Braking and accelerating during an eventful year
2020 was an eventful year due to a turbulent operating environment, deeply impacted by the pandemic. We were particularly affected during the first wave of the pandemic and the second quarter. Order bookings, net revenues and operating profit for the full year declined, although not as severely as we initially feared thanks to a strong end to the year. Three acquisitions contributed to our growth.
Effects of COVID-19
The year began with a slowdown in the industrial economy. At the same time, the outbreak of COVID-19 had a limited impact due to the shutdown of our operations in China. When it became clear that the world was in the grip of a pandemic, which reached Europe and the US in the spring, both the global economy and demand were more drastically affected. For Beijer Alma, this meant lower order bookings and sales in many of our operations. However, this trend was not equally drastic in all areas, and we noted differences between our various subsidiaries and business areas and between different customer segments geographic markets.
Decisive actions were taken throughout the Group to handle the prevailing situation and apply the brakes in a controlled manner, without skidding off course! Our focus was on cash flow and cost savings with the aim of ensuring adequate liquidity and earnings. We utilized various tools at our disposal – opting, for example, to place employees on furlough leave rather than laying them off. Restructuring costs were also incurred in order to ensure our long-term competitiveness. At the same time, we paused certain investments for a period of time. Thanks to the extraordinary efforts of our employees, the Group companies succeeded in fulfilling their deliveries to customers throughout this entire period. This confirms the benefits of our companies always working close to our customers and remaining robust, reliable suppliers, even in the face of new, unexpected challenges.
Braking and accelerating at the same time
The Group’s financial strength enabled us to take decisive action while maintaining a long-term approach – our ambition being to apply the brakes and the gas at the same time. In parallel with our focus on cash flow and cost savings, for example, we also worked to maintain the right inventory levels in order to serve our customers and to implement new acquisitions.
The activity level in the M&A market slowed in the wake of the pandemic, particularly in the spring and summer. Nevertheless, we kept our foot on the gas in order to leverage any opportunities that arose and make forward-looking investments. A total of three companies were acquired in a cautious market, which later saw a gradual improvement in activity during the autumn. A number of long-term investments were also completed, including in Lesjöfors’s new plant in Latvia and a capacity expansion at the fire hose manufacturer Svebab.
Lesjöfors – different dynamics
Demand in Lesjöfors’s Industry and Chassis Springs business areas varied considerably and a change in dynamic was noted. Chassis Springs – which normally has a clear peak season in the spring – instead experienced an initial sharp slowdown as workshops across Europe closed. Demand recovered by the summer, and the activity that normally takes place during the peak season largely shifted to the autumn since the fundamental need to replace springs was only impacted to a marginal degree. Within Industry, demand in certain segments and markets declined significantly during the spring. This decline was particularly noticeable among customers in the automotive industry, many of which were forced to close their plants. There has been a gradual recovery since the summer, even surpassing the previous year’s levels toward the end of the year.
Habia Cable – secure profitability
Early in the year, Habia Cable continued to deliver on its project contracts, particularly in offshore. Demand from industrial customers remained favorable at the start of the second quarter. In response to a gradual decline in demand – both in terms of project contracts and among industrial customers – restructuring measures were implemented, mainly in China and Sweden. The aim of these measures is to help ensure that Habia remains profitable, even in periods of lower demand. At the same time, the company continued to invest in proprietary cable technology for exciting future applications in such areas as sustainable transportation.
Beijer Tech – platform for acquisitions
Beijer Tech mainly works with Nordic industrial companies, an area where a decline in demand was noted in the second quarter. As a result of well-adapted inventory levels – for example, in Fluid Technology – deliveries could be made without any disruptions, despite the company’s dependence on foreign supply chains. Growth in segments such as medical technology partially offset the decline in demand. The company also donated materials and processing capacity for the production of protective equipment for healthcare professionals at the start of the pandemic. Demand in Fluid Technology increased gradually during the autumn. Within Industrial Products, the Norwegian market was hit hardest, while the operations in Denmark and Finland were impacted by the pandemic to a lesser degree.
At the same time, Beijer Tech is an important platform for acquisitions, not least in new areas that broaden the operations and enable growth. One such example is INU-gruppen, which was acquired during the autumn. INU-gruppen is a reputable, well-managed company specializing in building automation systems, an exciting area where the need for energy-efficiency enhancement and improved air quality are strong drivers.
Continued focus on sustainability
The Group and the companies’ work related to sustainability continued, despite an unusual market situation. We have a strong focus on internal training related to corporate social responsibility and anti-corruption, and the number of employees who took part in this training increased in 2020. In terms of environmental improvements, solar panels have been installed at two plants to produce electricity needed to power the manufacturing operations.
Our sustainability objectives remain based on the UN Global Compact, the UN Sustainable Development Goals (SDGs) and the direct environmental impact of our Group companies. At the same time, we are part of a value chain in which the shift toward a clearer focus on sustainability among our raw material, energy and transport suppliers plays an important role and has an indirect impact on the Group. It is important that we report the results of our sustainability efforts. We do this through our participation in CDP, an organization that helps companies, including investors, to measure and disclose their environmental impact. I am pleased to report that we succeeded in improving our CDP rating during 2020.
Despite these uncertain times, we all expect 2021 to be a better year than 2020. We know that the second wave of the pandemic has had a much less severe impact on the industrial sector than on society as whole. Our Group is stable and robust, not only financially, but also in terms of our close proximity to our customers, which in the long term will provide us with a strong business model – in a world where local and regional suppliers seem to be becoming increasingly important to industrial customers.
We also have a competitive cost base that can be leveraged, and will continue to focus on low costs and strong cash flow throughout 2021. At the same time, we must keep one foot on the gas, achieving profitable growth through further acquisitions and increasing our organic growth through investments in Group companies.
Over the past year, we have seen the powerful results that can be achieved when all of our employees do their utmost and work toward the same goals. As part of this work, a number of local initiatives have been carried out, proving that our decentralized way of working is an important asset for us. As we now put 2020 behind us, I would like to express my gratitude for the outstanding efforts of our employees over the year. I would particularly like to thank our CFO Jan Blomén, who has now retired after 34 years at Beijer Alma. With his years of experience, Jan was an invaluable support to me during my first two years as CEO.
Henrik Perbeck, President and CEO