Business report
CEO’s comments 1
Business mission, vision, strategies and goals 4
The Seco Tools share 6
Operations 8
Products and services 10
Market overview 10
Seco Tools in China 12
Seco Tools in the USA 14
Seco Tools in Germany 16
Seco Tools in France 18
Seco Tools’ vision is to be perceived by its customers as
the most dedicated partner in total solutions for metal cutting machining. This vision is achieved through a personal commitment to improving the customers’
competitiveness by offering solutions built on high- performance products and services.
The Seco Tools Group, headquartered in Fagersta, Sweden, has around 4,500 employees worldwide and annual revenue of approximately SEK 4,900 M.
Around 95 per cent of the Group’s revenue is generated in markets outside Sweden.
Seco Tools is represented in some 60 countries and has more than 50 wholly owned foreign subsidiaries. The company also collaborates closely with a large number of agents and distributors around the world.
Production is based primarily in Sweden, the Czech Republic, France and India.
SECO TOOLSnANNUAL REPORT 2009
eport has been produced by Seco Tools in association with Hallvarsson & Halvarsson. © Seco Tools AB. Photos: Kenneth Sundh, etc. Printing: Strokirk-Landströms, Lidköping 2010. Translation: GH Language Solutions.
Seco Tools’ corporate accountability
Seco Tools’ corporate accountability 21
Seco Tools’ history 22
Seco Tools’ Code of Conduct 24
Purchasing 25
Seco Tools’ shared values 26
Seco Tools’ employees 28
Talents 31
Seco Tools’ environmental and quality management 32
Corporate governance
Corporate governance report 78
Picture gallery
Board of Directors 84
Group Executive Management 86
Group Executive Council and Auditors 87
Addresses 88
Annual General Meeting 92
Definitions of key financial ratios 93 Administration report and financial statements
Administration report 35
Consolidated income statement 40
Consolidated statement of comprehensive income 40
Consolidated balance sheet 42
Consolidated statement of changes in equity 44 Consolidated statement of cash flows 46
Parent Company income statement 48
Parent Company balance sheet 49
Parent Company statement of changes in equity 51 Parent Company statement of cash flows 52
Accounting policies and notes 53
Proposed appropriation of profits 75
Audit report 76
Seco Tools Annual Report 2009
Business report
CEO’s comments 1
Business mission, vision, strategies and goals 4
The Seco Tools share 6
Operations 8
Products and services 10
Market overview 10
Seco Tools in China 12
Seco Tools in the USA 14
Seco Tools in Germany 16
Seco Tools in France 18
Seco Tools’ vision is to be perceived by its customers as
the most dedicated partner in total solutions for metal cutting machining. This vision is achieved through a personal commitment to improving the customers’
competitiveness by offering solutions built on high- performance products and services.
The Seco Tools Group, headquartered in Fagersta, Sweden, has around 4,500 employees worldwide and annual revenue of approximately SEK 4,900 M.
Around 95 per cent of the Group’s revenue is generated in markets outside Sweden.
Seco Tools is represented in some 60 countries and has more than 50 wholly owned foreign subsidiaries. The company also collaborates closely with a large number of agents and distributors around the world.
Production is based primarily in Sweden, the Czech Republic, France and India.
Seco Tools AB, SE-737 82 Fagersta, Sweden. Tel +46 223 - 400 00 www.secotools.com
02726860 ST20106234GB
SECO TOOLSnANNUAL REPORT 2009
This annual report has been produced by Seco Tools in association with Hallvarsson & Halvarsson. © Seco Tools AB. Photos: Kenneth Sundh, etc. Printing: Strokirk-Landströms, Lidköping 2010. Translation: GH Language Solutions.
