Interview: Allgon celebrates 1 year.
(Claes Hemberg) One year ago, Allgon’s CEO Johan Hårdén made sure that two Swedish radio control companies joined paths; Åkerströms and Tele Radio. Thursday, Hårdén shared in the companies quarterly report more about his views on the outcome of the merger and ambitions for the future. This awoke my curiosity, I decided to call to ask some questions.
One year has passed since the merger, where the two different radio control companies Åkerströms and Tele Radio got the same parent; Allgon. How is the new constellation doing?
– The merger was courageous, I must say. It was daring and innovative because we are in a very traditional industry. In one step, we grew 200 percent and now have customers around Europe, the US and Asia. At the same time, we are growing with two different companies with different ways to sell and grow; Åkerströms and Tele Radio.
Demand for radio control is increasing, you have said. Why is it growing so fast?
– The increasing demand for industrial radio control goes hand-in-hand with our industrial customers’ ambitions to increase safety in the workplace and to make work more efficient. In other words, we are just at the beginning of a long trend of workplace improvements in all the different kinds of industrial markets.
How common or unusual is it to merge in the radio control industry?
– It’s rare. For a long time, companies in the European industrial radio control industry in particular have talked about more collaboration and mergers. Yet it has not happened. The cause is a fragmented market with often highly specialized companies and customer relationships that extend over several decades. Nevertheless, we have succeeded in taking the step, when a year ago we merged two strong companies, by covering the differences between Åkerströms and Tele Radio. I am very enthusiastic about it today.
Is it important to be a major player in radio control?
– The global market is estimated to be worth about USD 800 million and grows by 10-12 per cent per year. That is a lot for the industrial markets. If we want to be better than the average, we need expertise, channels and different kinds of customers. And when our customers are both small, medium and large, we need to be big to be able to deliver across the entire market. Adding to that, our two companies meet the market in two different ways. This means that we now have two very different contact surfaces, like no other in the industry.
How do you create collaboration between two such different companies, such as Åkerströms and Tele Radio?
– We are now the top 5 in the world in radio control. Of course, it provides room for collaboration and coordination. At the same time, the companies are very different in their way of working, which is an advantage, because they reach out to completely different customer groups. Our two companies are therefore cooperating now in areas where it is smart, sensible and favors them both. At the same time we are building two individually strong legs with long customer relationships and good, stable margins. Exactly how we can adress down the line. We are building two long-term radio control companies.
Is the owner company Allgon complete, or can you imagine more aquisitions or refining the operation?
– Allgon’s backbone is radio control. In radio control, there are today many international companies where Allgon can be a unifying force, which streamlines and contributes with new customer values. We want to gather our companies around this task.
Does that mean you can further streamline Allgon?
– In order to strengthen our focus on radio control, we may make supplemental acquisitions in industrial radio control or divest subsidiaries. At the same time, it is not in a hurry to acquire or sell. We have a lot of exciting things to achieve within Åkerströms and Tele Radio individually, and what they can achieve together.
At the telephone conference on Thursday, you talked about the new Puma radio control. How has it been received?
– Puma is an important step forward in our technology development. It has now been out and tested with several customers. We have received good feedback and made some upgrades as requested by the market. This means that Puma is ready for a wider launch. In 2020 we will see the results of many years of work. It will be exciting.
Finally, by delivering radio control to a wide range of industries and geography, you should be able to give a picture of the business cycle. What does demand look like?
– We see that demand for our products and solutions for industrial radio control continued during the quarter. Again, it is noticed how diffrently the two companies operate. During October, Åkerströms took home an order for radio controls from industrial giant SSAB. At the same time, Tele Radio expanded to three new markets through new subsidiaries in Brazil, Russia and France, three important markets with great development potential and growing demand for industrial radio control.
Text: Claes Hemberg, independant economist, shareholder in Allgon.