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Electronics Production | April 07, 2009

Note CEO: We have developed a completely new business model

Notes CEO Arne Forslund writes in a comment to the company's annual report that the company worked methodically to realign the business—from a traditional role as a contract manufacturer of electronics to a unique services provider on the EMS market.
"We have developed a completely new business model tailored to the customer’s need to get products to market quickly. We can now offer product development close to our customers (Nearsourcing centres), cost control through product lifecycles (NOTEfied, PLM tool, sourcing) and cost-efficient production", Arne Forslund says.

"This realignment process has taken a long time and cost money. As part of our business concept, we have transferred production to units whose cost base benefits our customers and ourselves, to plants including our joint ventures in China and Poland. As a result, we took a decision to downsize staff in our Swedish business by some 400 people. 130 of them left us in the year, and the remaining lay-offs are expected to take place on the first half-year 2009. Adapting to our future is very challenging, and I’m really sorry that many of our skilled staff have had to leave us.", he continues.

Growth on the EMS market in recent years has been driven partly by the business cycle and partly by the current outsourcing trend. Competition in the sector features small local and large global players, and price pressure has resulted in low margins. In autumn 2008, demand fell as a result of the economic downturn. We think outsourcing will continue to grow according to previous patterns through a downturn. "A high share of NOTE’s sales come from our original business of traditional EMS services, while a smaller share is based on our new business model. Because the new model was not fully launched until late in the year, it exerted only a limited impact on our Income Statement for 2008."

January—December
Net revenue was SEK 1,709.5 (1,743.8) million. Operating profit/loss came to SEK –3.8 (111.9) million. Profit was charged with restructuring costs of some SEK 80 million. Operating margin was –0.2% (6.4%). Profit/loss after tax amounted to SEK –13.1 (78.2) million, while Cash flow was SEK 25.1 (–0.5) million.

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