Occupying most of two floors in the KPN building on Rama 9 at the heart of Bangkok, LV Technology is a company whose purpose is to assist clients in the cement and related industries to upgrade plant capacity and to save and reduce their energy bills.
The story of LV Technology is a story of success and also a story about some of the difficulties success and the accompanying rapid growth may bring.
Managing Director Peter Kirketerp and newly-appointed Deputy Managing Director for Marketing and Business Development, Bent Johannessen took time out to explain to ScandAsia’s readers the company’s situation and plans for the future. And just how LVT is going about the business of upgrading itself, its systems and staff to cope with current challenges and further growth.
The Success
The business success of LVT, which has been on record since the company’s inception in 1996 when Hans Joergen Nielsen, a capacity well known and highly respected within the cement industry worldwide, started the operation of L.V. Technology.
“The company is primarily a success based on a combination of Hans Joergen Nielsen’s business focus and on the flexibility and innovation he has build within LVT being the core strengths which LVT is providing to clients,” Kirketerp explains and uses an example from real life to elaborate:
“When a potential client in the cement industry finds that he is able to market more cement than his plant is capable of producing or if he wishes to upgrade his plant in order to save energy and improve output generally then he would be wise to contact LVT for engineering services.”
On a worldwide basis around only a handful of larger companies offer full cement plant manufactory capacity and only few of those are serious about upgradetion services. In comparison,
LVT is known to deliver economical and very flexible solutions to its clients.
“We aim to spend less time on our internal procedures and make a solution that is quick to implement,” Bent Johannessen explains and adds:
“That way of doing business has proved to be very successful also because it shortens the down time at client’s plant and pays back the investment rather quick.”
To this Peter Kirketerp adds:
“The interesting thing is that this company has made money from Day One and the reason is that the company was started by people, who all have a high degree of specialist knowledge in this field.”
The Growth
In the beginning Hans Joergen Nielsen managed the company with a relative small group of staff sufficient to handle the level of business. This worked fine until 2004, when LVT’s revenue increased three fold from Baht 250 million to Baht 750 million.
“Moreover, in recent years the LVT has established associate companies in India, France, the USA and in China as well as in Brazil and the revenue of these associate companies are not consolidated into the growth figures of LVT which in turn means that the real business activity of LVT is much larger than the figures for LVT alone suggests,” Peter Kirketerp says and adds:
“Such growth puts a lot of pressure onto an organization, and whilst resources were recruited a gap remained between the requirements for additional capacity and the actual resources employed – this applied both in terms of staff numbers and qualifications to cater for the level of revenue growth which LVT experienced.”
The rapid growth and gearing the company up to match the business activities it has got, is often a complicated exercise to manage.
“You have got to blend the existing resources with new competencies coming from outside the existing organization and often the new blood is represented by people with completely different corporate cultures – to blend and to manage such transition is not necessarily guaranteed to succeed,” Kirketerp points out.
Right now both Peter and Bent are focusing at managing the consequences of LVT’s phenomenal growth. One of these consequences is that it turns out, from time to time, to be somewhat difficult to complete certain projects within time and budget.
Here Kirketerp is realistic and states:
“I must admit that today we are not completely on top of all our projects for the simple reason that we did not gear up our resources and competencies in time to cater for the rapid growth we got into.”
The Solution
Hiring Peter Kirketerp in August 2005 and with him a great number of other staff was part of the solution to the problems caused by the growth and right now Peter is busy planning and implementing the company’s path out of the resource gab.
“The company has presented a new vision stating that LVT shall continue to segment its position as the leading company for providing productivity improving and energy saving technology solutions for the cement and related industries. Further more the vision aim at being a reliable partner striving at improving the economic wellbeing and the quality of working life for all stakeholders,” Peter Kirketerp starts explaining and continues:
“LVT has formulated action plans which aim at achieving just that vision. Plans with the goal of making the business more effective and always seeking improvements in execution of the projects with the clear view to improve the bottom line of LVT now and long term.”
LVT is implementing the plans during 2006 and needs are already uncovered.
“First off the plans have highlighted a need for further business procedures and also an injection of a broader management capacity.”
“When the company started in 1996 the accounting function was relative easy to deal with but today the revenue exceeds Baht 1,000 million in LVT alone and it is clear that quite a few things have had to change over the years,” Peter Kirketerp says.
The Future
LVT is looking forward to a busy 2006.This year is planned to be the year in which LVT gears up for further expansion and brings back the core controls and competencies necessary to execute projects as intended.
“In 2006 we plan results somewhat better than those achieved in 2005 – the net profit for 2005 was Baht 50 million and LVT is ready to do better than that this year.”
“2006 is a year in which we will focus also on improving the internal organization and after that it will be full speed ahead again,” Kirketerp emphasises.
But both LVT managers underline that one should not expect to see the explosive growth that has characterized LVT’s historical performance. Yet they are firm that results will continue to grow in the right direction.
“In 2006 we aim to hit a turnover around one billion and in 2007 1.5 billion. That’s growth of 50 percent, which is quite a lot, but not near the 300 percent we once saw,” Bent Johannessen says.
Kirketerp notes that the company has just completed a right issue offered to existing shareholders, who took up the new shares resulting in a capital injection of Baht 183 million which injection is a fundamental basis for the company’s ongoing business growth and development.
The FL Smidth story
Through the founder Hans Joergen Nielsen, who is an ex FL Smidth employee, LV Technology has close relations with Denmark’s FL Smidth.
The relations are further clear due to the fact that LVT has recruited quite a few former FLS employees both in process, engineering and in contracts execution functions.
The close relations between LVT and FLS resulted in FL Smidth buying 20 percent of the LVT shares at the end of 2005.
“The background for that is that we have always had a close relationship and interest in an intensified cooperation,” Peter Kirketerp explains and he goes on to say that this relationship has been further segmented by recent agreements exchanged between the two companies.
The managing director also reminds us that FL Smidth’s investment in LV Technology is not the story of the conglomerate finding a way into the Thai market – or taking over LVT.
“There isn’t a wish by FL Smidth to participate in any management roles of LVT, nor to take a larger interest than the current 20 % shareholding. It is solely a cooperation build around marketing and product development,” Kirketerp underlines.
The People
41-year-old Bent Johannessen is new in Bangkok. He started with LVT only in February this year.
His wife and three-year-old daughter moved with him to Bangkok. With his engineering education he is not new to the cement industry nor to Asia for that matter.
“I have been with FL Smidth from 1989 to 2005 and during those years I worked six years in Jakarta,” he explains.
His reasons for accepting a job at LV Technology are simple.
“The job is a great challenge. I get a new job taking part in the management role of shaping the
company’s future and I get to put my mark on the development. Also, I know Asia and didn’t have many second thoughts about moving out here when the opportunity arose.”
According to Peter “the new guy” is looking to have a long career in LVT.
“We consider Bent a key player in our future plans,” he says.
Peter Kirketerp has been in Bangkok for the last 20 years. He is married with two children, one still at home.
He says that a year ago he had planned to retire, but then he was contacted to join LVT.
“A member of the LVT board asked if the job at LVT would be interesting for me to do – and I started in August last year – and I have had no time to look back…”
“I could see that the company was into an exiting development and that it would be interesting to be a part of it. Also it looked like there were plenty of things that needed to be done,” he says adding with a smile.
“And I haven’t been disappointed.”
