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How does one company go from trading coal and oil to being a market leader in the cooling and heating industry?
What appear to be business activities at completely opposite ends of the marketplace spectrum in fact represent the trajectory of Sweden’s Beijer Ref Group across its almost 160-year history.
Founded originally as Firma G Beijer in Malmö, Sweden by brothers Gottfried and Lorens Beijer in 1866, the company initially traded in cereals. But in the 1930s, it struck black gold as it shifted into coal trading.
By the 1950s, oil had become the company’s primary commodity. Fast forward to the early 2000s, and Beijer Ref become a name synonymous with European refrigeration.
Today Beijer Ref Group is a leading wholesaler of cooling technology and heating, ventilation and air conditioning (HVAC) products, selling to 200,000 customers across 45 countries.
“We’re an old company, but we are also one that has changed as time has progressed,” President and CEO Christopher Norbye tells The CEO Magazine.
It may seem like a complete turnaround; however, the transition has been a gradual one.
“We usually say that we work with evolution, not revolution, when it comes to developing our business model,” he says.
Acquisitions have been key to shaping the company into its current form: the 2004 purchase of Elsmark, a Danish refrigeration group, positioned the company as the leading refrigeration wholesaler in Europe.
In the last two years alone, Beijer Ref has signed agreements to wholly acquire an Indian refrigeration and spare parts distributor and a French HVAC equipment distributor; become the majority shareholder of a Bulgarian HVAC distributor and British air conditioning supplier; and completed two new acquisitions in Australia of a refrigeration wholesaler and heating, air conditioning, and refrigeration (HVAC&R) wholesaler, among other investments.
The July 2023 acquisition of DS Maref saw the business enter the South Korean market for the first time; similarly, the January 2023 acquisition of Heritage Distribution, an HVAC&R parts and equipment platform, opened up North America.
In less than a year, the market has quickly demonstrated its strategic importance and already accounts for 25 percent of all sales. But Norbye has his eye on even larger figures over the next ten years.
“We see an opportunity to grow even faster, both organically and through further acquisition, as the market is very fragmented,” he explains.
Elaborating further on Beijer Ref’s appetite for acquisitions, Norbye explains that another benefit the business sees is more attractive pricing from suppliers. “There’s a lot of value add for Beijer Ref on this journey, because our purchase power grows,” he says.
Rather than shake up the entire outfit, Beijer Ref usually keeps the front office in tact. “We then try to create value with a better back office by the introduction of master data, ecommerce systems and platforms that weren’t previously available,” he explains.
“The third layer is that acquisitions often bring in new products that we can sell across the rest of our distribution models. So you usually create value both on the front and the back end of the business.”
He does have a word of advice on pursuing such a strategy, however: “If you don’t already have a strong business, with strong organic growth and access to capital, you don’t get a ticket to do acquisitions,” he says.
“If you have a weak business model, you can’t acquire yourself out of it.”
When Norbye joined Beijer Ref in 2021, he became only the third CEO to be appointed in four decades. He explains that his new employer’s proven track record in using acquisitions as a tool for growth was key to accepting the role.
“I like using acquisitions to strengthen a company’s market position,” he says. “Adding new products, new geographies and new suppliers makes a business even stronger than the competition.
“Even more importantly, it’s a way of adding more services for the customer. And that’s what really attracted me to Beijer Ref.”
With over 500 branches globally, what also appealed to Norbye was the decentralized nature of Beijer Ref’s operating strategy. Each subsidiary has freedom with responsibility which drives agility and flexible decision-making.
“We are a company where the decision is made close to the local customer,” he says.
“Where I sit in the center of it all, we look at how we can service the company, how we can create the infrastructure needed for growth and how we can scale that leverage as we grow to help our local operations grow and to ultimately achieve success around the world.”
Key distribution agreements allow the company to offer a wide breadth of products in various international markets.
These include Tecumseh, a leader of refrigeration, air conditioning and process cooling solutions in Europe and Africa; Copeland (previously Emerson Climate Technologies), a software, technology and engineering company in Europe; LU-VE, manufacturers of heat exchangers for refrigeration and air conditioning in Australia and New Zealand; and Bitzer, a refrigeration and air conditioning technology manufacturer in Europe, the Asia–Pacific and Africa.
Norbye arrived embracing the Beijer Ref business model and culture as opposed to trying to shake it up.
“We have a very good business with very good people and a very strong business model,” he says. “I didn’t have a mandate to go in and change those things. It was more a case of looking at how I could continue to develop and support it.”
