For us, 2016 was an intensive year of acquisitions that made Inwido both larger and stronger. The integration of the acquired companies Värmelux and Klas1 in Finland, and of CWG Choices in the UK progressed as planned and the operations began contributing positively to our earnings. In addition, we acquired 25 percent of Outrup in Denmark. Through the acquisition of CWG Choices, we brought PVC windows and doors into our product portfolio for the first time. PVC is the dominant material in the European window market outside the Nordic region. The acquisition gives us a much greater market potential if we are to succeed in our ambition to grow in Europe.
Our e-commerce initiative continued to be successful, with good growth, increasing order bookings and positive development in profitability. We entered two new markets, the UK and Ireland, and are now present with e-commerce operations in seven markets. Our plan is to continue to grow, both in existing and new markets.
We launched several new solutions for the smart home, including a door concept by the Diplomat brand in several markets and an integrated smart window through Hemmafönster in Sweden. The initiative has great potential and is in line with our mission – improving life at home.
Customer satisfaction increased among both customers and consumers. This applies to virtually all of our brands, in all channels and in all countries. After a few years with a cautious trend, 2016 was a breakthrough year with significant improvement.
In this connection, I want to highlight our continuous efforts to improve quality in all areas of operations. All operations in Sweden underwent an ISO 9001 certification audit, and we made major investments to modernize and automate production. Extensive efforts to improve production efficiency are yielding results. We are generally seeing gradually improved profitability with an increasing gross margin.
» Comments on financial development
For Inwido, 2016 was the strongest year to date, with good growth, improved margins, good order bookings and improved efficiency. Net sales rose by 9 percent to SEK 5,672 million and operating profit rose by 14 percent to SEK 673 million. The operating EBITA margin rose to 11.9 percent, in principle meaning that we achieved our long-term profitability target of 12 percent.
Inwido Denmark reported very strong results. Sweden remained stable with very good profitability even if sales were not satisfactory in the second half of the year. In Norway, the extensive measures undertaken are showing results and we saw improvement with strengthened confidence among customers. We also began to see signs of a positive turnaround of market demand and improved order booking in Finland. EBE (Emerging Business Europe) experienced somewhat weaker development than expected, due to weaker development in the UK operations. The recently acquired CWG Choices developed positively, however, and we see the UK as a highly important growth market for Inwido.
Naturally, there are challenges and areas for improvement. Growth in Sweden, profitability in the UK, employee satisfaction and the time it takes to develop and launch new products and concepts on the market are areas in which we are working to improve.
The increased volatility in demand requires flexibility and quick adaptation to changing market conditions. International developments, both political and financial, remain uncertain. An uncertain business environment can have a negative impact on consumer confidence, which is a key driver for Inwido.
However, I am highly confident in Inwido’s ability to handle any challenge. Inwido is growing and stable, and its strong financial position provides scope for continued investments in both new products, investments and acquisitions.
» Comments on sustainability work
Here, I wish to highlight our prominent focus on health and safety, throughout 2016. Thanks to better monitoring and more accurate reporting, safety awareness in the Group increased. We also made substantial investments in production for more efficient, more sustainable and safer processes, with fewer manual actions. During 2017, we will develop our sustainability work, including by drafting a new sustainability strategy.
» Future prospects
I take a positive view of Inwido’s future development, and I am optimistic as we move further into 2017. Underlying demand for energy-efficient windows and doors remains high in our markets due to urbanization, housing shortages, renovation needs, increasing demands on energy savings and environmental awareness.
We are now strengthening our focus on profitable growth. Our intention is to grow, both organically and through acquisitions to become substantially larger. Accordingly, in early 2017, we introduced a new financial ambition of increasing operating EBITA by an average of 10 percent annually, to reach SEK 1 billion by 2020.
Finally, I would like to state that Inwido’s success is ultimately the result of our employees’ excellent work and dedication. Having competent employees and managers is critical to a company’s success and it is particularly important in a decentralized organization like Inwido. I would like to thank all employees for their splendid efforts over the year. I also want to thank all of our shareholders for the trust they have shown in us by investing in Inwido. We will persist in working hard to ensure that Inwido continues to develop strongly, generating value for shareholders.