Vision, business concept, goals and strategies
We will be leading IN VALUE-ADDING TECHNOLOGY TRADING
Our vision is to be the leading value adding tech provider. As a Group-wide guiding principle, our vision directs how we should act in various situations, while effectively and successfully combining continuity with development. To achieve this vision we have broken it down into goals, strategy and business concept.
PARTNER THAT CREATES TECHNICAL AND FINANCIAL ADDED VALUE
Addtech has maintained the same successful business concept for more than 100 years. Our business concept is to offer high-technology products and solutions to companies in the manufacturing and infrastructure sectors. We provide both technological and economic added value by serving as an expert and professional partner to both customers and suppliers. In order to achieve our vision and develop our business in the long term, we strive to pursue our business in a sustainable way.
Addtech acts as a value-adding link between customers and suppliers. At one end of the chain, our customers seek a technical solution to meet their unique needs. As their business partner, we customise solutions in collaboration with our carefully selected suppliers. We create and add value for our customers to ensure that their products are more competitive in the end market. A central part of it, is to meet market demands for increased sustainability and responsible action in terms of economic, environmental and social value creation.
We have a large number of suppliers across the world and our purchases are made in large part from suppliers outside the Nordics, in Europe, the USA and Asia. Addtech conducts its own production on a minor scale, and so the major share of production takes place via orders to our suppliers.
FINANCIAL TARGETS AND FOLLOW-UP DURING THE YEAR
At Addtech, the expectations on earnings growth, profitability and development determine the conditions for each individual business. Our financial target is average earnings growth of more than 15 percent over a business cycle. In practice, this means doubling our earnings every five years. The economic climate naturally has a bearing on our opportunities each year. Over the financial year, earnings growth totalled 17 percent, which is above our long-term target.
At Addtech we measure profitability via the P/WC ratio. To calculate that, we apply the EBITA earnings measure (P) to our working capital (WC). The P/WC ratio in every unit shall amount to no less than 45 percent. Everything done day-to-day can be linked to the P/WC target, with the aim of optimising operations. P/WC places a premium on high earnings and low levels of tied-up capital, which in combination with earnings growth, provides good opportunities for a positive cash flow and long-term profitable growth. The P/WC ratio for the financial year 2017/2018 was 53 percent, well above our target.
We are developing and building our Group systematically in accordance with our well-established strategy. Every company represents a unique building block that fits in with the Group structure. During our acquisition process, we assess new businesses in order to identify new building blocks that fill the gaps we have, or that can strengthen our existing companies.
MARKET-LEADING NICHE POSITIONS
Addtech strives to be market-leading and active in carefully selected niches with high levels of knowledge and technology. Our customers are seeking carefully selected solutions, sub-systems or products, often in small or medium-sized volumes. We customise and sell solutions to our customers in partnership with selected suppliers. The market-leading position is important to achieve stable growth and profitability.
OPERATING MOBILITY - FLEXIBILITY AND ACTIVE OWNERSHIP
Operational mobility is characterised by a flexible organisation with solution-oriented, innovative employees who recognise and take full advantage of new business opportunities. Through active ownership of our companies, we can merge or separate whole or parts of businesses. That way, we can fully develop the growth potential of the individual subsidiary or segment. Operational mobility also requires us to have effective processes for integrating new companies into the Group.
GROWTH THROUGH ACQUISITIONS
Addtech is constantly growing through acquisitions of independent technology companies with market-leading niche positions. This makes it possible to complement business areas through new market segments in niches where we see the right conditions for gaining market leadership. Business units can expand and build market and/or product positions in selected market segments. We also make small bolt-on acquisitions that may serve to strengthen the market positions of our existing companies.
Addtech was listed in 2001, and has since then performed well both in terms of sales and profitability. Profitable growth is achieved through continuous business and organisational development. The following are the most important factors behind our successful business model.
Addtech’s employees are the absolutely key condition for our success. Our employees represent high business acumen and technical expertise that are continuously focused on developing existing and new lines of business. When employees enjoy their work and can develop personally, it is possible to drive up sales of products, solutions and sub-systems. Employees who are creative and decisive can prioritise their tasks and raise their sights and look forward.
Addtech has organised its business on the basis of decentralised responsibility for profitability and earnings. This offers good opportunities for combining the flexibility, personality and efficiency of a small company with the resources, networks and long-term approach of a large business. Every company has great freedom as to which customers it serves, but also has great responsibility to live up to expectations of earnings growth and profitability.
CONSISTENCY AND STRONG BUSINESS CULTURE
Addtech is characterised by a deeply rooted culture based on strategic and consistent acting, good planning, a long-term approach, diligent decision-making and effective implementation. Furthermore, Addtech is characterised by strong business acumen, a firm focus on profitability and an ethical approach.