Allgon is experiencing a continuing recovery in the sector. The demand for radio control solutions for machinery, installations and cranes is increasing month by month. With our 10,000 customers, our business is on a firm foundation. We know, however, that the pandemic may spring surprises and we have prepared ourselves accordingly. We have managed to maintain our cash levels, kept costs under control and established contingency plans, leading to a strong result for the third quarter.
With the economy fluctuating, the sector has increasingly recognised the need to streamline and also safeguard production and service. Of course, investments can be postponed if new temporary concerns arise. Despite this, we are seeing a genuine demand for technology, software and service that immediately give measurable results. This is very apparent in our two subsidiaries Tele Radio and Åkerströms.
In the past year, the strength we have in our broad customer base in five continents has been particularly noticeable. When a sector or a region is more defensive, other sectors or countries act as a counterbalance. Currently, demand is strongest in major exporting regions such as southern Germany, Sweden, the Netherlands and Switzerland. Sectors that are doing particularly well are construction, offshore wind power, specialist vehicles and machinery for the construction industry. These are all typical customers who need to be able to control, fine-tune and assess machinery, cranes and installations 24 hours a day. In some markets and sectors, there has been less demand and business has been sluggish. This is particularly the case with customers in the United Kingdom and the automotive, oil and shipping sectors. We have acquired new customers, mainly in our newest markets including Brazil, France and Russia.
Alongside this, we are continuing to put measures in place to enable us to cope with any setback in the global recovery. We have made sure that Allgon and our suppliers are able to act as quickly and decisively as we did in the spring. In regard to our customer relationships, some of which go back for several decades, we are well placed to develop business whatever the state of the economy.
By moving towards a more digitally-based way of working, we will ensure we are less affected by restrictions arising from the pandemic, and we will increasingly undertake meetings and deliver adaptations, service functions, sales and training using this approach. This is most apparent in more mature countries such as Sweden, the United States and Finland where IT infrastructure is most advanced. In the United States, for example, we have used digital channels to strike deals with brand new customers and install systems remotely. This could be indicative of the way we work in the future. For example, we have adapted our physical maintenance services for customers to the new socially-distanced circumstances. Our new mobile service unit for maintenance and service at our customers' sites has had a very positive reception. And our new software that collects process data from machinery is now installed at two major companies in Sweden, Boliden and SSAB. This is yet another area in which we can introduce successful developmental projects into all markets.
I have been hugely impressed by Allgon's employees in the past few quarters. Colleagues with experience of global crises have provided stability and a long-term perspective. Dedicated younger employees, meanwhile, have contributed fresh energy and creative solutions.
Not all competitors in our sector have got through the year so successfully, and so we have been able to win new customers in countries such as the Netherlands and Italy.
Our expansion continues
Allgon believes that there are major opportunities within industrial radio control for the company to grow and become the global leader. Our growth strategy centres on organic growth and selective acquisitions that complement our company. It remains our objective to establish a new subsidiary for Tele Radio during the year. Production in China and Vietnam is in full swing. We have moved some aspects of production between factories to further improve efficiency and resilience.
One important element of our work during the year has been the streamlining process that will enable Allgon to focus solely on its core activity of industrial radio control. During the quarter, Allgon has sold a further niche subsidiary, and industrial radio control now accounts for 90 percent of turnover. The remaining operation, Smarteq Wireless, has performed well and has won a pioneering order in the V2X (Vehicle-to-everything) field, i.e. communication between vehicles or between vehicles and their surroundings.
In summary, in the third quarter, despite an unsettled and challenging market, we have generated new business in radio control while continuing our streamlining process. We have also exercised restraint in terms of expenditure, leading to strong results. Allgon's mantra of "offering a safe, user-friendly work environment for our customers" will continue to resonate in everything we do. And, whatever direction the economy takes, we will be the premier company for our customers, employees and suppliers.
We are working very hard to deliver a reconfigured Allgon, ready to take the steps needed to continue developing and growing the business. We are already looking forward to 2021.
Johan Hårdén, CEO & President, Allgon
Stockholm, Sweden, 12 November 2020
The complete report can be downloaded at https://allgon.se/en/investors/reports/
This disclosure contains information that Allgon AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 12-11-2020 08:30 CET.
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