2006 ANNUAL REPORT

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2006 A N N U A L R E P O R T

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2 B e i j e r e l e c t r o n i c s 2 0 0 6

28

consolidated income statement

30

consolidated Balance sheet

30

consolidated statement

of changes to shareholders’ equity

32

consolidated cash Flow statement

33

Parent company income statement

34

Parent company Balance sheet

34

Parent company Assets Pledged

and contingent liabilities

35

Parent company statement

of changes to shareholders’ equity

36

Parent company cash Flow statement

37

notes

38

Audit report

60

Five-year summary

61

Definitions

62

Addresses

63

the Year in summary

3

ceo’s statement

5

the share

6

Business Model

8

Mitsubishi electric

10

Group overview 2006

12

the HMi Products Business Area

16

the Automation Business Area

20

organizational and Human resources

24

Board of Directors

26

senior executives

27

The Annual General Meeting (AGM) will be held at 4 p.m.

on Monday, 23 April 2007 at the Malmö Stock Exchange building, Skeppsbron 2, Malmö, Sweden.

Right to Participate at the AGM

Shareholders intending to participate at the AGM should:

• First, be included in the share register maintained by VPC AB (the Swedish Central Securities Depository & Clearing Organization) on Tuesday, 17 April 2007;

• Secondly, notify the company of their intention to participate, with the number of assistants they wish to bring, by no later than 12 noon on Tuesday, 17 April 2007.

Notification

Notifications should state the shareholders’ name, personal or corporate identity number, shareholding, address and telephone number, and can be effected at the company’s Website, www.beijergroup.se, by telephone on +46 (0)40 35 86 44, by fax on +46 (0)40 29 26 70, by e-mail arsstamma@beijergroup.se or by mail to Annika Johnsson, Beijer Electronics AB (publ), Box 426, 201 24 Malmö, Sweden (please mark the envelope ‘AGM’).

If participation is through power of attorney, a dated original should be sent to the company in good time before the Meet- ing. Representatives of legal entities should present certificates of incorporation or equivalent documentation stating author- ized signatories.

In order to participate at the meeting, shareholders’ with nominee-registered holdings must temporarily register their shares in their own name. This re-registration should be complete by 17 April 2007, and shareholders should notify their nominees in good time before this date.

Dividends

The Board of Directors is proposing that dividends of SEK 3.75 per share are paid for the financial year 2006, plus an extraordinary dividend of SEK 2.00 per share, with the record date of 26 April. Dividends are scheduled for payment via VPC on 2 May.

FiNANCiAL iNFORMATiON

• Annual General Meeting, 23 April 2007

• Three-month Interim Report, 23 April 2007

• Six-month Interim Report, 16 August 2007

• Nine-month Interim Report, 24 October 2007

• Financial Statement 2007, 7 February 2008

• Beijer Electronics’ Annual Report for 2007, April 2008

All financial information is uploaded to Beijer Electronics’

Website www.beijergroup.se/Investor Relations, where an e-mail subscription list for press releases and financial reports is also available.

Questions relating to the Beijer Electronics group should be addressed to the Corporate Management Assistant Annika Johnsson on tel: +46 (0)40 35 86 55, or via e-mail:

info@beijergroup.se.

Notice Convening

the Annual General Meeting

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Significant Events

In February, Beijer Electronics signed a new long-term master agreement with Tetra Pak regarding the delivery of new E1000 operator terminals, which are based on the new terminal series, EXTER. This agreement is global. Tetra Pak is one of the world’s largest users of automation equipment.

In early-April, Beijer Electronics decided to incorporate a subsidiary in Shanghai, China. The primary task of the Chinese subsidiary is to support the local distributor and service this market. The Shanghai office is staffed locally with professionals from China and Taiwan. Operations started in March 2007.

In June, Beijer Electronics signed an agreement with Mitsubishi Electric to take over the distribution rights to its agencies in Denmark and the Baltic region, and those agencies Automation did not already possess in Finland. Coincident with this deal, Mitsubishi Electric acquired 15 per cent of the

Automation business area. On 1 October, Beijer Electronics acquired parts of UTU Powel’s operations in this segment in Finland and the Baltic states, through the Automation business area. This transaction was enabled by the agreement with Mitsubishi Electric. This business has aggregate sales of some SEK 40 m, and about 20 staff.

On 1 January 2007, the Automation business area took over Mitsubishi Electric’s agencies on the Danish market, while simultaneously incorporating a new subsidiary, Beijer Electronics A/S, and opened an office outside Copenhagen.

Moreover, in late-2006, a collaboration agreement was signed with the previous Danish distributor of Mitsubishi Electric’s agencies, Lemvigh-Müller.

After the end of the financial year, Beijer Electronics acquired Danish Automation enterprise Brodersen Automa- tion, through the Automation business area. Brodersen, an automation components vendor, has annualized sales of some SEK 65 m, and total staff of about 30. Brodersen has been consolidated from 1 April 2007.

• Net turnover increased by 20 per cent to SEK 735.0 m (615.3).

• Operating profit rose 28 per cent to SEK 77.2 m (60.1).

• Profit after tax grew to SEK 91.0 m (41.2) including capital gains of SEK 37.4 m (0.0).

• Earnings per share after tax increased to SEK 14.51 (6.62). Earnings per share excluding capital gains were SEK 8.49 (6.62).

• The Board of Directors is proposing ordinary dividends of SEK 3.75 (3.25) per share, and the Board is also proposing an extraordinary dividend of SEK 2.00 (0.00) per share.

THE YEAR iN sUMMARY

A comprehensive five-year summary is provided on page 61.

THREE-YEAR sUMMARY

2006 2005 2004

invoicing, seK m 75.0 615. 464.0

Operating profit, SEK m 77.2 60.1 45.9

operating margin, % 10.5 9.8 9.9

Profit before tax, SEK m 11.1 58.6 45.9

ePs after tax, seK 14.51 6.62 5.25

Dividends per share, seK 5.75 .25 .00

equity ratio, % 44.0 8.5 49.2

700

600

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800 80

60

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0 seK m

Quarter seK m

rolling four quarters

Sales and Operating Profit

800

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The bars and left-hand scale indicate annualized sales. The curve and right-hand scale show annualized profit after depreciation and amortization.

2001 2002 200 2004 2005 2006

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“the highlight of the past year was our deal with Mitsubishi electric, bringing Beijer electronics

the agencies for its product range throughout the nordic and Baltic regions.”

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The highlight of the past year was our deal with Mitsubishi Electric, bringing Beijer Electronics the agencies for its product range throughout the Nordic and Baltic regions. This deal gave the Automation business area new growth opportunities, while simultaneously conferring long-term stability and secu- rity to business, and our relations with Mitsubishi Electronics.

These new opportunities also became a source of inspiration for Automation’s organization, and the year had a high tempo.

