Lindab
Annual Report 2006
annual report lindab
®
Financial key figures
Amounts in SEK M unless otherwise specified 2006 2005 Change %
Net sales 7,609 6,214 + 22
Of which: Organic, % 10 8
Acquired growth, % 13 3
Exchange rate effects, % –1 2
Operating profit ( EBITDA ) 1,103 751 + 47
Operating profit ( EBITA ) 9421 ) 5532 ) + 70
Operating profit ( EBIT ) 894 557 + 61
Profit after financial items ( EBT ) 797 484 + 65
Profit for the year 585 351 + 67
Cash flow from operating activities 778 730 + 7
Operating margin ( EBITA ), % 12.4 8.9
Return on capital employed, % 18.2 12.3
Return on shareholders’ equity, % 26.8 13.4
Net debt 2,602 1,846
Net debt/equity ratio ( times ) 1.2 0.7
Average number of employees 4,689 4,135
Data per share
SEK/share unless otherwise specified 2006 2005 Change %
Undiluted earnings per share 6.45 2.93 + 120
Diluted earnings per share ( EPS ) 6.29 2.86 + 120
Earnings per share3 ) 7.43 -
Cash flow from operating activities 9.89 5.94 + 66
Shareholders’ equity per basic share 27.82 23.77 + 17 Shareholders’ equity per diluted share 27.82 23.21 + 20
Proposed dividends 3.25 -
Number of diluted shares, 1000s4 ) 78,708 122,940
Contents
The year in figures This is Lindab The CEO’s comments The Lindab share
Lindab’s strategies for future growth Innovative system solutions Close customer relations Optimised production system Strong corporate culture Dedicated environmental work Responsible personnel policy Profile business area Ventilation business area Corporate Governance Report Board and Group Management Directors’ Report
The Group Key fi gures
Consolidated Income Statement Consolidated Balance Sheet
Changes in Consolidated Equity Capital Consolidated Cash Flow Statement The Parent Company
Notes to the Consolidated Financial Statements Auditors’ Report
Information to Shareholders Glossary
Lindab Group addresses
Key figures
The Group
Financial key figures/data per share Net sales
Operating profi t Cash fl ow Profile business area Ventilation business area The Group’s key figures
Important notes
Note 1 General information
Note 2 Summary of accounting principles Note 3 Financial and operational
risk management
Note 4 Key estimates and assessments for accounting purposes Note 5 Acquisitions
Note 7 Segment reporting Note 27 Consolidated borrowing
4 6 8 10 12 14 15 16 17 18 19 20 22 24 28 30 36 36 38 40 43 45 48 52 81 82 83 84
3 5 5 5 20 22 36
52 52 57
60 61 67 77
Contents 3 1 ) SEK 41 M adjustment for restructuring expenses, SEK 25 M in expenses related to the flotation of
the Company and a capital gain of SEK 27 M from the sale of real estate.
2 ) SEK 40 M adjustment for restructuring expenses and a capital gain of SEK 47 M from the sale of real estate.
3 ) Based on the current number of shares
4 ) Payment was made in May 2006 for the redemption of 44,832,150 shares.
The year in figures
4 The year in figures
( 891 ). Of these the biggest single invest- ments during the year were the acquisitions of CCL Veloduct Ltd. and Airbat S.A.S., total- ling SEK 311 M.
Initial Public Offering
Lindab’s shares were floated on the Stock- holm Stock Exchange on 1 December 2006.
The offer consisted of 35,418,519 shares and the issue was subscribed seven times at the highest level. The price was set at SEK 110 per share, corresponding to a total market capitalisation of SEK 8,658 M.
The price of steel
Steel prices continued to rise during the year.
Lindab has adjusted prices during the year to compensate for this. Efforts are also being made to lower the overall cost of raw materi- als, these include increasing the number of purchasing channels.
Construction industry trend The construction industry market has remained strong during the year, and this has been noticeable across Lindab’s busi- ness areas. In the Nordic, Central European and Eastern European markets, this healthy development has continued, while Western Europe has started to make a recovery.
Acquisitions
During the year, the Group acquired three
companies – the British company CCL Veloduct Ltd., the French company Airbat S.A.S. and Gowco Texas in the USA. All three companies operate in the ventilation sector. On 6 November, Lindab acquired CCL Veloduct Ltd. which was consolidated into the Group on 1 November. The prelimi- nary acquisition price was SEK 291 M. The company’s net sales are approximately SEK 545 M. In December, Lindab acquired Airbat S.A.S. The preliminary acquisition price was SEK 20 M and the company’s net sales are approximately SEK 50 M. Some of the opera- tions of Gowco Texas, USA, were acquired during the year. The acquisition price was approximately SEK 4 M. Gowco’s net sales are approximately SEK 30 M. These three companies specialise in circularventilation ducts and will be integrated with Lindab’s current operations to create a strong supplier in each market.
