2008
ANNUAL REPORT
IntroductIon
Beijer Electronics—Summary 3
Highlights of the Year 5
CEO’s Statement 6
Group performance
Operations and Organization 8
Vision, Goals and Strategies 10
The Industrial Automation Market 14
Beijer Electronics in the World 16
operatIons In 2008
Development Operations 20
Human Resources, Quality and Environment 22
The Automation Business Area 26
The HMI Products Business Area 28
The Industrial Data Communications Business Area 30
fInancIaL InformatIon
Directors’ Report 34
Consolidated Income Statement 38
Consolidated Balance Sheet 38
Consolidated Statement of Changes to Shareholders’ Equity 40
Consolidated Cash Flow Statement 41
Parent Company Income Statement 42
Parent Company Balance Sheet 42
Parent Company Assets Pledged and Contingent Liabilities 43 Summary Statement of Changes to Parent Company
Shareholders’ Equity 44
Parent Company Cash Flow Statement 45
Notes 46
Audit Report 75
InVestor and sHareHoLder InformatIon
Corporate Governance Report 76
Board of Directors 80
Senior Executives 81
Five-year Summary 82
The Share 84
Definitions 86
Addresses 88
Notice Convening the AGM 90
Financial Information 91
Beijer Electronics—summary
Automation
Offers a broad range of products and complete automation solutions for effective automation on markets in the Nordic and Baltic regions.
HmI Products
Develops and sells user- friendly, high-quality and innovative HMI products on the global market.
Industrial data communications
Develops and sells robust and reliable products for industrial data communica- tion on the global market.
Total
Business Areas
Beijer Electronics is an expansive technology corporation with long-term experience of industrial automation. Since its start-up in 1981, Beijer Electronics has evolved into a multinational group with subsidiaries in 14 countries, some 600 employees and yearly sales of nearly SEK 1.3 billion.
Beijer Electronics offers market-leading products to run, control and optimize critical processes and functions across
47%
33%
20%
SEK 1,275.6 m Share of Sales
40%
31%
25%
595 staff Share of Staff*
51%
27%
22%
SEK 116.5 m Share of Operating Profit
a wide range of operations, but also creates value through its ability to integrate and tailor products into effective solutions for each customer.
By delivering high-quality automation solutions, Beijer
Electronics helps enhance process efficiency, increase safety,
cut energy costs, rationalize the consumption of resources
and create a better working environment for users.
Beijer Electronics is a leading vendor of automation solutions for manufacturing industry. But its products also play a vital role in other segments. Beijer Electronics’ tailored concept solutions for specific segments save time and money for customers.
Beijer Electronics’ offering includes solutions for among others:
Our customers operate in an increasingly globalized world, so we need to be a global partner. With subsidiaries in 14 countries and a worldwide network of independent distributors, Beijer Electronics is always close to its customers.
Beijer Electronics in the World
Applications and concept solutions
OEm
We help OEMs worldwide to add value in their customer offerings.
Read more on page 12
marine
Tailored functionality, reliability and long useful lives have made our products popular among shipbuilders and the offshore industry.
Read more on page 18
Water
Easily integrated off- the-shelf solutions based on open architecture enhance the efficiency of water and waste water plants worldwide.
Read more on page 32
Real Estate
Our automation solutions create the right prospects for good indoor environments, high safety and reduced energy costs in all types of real estate.
Read more on page 24
Highlights of the Year
Net sales rose by 32 per cent to SEK 1,275.6 m (963.8).
•
Operating profit increased by 34 per cent to
•
SEK 116.5 m (86.9).
Profit after tax rose by 27 per cent to SEK 77.2 m (60.6).
•
Earnings per share after tax were SEK 11.72 (9.21).
•
The Board of Directors proposes a dividend of SEK 4.00
•
per share (4.00).
From january 1 onwards, Westermo Teleindustri became
•
a new business area in Beijer Electronics called Industrial Data Communications.
Fredrik jönsson succeeded Göran Sigfridsson as CEO and
•
President on April 20.
In August, the Automation business area signed a global
•
agreement with Alfa Laval to deliver operator panels.
In September, the Industrial Data Communications business
•
area secured a breakthrough order for telemodems from a French energy sector customer.
Successful integration of Brodersen Automation, Elektronik-
•
Systeme Lauer and Westermo Teleindustri added significant profit in the year.
Conny Persson, Business Area Manager of HMI Products,
•
retired on December 31. He was succeeded by Magnus Ekerot.
sales
0 300 600 900 1200 1500
2004 2005 2006 2007 2008 SEK 000
Net sales rose by 32 per cent to SEK 1,275.6 m (963.8) in 2008.
Operating profit increased by 34 per cent to SEK 116.5 m (86.9) in 2008. The operating margin was 9.1 per cent (9.0).
Operating Profit
SEK 000
0 30 60 90 120
2004 2005 2006 2007 2008
Cash flow from operations in 2008 was SEK 98.6 m (85.6).
cash flow from Operations
SEK 000
0 20 40 60 80 100
2004 2005 2006 2007 2008 Key financial Ratios
2008 2007
Sales, SEK m 1,275.6 963.8
Operating profit, SEK m 116.5 86.9
Operating margin,% 9.1 a) 9.0 b)
Profit before tax, SEK m 96.4 84.6
Earnings per share, SEK 11.72 9.21
Dividend per share, SEK 4.00 4.00
Equity ratio,% 31.2 38.2
Average number of employees 595 463
a) Including non-recurring expenses of SEK 7.5 m.
b) Excluding non-recurring expenses of SEK 5.3 m in 2007, the operating margin was 9.6 per cent.
More information in the five-year summary on page 82.
Well-prepared for the Future
I took over as CEO of Beijer Electronics in April 2008, and I can now look back at an exciting first phase with the company. Joining this new business has been a fascinating journey, and I have really benefited from my previous experi- ence as a CEO in related sectors. I had the privilege of taking over a well-managed, solid company with a secure techno- logy base and good customer relations—overall, a company with very good development prospects for the future.
Industrial Automation—Part of our future
The core of our business is offering products and solutions that give our customers the possibility to run, control and optimize their most critical processes and functions.
