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We take responsibility

By creating lighting solutions best adapted to people’s requirements and with the least possible impact on the environment, Fagerhult contributes to and takes responsibility for a sustainable development within the society in general. We see our work with sustainability as a continual process, which onwards is a natural part of our every day work.

Johan Hjertonsson, koncernchef Fagerhult

Johan Hjertonsson, President & CEO

The effects of the financial crisis and the weak economic cycle were issues high on the agenda in May 2009 when I assumed the position of CEO for the Fagerhult Group. In hindsight, this was also a tough year. The financial crisis impacted the order inflow significantly, and we had to strive to really show our capacity for business and adaptation under very difficult market conditions. However, in spite of the turbulence, it was an exciting year full of new developments, with many positive elements and new ideas coming to the fore. Most importantly, we began to establish a steady foundation on which Fagerhult will stand when the economic climate improves – and then we will be ready for major successes.

Structural measures to deal with lower volumes

Let me first say something about the manner in which the financial crisis impacted the market during the year. When order inflow decreased as a result of the weaker economic cycle, production had to be quickly adapted to the decreased volumes. Consequently, Fagerhult executed a number of tough structural measures during the year. The most difficult decisions concerned the reduction of the number of employees and the phasing out of the manufacturing plants in Borås and Falkenberg. The phasing out was possible as extensive investment in production technology, primarily in Fagerhult’s major factory in Habo, now means that production can be increased with fewer factories. In August, Employment Act negotiations were initiated and, thereafter, Fagerhult worked very closely throughout the entire process with both union representatives and local authorities. The phasing out work is progressing according to plan and is expected to be completed in the first quarter of 2010. When all of the restructuring plans initiated in 2009 are completed, the Group will see a saving of msek 40 per year. As expected, the weak economic climate negatively affected net sales and income for the entire year. However, it is worth noting that the cash flow during the year was strong and Fagerhult also defended its gross margins very well which, amongst other things, is evidence that we have been able to maintain our price levels.

Positive longs-term signs

Fagerhult is a company working within the latter end of the economic cycle and it is our assessment that the majority of our markets will remain weak during 2010. But this does not mean that we see a dark period ahead of us. Fagerhult quickly adapted its costs to the decrease in market volumes and the company’s good reputation in the market means that we are well positioned for competition in the next few years.

Furthermore, there are a number of applicable factors which, in the long-term, will create a positive and open market for new business possibilities. These factors include, for example, new legislation, directives for environmental efficiency measures and, not least, exciting changes in technological preferences towards LED and intelligent lighting systems. All of these will impact the clients’ desire to modernise and enhance the efficiency of their lighting solutions.

Fagerhult’s strategy continues to be to grow both organically and via acquisition, with continued commitment to international investment. We will always strive to be the industry leader. Fagerhult is already the industry leader in the Nordic Region and the goal is to be in the top three in all markets and segments in which we choose to operate. Otherwise, the phrase, ”Dig deep where you stand” sums up Fagerhult’s current operations quite well – the largest growth opportunities are found in the markets in which the company is already established. One example is retail lighting, which was hit hard by the economic downturn, but where the Nordic market will be of particular interest when the economic situation improves. The same can be said of outdoor lighting, a market which is expected to continue to grow during the forthcoming years, due to the EU’s energy directives on the phasing out of light sources involving mercury amongst other things.

Focus on environmental issues

Of course, the increased focus in society today on energy saving provides business possibilities, but it also impacts our own work with the environment, and social responsibility. We see our work with sustainability as a continual process, a process which is, and will remain, a natural part of both our everyday life and the everyday life of our clients. Beginning in 2008, Fagerhult reported on its sustainability work on the basis of the guidelines found in the Global Reporting Initiative (GRI). During 2009, we have, amongst other things, undertaken a review of our governance documents and have produced a revised code of ethics, which now applies for the entire group. During 2010, we will continue to develop and systemise our sustainability work.