Final settlement of the acquisition of Astron Buildings S.A. was also made during the year. This resulted in a negative cash flow of SEK 69 M.
Lindab signed a strategic partnership agreement with Berliner Luft GmbH in Ger- many last November. This agreement came into effect on 1 January and covers the sup- ply of circular duct systems to Berliner Luft by Lindab. At the same time, Lindab outsources its rectangular duct system production to Berliner Luft. This production streamlining means that the number of employees in Lindab’s German organisation will be reduced by 44.
Volume growth
Sales have continued to increase in the Nordic markets, as well as the Central and Eastern European markets. The sales trend in Western Europe has also shown satisfactory growth.
Sales
The Lindab Group’s net sales amounted to SEK 7,609 M in 2006, compared with SEK 6,214 M in 2005, which represents an increase of 22 percent. When net sales are adjusted for acquisitions and divestments, the increase was 9 percent. When adjusted also for currency effects, net sales increased by 10 percent.
Operating profit
Operating profit ( EBITA ), excluding one-off items, amounted to SEK 942 M ( 553 ) for the full year, which is an increase of 70 per- cent. The one-off items relate to a SEK 41 M reserve for restructuring expenses ( acquisi- tion of CCL Veloduct Ltd. ), SEK 25 M for flotation expenses and a capital gain of SEK 27 M from the sale of real estate. The unad- justed operating profit was SEK 903 M, which is a 61 percent increase over the previous year’s SEK 560 M.
Cash flow
Cash flow from operating activities amounted to SEK 778 M ( 730 ). This slightly stronger cash flow is due to a higher operating profit but is offset by increased working capital.
Investment
Gross investments, excluding acquisitions, amounted to SEK 146 M ( 218 ). Including acquisitions, investments totalled SEK 530 M
Prefabricated building structures. Ventilation duct systems.
Cash flow SEK 778 M ( 730 )
Net sales SEK 7,609 M ( 6,214 )
Operating profit ( EBITA ) SEK 942 M ( 553 ) excluding one-off items
Net sales SEK M
2002 2003 2004 2005
5,235
6,214 5,477 5,302
Operating profit (EBITA ) SEK M
2002 2003 2004 2005
325 305 384
553
The key figures for the years 2002–2003 have not been restated onto an IFRS basis.
The operating profit for 2005–2006 has been adjusted for non-recurring items.
Cash flow from operating activities SEK M
2002 2003 2004
118
730
395 426
2005 2006
7,609
2006
942
2006
778
Steel working
Sheet metal and steel are the materials that are the common denomi- nator for both the business areas. Many synergy and efficiency gains are created throughout the entire value chain by means of meticulous and consistent co-ordination – from purchasing, plate-working and production, to distribution, support and supply.
This is Lindab
The business
Lindab is an international group of companies that develops, produces, distributes and mar- kets products and system solutions in sheet metal for simplified construction and improved indoor climate. The Company is divided into two business areas, Ventilation and Profile. The Group had net sales of SEK 7,609 M in 2006, is established in 29 countries and has about 4,900 employees. The Ventilation business area focuses on the ventilation sector with com- ponents and system solutions. It conducts operations within two divisions, Air Duct Systems and Comfort. The Profile business area operates in the construction sector with building sys- tems and building components. It conducts operations within two divisions, Building Systems and Building Components. Lindab shares are traded on the Stockholm Stock Exchange. The principal shareholders are Ratos, Sjätte AP-fonden and Skandia Liv.
Markets
The main market is Europe. Lindab has had a strong presence in the Nordic region for many years. Central and Eastern Europe continue to offer extremely strong emerging markets. There has been a recovery in demand throughout Western Europe during the past year.
During the year new system solutions for simpli- fied construction have been launched.
Lindab is one of Sweden’s major purchasers of steel and sheet metal.
6 This is Lindab
Western Europe 1,854
Net sales per market SEK M
The Nordic region 3,222
Central and
Eastern Europe 2,139
Other markets 394
Products
Building systems
The Building Systems division specialises in pre-engineered systems for the construction of steel buildings. These are mar- keted and sold by authorised building contractors.
Building components The Building Components division comprises a highly- advanced system of compo- nents for roof drainage, roof and wall cladding, and wall construction components.
Duct systems
The Air Duct Systems divi- sion focuses on complete duct systems for ventilation. These provide optimum flow and good energy efficiency.
Indoor climate products The Comfort division com- prises components that help to distribute and treat ventilating air to create improved indoor climates.
This is Lindab 7
Customers
The majority of the Group’s customers are distributors, installation companies and building contractors in the construction industry. Sales are also increasing through smaller construc- tion companies delivering turnkey steel buildings.
Distributors/
Retailers Installation com-
panies/Contractors Clients Lindab
Organisation
LindabGroupBusiness areas
Divisions
Ventilation Profi le
Air Duct Systems Comfort Building Systems Building Components
Pre-engineered building systems. Building components. Ventilation duct systems. Products that enhance
the indoor climate.
