Annual Report in English - Consilium

Marine & Safety business area
The core business consists of safety and navigational
products. Consilium’s market companies also sell
and service external products to make them more
complete local suppliers of products and services to
our customers. Several of Consilium’s products are
also sold to other system suppliers for inclusion in
their own systems.
Consilium develops and markets products and
systems to prevent and control fires and explosions.
Consilium’s systems detect smoke, various gases and
oil mist. We also supply advanced safety management
systems and emergency shutdown systems, as well as
control units for sprinklers. Consilium develops and
markets products and systems for safer navigation.
Consilium’s navigational products and systems in crease
safety with the aid of radar, electronic nautical charts,
voyage data recorders (VDRs), bridge watch alarms
and more.
The total number of sailing vessels in the world and
volume transported by sea is constantly increasing.
This is important for both new construction and the
aftermarket. However, there is overcapacity in several
segments of the merchant fleet, which is resulting
in lower freight rates for shipping companies, and
a decline in new orders to shipyards. A reduction
in orders for new commercial vessels has increased
the price competition in this market. The stronger
Swedish krona has gradually affected Consilium’s
margins. In response, we have reduced our fixed
costs considerably. Even in a weaker market climate,
Consilium has been able to maintain or increase its
market shares.
The Marine & Safety business area currently has
a good balance between different market areas. Net
sales are distributed as follows: new construction
of commercial vessels approx. 30 percent, the
aftermarket approx. 50 percent, specific niches
approx. 10 percent and the land market approx.
10 percent. The expected reduction in deliveries to
new construction of commercial vessels is offset by
increased investments in niche areas and continuing
steady growth for the aftermarket and sales of fire
alarms to the land market.
Sales to new construction of commercial vessels
Consilium used to be more dependent on new construction
of large commercial vessels, but has developed
other market segments during the last five years.
At present, sales of equipment for new construction of
commercial vessels account for approx. 30 percent of
total net sales in the Marine & Safety business area.
Until the middle of 2008, there had been a sharp
increase in orders to shipyards for new construction
of commercial vessels and the shipyards built up large
order backlogs. This was followed by a downturn in
the global economy. Growth in world trade declined
and several countries were hit by recession. New
orders for ships fell sharply, while new construction
Net sales per quarter in 2011, %
Q1
Q2
Q3
Q4
28
26
22
24
remained at a high level due to the large order backlog.
Shipyards were affected by large cancellations
and a decline in new orders, which gradually affected
equipment suppliers like Consilium.
In the long term, demand for sea transport is growing
steadily, but the weakened global economy and
high level of new construction has led to overcapacity
in many vessel segments. Shipping companies’ freight
rates on the spot market have decreased in most vessel
segments. Consilium’s deliveries to new construction
of commercial vessels remained good in 2011, as a
result of long lead times and the large order backlog.
However, the order intake was lower than net sales.
New construction of commercial vessels is expected
to decline by approx. 30 percent in the coming years,
which is partly compensated by a larger share of
gas tankers with higher order value per vessel, and
Consilium is adapting its organisation and market
focus accordingly. Our goal is to maintain or increase
our market shares in the face of more intense competition
in a shrinking market.
Sales to the aftermarket
Sales to the aftermarket are assuming increasing
importance for Consilium. This part of the business
has grown to approx. 50 percent of total net sales
and is achieving steady annual growth. More than 90
percent of the world’s freight is transported by sea.
As a result of the globalised economy, transportation
by sea is increasing at a multiple of world economic
growth. The number of tonnes transported is
expected to increase significantly over the next 10
years. With the construction of increasingly large
ships, the number of vessels is showing a smaller
increase. However, the number of sailing vessels is
increasing constantly. Upgrades and replacements of
old systems, spare parts, servicing and other services
have increased significantly in line with the expansion
of our own global market organisation. Our service
level has increased and the goal is to further increase
sales to the aftermarket.
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