Companies in the automation sector have a decisive role to play in satisfying increasing production efficiency standards worldwide. However, contemporary industrial production is not merely about maximizing efficiency. A focus on environmental issues and climate change also brings greater awareness of the significance of automation for energy savings and the efficient usage of the earth’s resources. That’s why I think Beijer Electronics is part of one of the sectors of the future.
Integrating Acquisitions
Beijer Electronics made three significant acquisitions in 2007, of three companies in three countries, active in three technology segments. In 2008, we did a lot of work on integrating these units into our business effectively.
The acquisition of Brodersen Automation by our
Automation business area very quickly gave us a strong position on the Danish market with sales of some SEK 110 m in 2008. The acquisition of Lauer, with its development strengths, advanced our position on the German market, and was an excellent complement to our already impres- sive HMI Product offering. Progress for Westermo, which created the new Industrial Data Communication business area, was just as exciting. In all three cases, the integration process went completely as planned, and I’m delighted to conclude that all acquisitions are already delivering in line with profit targets.
development with a customer focus
Our ability to stay at the leading edge of technological progress is completely decisive to our success. In 2008, we invested over SEK 80 m in product development, includ- ing a new software platform for our HMI products, based on the latest .net technology. In Westermo, product devel- opment work focused on new communication products based on a new and far faster communication protocol. We also started an initiative on tailored automation solutions for real estate, water treatment and marine operations, which have already achieved results on the market.
High Growth in the Year
The successful integration of our acquisitions and oth- erwise stable operations produced sales gains of 32 per cent in the year, to nearly SEK 1.3 billion, and a 34 per cent increase in operating profit, making 2008 the most 2008 was the most successful year ever for Beijer Electronics. Well-
executed integration of acquisitions and stable sales growth mean that in profit terms, we are well prepared for the more challenging times that await us in 2009.
cEO’s sTATEmENT
successful year in Beijer Electronics’ history. It is especially satisfying that we succeeded in managing such high sales growth while remaining profitable, thanks to our firm cost control and strategic procurement processes.
strategy Work Involving Everyone
In a high-growth company like Beijer Electronics, col- lective values and strategic consensus are critical success factors. In the year, we jointly conducted an extensive update of our strategy, and as part of this process, all our employees worldwide participated in workshops that transformed our visions, values and formalized targets as concrete realities for our staff.
Outlook for 2009
That we are going into a highly uncertain 2009 is a fact that hardly needs any more explanation. But it is too early to say exactly how the financial crisis and recession will affect us at Beijer Electronics. However, what is clear is that our healthy profit growth, strong market position and stable technology base mean we’re well prepared to cope with more challenging times.
Our strategy for 2009 includes work on further penetra- tion of existing markets, but also a focus on geographical expansion into new markets offering high potential. We will continue our efforts on developing specialized auto- mation solutions in specific application segments close to the customer, as well as exploiting the synergies between our business areas.
In conclusion, I’d like to thank all our staff for the great work they’ve done, and our customers for the trust they have shown us. I look forward to Beijer Electronics’ con- tinued progress with confidence.
Fredrik Jönsson
CEO, Beijer Electronics AB
“The core of our business is giving our customers the possibility to run, control and optimize their most critical processes and functions.”
fredrik Jönsson
cEO
This is Beijer Electronics
Beijer Electronics is an expansive corporation with long- term experience of industrial automation. Since start-up in 1981, Beijer Electronics has evolved into a multinational group with subsidiaries in 14 countries, some 600 employ- ees and yearly sales of nearly SEK 1.3 billion.
Beijer Electronics offers leading products to run, con- trol and optimize critical processes and functions across a wide range of operations, but also creates value through its ability to integrate and tailor products into effective solutions for each customer.
Our business is permeated with high commitment and close relations with customers and collaboration partners.
All our development activities proceed from user-friendli- ness, a high-technology content and high quality.
By delivering high-quality optimization automation solutions, Beijer Electronics helps enhance process effi- ciency, increase safety, cut energy costs, rationalize the consumption of resources and create a better working environment for users.
Technology in development
With its proprietary development resources in HMI and industrial data communication, Beijer Electronics remains at the leading edge of two technology segments in rapid change, and with substantial potential for the future.
Development is largely driven by general progress in the IT segment, including new technology platforms, interfaces and IP-based communication, tailored to the special reli- ability and robustness requirements of manufacturing.
A Raft of Application segments
Every industrial segment needs efficient industrial automa- tion solutions. Beijer Electronics has a proud tradition as a competitive vendor of automation solutions for the auto- motive, food and engineering industries. OEMs (original equipment manufacturers) are becoming an increasingly important segment, where Beijer Electronics’ products are becoming a more central component of machine solutions.
The infrastructure segment also offers a wealth of applications for Beijer Electronics’ solutions including roads, tunnels, railways and general transportation links.
Water and waste water treatment is another, as is real estate automation, with a sharper focus on energy costs driving demand. The marine sector, consisting of wharves, shipbuilders and the offshore industry, is a segment where Beijer Electronics’ specially tailored products and solutions have scored major successes.
Beijer Electronics is a leading vendor of automation solutions that center on quality, functionality and user-friendliness. Building on market-driven product development, we deliver complete solutions tailored to customer needs in a raft of application segments.
OPERATIONs ANd ORGANIzATION
“Beijer Electronics offers leading prod-
ucts and solutions to RUN, cONTROL and
OPTImIzE business critical processes and
functions.”
Three strong Business Areas
Beijer Electronics’ operations are divided into three busi- ness areas with highly decentralized business accountabil- ity. The Automation business area offers a broad range of industrial automation solutions on the Nordic and Baltic markets. The HMI Products and Industrial Data Communications business areas both operate globally on the development and sale of HMI and industrial data communication products.
Each business area has a competitive offering and secure positioning on its markets, but together, also creates a whole that is greater than its parts. Automation’s applica- tion know-how and close relations with integrators and end-customers creates valuable market knowledge for the
other business areas’ development projects. Proprietary product development resources also offer extra competi- tiveness in Beijer Electronics’ overall offering.