8 The CEO’s comments
A year that paves the way for continued success
A robust year
2006 has been a fantastic year for Lindab.
Profits have soared to SEK 942 M, exclud- ing one-off items, from SEK 553 M last year.
Consistent efforts over several years have yielded results, thanks to strong resolve and perseverance by the entire organisation in all countries. We have made successful strate- gic acquisitions and experienced favourable market conditions in the construction industry during the past 15 months. In addition, we have successfully streamlined our ventilation operations, grown even stronger in the area of building components and created more integrated building system packages.
Back on the stock exchange
The biggest single event of the year was our return as a listed company, with the much talked-about and successful flotation of our Company on the Stockholm Stock Exchange on 1 December 2006.
What are Lindab’s strengths?
We are a market leading company in most
of our markets and have achieved signifi- cant growth and good profitability. We have reached this position through our many inno- vative products that bring numerous benefits to customers by simplifying the construc- tion process. We also have excellent market coverage across the whole of Europe. This is particularly the case in the Nordic countries and in the expansive markets of Central and Eastern Europe, and to a growing extent in Western Europe too. Today, the Nordic countries account for 42 percent, Central and Eastern Europe for 28 percent and Western Europe for 24 percent of sales volumes. The company also has a good geographic spread of its production resources, a high level of automation and some of its manufacturing in expanding low-cost countries. Last, but not least, we have consistently invested in our employees, which has created a very pro- ductive corporate culture that promotes and encourages the growth of our Group.
Strong products
Today, we have a portfolio of very strong
products that are the result of innovative development. Furthermore, production units for these product groups have gradually expanded through determined and consistent efforts to produce optimal conditions for the manufacturing processes.
LindabRainline roof drainage system is one outstanding example. This smart, high- quality system is now being successfully marketed in large areas of Europe, where it is gaining market share over its rivals, especially from plastic and zinc products.
Another is Construline steel battens for interior walls which is beginning to conquer the market for partition wall construction. As the construction process becomes industri- alised, steel battens beat wood as a mate- rial. The result is not only a faster, more cost-effective construction process, it also reduces the weight of partition walls. We are now broadening our efforts to include steel battens for exterior walls.
Steel buildings constitute a market of SEK 40 billion in Europe, excluding Russia and Ukraine. 10 percent of these are prefabrica- ted structures. Today, Lindab has 35 percent of this market via Building Systems. In other words, the potential is huge. In the ventilation sector, development of circular duct systems is good, since these systems offer far greater energy efficiency and are 20 to 25 percent more economical than the rectangular sys- tems in terms of materials and installation.
Lindab’s ”Round Solution” campaign is pro- ducing obvious results since sales of circular duct systems are increasing noticeably.
Strong distribution network
Over the years, Lindab has built up a strong network of almost 1,700 distributors. This network enables us to offer our many custo- mers a high degree of service and proxim-
Kjell Åkesson CEO and Group President.
The CEO’s comments 9
ity. We have a broad risk spread, since the largest customer only accounts for about 1 percent of Lindab’s sales and the ten biggest customers no more than about 5 percent. We work hard to achieve close relationships with our distributors, by introducing our own IT support service, traded goods activity and by launching new technological solutions.
High steel prices
Steel is our most important raw material. Our company possesses in-depth knowledge of purchasing, working and processing this material and manufacturing and marketing sheet metal products. Steel is a strong, light- weight, versatile and, above all, cost-effective material. Steel is also an environmentally- friendly material that can be recycled. Lindab is a major buyer of steel from suppliers throughout the global steel market. Every year, we buy about SEK 2 billion worth of steel, which means that our company is one of Sweden’s top steel purchasers. The share of purchasing from outside Europe is gradually increasing. Lindab’s accumulated expertise together with central purchases of large volumes, have helped us to improve our profitability despite the high steel prices dur- ing the last few years.
Strong results management
”Fill the Gap” is our method of helping the organisation to focus on the right things and to ensure that all our activities, large and small, contribute to the bottom line in a positive way. The principal goal is to improve profitability and to create an effective activity culture.
More acquisitions
Astron Buildings, with its pre-engineered steel building operations, was acquired in
2005. Its integration with the Group’s other operations has continued very successfully throughout the year and it is now contribut- ing strongly to this year’s results. In 2006, a further three companies were acquired. CCL Veloduct Ltd. is a strategic acquisition that will make Lindab’s UK operations the single largest ventilation market. Airbat S.A.S. pro- vides reinforcement in the already successful operations in France. With the acquisition of Gowco Texas, Lindab steps into the expand- ing Texas market in the USA.
Integration of Astron
The integration of Astron’s business is a fine example of how strong Lindab’s corporate culture is and how it facilitates business com- binations.