To accelerate the development of our new agency business, we acquired Finland’s UTU Powel’s automation operations in Finland and the Baltic states, and were able to integrate these acquired operations with the aid of Automation’s existing resources through the autumn, entirely according to plan.

SEK 165 m Extra Sales for Automation

At year-end, Automation incorporated a new Danish subsidiary, Beijer Electronics A/S, and opened an office outside Copenhagen. From day one, the office was staffed by five professionals with lengthy sector experience. Moreover, as part of our start-up in Denmark, we signed an agreement with Lemvigh-Müller, who will be Beijer Electronics’ wholesaler in this country. To further augment Automation’s start-up on the Danish market, we acquired Brodersen Automation in March 2007. This acquisition brings us a broad customer contact network in Denmark, and extends and supplements Automa- tion’s product range.

Our aggressive initiatives in Automation mean that in one step, we boosted our annualized sales by some SEK 165 m.

However, the acquired operations have somewhat lower profitability. Our next challenge will be to attain volume growth in Denmark, Finland and the Baltic states, to lift profitability.

Accordingly, this is also a matter of building on our new platform in the Nordic and Baltic regions, which will need more resources.

HMI Products – Convincing Progress

The HMI Products business area made very convincing progress, setting new sales and profit records. While there is no single explanation for the success in the year, our goal- oriented and long-term efforts are now paying off. Neverthe- less, I’d like to highlight a few significant points that illustrate the past year’s fantastic progress.

HMI Products has succeeded splendidly in coping with an extensive technology shift. Its new terminal range, EXTER, launched in the high-end segment in 2005, generated the majority of sales gains in 2006. Meanwhile, sales of the previous generation of operator terminals stood up surprisingly well. This corroborates the strength of the business area’s product offerings.

Hitech Electronics, acquired in spring 2005, has achieved continued success. Its progress underscores this highly successful acquisition, which has exceeded our expectations. Overall, HMI Products made huge advances in its status as a global player.

The year’s development activities focused on two new compact terminals in the EXTER series for the lower-end segment. This terminal range is now complete. Major resources were also channeled into developing a new software platform, whose launch is scheduled for 2007.

Two Hard-hitting Business Areas

Beijer Electronics now possesses two strong and comparably sized business areas. Both have created competitive platforms for sustained profitable growth. The group parent company has centralized its shared strategic development, accounting and finance functions to support the development of our business. Moreover, we possess a secure financial position.

Thus, we enjoy good prospects for positive progress through the coming years, although we must not underestimate the risks. Automation faces intense, rigorous efforts to increase sales and profitability in its new business.

Despite brisk growth, HMI Products remains a small player on the global market. To cope with our extended product range, we need to consolidate our positioning in marketing and sales, particularly in Europe and the US. We are also continuing our intensive development activities to safeguard our secure positioning in this product segment, and stay at the leading edge of progress. Acquisitions in the HMI segment are a high priority.

Outlook for 2007

We put in a strong finish to the past year, and have made a brisk start to the new one. We anticipate sustained positive market progress. Automation now has a bigger market to service, and has thus paved the way for good growth opportunities through 2007. HMI Products has a strong, extended product range, and more established sales channels, offering opportunities for continued high growth. Overall, I think Beijer Electronics has good prospects of continuing to increase sales and operating profit in 2007.

Göran Sigfridsson

President and Chief Executive Officer

Beijer Electronics produced another record year in sales and profit terms in 2006. I’m delighted with how well our new organization has worked, and that we’ve been able to satisfy our objectives and implement the strategies we formulated a few years ago. A number of things came together in the year.

CEO’s sTATEMENT

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THE BEIjEr ElECTrONICS SHArE

Share Capital

Beijer Electronics’ share capital is SEK 6,221,488 divided between 6,221,488 shares. The minimum share capital is SEK 2,000,000, and the maximum, SEK 8,000,000. Each share has a quotient value of SEK 1. All shares have one vote and confer equal rights to participation in the corporation’s assets and profits.

Share Price and Turnover

In terms of bid price, the share price was SEK 154.50 on 29 December 2006, against SEK 118.50 on 31 December 2005, equivalent to 30.4 per cent gains in the year. In the same period, the SIXGX rose by 23.6 per cent. Beijer Electronics traded at a high of SEK 154.50 and a low of SEK 109 in the year.

Share turnover was 1.5 million shares, or 24 per cent of the total number of shares. In value terms, turnover was SEK 203 m.

Earnings per Share

Earnings per share after tax were SEK 14.51 (6.62). Excluding capital gains from the sale of 15 per cent of Beijer Electronics Automation AB, earnings per share were SEK 8.49.

Dividends

The Board of Directors has proposed dividends of SEK 3.75 (3.25) for the financial year 2006. The Board of Directors is also proposing an extraordinary dividend of SEK 2.00 (0.00) per share. Total dividends equate to 40 per cent (49) of profit after tax. The proposed dividends imply a dividend yield of 3.7 per cent (2.7) as of the closing price at year-end 2006.

The Beijer Electronics share is quoted on the Stockholm Stock Exchange’s OMX Nordic Small Cap list. A trading lot comprises 100 shares.

1) Earnings per share before capital gains were SEK 8.49 in 2006.

2) Proposed dividends for 2006.

sHARE dATA

2006 2005 2004

earnings per share, seK ¹⁾ 14.51 6.62 5.25

Dividend, seK ²⁾ 5.75 .25 .00

Pay-out ratio, % 40.0 49.0 57.0

Dividend yield, % .7 2.7 .9

shareholders’ equity per share, seK 2.81 24.19 18.47

return on equity, % 51. 1.0 0.4

closing price, seK 154.5 118.5 77.5

no. of shares, million 6.22 6.22 6.22

Market cap., seK m 961.0 77.0 482.0

Shareholder Categories, Equity Holding

Unit trust/mutual fund corporations 16 %

insurance companies and pension institutions 8. %

other organisations 14.1 %

Foreign shareholders 2.8 %

swedish private individuals

24.8 % other legal

entities

4.0 %

source: VPc

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 160

150

140

10

120

110

100

Stock Index 2006

Beijer electronics share siXGX

csX Kr

source: siX AB

Holding no. of

shareholders Percentage of no.

of shareholders no. of shares Percentage of share capital

1 – 500 2,622 80.6 11,078 5.0

501 – 1,000 285 8.7 245,789 4.0

1,001 – 5,000 258 7.9 596,764 9.6

5,001 – 10,000 48 1.5 56,745 5.7

10,001 – 15,000 12 0.4 150,698 2.4

15,001 – 20,000 0.1 55,200 0.9

20,001 – 25 0.8 4,505,214 72.4

Total 3,253 100.0 6,221,488 100.0

Breakdown by Shareholding source: VPc

SHArEHOlDErS AS Of 31 DECEMBEr 2006 No. of Shares

and Votes %

stena sessan rederi AB 1,605,72 25.8

svolder Aktiebolag 751,200 12.1

livförsäkrings AB skandia 504,800 8.1

seB sverige small caps 250,700 4.0

AMF Pension 226,00 .6

seB sweden small caps fund 212,6 .4

lannebo small caps 194,00 .1

charles Werner and family 150,000 2.4

torsten Bjurman with

fam. & companies 15,600 2.2

carlson small caps fund 79,00 1.