A multinational corporation
A large international presence is a precondition for Beijer Electronics being an attractive global partner for custom- ers. Sales and customer support are conducted through proprietary subsidiaries in 14 countries and a network of independent distributors on another 44 markets. Product development operations are also spread geographically across Sweden, Germany and Taiwan, to capture techno- logical and market progress on differing markets.
sales Operating Profit
SEK m 2008 2007 2008 2007
Automation 607.1 571.3 32.7* 34.1
HMI Products 505.1 465.4 62.7* 58.3
Industrial Data Communications 249.7 26.6
Internal sales -86.3 -72.9
Non-recurring expenses -5.3
Group adjustments -5.5 -0.2
Group 1,275.6 963.8 116.5 86.9
* Including non-recurring expenses of SEK 6.5 m for Automation and SEK 1.0 m for HMI Products.
Organizational structure
Sales and Operating Profit by Business Area
Beijer Electronics AB
Beijer Electronics
Products AB Westermo
Teleindustri AB Beijer Electronics
Automation AB
Denmark Estonia Finland Latvia Lithuania
Norway sweden
France Germany Singapore sweden
UK
Automation business area HmI Products business area Industrial data communications business area
China Germany
sweden Taiwan USA
VIsION, GOALs ANd sTRATEGIEs
Our Way Ahead—Together
Our vision is to be a leading provider of user-friendly automation solutions on a global basis. Building on our collective values, we formulate our busi- ness concept and strategies to realize our vision and achieve our financial and business goals.
OUR VIsION
“A leading provider of user-friendly automation solutions on a global basis.”
Our vision sets the course of our work in maintaining positioning on the market as a leading global vendor of automation solutions that feature simplicity—in usage, implementation and operation.
OUR BUsINEss cONcEPT
“Driven by a strong commitment to people and technology, we provide automation solutions that our customers can trust.”
Beijer Electronics’ business concept means that we build on our in-depth knowledge of market needs, high level of technological skills and global pres- ence, to provide our customers with automation solutions that help increase efficiency in critical processes and functions.
Our vision, business concept and our objectives set our course for the way ahead, and through our strategies, we secure the tools to get there. We have identified five pri- oritized strategic segments that are decisive to the company’s progress and long-term survival.
maximized market Impact Key factors for securing maximum market impact on our prioritized markets include our strategic work on tailoring solutions for selected customer segments, continuous improvements to our distribution structure and a long-term acquisition strategy.
Geographical Expansion The automation market is becom- ing more globalized. To satisfy our customers’ needs for a global partner, an increased international presence is strategic for us.
Prioritized strategic segments
Our Values cOmmITmENT dRIVE TRUsT
fINANcIAL GOALs
Beijer Electronics’ financial goals are formulated as:
Yearly growth: >15 per cent Operating margin: >10 per cent Capital employed: <10 per cent
competence development In a world making rapid technologi- cal progress, our ability to attract, develop and retain competence is a critical success factor. Strategic hiring, training initiatives and employee dialog are key tools in our strategic human resources work.
Market-driven Product development
Investments in strategic product development are a decisive factor for our long-term competitiveness.
Close collaborations with custom- ers and partners and geographical diversity of development centers ensure that all product develop- ment is based on market needs.
continuous Improvements Firm cost control and constant rationalization in segments like procurement, production and distribution sharpen our competi- tiveness and are a precondition for the company’s long-term survival.
Commitment reflects our commit- ment to maximize customer benefit and closeness in our relationships with customers, collaboration part- ners and employees.
Drive represents our proactivity and go-ahead mindset, in our atti- tude and technology development.
Trust represents honest and trusting action in all our relations.
Our Values
sTRATEGIc sEGmENTs
Maximized market impact Geographical expansion Competence development
Market-driven product development Continuous improvements
Our Values cOmmITmENT dRIVE TRUsT
OEms
The world’s OEms (original equipment manufacturers) lead challenging lives.
Technological leads seldom last long, and many players offer the same type of ma- chinery to the same type of customer. In this harsh competitive environment, having the right partner can make all the differ- ence—a partner like Beijer Electronics.
OEMs design and produce machine solutions that are then sold on to various types of manufacturer. Another way to express this is that OEMs create a whole that is greater than the sum of its parts. Components and sub-systems are assembled into machine solutions that satisfy customer needs for capacity, accuracy and reliability—and do so at a competitive price.
much more Than Just a Product Vendor
Our strong position as a strategic partner to the OEM industry is based on a commitment far greater than just a product vendor. Over the years, our dedicated OEM team of sales and technology professionals have accumulated the experience and machinery expertise needed to be able to ask the question: “Why don’t you solve the problem like this instead?”
Our proprietary product development operation and close collaboration with our suppliers means we have the resources to be a part of our OEM customers’ strategic product development processes. We develop and tailor our solutions alongside the customer, always keeping the overall perspective in focus. Our collaboration with Tetra Pak on custom operator panels is an example.
A Global service Partner
But our commitment doesn’t just stop when machinery
is delivered. Our international presence and network of
global vendors makes us an important part of OEMs’ global
service offering. Where every minute of machine downtime
means lost profitability, access to support, spare parts and
updates are decisive competitive tools.
»Affärsområde Automation marknadsför och säljer ett brett produktprogram inom automation på marknaderna«
“OEm competitiveness depends on solutions with maximum performance at the right price.
Our concept of high-quality products and unique solutions gives our OEm customers the market edge they need.”
Gert-Inge Nilsson
marketing manager, Automation business area
A Growth market with challenges
The presently estimated value of the global industrial automation market is some SEK 700 billion.
At present, Beijer Electronics’ addressable market is worth some SEK 34 billion. It is limited partly by the product segments where the company’s business areas are active, and partly by the Automation business area’s market coverage being confined to the Nordic and Baltic regions.
market Progress
Market progress in industrial automation is closely linked to global industrial production, which in turn, follows GDP growth. In recent years, the automation market has grown somewhat above GDP, at a yearly average of 5 per cent. The underlying demand drivers are:
Environmental technology. Climate issues and a focus on efficient consumption of resources is creating a need for realignment and rationalization in the energy sector.
The water and waste water segment also has a substantial need for automation solutions.
