Together, toward new heights
2023 was a successful year. We posted favorable financial results while continuing to execute our strategy of driving profitable growth and building an even stronger company.
Market development and financial performance
Our first full-year as a listed company on Nasdaq Stockholm was successful. Our revenues grew organically by 8% to new all-time-highs. Adjusted EBIT grew 27% to SEK 2,141 million year on year, with an adjusted EBIT margin of 10.4%. Higher revenues combined with an improved product mix and well-implemented price increases contributed to the favourable earnings development. The Tube and Kanthal divisions noted a positive revenue and earnings development, with solid demand in several of the customer segments. We have a clear benefit from our diversified exposure to industries being in different phases of the business cycle. The Strip division noted a negative development compared with the preceding year, on the back of a challenging market situation. Overall, we strengthened our order book throughout the year, and I see good opportunities for continued value creation over time.
A strengthened company
We have a clearly stated strategy that involves focusing on segments where demand is driven by global megatrends, including the trend toward the green transition. The priority segmentsinclude Industrial Heating, Medical, Chemical and Petrochemical, and Hydrogen and Renewable Energy. These are generally growing faster, are more profitable, and are less cyclical and capital-intensive than the average for our business. During the year, these segments grew by 24% and now represent a larger share of our total revenues than in the preceding year, which is a clear indication of our strong position today and for the future. While our capital allocation strategy is primarily focused on these four areas, we have a clear intention to grow organically in our profitable niches in other parts of the business in order to further strengthen the company.
Continued successful development for Kanthal
The Kanthal division continued to show a positive trend. Due to a good product mix combined with operational improvements, Kanthal has significantly increased its earning capacity over time. During the year, we received project orders for Industrial Heating in niche applications such as solar and lithium-ion battery production, as well as pilot orders for electric process gas heaters for the steel industry. We initiated several strategic partnerships that will enable us to provide the market with a unique offering to meet our customers’ needs. In addition, we decided to invest in our production facility for silicone carbide heating elements in Perth, in the UK, as well as a new service center at our facility in Concord, inthe US.
The Medical segment also continued to perform well. Successful launches of new products continued to drive growth, and new sales records were noted. In total, the Medical segment’s revenues increased close to 60 % year on year.
Strong energy sector including demand for fossil-free energy
Demand for energy continued to grow and we are well positioned across the entire sector. In the Hydrogen and Renewable Energy segment, we delivered our first order in carbon capture and storage (CCS). The Nuclear segment delivered a positive performance in both the traditional business and through new applications, such as steam generator tubes for small modular reactors (SMRs). These two projects are both key milestones for driving profitable growth through areas that are enabling the green transition. As a technology leader and progressive customer partner, we see good opportunities for further development here. Our Oil and Gas segment also delivered a strong performance during the year, and the backlog is solid for all of 2024.
Improved operational efficiency and safety practices
We continued to compensate for the cost inflation with our pricing. We feel secure in our role as a price and technology leader, and have also maintained our favorable price levels in the low-refined business, which showed slightly weaker market conditions during the year. Due to the favorable prices in our backlog, this will benefit us when the market recovers. We also focused on improving our inventory management and have clear activities for controlling inventory levels.
During the year, we reached record lows in inventory volumes relative to our revenues. By working with continuous improvements and streamlining our operational processes, we also reduced our total CO₂ emissions during the year while also growing our business. During the year we continued to work with safety, first and foremost in our daily operations, but also through training in our safety principles, safety days and production walks.
Our customers’ needs in focus
One of our competitive advantages is our global presence, and our strategy is expressed in a local premium offering. To strengthen our presence and meet the growing demand, in primarily the Tube division's Chemical and Petrochemical segment in Asia, we decided to expand our capacity by investing in a new facility in Zhenjiang in China. We also inaugurated our two new production lines in Mehsana in India. These investments are important for securing our long-term growth in these profitable and growing markets.
In the Tube division, we have strong customer relationships with leading players in Medical and Aerospace. Our customers are requesting end-to-end solutions and also therefore bar in small dimensions, which we have not been able to produce in-house before. Moving forward, our acquisition of the Söderfors Steel production facility will enable us to deliver directly to our customers without intermediaries, and we are currently working to secure the qualifications required for these demanding industries.
Enabling sustainable processes
To enable sustainable processes through, for example, the electrification of carbon-intensive industries is an area in which our material innovations are requested. During the year, a Swedish steel producer replaced its fossil-fuel heating process with electric heating using our solution. The estimated CO₂ savings generated by converting the customer’s furnaces to electric heating vary from 1,400 to 2,000 tons per year and furnace. This is a prime example of how our products are making a positive contribution to a more sustainable future. We believe that sustainability and profitability go hand-in-hand.
Electrification of CO2-intensive industries
To enable sustainable processes through, for example, the electrification of carbon-intensive industries is an area in which our material innovations are requested. An example is our collaboration with a Swedish steel producer who replaced its fossil-fuel heating process with electric heating using our solution. The estimated CO₂ savings generated by converting the customer’s furnaces to electric heating vary from 1,400 to 2,000 tons per year and furnace. This is a prime example of how our products are making a positive contribution to a more sustainable future. We believe that sustainability and profitability go hand-in-hand.
Our first year as an independent company
Our 160-year history and the expertise we have gradually developed have given us a solid foundation, and our first year as an independent company has been an exciting journey. In addition to developing the business successfully, we also marketed our new brand and worked to strengthen our brand position and recognition. We received several accolades during the year, including recognition as a Career Company 2024 (a distinction for Swedish employers who offer unique career and development opportunities), a gold medal in the Grand Prix category of The Magnet Employer Branding Awards, and a silver medal from EcoVadis for our Sustainability Rating.
