Pontus Boman Reflects on Rosti Group’s 80th Anniversary: A Journey of Growth and Innovation

As Chairman of Rosti Group, I reflect proudly on our remarkable journey as we celebrate our 80th anniversary. Since joining our portfolio in 2004, Rosti has epitomised the essence of sustainable, profitable growth, a cornerstone of the Nordstjernan Group investment philosophy.

At the time of acquisition, Rosti was a €30 million single-site business. Today, it stands as a global player with a turnover exceeding €400 million, a testament to our strategic vision and commitment to nurturing thriving businesses. Our investment hypothesis centres on fostering capital-efficient operations, and Rosti’s contract manufacturing model exemplifies this ethos, delivering one of the strongest returns on investment in our portfolio.

As a board, we wanted to diversify the geographical presence of Rosti. Looking back maybe five years, the Chinese operations were quite dominant, generating more than 50% of the overall profit for the group. Looking at Rosti now, it’s a much more balanced portfolio of sites.  Looking at the turnover and the profit, it’s almost equal between the three main regions, US, Europe and China.

Over the years, Rosti has undergone transformative changes, expanding our footprint across diverse geographies. From entering China in 2007 to strategic acquisitions like PCI in 2021, we have strategically expanded our global presence, this has not only mitigated risk but positioned Rosti as a truly global leader in plastic injection molding.

Setting the Standard for Operational Excellence

What sets Rosti apart is our relentless pursuit of operational excellence and customer-centric approach. Visiting Rosti’s plants, I’ve witnessed first-hand their cutting-edge capabilities and unwavering commitment to innovation. From advanced manufacturing techniques to design capabilities, Rosti remains at the forefront of the industry, driven by a decentralised model that empowers plant managers to steer the business with autonomy.

When it comes to plastic injection molding, I’m so impressed with the level of operational excellence and how we drive this process in our different plants, and I’ve seen a lot of plants during my career.

From advanced injection molding capabilities for contract manufacturing to the design capabilities in our Innovative Centres, I would say that we are at the forefront of the entire industry.  We’re also investing and introducing new manufacturing techniques and design capabilities to the market as we speak.

Then if you take a step back and try to understand, why is that? How have we been able to drive that change in capability? Then I really think that the core strategy of being customer-centric, to follow your customers, to listen to your customers, to understand what they need is vital to this success.

Being able to provide the complete service around their needs, both from manufacturing a technically advanced product, but also to all the other services we provide. I think with the combined decentralised model where each plant manager drives their business with a high degree of freedom, that’s been a key driver to enable this development of the capabilities.

Integral role in the Nordstjernan Group

Rosti’s contributions extend beyond its operational success, enriching the wider Nordstjernan Group. As a major holding, Rosti’s strong cash flow and dividends bolster our ability to allocate capital effectively and manage risk exposure. Moreover, Rosti’s strides in finance, sustainability, and operational excellence serve as invaluable resources for our portfolio companies, fostering collaboration and shared learning.

As an investment company, we also operate in a decentralised model, we don’t try to centralise capabilities across our holdings because we really believe in this type of structure to drive the business.

Then if you look at the more functional capabilities like finance, sustainability and CSR, as well as the improvements towards operational excellence, I think Rosti have come a long way on the development journey, and we leverage this knowledge to support the wider portfolio.

We bring together the CEOs and CFOs from the Nordstjernan portfolio to meet on a bi-annual basis to share experiences and knowledge with each other, both in terms of market intelligence and how to approach economic challenges, but also doing business together.

Operational excellence questions like Lean Manufacturing or Six Sigma, Rosti would be the first one to turn to in the group. Certainly, we can do more, but we don’t want to force it either. We take these opportunities as they crop up in the portfolio.

Active Ownership with Rosti Management Teams

Firstly, at Nordstjernan Group, we want to be a driving force to achieve the best potential in the companies that we invest in. We take a slightly longer-term perspective than the management. Our management teams may have a strategy for the next 3 – 5 years. We try to stretch that thinking a little bit and say OK where will this market be in 5 plus years.

We are then able to ask ourselves “Do you really believe that we can create that value over time or what do we need to do to drive more value from this business?”

A clear example of where this thinking has had a material impact on the strategy, I think is the medical strategy for Rosti. We’ve seen that we would like to enter into that business as we see there is good underlying growth and we also have knowledge in the group or in that sector.

So I think that’s a clear impact on the on the strategy of Rosti and also of course the acquisition of PCI to diversify Rosti to make it even more resilient going forward.

We try to work very close with the management team to be clear about what our expectations are. We are not afraid to be very clear and have a strong dialogue.

This provides clear direction on where our CEOs and management teams can drive activities with confidence. Also fostering a collaborative working model that when there are tough decisions to make, our team can rely on me, as a representative from the owner, to support them.

Building solid working relationships with the management team is crucial for me. You must build trust. You must be very open with what your ownership agenda is. You must be aligned with how we’re going to create value.