Strong growth and stable margin
First quarter 2018
- Net sales rose by 16 percent to SEK 945 million (815). Organic growth was 9 percent.
- Order intake was in line with net sales.
- Operating profit (EBITA) rose to SEK 106 million (91) and the operating margin was 11.2 percent (11.1).
- Earnings per share rose to SEK 1.98 (1.63).
The Group in brief
| Quarter 1 | D | 12 months rolling | Full year | ||||||||
| SEK million | 2018 | 2017 | % | 2018/17 | 2017 | ||||||
| Order intake | 944 | 811 | 16 | 3,389 | 3,256 | ||||||
| Net sales | 945 | 815 | 16 | 3,331 | 3,201 | ||||||
| Gross profit | 277 | 238 | 16 | 956 | 917 | ||||||
| % | 29.3 | 29.2 | 28.7 | 28.6 | |||||||
| Operating expenses | -171 | -147 | 16 | -630 | -606 | ||||||
| % | 18.1 | 18.0 | 18.9 | 18.9 | |||||||
| Operating profit (EBITA) | 106 | 91 | 16 | 326 | 311 | ||||||
| % | 11.2 | 11.1 | 9.8 | 9.7 | |||||||
| Operating profit | 104 | 90 | 16 | 318 | 304 | ||||||
| % | 11.0 | 11.0 | 9.5 | 9.5 | |||||||
| Profit after tax | 75 | 62 | 20 | 226 | 213 | ||||||
| Earnings per share, SEK | 1.98 | 1.63 | 21 | 5.96 | 5.61 | ||||||
CEO'S OVERVIEW
Bufab had a successful first quarter of 2018. Despite fewer work days year-on-year, growth totalled 16 percent, driven by acquisitions, increased market shares and favourable demand.
Particularly strong performance was noted for our largest operating segment, International. We continued to take market shares, just like before in the form of many small new businesses with many customers. We have now increased our market shares every year for several years in most of the markets where we operate. Nevertheless, we still see many business opportunities to explore moving forward. Increased market shares in combination with healthy underlying demand generated organic growth of 9 percent despite fewer work days. Growth was particularly strong in Eastern and Central Europe and in Asia. The segment's sales and profit were also significantly strengthened by strong contribution from two of our most recent acquisitions, in the UK and Singapore.
We also increased our market share in Sweden during the quarter, now for the second consecutive year. Furthermore, as in 2017, we also noted a good underlying demand. We estimate that Swedish industrial activity remained strong during the quarter. Growth was spread over many customers and industries.
The healthy demand in both of the operating segments and our inflow of new business are creating challenges in our supply chain. It is therefore gratifying to note that Bufab succeeded in upholding a good delivery precision during the quarter, thus securing our customers' production.
The Group's gross margin was strengthened slightly year-on-year and significantly outperformed the final quarter of 2017. The price increases implemented by Bufab in 2017 offset the increases in raw material prices that occurred during the first half of the year. However, because raw material prices continued to rise in the second half of the year, increasing the prices will again be an important area and a major challenge during 2018. This need is particularly significant in Sweden due to a weak exchange rate for the SEK, while the situation in International was mitigated by a strong EUR exchange rate in the quarter.
During the quarter, our operating expenses increased organically at the same rate as sales. One important reason was cost associated with our "Leadership 2020" initiatives. Despite this, the favourable growth, combined with stable gross margins, led to a 16-percent increase in operating profit over a strong first quarter last year. About half of the profit growth was due to acquisitions and half was achieved organically.
We are quite satisfied with our performance during the early part of the year. Our strategy is working and is generating healthy returns in the form of growth and profit. We have strengthened our customer and supplier relationships. We have a more competitive customer offering, better internal processes and systems, and an even stronger team than a year ago.
During 2018, we will need to continue to work on price increases and, as always, ensure that our customers are satisfied and that our delivery and quality are spot on. We intend to continue to capture market shares and we hope to complete additional value-generating acquisitions in the future. But primarily we will focus on further increasing our short and long-term customer value. Our target is to be the leading player in our industry by 2020.
Jörgen Rosengren
President and CEO
CONFERENCE CALL
A conference call will be held on 26 April 2018 at 10:00 a.m. CET. Jörgen Rosengren, President and CEO, and Marcus Andersson, 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) 1452 555566, UK: 08444933800, Sweden: 0850336434, or the US: 16315107498. Conference code: 7964027.
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 Andersson
CFO
+46 370 69 69 66
marcus.andersson@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 26 April 2018 at 7:30 a.m. CET.
