Annual report 2008
Firm foundations for further success
Terje Gunnulfsen, Chief Executive Officer
After a number of years of economic prosperity and strong economic growth, 2008 saw a global economic downturn of historic proportions. The effect of the financial crisis reinforced the economic downturn and resulted in increased unemployment, reduced consumer demand and falling economic growth.
InfoCare was also affected by the economic downturn, mainly through reduced volumes linked to the consumer market. 2008 was therefore a year characterised by major restructuring and further consolidation in order to adapt the operation to the new market situation. In line with the integration plan made in 2007, the company closed eight production facilities and moved the activity from these operations to other locations within the Group. This work affected the Group’s operations in all the Nordic countries, and the restructuring resulted in an annual production volume equivalent to 280,000 activities being physically moved to other locations and affected over 350 full-time equivalents. For all people affected by these consolidations, this has been a demanding situation.
Together with the restructuring that has been carried out, the economic downturn has had a negative impact on the Group’s profitability, partly in the form of substantial non-recurring restructuring costs and partly in the form of production losses while the restructuring was carried out. However, through the work that has been completed, we have considerably reduced the company’s cost base and improved the efficiency of operations within every area of the Group. At the start of 2009, we are now gaining rewards of last year’s restructuring and operational improvements in the form of sharply improved earnings. The restructuring that has been carried out has made InfoCare a more robust company well equipped to meet the challenges of the future.
We strengthened the Group’s market position and took new market shares during the year. We won a number of large and important agreements with both existing and new customers. The most important single event was the takeover of Logica’s IT service operation in Sweden. This agreement resulted in welcoming 120 new employees to InfoCare during the summer and at the same time beginning a strategic, long-term partnership as preferred supplier with Logica.
InfoCare has now entered a phase where perfecting the operational activity will be an important initiative area. For a business in which the profit margins are under constant pressure, continually improving the service delivery and making it more efficient represents a key challenge. We are doing this by developing and streamlining internal processes, routines and IT systems, so that we are continually able to create more cost-effective delivery processes and improved delivery quality.
InfoCare will continue to be a driving force in the ongoing consolidation within the niches in the IT service industry in which the company operates. Companies that have been acquired and integrated in recent years will now be refined further, and the potential that lies in further coordination will be realised, so that in future our customers will be offered an even broader and more competitive range of services by InfoCare.
At the start of 2009, the macroeconomic framework conditions are uncertain. Our experience is that challenging macroeconomic situations can also open up exciting industrial opportunities and initiatives aimed at bringing about improvements. InfoCare has a strong strategic position, and it is our ambition that the collective expertise and competitiveness which our 2,500 employees represent will now truly become apparent.