Business model, targets and strategy
How Addtech generates value
Our vision is to be the leader in value-adding technology trading. To achieve this, we apply long-term objectives and clear strategies. Throughout our operations, the common thread is our focus on the long term and on sustainability.
OUR BUSINESS MODEL
Addtech’s business concept is based on a model dating back more than 100 years: value-adding technology trading. The company’s roots extend back to the business that Arvid Bergman and Fritz Beving founded in the early 1900s, when Bergman & Beving began importing technical products from Germany to sell on to Swedish industry, which was expanding rapidly at that time.
While the concept has been broadened and refined over the years, its core remains intact – to generate added technical and financial value for our customers. The Addtech companies act as technology partners and specialists, helping customers find the right solutions based on their needs. We can offer customised solutions, proprietary products and brands, as well as trade products from our broad network of suppliers. In this way, we contribute and enhance value for our customers, increasing the competitiveness of the products they supply to the end-market. We also generate value for suppliers, with our knowledge of customers and industries increasing their opportunities to adapt their products and systems to the customers’ needs.
We have suppliers all around the world and we make a large part of our purchases from companies outside the Nordic region, including in other parts of Europe, as well as in North America and Asia.
Throughout our operations, a common thread is an increasing focus on sustainability. This is due both to society’s increasing demands in terms of economic, environmental and social responsibility, as well as to the increasing business opportunities we perceive in this area. Our sustainability focus means that we also generate value for other stakeholders, including end-customers and sub-suppliers who gain assistance in consuming and producing more sustainably, while we also generate value for society as a whole in the form of tax revenues and jobs.
Addtech –business model and focus – value adding tech provider
Our financial targets
Each operation within Addtech is guided by shared Group targets for earnings growth and profitability. We target earnings growth of at least 15 percent annually, viewed across a business cycle. In principle, that means we must double our earnings every five years.
An important measure that we apply on a day-to-day basis is P/WC, which measures how optimised the operations are by considering profit, EBITA (P), in relation to working capital (WC). We strive for high earnings with little capital being tied up, which, combined with earnings growth, facilitates positive cash flow and long-term profitable growth.
Our three main strategies
Market-leading niche positions: The Addtech companies are to be market leaders building positions within selected niches with a high knowledge and technology content. Retaining market leadership is important for stable growth and sustainable profitability.
Customers often seek carefully selected solutions, sub-systems or products, often in small and medium-sized volumes.
Operational agility: The ability to act quickly is an important key to success. The companies should nurture their freedom of action, enabling them to act quickly and agilely in response to new business opportunities. The Group should also be able to act quickly in its ownership role by, for example, merging or splitting operations. Operational agility also includes maintaining efficient processes for integrating new companies into the Group.
Growth through acquisitions: Acquisitions are an essential part of Addtech’s growth philosophy. They make it possible to expand quickly into new market segments, to broaden the range of niche products and services and to build new positions. Our subsidiaries are also able to implement supplementary acquisitions to strengthen their market positions.
Three key success factors
Addtech has identified three important long-term success factors: Competent employees; Decentralised organisation and entrepreneurial spirit; and Consistency and strong business culture. Within this framework, where are a number of additional focus areas, selected to particulary highlight prioritised topics.
- Competent employees
It is our employees who make the difference. Ultimately, sales of products, solutions and sub-systems are driven by good business acumen and superior technical expertise. Ensuring that our employees enjoy their work and develop enables them, in turn, to generate new business and apply the right priorities. To develop our talented employees, ensuring that we have the right skills for the future, we work strategically with, for example, our focus area New talents with equal opportunities.
- Decentralised organisation and entrepreneurial spirit
Entrepreneurial spirit and a small-scale approach are part of Addtech’s DNA. We run a highly decentralised business that combines the flexibility, efficiency and entrepreneurial spirit of small businesses with the resources, network and long-term perspective of a large corporation. Each company enjoys considerable freedom in choosing customers and its paths to the market, but also bears considerable responsibility to meet ambitious expectations in terms of profit growth and profitability. Our focus areas Entrepreneurship 2.0 and Increased decentralised responsibility serve to safeguard that Addtech preserves its unique entrepreneur-driven model.
- Consistent action and strong corporate culture
Cultural issues are important to Addtech. To build a sound and robust organisation, it is necessary to act strategically and consistently, to plan well, to take a long-term approach, to make well-considered decisions and to implement measures efficiently. Good business acumen and a strong focus on both profitability and sustainable business are also prerequisite for our success. We also strive to further develop our potential from the network perspective. Our Co-creation focus area is a tool for identifying new co-operation opportunities between the companies.