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Ä LV S B Y H U S
Fully booked factories – but
challenging times ahead
Your home is your castle. Älvsbyhus offers an affordable option for those
dreaming of their own house. However, after a couple of record years when
the pandemic made many people want to leave urban areas for a less densely
populated existence, things have turned around. Rising interest rates and price
inflation became a less than pleasant combination in the second half of last year.
Älvsbyhus is being run by the third generation of the
Johansson family, current CEO Kent Johansson, after his
father Donald Johansson and his grandfather, founder
Göran Johansson. The company builds prefabricated houses and
delivers them on a turnkey basis to the buyer’s lot. Manufacturing in
Älvsbyn has been fine-tuned for decades, with everything from the
production of fitted kitchens, its own sawmill and railway tracks for
freight generating a level of cost efficiency that is hard to beat. This
is no secret but a well-known and indisputable fact behind the long-
standing success of Älvsbyhus.
“This is the reason why we can have the highest profitability in
the industry, year after year, while keeping prices lower than our
competitors,” says Kent Johansson. “We have control over the entire
production chain and are constantly finding new ways to work more
intelligently and more efficiently. Due to our in-house production of
each component, we also have control over the quality.”
BIGGEST IN THE MARKET – FOR THE 23RD YEAR IN A ROW
The pandemic brought unprecedented demand for single-family
homes. The company’s three house factories in Älvsbyn, Bjärnum and
Kauhajoki in Finland have been working at full speed since the summer
of 2020. Älvsbyhus sells its products in Sweden, Norway and Finland.
The Swedish market is the biggest by some margin, selling 500 houses
in 2022. This gives Älvsbyhus a market share of just over 11 percent,
making it the industry leader – a position it has held for 23 years in a row. One challenge for a manufacturer of standardized houses is the
Close to 200 houses were sold during the year in Norway, with
higher profitability than in Sweden. Prices in Norway are higher than
in Sweden due to different building standards, and also because of
Norwegian purchasing power, which is relatively strong. More than
100 houses were sold in Finland. Finnish homebuyers have started to
return to Älvsbyhus after a few lean years.
Demand during the pandemic meant that the order book was fully
subscribed for almost two years, resulting in increasingly longer lead
times. Around 730 houses were delivered in 2022, and the factories
are booked to run at the same capacity throughout 2023, provided
that order intake picks up before the summer.
LOWER DEMAND TO BE EXPECTED
However, the combination of higher interest rates and inflation is
reducing the demand for housing. Inflation also affects the prices of
Älvsbyhus’ inputs, forcing price increases.
“We have fixed price lists, so the customer knows what their house
will cost, and it doesn’t increase in price while they’re waiting for
delivery,” says Kent Johansson. “We’re proud of that. But when
our purchase prices go up while the price to the customer remains
unchanged, it affects profitability. We’ve updated our price lists more
frequently. Now we adjust them about every four months compared
to every six months in the past. The price of a finished house has
gone up by around 20 percent since 2021. But this is 20 percent of a
lower amount than our competitors, so in monetary terms our price
increases are smaller.”
However, Kent Johansson is moderately concerned. He points out
that interest rates are expected to peak in 2023 and then stabilize.
In addition higher energy prices have provided an incentive to save
energy, and a new Älvsbyhus house is extremely energy-efficient after
major investments in energy-efficient walls.
“It remains to be seen how new sales will fare in 2023,” says Kent
Johansson. “But I’m an optimist. There will be pent-up demand. I
think sales will pick up during the year.”
It is also a question of fine-tuning the range by introducing new
house models. During the year, a new single-story house of 129
square meters was launched which, with its spacious rooms and
possibility of a home office, was in demand.
BUILDING PERMIT REGULATIONS A CHALLENGE
building permit regulations, which can be interpreted differently
in different municipalities. One example is a case in Nässjö where
the municipality did not grant a building permit for an Älvsbyhus
house because the distribution board was placed too high up. The
municipality claimed that disabled people would not be able to reach
it, even though the board was positioned in accordance with national
building permit regulations. However, Älvsbyhus won the case in all
instances after the municipality appealed, which will hopefully set a
precedent.
“I wish municipalities would stick to the national building permit
regulations, which we use as a basis when designing our houses,”
says Kent Johansson. “This would save us, the municipalities and, not
least, the customers time and money.”
Kent Johansson, CEO
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