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2020 will go down in history after what the world experienced, and is still experiencing, as the worst pandemic in modern times. For Frydenbø, 2020 was challenging in many ways, but profitable and with very high demand for our products and services. We land solidly thanks to loyal customers and a fantastic effort from all employees who have delivered quality and world-class service - even in a demanding time. I am proud of how everyone has stood up for the companies and the workplaces.
Main picture: Knut Herman Gjøvaag, CEO and owner of Frydenbø Group.
When the pandemic struck
After a good start to the year with several restructuring processes initiated within both the Industry and the Marine companies, the COVID-19 pandemic struck like lightning from clear skies, with the national shutdown of Norway on 12 March. From one day to the next, we went from normal operations to emergency preparedness. On top of this, it did not make it easier when all the offices had to be closed and all communication had to take place digitally.
When the emergency staff was set and we gradually gained control of the situation through daily meetings and good dialogue with banks and suppliers, we gradually returned to operating mode in mid-April. At worst, the redundancy rate was as high as 20% within Frydenbø Group. The customers were as far as possible shielded from redundancies, which was important and proved to be absolutely crucial to keep the business activity going.
As a result of the shutdown, the car rental and hotel businesses were hit particularly hard throughout the spring. The car rental business had already been agreed to be sold by the end of 2019, and after the renegotiation of the agreement, the business was divested in mid-2020. Dr. Holms Hotel reopened in the first half of June, where we had a fantastic summer season, but the autumn and especially winter season were quite challenging and ruined the positive trend the operation was in. The last half of the year involved a decline in redundancies, while there were still demanding times in tourism and industry which affected both the ship service and hotel business at Dr. Holms Hotel.
A new setback ended positively for Frydenbø Marine
In the springtime, when we finally felt like things were returning to normal, we got another setback when BRP decided to shut down their production of Evinrude motors at the end of May. After a few quite demanding and very intensive weeks in June, a new engine agreement was entered into with Brunswick and Mercury engines. Had we not bought Nordkapp Boats in 2019, we could have been out of the boating industry with one stroke of a pen! After the closure of the Evinrude factory, our time as a pure engine distributor was over, and during the autumn, plans were made for a new and sustainable structure for the Marine Group. The plan was approved in late autumn and all ownership interests in both Nordkapp Boats, now Frydenbø Boats, and Frydenbø Milpro were gathered in Frydenbø Marine, and I am very happy that we have both Ronny Antonsen and the brothers Trond and Sten Frode Underhaug in our joint group company.
What was fortunate for us, after all, was that even before the pandemic hit us, we had initiated several cost and efficiency projects based on a weak year in 2019. This gave us extra speed when things first loosened up. Frydenbø Bil showed a gradual improvement over the spring of 2020, and when it became clear that the summer vacation would take place in Norway, for practically everyone, sales exploded both for new and used cars. What a few weeks earlier had started as a warehouse challenge, suddenly turned into delivery challenges.
Major changes and high speed within the car group
We performed very well, especially in the car and boat businesses. Domestic holidays last year, with a high probability of domestic holidays for the current year as well, are positive influencing factors for these parts of the business. Our established car brands do well in the hybrid segment, and we also have several all-electric alternatives, both with the new XC40 which came in stores in December and Polestar where we started deliveries in Q4. The all-electric car brands Maxus and BYD were launched at selected Frydenbø's car centres last autumn, and on 17 December, we also opened up a completely separate Polestar showroom in the center of Bergen.
Further at Bil, we have moved our investment in Imove out of the car group and into Frydenbø NXT, which is the investment part of Frydenbø Group. Imove has experienced further growth and gained many new mobility subscribers throughout the year. We are still the largest shareholder in the company and have, together with other partners, developed the company further. We have also started up in Sweden and are planning an international expansion at the same time as a major issue which we hope to close in Q2/21 .
Changes also took place for our companies within Damage & Paint last year, by merging our damage and paint business with Kverneland Bil's corresponding units. This, together with the already established collaboration around Dekkstra, also meant that this year we created a completely new unit, MyCar Group, which also includes our independent used car units. The merger is already yielding good results and the goal is for it to be a strong national unit.
New construction and new purchases of commercial property
It has been a demanding year in the real estate division. Dr. Holms Hotel was closed on 13 March and did not open until mid-June. The first weeks were calm, before a BOOM started with the joint holiday and a great month of July. The autumn also started well, but the new, partial closure in November meant that the end of the year did not turn out quite as we had hoped.
In July, we made an agreement to buy the neighbouring property in Åsamyrane - a property I have been looking to acquire for many years in order to form a larger business park in Åsane. After some minor hiccups, the construction of Kilen also went according to plan and will be completed in May this year. This is a project that has been in the making since we bought Sabben in 2006. Both of these projects show our long-term perspective in what we develop and create through generations!
For commercial real estate, and especially the office market, we are curious as to how the pandemic will affect us in the long term, and how office solutions and home office situations will be. We see a trend that both employees and employers want to return to their offices, and this is also something we see in our own companies, at the same time as digitalisation and travel patterns may have led to new and changed routines.