Seco Tools’ corporate accountability
Seco Tools’ corporate accountability 21
Seco Tools’ history 22
Seco Tools’ Code of Conduct 24
Purchasing 25
Seco Tools’ shared values 26
Seco Tools’ employees 28
Talents 31
Seco Tools’ environmental and quality management 32
Corporate governance
Corporate governance report 78
Picture gallery
Board of Directors 84
Group Executive Management 86
Group Executive Council and Auditors 87
Addresses 88
Annual General Meeting 92
Definitions of key financial ratios 93 Administration report and financial statements
Administration report 35
Consolidated income statement 40
Consolidated statement of comprehensive income 40
Consolidated balance sheet 42
Consolidated statement of changes in equity 44 Consolidated statement of cash flows 46
Parent Company income statement 48
Parent Company balance sheet 49
Parent Company statement of changes in equity 51 Parent Company statement of cash flows 52
Accounting policies and notes 53
Proposed appropriation of profits 75
Audit report 76
Seco Tools Annual Report 2009
2009 2008 2007 2006 2005
Revenue, SEK M 4,889 6,536 6,034 5,451 4,936
Operating profit, SEK M 307 1,332 1,491 1,266 1,100
Profit after financial items, SEK M 223 1,246 1,437 1,235 1,094
Operating margin, % 6.3 20.4 24.7 23.2 22.3
Profit margin, % 4.6 19.1 23.8 22.7 22.2
Basic earnings per share, SEK 1.11 6.12 6.99 6.00 5.39
Diluted earnings per share, SEK 1.11 6.12 6.99 6.00 5.39
Ordinary dividend, SEK –1) 3.20 4.20 3.80 3.40
Extraordinary dividend, SEK –1) – 2.00 2.20 2.00
Return on capital employed, % 6.7 30.8 42.6 40.9 40.5
Return on equity, % 6.7 35.6 43.9 39.4 37.0
Equity, SEK M 2,230 2,603 2,406 2,221 2,207
Cash and cash equivalents, SEK M 186 284 294 243 226
Cash flow, SEK M –96 –37 47 36 –74
Cash flow from operating activities, SEK M 861 851 1,126 1,004 802
Equity/assets ratio, % 41 41 46 49 53
Capital expenditure on fixed assets, SEK M 325 796 563 426 377
Number of employees at end of year 4,412 5,038 4,662 4,224 4,036
Financial overview 2005–2009
Capital employed
Total assets less interest-free liabilities and deferred tax liabilities.
Operating margin
Profit after amortisation/depreciation divided by revenue.
Profit margin
Profit after financial items divided by revenue.
Return on capital employed
Profit after financial items plus interest expenses and foreign exchange expenses on loans divided by average capital employed.
Return on equity
Profit after reported tax divided by aver- age equity.
Equity/assets ratio
Equity divided by total assets.
Cash flow from operating activities The total of cash generated by ordinary activities during the year plus changes in working capital excluding cash and cash equivalents.
Basic earnings per share
Profit after reported tax divided by the weighted average number of shares out- standing based on the number of days a certain number of shares was outstan- ding in relation to the year as a whole.
Diluted earnings per share
Profit after reported tax plus interest expenses on convertible debentures divi- ded by the weighted average number of shares outstanding based on the number of days a certain number of shares was outstanding in relation to the year as a whole.
Revenue
Refers to revenue arising from the sale of goods measured at fair value less VAT, discounts and returns.
SMALL PART MACHINING
GENERAL ENGINEERING
AUTOMOTIVE INDUSTRY AEROSPACE
INDUSTRY
We manufacture innovative and high qual- ity products for the metal cutting industry in the areas of milling, turning, holemak- ing and tooling systems.
The products are supported by a range of complementary services that help custo- mers to optimise their manufacturing pro- cesses and improve their cost-efficiency.
Closeness to our customers enables us to understand their business and needs so that we can offer optimal individualised solutions…
... to customers with high demands on quality, service and cost-efficiency in the aerospace, automotive, small part machin- ing, mould and die, energy and general engineering industries.
• The year was marked by a deep recession and the total market contracted by around 38 per cent.
• Revenue fell by 31 per cent at fixed exchange rates and amounted to SEK 4,889 M. Operating profit was SEK 307 M, equal to an operating margin of 6.3 per cent.
• Profit after tax for the full year was SEK 161 M. Earnings per share for the full year were SEK 1.11.
• Cost adaptations led to workforce reductions amounting to approximately 850 jobs, of which reduced working hours equal to approximately 200 full-time positions.
• A new plant for pressing and sintering was opened in Fagersta, Sweden.
• Seco Tools successfully launched a number of new products such as the Square 6™ family of milling cutters, the Double Octomill face milling cutters, Steadyline™ the vibration damping concept and new insert grades with Duratomic® coating technology.
2009 2008 2007 2006 2005
Revenue, SEK M 4,889 6,536 6,034 5,451 4,936
Operating profit, SEK M 307 1,332 1,491 1,266 1,100
Profit after financial items, SEK M 223 1,246 1,437 1,235 1,094
Operating margin, % 6.3 20.4 24.7 23.2 22.3
Profit margin, % 4.6 19.1 23.8 22.7 22.2
Basic earnings per share, SEK 1.11 6.12 6.99 6.00 5.39
Diluted earnings per share, SEK 1.11 6.12 6.99 6.00 5.39
Ordinary dividend, SEK –1) 3.20 4.20 3.80 3.40
Extraordinary dividend, SEK –1) – 2.00 2.20 2.00
Return on capital employed, % 6.7 30.8 42.6 40.9 40.5
Return on equity, % 6.7 35.6 43.9 39.4 37.0
Equity, SEK M 2,230 2,603 2,406 2,221 2,207
Cash and cash equivalents, SEK M 186 284 294 243 226
Cash flow, SEK M –96 –37 47 36 –74
Cash flow from operating activities, SEK M 861 851 1,126 1,004 802
Equity/assets ratio, % 41 41 46 49 53
Capital expenditure on fixed assets, SEK M 325 796 563 426 377
Number of employees at end of year 4,412 5,038 4,662 4,224 4,036
1) According to Board proposal.
