The 2018/19 financial year has been characterized by turmoil in the world around us, with overall uncertainty creating increasingly short-term behavior that, in itself, drives an economic downturn. Market conditions were very changeable for most of our businesses. Major price shifts occurred in commodity markets throughout the year. Pessimistic market projections intensified in the latter part of the financial year, which resulted in relatively large price drops.

As part of its environmental improvement efforts, China introduced a very strict policy on the import of mixed waste fractions of paper, plastics and metals. The country has gone from being one the world’s largest importers of these waste products to virtually closing its doors in just over a year. In the rest of the world, this has caused a major increase in the supply of these materials for recycling, which has pushed prices down considerably.

While volatile markets have led to challenging conditions for everyone, we have continued to develop our business in a positive way. With a combination of continuous improvement work and focused investments, we are continuing to grow. I am impressed by the commitment and business acumen shown throughout the Group during the year. It is proof that giving clearly delegated mandates to the right people with the right skills can create success, even in more challenging times.

I am particularly pleased with the quality and creativity of our result-oriented business acumen, which generates many new value-creating projects and collaborations.

Stena Recycling continues to make strong progress. As the Nordic region’s leading recycling company, we are advancing our market position, while continuing to invest in new solutions that further increase the degree of refining in our recycling. Our large network of branches and closeness to customers provides a solid foundation for Stena Recycling’s good growth. More than 170 branches, linked through increasingly efficient logistics, with regional as well as central production units, continue to create new, exciting solutions for our customers, as well as for ourselves. The Stena Nordic Recycling Center (SNRC) is the Group’s hub for its industrial material recycling infrastructure and continues to contribute to higher recycling rates and a higher quality yield. During the financial year, we continued to invest in SNRC and initiated four new recycling processes, in addition to productivity enhancements in existing lines. It is gratifying that we have deepened collaborations with a number of our customers, in order to find new, sustainable solutions together. With these focused, value-creating projects, truly exciting circular solutions are created for the benefit of all parties. The recognition of Stena Recycling as Sweden’s most sustainable brand (B2B) for 2018 is a gratifying proof that we are on the right track.

In an increasingly difficult market, Stena Aluminium strengthened its strong market position during the year.

Stena Components sold its Molkom facility, in order to fully focus on improvement work at its primary site in Nybro.

In a progressively weaker market, Stena Stål continues to make more possible through customer-oriented improvement work and by focusing on quality and efficiency.

Stena Oil has delivered improved results and strengthened its position as the leading, quality-assured supplier in the Scandinavian market.

Stena Metall Finans showed very good results for the year, while delivering continued strong support to our other operations, in terms of cash management and risk factors. It continues to contribute to the overall good financial discipline of the Stena Metall Group.

The Group is firmly committed to research and development. In addition to our own R&D unit, we work closely with several universities and colleges in order to find new recycling solutions. At the Stena Nordic Recycling Center, we have created the Stena Recycling Lab, a test arena for new recycling technologies and the development of new and sustainable products. This meeting place for entrepreneurs, researchers, students and companies acts as a catalyst for recycling innovation and development. Two areas of particular focus are "automation for improved recycling and safer work environments ", and "creating new products from complex waste types".

With our New Ventures business area we have a good channel for translating new ideas into business solutions. During the year, we launched several new construction products made from recycled material, as well as a digital platform to increase the reuse of white goods, which resulted in us receiving the New Thinker of 2019 award, in the Öresund Institute’s Real Estate Award.

By working closely with the automotive industry, we are seeking to lead the way in lithium-ion battery recycling. Through research and development work, among other initiatives, we are seeking new and improved recycling solutions for vehicle batteries. We have signed agreements with many vehicle manufacturers to handle lithium-ion batteries. In addition to recycling, we are introducing a first-stage solution that uses the batteries for energy storage during the current financial year.

We have a solid foundation in our overall business acumen. While our focus on continuous improvements works with full force, we want to continue to grow. By focusing on the efficient utilization of our resources, and the resources of our partners, we see good growth opportunities for most of our operations.

At the time of writing, market conditions continue to weaken. The situation in the market for raw materials have worsened throughout the autumn and it appears that the situation will persist through this calendar year and, perhaps, a bit into the next year. Major price fluctuations and periods of increased market uncertainty are recurring challenges that we must address. Our financial position is strong and by maintaining financial discipline, we are well equipped to handle the situation in the best possible way. However, if current market conditions persist, it will be more difficult to preserve last year’s good result.

 

Anders Jansson, October 2019, Gothenburg