Demands for efficiency in industrial production.
Manufacturing demand for automation solutions is driven by new investments in production capacity, but also by a need for low production costs and increased efficiency given unchanged or reduced production volumes.
Energy costs. Increased awareness of the importance of energy consumption is driving the need for effective auto- mation, both in manufacturing and other applications like real estate automation and the shipping industry.
Investments in infrastructure. There is a substantial need
for investment in new infrastructure in many emerging economies. In countries like the US, widespread mainte- nance investments are driving the demand for automation for infrastructure.
Expected Progress in 2009
Current global economic conditions mean that progress in 2009 is extremely uncertain. Expected low GDP growth across much of the world means that the automation market is likely to trace relatively weak progress in the coming year.
Trends in the Automation segment
Technological advances and changing customer needs con- stantly alter the conditions for players in the automation market. Some selected trends are:
Demand for full-range providers. Demand is increasing for providers of complete solutions for customer automation needs, which for Beijer Electronics, means control system, drive system, operator system and data communication products. Greater interest in total concept solutions tailored for specific customer segments is part of this process.
Increased globalization. Greater globalization has accen- tuated the need for international servicing by automation providers across many customer segments.
A degree of consolidation. The automation industry is also subject to some consolidation, with large, global players becoming more dominant. However, there is still room for niche players in specific segments.
The global industrial automation market has made positive progress for a long period. Demands for increased production efficiency, infrastructure investments and environmental awareness are driving continued demand, while the current financial climate means the automation sector is facing major challenges.
THE INdUsTRIAL
AUTOmATION mARKET
New technologies. Technological progress and changing customer needs are driving product development in the automation segment. Generally, progress is towards an altering development focus, from hardware to software.
Development trends include new software development technologies, the integration of PLC and operator termi- nals, more sophisticated graphics in operator interfaces and a migration to Ethernet technology in industrial data communication.
Beijer Electronics’ market Position
Beijer Electronics’ strongest position is on the Nordic and Baltic markets, where its sources 54 per cent of sales. The Automation business area is the third largest player on the Nordic and Baltic markets with an estimated market share of some 15 per cent. HMI Products has a global market share of 4 to 5 per cent, and is thus the fifth to sixth largest vendor of HMI products in the world. HMI Products’ strongest geographical markets are the Nordic region (35 per cent), where it is a dominant player, Taiwan and China (10-15 per cent market share) and Germany (8 per cent). At present, Industrial Data Communication has an estimated global market share of some 5 per cent.
The strongest markets include the Nordic region, the UK, France and Germany, with market shares of 12 per cent.
competitors
Beijer Electronics’ competes with large, global players that compete across many markets and multiple business seg- ments and niche players that operate locally or in a defined product segment. Thus the competitive position differs across the group’s business areas.
There are some ten players in automation solutions on the Nordic and Baltic markets. Siemens of Germany has market leader status and other competitors include ABB Automation, Rockwell of the US, Schneider Electric of France and Omron of Japan.
HMI Products operates on a fragmented global market with a wide array of players. A small cluster of players operate globally like Siemens, Schneider Electric/Proface and Rockwell. There are also regional competitors in HMI Products’ various markets. In Europe, B&R of Austria, EXOR and ESA of Italy, and in the USA, companies like GE Fanuc, Eaton Electrical and Automation Direct.
Industrial communication is a broad sector consisting of many segments. Most competitors are niche players in product or geographical terms. IDC’s competitors include Moxa, Hirschmann, Cisco, Phoenix and Weidmüller.
-3 -2 -1 0 1 2 3 4 5 6 7
The world 3.3
1.2 1.3
0.6 0.9
1.5 2.5
0.0 6.0
-2.5 -2.6
-1.0
USA Europe
Asia Estimated future Global GdP Growth (%)**
2008 2009 2010
Global
market Addressable market Beijer Electronics’ Addressable market in Relation to Global market (sEK bn)*
Automation Industrial automation HMI
IDC
700 34
5
23
6
Beijer Electronics in the World
Beijer Electronics is a multinational group with subsidiaries in 14 countries and a presence through distributors in another 44.
The Nordic market is the base of its operations and is the source of most of its sales. Asia, Europe and other global regions are also central to the company. continued geographical expansion is an important component of Beijer Electronics’ strategic development.
NORTH AmERIcA
sales 2008: sEK 86 m share: 7 per cent
North America is a challenging market with high future potential. HMI Products is represented with its own offices and distributor network; Industrial Data Communications is represented via distributors. Apart from a strong OEM segment, reported initiatives in infrastructure and rationalization in the energy sector offer high market potential for Beijer Electronics.
REsT Of WORLd
sales 2008: sEK 17 m share: 1 per cent
At present, markets in South America, the Middle East and Africa presently are less significant to Beijer Electronics’
global sales. However, Beijer Electronics
thinks that markets in the Middle East
have especially high potential, mainly
in energy, water treatment and real
estate automation, but also in the food
and packaging industries.
AsIA
sales 2008: sEK 103 m share: 8 per cent
Asia is of high strategic significance to Beijer Electronics’ long-term development. The company has a proprietary presence in China, Singapore and Taiwan, and is present through distributors on another five markets. China and India are top priorities as growth markets in manufacturing and infrastructure.
Starting from Industrial Data Communications’ new sales office in Singapore, nearby markets like Vietnam and Malaysia are also attractive future growth markets.
NORdIc ANd BALTIc REGIONs
sales 2008: sEK 683 m share: 54 per cent
The Swedish market is this region’s engine and a key test market for new concept solutions. In Norway, the marine sector is significant, and in Denmark, OEMs are an especially attractive segment. Like Sweden, Finland has a strong industrial tradition, but made weak progress in the past year. Estonia, Latvia and Lithuania are small markets offering growth potential, mainly in the infra- structure segment.
REsT Of EUROPE
sales 2008: sEK 387 m share: 30 per cent
Germany is the biggest European
market for Beijer Electronics, where
HMI Products and Industrial Data
Communications both have strong
positions. As major industrial nations,
France and Italy are priority markets,
and in Italy’s case, also offering
potential in marine solutions. Eastern
Europe remains an attractive growth
market. For the Industrial Data
Communications business area, Russia
is especially promising.
marine
Providers of automation solutions to marine operations have a lot of demands to satisfy. firstly, products must have all the right certification. Vendors need to be reliable partners that always deliver high quality. Preferably, they build special marine functionality into their products….
and not least, their products must come in black.