Total, shareholders with over

75,000 shares, 10 st 4,109,908 66.0

other shareholders ,24 2,111,580 4.0

Total 3,253 6,221,488 100.0

source: VPc

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BEIjEr ElECTrONICS’ BUSINESS MODEl

Group Business Concept

Beijer Electronics will apply a high level of professional skills and novel thinking to develop and commercialize proprietary and agency products, and to offer automation systems and services. All products, services and systems should include a high technology content and feature user-friendliness and high quality, in order to provide our customer groups with efficient automation solutions, contributing to enhanced customer benefit.

long-term Group Objectives

• The group will achieve minimum average yearly growth including acquisitions of 15 per cent;

• The group will achieve an average operating margin of 10 per cent;

• The group will tie up little capital in fixed assets, limiting its need for extensive shareholders’ equity. However, it will maintain a minimum equity ratio of 30 per cent;

• The group will maintain healthy cash flows, and thereby, high dividend pay-out capacity. Dividends will be consid- ered each year in the context of the group’s capital require- ments for future expansion.

Group Strategies

The overarching strategy of the Beijer Electronics group is to be active in the automation segment. Operations shall be conducted in separate business areas, and currently by the subsidiaries Beijer Electronics Automation and Beijer Electronics Products, with individual objectives and strategies reviewed in the sections on each business area.

The group will promote the open exchange of ideas, information and solutions between its various parts.

Apart from being accountable for centralized functions such as Strategic Development, Accounting & Finance, IT, HR, Quality & Environment and Corporate Communications, the parent company is a holding company that supports and stimulates development of the business areas’ activities. Retain- ing and enhancing the highly significant interaction between Automation and HMI Products, established over the years, is a central element.

Each business area’s development is stimulated by close collaboration, and thus, so is total growth. For example, through its close customer collaboration, Automation gathers practical working experience and crucial insights into customers’ processes and the users’ role in them. This is a valuable source of Beijer Electronics offers its customers proprietary and agency products within automation, and accordingly, the corporation pursues two business models in two separate business areas – Automation and HMI Products.

These business models are tailored to each business area’s specific circumstances on various markets. Even if the business areas each have their own working methods and differing geographical focuses, they are in close collaboration, which stimulates the progress of both. Objectives and strategies are formulated within the framework of the group’s business concept, objectives and strategies.

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SATISfACTION Of QUANTITATIvE OBjECTIvES

Objective Ave. 3 Yr. Ave. 5 Yr. 2006 2005 2004 2003 2002

sales growth, % 15 19.0 11.0 20.0 2.6 6.0 1.4 0.

operating margin, % 10 10.1 8.9 10.5 9.8 9.9 5.9 8.7

equity ratio, % > 0 44.0 41.0 44.0 8.5 49.2 48.4 50.5

Nordic Baltics

World HMI Products Group Management

Automation information for HMI Products’ product development. Simul-

taneously, HMI Products’ products are part of Automation’s product range, which means that this close collaboration offers Automation scope to influence progress, an in turn, enhance its overall product range.

A pronounced customer focus and close customer collaboration are also guiding principles of group strategies. The group puts a high priority on understanding customer and user needs. Proceeding from this knowledge, customers will be offered products, tools, support and service that enhance their competitiveness and productivity.

Staff commitment and know-how are decisive for the implementation of group strategies, and the group thereby achieving its predetermined objectives. Another significant part of group strategy is to design controls to stimulate the group’s employees’ ongoing skills enhancement.

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THE MITSUBISHI ElECTrIC DEAl

– CREATiNG A PLATFORM FOR ExPANsiON

The background to the deal with Mitsubishi Electric was to create increased scope for Automation’s growth in the Nordic region and neighboring markets. Meanwhile, the deal reduces the business area’s risk exposure, and confers long-term secu- rity. Beijer Electronics and Mitsubishi Electric have been in close collaboration for 25 years, and throughout this period, Beijer Electronics has possessed the agencies to Mitsubishi Electric’s automation equipment product range in Sweden, Norway and Finland.

From the foundation of these agencies, Beijer Electronics has built operations in the segment into one of the region’s leaders.

The Automation business area has an estimated market share of 18-20 per cent in Sweden and Norway. By Beijer Electronics taking over agencies in the affected countries, Mitsubishi Elec- tric has seen an opportunity to further advance its positioning as a vendor for the whole region. The agencies are expected to bring Automation sales of some SEK 100 m in 2008.

Automation introduced a new organizational structure in 2004-2005, implying shared and coordinated marketing, changes that generated savings and enhanced efficiency, plus greater market impact. The new organizational resources are also dimensioned to manage the new agencies in each country, to further enhance total business throughout the region.

Acquisitions in finland and the Baltic region

Building on the deal with Mitsubishi Electric, Automation acquired parts of UTU Powel of Finland’s automation segment operations in Finland and the Baltic countries, which had aggregate annualized sales of some SEK 40 m in autumn 2006.

This acquisition mainly covered the sales of frequency inverters from Mitsubishi Electric in Finland and Mitsubishi Electric’s complete product range such as control systems, frequency inverters, servo systems and robots in Estonia, Latvia and Lithuania. The acquired operations have a total of some 20 staff. The transaction meant Automation was able to take over and develop the regional business in Mitsubishi Electric’s agencies faster.

The acquired operations are being integrated with Automa- tion’s existing resources in Finland, and the business area’s pan- Nordic marketing, procurement and logistics resources. The objective is to further enhance and increase regional market shares, and increase the sales of Beijer Electronics’ proprietary HMI products. Automation’s sales in Finland will rise to some

SEK 70 m in 2007, implying an estimated market share of 10-12 per cent.

Start-up in Denmark

On 1 January 2007, Automation took over Mitsubishi Elec- tric’s agencies on the Danish market, while simultaneously incorporating a new subsidiary, Beijer Electronics A/S, and opening an office outside Copenhagen.

The pan-Nordic marketing, procurement and logistics organization will also be utilized in Denmark. In 2007, the Danish organization was extended into sales, technical support and servicing. In late 2006, Beijer Electronics signed a strategic agreement with the previous distributor of Mitsubishi Electric’s agencies, Lemvigh-Müller, who will now serve as Beijer Electronics’ wholesaler in this country.

