Bufab Group: Interim report January-September 2022

Bufab Group

Continued healthy growth and strong results

Third quarter of 2022

• Net sales increased by 49 percent to SEK 2,122 million (1,425). Organic growth was 9 percent and order intake was in line with net sales

• Operating profit (EBITA) increased to SEK 272 million (164) and the operating margin was 12.8 percent (11.5)

• Adjusted for remeasured additional purchase considerations, operating profit (EBITA) increased to SEK 274 million (182) and the operating margin to 12.9 percent (12.8)

• Earnings per share increased by 62 percent to SEK 4.71 (2.90)

January – September 2022

• Net sales increased by 49 percent to SEK 6,358 million (4,279). Organic growth was 16 percent and order intake was in line with net sales.

• Operating profit (EBITA) increased to SEK 748 million (526) and the operating margin was 11.8 percent (12.3)

• Adjusted for remeasured additional purchase considerations, operating profit (EBITA) increased to SEK 845 million (557) and the operating margin to 13.3 percent (13.0).

• Earnings per share increased by 34 percent to SEK 12.64 (9.40)
  
  

The Group in brief

	Quarter 3		Δ	Jan-Sep		Δ	12-months rolling	Full year
SEK million	2022	2021	%	2022	2021	%	2022/21	2021
Order intake	2,071	1,454	42	6,361	4,461	43	7,874	6,084
Net sales	2,122	1,425	49	6,358	4,279	49	7,953	5,867
Gross profit	601	405	49	1,807	1,195	51	2,249	1,638
%	28.3	28.4		28.4	27.9		28.3	27.9
Operating expenses	-329	-241	37	-1,059	-669	58	-1,332	-942
%	-15.5	-16.9		-16.6	-15.6		-16.7	-16.1
Operating profit (EBITA)	272	164	66	748	526	42	918	695
%	12.8	11.5		11.8	12.3		11.5	11.9
Operating profit	250	157	59	705	505	40	865	664
%	11.8	11.0		11.1	11.8		10.9	11.3
Profit after tax	177	113	57	474	355	34	589	470
Earnings per share, SEK	4.71	2.90	62	12.64	9.40	34	15.57	12.57

CEO’s overview

This was my first quarter as CEO of Bufab and I am pleased to report that the third quarter of 2022 was yet another strong quarter despite challenging market conditions. We reported a continued healthy growth, a stable gross margin and a strong result. However, given the geopolitical and macroeconomic situation, the uncertainty regarding the upcoming year has increased.

We saw a strong growth of 49 percent during the quarter. The growth was largely driven by acquisitions completed in the past year, but we also noted a continued good organic growth of 9 percent. The underlying demand was relatively stable, and the organic growth was mainly a result of price increases and captured market shares. In particular, Segments West and UK/North America showed a strong organic growth for the quarter.

Thanks to a stable gross margin and a lower share of operating expenses, both the operating profit and the operating margin increased significantly. There is a continued good cost control within the group, and this, together with the organic growth and recent acquisitions, accounts for the good profit development in the quarter. Overall, the operating profit increased by 66 percent and the operating margin amounted to 12.8 percent (11.5). All segments contributed to the strong development, especially, Segments West and UK/North America.

The cash flow remained weak during the quarter as a direct result of a continued increase in working capital, mainly in terms of inventory. It is the strong organic growth in combination with the past two years’ longer lead times, that has led to the need for us to increase our inventory. The lead times have been decreasing for some time and we have taken several measures to ensure that our inventory follows suite. We expect the trend in increasing inventory to reverse in the fourth quarter and that the cash flow will then gradually improve.

The work to integrate the recent acquisitions is fully under way and the effort to realise growth synergies is particularly high on the agenda going forward. We also continue to develop our business for the long-term by gradually broadening our customer offer and increasing our degree of digitalisation and productivity.

The energy crisis in Europe, the war in Ukraine, the high inflation rate and rising interest rates indicate major uncertainty ahead of 2023 and point to a weaker economic development. We have noted a somewhat higher level of caution among customers in certain segments. At the same time, we have a well-diversified portfolio of customers and product items with good risk diversification. If demand were to weaken, we are well-positioned with specific measures for each Bufab company. In addition to this, we continue to focus on efficiency improvements, cost savings and price increases towards customers.

A potentially weaker economy implies greater opportunities for strong companies to capture market shares and Bufab has a history of managing challenges in a flexible, dynamic, and successful manner. This combined with a progressively broadened offer and increased customer relevance, provides a solid basis for a continued long-term, sustainable, and profitable growth journey going forward.

I took over the role of CEO of Bufab in mid-August. During the past two months, I have had the privilege to meet a large number of our employees in the Group, visited our subsidiaries and participated in customer meetings, reviews and analyses of our operations. It is clear that Bufab is well-positioned for the future. With our strong customer offering, stable global platform and well-diversified customer base, as well as our strong team and exciting growth opportunities in new and existing markets, we have every opportunity to succeed in the short and long term.

Finally, I would like to thank all our customers around the world for the trust you show in us and to extend a big thank you to our more than 1,800 “solutionists” throughout the world. Without your strong commitment and work, we could not have delivered this strong result.

Erik Lundén
President and CEO

Conference call

A conference call will be held on 27 October 2022 at 10:00 a.m. CEST. Erik Lundén, 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: UK +44 (0) 33 0551 0202, Sweden +46 (0) 8 5051 0086 or the US +1 678 805 0961. Conference code: 1176114#.

Please dial in 5-10 minutes ahead in order to complete the short registration process.

 

Contact

Erik Lundén
President and CEO
+46 370 69 69 00
erik.lunden@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 contact on 27 October 2022 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

 

Attachment

• Interim report Q3 2022