Astron’s company management has quickly adopted Lindab’s culture, helping to achieve rapid harmonisation within Building Systems. Consequently, Building Systems has very robust operations and is now grow- ing swiftly, particularly in Central and Eastern Europe.
Intensive marketing
Lindab is a strong brand name in Europe. We will continue to intensify brand building initia- tives and implement sales promotion cam- paigns. In recent years, we have achieved excellent results, with centrally initiated and co-ordinated campaigns launched in several countries simultaneously, including cam- paigns for the LindabRainline and LindabSafe product groups. These campaigns have gene- rated very good sales growth in mature mar- kets in Northern Europe as well as in rapidly expanding markets in Central and Eastern Europe.
Future prospects looking good
Euroconstruct ( Europe’s leading survey insti- tute for the construction industry ) predicts that Lindab’s growth potential is 4.5 percent in 2007, slightly exceeding the rate for 2006.
Growth is expected to be greatest in Central and Eastern Europe, including Russia. One of the most important projects during 2007 is our investment in the new Yaroslavl produc- tion unit in Russia, estimated at SEK 150 M.
It will be operational during the second quar- ter of 2008. The production unit in St. Peters- burg is now ready for Air Duct Systems to be launched on the rapidly growing Russian market.
Demand in Western Europe is increas- ing and the Nordic countries are maintaining good levels of demand. We are therefore anticipating that the construction market will see continued good growth during 2007 in most of Europe, not just in the eastern region.
For the long term, we particularly expect good results from our investment initiatives in Russia. We also expect to gain further mar- ket share from traditional products in mature markets. All in all, 2007 looks to be a promis- ing year.
Grevie, February 2007
Kjell Åkesson
CEO and Group President
The Lindab share
Lindab on the stock exchange On 1 December 2006, Lindab International AB ( Lindab ) shares were floated on Stock- holm’s Stock Exchange under the trading symbol ”LIAB”. The share offer generated great interest prior to flotation. The offer consisted of 35,418,519 shares and the issue was subscribed seven times at the highest level. Because of the huge interest, the advi- sors exercised an over-allotment option of 3,935,391 shares, meaning that a total of 39,353,910 shares were sold, corresponding to 50 percent of the number of shares. The price was set at SEK 110 per share, corre- sponding to a total market capitalisation of SEK 8,658 M.
Flotation on the Stockholm Stock Exchange
Lindab was previously listed on the Stock- holm and Copenhagen Stock Exchanges. In 2001, the Company’s present majority owners bought Lindab out of the stock exchanges.
Prior to the flotation on 1 December 2006, Ratos held 46 percent of the shares in the Company, Skandia Liv 23 percent and Sjätte AP-fonden 23 percent. The remaining 8 percent were held by the Company’s board and management and former management.
Handelsbanken Capital Markets and Morgan Stanley were the Company’s and owners’
Joint Global Coordinators and Joint Book Runners for the flotation. SEB Enskilda acted as co-lead manager.
Preparations
”Since leaving the stock exchange in 2001, we have implemented many key organisa- tional changes, achieved essential cost sav- ings by streamlining production and made a number of acquisitions that have been successfully integrated. In addition, the rate of growth has accelerated, particularly in Central and Eastern Europe. We are now ready to return to the stock market as a bigger and more profitable company”, explained Kjell Åkesson, Lindab’s CEO, prior to flotation.
Trading and turnover
The shares are quoted on the Mid Cap list of the Nordic Exchange. During December, the total turnover of shares was 19.8 million, giv- ing an average turnover rate of more than 1 million shares a day. Excluding the first day of trading, the average rate of turnover was half a million shares daily.
Ownership structure
The number of shareholders was approxi- mately 8,500 at year-end. The three largest shareholders represented 44.82 percent of the share capital and the voting rights. The three main shareholders have undertaken not to sell further shares for a period of 270 days after the first day of trading.
Share price development in 2006 The closing price in 2006 for Lindab Interna- tional AB’s shares was SEK 130.25, which is equivalent to a market capitalisation of SEK 10,252 M. The share rose by 18 percent in December. During the same period, the OMXS index rose by 8 percent. The high- est closing rate for the share, SEK 132, was recorded on 29 December and the lowest rate was SEK 111 on 1 December in the same period.
Lindab’s largest shareholders
Shares Capital % Votes %
Ratos AB 17,699,157 22.48 22.48
Skandia Liv 8,798,874 11.17 11.17
Sjätte AP-fonden 8,798,874 11.17 11.17
Other shareholders 43,410,915 55.18 55.18
Total number 78,707,820 100 100
10 The Lindab share
Svend Holst-Nielsen, Chairman and Kjell Åkesson, CEO and Group President, at the trading start of the Lindab share.
