NIBE: Creating Millionaires and a Greener Future

1 minutes reading time
Published 6 Dec 2023
Reviewed by: Peter Westberg
Updated 7 Feb 2024

According to the Swedish Energy Authority, over 60% of all Swedish small homes had at least one heating pump installed in 2019. Despite a higher total number of buildings, the energy usage is lower today than it was in 2000. Heating pumps, together with district heating, is one of the main reasons behind why Sweden has almost entirely abandoned fossil fueled heating.

NIBE is a manufacturer of these heating solutions and plays a large part in this transition. It’s probably one of the most impressive and consistent companies you’ve never heard of, and since its IPO in 1997, the company has grown from $70 million in revenue to $4.5 billion. This, while never sacrificing profitability – compounding its earnings per share (EPS) at around a 19% compounded annual growth rate (CAGR).

NIBE, just like IKEA, was founded in a rural part of Sweden called Småland. The company offers a wide range of pumps, wood stoves, and solar panels. Long-term shareholders of NIBE have been truly rewarded – enjoying an insane CAGR of 25% during the last 25 years.

History of NIBE

Having gone from creating heating plates for piglets into a world leader in heat pump technology, innovation lies at the heart of NIBE. The foundations of the company were laid in 1952 by Nils Bernerup, a visionary entrepreneur and estate owner from Skåne in the furthest south of Sweden. Bernerup started out by manufacturing equipment for farms, an initiative that evolved into the establishment of NIBE AB. He named the company after the initials in his first and last name, looked for a factory, and invested 5,000 Swedish kronor to kickstart the business. Within just three years, the company grew from 3 to 30 employees.

The modern NIBE structure first took its form in 1989, when current CEO, Gerteric Lindquist, accompanied by 17 other employees and a co-financiere, bought out the company. This wasn’t his first encounter with the heat engineering company, as he – already as a 26 year-old – worked as an export manager in the company. He also served a stint in a similar role at Assa Abloy (then called Assa Stenman) during the 1980s, before assuming his current position at NIBE.

Today, NIBE employs more than 21,000 people in over 30 countries, and despite many changes, the company’s core mission has remained constant: to improve the efficiency, sustainability, and user-friendliness of its energy solutions.

Key Milestones in NIBE’s History

The Electric Water Heater (1955)

NIBE achieved a breakthrough with the introduction of the electric water heater in 1955, a response to new hygiene regulations in dairy farming. This innovation utilized the same technology as the heating plates for piglets and demanded not just invention but also mastery in production and craftsmanship. In the 1970s, NIBE developed an extensive range of water heaters, which became the company’s hallmark – a staple in most Swedish homes.

The Exhaust Air Heat Pump (1981)

The 1970s were marked by electricity-heated homes and inadequate ventilation. In response to this, NIBE combined electric boilers and water heaters and housed them in sleek white cabinets, a welcome addition to the modern laundry rooms of that era. A number of energy crises and increasing ventilation and energy consumption regulations, for example, the requirement to replace the entire amount of air in a house every two hours and recycle at least half of the energy from the exhaust air, made NIBE’s launch of its first exhaust air heat pump in 1981 a success.

Inverter Technology (2006)

NIBE began exploring inverter technology in 2006 to simplify customer and installer experiences. This technology utilized a compressor, allowing for customizable energy production to suit various homes and needs. The breakthrough in 2014 with inverter technology meant greater annual energy savings, more stable operation, and better comfort compared to traditional technology.

NIBE Uplink App (2012)

In 2012, NIBE introduced internet connectivity for its heat pumps through the NIBE Uplink app. This was a pioneering move, making built-in connectivity a standard not just for heat pumps but for all its products. The digital platform required a new approach to teamwork and problem-solving, and initial response upon release made it, according to NIBE themselves, all worth it.

The Intelligent Heat Pump (2019)

The launch of the S-series in 2019, featuring wireless connectivity and smart components, marked a significant step forward. These heat pumps could be updated and enhanced with new software, accessories, and functions like voice assistants or solar panels.

It’s evident, as stated above, that innovation lies at the heart of NIBE. It makes one wonder more about how the company is run on a daily basis, and the Core Principles below, forming the NIBE Operating System, gives us interesting insights. Let’s take a look!

The NIBE Operating System: Core Principles

According to Gerteric Lindquist, the company’s iconic CEO since 35 years back, NIBE’s success can be attributed to eight core principles.

These principles were first made public ahead of the company’s IPO, and still functions as the company’s internal operating system. Below are the principles accompanied by the internal motivation for each one:

1. Strong Profitability

“the most important and basic condition for long-term success and continuous growth”

2. High Productivity

“to continuously improve everything and what cannot be measured cannot be improved”

3. Proactive Product Development

“a condition for continued good organic growth and breaking into new markets”

4. Quality Throughout

“our customers must always have full confidence in our company, products and employees”

5. Market-oriented Expansion

“breaking into new markets must be well prepared and consistently carried out”

6. Three Core Operations

“there are very large international expansion opportunities for all three of NIBE’s business areas”

7. Dedicated Employees

“high requirement for honesty and straightforward messages create clarity”

8. Long-term

“our constant striving to establish long-term relations both internally and in the outside world creates a long term, sustainable operation”

“Knowledge of our management philosophy is extremely important for both new appointments and an acquired unit in order to understand the company spirit and culture within NIBE.”

NIBE: The Millionaire Factory

If you invested $1,000 in the NIBE IPO of 1997, that investment would be worth $215,000 today – a total return of 215x. This incredible stock (and business) performance has made many employees multi-millionaires. Here are the current (as of December 2023) top-10 holdings in NIBE by current and former employees:

  1. Gerteric Lindquist, CEO: $554 million.

  2. Leif Gustafsson, Senior Advisor: $431 million.

  3. Bengt Hjelm, former Chairman of the Board: $287 million.

  4. Harry Andersson, former Head of Sales: $246 million.

  5. Stig Svensson, participated in the 1989 buyout: $178 million.

  6. Holger Svensson, former Head of Business Development: $124 million.

  7. Christer Fredriksson, Business Area Manager NIBE Element: $110 million.

  8. Christel Fritiofsson, Investor Relations Manager: $95 million.

  9. Benny Torstensson, former CIO: $94 million.

  10. Göran Larsson, Partner: $73 million.

From Wealth Creation to Environmental Stewardship

From its role in driving Sweden’s shift away from fossil fuels, to substantial wealth creation for its various stakeholders, NIBE’s trajectory from small-scale innovator to global leader in sustainable heating technologies is a remarkable story. It offers invaluable insights into how a company can achieve sustained growth without sacrificing profitability. The NIBE Operating System, with its eight core principles, provides a blueprint for success that balances ambition with pragmatism. As NIBE continues to expand and innovate, it proves the potential of combining a strong vision with a steadfast commitment to core values.


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