After year-end, Beijer Electronics also acquired Danish automation enterprise Brodersen Automation through the Automation business area. Brodersen, an automation components vendor, has annualized sales of some 65 m and total staff of about 30.

Mitsubishi Electric’s agencies have estimated annualized sales of some 50 m on the Danish market, equating to a market share of 6-8 per cent.

Beijer Electronics Automation AB – New Board of Directors

Coincident with incorporation, Beijer Electronics Automation AB gained a new Board comprising Stig-Arne Blom from the parent company Board, Göran Sigfridsson, CEO of Beijer Electronics AB, Lars Ekelund, CEO of Automation and Nori- aki Himi from Mitsubishi Electric Europe.

Beijer Electronics’ deal with Mitsubishi Electric was the single biggest highlight of the past year. This deal means the group’s Automation business area also gaining Mitsubishi Electric’s agencies in Denmark and the Baltic region, and those agencies it did not already possess in Finland. Mitsubishi Electric simultaneously acquired 15 per cent of the business area, which was reformed as a new group subsidiary – Beijer Electronics Automation AB.

On 1 October 2006, Mitsubishi Electric acquired 15 per cent of the Automation business area (Beijer Electronics Automation AB above).

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This is Mitsubishi Electric

Mitsubishi Electric is a global player in an array of segments, and one of Japan’s biggest corporate groups. Consolidated sales were almost USD 31 bn – some SEK 215 bn – in the financial year 2005/2006.

Operations are extremely extensive, encompassing products like turbines, generators, nuclear power equipment, industrial automation, mobile phones, telecom equipment, semiconduc- tors, refrigerators and TVs. Mitsubishi Electric is divided into six business areas:

The three largest business areas – Consumer Products, Energy & Electrical Systems and Industrial Automation – are comparable in size, with over one-fifth of consolidated sales each. Then the group has Information & Communication Systems, which generate some 16 per cent of sales. Electronic Components represents 4 per cent. The ‘Other’ group, comprising 15 per cent, includes finance, real estate, advertising and procurement.

Although Mitsubishi Electric is a global Corporation, sales on the Japanese market dominate. In 2005/2006, sales in Japan were nearly USD 27 billion, or over 75 per cent of the consolidated total. Non-Japan Asia is the second biggest market, with nearly 10 per cent of sales, followed by North America and Europe, each with some 6 per cent.

In the financial year 2005/2006, the group posted operating earnings of USD 1.35 bn, equating to an operating margin of 4.4 per cent. Industrial Automation was the most profitable business area, with an operating margin of over 11 per cent.

Consolidated profit after tax was USD 818 m. Total assets at year-end 2005/2006 were USD 28 bn, and shareholders’ equity was USD 8 bn. Mitsubishi Electric is listed on the Tokyo and Osaka stock exchanges, and on the London, Amsterdam and Frankfurt exchanges.

Beijer Electronics has collaborated with Mitsubishi Electric’s Industrial Automation business area, one of the corporation’s most successful segments, for 25 years.

The Mitsubishi Electric Group’s Sales by Business Area

information &

communication systems 15.9 % electronic components 4.2 %

consumer Products 22.2 %

energy &

electrical systems 21.5 %

industrial Automation 21. %

other 14.9 %

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GROUP OVERViEW 2006

The deal with Mitsubishi Electronic brought a new group structure to Beijer Electronics from 1 June 2006. The parent company was converted to a holding company – Beijer Electronics AB – with centralized Strategy, Accounting &

Finance, IT, Human Resources, Quality & Environment and Corporate Communication functions. The Automation and HMI Products business areas were incorporated, forming two subsidiaries of the parent company, Beijer Electronics Auto- mation AB and Beijer Electronics Products AB.

Beijer Electronics followed the Mitsubishi Electric deal with Automation acquiring parts of UTU Powel’s Finnish operations in the automation segment in Finland and the Baltic states, with aggregate annualized sales of some SEK 40 m.

At year-end 2006, Automation took over Mitsubishi Electric’s agencies on the Danish market, while simultaneously incorporating a new subsidiary, Beijer Electronics A/S, and opening an office in Denmark.

Signing a new long-term master agreement with Tetra Pak for the supply of operator terminals based on the new EXTER platform was another highlight of the year. This master agreement is global, and covers deliveries to the process equipment and machine controls that Tetra Pak produces and sells worldwide. Tetra Pak is one of the world’s biggest users of automation equipment.

Beijer Electronics also decided to incorporate a subsidiary in Shanghai, China. Through Hitech, the group already has

a local distributor in China; the main purpose of the Chinese subsidiary is to support Hitech’s Chinese sales channel. Opera- tions started in March 2007.

Market

The total industrial automation market is tracing trend growth exceeding GDP. The growth drivers are investments in new products, ongoing rationalization of production controls and logistics, and the rationalization of industrial processes.

Meanwhile, the market for automation products is in continuous change with new applications keeping pace with technological progress, new applications, product development and new customer needs.

However, the market for automation products was divided in 2006. The total global market for HMI products kept pace with long-term growth of over 5 per cent. The Nordic automation products market progressively firmed in the year, although growth was fairly restrained overall, particularly in Sweden and Finland, while performance on the Norwe- gian market was better. The relatively weak demand can be explained by otherwise brisk economic activity, implying that manufacturing investments are held in check until capacity ceilings are reached. This pattern was also corroborated by the absence of major investment projects, while activity on small and medium-sized investments was healthy.

Overall, the industrial automation market was stable in 2006. Beijer Electronics advanced its positions and market shares in Automation on the Nordic markets and HMI Products on the global market. The group was also able to post its best-ever year of sales and profits, simultaneous with its deal with Mitsubishi Electric providing a new platform for continued growth.

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Sales

Beijer Electronics made very positive progress in the year, primarily due to a distinct improvement in market positions.

For the full year 2006, consolidated sales grew by 20 per cent to SEK 735.0 m (615.3).

Sales in Sweden, which is Beijer Electronics’ biggest market, were SEK 262.1 m (249.9). Sales in Norway grew by 15 per cent to SEK 109.1 m (95.2), and by 28 per cent to SEK 44.8 m (35.1) in Finland.

Consolidated sales outside the domestic markets of Sweden, Norway, Finland and the Baltic states were SEK 319.0 m (235.1). Sales in Europe outside the domestic market rose by 22 per cent to SEK 123.4 m (97.7). Sales in Asia grew by 42 per cent to SEK 106.1 m (74.4), while North American sales grew by 43 per cent to SEK 83.2 m (58.2). Sweden represented 36 per cent (41) of consolidated net turnover.

Business Area Sales

The Automation business area’s sales increased by 10 per cent to SEK 408.6 m (370.7), with Automation representing 51 per cent (56) of consolidated total sales. The HMI Products business area increased sales by 33 per cent to SEK 392.5 m (295.2), or 49 per cent (44) of total sales.