Analysts who follow Lindab
Company Name Telephone number E-mail
Handelsbanken Kenneth Toll +46 8 701 81 54 keto03@handelsbanken.se
Morgan Stanley Gustaf Lindskog +44 20 7425 2057 gustaf.lindskog@morganstanley.com
SEB Anders Trapp +46 8 52 22 97 57 anders.trapp@enskilda.se
Swedbank Jon Hyltner +46 8 58 59 25 66 jon.hyltner@swedbank.se
ABG Sundal Collier Tobias Ottosson +46 8 56 62 86 49 tobias.ottosson@abgsc.se
Share capital and voting rights The share capital is SEK 78,707,820 split between 78,707,820 class A shares only.
All shares have a face value of SEK 1.00 and are thus entitled to an equal share of the Company’s assets and results. Each share also entitles the holder to one vote at
Lindab’s Annual General Meeting. A trading lot comprises 100 shares. Under Lindab’s Articles of Association, the issued share capital must not fall below SEK 60 M nor exceed SEK 240 M and the number of shares must not fall below 60,000,000 nor exceed 240,000,000. The Board of Directors and the
CEO recommend that SEK 3.25 per share, SEK 256 M, should be paid in dividends to shareholders for the financial year of 2006.
Lindab’s policy on dividends is to pay out between 40–50 percent of the net profit.
However, Lindab’s long-term financial needs shall always be taken into consideration.
Share capital
Year Action No. of shares
Class A Class B1 )
Change in share capital ( SEK 000’s )
Total share capital ( SEK 000’s )
2001 New formation 1,000 - 100 100
New shares issue 9,000 - 900 1,000
2002 Share split ( 100:1 ) 1,000,000 - - 1,000
2006 Share split ( 8:1 ) 8,000,000 - - 1,000
New shares issue - 2,988,810 374 1,374
Redemption of shares and reduction of share capital –2,988,810 - –374 1,000
Redemption of shares and reduction of share capital - –2,988,810 –374 626
Bonus issue - - 74,542 75,168
Share split ( 15:1 ) 75,167,850 - - 75,168
Exercised options 3,539,970 - 3,540 78,708
Closing balance 78,707,820 - 78,708
1 ) All Class B shares were redeemed in May 2006 and this type of share has been removed by a change to the Articles of Association.
The Lindab share 11
Data per share
SEK/share unless otherwise specified 2006 2005 2004 20031 ) 20021 )
Profit/loss after tax and dilution 6.29 2.86 1.65 0.21 0.17
Earnings per share2 ) 7.43 - - - -
Dividend 3.253 ) - - - -
Direct return, %4 ) 2.50 - - - -
Dividends %2 ) 43.74 - - - -
Quoted price at end of period 130.25 - - - -
Highest quoted price 132.00 - - - -
Lowest quoted price 111.00 - - - -
Shareholders’ equity, after dilution 27.82 23.21 19.30 18.00 18.35
Diluted number of shares 78,707,820 122,940,000 122,736,000 122,736,000 122,736,000
1 ) Not restated on an IFRS basis.
2 ) Based upon the current number of shares 3 ) Proposed dividends.
4 ) Dividends as a percentage of the quoted price at end of period.
Lindab’s strategies for future growth
12 Lindab’s strategies for future growth
Business strategies
Profitability Lindab’s profitability target ( opera- ting margin ) is 12 percent. This is to be achieved through organic and acquired growth, cost-effective measures, and a focus on Lindab’s core products.
Finance Lindab must possess the financial strength and resources needed to respond quickly and take advantage of any acquisition and business opportunities that may arise.
Acquisitions Above all, Lindab shall grow organically, but there is also scope for strategic acquisitions.
Business concept
Lindab develops, manufactures, markets and distributes products and system solutions in sheet metal for simplified construction and improved indoor climate. The Company is divided into two business areas, Ventilation and Profile. Its products are distinguished by their high quality, ease of assembly, energy efficiency and environmentally-friendly design and are delivered with high levels of service.
Altogether, this increases the value for cus- tomers.
Method of increasing profitability
”Fill the Gap” is the method that Lindab has
been using since 2003 for structured manage- ment of business objectives, so that set profitability goals are actually achieved. It is one of several key tools that are being used to budget, plan, manage and evaluate major projects and smaller, local activities. This method allows Group activities to be priori- tised and ensures profitability at central and local levels. The activities may range from the establishment of a new branch, support for a sales organisation to a new production line or a large-scale advertising campaign. This pro- fitability strategy permeates the entire Group, involving personnel groups at all levels.
Lindab’s strategies for future growth 13
Products Lindab will focus on its core activi- ties in the areas of circular duct systems, building systems and building components.
Distribution Lindab’s products will be distribu- ted through market-tailored solutions that guarantee close proximity and accessibility within the defined market areas.
Production Standard products will be manu- factured at cost-effective production units.
This will be supplemented by local production where transport costs and product customi- sation necessitate such measures.