Beijer Electronics has been delivering automation solutions to the demanding shipping and offshore industry for over 20 years. It has been highly successful on its largest market, Norway, where its products set the standard in the shipping industry. There are several reasons for this.
Top Grade Equipment
The right certification for marine use is a precondition for being considered as a supplier to marine businesses—and a lot of certification is required. Over several years, Beijer Electronics has taken a goal-oriented approach to certifying its PLC systems, operator panels and other products.
Through the years, Beijer Electronics has become a dependable provider of high quality, decisive in a sector where each newbuild vessel involves a multi-million invest- ment and has a useful life of several decades.
Tailored functionality
Most of Beijer Electronics’ product lines and solutions are also suited to marine applications, and the acquisition of Lauer in 2007 reinforced Beijer Electronics’ marine offer- ing. In dialog with customers, Beijer Electronics’ propri- etary development has enabled a range of functionality satisfying the special needs of the marine environment.
Fully dimmable screens that do not disrupt night vision on vessel bridges, and panels that are readable even in strong sunlight are just a few examples. Additionally, because of the tradition in marine products, Beijer Electronics’ opera- tor panels are, of course, available in black.
for All Types of Vessel
Beijer Electronics’ products and solutions are used across a wide range of marine applications. From hydraulic sail hoisting on racing yachts to safety systems on passenger ferries and automated unloading solutions for freighters.
And they are also used in some more exotic contexts—
like the sprinkler system for the historically recreated East
Indiaman, the S/S Götheborg.
“Our broad product range of robust and powerful marine products makes us unique in the market. Our products have been specially developed for use in bridges or engine-rooms.”
Pelle Johnson
Product manager, HmI Products business area
Innovation centering on the customer
Beijer Electronics invested a total of SEK 80.5 m in devel- opment in 2008, or 6.3 per cent of the company’s sales.
The HMI Products and Industrial Data Communications (IDC) business areas have internal development resources, with technology and product development in their rel- evant technologies. All of Beijer Electronics’ development proceeds from its vision of being a leading vendor of user- friendly automation solutions.
development Resources—HmI Products
HMI Products’ development operations are divided between three centers in Sweden, Germany and Taiwan.
Operations in Germany and Taiwan were added to the business area’s development resources through the acqui- sitions of Hitech in 2005 and Lauer in 2007. In 2008, extensive efforts were conducted to integrate the develop- ment process, through channels including using the same modules and components in product development. A total of 65 staff work on development in HMI Products.
development Policy—HmI Products
HMI Products’ development operations conform to a number of defined principles:
User-friendliness. Despite the sophisticated technology employed, products must always be easy to configure, install and use.
Design. An operator panel is the visible part of an auto- mation solution, so an attractive appearance is an impor- tant competitive edge.
Innovation based on needs. Innovative solutions and leading- edge technology should feature in our products. Meanwhile, every new solution must satisfy a customer need.
Recognized technology. To satisfy the challenging stand- ards of industry, all product development should be based on technology whose reliability has already been proven in other segments.
major development Projects in 2008—HmI Products The most significant development projects in the year were the development of a new software platform for HMI products. The platform is based on .net technology and represents a technological leap forward that enables com- pletely new functionality and flexibility on future prod- ucts. The project has been running for three years, and the first products will be launched in 2009, making Beijer Electronics the world’s first vendor of operator panels with .net technology.
strong development operations are a prerequisite for Beijer Electronics’
long-term competitiveness and ability to survive. The fundamental princi- ples of all Beijer Electronics’ product development are user-friendliness, functionality and good design.
dEVELOPmENT OPERATIONs
development Expenses, 2008
HMI Products 63%
IDC 37%
In August, Beijer Electronics reached a global agreement with Alfa Laval to develop and deliver operator panels for process equipment. This project involves the preparation of a new global standard solution based on the new software platform. The collaboration with Alfa Laval was highly significant to developing and prioritizing functionality.
development Resources—Idc
The Industrial Data Communications business area has two development centers, in Eskilstuna and Västerås, both near Stockholm. Highly qualified professionals conduct development work in specialist technology. Development resources have a total of 32 staff.
development Policy—Idc
The business area’s guiding principle—robust data com- munication made easy—directs all development work.
Industrial data communication is often mission criti- cal, setting high standards on software and hardware.
Developed products have to cope with harsh environments with humidity, dust, temperature changes and current spikes, so they need to be robust in a lot of situations.
Another big challenge lies in developing products that are easy for customers to install, configure and handle despite increasingly complex and technologically sophis- ticated functionality.
A constantly accelerating rate of development is another big driver. A high tempo with short times to market on devel- opment work are the keys to the business area’s growth.
major development Projects in 2008—Idc
Four products in the new SHDSL range, called Wolverine, were launched in the year. These products are Ethernet Extenders that enable customers to retain existing infrastruc- ture but still get communication solutions with far higher transmission speeds. Wolverine’s development is continu- ing, and another 3-4 launches are planned for 2009.
A highly strategic customer project was conducted in the year; IDC developed an Ethernet-based solution for on-board communication on trains with train producer Bombardier. After 2½ years’ development, Bombardier will be the first train producer to get an ‘IP train’ rolling, with IDC’s products giving it the necessary reliability and network capacity. Off-the-shelf rail products were also launched in the year. Swedish company Dellner Couplers, a leading supplier of train couplers, is a very promising partner for the future.
HMI Products IDC
The ability to attract, develop and retain skilled staff is a key factor for Beijer Electronics’ continued development and long-term survival. Our goal is to offer an attractive workplace where employees can develop, personally and professionally, and where all employees feel committed and proud about being a part of the company. We genuinely work together and help each other (commitment), we are proactive and find solutions (drive), we are open and hon- est in our communication (trust). These collective values reinforce the sense of belonging and ensure consistent actions in all our units worldwide.
search and selection
Beijer Electronics has had an acute need to hire staff in recent years, mainly in sales, development and support.