Operating Profit

Consolidated operating profit grew by 28 per cent to SEK 77.2 m (60.1). The operating margin was 10.5 per cent (9.8), this sharp gain mainly due to rising sales volumes. Meanwhile, profit was subject to non-recurring expenses for reorganization and the introduction of a new group structure.

Development expenditure, exclusively relating to the HMI Products business area, was SEK 40.8 m (36.0) for the full year. SEK 10.9 m (11.8) of development expenditure was capitalized. The depreciation of capitalized development expenses was SEK 5.5 m (4.1). Total development expenses of SEK 35.2 m (28.3) were posted to profits for the financial year.

The operating profit of the Automation business area rose to SEK 27.3 m (25.9). HMI Products’ profit increased to SEK 53.0 m (34.2).

Profit before and after Tax

Consolidated net financial income/expenses were SEK 35.9 m (-1.5). Net financial income/expenses for 2006 include capital gains of SEK 37.4 m from the sale of 15 per cent of Beijer Electronics Automation AB to Mitsubishi Electric. Profit before tax amounted to SEK 113.1 m (58.6). Profit after tax increased to SEK 91.0 m (41.2), equivalent to earnings per share of SEK 14.51 (6.62). Adjusted for the capital gain, earnings per share were SEK 8.49.

seK m rolling four quarters

0 20 40 60 80 100 120 140 160 180 200 220 240

0 60 120 180 240 300 360 420 480 540 600 660 720

The bars and left-hand scale indicate quarterly invoicing.

The red curve and right-hand scale show rolling four quarter invoicing.

Consolidated Invoicing

seK m Quarter

1 2 4 1 2 4 1 2 4 1 2 4

200 2004 2005 2006

The bars and left-hand scale indicate quarterly profit after depreciation and amortization. The red curve and right-hand scale show rolling four quarter profit after depreciation and amortization. Operating profit from Q1 2004 onwards is accounted pursuant to IFRS.

Consolidated Operating Profit

seK m

Quarter seK m

0 3 6 9 12 15 18 21 24 27

0 9 18 27 36 45 54 63 72 81

200 2004 2005 2006

1 2 4 1 2 4 1 2 4 1 2 4

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Investments, Cash flow and financial Position

Investments in fixed assets including capitalized development expenses and acquisitions were SEK 36.4 m (157.4). Cash flow from operating activities before changes in working capital was SEK 69.5 m (54.5). Liquid assets amounted to SEK 91.9 m (63.7), and interest-bearing liabilities were SEK 80.7 m (82.4) at year-end 2006. Consolidated financial net assets were SEK 11.2 m (-18.7). Shareholders’ equity was SEK 204.1 m (150.5) at year-end, equivalent to an equity ratio of 44.0 per cent (38.5).

Profitability

Return on equity was 51.3 per cent (31.0). Return on capital employed and net operating assets was 45.3 per cent (33.1) and 42.6 per cent (52.3) respectively. The high profitability is due to a combination of healthy operating margins and high rate of capital turnover, a consequence of low capital tied-up.

Human resources

The average number of employees was 314 (294). Sales per employee were SEK 2.3 m (2.1).

Operational risks

Beijer Electronics’ business is influenced by a number of exogenous factors, whose effects on consolidated profits and financial position can be controlled to varying degrees. The group has a close collaboration with Mitsubishi Electric, which is significant to operations, and accordingly, constitutes a risk factor. Mitsubishi Electric is a supplier to the group and buyer of Beijer Electronics products, creating a balance and mutual dependency that alleviates this risk. The collaboration with Mitsubishi Electric has lasted over 25 years, and was strengthened by Mitsubishi Electric acquiring 15 per cent of the Automation business area in 2006.

Other business risks such as market risks, collaboration agreements, product liability, technological progress and dependency on staff are subject to continual analysis, and where nec- essary, measures are taken to reduce the group’s risk exposure.

Currency risks

Beijer Electronics has sales and purchasing in foreign currencies.

The majority of other external expenses and personnel expenses are denominated in Swedish kronor. Normally, the group does not hedge its various currency flows.

The group’s business areas are influenced by exchange rate variations, although in opposing directions. Automation is partially favored by a stronger krona, but it has a detrimental effect on HMI Products. Exchange rate variations reduced consolidated profit by SEK 2.9 m in 2006.

financial risks

Beijer Electronics is subject to limited financial risks. Interest- bearing liabilities amounted to SEK 80.7 m at year-end 2006.

The group’s financial net assets were SEK 11.2 m.

Sensitivity Analysis

Consolidated profits are primarily dependent on the cost of materials, personnel expenses and product sales. The following sensitivity analysis proceeds from 2006 figures. It is static and some caution should be applied to its interpretation.

• A +/-10 per cent change in sales increases/decreases operating profit by SEK 35 m.

• A +/-10 per cent change in cost of materials reduces/increases operating profit by SEK 37 m.

• A +/-10 per cent change in personnel expenses reduces/increases operating profit by SEK 17 m.

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Sales 12 Months

Operating Profit 12 Months

sEK m 2006 2005 2006 2005

Automation 408.6 70.7 27. 25.9

HMi Products 92.5 295.2 5.0 4.2

intra-group sales -66.1 -50.6

central costs -.1

Group 735.0 615.3 77.2 60.1

Business Area Sales and Operating Profit

Beijer Electronics introduced a new group structure on 1 June 2006, implying that central expenses are posted directly to the business areas. The actuals for 2005 and the period until May 2006 inclusive have been recalculated to attain comparability between the periods, as is illustrated in the above table. The -SEK 3.1 m net item for the full year mainly comprises expenses arising coincident with the new structure and the deal with Mitsubishi Electric.

Cost of Goods Sold by Currency

swedish kronor 15 %

euros other 45 %

21 %

Us dollar 19 %

Consolidated Sales by Currency

swedish kronor

7 %

euros 22 %

other 5 %

norwegian kronor 15 % Us dollar 21 %

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Operations in 2006

The HMI Products business area performed very strongly in 2006. The year featured consolidation after the strategic acquisition of Hitech Electronics in spring 2005. Coincident with the group’s reorganization, the business area was incorporated as a company on 1 June 2006, with all operations transferred to a wholly owned subsidiary, Beijer Electronics Products AB.

HMI Products significantly enhanced its status as a global player in the HMI segment in the year. The total global HMI products market grew by some 5 per cent in 2006, according to IMS Research. Growth was divided equally between the three major regions of Europe, Asia and America. IMS rates the Asian market as the largest, representing some 40 per cent of the total, with Europe at 35 per cent and America the remaining 25 per cent.