Thank you to all employees, customers, partners and owners for a successful year. We are reaching new heights together!
Göran Björkman,
President and CEO
Our first full-year as a listed company on Nasdaq Stockholm was successful. Our revenues grew organically by 8% to new all-time-highs. Adjusted EBIT grew 27% to SEK 2,141 million year on year, with an adjusted EBIT margin of 10.4%. Higher revenues combined with an improved product mix and well-implemented price increases contributed to the favourable earnings development. The Tube and Kanthal divisions noted a positive revenue and earnings development, with solid demand in several of the customer segments. We have a clear benefit from our diversified exposure to industries being in different phases of the business cycle. The Strip division noted a negative development compared with the preceding year, on the back of a challenging market situation. Overall, we strengthened our order book throughout the year, and I see good opportunities for continued value creation over time.
A strengthened company
We have a clearly stated strategy that involves focusing on segments where demand is driven by global megatrends, including the trend toward the green transition. The priority segmentsinclude Industrial Heating, Medical, Chemical and Petrochemical, and Hydrogen and Renewable Energy. These are generally growing faster, are more profitable, and are less cyclical and capital-intensive than the average for our business. During the year, these segments grew by 24% and now represent a larger share of our total revenues than in the preceding year, which is a clear indication of our strong position today and for the future. While our capital allocation strategy is primarily focused on these four areas, we have a clear intention to grow organically in our profitable niches in other parts of the business in order to further strengthen the company.
Continued successful development for Kanthal
The Kanthal division continued to show a positive trend. Due to a good product mix combined with operational improvements, Kanthal has significantly increased its earning capacity over time. During the year, we received project orders for Industrial Heating in niche applications such as solar and lithium-ion battery production, as well as pilot orders for electric process gas heaters for the steel industry. We initiated several strategic partnerships that will enable us to provide the market with a unique offering to meet our customers’ needs. In addition, we decided to invest in our production facility for silicone carbide heating elements in Perth, in the UK, as well as a new service center at our facility in Concord, inthe US.
The Medical segment also continued to perform well. Successful launches of new products continued to drive growth, and new sales records were noted. In total, the Medical segment’s revenues increased close to 60 % year on year.
Strong energy sector including demand for fossil-free energy
Demand for energy continued to grow and we are well positioned across the entire sector. In the Hydrogen and Renewable Energy segment, we delivered our first order in carbon capture and storage (CCS). The Nuclear segment delivered a positive performance in both the traditional business and through new applications, such as steam generator tubes for small modular reactors (SMRs). These two projects are both key milestones for driving profitable growth through areas that are enabling the green transition. As a technology leader and progressive customer partner, we see good opportunities for further development here. Our Oil and Gas segment also delivered a strong performance during the year, and the backlog is solid for all of 2024.
Improved operational efficiency and safety practices
We continued to compensate for the cost inflation with our pricing. We feel secure in our role as a price and technology leader, and have also maintained our favorable price levels in the low-refined business, which showed slightly weaker market conditions during the year. Due to the favorable prices in our backlog, this will benefit us when the market recovers. We also focused on improving our inventory management and have clear activities for controlling inventory levels.
During the year, we reached record lows in inventory volumes relative to our revenues. By working with continuous improvements and streamlining our operational processes, we also reduced our total CO₂ emissions during the year while also growing our business. During the year we continued to work with safety, first and foremost in our daily operations, but also through training in our safety principles, safety days and production walks.
Our customers’ needs in focus
One of our competitive advantages is our global presence, and our strategy is expressed in a local premium offering. To strengthen our presence and meet the growing demand, in primarily the Tube division's Chemical and Petrochemical segment in Asia, we decided to expand our capacity by investing in a new facility in Zhenjiang in China. We also inaugurated our two new production lines in Mehsana in India. These investments are important for securing our long-term growth in these profitable and growing markets.
In the Tube division, we have strong customer relationships with leading players in Medical and Aerospace. Our customers are requesting end-to-end solutions and also therefore bar in small dimensions, which we have not been able to produce in-house before. Moving forward, our acquisition of the Söderfors Steel production facility will enable us to deliver directly to our customers without intermediaries, and we are currently working to secure the qualifications required for these demanding industries.
Enabling sustainable processes
To enable sustainable processes through, for example, the electrification of carbon-intensive industries is an area in which our material innovations are requested. During the year, a Swedish steel producer replaced its fossil-fuel heating process with electric heating using our solution. The estimated CO₂ savings generated by converting the customer’s furnaces to electric heating vary from 1,400 to 2,000 tons per year and furnace. This is a prime example of how our products are making a positive contribution to a more sustainable future. We believe that sustainability and profitability go hand-in-hand.
Electrification of CO2-intensive industries
To enable sustainable processes through, for example, the electrification of carbon-intensive industries is an area in which our material innovations are requested. An example is our collaboration with a Swedish steel producer who replaced its fossil-fuel heating process with electric heating using our solution. The estimated CO₂ savings generated by converting the customer’s furnaces to electric heating vary from 1,400 to 2,000 tons per year and furnace. This is a prime example of how our products are making a positive contribution to a more sustainable future. We believe that sustainability and profitability go hand-in-hand.
Our first year as an independent company
Our 160-year history and the expertise we have gradually developed have given us a solid foundation, and our first year as an independent company has been an exciting journey. In addition to developing the business successfully, we also marketed our new brand and worked to strengthen our brand position and recognition. We received several accolades during the year, including recognition as a Career Company 2024 (a distinction for Swedish employers who offer unique career and development opportunities), a gold medal in the Grand Prix category of The Magnet Employer Branding Awards, and a silver medal from EcoVadis for our Sustainability Rating.
Thank you to all employees, customers, partners and owners for a successful year. We are reaching new heights together!
Göran Björkman,
President and CEO
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