Last edited: 20.9.2017

Strategy

Robit is aiming at being globally the largest company focusing on Top Hammer and Down-the-Hole drilling consumables. Robit serves its customers in four market segments, which are mining, construction, tunnelling and well drilling.

Robit’s operations have evolved according to the strategic objectives published by it in 2015 and the company will continue to emphasize growth as one of its most important business objectives. Robit’s long-term strategic objective is doubling its market share. The company will seek to achieve its objectives by pursuing the following measures:

Increasing marketing and sales activity. Robit is first and foremost a sales company. Since 2015, Robit’s sales and service points have increased by ten and that has improved the company’s sales power. Robit’s products are sold via an extensive distribution network, i.e. 150 distributors and direct sales. The company’s 21 sales and service points carry on active direct sales to large customers and support the operations of the distributors located in the area. Instead of increasing the quantity of its own sales points, Robit’s central focus lies in growing the business by means of active sales and legwork. Nevertheless, readiness for the establishment of individual sales and service points will be retained, should the target market necessitate same. Furthermore, the company has invested in the visibility of the Robit brand and the multi-brand, with the aid of both international and local trade fairs and events.

At the turn of last year, Robit’s sales operations were divided into four geographic market areas, which have become more powerful entities with greater independence. The most focal objective of the geographic market areas is the strengthening of growth and market share in their regions. The objective is to shift the decision-making of the company closer to the customers and markets, to simplify and clarify the company’s structure, further accelerate decision-making and to create clear profit responsible units. Such measures will serve to create enhanced and faster prerequisites for renewal, development and growth.

Strategic acquisitions. In 2015 Robit aimed to carry out potential acquisitions, which would enable the company to widen its product offering and strengthen its presence at the current or new markets. Since 2015 Robit has carried out four acquisitions and thus widened its product offering significantly, in particular Down-the-Hole products. Selected strategic corporate acquisitions will continue to be part of the company’s growth strategy. By means of corporate acquisitions, Robit seeks to expand its technology, reinforce its distribution network in existing or new markets, as well to add complimentary products and products with synergy benefits into the product portfolio. Potential corporate acquisitions are examined in the drilling consumables industry.

Robit’s central short-term action plan is to integrate the acquired companies into the corporate group, utilizing, however, the best practices of the acquired companies for the benefit of the entire corporate group. The company continues to examine new suitable corporate acquisition objects as part of its own growth strategy. The number of corporate acquisitions to be potentially carried out is dependent, inter alia, upon the synergic suitability and size of the acquisition target, as well as upon how challenging the integration of the acquisition objects is.

Guaranteed availability and increased service model. As drilling contractors and mines require uninterrupted processes, Robit strives to further develop and secure the availability of drilling consumables for its end customers. Robit’s ability to produce products and secure the availability of the products both regionally and locally has significantly improved. The expansion carried out over the years of 2015 through 2017, along with the corporate acquisitions, create the foundation for a diversified production strategy and enable ever better service and delivery ability to distributors and direct customers globally. In addition to the diversified production strategy, Robit strives to ensure availability and service to the end customers by, inter alia, maintaining a good inventory level at its largest own sales and service points. Simultaneously, the company has been developing its sales projection system, with the aim of optimizing the storage needs and delivery ability of each sales area.

Robit prices its products on a product-specific basis, or in larger supplied units desired by the customer. Alternatively, the company may also utilize performance or cost-based billing, or various annual agreement or service agreement models.

Flexible, state-of-the-art production concept. Robit has made good use of its knowledge relating to modern automated production technology. An example of this is the launching of the drill bits manufacturing in DTA’s factory in Perth in April 2017. In addition, the company has made a decision regarding the construction of additional capacity and increasing of automation in the South Korean unit. Robit continues to invest in modern automated production technology, because the company’s management believes that automation improves productivity, speeds up production efficiency and ensures consistent high quality. Robit’s own production operations encompass only the critical, demanding phases of the manufacturing process that require special expertise, such as button bit drilling and buttoning, as well as the manufacturing of the key components for Down-the-Hole drilling hammers. Subcontracting services and raw materials are purchased from a limited number of key suppliers and partners.

Robit considers that the production concept described above enables flexible production volumes, reduced operating costs, as well as the efficient duplication of the production concept or of parts thereof in existing or new geographic areas.

Human resources. Robit’s management believes that skilled personnel supports and enables the growth of the company. Robit has carried out recruiting in accordance with its growth plan. In 2015, the company hired four young, and again in the autumn of 2016, two young talents to ensure the future growth of the company and a youthful age distribution. In the beginning of 2017 Robit constituted the Global Management Team, which substantially strengthen the company’s ability to lead global business operations. In the long-term, the company has continuously invested in its employees, with a particular focus upon sales and customer service personnel, the proportion of which from the company’s personnel amounted to approximately 30 per cent at the end of 2016. In addition, Robit has focused upon increasing product development and digitalization know-how and resources to develop and design the company’s competitive and innovative offering, as well as to enable the increased utilization of digital potential in the serving of customers.

Robit also continues to recruit new young talents in order to implement its growth plan. In addition, the company promotes a business and growth oriented corporate culture, inter alia, with the aid of attractive incentive systems. Robit has also resolved upon a three-year share scheme for the management.

The company’s strategic objective, along with new recruitments, is to develop and train the organization so that the growth and competitive ability can be secured. Robit implements training programs on the individual, skill area and corporate levels.

Intellectual property rights and research and development. Robit’s management believes that intellectual property rights play an increasing role in the company’s business operations. Since 2015 the product development personnel has strengthened substantially, as the company has acquired skilled personnel due to the corporation acquisitions. In addition, Robit continues and develops cooperation with the educational establishments as it was proved to be functional and successful. Robit continues to invest in both its own product development and collective product development projects in the industry in order to secure growth and competitiveness in the future. A prime example of investing in development is the company’s Digital Services business unit which was established to accelerate the development of new digital product innovations and related service business. This business unit develops products and services that allow the company’s customers to utilize the possibilities of for example, IoT, cloud and industrial Big Data.

The company will also continue to reinforce its existing patent and intellectual rights portfolio by acquiring and licensing strategic patents, other intellectual property rights and technologies. Robit also strives to actively protect its intellectual property rights from infringements globally.

Financial targets. Robit has set the following key targets transcending the economic cycle:

  • to increase its net sales organically on average by a minimum of 15 per cent per annum (CAGR), and
  • to achieve an EBITA margin of above 13 per cent.
2016 (IFRS)2015 (IFRS)2015 (FAS)2014 (FAS)
Per cent(unaudited)
Growth of net sales organically %6.419.119.112.6
EBITA, per cent of net sales7.46.77.610.0

Table: realized information relating to the financial targets for the financial years 2016, 2015 and 2014.