For definitions of key ratios, see page 93. In order to obtain comparable figures, the key ratios per share have been restated as if the share split in 2006 had been carried out at an earlier date.
Financial overview 2005–2009
Capital employed
Total assets less interest-free liabilities and deferred tax liabilities.
Operating margin
Profit after amortisation/depreciation divided by revenue.
Profit margin
Profit after financial items divided by revenue.
Return on capital employed
Profit after financial items plus interest expenses and foreign exchange expenses on loans divided by average capital employed.
Return on equity
Profit after reported tax divided by aver- age equity.
Equity/assets ratio
Equity divided by total assets.
Cash flow from operating activities The total of cash generated by ordinary activities during the year plus changes in working capital excluding cash and cash equivalents.
Basic earnings per share
Profit after reported tax divided by the weighted average number of shares out- standing based on the number of days a certain number of shares was outstan- ding in relation to the year as a whole.
Diluted earnings per share
Profit after reported tax plus interest expenses on convertible debentures divi- ded by the weighted average number of shares outstanding based on the number of days a certain number of shares was outstanding in relation to the year as a whole.
Revenue
Refers to revenue arising from the sale of goods measured at fair value less VAT, discounts and returns.
SMALL PART MACHINING
MOULD AND DIE
GENERAL ENGINEERING
AUTOMOTIVE INDUSTRY AEROSPACE
INDUSTRY
ENERGY ity products for the metal cutting industry in the areas of milling, turning, holemak- ing and tooling systems.
complementary services that help custo- mers to optimise their manufacturing pro- cesses and improve their cost-efficiency.
Closeness to our customers enables us to understand their business and needs so that we can offer optimal individualised solutions…
... to customers with high demands on quality, service and cost-efficiency in the aerospace, automotive, small part machin- ing, mould and die, energy and general engineering industries.
• The year was marked by a deep recession and the total market contracted by around 38 per cent.
• Revenue fell by 31 per cent at fixed exchange rates and amounted to SEK 4,889 M. Operating profit was SEK 307 M, equal to an operating margin of 6.3 per cent.
• Profit after tax for the full year was SEK 161 M. Earnings per share for the full year were SEK 1.11.
• Cost adaptations led to workforce reductions amounting to approximately 850 jobs, of which reduced working hours equal to approximately 200 full-time positions.
• A new plant for pressing and sintering was opened in Fagersta, Sweden.
• Seco Tools successfully launched a number of new products such as the Square 6™ family of milling cutters, the Double Octomill face milling cutters, Steadyline™ the vibration damping concept and new insert grades with Duratomic® coating technology.
CEO’S CO
The crisis brings
new opportunities
In 2009 we were confronted with the most severe market downturn in many years and saw the total market contract by around 38 per cent. In response to this, we chose to do two things. First and foremost, we quickly adapted our level of operations to the new low demand and thus succeeded in avoiding losses in every quarter. We also decided to take advantage of the opportunities created by the crisis. Through sizeable investments in modern production technology, intensive efforts to further strengthen the partnership with our customers and a faster rate of product launches, I am convinced that we will emerge from the recession as a stronger company.
SECO TOOLS n annuaL rEpOrT 2009 2
CEO
he year was unavoidably marked by the deep reces- sion. The diagram below clearly shows the serious- ness of this downturn compared to earlier market slumps.
The sharp drop in demand led to declining revenue and lower earnings. Our revenue fell by nearly a third in compara- ble currencies and the operating margin weakened from 20.4 per cent to 6.3 per cent. The business cycle reached its lowest point in the second quarter and after the summer demand sta- bilised at a low but somewhat better level. In certain markets we noted signs of improvement and markets like India and China showed positive development in the fourth quarter.
Rapid adaptations
The weak market forced us to make substantial cost adapta- tions. We chose to implement these as quickly as possible, and the first workforce reduction that was announced in Novem- ber 2008 was followed by another in February 2009, affecting a total of around 650 employees. In addition, we agreed on cut- backs equal to an additional 200 full-time jobs through a temporary reduction in working hours and salaries.
