A Word from the CEO

Flokk CEO Lars Roiri shares his thoughts on the continued growth and development of the Flokk House of Brands, including the acquisition of several new brands and a challenging 2020.

Flokk – Strong performance in an extraordinary year

I’m very happy to be able to look back at 2020 and say to the Flokk team: Well done, everyone!

This is especially gratifying as the year got off to a very rocky start, for society as a whole and for Flokk as a company.

In addition to the global pandemic, Flokk faced some company-specific challenges. In the fall of 2019, we acquired the US company 9to5 Seating. However, we hardly got to properly celebrate this milestone for the Flokk Group and get ready to know our new colleagues before we learned that one of our main production facilities, in Turek, Poland, was damaged in a fire. Most importantly, none of our colleagues were physically injured, and we immediately initiated a process to recover production of the affected products. Through great efforts by our product development and sourcing teams, we have exceeded our internal projections and recovered 90 per cent of the products that were made unavailable by the fire. The incident of course significantly affected sales through our Profim brand, which is produced in Turek. However, we have strong momentum, and I am certain we will regain our market share now when our portfolio is fully restored.

Then, of course, came the extensive pandemic restrictions and shutdowns from March and onwards. After a couple of weeks, we saw orders decrease due to uncertainty in the market and we had to react immediately to align costs with the new reality. In this situation, which had similarities to the one we saw after the financial crisis a decade earlier, the Flokk team again proved impressive at adjusting our cost base as measures were quickly implemented throughout the Group. This flexibility enabled us to maintain healthy profitability through the ups and downs of 2020.

Strengthened position

Given this start to the year, I am extremely proud of what we have achieved in 2020.

While the total office seating market declined in 2020, we managed to strengthen our position across several of our largest markets in Europe. We remain the clear market leader in the European office seating market. In 2020, 76 per cent of sales were from outside of Scandinavia, so we have definitely moved beyond our Scandinavian home turf. The acquisition of 9to5 Seating provides an attractive growth platform in the important US market as well as a manufacturing foothold in Asia, underlining our global ambitions.

The market also offered pockets of robust...

Lars_Roiri_2

In 2020, we also took significant steps within digitalization. Flokk's back-end has been completely digital for a long time, and our front-end is now becoming increasingly digital too, as we are continuously building digital tools and solutions to strengthen our online presence and empower our dealers and architects.

We saw the pandemic accelerating workplace trends that were already underway, such as a more flexible approach to working from home or the office, and more collaborative use of office space. We have high-quality and attractively designed task chairs for home offices, and we are now a complete supplier for the office of the...

chic-lounge-3-jpg[ppt]

Sustainability

ESG – environmental, social and governance factors – have always been a core part of Flokk's DNA, and in 2020 we saw these topics continue to move up on the agenda of not only NGOs and politicians, but also the financial and business communities.

When designing new products, we follow long-standing circular design criteria intended to limit the environmental footprint of our products. These guide how we assemble products and the materials we use, and even dictate our high quality and timeless design, which make for long-lasting products.

During 2020, we increased the external communication of our long track record in ESG, and this will be...

SFF_picture

Looking ahead

Having weathered the turbulence of 2020, I believe Flokk is very well positioned for the next leg of our journey.

Firstly, the demand pickup we saw at the end of 2020 has continued into 2021, and we expect a general market rebound post corona to set the stage for renewed organic growth for Flokk. We will continue to pursue the opportunities offered by the fundamental change to the office we observed in 2020.

Efficient operations are a hallmark of Flokk, and we will continue our operational excellence program throughout the Group, based on our automated, lean, and scalable operational platform, which enables on-demand production and highly...

Flokk_Concept_28[ppt]

Flokk is a leader within our industry when it comes to sustainability, with a decades-long history of innovation dating back to the early 90s when HÅG was the first company in Norway to hire a full-time sustainability manager. Our dedication to this area will continue moving forward, and we have set a number of ambitious goals for Flokk to actively track our progress. One example of our long-term and determined sustainability work is the use of recycled plastics. This has increased from year to year, reaching approximately 800 tonnes in 2020, an increase from 649 tonnes the previous year. In 2021 we target a further increase to 1,000...

HÅG Capisco Puls 8010 Snow-plough-markers_1400_1200

Final Thoughts

Lastly, industry consolidation will remain high on our agenda. Over a number of years, we have established a proven model for buying, integrating and improving companies. We have acquired six companies in the last five years, gaining access to new markets, adding new products to our portfolio and realizing significant synergies. As the European market leader, we intend to use this position to continue the consolidation of what is still a highly fragmented office seating industry and are actively looking for value-creating M&A opportunities.

I am truly proud of the way our people handled the challenges thrown at them in 2020, and this strong culture makes me confident that Flokk is facing a bright future, in 2021 and beyond.

 

Lars I. Røiri

Chief Executive Officer

Want to know more?

Drop your details in the form below to receive our latest annual report