CONTINUED STRONG GROWTH AND ROBUST IMPROVEMENT IN PROFITABILITY
FIRST QUARTER OF 2021
- Net sales increased by 8 percent to SEK 1,423 million (1,316).
Organic growth was +14 percent and order intake higher than net sales - Operating profit (EBITA) increased by 40 percent to SEK 177 million (126) and
the operating margin was 12.4 percent (9.5) - Operating cash flow increased to SEK 105 million (84)
- Earnings per share increased by 38 percent to SEK 3.18 (2.31)
- Bufab achieved its highest ever single quarter sales, operating profit and earnings per share
- Bufab joined the Science Based Targets initiative
- Bufab’s Board of Directors decided on new financial targets until 2025
THE GROUP IN BRIEF
| Quarter 1 | Δ | 12-months rolling | Full year | |||
| SEK million | 2021 | 2020 | % | 2021/20 | 2020 | |
| Order intake | 1,481 | 1,321 | 12 | 4,987 | 4,827 | |
| Net sales | 1,423 | 1,316 | 8 | 4,863 | 4,756 | |
| Gross profit | 397 | 351 | 13 | 1,298 | 1,252 | |
| % | 27.9 | 26.7 | 26.7 | 26.3 | ||
| Operating expenses | -220 | -226 | -3 | -765 | -771 | |
| % | -15.5 | -17.2 | -15.7 | -16.2 | ||
| Operating profit (EBITA) | 177 | 126 | 40 | 533 | 482 | |
| % | 12.4 | 9.5 | 11.0 | 10.1 | ||
| Operating profit | 170 | 118 | 44 | 504 | 452 | |
| % | 11.9 | 9.0 | 10.4 | 9.5 | ||
| Profit after tax | 119 | 86 | 38 | 332 | 299 | |
| Earnings per share, SEK | 3.18 | 2.31 | 38 | 8.91 | 8.04 | |
CEOs OWERVIEW
The first quarter of 2021 was operationally very challenging for Bufab. Despite this, we achieved our best-ever sales and operating profit and increased our profitability significantly.
Already during the end of 2020, we saw a return to healthy growth with most of our customers. This trend continued into the first quarter. Organic growth was 14 percent, albeit in relation to a weak first quarter in 2020, mostly in Asia. We saw both good underlying demand and continued market share growth.
During the end of last year, the growth was mainly driven by our customers regaining lost production volumes from the beginning of the year. We believe the growth at the beginning of 2021 to be more solid, and mainly driven by stronger demand from end customers. This is particularly true for industries that have for various reasons benefited from the coronavirus pandemic.
The dramatic shifts in demand caused difficulties during the quarter in the global supply chains. Raw materials and production capacity were affected by bottlenecks and sharp price increases. Certain categories of components have been difficult to obtain at all. Transport systems experienced major capacity problems, particularly in container freight from Asia to North America and Europe. Bufab has been hit with significant increases in the cost of components and freight, which in turn has led to an increased workload as all prices with both suppliers and customers need renegotiation. Overall, the supply situation and corresponding workload at Bufab were under immense strain during the quarter.
We are therefore particularly proud that, under such challenging circumstances, we have been able to keep our customers supplied with the billions of components featuring more than a hundred thousand unique specifications that we manage on their behalf. We are convinced that this strengthens our customer relationships in the short and long term, while laying the foundation for further growth going forward.
Under these circumstances, it is also further satisfying that Bufab achieved a really strong result. Sales increased by 8 percent and operating profit by a full 40 percent to SEK 177 million, which is our best-ever operating profit in a single quarter, by a wide margin. This in turn is due to strong demand combined with very low operating expenses. We have significantly increased the efficiency in our operations during the last two years, and thus were able to implement last year’s cost savings programme of SEK 100 million without compromising on quality or delivery precision, and without slowing down our sales initiatives. Earnings improved on a broad front: all operating segments increased their sales, profit, and margins. Our newly acquired companies performed particularly well.
Now that the pandemic is entering its fifth quarter, there is naturally great uncertainty. Higher costs for components and freight will put pressure on the gross margin and will need to be passed on to the customers. We will also need to increase recruitment to address the current high level of activity, which will add to costs from the current very low level. On the other hand, we have seen healthy demand at the beginning of the year, we have increased our market shares, and order intake shows no indication of a downward turn. Combined with very low inventory levels throughout the manufacturing industry in Europe and North America, this provides excellent conditions for a continued favourable development moving forward. Our financial status is also strong due to excellent cash flow and profit recently.
We can now therefore look to the future and invest in future growth. During the quarter, we launched a new strategy for Sustainable Leadership 2025. It entails intensified work with growth and profitability improvement, as well as investment in development and further acquisitions. We have also communicated new financial targets. Until 2025, we aim to increase our sales by 10 percent and profit by 15 percent per year, and achieve a sustainable operating margin of 12 percent latest by 2023. Also, Bufab has joined the UN’s Science-Based Targets initiative, which marks a significantly increased ambition level in the area of sustainability.
Once again, I want to thank Bufab’s 1,300 “Solutionists” throughout the world for their outstanding work.
Jörgen Rosengren
President and CEO
CONFERENCE CALL
A conference call will be held on 20 April 2021 at 10:00 a.m. CET. Jörgen Rosengren, President and CEO, and Marcus Söderberg, CFO, will present the results. The conference call will be held in English.
To participate in the conference, use any of the following dial-in numbers: +44 (0) 2071 928000, 08 445 718 892, Sweden 08 506 921 80 or the US 1 631 510 74 95. Conference code: 4371767.
Please dial in 5-10 minutes ahead in order to complete the short registration process.
CONTACT
Jörgen Rosengren
CEO
+46 370 69 69 00
jorgen.rosengren@bufab.com
Marcus Söderberg
CFO
+46 370 69 69 66
marcus.soderberg@bufab.com
This information is such that Bufab AB (publ) is obliged to disclose in accordance with the EU’s Market Abuse Regulation. The information was submitted for publication by the aforementioned contacts on 20 April 2021 at 7:30 a.m. CEST.
Bufab AB (publ) Box 2266 SE-331 02 Värnamo, Corp. Reg. No. 556685-6240
Tel: +46 370 69 69 00 Fax +46 370 69 69 10
www.bufab.com
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