These actions caused hardship for many individuals and for this reason, above all, it was positive that we were able to carry out a relatively large share of the adaptations through a temporary decrease in salaries and working hours. I see this as a good model from both a business and human perspective. All in all, these measures yielded cost savings of SEK 560 M for the full year.
In 2009 the market presented us with daunting challenges, but in many respects it was also a successful year.
As a result of our timely and forceful measures we came through 2009 without incurring a loss in any single quarter, which is something few of our key competitiors probably succeeded at.
stRongeR maRket position
We also won market shares. This is something we are proud to have achieved for several consecutive years, but in 2009 these shares increased at a significantly faster rate than earlier. Seco Tools’ revenue development of -31 per cent should be com- pared to global market development of -38 per cent. There were four main reasons for this:
Our geographical positioning gave us advantages in relation to the total market, mainly in that the worst market collapse took place in Japan where we have a relatively minor presence.
Our breakdown of revenue by customer segment was also favourable in the perspective that we have a strong position in industries such as aerospace, energy and small part machining, all of which weathered the recession comparatively well.
Furthermore, our already fundamentally strong product offering was further enhanced through a number of successful launches during the year. A few such examples were the Square 6™ square shoulder mills, the Double Octomill face milling cutters, the Steadyline™ vibration damping shell mill holders and new insert grades with the Duratomic® coating technology.
Finally, we succeeded in upholding the pace in our efforts to offer optimised solutions through closeness to the custom- ers. Our sales engineers continued working with a high level of motivation and maintained stability in our customer contacts despite a turbulent market.
seeing tHe possiBiLities
All of this is naturally encouraging, but in a few years when we look back on the recession I believe that we will be most satis- fied with the fact that we dared to look forward, see the possi- bilities and position ourselves for the future at an early stage.
T
Cumulative growth in market share relative to 2005
0.0 0.5 1.0 1.5 2.0
2010 2009 2008 2007 2006 2005
%
Seco Target
Relative target of 0.2 percentage points per year
Utdelningens andel av vinst per aktie
0 10 20 30 40 50 60 70
2008 2009 2007 2006 2005
%
Ordinary dividend,
% of earnings per share Extraordinary dividend,
% of earnings per share Goal, %
According to proposal
Return on capital employed Goal, %
Avkastning på sysselsatt kapital, %
0 10 20 30 40 50
2008 2009 2007 2006 2005
%
Rörelsemarginal
0 5 10 15 20 25
2008 2009 2007 2006 2005
%
Nettoskuldsättningsgrad
0.0 0.2 0.4 0.6 0.8 1.0
2008 2009 2007 2006 2005
%
Organisk tillväxt
-40 -30 -20 -10 0 10 20
2008 2009 2007 2006 2005
%
*
*
%
–40 –30 –20 –10 0 10 20 30
2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993
Change in invoicing by quarter (in comparable currencies)
The change in invoicing by quarter illustrates the seriousness of the latest downturn compared to earlier market slumps.
CEO’S CO
Although we were forced to cut costs in virtually all areas, we decided to continue our R&D activities at the same high level and accelerated the pace of development by moving for- ward a number of product launches. 2009 was probably one of our best years ever in terms of the number and quality of prod- uct launches, and I dare to predict another strong year in 2010.
We also chose to go forward with the previously decided investments. The largest and most important of these was the new pressing and sintering unit in Fagersta that will provide increased capacity and the conditions for future advances in both product quality and production.
In recent years we have established a global production structure and laid the foundation for standardisation of the production methods. This work will now be expanded to include smaller tooling production units.
We are naturally also carrying on the continuous improve- ment programme known as LIFE – Little Improvements From Everyone. It is satisfying to see the enthusiasm this programme has attracted at all units after several years of systematic imple- mentation.
Another global initiative is the group-wide values that we have now established throughout the organisation. All employ- ees have taken part in exercises to explore how the values can help us to choose our behaviour in different situations. This work is of major importance in a global organisation with an ambition to act in a more consistent manner both internally and in dealing with our customers, and the values are cur- rently being integrated into our processes for everything from recruitment to performance reviews.
With regard to predicting market development in 2010, I prefer to take a cautious stance. Our base scenario assumes
2013–14, but even this represents a relatively large increase from the current level. Due to uncertainty about the market development, we are working with a number of different sce- narios and contingency plans.