The business area’s broad product range has been well received by the market. The new terminal series EXTER, launched in 2005, represented a sizeable portion of business area sales gains in the year. Six new mid-range terminals in the EXTER series were launched in 2006. The modification of Hitech’s operator terminals into a new H-series was completed in 2005, and marketing started through the business area’s

existing European and North American sales channels over the past year. The H-series was also supplemented by more terminals, and this series is now complete. The new mid-range terminals, plus the new and extended H-series, are expected to exert a more tangible sales effect in 2007.

Early in the year, Beijer Electronics signed a new long-term master agreement with Tetra Pak to supply operator terminals based on the new EXTER terminal series. This master agreement is global, and covers deliveries for the process equipment and machine controls Tetra Pak produces and sells worldwide.

Tetra Pak is one of the world’s largest users of automation equipment.

Beijer Electronics already has strategic master agreements with ABB and Mitsubishi Electric for the supply of the new terminal series, which they market and sell worldwide on a brand label basis.

In the year, Beijer Electronics decided to incorporate a subsidiary in Shanghai, China, to accelerate the group’s aggressive strategy as a global HMI product player after the acquisition of Hitech Electronics in Taiwan. Through Hitech, the group already has a local distributor in China. The primary purpose of the Chinese subsidiary is to support the local distributor and service the market as part of the launch of Beijer Electron- ics’ EXTER terminals in China. The company in China is staffed by professionals from China and Taiwan, and became operational in March 2007.

HMI Products made a notable move into the Italian marine applications market in the year. This required some customer modification of the EXTER series, which can then be utilized

2006 2005 2004 200

sales, seK m 92.5 295.2 17.4 148.5

Operating profit, SEK m 5.0 4.2 29.4 8.5

operating margin, % 1.5 11.6 16.9 5.7

The HMI Products Business Area’s Sales and Operating Profit, 2003-2006

The HMI (Human Machine Interface) Products business area develops, markets and sells operator terminals globally. Beijer Electronics offers its customers high-functionality, user-friendly products.

THE HMI PrODUCTS BUSINESS ArEA

THE HMI PrODUCTS BUSINESS ArEA

Automation

Australia’s Atherton selected the EXTER series for it disinfectors, used in hospitals and research facilities.

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on more markets. The business area is also examining its pos- sibilities of developing the series for other vertical markets.

HMI Products introduced a new global organizational structure on 1 January 2007, with coordinated and group- wide functions and responsibilities for marketing, sales and product development.

Development

The year’s development activities focused on developing two new compact terminals in the EXTER series for the lower-end

segment, to complete this terminal series. The launch of these new terminals is scheduled for spring 2007. Sizeable resources were also channeled to the development of new software, which offers more functionality and interfaces with third- party software. The introduction of a new HMI product based on this new software is expected in 2007.

Activities also involved the development of several terminals in the new H-series, which now has a complete product family.

Development expenditure increased to SEK 40.8 m (36.0), equivalent to 10.4 per cent (12.2) of business area sales. SEK 10.9 m (11.8) of development expenditure was capitalized.

The depreciation of capitalized development expenses was SEK 5.5 m (4.1). Total development expenses of SEK 35.2 m (28.3) were posted to the year’s profits.

Sales

With its new operator terminals, HMI Products has secured its competitiveness and won market share. Business area sales increased robustly in the year, by 33 per cent to SEK 392.5 m (295.2). The majority of the sales gains were organic.

Sales increased on all markets and through all sales channels.

Sales on the business area’s biggest market – non-Nordic Europe – grew by 22 per cent to SEK 123.4 m (101.2). Progress in Germany was strongest, where sales doubled. Asian sales grew by 42 per cent to SEK 106.1 m (74.7). North American sales maintained their robust performance, with a 43 per cent increase to SEK 83.2 m (58.2). Sales on the Nordic domestic market through the Automation business area grew by 31 per cent to SEK 64.9 m (49.6).

Taipei, Taiwan Malmö, Sweden

Stuttgart, Germany Borstel, Germany

Shanghai, China Kernersville, USA

Schaumburg, USA

Los Angeles, USA

48 %

17 %

55 % 28 %

The division of invoicing between various sales channels in the HMI Products business area in 2005 and 2006.

Invoicing, HMI Products by Sales Channel

Brand label partners Automation business area own sales channels

2006 2005

17 %

5 % 48 %

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AFFäRsOMRådE HMi PROdUCTs

HMI Products’ Business Model

HMI products are developed entirely autonomously.

The intention is for product development to be innovative, world-leading, and remain one step ahead of competitors.

HMI Products will offer customers user-friendly, high-functionality products that communicate and transform data into useful information.

Products should be compatible with basically all the world’s leading automation equipment brands. Development includes design, testing and documentation. The business area also offers customer tailoring of its products, technical support, servicing and training. The business area also produces and sells LCD (liquid crystal display) modules; the ambition is to produce LCD modules with enhanced functionality.

Although proprietary products are marketed and sold globally, this differs depending on market. The Automation business area is responsible for sales in the Nordic and Baltic regions, where Beijer Electronics is a leading player. Markets outside these regions are serviced through differing distribution media:

• Global corporations like ABB and Mitsubishi Electric, that sell products on a brand label basis.

• Beijer Electronics’ export resources that sell operator terminals via distributors or direct to end-customers under the proprietary brands EXTER, CIMREX and H-series.

long-term Objectives

• Secure positioning as one of the world’s largest independent suppliers of operator terminals.

• Achieve annual growth of 15 per cent.

• Attain a minimum operating margin of 10 per cent.

Strategies

• To extend sales resources with more distributors.

• Consolidate in-house export resources.

• Pursue continuous product development to remain at the leading edge within HMI products, from intelligent LCD modules to PC-based HMI products.

• A significant share of production outsourced to contract manufacturers to achieve high flexibility, specialization and cost efficiency.

• Make strategic acquisitions to consolidate international positioning further.

Sales through own sales channels posted the biggest gains, of 46 per cent to SEK 282.1 m (193.7). These channels represented 72 per cent (66) of business area sales. Sales through the brand label channels Mitsubishi Electric, ABB and SEW Eurodrive grew progressively through the year. Sales totaled SEK 110.4 m (101.5), or a 9 per cent increase.

Operating Profit

Business area operating profit rose sharply, by 55 per cent to SEK 53.0 m (34.2), equivalent to an operating margin of 13.5 per cent (11.6). The operating profit gains are explained by higher sales volumes.

B e i j e r e l e c t r o n i c s 2 0 0 6

18

seK m

Quarter seK m

Invoicing, HMI Products

The bars and left-hand scale indicate quarterly invoicing. The curve and right-hand scale show rolling four quarter invoicing.

0 10 20 30 40 130

50 60 70 80 90 100 110 120

0 120 90 60 30 150 180 210 240 270 300 330 360 390

1 2 4 1 2 4 1 2 4 1 2 4

200 2004 2005 2006

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WHAT HMi PROdUCTs dOEs

The operations of the HMI Products business area encompass development, and some manufacture, of operator terminals and LCD modules that are marketed, distributed and sold globally.

