Esteemed shareholders,

During the past two years, we have experienced the worst economic downturn in modern times. It started as a local mortgage crisis in the US, spread like wildfire across the world’s financial markets and ultimately resulted in a global recession. Some of the largest banks and car manufacturers declared bankruptcy or were bailed out by their national governments, and for the first time since the post-war period, global GDP growth was negative in 2009. Obviously, Beijer Alma was also impacted by these difficult times. Since the Group sells components for investment goods, we are dependent on the industrial sector’s investments in new equipment, and this type of activity tends to decline in periods of recession. Nevertheless, I am pleased with how we have coped with this severe economic downturn. Group invoicing declined 14 percent to SEK 1.6 billion. Profit amounted to MSEK 226, down MSEK 69 compared with the preceding year. However, it is important to remember that 2008 was Beijer Alma’s strongest year to date. Moreover, we were able to capitalize on the weak economic situation and acquire a new sub-group – Beijer Tech.

Although Lesjöfors’ operating profit declined compared with the preceding year, the company ended the year at MSEK 243, despite the severe recession. At the same time, the company was able to maintain its high operating margins. Invoicing fell in Industrial Springs and Flat Strip Components, while Chassis Springs continued to report robust growth. Habia experienced a decline in invoicing in telecom and other business areas, with invoicing dropping a total of 24 percent and profit declining sharply compared with the preceding year.

The year 2009 began with a relatively stable first quarter. Although order bookings declined 9 percent compared with the year-earlier period, the drop in invoicing was marginal. Profit fell 15 percent to MSEK 66. The largest decline was reported in Habia, while Lesjöfors fared better.

The decline in demand intensified in the second quarter. Invoicing fell 16 percent and profit dropped 38 percent to MSEK 57. Once again, Lesjöfors coped relatively well, while Habia experienced a decline in earnings.

During the third quarter, invoicing declined 14 percent. Habia’s result was once more well balanced, while Lesjöfors reported a minor drop in profit. In total, the Group earned MSEK 49, compared with MSEK 77 in the year-earlier period.

During the fourth quarter, invoicing fell 15 percent. Although both companies reported weaker invoicing, Habia experienced the most significant drop. Order bookings and invoicing were well balanced, and profit amounted to MSEK 55, which was a stronger result than in 2008.

To summarize 2009 as a whole, invoicing fell 14 percent to SEK 1.6 billion and profit declined MSEK 69 to MSEK 226. The full-year operating margin was 15 percent. Although this is lower than in the preceding year, when the operating margin amounted to 16 percent, it is important to remember, as I have already stated, that 2008 was the peak of the economic cycle and our strongest year to date.

One reason that the decline in demand did not have a more significant impact on profit was the major savings measures we implemented. Both Habia and Lesjöfors introduced savings packages at an early stage when it became evident that demand had begun to weaken. Since then, the companies’ costs have gradually been adapted to their increasingly weak trends.

The largest savings were achieved by reducing the number of employees. A total of 224 people, or 17 percent of the total number of employees, have left the Group since autumn 2008. These cutbacks were primarily implemented in high-cost countries, while the number of employees in low-cost countries increased instead.

Another important reason that the profit trend remained relatively strong was the Group’s favorable product mix. Our three largest customer segments are other industry, telecom and chassis springs. Other industry and telecom were affected significantly by the declining demand, while chassis springs experienced robust growth despite the severity of the recession.

We also adapted our balance sheet. Inventories and accounts receivable declined, and investments were reduced compared with earlier years and are now lower than the rate of depreciation. Along with favorable profitability, this contributed to a healthy cash flow. The Group has now had a positive cash flow for eight consecutive years, resulting in a strong balance sheet. As we entered 2010, our debts had been transformed into net cash despite a high dividend. In spring 2009, Beijer Alma distributed 63 percent of its profit after tax for 2008.

We have now probably passed the peak of the recession, and it is reasonable to assume that we will begin to see a gradual improvement. Most macroeconomic data support the forecast of an upturn. One important sign in our own operations is our stock of orders, which started to decline in the third quarter of 2008. However, this trend was broken in the autumn, when order bookings once again surpassed invoicing. This is a typical sign of the beginning of an improvement.

I have long maintained that we should be able to establish a higher and more even profitability level than during earlier economic cycles. Now that we have likely left the peak of the recession behind us, this assertion has been put to the test. And I would say that we passed this test with flying colors. During earlier economic peaks, the operating margin has been about 10 percent. At the peak of the most recent economic cycle in 2008, we nearly doubled this figure. In earlier periods of downturn, profit was nearly nonexistent or losses were reported. Although we have been impacted by the most recent recession, the effects on profit were significantly less substantial.

Let us now review the performance of each of our subsidiaries in 2009.

Lesjöfors’ invoicing declined 9 percent to MSEK 1,040. Operating profit amounted to MSEK 243, down 13 percent compared with the preceding year. The operating margin was 23 percent. Although this was certainly a drop, it is still a comparatively high figure. In addition, all business areas reported favorable profitability.

