Division Electronics offers solutions based on special components from world-leading manufacturers as well as proprietary products. Customers are typically manufacturing companies in the fields of marine industry, medical technology, automation, telecommunication and other industry with stringent demands. The division operates mainly in Denmark, Norway, Finland, Germany, Poland and China.
Most companies in division Electronics act as value-adding distributors. The customer is offered products and solutions from world-leading manufacturers with a high degree of customer adaptation, support and services. For the suppliers our businesses serve as a sales organisation that builds demand by exercising good businessmanship and a high level of technical expertise. In order to further enhance the value-adding feature, the offer is complemented with products developed in-house. This is especially true in the marine business. Many of the customers pose stringent requirements, particularly when they are subject certification and regulatory control. Examples are marine navigation equipment, sensors for gas measurement and medical-technical equipment in the health care area.
MARKET
Division Electronics mainly addresses OEM customers in electronics in the Nordic Region, Germany and Poland. Electronics is active in growth areas and seeks leading positions. In communication Electronics is a leader in areas such as distribution of GSM modules. In embedded electronics the division commands advanced positions in a number of areas, including marine PCs.
2008/09 OPERATIONS
Revenue for Electronics fell during the year to MSEK 727 (778). Already early during the period flagging demand was seen in the markets outside the Nordic Region, especially in Germany and the UK. The decline was a result of lower propensity to invest among many companies due to the recession. As the year passed, lower demand spread to most companies in the division. Cost-cutting and capital-reducing measures were therefore introduced during the second half of the year. These measures consisted of streamlining and concentrating operations to the larger markets. In Sweden this means that the company for wireless communication (Acte Wireless) and the company for embedded systems (Acte Embedded) are integrated from 1 April 2009 into one company: Acte Solutions. The UK and Swiss operations are integrated into the Danish and German operations, respectively.
The operating result declined during the year to MSEK 24 (38). This result contains costs affecting comparability in an amount of MSEK 4 (0), mainly during the fourth quarter, as a result of the measures taken, personnel reductions in particular. The operating margin not including these items affecting comparability was 3.9 percent (4.9).
STRATEGY AND BUSINESS DEVELOPMENT
Development work in the division is focused on building strong market positions in growth niches and to increase the value-added component in sales. The gross margin continued to grow during the year thanks to product line improvement and competence enhancement measures taken. The proportion of project sales of semi-finished articles and modules for small and medium-sized production series is on the rise at the expense of standard components for large production series. The element of services and proprietary products is also growing.
One example of successful strategic development is the small acquisition made in Norway during the past year. This acquisition brings the Norwegian business into a new customer segment, IT solutions for digitising and computerisation of health care.
Another example is the establishment of a competence centre in Poland for customer-specific development of products in the communications area. This means new opportunities for increased value added for customers in Poland as well as in other markets.
PROSPECTS
The strategies and the business model, with distinct decentralisation and management by objective, have led to clear improvements in the business. In the long term division Electronics will continue to develop along the path staked out. The economic outlook for the year ahead is fraught with significant uncertainty, however. In the short term Electronics will therefore follow the development closely and adapt its operations to the situation at hand.
Revenue by business type
Key figures
| Division Electronics | 2008/09 | 2007/08 | 2006/07 |
|---|---|---|---|
| Net revenue, MSEK | 727 | 778 | 751 |
| Operating result, MSEK | 24 | 38 | 23 |
| Operating margin, % | 3.9 | 4.9 | 3.1 |
Electronics’ business model – value adding distribution
Several other distributors in the market are global players with a very broad product line, the focus of whom will be to maintain inventory of and to provide logistics for more standard-type components.
