Annual review 2020

Word from the CEO, Mia Brunell Livfors

A Year of challenges, resilience – and acceleration!

The year 2020 was filled with severe strains on health, the economy, the individual and society. This was also evident in our operations. But our 2020 is also a story of resilience. About numerous leaders and employees who stepped forward to continue to develop and grow our businesses and ensure we take our responsibility towards our customers, during a year when nothing could be done on autopilot. 

The power and leadership shown at all levels within Axel Johnson evoke pride and humility most of all, as I look back on the year. 

It is also with pride that we close the books for 2020 with profits* of SEK 2.754 billion. Given that we operate in several of the industries hardest hit by the pandemic, it is an outstanding collective achievement – and far higher than we dared to dream during spring 2020.

Even more important than the profits for the year is that we managed to keep our heads up and keep pace with our transformation. In 2020, we continued to invest in improved e-commerce, increased technical competence and capacity, automation, and we are gradually building more modern and sustainable logistics services. 

We not only feel that we are maintaining a fast rate in our transformation, we also see it reflected in our numbers. When we measure how fast we are moving towards our 10/50 target – that half of our revenue in ten years’ time will come from activities that we do not do today – we see that in 2020 we held to our pace in our transformation.

“We not only feel that we are maintaining a fast rate in our transformation, we also see it reflected in our numbers.”

Growth in our group companies

Our industrial group Axel Johnson International reported a record profit of SEK 816 (746) million. During a year of challenges, with closed industries in many parts of Europe in the spring, messy supply chains and various restrictions in each of the company’s 30 or so markets, this is an outstanding achievement.

Axfood showed a very strong profit of SEK 2.394 (2.173) billion and grew more than the market both in physical stores and online, where growth landed at 112 percent. Although the grocery industry as a whole has been strong during the pandemic, the reality is more varied. While Willys noted sales records, we saw large losses in visitor numbers in the Swedish stores along the Norwegian border and in many shops in metropolitan locations. With this in mind, the improvement in earnings is a message of strength, which also signals further potential going forward.

AxSol, which consists of our investments in solar energy, invested in two new companies during the year, including Alight, which targets the corporate market, which entered into an agreement with Martin & Servera in December for the construction of Sweden’s largest solar park. We see great opportunities both for European expansion within our existing holdings and in new investments in a market where we can really grow with one of the megatrends of our time.

Last spring, Dustin saw how many small and medium-sized companies paused their IT investments, but business came back in full force during the second half of the year. At the same time, accelerated digitalization overall and the need for professional IT environments in many homes created great opportunities for Dustin’s combination of hardware and online services.  

Kicks proved, during a year of steep declines in physical store visits, that the investments in technology and new skills that we have made in recent years created value. Through fast-growing and profitable e-commerce sales in combination with savings, earnings improved – despite difficult and rapidly changing market conditions – to SEK 37 (11) million. 

Martin & Servera, Sweden’s leading restaurant wholesaler, had a year where for several months, the fall in the private restaurant market was up to 75-80 percent. Which means profits took a hard hit, landing at SEK -62 (426) million. But when the restaurant market finally turns around, Martin & Servera is well-equipped for growth in a market that will benefit from underlying trends such as urbanization and people’s continued demand for convenience.

Åhléns’ profit came in at SEK -331 (-116) million as a result of primarily drastically reduced visitor numbers, especially in the city department stores, which caused in a loss of sales that growth in e-commerce could not compensate for. New CEO Annica Hagen is leading the effort of finding a sustainable future model for Åhléns with new approaches, built on omni-commerce with an improved e-commerce experience and profitability in the physical department stores.

Our investment business Novax has continued to develop and invest in its focus areas of retail technology, health, food tech, and technical security – areas that all have the potential to become significant future parts of Axel Johnson. At the turn of the year, an agreement was entered into for an investment in Aqua Dental, which makes Novax a major player in Sweden’s fastest growing dental care chain.

With long-term family ownership supporting us, we also have been able to continue to develop our companies and invest in the future during a crisis year”

Family Ownership Provides Direction 

In addition to the fleet-footed leadership we saw in our companies, I see an additional success factor that contributed to us keeping both to our course and to our speed through 2020: Axel Johnson’s owners. With long-term family ownership supporting us, we also have been able to continue to develop our companies and invest in the future during a crisis year; and based on the common values of long-term and social responsibility, we have been guided to prioritize responsibility even when it costs money in the short term.

Based on the same values, sustainability work and community involvement continued to have a central place as we continue to develop Axel Johnson. We focus in particular on reducing our climate impact, achieving increased circularity, and developing our work in social sustainability with a focus on diversity and inclusion. 

In 2020, we started Axelerate, a new part of our business aimed at developing our work with diversity and inclusion. The goal is to strengthen our companies’ ability to attract and develop talent, and to understand and serve customers in the best ways. In addition, we aim to make Axel Johnson a market leader and role model in the Swedish business community in this area.

“If there is one thing we have learned in the past year, it is to expect the unexpected, and to act fast when it happens.”

Moving Forward: Speed, Renewal, Sustainable Growth

When we analyze everything that has happened in our markets in order to see what will have a permanent impact, we see two main tracks. The acceleration in the transition to e-commerce is one. The second major movement concerns the change in our economic geography, which is connected to working from home. It is impossible to predict which behavioral changes will persist after the pandemic and to what extent, but we are convinced that we will see significant and lasting consequences not only for the labor market, but also for travel, commerce and real estate  (read more on pp. 22-29). 

What we do know, however, is how crucial it is to continue to be quick to adapt. If there is one thing we have learned in the past year, it is to expect the unexpected, and to act fast when it happens. 

None of us knows exactly when and how our societies will switch to vaccinated everyday life. But when society and markets come back up again, we must be equipped for growth in all operations within Axel Johnson. 

When we look ahead, we do so from a very strong platform with a strong financial base, a fast pace in our transformation, and long-term family ownership as a foundation. If we can also build on the culture of willingness to change and team spirit that we showed last year, we have every opportunity to make 2021 a year of growth and successful transformation.

The facts

ProfitAX for the year: SEK 2.754 billion

ProfitAX for the listed companies is profit after financial items in accordance with IFRS and for the non-listed companies profit after financial items excluding goodwill amortization, adjustments to additional purchase consideration, items affecting comparability and discontinued operations. ProfitAX is used to enable increased comparison between group companies and other, listed companies outside the group, and comparison between years.