The Nordic markets recovered during the year – as did Addtech. Revenue rose by 20 percent to more than SEK 4.4 billion and earnings per share increased by about 80 percent. Addtech also reinforced its positions in several market segments, partly via 14 acquisitions.
The Swedish market has acted as the main locomotive during the recovery. Several industries have really picked up speed, including the vehicle and engineering industries. This has meant that our subsidiaries that sell products and solutions to the manufacturing industry have enjoyed a much better business climate. Other markets still have growth potential, because corresponding market segments have so far grown more slowly than those in Sweden. The subsidiaries that target the energy market have also seen stronger demand, while our subsidiaries that sell to the healthcare sector have had a stable business climate – which was actually also the case throughout the recession.
Although business was good for Addtech during the year, we have not yet regained the levels of demand that we had before the financial crisis. The fact that we achieved such favourable results in a short space of time is thanks to our successful work to maintain customer relationships during the recession, even though the sales volumes were sometimes very low. When demand subsequently returned, we were ready to quickly resume delivery of our products and solutions.
More attuned to customers’ needs
Part of our work on building market positions involves being attuned to our customers and their needs. This approach has enabled us to strengthen our role as a refining link between manufacturers and customers. As a result, sales of modifi ed standard products as well as products and solutions designed in house have steadily increased. Half of our operations remain focused on standard products, however, and they form the core of our offering.
Acquisitions bolster our market positions
Our objective is earnings growth of at least 15 percent per annum over the course of a business cycle. We are to achieve this through a combination of organic growth and acquisitions. Strategic acquisitions are a particularly important part of our efforts to create long-term, profi table growth. In 2008/2009 Addtech made few acquisitions, because the prices were often at unrealistic levels in relation to lower profi tability. During the past year, we substantially increased the rate of our acquisition activity. We acquired a total of 14 companies that operate in strategically interesting market segments and fit in with the Group’s business model. Through the acquisitions, we strengthened our positions at several levels. The subsidiaries made smaller bolt-on acquisitions, and many business units reinforced their positions in their respective market segments. Finally, one business area added a completely new business unit by acquiring the BEVI group, which is now the Power Drives business unit at Addtech.
Focusing produced results
Three years ago, we grouped all subsidiaries into market-oriented business units. The objective was to boost the focus on sales in each market segment and increase the right conditions for costeffective cooperation. The market orientation has led to a more intensive exchange of experience between heads of subsidiaries and heads of business units. Dialogue in the business units has meant that our employees now have better understanding of where Addtech is heading and what we can do to harness future opportunities in each segment. Experiences from the latest crisis show that our organisation is resilient in both good and bad times and can be rapidly adapted to the prevailing conditions.
The leading technology trading company
Addtech’s basic strategy stands firm, at the same time as our operations are constantly evolving and being tailored to the current market conditions. Strategically, we are going from strength to strength, and to elevate our level of ambition even more, we established a joint vision in June of this year stating that Addtech is to be the leading value adding tech provider. The vision is not new to each individual subsidiary, but as a Group-wide watchword it adds another dimension that I know will affect the way we do business. To be a leader means that we must be best at what we do. We are to stand for continuity and development at the same time as being perceived by our customers, suppliers and employees as the most competent and long-term partner. The year’s sustainability work is one example of several areas in which we can work together in the Group to become the leader in our industry.
Well-equipped for the future
I rate the outlook for 2011/2012 as good. Addtech is wellequipped to face the challenges and opportunities that the future will bring. Sweden will probably return to a more normal rate of growth in light of the robust recovery that has taken place.
However, there are still plenty of opportunities for substantial growth in other Nordic markets; the positive trend of the past six months in Denmark and Finland looks set to continue, while the recovery in Norway might not take place until some way into the new financial year. I also see a positive market trend for our markets beyond the Nordic countries. Exports to these markets continue to rise, and the business climate is favourable for our operations outside the Nordics.
Dear shareholders, our employees’ competence, skills, professionalism and personal commitment are what form the foundation of our business model and make it possible for us to continue delivering technical and financial value added to our customers, year after year. That’s why I’d like to say a big thank you to all employees who have contributed to the admirable growth of the past year!
Stockholm, June 2011
Johan Sjö
Group President and CEO