New hybrid solution and turnaround operation in the industrial business
After a weak year in 2019, Frydenbø Industri was the highest focus at the beginning of last year. The businesses in the North and South are quite differentiated, so the business was divided into two operating units. Although 2020 was a challenging year, it is satisfying to see that we managed to turn negatives to positives overall, but there are still challenges in the North that remain to be solved in the current year. It is, therefore, extra nice to see that the trend in the first months of 2021 show a positive development and profit in all units also in the North.
When it comes to collaboration, we see some positive organisational effects of the pandemic. We were well equipped on the digital platform, which made the transition to new meeting places smooth and we quickly got ahead in terms of crisis management - both in top management and at the department level. During morning meetings every day, in the first period of the pandemic, we provided continuously adapted measures in the individual companies. It has also been important to me that all employees continuously received updated information, both practically in relation to infection control considerations and about how the operational situation was within the different companies. We have received good feedback, and we are also bringing these routines with us as we go out of the crisis.
Other organisational effects we have experienced are that the pace of change has become more rapid and the interaction and power of innovation have become stronger. This is expressed in proactivity and creativity around alternative ways of delivering customer promises and creating good customer journeys in a challenging phase. Among other things, we accelerated hybrid production in the industrial business and are delivering the hybrid solution to Ewos Innovation (Cargill) in collaboration with Promek.
The importance of good customer experiences and making good choices
The marketing departments have also focused on adapting touchpoints with customers, and we see that we have lifted ourselves by, among other things, utilising digital marketing, creating good content and using videos in the customer journey.
2020 is our first full year of operation after we lifted our four strategic focus areas across the group, and we will continue to work actively with these in the coming years. This means that all subgroups define sub-goals and measures, linked to KPIs, within Customer Travel, Team, Profitability and Sustainability.
Within Sustainability, we have defined a separate resource person who follows up the subgroups on sub-goals and measures. We are already seeing several exciting measures for climate and other sustainability goals as a result of this work. By the end of 2021, it is planned that all our subgroups will be environmentally certified either as an Eco-lighthouse or in accordance with ISO14001.
Frydenbø Industri has continued the further development of the hybrid investment and now sees great opportunities in the green shift. With this work, we want to help develop propulsion systems that are more environmentally friendly - at the same time as they are more cost-effective for end customers.
At Frydenbø Eiendom, we have placed an emphasis on reducing consumption, in particular reducing energy consumption. A large-scale project was launched to cut energy consumption by 20% for the entire real estate portfolio. In collaboration with Entro on the advisory side and with financial support from Enova, we have cut consumption by 15% in just three years. Over the next two years, the goal is to cut the last 5 percentage points to reach the 20% target. A concrete example in this work is that we use smart sensors that measure indoor climate continuously.
Energy for heating and cooling is obtained from the seawater pipeline in the fjord that we are located right next to. In parallel with the energy cuts, work is being done on the environmental certification of buildings. Such certification maps all the conditions of a building that affect the environment - locally and globally. The survey is very useful tool in our further work with sustainability. All new buildings have been approved BREEAM-NOR-certified to be at least "very good" or better. The Breeam-NOR certification is the oldest and most widespread environmental certification in Norway. Furthermore, we are in the process of environmentally certifying the existing building stock at Damsgård.
The car business is also working to reduce their climate footprint. All of our locations are certified Eco-lighthouse companies, where, among other things, there is a strong focus on climate and environmental requirements related to procurement. Through area efficiency programmes and other measures for energy optimisation and goals for waste reduction, efforts are made to reduce energy consumption and waste for incineration. Digitisation of processes contributes to the reduction of paper use, and measures are being taken to reduce plastic packaging from the largest suppliers (Volvo). We have also delivered our first climate accounts for 2020.
The marine business has set a goal of increasing the recycling rate, especially for plastic and paper. We have also set up a team to look at the possibilities for electric boats, and it is planned that during the year we will be certified as an Eco-Lighthouse.
Furthermore, we include sustainability as an evaluation criterion in procurement processes, where suppliers must describe how they work with sustainability, and contract suppliers must sign that they relate to Frydenbø's specific requirements for ethics and social responsibility, which in turn are linked to UN and OECD standards. In some cases, we require that environmental declarations (EPDs) be attached to offers where these exist so that we can actually compare the climate footprints of different products as part of the evaluation. It is gratifying that we are increasingly experiencing that preferred suppliers with the highest scores on commercial and technical evaluation criteria are also the ones who score best on sustainability.
It is about making good choices that have a positive impact on achieving sustainability goals for our own businesses, but also about seeing opportunities for sustainable development and new earnings related to commercialising our sustainable solutions.
Thank you, team Frydenbø
In conclusion, I would like to highlight and thank our most important resource - all employees in TEAM FRYDENBØ - for the fantastic job that has been done in the last year which makes Frydenbø even stronger than before the pandemic hit us and the world.
Thank you - I look forward to the continuation!