Lindab’s core values
Simplified construction Down-to-earth Neatness and order
Expansion High priority is given to the continu- ed expansion of existing and new markets.
The goal is to achieve a strong position in the markets where Lindab decides to act.
Brands
Lindab currently focuses its marketing com- munications on the Lindab brand. This will be promoted in all activities aimed at all target groups in all markets. The brand communi- cates the three core values: Simplified con- struction, Down-to-earth and Neatness and order.
Organic sales growth/year, % 6
Operating margin ( EBITA ), % 12 Net debt/equity ratio, ( times ) 1.0–1.4
Financial targets Vision
We simplify construction
Dividend policy
The dividend policy, approved by the Board of Directors, states that the dividend should represent 40–50 percent of net profit. The pro- posed dividend shall take into consideration Lindab’s financial targets, acquisition opportuni- ties, future results, financial position, cash flow, credit terms and other factors.
High quality products
It is Lindab’s strategy to develop, produce and supply high-quality products. This en ables the Company to maintain its signifi- cant presence in the market as the leading supplier in terms of quality. It also provides scope for successfully offering steel alterna- tives to products and solutions in other mate- rials, such as wood, concrete, aluminium and plastic.
Systems approach
All the different product groups within Lindab are permeated by a systems approach. The products are easy to assemble and they offer a long service life with invariably high and reli- able functionality. LindabRainline roof drain- age system, LindabSafe ventilation product ranges and Building Systems for pre-engi-
Innovative
system solutions
14 Innovative system solutions
neered steel buildings are three very obvious examples.
Simpler for everyone
Lindab simplifies the construction process for installation companies and builders by offering smart system solutions that maintain a high standard of quality. The actual instal- lation process is made more effective, more economical and quicker. It results in lower installation and operating costs for the end customer.
Focus on installers
Lindab simplifies the work of installing duct systems for builders and ventilation compa- nies and offers tremendous savings in time by providing the systems as complete packages.
The products arrive just-in-time and the com-
LindabRainline roof drainage system is manufactured in eight different colours, making it easy to match roof and wall colours.
LindabSafe circular duct system can be supplied with a simulated computer model so that property owners can see how the ventilation system will operate when in place.
The exchangeable diffusers ( Versio ) in the Comfort division are attached with magnetic locks, making it easy to mount, remove and replace them.
Lindab Building Systems speed up the construction of entire supermarket buildings, sports halls and ware- houses with ready-to-assemble, pre-engineered steel construction kits.
Interior walls half the weight and thickness of walls with traditional wooden battens are possible with Construline steel battens.
The Coverline roof and wall cladding system is avail- able in more than ten different profi les and in two colour systems with a total of eight colours, allowing freedom to design roofs and facades.
ponents are clearly marked, which simplifies the work of assembling the parts on the con- struction site.
Product development
Lindab’s business operations are based on simplifying the construction process through the development of innovative products. The Company aims to remain at the forefront of product design and development in its two business areas. To make this possible, cus- tomer thoughts and feedback are utilised as a constant source of information for product development. Development is carried out in close collaboration with universities and materials suppliers.
Close customer relations 15
Close customer relations
Lindab operates in close collaboration with installation companies and building contractors.
The customer’s best friend
We provide significant business advantages for our customers by offering them systems that make their work quicker, easier and more cost-effective. This in turn creates the founda- tion for increased sales – and profits – for both the customer and for Lindab. Providing customers with high levels of service, in the best manner possible, is therefore given the high- est priority throughout Lindab’s organisation.
Proximity to products
Contractors and installation companies demand proximity and Lindab creates this through its network of branches, retailers and distributors and, in certain markets, with distribution via builders’ merchants and DIY stores. Combined with efficient logistics sys- tems this guarantees the right product in the right place at the right time.
Proximity to support
Lindab offers support throughout the plan- ning and specification process. Sales and product specialists provide constant support to contractors, installation engineers, consult- ants and architects, whether they are offering basic advice to those working with specifica- tions or giving practical training to installation engineers.
IT support unique in the sector Lindab offers a range of proprietary software for design, dimensioning and other calcula- tions of the systems and products marketed by the Group. These different types of IT support are intended for those involved in the specifications stage ( architects and consultants ) and increasingly for installation engineers and builders. Lindab’s unique IT support includes Cyprion, CADvent and ADT- Tools.
Wide market presence
Lindab’s strategy is to build up a local market presence based on the conditions that each local market offers. This means that sales and distribution are allowed to vary between dif- ferent geographical regions and between the different business areas. In the Nordic region, Lindab has an extensive own branch network common to both the Ventilation and Profile business areas. The Profile business area is complemented with distribution through building material chains. In Western Europe,
Lindab works through its own branches and through a number of distributors that serve installation companies. In Central and Eastern Europe, products are primarily distributed through an extensive network of retailers. In the US, products are distributed through a large number of stockists whose businesses focus on products for ventilation and indoor climate solutions.
ing cost after steel. It is therefore important to optimise the transportation of the Group’s goods. Lindab handles large volumes of heavy and light goods. Heavy goods often consist of processed raw materials for the Company’s production facilities across Europe. Bulky light goods often consist of finished products such as packed ventilation parts or roof drainage parts. Coordinated loading of these two categories results in optimisation with regards to weight and vol- ume. The result is a shared transport system that provides greater cost and environmental benefits.
