In this Research Note, we examine the Belimo Group, based on their 2021 annual report, investor presentations and their long-term growth strategy in the building automation field devices sector.
Belimo Group, a listed company on the Swiss Stock Exchange, is headquartered in Hinwil, Switzerland with approximately 2,000 employees. The group is a market leader in field devices for the energy-efficient control of HVAC systems. The focus of their core business is on damper actuators, control valves, sensors, and meters.
On 7th March 2022, the company reported a successful year with 2021 net sales increasing in comparison to prior year by 15.7%, to CHF 765.3 million. The EBIT margin of 19.0% (previous year 16.3%) confirmed the validity of the Belimo strategy and business model.
Two customer types / channels are served by the Belimo group:
- HVAC contracting businesses, such as controls companies, systems integrators and distributors.
- Original Equipment Manufacturers (OEMs) of air handling units, boiler groups, dampers etc.
In 2021, Belimo released its long-term Growth Strategy to 2030 with six distinct initiatives, as outlined in more detail in their Annual Report. Three initiatives fall under the Customer Value category:
- Accelerate the Renewal of the installed base: This initiative offers the opportunity to expand the existing retrofit business by leveraging synergies among damper actuators, control valves, and sensors/meters for an increased impact on Comfort, Energy Efficiency and Safety, thus accelerating the renewal of the installed base;
- Grow Asia Pacific: The market for actuators, valves, and sensors/meters in Asia Pacific is estimated to represent only about 18% of the global market, but is the one growing at the fastest rate. In China, a city cluster hub strategy was implemented in 2017 and has since led to significant gains in market share. Additional locations will therefore be added to the eleven hub offices that have already been established. For the OEM sales channel, a dedicated organization has been established and is being expanded;
- Digital Customer Experience: The use of digital tools in the planning, design, and execution of HVAC projects will become increasingly prevalent. Belimo will increase its resources to augment customer experiences with the company.
A further three initiatives are in the Solution Leadership category:
- Grow Actuators and Valves business and expand market leadership: The biggest sales contribution in the growth plan for the period leading up to 2030 is expected to come from the damper actuators and control valves business. That is why “existing business” is emphasized, with a dedicated initiative for growing the business and expanding market leadership by leveraging the economies of scale that result from having the highest volume shares in the market;
- Expand Sensors and Meters with a range of comfort, energy and safety sensors and meters and increase market share;
- Leverage platform capabilities, edge logic and allow seamless access to device data through a Digital Ecosystem.
The strategic acquisition of Opera Electronics Inc. announced in December 2020 enabled the Group to expand their product range into specialty air quality and gas sensors for buildings. The total purchase price amounted to CHF 3.3 million of which CHF 2.8 million was settled in cash in 2020. Rebranded as Belimo Sensors, the Montreal-based firm provides sensors for core applications such as vehicle emission monitoring in car parks, refrigeration gas leak detection, and combustible gas monitoring in HVAC plant rooms. The acquired business generated annual sales in the low single-digit million Canadian Dollar range.
Most Building Automation and Controls Systems (BACS) will evolve into cloud-based and Building IoT (BIoT) systems. In the light of these trends and the increasing interest of building operators in energy and operational data, Belimo believes that digital connectivity of their devices will be of increasing importance.
As part of the Digital Ecosystem initiative, a digital twin is created for each Belimo IoT device, collecting all the digital information the device needs to operate. Customers who own a Belimo IoT device thus also own its digital twin and can interact with it through an open and fully documented interface: the Belimo Cloud API. Third-party applications can then elaborate and aggregate the data collected by their devices.
In 2021, the company established digital ecosystem collaboration partners with other building technology players, mainly startup companies, to leverage data from their respective platforms and devices to unlock the potential of connected buildings. Eighteen digital ecosystem collaborators are currently listed on the Belimo US web site, including Buildings IOT, Facilio, PassiveLogic, Brainbox AI, Sally R and J2 Innovations.
Belimo is well-positioned to maintain its leadership position in control valves and damper actuators particularly through its digital connectivity and ecosystem approach.
This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.