Competence, personality and quality are the key concepts in all search and selection efforts. We encourage internal appointments, ensuring skills and giving our employees the option to grow and develop in the company. Our induction package offers new employees a clear and quick insight into our operations, and our goals and visions.
For several years, Beijer Electronics has been in part- nership with institutions including Lund University’s engineering faculty on open days, recruitment events and assessed work placements. The aim is to market the company and attract the right skills.
competence development and Leadership
Goal-oriented competence development is a strategic
question for Beijer Electronics and a precondition for being an attractive employer. Beijer Electronics utilizes goal and appraisal interviews designed to enhance employee per- formance through mutual dialog between the employee and first-line manager, thus sharpening the company’s competitiveness and stimulating staff.
Beijer Electronics started strategic work on improving and supporting its leaders in 2008. The company con- ducted two leadership programs, one for senior man- agement and one for middle management, guided by a leadership profile it has prepared. Beijer Electronics works continuously to ensure good growth of the leaders within Beijer Electronics.
stakeholding in strategy Work
The biggest internal project in the year was a roll-out of the strategy efforts conducted at group level. All employees worldwide participated in a workshop to discuss Beijer Electronics’ collective vision, values, goals and strategies.
dialog and communication
Beijer Electronics’ employee survey has created a channel for employees to make their voices heard. Its purpose is to capture the opinions of staff and identify key areas of improvement. Action-plans are prepared from its results, which are monitored in the year. INSIDE, the company’s staff newsletter published in English and Chinese four times yearly and distributed to offices worldwide, is one internal communication medium.
Involvement creates commitment
For a global, high-growth organization like Beijer Electronics, strategic HR work is an important and challenging segment. competence development, staff dialog and internal communication are some of the building-blocks of this process.
HUmAN REsOURcEs,
QUALITY ANd ENVIRONmENT
Quality
Quality was in focus across all business areas in 2008.
IDC’s work with the Kaizen method was especially note- worthy, to help all staff to improve quality and delivery fulfillment by making small improvements. It is vital that Beijer Electronics’ customers maintain high trust in the company delivering with high quality—from initial contacts with salespeople to delivery and support. Beijer Electronics constantly monitors how customers experience the corporation and its products to continuously improve its offering. Its quality management system integrates processes and instructions to ensure that the company is working on a structured and efficient basis. This system is documented in Beijer Electronics’ IT platform, where it is easily available to all the group’s units. The Swedish companies in HMI and Automation are certified accord- ing to ISO 9001 (1997) and ISO 14001 (2002). The system the Swedish companies in IDC use is ISO 9001
(1999) certified. Product certification is another important component of quality efforts to satisfy specific standards in the marine sector, for example.
Environment
Primarily, Beijer Electronics’ environmental activities are focused on finding alternatives that minimize the environ- mental impact of its products, in its production and in collaboration with suppliers. But there is also an important role to play in customers’ environmental activities. Often, Beijer Electronics’ products and solutions help realize cus- tomers’ own environmental goals.
Involvement creates commitment
0 5 10 15 20
%
0—24 25—29 30—34 35—39 40—44 45—49 50—54 55+
Age Profile
2008 2007 Ave. no. of full-time employees 595 463
Sales per employee, SEK m 2.1 2.1
Earnings per employee, SEK 000 129.7 130.9
Average age 39 38
Division men/women,% 69/31 70/30
Human Resources Key figures
Job category
Production 24%
Technologists 32%
Other/
Administration 17%
Sales/Marketing 27%
Education
University 58%
Senior high school 42%
Real Estate
There are many aspects of effective real estate management. People in buildings want a good indoor environment and sufficient safety. Increasing energy prices also mean that optimizing energy con- sumption is a priority. Beijer Electronics’
real estate automation solutions play a key role in these activities.
Real estate automation is a segment that has progressed rapidly in recent years. There is a big pay-off for estate managers and operational managers when they have effec- tive solutions to control and monitor functions like heat- ing and ventilation. It is easy to capture daily operational data from the system to optimize energy consumption and indoor climates.
simple and clear
Beijer Electronics has developed open standard systems specially tailored for real estate automation. The openness of these solutions means they are easy to implement and integrate with other equipment. With Beijer Electronics’
operator panels, the information is clear and their contem- porary design suits public environments well.
from Homes to Hotels
Communication products enabling the centralized con- trol and monitoring of complete real estate holdings via Ethernet or GSM/GPRS/3G links is another important component of Beijer Electronics’ offering to the real estate market.
These solutions are installed across a range of real estate including family homes, rented accommodation, movie theatres, churches, and even in the Hermitage Museum in St. Petersburg, Russia.
A Better climate for scania
But arguably, the biggest automation gains, and possibili-
ties, are in industrial real estate. The automation of Scania’s
truck production plant in Södertälje, near Stockholm, is
probably one of Sweden’s largest real estate automation
installations ever. Heating and ventilation in over 150
buildings is controlled by a super-ordinate CitectSCADA
system, backed by a total of over 200 PLC systems. The
outcome is more efficient operation and a better working
environment for employees.
“There are big gains to be made in industrial real estate by integrating production, real estate itself and energy management in a single automation system. Our broad offering means we are a strong player here.”
Roger Westin
Product manager, Automation business area
The Automation Business Area
market
2008 2007 2006
Sales, SEK m 607.1 571.3 408.6
Operating profit, SEK m 32.7* 34.1 27.3
Operating margin,% 5.4* 6.0 6.7
* Including non-recurring expenses of SEK 6.5 m.
Automation Business Area sales and
Operating Profit, 2006−2008 Invoicing, Automation by Product category
share of Group
Sales: 47% Profit: 27% Staff: 31%
The Automation business area delivers a broad range of products and complete solutions for effective automation on markets in the Nordic and Baltic regions. This offering consists of control systems, drive systems, operator systems and components. Tailoring products to customers, tech support, training and project management make another important component of the offering.
There are many applications for these products, from traditional industrial production to real estate automa- tion, energy systems and marine operations. Customers include engineering consultants and integrators, OEMs and end-customers. Operations feature closeness to the customer; the business area presently has 21 offices across seven countries.