As he has settled into the role, he’s had the backing of his predecessors: Joen Magnusson and Per Bertland, whose tenures were 30 and eight years respectively. “They’re still majority shareholders and members of the board,” he explains. “They impart a lot of knowledge to me.”
And it is advice that is welcome, as the Beijer Ref continues on its evolutionary path, this time towards its self-production of environmentally friendly cooling units and heat pumps for both the commercial and residential markets.
“Our vision is to create sustainable temperature control for all,” Norbye says.
After all, if you live in either a hot or cold climate, you still need to cool down or warm up. There will always be a need for cooling and heating; the key is making it as sustainable as possible.
The business has made a foray into developing energy efficient products such as refrigeration units and heat pumps.
It has also inaugurated centers for green technology in Sweden (centered on propane) and the Netherlands (centered on ammonia) as the industry looks to replace the widespread reliance on hydrofluorocarbon refrigerants, synthetic chemicals and potent greenhouse gases with climate-friendly natural refrigerants such as carbon dioxide, ammonia and propane.
“The biggest impact we can have is to drive the green solution,” Norbye acknowledges. “That means all our products that come into the market are now moving into natural refrigerants.”
Beijer Ref has been able to position itself as one of the original equipment manufacturer (OEM) market leaders in full commercial refrigeration and industrial heating based on CO2.
Last year alone, Norbye reveals, calculations indicate the production and manufacturing innovations that have been implemented have reduced the impact on the environment by one million metric tons of CO2.
“That’s the equivalent of one hundred thousand cars,” he says.
“And the way we drive the company, that’s going to double over the next three to five years. Eventually, these kinds of solutions will become the new norm and evolve into good business cases for our customers too.”
Along with natural refrigerants, the business is also capitalizing on the increased demand for environmentally friendly HVAC systems to replace oil and gas burners, particularly in Europe.
Having predicted the shift early, Beijer Ref has ideally positioned itself to offer sustainable HVAC solutions across its distribution network.
The Beijer Ref business can be broken down into the following three segments:
Comfort Heating and Cooling (HVAC) for homes, offices and shops comprises 52 percent of the business.
Commercial and industrial refrigeration across industries including retail, hospitality, ice rinks and the offshore industry are 38 percent of the business.
OEM of environmentally friendly cooling units and heat pumps make up the final 10 percent.
This focus on sustainability is also an integral tool in the talent war.
“If you work for Beijer Ref, the products that you are going to be involved in are also going to help tackle the environmental issues that we have in the world,” he says.
Add this to a robust company culture and the business is well-rounded when it comes to the issue of recruitment.
“Of course there are challenges, and we have an aging workforce like everybody else, and a lot of expertise that will go out the door in the next ten years. But people like what they do,” Norbye explains.
“They have much greater autonomy over their workday because it’s not some central governing model that decides how you should work.”
It’s one of the reasons why the company enjoys a very high retention rate.
The company also invests in its people through the Beijer Ref Academies, a global network where both employees and customers are educated on the latest sustainable refrigeration products.
Norbye recognizes that people are at the core of the company’s ongoing success.
“We have over 6,000 people around the world, and every morning they wake up, ready to add value to our business,” he explains. “We do everything that we can to make their job better, easier and more competitive.”
The way the company is set up, most of those people are in customer-facing roles. And it’s essential to strike a balance between customer and employee focus.
“If we take care of our employees, they will take care of our customers,” he says.
Balance is at the core of Beijer Ref: a balance between heat and cold, between organic and non-organic growth, between employee and customer focus, resulting in a wealth of experience in maintaining a state of equilibrium.
In doing so, Beijer Ref has grown into one Sweden’s most well-known companies internationally and is one of the country’s best performers on the stock exchange, Norbye adds.
The second quarter of the 2023 financial year has been the company’s best ever, amounting to US$815 million in net sales. As it looks towards the next 150 years of business through a sustainable lens, the name Beijer Ref is on track to become an international household name.
To continue this legacy, Norbye knows good leadership is essential. With such a strong regional network of divisional leaders in Beijer Ref, how does he describe his leadership style?
“It’s simple,” he says. “I lead by example. I can’t just sit there and say things. I need to do it. I need to work hard and meet with our people around the world. I listen a lot. I make sure I am visible and available for people.
“I also need to look at the long term. What’s the future going to look like? What’s around the corner, what are our opportunities and threats, what are the trends we need to be on to continue our success five, 10, 20 years down the road?”