Vision, business concept, goals and strategies

”The pandemic has presented challenges to the organisation, whose ability to adapt and be creative has been evident.

year are oem Electronics and Batteripoolen with growth close to 25%. oem Automatic, the Group's largest company, which is a good bellwether of the economic health of Swedish industry, reported sales growth of 11%. The operating profit (ebita) rose 32% as a result of the growth and a stronger gross margin.

In the Finland, Baltic States and China region, sales increased by 14% and incoming orders by 25%. All operations have delivered strong performances with RauHeat and Akkupojat reporting sales growth of 25% and 24% respectively. Hide-a-lite and oem Electronics achieved growth in excess of 20% and oem Automatic, the largest of the operations, reported an increase in sales of 12%. The operations in the Baltic states and China have also performed strongly with growth of 24% and 22% respectively. The operating profit (ebita) rose 42% as a result of the strong sales growth and improved gross margin.

Region Denmark, Norway, the UK and East Central Europe reported a 14% increase in sales and incoming orders rose 27%. The strongest performance was delivered by the UK operations where total growth was 33%. The operations in Slovakia and Poland also reported healthy growth figures of 25% and 16% respectively. Profitability was driven by the growth and the operating profit (ebita) rose 43%.

Acquisitions

A number of potential acquisition targets were identified and discussed during 2021. The jump starter trading operations of Norwegian Export Import AS in Norway were purchased in October. The business has a turnover of SEK 5 million and its sales have been integrated into Svenska Batteripoolen AB.

The acquisition of Demesne Electrical Sales Ltd in Ireland was made in early January 2022. The company had a turnover of approximately SEK 205 million with an operating profit of around SEK 26 million in 2021. The company is a leading distributor of electrical control, energy-saving and installation products. Demesne uses several of the same suppliers as other oemcompanies and runs a similar business model. The acquired business is an excellent complement to the Group and allows oem to establish a presence in a new, interesting market.

Digitalisation is helping to streamline business

There has been continued investment in digital platforms and their use has helped drive efficiencies across the operations and enabled us to provide customers with a good standard of service during the pandemic. The efficiency and quality of internal processes have improved. Today, business meetings are held both physically and electronically which has increased efficiency greatly. It is possible to measure the effect of digitalisation as sales per employee. In 2019, the figure was SEK 3.76 million and in 2021 it was SEK 4.26 million.

Dividend

oem's philosophy is to pay dividends to the extent considered reasonable, taking into account the company's financial position, investment needs and potential acquisitions. The proposal for the 2021 financial year is a dividend of SEK 2.75 per share combined with a redemption share of SEK 3.25 per share. This is equivalent to 91% of earnings per share after tax and a direct return of 3.2% based on oem's year-end share price. The proposed dividend means that, for the second consecutive year, oem is paying an extraordinary dividend and that the ordinary dividend has been increased on average by 12% each year over the last 13 years.

Uncertain global environment creates a challenging market situation

The pandemic has presented challenges to the organisation, whose ability to adapt and be creative has been evident. The geopolitical tensions currently playing out in Europe have created a new instability and the consequences are difficult to predict. Our role as a trading company is to maintain close contact with customers and suppliers and adapt our strategies as and when required so we can serve our customers in the best possible way, and also to seek new opportunities for conducting business and promoting the future growth of customers and suppliers. Even in these troubled times, I am confident that the creativity, loyalty and commitment found in our organisation will ensure that the Group continues to evolve and grow stronger.

Tranås, March 2022

Jörgen Zahlin

Managing Director and CEO, OEM International AB.

Vision, business concept, goals and strategies

SALES GROWTH (%)

10 %

15 14 6 0 15

2017 2018 2019 2020 2021

The result for 2021 was 15 % compared with the minimum target of 10 %.

EBITA MARGIN (%)

10%

11.2 11.0 11.7 12.9 15.6

2017 2018 2019 2020 2021

The result for 2021 was 15.6 % compared with the minimum target of 10%.

RETURN ON EQUITY (%)

20 %

28 29 29 26 33

2017 2018 2019 2020 2021

The result for 2021 was 33.4 % compared with the minimum target of 20 %.

EQUITY/ASSETS RATIO (%)

35 %

54 59 62 69 67

2017 2018 2019 2020 2021

The result for 2021 was 67 % compared with the minimum target of 35 %.

VISION

OEM shall be a leading technology trading group in industrial components and systems in selected markets in Northern, Central and East Central Europe.

BUSINESS CONCEPT

oem offers an extensive and detailed range of industrial components and systems from leading suppliers. A well-structured local market organisation and efficient logistics make oem a better alternative to the suppliers' own sales organisations. oem provides a high level of expertise and service and markets the products according to the specific conditions of each market.

GOALS

oem's overall business objective is to be one of the largest technology trading companies in the company's chosen geographic markets. Profitability will be on par with, or better than, that of the largest players in each market.

Financial targets

oem shall deliver sustainable profitable growth coupled with a good return on shareholders' equity and with minimal financial risk. The company has four financial targets: Sales growth

Minimum sales growth of 10% per annum through a business cycle. In 2021, sales were up 15% on the previous year.

Currency movements had an adverse 2 percentage point impact on growth while acquisitions had no impact on growth, resulting in organic growth of 17%.

Average annual sales growth was 10% in the last five-year period. EBITA margin ebitamargin of at least 10% per annum through a business cycle. The ebitamargin reached 15.6% in 2021. The average ebitamargin has been 12.5% for the past five years.

Return on equity

A minimum return on equity of 20% per annum through a business cycle. Return on equity reached 33.4% in 2021. The average return on equity has been 29.1% for the past five years. Equity/assets ratio

A minimum equity/assets ratio of 35%.

The equity/assets ratio was 67% at the end of 2021. The average equity/assets ratio has been 62% for the past five years.