Attractive range of interior products
Södra Interiör strengthened its position, broadened its product range and increased its market presence through acquisitions. The focus was on efficiency and expansion.
Södra Interiör manufactures and develops interior wood products for domestic and public environments. Key products are mouldings, panelling, solid flooring, glued-joint boards, pillars and sawn hardwood products. The distribution network was further improved by consolidating distribution to southern Sweden. Södra Interiör strengthened its position as leading Scandinavian producer of interior products through a number of acquisitions and a name change from Gapro to Södra Interiör on 1 January 2010.
The business operates from ten locations in Sweden, five in Norway and three in Denmark. The Swedish units are in Ronneby, Kallinge, Grimslöv, Våxtorp, Hedåker, Sävar, Jokkmokk, Rottne, Djursdala and Bönhamn. In Norway, Södra Interiör is located in Gardermoen, Brumunddal, Arendal, Skodje and Namsos. Danish operations are located in Sunds, Silkeborg and Åbyhøj.
Weak demand early in the year strengthened somewhat in the autumn. Despite a slight improvement in the fourth quarter, the overall market for interior wood products decreased during the year. The resulting overcapacity led to price pressure which was accompanied by more expensive raw materials. Increasing competition reduced industry profitability.
Scandinavia is Södra Interiör’s domestic market. Danish presence was strengthened through two acquisitions. Export destinations include Germany, Ireland, Eastern Europe, Japan and South Korea.
Acquisitions and investments
Södra Interiör has a growth and acquisition strategy that aims to broaden its product range, increase market share and develop its distribution network. Acquisitions were all in the domestic market and improved geographic presence and distribution effectiveness.
A number of acquisitions were made during the year. The Wernerträ hardwood sawmill near Vimmerby was acquired in January. This provides a source of hardwood for Södra Interiör plants as well as opportunities for external sales. Earnings were limited during the year by the large inventories acquired and restructuring of sawing technology. Glued-joint board producer BJU, near Växjö, was acquired in May and provides Södra Interiör with an internal source of supply for glued joints and greater control of product development. The company is one of Sweden’s biggest producers and suppliers of glued-joint boards for the building trade. Glued-joint boards are currently produced primarily in pine, but in 2010 will also be made in spruce and hardwood.
Another specialized company, Nordingrå Trä on the High Coast in northern Sweden, was also acquired. The company manufactures a range of posts, pillars and fence profiles in pine. Sale of the new products has progressed well. In Norway, mouldings manufacturer Vikan Trelast was acquired in Namsos in the Trondheim area. This provides Södra Interiör with a geographic presence in northern Norway and a complete network in the country for distribution of the full product range. In Denmark, mouldings manufacturers B.E. Profiler and Vima were acquired in the autumn, strengthening the company’s position and distribution in the Danish market.
The Södra Interiör strategy and concept creates a broad, deep and attractive range that targets key customer segments including the building trade, housing constructors and the timber industry. The acquisitions have further broadened the range. Much emphasis is put on the regular launch of new products to the building trade.
The acquisitions and new product releases have increased opportunities for Södra members to sell hardwood. Advanced logistics enable products to be quickly supplied to customers, facilitated by the centralisation of warehouses to fewer locations. Productivity processes are prioritised and systematic improvement efforts have increased process efficiency in the plants and reduced the cost per produced running metre.
On 1 January 2010, the business area changed name to Södra Interiör. The change was made to leverage the strength of the Södra brand with customers and end consumers, while also strengthening corporate unity. All units except Nordingrå Trä are included in the name change.
Södra Interiör has been able to supply FSC products since autumn 2009.
The objective is to continue growing geographically with a broader, more in-depth product range. Priorities for 2010 are effectiveness, consolidation and profitability. New product development remains important along with the utilisation of knowledge in acquired companies. The product range includes a growing proportion of Swedish wood species such as ash, birch, aspen, alder and oak.
Net revenue increased to SEK 935 million (870). Operating profit was SEK 0 million (46). The weakening is primarily due to restructuring costs in conjunction with acquisitions and also in hardwood operations.