Optimised
production system
16 Optimised production system
Efficient supply of materials
Steel is Lindab’s primary raw material and the Company’s business is forged on its expertise in the rational processing and finish- ing of sheet metal. Today, Lindab is one of Sweden’s largest purchasers of sheet metal.
This places great demands on material supply and distribution. Centralised purchasing, effi- cient production processes and well-coordi- nated logistics are therefore important corner- stones in Lindab’s approach to profitability.
Furthermore, the Company is committed to responsible environmental practices.
Centralised purchasing
With a centralised organisation for company- wide purchasing, Lindab has a strong nego- tiating position. Suppliers always negotiate with one and the same party. Negotiations become clearer and it is always quite obvi- ous that Lindab’s centralised purchasers are fully authorised to make decisions. Lindab has progressed a long way with regard to the purchasing of steel and sheet metal, and is a major player in the European market.
Rational production
By designating a number of competence centres, clear business hubs have been created. These competence centres are cen- tral production units of strategic importance to operations and bring together responsi- bility for product development, production and high product quality. The facilities in Grevie in Sweden and Haderslev in Denmark are Lindab’s competence centres for the Air Duct Systems division. In Grevie, there is an air laboratory for product development, measure ment and customer tests. The facil-
ity in Farum in Denmark is a competence centre for the Comfort division. One of the world’s leading audio laboratories for acoustic measurements of ventilation systems and a complete air laboratory are situated there.
Lindab’s new facility in Prague, in the Czech Republic, is a state-of-the-art, streamlined production unit for ventilation products.
Within the Profile business area, the facility in Förslöv in Sweden is a competence centre for LindabRainline and Construline product groups, while Building Systems’ competence centre for pre-engineered steel buildings is in Diekirch in Luxembourg.
Coordinated logistics
Freight is Lindab’s second largest purchas-
Optimised material supplies and effi cient logistics are two of the cornerstones in Lindab’s operations.
Strong corporate culture 17
Strong
corporate culture
have been an increasing number of dedicated sales campaigns run centrally. One example is the campaign for LindabRainline, which has been implemented in six countries during the past two years and has contributed to a con- siderable increase in sales. It is worth noting that more and more products, following the example of LindabRainline, are now carrying the Lindab name.
Personnel development based on common values
In order to be able to develop the Company at all levels, both externally and internally, Lindab has been working for a number of years with three distinct, well-founded opera- tional core values – ”Simplified construction”,
”Down-to-earth” and ”Neatness and order”.
These are constantly used as the starting point for ongoing personnel development in the Company. Training courses are held at various levels in the Company.
Deeply rooted entrepreneurial spirit The entrepreneurial spirit that has charac- terised Lindab since its beginnings has been maintained even though the Company has grown into an international, stock market listed group. Dedication and interest among employees is especially important when settling in new markets and building up new production units. The Company’s employees are encouraged to participate in ongoing improvement efforts and many employee suggestions contribute to developments at various levels throughout the organisation.
The Lindab Awards honourable mentions are presented regularly to Lindab companies and employees who have made outstanding development proposals.
Lindab Lifestyle
For many years, Lindab has had a deeply- rooted and very distinct corporate culture. It is well documented and the factors behind Lindab’s success are continuously communi- cated within the Company. This means that the requirements placed on managers and employees are clearly formulated. Behind all this, which is summarised under the motto
”Lindab Lifestyle”, lies an aspiration to be continually developing the entire organisation by making optimum use of the Company’s strengths and injecting it with new energy.
This will be particularly important when inte- grating newly-acquired organisations.
Professional leadership
Lindab’s Business Acumen training pro- gramme provides continual development for Group employees. The programme provides knowledge of financial relationships and, through practical training and simulation of various processes, gives individual employees a fine insight into all possible outcomes. In
order to train people in leading positions how to formulate clear and useful arguments when marketing Lindab’s products and systems, the programme includes analysis and discus- sion of the added value that Lindab offers its customers. Almost 450 employees have completed this programme to date.
Dedicated market communication Lindab is focused on building a strong brand, based on a clear platform and consistent strategy. The sales companies’ websites have a generic structure and appearance in every market and all product areas are well-documented in printed matter and on the websites. Lindab Direct, the customer magazine, is distributed to more than 40,000 people and is produced in Swedish, Eng- lish, German, Hungarian, Polish, Czech and Romanian. Flotation on the Stock Market was followed by an advertising campaign in the trade press and on the Internet. There
Lindab has a strong and deeply-rooted corporate culture stretching back many decades.