However, one thing that appears likely is that China, India and Brazil will be first markets to recover from the crisis. This means that ongoing targeting of these markets and Russia will go from being very important to becoming fundamental for Seco Tools.
an even stRongeR company
The cutting tools industry has consolidated over the past 20 years and we expect this trend to continue at a somewhat slower rate, although the drastic downturn in 2009 can create new dynamics. Our success has historically been based mainly on organic growth, which has been supplemented with selec- tive acquisitions to strengthen geographical positions or specific product areas. We will continue to focus on organic growth, but our strong finances and good profitability relative to the indus- try give us the means to pursue possible acquisitions.
All in all, it is my conviction that our rapid adaptations and forward-looking activities have given us a unique chance to emerge from the recession even stronger than we entered it.
I look forward with confidence to Seco Tools’ opportunities in the future.
Lastly, I want to thank all members of the Seco Tools family for their excellent contributions during the year. In a year like 2009, the importance of your expertise and dedication for our success stands out even more clearly.
Kai Wärn, President and CEO
Kai Wärn
SECO TOOLS n annuaL rEpOrT 2009 4
buSinESS miSSiOn, ViSiOn, STraTEgiES
business mission and vision
Seco Tools’ business mission is to develop, manufacture and globally market metal cutting products that satisfy high cus- tomer requirements for quality, service and cost-efficiency. The product portfolio consists of solutions for milling, turning, holemaking and tooling systems.
Seco Tool’s vision is to be perceived by the customers as the most dedicated partner in total solutions for metal cutting machining. Seco Tools aims to realise this vision through a per- sonal commitment to maximising the customers’ competitive- ness by offering solutions built on high-performance products and services.
Strategies
Seco Tools’ strategy is based on customer closeness, a focus on solutions, product innovation and global networking. In addition, partnership with distributors, control over the value added chain and supplementary acquisitions are vital compo- nents in meeting the strategic goals.
customeR cLoseness
Closeness to the customers is vital in understanding their busi- ness and effectively addressing their needs with the best possi- ble solutions. Close contact and long-term cooperation with the customers creates a deeper understanding and uncovers new needs in the market, providing critical input for the Group’s product development. Direct contact with customers is essential for effective use of R&D resources.
Customers should feel that Seco Tools is easy to work with, has a high service level and makes a significant contribution to improving their productivity.
One way to achieve customer closeness is by having a large in-house sales force with a high level of technical expertise and relationships that can be built and deepened over time. Conse- quently, long-term customer relationships are of key impor- tance for Seco Tools.
a focus on soLutions
Because the professional expertise of our employees is critical in order to offer optimal solutions, we pursue systematic and continuous learning initiatives to enhance their technical and sales-related skills. Aside from customer-close technical resources, our ability to deliver solutions is strengthened by investments in equipment and through the technical centres that have been established in a number of markets.
paRtneRsHip witH distRiButoRs
Close collaboration with distributors provides good market coverage and penetration as a complement to direct sales. This enables us to reach smaller customers and customers in mar- kets traditionally dominated by distributors rather than direct sales from manufacturers. Our long-term ambition is to con- tinuously strengthen our distributor partnerships through training and other activities.
taRgeting new maRkets
To enhance our growth opportunities, we offensively target geographical markets that offer particularly good potential for growth, primarily in Asia and Eastern Europe. Growth in these regions has been considerably higher than in Western Europe and North America, and is expected to remain so in the fore- seeable future.
acquisitions
Seco Tools strives primarily for organic growth. However, as a complement to this, we continuously evaluate the possibilities to maximise growth in selected market or product areas through partnerships or acquisitions.
pRoduct innovation
Products of a high quality and superior performance are cru- cial for success in the market. In each new product generation, Seco Tools strives to offer customers significant improvements in machining performance. Another priority is ongoing improvement in ease of use.
Part of our product development strategy is to continuously streamline the internal processes and accelerate time to market.
contRoL oveR tHe vaLue added cHain
We see control over the entire value added chain for cemented carbide as imperative for strong long-term development of our product innovation. This also applies to attributes like product quality and cost-efficiency, which are ultimately the basis for good profitability.
gLoBaL netwoRking
Well developed global networking is necessary in order to opti- mally utilise the wide-ranging expertise found in the Group and create economies of scale. Through cooperation across national borders, it is possible to offer the best solutions to cus- tomers worldwide.
This networking also includes knowledge sharing between the production units. We have built up a global production structure and strive to apply uniform processes and produc- tion methods.
With globally spread operations that span across both cul- tural and geographical boundaries, it is important to create a uniform culture and values. Seco Tools’ goal is for the com- pany to be perceived in a consistent manner, no matter where in the world operations are conducted.