2008 26%
27%
20%
6%
12%
Operator Systems
Operator Systems Drive Systems
Components Projects and Other
36%
Control Systems
2007 22%
14%
Drive Systems
Projects and Other 37%
Control Systems Invoicing, Automation
SEK m Rolling four-quarterly SEK m
Quarter
The bars and left-hand scale indicate quarterly invoicing.
The curve and right-hand scale show rolling four-quarterly invoicing.
0 20 40 60 80 100 120 140 160 180 200 220
0 60 120 180 240 300 360 420 480 540 600 660
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2005 2006 2007 2008
What’s the most exciting thing that happened in 2008?
For the Automation business area, 2008 was a year of consolidation. Our acquisition of Brodersen Automation in Denmark in 2007 produced significant profits in the year. With sales of SEK 109.9 m for 2008, the Danish market is now the group’s fourth largest.
Apart from a continued focus on our biggest customer segment, OEMs, we devoted a lot of resources to develop- ing concepts solutions for real estate automation, marine operations and the water treatment segment. This gives us visibility on the market, and has already left its impres- sion in sales.
The past two years have been eventful for automation, including the addition of the Baltic markets and the acqui- sition in Denmark. I’m delighted at how we’ve succeeded in implementing these changes successfully, while simul- taneously growing, by 6 per cent this year.
What’s your view of progress in the automation segment?
One trend is the growing demand for total solutions, where collaboration with other business areas is strategic.
We’re also noting greater awareness of energy and envi- ronmental issues. This is driving demand for production efficiency and creating business opportunities in segments like real estate automation and water treatment.
Which geographical markets are most attractive?
Naturally, with sales of SEK 264.4 m, Sweden is our big- gest market at present. The Swedish domestic market is also highly significant as a test market for new products
and solutions. We also made fantastic progress in Norway in the year, achieving growth of 15 per cent, where our marine solutions have made a major breakthrough. The Baltic states are attractive emerging markets in the infrastructure and real estate automation segments, but remain small markets with limited volumes. We made the weakest progress in Finland, with sales gains of 6 per cent in 2008.
What challenges face the Automation business area in the coming year?
Our biggest challenge for 2009 will be to maintain the drive and direction of our strategic work on a highly uncer- tain market. We have already seen the recession affecting many of our customers. But the effects of the current economic conditions are not exclusively negative for our business. Harsher times create greater demands for produc- tion efficiency, in turn triggering a greater need for effective automation solutions. The current sharper focus on energy savings is also bringing us new business opportunities.
What are your strategic priorities for 2009?
Our strategy for next year includes:
• Strengthening our important OEM volume business further.
• Continuing our work on the infrastructure segment and enhancing our concept solutions in real estate automation and water treatment.
• Focusing on a still closer collaboration with our customers.
Integration and concept development
stronger positions on the danish and Norwegian markets and successful work on concept solutions for specific customer segments featured in the Automation business area’s year.
“Our concept solutions in real estate automation, marine operations and water treatment give us visibility on the market and have already left an impression in sales.”
Lars Ekelund
Business Area manager, Automation
The HmI Products Business Area
HMI Products develops, markets and sells products for effectively visualizing, interpreting and tracking information at the human machine interface (HMI). Beijer Electronics’
HMI products feature innovative design, user-friendliness and high functionality. With its broad product selection of PC-based HMI, software, operator panels and LCD modules, HMI Products has got all price segments and applications covered, from a cost-effective entry-level range to high-technology premium products.
Sales are under a proprietary brand through subsidiaries in China, Taiwan, Germany and the US, and a global network of independent distributors. The Automation business area markets and sells its product portfolio in the Nordic and Baltic regions. There are also a number of brand label part- ners like ABB, Mitsubishi Electric and SEW Eurodrive that sell these products on a brand label basis.
market
2008 2007 2006
Sales, SEK m 505.1 465.4 392.5
Operating profit, SEK m 62.7* 58.3 53.0 Operating margin,% 12.4* 12.5 13.5
* Including non-recurring expenses of SEK 1.0 m.
HmI Products Business Area sales and
Operating Profit 2006−2008 Invoicing, HmI Products by sales channel
share of Group
Sales: 33% Profit: 51% Staff: 40%
2008
2007
20%
22%
80%
78%
Brand label partners
Brand label partners Own sales channels
Own sales channels Invoicing, HmI Products
SEK m Rolling four-quarterly SEK m
Quarter
The bars and left-hand scale indicate quarterly sales.
The curve and right-hand scale show rolling four-quarterly sales.
0 20 40 60 80 100 120 140 160 180
0 60 120 180 240 300 360 420 480 540
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2005 2006 2007 2008
What was the most exciting thing that happened in 2008?
Our acquisition of Lauer of Germany in 2007, plus the previous acquisition of Hitech in Taiwan, brought us a broad range of HMI products covering all segments, from entry-level to premium plus. In 2008, we continued to work on integrating the product range and increasing the usage of shared components and modules.
Our new software platform was our biggest product development project in the year, and a very important step for the future competitiveness of our products.
In profit terms we had our best year so far, with sales of SEK 505.1 m and growth of 9 per cent. Personally, the biggest change for me is my retirement at year-end 2008.
Magnus Ekerot will be the new Business Area Manager of HMI Products, who will join us from a position as CEO of Central Europe for Axis Communications GmbH. He will start with us on January 1, 2009 (more information on page 81).
What’s your view of progress in the HmI segment?
The ability to effectively visualize, interpret and track information is becoming an increasingly decisive function in many sectors, driving the development of HMI solu- tions. Some of the trends we see are greater demands on graphics, integrated solutions with more functionality in terminals, more openness, with the capacity to download information from the Internet or intranets, and demands for more scope to tailor operator panels for individual operators.
Which geographical markets are most attractive?
Our takeover of Lauer meant we achieved a very strong position on the German market, with sales of SEK 167 m, and this is a position we will continue to exploit. North America is also an attractive and challenging market, where we made sales advances in the year. Our sales fell some- what in Asia in 2008, mainly due to declining demand for LCD modules. However, China and India are both priority markets for future growth.