Products

Beijer Electronics’ operator terminals are used in industry to provide operators with quick and clear information on the operational status of machines and processes, thereby enhancing the productivity and availability of facilities. The product range consists of different series of operator terminals targeted at various market segments. The range also includes single or multi-function LCD modules (Liquid Crystal Display).

Production

Beijer Electronics outsources the majority of the group’s operator terminal production to contract manufacturers. The group has three contract manufacturers, two in Sweden and one in Thailand.

Beijer Electronics has in-house production of operator terminals and LCD modules in Taiwan. This terminal production mainly consists of assembling components and final product testing.

Market and Customers

The business area markets and sells proprietary HMI products globally, focusing on Europe, North America and Asia.

According to Intex Management System (IMS), the global market for HMI products was worth over USD 1.5 billion in 2006. Operator terminals have secured an increasing portion of the automation market over the last 10-15 years, with annual growth of some 5-6 per cent.

The HMI market can be divided into various segments – text panels, graphical terminals, touch-screen terminals and PC-based operator terminals, with previously, text panels dominating the market. In recent years, touch-screen terminals and PC-based operator terminals have taken an increasing market share.

The market is represented by all industrial sectors, with the largest individual customer groups being the automotive and

food industries. The rest of the engineering industry, chemical and pharmaceuticals industries, as well as packaging machinery, each constitute some 10 per cent of the market. Other notable customer groups are the paper and pulp, rubber, plastics, semiconductor and textile industries.

HMI Products’ biggest individual customers are Mitsubishi Electric and ABB, which sell brand label operator terminals.

The business area’s export resources sell products under the Beijer Electronics brands EXTER, CIMREX and H-series.

Sales are mainly through a network of distributors in Europe, North America and Asia.

Beijer Electronics has a US subsidiary with its registered office in Chicago and branches in California and North Caro- lina, as well as a German subsidiary, with its registered office in Stuttgart and a branch in Hamburg. Subsidiary Hitech Electronics has its registered office in Taipei, Taiwan. An office was opened in Shanghai, China, in early-2007. The foreign subsidiaries collaborate actively with distributors, while also supporting the business area’s brand label customers and global OEM customers on each market, providing technical support, servicing, while serving end-customers.

Competition

The HMI sector is relatively fragmented with many players active on the global market. The market is dominated by a cluster of major global corporations like Siemens of Germany, Schnei- der Electric/Proface of France and Rockwell of the US. Regional competitors in Europe like Omron of Japan, Italy’s EXOR and ESA, and Lauer and Pilz of Germany are additional. US competitors include GE Fanuc, Eaton Electrical and Horner.

Beijer Electronics is the fifth or sixth largest vendor worldwide, with a market share of 4-5 per cent. The group is a dominant player on the Nordic market. Its market shares in China and Taiwan are some 15 per cent.

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Operations in 2006

The deal with Mitsubishi Electric in 2006 was the most important and decisive event for the Automation business area’s future progress. It meant Automation taking over Mitsubishi Electric’s agencies in Denmark and the Baltic regions, and those agencies Automation did not already possess in Finland.

As part of its expansion, Automation acquired parts of Finn- ish company UTU Powel’s operations in Finland and the Baltic states, with aggregate annualized sales of some SEK 40 m. This transaction mainly encompasses the sale of frequency inverters from Mitsubishi Electric in Finland, and Mitsubishi Electric’s complete product range in the Baltic states such as control systems, frequency inverters, servo systems and robots.

As of 1 January 2007, Automation took over agencies on the Danish market, and simultaneously opened an office in the country. In 2007, sales, technical support and servicing resources will be added in Denmark. An agreement was also

signed with Lemvigh-Müller in 2006, which will be Beijer Electronics’ wholesaler in the country.

The take-over of these agencies provides a secure platform for future expansion by exploiting the Beijer Electronics group’s pan-Nordic marketing, procurement and logistics organization. Market shares in each country are significantly lower than Automation’s market shares in Sweden and Nor- way. The objective is to increase regional market shares and increase sales of Beijer Electronics’ proprietary HMI products.

The new agencies are expected to make a positive contri- bution to business area operating profit, although operating margins are expected to be somewhat lower for the whole business area in 2007 and 2008. These initiatives will require some investment.

The market for automation products improved progressively through the year, although overall, growth was fairly restrained, particularly in Sweden and Finland, while progress on the Norwegian market was better. The weak demand can be explained by otherwise brisk economic activity, implying that manufacturing investments are held in check until capacity ceilings are reached. This pattern was also corroborated by the absence of major investment projects, while activity on small and medium-sized investments was healthy.

In sector terms, the Norwegian maritime and shipbuild- ing industries generated high demand growth. Infrastructural and engine building investments were also healthy. However, investments in the food and automotive sectors reduced.

The markets for Drive and Operator Systems saw somewhat better growth than Control Systems.

2006 2005 2004 200

sales, seK m 408.6 70.7 6.7 26.9

Operating profit, SEK m 27. 25.9 2.4 21.

operating margin, % 6.7 7.0 6.9 6.5

The Automation Business Area’s Sales and Operating Profit, 2003-2006

The Automation business area markets and sells a broad automation product range on the Nordic and Baltic markets. Automation supplies agency products from major multinational producers and operator systems from the HMI Products business area.

THE AUTOMATION BUSINESS ArEA

THE AUTOMATION BUSINESS ArEA

Automation

The Stockholm Globe Arena hosts all kinds of event. Beijer Electronics has supplied equipment to its computer-controlled ceiling, enabling audio and visual systems to be installed and swapped quickly.

image: jan jordan

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During the year, Automation signed a new three-year contract with Citect on SCADA systems in the Operator Systems product area.

Sales

The Automation business area succeeded in winning market shares, with its sales outgrowing the market. Sales grew by 10 per cent in the year to SEK 408.6 m (370.7). In organic terms, sales grew fastest in Norway, with 15 per cent gains to SEK 109.1 m (95.2). Sales in Finland grew by 28 per cent to SEK 44.8 m (35.1), with the acquisition of UTU Powel’s operations contributing SEK 7.4 m in the final quarter. Sales in Sweden, the business area’s biggest market, grew by 6 per cent to SEK 262.1 m (246.3).

The Control Systems product category is the largest, representing some 45 per cent of business area sales. Sales

THE AUTOMATION BUSINESS ArEA

Malmö, Sweden

Tammerfors, Finland Vanda, Finland

Tallin, Estonia

Vilnius, Lithuania Riga, Latvia Sollentuna, Sweden

Jönköping, Sweden Ballerup, Denmark

Gothenburg, Sweden Drammen, Norway Ålesund, Norway

Stavanger, Norway Bergen, Norway

Jyväskylä, Finland Trondheim, Norway Sundsvall, Sweden

Karlstad, Sweden

Luleå, Sweden

Ulvila, Finland

Invoicing by the Automation business area’s product categories in 2005 and 2006.