SECO TOOLS n annuaL rEpOrT 2009 5
Financial goals goal attainment Shareholder value
organic growth
Organic revenue growth should amount to at least 7 per cent annually over a business cycle.
seco tools’ overall objective is to provide its shareholders with an attractive return and value growth over time.
over the past five-year period, seco tools has paid total dividends of sek 20.80 to its share- holders, equal to a direct return of 4.6 per cent.
operating margin
The average operating margin over a business cycle should be 20 per cent.
Return on capital employed
The average return on capital employed should be least 30 per cent over a business cycle.
net debt
The average net debt/equity ratio should be less than 1.0.
dividend
The dividend payout ratio for the ordinary dividend should be at least 50 per cent.
0.0 0.5 1.0 1.5 2.0
2010 2009 2008 2007 2006 2005
%
Seco Target
Relative target of 0.2 percentage points per year
Utdelningens andel av vinst per aktie
0 10 20 30 40 50 60 70
2009 2008 2007 2006 2005
%
Ordinary dividend,
% of earnings per share Extraordinary dividend,
% of earnings per share Goal, % According to proposal
Return on capital employed Goal, %
Avkastning på sysselsatt kapital, %
0 10 20 30 40 50
2009 2008 2007 2006 2005
%
Rörelsemarginal
15 20 25
%
Nettoskuldsättningsgrad
0.6 0.8 1.0
%
Organisk tillväxt
0 10 20
%
*
*
0.0 0.5 1.0 1.5 2.0
2010 2009 2008 2007 2006 2005
%
Seco Target
Relative target of 0.2 percentage points per year
Utdelningens andel av vinst per aktie
0 10 20 30 40 50 60 70
2009 2008 2007 2006 2005
%
Ordinary dividend,
% of earnings per share Extraordinary dividend,
% of earnings per share Goal, % According to proposal
Return on capital employed Goal, %
Avkastning på sysselsatt kapital, %
0 10 20 30 40 50
2009 2008 2007 2006 2005
%
Rörelsemarginal
0 5 10 15 20 25
2009 2008 2007 2006 2005
%
Nettoskuldsättningsgrad
0.0 0.2 0.4 0.6 0.8 1.0
2009 2008 2007 2006 2005
%
Organisk tillväxt
-40 -30 -20 -10 0 10 20
2009 2008 2007 2006 2005
%
*
*
0.0 0.5 1.0 1.5 2.0
2010 2009 2008 2007 2006 2005
%
Seco Target
Relative target of 0.2 percentage points per year
Utdelningens andel av vinst per aktie
0 10 20 30 40 50 60 70
2009 2008 2007 2006 2005
%
Ordinary dividend,
% of earnings per share Extraordinary dividend,
% of earnings per share Goal, % According to proposal
Return on capital employed Goal, %
Avkastning på sysselsatt kapital, %
0 10 20 30 40 50
2009 2008 2007 2006 2005
%
Rörelsemarginal
0 5 10 15 20 25
2009 2008 2007 2006 2005
%
Nettoskuldsättningsgrad
0.0 0.2 0.4 0.6 0.8 1.0
2009 2008 2007 2006 2005
%
Organisk tillväxt
-40 -30 -20 -10 0 10 20
2009 2008 2007 2006 2005
%
*
*
0.0 0.5 1.0 1.5 2.0
2010 2009 2008 2007 2006 2005
%
Seco Target
Relative target of 0.2 percentage points per year
Utdelningens andel av vinst per aktie
0 10 20 30 40 50 60 70
2009 2008 2007 2006 2005
%
Ordinary dividend,
% of earnings per share Extraordinary dividend,
% of earnings per share Goal, % According to proposal
Return on capital employed Goal, %
Avkastning på sysselsatt kapital, %
0 10 20 30 40 50
2009 2008 2007 2006 2005
%
Rörelsemarginal
0 5 10 15 20 25
2009 2008 2007 2006 2005
%
Nettoskuldsättningsgrad
0.0 0.2 0.4 0.6 0.8 1.0
2009 2008 2007 2006 2005
%
Organisk tillväxt
-40 -30 -20 -10 0 10 20
2009 2008 2007 2006 2005
%
*
*
0,0 0,5 1,0 1,5 2,0
2010 2009 2008 2007 2006 2005
%
Seco Mål
Relativt mål om 0,2 procentenheter per år
Utdelningens andel av vinst per aktie
0 10 20 30 40 50 60 70
2009 2008 2007 2006 2005
%
Ordinarie utdelning %, av vinst per aktie Extra utdelning %, av vinst per aktie Mål, %
Enligt förslag
Avkastning på sysselsatt kapital Mål, %
Avkastning på sysselsatt kapital, %
0 10 20 30 40 50
2009 2008 2007 2006 2005
%
Rörelsemarginal
0 5 10 15 20 25
2009 2008 2007 2006 2005
%
Nettoskuldsättningsgrad
0,0 0,2 0,4 0,6 0,8 1,0
