Lagercrantz 2008/09

Mechatronics offers systems and products to customers in manufacturing industry, power generation and electricity distribution with high requirements for quality, proximity and support. Mechatronics conducts business in Denmark, Finland, Sweden, Germany and China.

The offer of division Mechatronics comprises production of customised cable harnesses and adjacent products and services, production and marketing of electrical connection systems, and dealing in mechanical and electro-mechanical products and electronic products. The products manufactured by the division’s companies are characterised by high quality, reliability and extended user life. Trade in Mechatronics comprises proprietary products and complementary products from leading manufacturers. The main focus for the companies in the division is on proximity to its customers in order to be able to offer customer-unique products, provide the best possible technical advice and to offer short delivery times and high availability.

MARKET

Division Mechatronics’ offer is aimed at two main customer categories. Dominating is Nordic manufacturing industry, especially in power generation, trains and railway, heavy vehicles and machinery, and in telecommunication. The second category is electrical grid owners and electric power distribution. The division holds a market leader position within electrical connection systems on the utility market in the Nordic countries and is an important supplier of cable for several large manufacturers.

2008/09 OPERATIONS

Mechatronics recorded higher revenue in 2008/09 than in the year before. Net revenue increased to MSEK 628 (604). Growth was seen during the first three quarters of the year. Demand declined during the third quarter and this was further accentuated during the fourth quarter. The division was particularly impacted towards the end of the year by the lower rate of capital spending among end customers. Gradually lower demand followed as the effect spread in the production chain, in part through inventory reductions among the division’s customers. As a consequence of lower revenue during the latter part of the year, the division’s capacity utilisation was affected, leading to lower profit. At the end of the year measures were taken to reduce overcapacity in the division’s producing units, in part by personnel reductions and by delaying capacity investments. Additional action includes measures to reduce working capital, especially in the form of inventory and trade receivables.

The operating result amounted to MSEK 49 (50). This result contains costs affecting comparability in an amount of MSEK 4 (0), mainly during the fourth quarter, as a consequence of action taken. The operating margin, not including these items affecting comparability, was 8.4 percent (8.3) for 2008/09.

STRATEGIES AND BUSINESS DEVELOPMENT

During the year Mechatronics worked on strengthening, improving and streamlining the production apparatus. Mechatronics’ shall assume responsibility for quality, management, control and material supply together with its customers.

Mechatronics’ offer has been complemented with a view to developing the business in the direction of larger undertakings in the prioritised niches. With more complex deliveries consisting of several products assembled in accordance with the requirements of the customer, full justice will be done to Mechatronics’ technical expertise and wide range of products and the value added can be further increased. During the year Mechatronics has therefore strengthened its marketing and support functions.

Several companies in the division have managed to broaden their customer base in recent years. This has been accomplished on existing geographic markets as well as on new ones. The establishment by subsidiary Elpress in China has been a success in this regard. Initially, the offer has been aimed at existing customers from the home market in the Nordic Region setting up operations in China. A broadening towards local players in the same segment has begun. Also in other parts of the world export efforts towards a few selected segments has continued successfully.

In some areas low-cost production initiatives were taken outside the Nordic countries. A partner network has been created and manufacturing has been initiated for some of the division’s products.

PROSPECTS

The global climate issue and requirements for safe and secure electricity distribution to the various functions in society drives the demand. Mechatronics and its customers are active in market segments that are likely to be interesting investment targets, for example, wind power production, energy efficiency and effective transportation.

Revenue by business type

Key figures

Division Mechatronics	2008/09	2007/08	2006/07
Net revenue, MSEK	628	604	541
Operating result, MSEK	49	50	35
Operating margin, %	8.4	8.3	6.5

Operating margin shown not including items affecting comparability.

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