In his address to the Annual General Meeting of Seco Tools AB on 3 May 2011, Lars Bergström, President and CEO, commented on the significant events of 2010 and the company’s performance in the first quarter of 2011. He began by stating that the downturn experienced in 2009 was followed by an very strong recovery in 2010. Seco Tools’ revenue increased by 27 per cent at fixed exchange rates and 20 per cent in SEK. Viewed by geographic region, 2010 represented an additional increase in the proportion of revenue that was attributable to emerging markets, primarily in Asia. Operating profit also improved substantially and amounted to SEK 1,098 M, which corresponded to an operating margin of 18.7 per cent. Despite such favourable growth, tied-up capital did not increase during the year which, in turn, contributed to strengthened cash flow. The dividend proposed by the Board of Directors corresponded to distribution of 82 per cent of the profit for the year and restoration of the ordinary dividend to the level prior to the financial crisis.
Lars Bergström then provided an overview of some of the Group’s initiatives for increased growth. These included expansion of sales and technology resources close to the customer, investments, acquisitions completed, the establishment of a new competence centre in Germany, new products, the sustainability initiatives and increased focus on specific customer segments with favourable growth potential. The aerospace industry was held up as an example of the latter.
The President then presented sales trends and the results for the first quarter of 2011. The favourable trend in demand seen in 2010, continued to successively improve during the beginning of 2011 and sales for the first quarter of 2011 were the highest ever for Seco Tools. Growth at fixed exchange rates amounted to 36 per cent, of which 6 per cent was attributable to acquisition effects. The strength of the SEK resulted in negative currency effects of 10 per cent on revenue and the increase in SEK was 26 per cent. Sales continued to be strong in emerging markets and particularly strong growth was noted in Central and Eastern Europe. In addition, Lars Bergström pointed out that growth in many major mature markets including Germany and the US was also favourable. Operating profit for the first quarter increased by 60 per cent to SEK 352 M, corresponding to an operating margin of 20.5 per cent. The increase was attributable to increased volumes and improved utilisation of capacity. Negative currency effects had a dampening effect on the earnings trend.
Following this, Nils Edlund, Senior Vice President Supply Chain, gave a presentation of the company’s production structure in various product areas. He continued with a description of the strategic project for the large production facility for indexable inserts in Fagersta. The overall intent is to expand and modernise production of cemented carbide powder and, in general, to create simple, dedicated production flows with the aim of realising shorter lead times, higher productivity and more stable quality levels.
In conclusion, Lars Bergström gave a summary of the Group’s strategic plans in respect of customer closeness and solution orientation. He stressed the importance of close collaboration and dialogue with end customers and distributors for greater understanding of customer manufacturing processes. Other crucial cornerstones of the strategy that were highlighted included the continuous development of new competitive products, control of product innovation, global competence and support structures as well as making selective acquisitions.
The Annual General Meeting resolved in favour of the Board’s proposed regular dividend for 2010 of SEK 4.20 per share, amounting to a total of SEK 611 M (no dividend was paid for 2009). The AGM adopted 6 May 2011 as the record date for entitlement to receive dividends, which means that dividends are expected to be disbursed on 11 May 2011.
In connection with presentation of its proposals, the Nominating Committee reported on its work.
The AGM re-elected sitting Board members Annika Bäremo, Stefan Erneholm, Anders Ilstam, Staffan Jufors, Peter Larson and Carl-Erik Ridderstråle. Alrik Danielson and Lars Bergström were elected as new ordinary members of the Board.
Anders Ilstam was re-elected as the Chairman of the Board.
The AGM approved total Board fees of SEK 2,050,000, of which SEK 550,000 will be paid to the Chairman and SEK 250,000 to each Board member not employed by the company. Total fees to the members of the Audit Committee were approved in an amount of SEK 220,000, of which SEK 100,000 will be paid to the chairman of the Audit Committee and SEK 60,000 to each of the other members. Fees to the auditors will continue to be paid according to current account.
KPMG AB was elected as the company’s auditors.
The Board’s proposed principles for remuneration and other terms of employment for the executive management were approved.
The Nominating Committee consists of the Board Chairman and one representative for each of the four largest shareholders in terms of voting power, of whom none may be Board members of the company. The composition of the Nominating Committee ahead of the 2012 AGM is published as soon as it has been established, but no later than six months prior to the AGM. No fees are paid to the members of the Nominating Committee. The Nominating Committee makes recommendations regarding matters such as election of a chairman of the AGM, the number of Board members, compensation to Board members and auditors and election of Board members and the Board Chairman.
At the statutory meeting following the AGM, Annika Bäremo, Stefan Erneholm and Carl-Erik Ridderstråle were appointed to the Audit Committee. Peter Larson, Carl-Erik Ridderstråle and Anders Ilstam were appointed to the Remuneration Committee. Patrik Johnson, who is Chief Financial Officer of Seco Tools and not a member of the Board, was appointed as Board Secretary.