2009 2008 2007 2006 2005
%
Organisk tillväxt
-40 -30 -20 -10 0 10 20
2009 2008 2007 2006 2005
%
*
*
0.0 0.5 1.0 1.5 2.0
2010 2009 2008 2007 2006 2005
%
Seco Target
Relative target of 0.2 percentage points per year
Utdelningens andel av vinst per aktie
0 10 20 30 40 50 60 70
2009 2008 2007 2006 2005
%
Ordinary dividend,
% of earnings per share Extraordinary dividend,
% of earnings per share Goal, % According to proposal
Return on capital employed Goal, %
Avkastning på sysselsatt kapital, %
0 10 20 30 40 50
2009 2008 2007 2006 2005
%
Rörelsemarginal
0 5 10 15 20 25
2009 2008 2007 2006 2005
%
Nettoskuldsättningsgrad
0.0 0.2 0.4 0.6 0.8 1.0
2009 2008 2007 2006 2005
%
Organisk tillväxt
-40 -30 -20 -10 0 10 20
2009 2008 2007 2006 2005
%
*
*
0,0 0,5 1,0
2010 2009 2008 2007 2006 2005
Seco Mål
Relativt mål om 0,2 procentenheter per år
Utdelningens andel av vinst per aktie
0 10 20 30 40 50 60 70
2009 2008 2007 2006 2005
%
Ordinarie utdelning %, av vinst per aktie Extra utdelning %, av vinst per aktie Mål, %
Enligt förslag
Avkastning på sysselsatt kapital Mål, %
Avkastning på sysselsatt kapital, %
0 10 20 30 40 50
2009 2008 2007 2006 2005
%
Rörelsemarginal
0 5 10 15 20 25
2009 2008 2007 2006 2005
%
Nettoskuldsättningsgrad
0,0 0,2 0,4 0,6 0,8 1,0
2009 2008 2007 2006 2005
%
Organisk tillväxt
-40 -30 -20 -10 0 10 20
2009 2008 2007 2006 2005
%
*
*
buSinESS miSSiOn . ViSiOn, STraTEgiES and gOaLS
SECO TOOLS n annuaL rEpOrT 2009 6
ThE SECO TOOLS
The Seco Tools share
HistoRy
Seco Tools AB was introduced on the Stockholm Stock Exchange in 1989. On 31 December 2009 the company had 101,967,690 class B shares quoted on NASDAQ OMX. The class A shares are not publicly listed. Changes in the number of shares outstanding are shown in the table below.
sHaRe pRice deveLopment
The closing price of the Seco Tools share in 2009 was SEK 86.75, representing an increase of 45 per cent during the year.
Over the same period the OMX Stockholm Index rose by 47 per cent. The year’s highest bid price was quoted at SEK 102.00 on 28 September 2009 and the lowest at SEK 55.25 on 1 April 2009. The Seco Tools share has produced a solid return and the share price including reinvested dividends has risen by an average of 13 per cent annually over the past ten- year period.
sHaRe capitaL
On 31 December 2009 the share capital in Seco Tools amounted to SEK 73 M (73), consisting of a total of 145,467,690 shares with a quota value of SEK 0.50 each. The shares are divided between class A and class B shares. All class A shares are held by Sandvik AB and grant entitlement to ten votes each, while the class B shares grant one vote each.
sHaRe tRading
A total of 13.0 million (12.7) Seco Tools shares were traded in 2009, equal to 13 per cent (12) of all class B shares in the com- pany. The average trading volume was 51,965 shares (50,261) per business day and the average number of transactions was 53 per business day.
dividend
The overall objective for the Seco Tools Group is to provide its shareholders with an attractive long-term return and value growth over time, with a regular dividend payout ratio of at least 50 per cent over a business cycle. The Board of Directors proposes to the 2010 AGM that no dividend be paid (SEK 3.20 per share). The average dividend payout ratio over the past five years is 57 per cent excluding extraordinary dividends and 82 per cent including extraordinary dividends.
owneRsHip stRuctuRe
The number of shareholders on 31 December 2009 was 13,418, compared to 13,123 at the beginning of the year. The ten largest shareholders controlled 88.8 per cent (87.3) of the share capital and 97.0 per cent (96.7) of the number of votes at year-end 2009. Financial institutions and equity funds held 30.0 per cent of the share capital and 8.1 per cent of the num- ber of votes at the end of the year.
