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MARKET OUTLOOK
From a geopolitical perspective, uncertainty and instability have “We immediately wound up all business in and with Russia, and for
increased significantly in recent years. There have been major Duni this meant a relatively extensive effort in terms of closing down
and rapid changes in a short time, which definitely affects how our subsidiary there,” says Thomas Gustafsson. “In general, the main
Mellby Gård thinks and acts. direct consequences have otherwise been higher input and energy
prices, i.e. a sharp rise in inflation.”
“Overall, the holdings where I chair the board or am a board member
have performed well in 2023, much better than we thought they would “The cost increases meant that in 2023, we had to compensate by
at the beginning of the year,” says Thomas Gustafsson, Deputy CEO of increasing our prices. Finding the right levels has been a challenge for
Mellby Gård. “We were quite pessimistic going into 2023. Above all, we several companies. This is partly because some cost increases have been
were worried about the effects of inflation and high mortgage rates.” very volatile, and partly because some components have increased in
price significantly more and for a longer period than anticipated. But the
It was estimated that essential consumption of food, for example, companies have generally handled the issue very well.”
would remain reasonably stable, while consumption of clothing and
restaurant food would decrease. But clearly, many individuals have had In the longer term, Thomas Gustafsson believes that tensions in
fixed interest rates and possibly used their savings for consumption. many parts of the world may continue to rise. For example, in 2023
This has led to them prioritising both eating out and buying clothes the Israel/Palestine conflict escalated, while the 2024 US presidential
more than anticipated. elections could further increase instability.
“Our analysis for 2023 was probably correct, but we didn’t take “Overall, there are currently more factors with potentially negative
into account the shift in consumers’ personal finances,” Thomas impacts than factors that improve the geopolitical situation,” he says.
Gustafsson continues. “Now, ahead of 2024, we’re making a similar
assessment and assuming that private consumption will decrease, Cybersecurity is another concrete example of the impact of the
which will probably affect several segments.” turbulent geopolitical situation. Thomas Gustafsson says that the
companies are seeing an increase in crime in this area and that the
A BRAND-NEW WORLD ORDER TO CONSIDER offences are becoming increasingly sophisticated. IT security is an
existential issue that cannot be underestimated – it is important that it
It has become unstable in many parts of the world, and a new world is prioritized and continuously improved.
order has rapidly emerged. This has quickly and extensively influenced
the way Mellby Gård thinks and acts. Companies, in turn, are living with REVIEW OF MANUFACTURING AND PURCHASING
greater and, in many respects, novel uncertainty.
In the current global situation, there is also reason to review where
“The increasingly turbulent environment means, among other things, companies have manufacturing facilities and where they make their
that we’re assessing geographical markets from a broader perspective,” purchases from. This is also strongly linked to the sustainability
says Thomas Gustafsson. “A few years ago, such assessments mainly perspective and to a more rigorous assessment of political risk.
concerned the level of corruption. Today, for example, we can see a
much stronger link between political risk and business risk. This has “In several sectors, particularly ready-to-wear clothing, a shift in
made us more vigilant, and those constraints weren’t as strong a few manufacturing has been underway for several years,” says Thomas
years ago when we saw China as being more attractive, for example.” Gustafsson. “The sustainability transition is an important driver, but
He continues: there’s also a more rigorous assessment of risks.”
“As many countries have become more protectionist, companies Thomas Gustafsson says that in 2021, many of the world’s companies
naturally feel more secure in existing markets or where the political risk became painfully aware of the fragility of global infrastructure and the
is not as great or obvious. This is a wise conclusion, but at the same implications of the container cost going from USD 2,000 to USD 17,000
time it’s important not to become too defensive.” in the space of four months. Such a scenario was probably not in the
risk calculus of any company in the world, and obviously nobody wants
At Mellby Gård, Thomas Gustafsson and his colleagues listen closely to end up there again.
to the Group’s companies regarding geopolitical issues.
“All in all, the companies within Mellby Gård should be highly
“It’s important for us to keep our ear to the ground in the various commended for the way they handled first the pandemic with
markets,” he says. “Some of our companies are national, while others lockdowns and restrictions, and then even greater turbulence with high
are distinctly international. We continuously share information and inflation and in many places a war-torn world,” he says.
experiences with all our companies on various external events, how to
assess them and what effects they may have. It’s an extensive exchange “We at Mellby Gård always work closely with our companies, and in
of knowledge that’s crucial to us, and one of the strengths of belonging recent years we’ve had an even closer dialogue. Despite the current
to a group like Mellby Gård.” situation, all companies have continued to prioritize their strategic
projects. In times of uncertainty, it’s easy to only look at the short
IMMEDIATELY WOUND UP ALL BUSINESS IN RUSSIA term, but the companies have certainly not slowed down regarding
their strategic agenda, which is a clear sign of strength,” Thomas
When Thomas Gustafsson looks back a few years, he sees a world that Gustavsson concludes.
was taking a breather after the pandemic had kept it in a tight grip. It
was expected that things would get back to normal as far as the impact
of external factors was concerned. So Russia’s full-scale invasion of
Ukraine came as a bolt from the blue.
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