Chassis Springs produces replacement springs for passenger cars and light trucks. Lesjöfors is the largest supplier of chassis springs in Europe, with a market share of approximately 40 percent. Despite the recession, sales continued to grow substantially. Weak sales of new cars and aging vehicles had a positive impact on demand. High growth, combined with weaker demand in other business areas, enabled Chassis Springs to increase its share during the year.

In the area of Industrial Springs, Lesjöfors is the dominating player in the Nordic region and one of the largest companies in Europe. Although this area is normally the largest segment in Lesjöfors, its share declined due to the economic situation. Invoicing fell 20 percent compared with the preceding year.

The Flat Strip Components business area was impacted even more severely by the weak economic climate. This area was also affected by sharply declining demand from telecom customers, and invoicing fell 35 percent.

Lesjöfors once again successfully coped with the fluctuations in demand. The company implemented rapid cost reductions and worked hard to enhance its efficiency and productivity. Lesjöfors also developed its operations in the area of Chassis Springs, thereby generating positive results and high margins in one of the most difficult periods ever experienced by Swedish industry.

Habia was hit harder by the downturn since the recession impacted telecom sales and other customer areas. Invoicing declined 24 percent to MSEK 523. Operating profit fell 84 percent to MSEK 12.

Habia’s operations can basically be divided into two business areas: telecom and other customers. In 2009, telecom accounted for 40 percent of total invoicing. For Habia, telecom essentially comprises cables for base station antennas. Habia is the global leader in this area, with a market share of more than 50 percent. Today, the company’s products are relatively standardized and the market is consolidated. There are a handful of major customers and few competitors worldwide. This also means that the dependency on individual customers is relatively large in these operations. In contrast, the area of other customers is more fragmented. In this area, Habia delivers smaller quantities of custom-designed cables to a large number of customers. The dependency on individual products and customers is thus smaller. There are also more competitors in this area, often local companies operating in their national markets.

Both telecom and other customers reported declining sales in 2009. While the telecom operations initially managed well, demand fell substantially after the first quarter. Sales to the telecom sector dropped a total of 23 percent during the year, and sales to other customer segments fell 24 percent. Telecom is a rapidly maturing market that is exposed to intense price pressure. Sales are also highly volatile. Habia is handling the difficult demand situation by relocating an increasing portion of its production operations to China. We established a plant in China early on, which has provided us with a competitive edge. We now plan to do the same in other customer segments. In May 2009, a new manufacturing plant was opened for custom-designed cables for other customer groups, specifically nuclear power, defense, transport and other industry. This provided Habia with a unique opportunity to supply the Chinese market with locally manufactured products.

For us, it is important to have a presence in emerging markets, where the cost of labor is competitive. Accordingly, we have gradually increased Beijer Alma’s presence in low-cost countries. This applies in particular to China, but we also currently conduct major operations in Poland and Latvia.

Nearly 40 percent of Habia’s employees work in low-cost countries, compared with only a few percent ten years ago. In the past ten years, Lesjöfors has gone from 0 percent to approximately 25 percent. This is a trend that will continue. While access to competitive labor is crucial, proximity to customers is equally important, and in the future, our customers will increasingly be located in emerging regions.

During the past year, we have made considerable efforts to adapt our operations to the declining demand situation. For several years, we have also established a strong balance sheet in preparation for the more difficult times that would inevitably occur and with an eye to future acquisitions. At the same time, we deemed the forecasts and valuations of possible acquisition objects to be excessive.

Times are different now. We have faced a recession that turned out to be more severe than we could have imagined and market expectations have changed dramatically. We have capitalized on this situation by investing in a new operating area. In March, the Group acquired the technology trading company Beijer Tech. The company’s principal market is the Nordic region, where Beijer Tech conducts operations in six product areas. This acquisition has improved our growth opportunities in the Nordic region and other areas of Europe.

As in the past, the “mantra” of our operations is profitable growth, and we seek out both organic and acquired growth. To continue creating value for our shareholders, the strategic criteria we have established for our operations must be fulfilled. We aim to grow by acquiring or developing operations that offer high customer value. This means that we focus on specialized products in small and medium-sized series. We operate in relatively narrow niches, where we aim to be a major player with high market shares. Because we also work in business areas in which the market in each region is often limited, we must expand internationally if we are to have sufficient growth opportunities. Add to this perhaps our most important criteria of all – we strive for a diversified customer portfolio to avoid becoming dependent on a small number of customers.

By basing our work on these criteria, we have created significant value for our shareholders in recent years. An investment of SEK 100 in Beijer Alma on January 1, 2005 would have grown to SEK 265 by year-end 2009. If the same investment had been made in the general stock market index, the value of the investment would have grown to SEK 158.

Allow me to conclude with a few words on the performance of the operations so far in 2010.

The improvement in demand that began in the second half of 2009 has continued. Although the stock of orders also increased during the first few months of the year, the rate of improvement has been slow and demand from telecom customers remains low.

However, the full effects of the cost-saving measures implemented in 2009 are now being felt, which is having a favorable impact on the Group. We also expect the acquisition of Beijer Tech to contribute positively starting in the second quarter.

In summary, our potential for improved earnings in 2010 compared with 2009 is excellent.