The share price, including reinvested dividends, has risen by an average of 13 per cent annually over the past ten-year period.
Earnings and ordinary dividend per share Changes in the number of shares outstanding no. of a shares
no. of b shares
Total no.
of shares
Share capital, SEK
IPO in 1989 8,700,000 19,700,000 28,400,000 71,000,000
Conversion in 19921) 8,700,000 19,710,480 28,410,480 71,026,200 Conversion in 1993 8,700,000 19,773,980 28,473,980 71,184,950 Conversion in 1994 8,700,000 19,913,588 28,613,588 71,533,970 Conversion in 1995 8,700,000 20,132,898 28,832,898 72,082,245 Conversion in 20042) 8,700,000 20,393,538 29,093,538 72,733,845 5-for-1 split in 2006 43,500,000 101,967,690 145,467,690 72,733,845
1) In 1988 Seco Tools issued a convertible debenture loan in a face amount of SEK 30.6 M. The debentures were subscribed for only by permanent employees in the Swedish part of the Seco Tools Group. The debentures carried a fixed annual interest rate of 9.25 per cent and matured on 30 March 1995. During the period from 1 March 1991 to 15 March 1995, the debentures were convertible to class B shares at a conversion price of SEK 70 each.
2) In 1999 Seco Tools issued a convertible debenture loan in a face amount of SEK 69.6 M. The debentures were subscribed for only by permanent employees in the Swedish part of the Seco Tools Group. The debentures carried interest corresponding to STIBOR less 0.75 percentage points and matured on 30 May 2004. The debentures were convertible during the period from 1 February 2001 to 30 April 2004. Those conversions that took place were carried out during the period from January to April 2004.
0 1 2 3 4 5 6 7 8
2005 2006 2007 2008 2009
SEK
Basic earnings per share Ordinary dividend
ThE SECO TOOLS
Key financial ratios per share, SEK
2009 2008 2007 2006 2005
Basic earnings 1.11 6.12 6.99 6.00 5.39
Diluted earnings 1.11 6.12 6.99 6.00 5.39
Equity 15.33 17.89 16.54 15.27 15.18
Ordinary dividend – 1) 3.20 4.20 3.80 3.40
Extraordinary dividend – 1) – 2.00 2.20 2.00 Share price at year-end 86.75 60.00 111.25 112.00 80.00
Direct return2), % – 5.3 3.8 3.4 4.3
P/E ratio3), times 78.2 9.8 15.9 18.7 14.8
Price/equity ratio, % 566 335 673 733 527
1) According to Board proposal.
2) Ordinary dividend divided by the share price at year-end.
3) Share price at year-end divided by basic earnings per share.
To obtain comparable figures, the key ratios per share have been restated as if the share split had been carried out at an earlier date.
For definitions of key ratios, see page 93.
Largest shareholders (31 December 2009)
% of no.
of shares
% of voting power
Sandvik Invest AB 60.4 89.3
Alecta pensionsförsäkring 9.5 2.6
Swedbank Robur Fonder 8.1 2.2
Capital Group Fonder 2.3 0.6
Lannebo Fonder 1.9 0.5
SEB Fonder & SEB Trygg Liv 1.7 0.5
AFA Försäkring 1.4 0.4
AMF Försäkring & Fonder 1.4 0.4
Skandia Liv 1.2 0.3
HQ Fonder 0.9 0.2
Other shareholders 11.2 3.0
100.0 100.0
A number of the shareholdings owned by foreign investors are registered in the name of a trustee, which means that the true owners are not publicly registered.
The largest foreign investors are therefore not included in the above list unless the size of their shareholdings can be established.
no. of shares no. of shareholders
% of all shareholders
aggregate holdings
% of share capital
average holding
1–500 10,296 76.7 1,554,780 1.1 151
501–1,000 1,382 10.3 1,146,733 0.8 830
1,001–10,000 1,554 11.6 4,613,139 3.2 2,969
10,001–100,000 139 1.0 4,127,734 2.8 29,696
100,001– 47 0.4 134,025,304 92.1 2,851,602
Share price development
2004 2005 2006 2007 2008 2009
40 60 80 100 120 140 160 180
© NASDAQ OMX
SIX Return Index B share
Share price development including reinvested dividends
2004 2005 2006 2007 2008 2009
40 60 80 100 120 140 160 180
© NASDAQ OMX
SX20 Industrials_PI OMX Stockholm PI B share (including dividends)
Distribution of shareholdings (31 December 2009)