Invoicing, Automation by Product Category

control systems operator systems Drive systems Projects and other

20 %

8 %

4 %

29 %

2006

18 %

8 % 45 %

29 %

2005 The bars and left-hand scale indicate quarterly invoicing.

The curve and right-hand scale show rolling four quarter invoicing.

seK m

Quarter seK m

Invoicing, Automation

0 20 40 60 80 100 120 140

0 60 120 180 240 300 360 420

1 2 4 1 2 4 1 2 4 1 2 4

200 2004 2005 2006

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grew by 5 per cent to SEK 175.5 m (167.2). The Operator Systems product category increased 11 per cent to SEK 119.7 m (107.5). Beijer Electronics has a dominant position on the Nordic operator terminal market.

Sales in the Drive Systems product category advanced 21 per cent to SEK 80.2 m (66.3), with stronger demand for frequency inverters and servo systems explaining the total sales gains. Sales in the Projects product category were unchanged at SEK 16.3 m (16.4).

Technical Support and Servicing

Beijer Electronics pursues close customer collaborations;

technical support and servicing are central elements of its customer offering, and important competitive factors. Fast and personal processing of customer requests are other priorities.

The business employs some 30 staff.

Training

Beijer Electronics has an extensive course program to dis- seminate automation know-how and skills to its customers. Its training offerings include both scheduled and tailored courses that typically last two to three days. Activity was brisk in the year, with 1,199 participants.

Operating Profit

Business area operating profit increased by 5 per cent to SEK 27.3 m (25.9), equivalent to an operating margin of 6.7 per cent (7.0). This improvement is due to increased volumes.

Meanwhile, profits were subject to non-recurring expenses for the acquisition and integration of UTU Powel’s operations.

AFFäRsOMRådE AUTOMATiON

Automation’s Business Model

Automation’s business model encompasses the group’s entire product range, focusing on the markets in Sweden, Norway, Denmark, Finland, Estonia, Latvia and Lithuania. Product modification, technical support, servicing and training are also bundled into the offering. Customers can be divided into three main groups:

• Technical consultants and systems integrators responsible for all, or parts of, automation installations for the end-customer.

• Machinery manufacturers that embed automation equipment in their own products.

• Two types of end-customer:

– Customers’ in-house project management functions undertaking installations.

– Beijer Electronics assumes total responsibility, providing the product itself and undertaking the installation.

long-term Objectives

• Consolidate positioning on the Nordic and Baltic markets, achieving a market share of 20 per cent.

• Achieve annual growth of 10 per cent.

• Attain a minimum operating margin of at least 8 per cent.

Strategies

• Offer a broad range of automation products, services and systems.

• Marketing, distribution and sales will be effected through in-house sales resources.

• Technical support is an important part of customer offerings.

• Increased sales initiatives for new sectors, and a higher share of large control systems sales.

• Coordination of the Nordic and Baltic operations and ongoing efficiency gains.

• The business area will have the capacity to perform total undertakings, implemented as projects.

• Make complementary acquisitions.

The Volvo Ocean Race, 2005. Two of the competing yachts were equipped with Beijer Electronics products, which controlled features including swinging keels.

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The Control Systems Product Category. Control systems are used to control a machine or process automatically. A microprocessor that detects and controls a number of digital inputs and outputs is the central component of such systems.

PLCs (programmable logic controllers) are the most widely used control system in manufacturing. This product category includes modular and compact PLCs. Beijer Electronics has agencies for control systems products from Mitsubishi Electric. These agencies cover Sweden, Norway, Denmark, Finland, Estonia, Latvia and Lithuania.

The Drive Systems Product Category. Drive systems are vari- ous types of motor control, conferring controlled movements in automation processes. This category includes frequency inverters, servo systems, positioning systems, vision systems and robots. Beijer Electronics has agencies for products from world-leading vendors like Mitsubishi Electric, Delta Tau and Cognex. These agencies cover the Nordic and Baltic markets.

The Operator Systems Product Category. Operator systems comprise the group’s operator terminals and SCADA systems.

Beijer Electronics has the agency for SCADA systems from one of the world leaders in this category – Citect of Australia.

The Projects Product Category. Project assignments include partial and total undertakings, covering everything from system solutions to commissioning and servicing. Projects are a supplementary business, pursued to a limited degree in order to avoid competing with key customer groups. However, in some cases, customers require total responsibility for a project.

Accordingly, the ability to offer the skills and capacity for such undertakings is a key competitive factor. This also implies an opportunity to use products in real applications, providing valuable experience and know-how for their future usage.

Organizational Structure

The organization is divided into four functions – Marketing, Procurement/Logistics, Technology and Sales. The Marketing function is responsible for coordinating marketing of the whole business area’s product range in the Nordic and Baltic regions.

Procurement & Logistics is accountable for central procurement, a joint order system and central warehousing for all product categories across the Nordic and Baltic regions. Technology handles support, training and servicing. Operations are local by nature, and in all countries. The sales resources are divided into four regions in Sweden, and Norway, Denmark, Finland, Estonia, Latvia and Lithuania. A Project function is additional.

Market and Customers

The total market for the Automation business area in the Nordic and Baltic regions has an estimated annual value of some SEK 4 billion. Control Systems is the largest segment, comprising some 55 per cent of the market. Drive Systems represents some 35 per cent of the market, with Operator Systems making up the remaining 10 per cent. Sweden represents just over 40 percent of the market. Denmark, Norway in Finland comprise 17-18 per cent each, and the Baltic states represent the remainder.

Typically, over a business cycle, annual market growth is around 5 per cent. Drive and Operator Systems are outgrowing Control Systems. Basically, the market covers all sectors, with the centre of gravity on engineering. The pharmaceuticals and foods segments are other important customer groups.

Beijer Electronics has a broad customer base in the Nordic and Baltic regions with some 3,500 buyers each year.

Competition

The Nordic automation market has around ten major players.

Beijer Electronics is the third-largest with a market share of approximately 15-20 per cent. Siemens of Germany is the market leader, controlling some 30 per cent of the market.

ABB Automation’s estimated market share is around 20 per cent. Other competitors include Rockwell of the US, Schnei- der Electric of France and Omron of Japan.

WHAT AUTOMATiON dOEs

The operations of the Automation business area encompass the group’s agency products, comprising a range of offerings sourced from leading multinational vendors, and the group’s proprietary operator terminals from the HMI Products business area. In turn, the various product areas form a number of product categories.

2006 ANNUAL REPORT