted operating profit1)2) amounted to SEK 1,008	• Carbon emissions intensity amounted to 0.88 tonnes	• Total Recordable Rate increased to 6.5, which
million (648) and adjusted operating profit per tonne was	CO2e/tonne for scope 1+2 and 8.4 tonnes CO2e/tonne for	corresponds to 6.9 (5.5) excluding Gränges Konin
2.1 kSEK (1.8).	scope 3. Excluding Gränges Konin and Gränges Powder	and Gränges Powder Metallurgy.
• Profit for the period amounted to SEK 595 million (363)	Metallurgy, scope 1+2 intensity was reduced by 11 per	• The Board of Directors proposes a dividend of
cent to 0.73 (0.83) and scope 3 by 3 per cent to 9.3 (9.6).
and includes items affecting comparability of SEK -175	SEK 2.25 (1.10) per share, corresponding to 40 per cent
Total carbon emissions intensity (scope 1+2+3) has now
million (-64).	(32) of the profit for the year.
been reduced by 19 per cent vs. baseline 20173).

Sales volume

ktonnes 500

400

300

200

100
0	17	18	19	20	21

Asia Pacific Europe North and South America

Adjusted operating profit 1) 2)
SEK million				kSEK
1,000						4
750						3
500						2
250						1
0	17	18	19	20	21	0

Adjusted operating profit Adjusted operating profit per tonne

Adjusted cash flow before financing 2)

SEK million					%
1,200						200
900						150
600						100
300						50
0	17	18	19	20	21	0

Adjusted cash flow before financing Cash conversion

Carbon emissions intensity4)

Tonnes CO2e/tonne

15
10
5
0	17	18	19	20	21

Own operations and purchased energy (scope 1+2)

Sourced metal inputs (scope 3)

Sourced aluminium scrap4)

%
30
25
20
15
10
5
0	17	18	19	20	21

Aluminium scrap of total sourced metal inputs

1) Adjusted for items affecting comparability. Read more on page 87,	3) Baseline 2017 recalculated to include Gränges Konin.
Note 14.	4) 2017-2020 exclude Gränges Konin and Gränges Powder Metallurgy.
2) Read more about alternative performance measures on page 101.

• GRÄNGES ANNUAL AND SUSTAINABILITY REPORT 2021