Agile through cycle

Being agile through the cycle starts with resilient revenues which are supported by, for example, a higher share of parts, services and consumables or increased software revenues. In 2023 we demonstrated good pricing power and ability to mitigate inflation with price increases.

Ramping up after Covid–19, we have chosen to implement a higher share of flexible costs. We have increased the share of variable costs through actions like increasing third-party personnel and satellite, or outsourced, production. Developing alternative supply chains and acquiring assets, such as Buffalo Tungsten and a foundry in India, also increased operational flexibility.

We actively work with establishing an efficient cost base and continuously improve the fixed cost structure. In 2022 we announced long-term structural measures that will generate annual savings of about SEK 785 million, with a full run-rate in 2025. Measures include consolidation of sites and optimizing the organization, and at year-end we had delivered on 48 percent of the program, which is according to plan.

The key measurement for success is our margin target 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.

Our decentralized organization helps us to act quickly on market intelligence and all business areas have well-prepared contingency plans for different scenarios.