Increased sales and improved operating profit. Strong cash flow.
Acquisition of HT BENDIX A/S.
Second quarter of 2019
- Net sales rose by 11 percent to SEK 1,089 million (980). Organic growth was 3 percent
- Order intake increased by 10 percent and was slightly lower than net sales
- Operating profit (EBITA) rose to SEK 103 million (98) and the operating margin amounted to 9.5 percent (10.0)
- Earnings per share amounted to SEK 1.91 (1.78)
- After the end of the quarter, the acquisition of HT BENDIX A/S was completed, with annual sales of approximately SEK 500 million. Acquisition costs of SEK 3 million were charged to the second quarter. The acquisition is expected to contribute to Bufab’s earnings per share as of the third quarter of 2019
January – June 2019
- Net sales rose by 13 percent to SEK 2,180 million (1,925). Organic growth was 4 percent
- Order intake increased by 13 percent and was somewhat lower than net sales
- Operating profit (EBITA) rose to SEK 222 million (204) and the operating margin was 10.2 percent (10.6)
- Earnings per share rose to SEK 4.14 (3.77)
THE GROUP IN BRIEF
| Quarter 2 | Δ | Jan–June | Δ | 12-months rolling | Full year | |||||||||||||||||
| SEK million | 2019 | 2018 | % | 2019 | 2018 | % | 2018/19 | 2018 | ||||||||||||||
| Order intake | 1,080 | 979 | 10 | 2,164 | 1,923 | 13 | 4,039 | 3,798 | ||||||||||||||
| Net sales | 1,089 | 980 | 11 | 2,180 | 1,925 | 13 | 4,041 | 3,786 | ||||||||||||||
| Gross profit | 303 | 282 | 8 | 607 | 559 | 9 | 1,136 | 1,088 | ||||||||||||||
| % | 27.8 | 28.8 | 27.8 | 29.0 | 28.1 | 28.7 | ||||||||||||||||
| Operating expenses | -200 | -184 | 9 | -385 | -355 | 8 | -751 | -721 | ||||||||||||||
| % | 18.4 | 18.8 | 17.6 | 18.4 | -18.6 | 19.0 | ||||||||||||||||
| Operating profit (EBITA) | 103 | 98 | 5 | 222 | 204 | 9 | 385 | 367 | ||||||||||||||
| % | 9.5 | 10.0 | 10.2 | 10.6 | 9.5 | 9.7 | ||||||||||||||||
| Operating profit | 100 | 96 | 4 | 217 | 200 | 8 | 375 | 358 | ||||||||||||||
| % | 9.2 | 9.8 | 9.9 | 10.4 | 9.3 | 9.5 | ||||||||||||||||
| Profit after tax | 71 | 67 | 7 | 155 | 142 | 9 | 268 | 255 | ||||||||||||||
| Earnings per share, SEK | 1.91 | 1.78 | 7 | 4.14 | 3.77 | 10 | 7.16 | 6.79 | ||||||||||||||
CEO’S OVERVIEW
Bufab continued to perform well during the second quarter of 2019, reporting growth of 11 percent. Earnings and cash flow increased compared with the very strong second quarter in 2018. We continued to invest in our “Leadership 2020” strategy, and in July we completed a significant acquisition.
All of this was achieved against a background characterized by increased uncertainty in the market. The underlying demand decreased during the quarter, particularly in certain industries (such as automotive) and geographies (such as China). Despite this, Bufab posted organic growth of 3 percent, due to increased market shares in many markets.
Both operating segments increased their operating profit. In segment International, we saw a good but somewhat weaker growth than previously. We increased our market shares and continued to invest in strategic areas. Earnings for the quarter increased only marginally, but the development for the first half of the year was good. In segment Sweden, we experienced weaker market conditions and negative organic growth. Despite a continued weak Swedish krona, the gross margin strengthened significantly compared to the last two quarters. This improvement was attributable to comprehensive price increases, which, combined with effective cost control and the contribution from the acquisition of Rudhäll Industri, enabled a higher operating profit also in this segment.
During the quarter, we continued our focus on the “Leadership 2020” strategy, with the objective to become the leading company in our industry next year, in 2020. We are now about halfway and are beginning to see the results take form. We have significantly strengthened our processes, tools and our team in such key areas as purchasing, logistics and quality. We have developed new solutions that help our customers improve their productivity. We are also integrating closer with our customers and suppliers using new digital tools, enabling us to streamline the entire value chain. We are constantly improving relations with our key customers and are well on the way to building a world-leading supplier base. These activities have been financed through the growth we have achieved supported by increased market shares in recent years.
We also continued our search for attractive acquisition candidates that can contribute with growth synergies, customer relations, supplier bases and expertise. In July, Bufab completed the acquisition of HT BENDIX A/S, a leading Danish “Supply Chain Partner” with approximately SEK 500 million in sales. This acquisition is a strong and significant complement to our existing operations in the Nordic region.
Recently, the market outlook has become more uncertain that before, which is reflected in Bufab’s somewhat lower organic growth and order intake for the quarter. We will continue our strategic initiatives, but are now entering a phase in which the focus will be mainly on generating results, for example, in the form of purchasing savings. We will also focus increasingly on internal efficiency.
On the basis of these measures, we intend to generate continued good development even in a possibly more uncertain market climate.
Jörgen Rosengren
President and CEO
CONFERENCE CALL
A conference call will be held on 18 July 2019 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 2071 928 000, UK 08 445 718 892, Sweden 08 506 921 80 or the US 1 631 510 7495. Conference code: 1098999.
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
About Bufab
Bufab AB (publ), Corporate Registration Number 556685-6240, is a trading company that offers its customers a full-service solution as Supply Chain Partner for sourcing, quality control and logistics for C-Parts (screws, nuts, etc.). Bufab's Global Parts Productivity TM customer offering aims to improve productivity in the customers' value chain for C-Parts.
Bufab was founded in 1977 in Småland and is an international company with operations in 27 countries. The head office is located in Värnamo, Sweden, and Bufab has about 1,300 employees. Bufab's net sales for the past 12 months amounted to SEK 4.0 billion and the operating margin was 10 percent. The Bufab share is listed on Nasdaq Stockholm, under the ticker "BUFAB". Please visit www.bufab.com for more information.
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 18 July 2019 at 7:30 a.m. CET.
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