Accreditation
Most of the Group’s companies that have extensive production operations implement the ISO 14001 environmental management standard. Environmental insurance for opera- tions performed at sites in Sweden covers liability to damages under the Swedish Environ mental Code.
Dedicated
environmental work
Environmental work
Lindab places a high priority on environmental issues. As part of its work, the Group shall:
Use its expertise and personal commitment to continually strive to achieve ecologically sustainable development. This means that all operations shall be characterised by consid- eration for the environment, health and safety.
Develop, manufacture and market products that have the least possible negative impact on the environment.
Give priority to materials that can be recycled and do not have a negative impact on the environment.
Make overall assessments of the products and continually improve resource utilisation.
Comply with legislation and regulations.
Environmental targets
Lindab pursues continuous improvement to minimise adverse impacts on the environ- ment. Current environmental targets:
Develop coatings that have less impact on the environment and minimise the use of zinc.
Reduce energy consumption.
Reduce the use of packaging, especially plastic packaging.
Improve waste management.
Reduce the use of oils in production pro- cesses.
Reduce the impact on the environment from the transportation of goods on vehicles.
Steel can be recycled
Lindab’s operations primarily consist of the manufacture of steel and sheet metal pro- ducts. Given the production processes and the products involved, the environmental
impact is minimal. Above all, steel can be recycled – both the waste steel from the pro- duction process and the products at the end of their useful lives.
Transport
By loading heavy and light-weight goods on the same vehicles, each truck is optimised with regards to weight and volume. The result is a shared transport system that eases the burden on the environment.
Surface treatment
The use of solvent-based paint for coatings is now more or less obsolete. Today, we use HB polyester, an environmentally-friendly plastic, to coat most sheet metal products. The coat- ing process is performed by suppliers. Most of Lindab’s sheet metal products have zinc coating to protect them from corrosion. The goal is to minimise this use of zinc.
Environmental impact
The Group has no environmental liabilities and the business is not of a type that causes the contamination of land or water, which can require clean-up measures.
An independent third-party expert has conducted environmental investigations at 14 of the Company’s production units. It conclu- ded that there are no environmental liabilities associated with the production units. Regular tests are carried out to check for any impact on the immediate environment.
Energy consumption
As a result of a series of energy-saving measures, energy consumption per tonne of manufactured sheet metal products has now been reduced.
Lindab’s environmental accountability starts with the Company’s immediate environment.
18 Dedicated environmental work
Responsible
personnel policy
Clear personnel policy
The Company has given priority to internal recruitment, thereby creating opportunities for its employees to develop, promoting business continuity and reducing employee turnover.
As a result, a large proportion of Lindab’s employees have been with the Company for a number of years and many have been pro- moted to leading positions.
Employees
On 31 December 2006, Lindab employed a staff of 4,942 ( 4,479 ), of which 2,013 ( 1,890 ) worked in the Profile business area and 2,771 ( 2,443 ) in the Ventilation business area.
International distribution Approximately 22 percent of Lindab’s employees work in Sweden, 17 percent in the Czech Republic, 13 percent in Denmark, 9 percent in Hungary, 7 percent in Luxembourg.
4 percent work in the UK, Switzerland and Germany respectively. The Company also has employees in Belgium, Bosnia-Herzegovina, Bulgaria, Croatia, Estonia, Finland, France, Italy, Latvia, Lithuania, the Netherlands, Nor- way, Poland, Romania, Russia, Ukraine and the USA. 20 percent of Lindab’s employees were located throughout these countries as of 31 December 2006.
Trade union membership
In some countries, ( chiefly Sweden, Den- mark, Norway, Luxembourg and the USA ) Lindab’s employees are members of trade unions. Lindab considers it has a good rela- tionship with its employees and their trade unions and the Company has not experi- enced or been the subject of any major stop- page of work, reduced working pace or col- lective action. Furthermore, Lindab has had no problems in the recent past, and expects no problems in the foreseeable future, with the recruitment of personnel for its opera- tions.
Skills development
Lindab’s training programme is the basis for the Company’s strategy of internal recruit- ment of executive personnel. Training activi- ties are conducted at both a local and Group level with courses for new employees through to specialist leadership training. Lindab Busi- ness Acumen combines practical exercises and simulations to give employees in leading positions a deeper insight into Lindab’s opera- tions, markets and financial circumstances.
On average, every Lindab employee spends two to three days on courses each year.
Gender distribution
Age distribution
Average no. of employees Men 81 %
Women 19 %
51 years and over 22 %
–30 years
25 % 31–50 years
53 %
3,766
4,138 4,135
4,689
2003 2004 2005 2006
A workplace health promotion programme is a fundamental part of Lindab’s personnel policy.
