Customers are our top priority. Adopting a structured, long-term approach in order to achieve greater customer value is the main driving force for our employees. We create profitable growth by having satisfied customers and dedicated employees, which ultimately benefits our owners.
Sectra works towards financial goals as well as operational targets related to three areas: customers, innovation/new business and employees/culture/processes. By governing our operations with these goals in mind, we ensure that our operations create value and contribute to sustainable business development. In addition to the Group-wide goals, there are also business-specific goals in each business area and entity.
The value we create for customers lays the foundation for long-term, sustainable success. The goal is to have a high level of customer satisfaction in the markets and customer segments where we operate as well as to significantly improve our customers’ operations through our solutions.
The goal for customer satisfaction is measured on an ongoing basis through internal evaluations based on the NPS method and through leading external evaluations in each area, such as KLAS for our medical systems in the US.
Our employees—and the corporate culture that shapes their behavior and decision-making—are our main competitive advantage. We therefore aim to ensure we have satisfied employees who perceive Sectra as an equal-opportunity workplace and feel that our corporate culture motivates and inspires them. This is also crucial to our ability to recruit and retain the right personnel. These targets are monitored through our annual employee survey. To ensure we are growing in an efficient manner, we will also monitor our operating profit in relation to payroll expenses over time.
Sectra aims to be a future-proof partner for our customers. Innovation and continuous development are therefore important. This target can be summarized in the words of the hockey great Wayne Gretzky: “Skate to where the puck is going to be.” In other words, we must ensure that Sectra is well positioned to meet future customer needs. This target will be monitored through our annual employee survey.
In order of priority:
The equity/assets ratio is to be at least 30%.
The operating margin (EBIT margin) is to be at least 15%.
Operating profit (EBIT) per share is to grow by at least 50% over a five-year period.
All three financial goals have been met as of the balance-sheet date April 30, 2019.
The equity/assets ratio exceeds the strategic goal. An increase in comprehensive income combined with a higher rate of capital turnover contributed to an increase in the equity/ assets ratio in 18/19.
A strong financial position provides security for customers and enables investments in products, services and areas that create additional value. A strong balance sheet also enables Sectra to finance managed-services agreements with customers, which is a major advantage since demand for these types of agreements has grown in recent years.
Profitability exceeds the strategic goal. Profitability has displayed a positive trend in recent years through structural changes, additional customers, a higher proportion of license and service sales, product development and a more efficient delivery organization.
A healthy operating margin means that the business transactions in which Sectra can provide the most value are given higher priority than devoting resources to areas in which such value is lower. Favorable profitability enables Sectra to implement growth initiatives that generate a strong long-term return for its shareholders.
The growth in profit exceeds the strategic goal. The growth in profit per share is a result of growing sales and Sectra’s long term efforts to boost cost-efficiency while increasing the proportion of higher-margin products, such as software licenses.
Profit growth is a more relevant goal for the company than higher sales since the proportion of software, services and deliveries via the Internet increases at the expense of hardware deliveries, for example.
The goal is calculated per share in order to include the effects of potential acquisitions paid for with treasury shares and other dilution effects. This places the focus on ensuring that each acquisition results in higher operating profit per share, which is in the best interests of the shareholders.
“Our financial focus on long-term growth continues, and we consider two of our goals—the equity/assets ratio and operating margin—to be hygiene factors. Any profit we generate above a 15% operating margin will be reinvested in growth opportunities—a strategy that has proved successful for Sectra’s shareholders in the past.”
Torbjörn Kronander, CEO and President Sectra AB
