Agile through cycle

Being agile through a business cycle for us means being flexible in order to effectively manage both the upturns and downturns in line with macroeconomic changes. The key measurement for success is our new margin goal of an adjusted EBITA margin ranging between 20–22 percent through a business cycle. The EBITA corridor is to be seen as a guide for when additional corrective measures may be necessary or what may not be seen as long-term sustainable margins.

Being agile starts with reducing sales volatility and having a resilient top line growth. It is also necessary to establish an efficient cost base and continuously improve the fixed cost structure. We have a flexible cost base and well-prepared contingency plans to enable quick actions. We also work to optimize the operational efficiency.

Being a decentralized organization helps us to act quickly on market intelligence. We have increased the share of variable costs through actions like increasing third-party personnel and satellite, or outsourced, production. We successfully implemented improved, proactive price management.

We built operational flexibility in 2022 by developing alternative supply chains, regional hubs, spreading production to more than one location and developing new logistical solutions. We also created satellites with spare parts close to the customer. We announced a new restructuring program in 2022, including consolidation of production units, site closures and optimizing the structure of the sales organization. The program will generate annual savings of about SEK 600 million, with a full run-rate in 2025. The restructuring costs will amount to SEK 1.7 billion (SEK 670 million in 2022 and the remainder in 2023).

Being a market leader is a competitive advantage, leading to a resilient top line achieved through, for example, recurring revenue streams like parts, services and consumables, and subscription contracts for software and digital services. Our combined hardware and software solutions strengthens our position as a supplier of choice both in upturns and downturns.