What challenges face the HmI Products business area in the coming year?
In the current market conditions, our biggest challenge is to focus on exploiting the business opportunities we have optimally. 2009 will not be a year of elaborate plans, but rather a period of strengthening customer relations and continuing to develop competitive products that center on customer benefit.
What are your strategic priorities for 2009?
Some of the segments we will be focusing on over the coming year are:
• Conducting an effective launch of our new software platform.
• Continuing our successful focus on marine products.
• Developing more sales channels on the Asian markets.
• Exploiting our business opportunities in the OEM volume segment optimally.
successful Acquisitions Pay Off
Positive sales performance and a broader offering across all segments made 2008 a successful year for HmI Products.
“The acquisition of Lauer of Germany gave us a very strong position on the German market, a position we will continue to exploit.”
conny Persson
Business Area manager, HmI Products
The Industrial data communications Business Area
Beijer Electronics acquired Westermo in 2007, and the company has been an independent business area in the group, Industrial Data Communications (IDC), since January 1, 2008. IDC develops, produces, markets and sells industrial data communication products, a market subject to very high standards of robustness and reliability. The product portfolio includes modems for fiber optics, GSM and analog lines, network routers, ADSL and 3G routers and market-leading industrial Ethernet products.
The company has its own production facility outside Eskilstuna near Stockholm, and markets its products under its own brand through sales companies in Sweden, the UK, Germany, France and Singapore, and through some 30 distributors worldwide. The demand for industrial data communication is driven by a growing need for data transmission across an array of segments, like industrial production, water treatment and power plants, traffic sys- tems and rail.
market
2008
Sales, SEK m 249.7
Operating profit, SEK m 26.6
Operating margin,% 10.7
IDC Business Area Sales and Operating Profit 2008 Invoicing, Idc by Product category share of Group
Sales: 20% Profit: 22% Staff: 25%
2008 25%
49%
Remote Access Industrial Ethernet
21%
5% Local Access
Other
What was the most exciting thing that happened in 2008?
First and foremost, 2008 was the first year that Westermo became part of Beijer Electronics. We have already started to realize synergies in segments including procurement and our global sales organization, and we’ll be developing our collaboration with other business areas further in the coming year.
We also opened a new sales office in Singapore in the year as part of our initiative on the Asiatic markets. On the product side, our launches included Ethernet Extenders, 3G and ADSL routers and product solutions for rail applications.
What’s your view of progress in the Idc segment?
There is a general trend towards more advanced function- ality, with a bigger software component. The development driver is the continuously increasing need for information with larger data volumes to process. A sharper focus on effective water and energy consumption and the need for infrastructure investments are also driving the demand for datacom solutions in harsh environments.
Industrial data communication is in the midst of a tech- nology shift, where Internet-based communication and Ethernet technology are replacing traditional industrial data communication solutions. With in-house Ethernet technology, we are a strong player that is playing an active role in developing the market.
Which geographical markets are most attractive?
We already have a strong position in Western Europe, which advanced further in the year. Eastern Europe,
especially Poland, is attractive in the infrastructure and transport segments. Our focus on the sales office in Singapore has already paid off, and in 2008 we also devel- oped our collaboration with new distributors in India, Korea, Canada and the Middle East—attractive markets for the long term.
What challenges face the Idc business area in the coming year?
With our positive profit performance, healthy order intake and strong product development operations, we’re well prepared for uncertain market conditions. Our big chal- lenge next year will be to maintain the momentum of our business and to keep developing.
What are your strategic priorities in 2009?
In the coming year we will be focusing on segments including:
• Winning market shares on priority markets.
• Strengthening our positioning in key segments like water treatment, energy and transport.
• Securing a good foothold in India, China and the Middle East.
• Developing our collaboration further with other business areas, through channels including exploiting shared business opportunities on the Nordic markets with Automation.
Technology shift creates Opportunities
A series of product launches in strategic segments and advanced market positions around the world mean the Industrial data communications business area has bright future prospects.
“Industrial data communication is in the midst of a technology shift, with Internet-based communication and Ethernet technology replacing traditional industrial data communication solutions.”
Lars-Ola Lundkvist
Business Area manager, Industrial data communications
Water
dependable access to clean water is vital for the whole world’s population—and a precondition for food production and other industries. Beijer Electronics’ solu- tions for controlling and monitoring water and waste water plants create efficiency and save time and money, in installation and operation.
Rationalizing processes at water and waste water plants is nothing new to Beijer Electronics. The corporation has been helping customers in this segment satisfy regulatory purity requirements and swap old equipment for state-of- the-art automation solutions since the 1990s, to produce more effective, energy-efficient and workable operations.
Openness means simplicity
With its long-term experience, Beijer Electronics has built concept solutions to control complete installations includ- ing water works, pumping stations and booster stations.
Beijer Electronics’ systems, which include SCADA, fre- quency inventers, PLCs and operator panels, have an open architecture and are built from off-the-shelf applications.
This makes integration with other equipment easy and saves time in project management, design, configuration, maintenance and training.
Waterworks are often large facilities, surrounded by mul- tiple pumping stations. Using Beijer Electronics’ modem and Ethernet products, the various parts of the installation can be interconnected, enabling operators to monitor plant status from any location.
clean Water in sweden—And the World
Beijer Electronics’ water and waste water solutions have strong status in Sweden—the current customer base runs to plants in over 75 municipalities. But other parts of the world, where access to clean water is not as easy, also need Beijer Electronics’ products and solutions. One example is the Middle East, where the company’s communication products have been a success.
The customer base in the water segment extends beyond
traditional water and waste water treatment facilities. HMI
Products’ unusual projects include supplying 60 operator
panels to monitor watering of a huge almond plantation
in Australia.
»Affärsområde Automation marknadsför och säljer ett brett produktprogram inom automation på marknaderna«
»Affärsområde Automation marknadsför och säljer ett brett produktprogram inom automation på marknaderna«
“Access to clean water is a decisive health and development issue worldwide. contrib- uting to improvements through our products and solutions is a fantastic motivator.”
Lars-Ola Lundkvist
Business Area manager, Industrial data communications
