Bufab Group: Interim report January – June 2021

Strong growth and highest operating profit ever

Second quarter of 2021

• Net sales increased by 40 percent to SEK 1,431 million (1,022). Organic growth
  was +44 percent and order intake was clearly higher than net sales

• Operating profit (EBITA) rose to SEK 185 million (92) and the operating margin to 12.9 percent (9.1)

• Operating cash flow amounted to SEK 76 million (116).

• Earnings per share increased by 156 percent to SEK 3.18 (1.24).

• Bufab again achieved its highest sales and operating profit ever for a single quarter

• The recruitment of a new President and CEO is proceeding as planned and is in its final stages. The Board of Directors has appointed Johan Lindqvist as acting CEO from 1 September 2021 until the permanent CEO has taken office.

January – June 2021

• Net sales rose by 22 percent to SEK 2,854 million (2,337). Organic growth
  was +26 percent and order intake was clearly higher than net sales

• Operating profit (EBITA) increased to SEK 362 million (218) and the operating margin was 12.7 percent (9.3)

• Operating cash flow amounted to SEK 172 million (201)

• Earnings per share rose by 83 percent to SEK 6.49 (3.54)

The group in brief

	Quarter 2		Δ	Jan–June		Δ	12-months rolling	Full year
SEK million	2021	2020	%	2021	2020	%	2021/20	2020
Order intake	1,526	987	55	3,007	2,308	30	5,525	4,827
Net sales	1,431	1,022	40	2,854	2,337	22	5,273	4,756
Gross profit	393	258	52	790	609	30	1,433	1,252
%	27.4	25.2		27.7	26.1		27.2	26.3
Operating expenses	-208	-165	26	-428	-391	10	-809	-771
%	-14.5	-16.2		-15.0	-16.7		-15.3	-16.2
Operating profit (EBITA)	185	92	101	362	218	66	625	482
%	12.9	9.1		12.7	9.3		11.8	10.1
Operating profit	178	85	109	349	203	71	596	452
%	12.4	8.3		12.2	8.7		11.3	9.5
Profit after tax	124	46	170	243	132	84	410	299
Earnings per share, SEK	3.18	1.24	156	6.49	3.54	83	10.99	8.04

CEO’s comments

The strong demand continued into the second quarter of 2021, and once again we reached an all-time-high sales and operating profit. The positive development should be seen against the backdrop of solid market demand, but also challenging market conditions.

The strong demand that returned at the end of 2020 increased further during the second quarter in all business units and all markets. Our customers, who during mid-2020 had reduced production rates and forecasts, were in many cases taken by surprise by the strength of demand since the end of 2020. This in turn led to a strong increase in the production pace and forecasts, as well as very low inventory levels throughout the supply chain. Naturally, this affected our team, which is now handling much higher volumes per person compared to a year ago. We see the same development in most industries but, of course, even more among customers whose demand has been positively impacted by the pandemic, such as customers making medical devices, kitchen and bathroom equipment and outdoor recreation. We have seen no indication of a slowdown, on the contrary, we have noted an order intake in the quarter that substantially exceeded net sales.

The strong demand resulted in a very good growth. Relative the week second quarter of 2020, organic growth was a full 44 percent, but the growth was also good relative 2019 and the first quarter of this year.

The high demand does create difficulties, in the form of a very constrained supply chain and increased prices of raw materials and transportation. The supply chain for the global manufacturing industry (and especially in Europe and North America) has struggled with serious bottlenecks for raw materials, component manufacturing and transportation. We have good insight into these problems due to our very broad customer base, which covers most geographies and industries. Bufab has never experienced a similar situation. These bottlenecks create uncertainty and additional work throughout the supply chain. Further, the imbalances in the supply chain have resulted in very strong price increases for raw materials and components, and even larger price increases for transportation.

Against this background, it is particularly gratifying that Bufab has succeeded in maintaining healthy deliveries, a stable gross margin and a very low cost level. The entire industry was impacted by production disruptions during the quarter, but very seldom due to Bufab. We have, as everyone else, been affected by large price increases for components since the end of 2020 but have so far succeeded in offsetting these with price increases to customers.

Our strong focus on always helping our customers maintain production has caused a great deal of additional work throughout the organisation. Due to our underlying efficiency improvements and higher degree of digitalisation, we have managed these challenges with significantly fewer employees. Overall, we report a very good operating margin, which is partly driven by a very high capacity utilisation and partly by generally lower costs during the pandemic. The challenge going forward will be to meet the normalisation of the cost level with additional increased productivity and to maintain delivery precision despite bottlenecks, as well as implementing further significant price increases.

The good development creates confidence in the organisation, and we therefore continue our long-term investments, such as the further developing of our sales team and customer relations. Our market share continues to increase. We also have potential acquisitions in the pipeline, made possible by our strong balance sheet.

During the autumn, I will leave the CEO position after nearly ten years. Bufab is a great company with a fantastic business model and entrepreneurial spirit across the team of 1,300 “Solutionists.” Our focus has been to create profitable growth in a sustainable manner and to continuously build a stronger company. This effort has produced good financial results: strong growth and an increase in operating profit by 17 percent per year. We have ambitious goals for profitable growth and increased sustainability moving forward. It is therefore a good time to hand over the helm to a successor, who can take Bufab to the next level.

Most of all, I am proud of the entire team at Bufab, who have done a fantastic job now as always. My warm thanks to all of you!

Jörgen Rosengren
President and CEO

Conference call

A conference call will be held on 13 July 2021 at 8:00 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: Standard Intl. +44 (0) 2071 928000, UK 08 445 718 892, Sweden 08 506 921 80 or the US 1 631 510 74 95. Conference code: 4178014.

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 13 July 2021 at 7:00 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

Attachment

• Delarsrapport Q2 2021 EN