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Bufab Group: Interim report January-September 2021

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·6-min read
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Continued strong growth and earnings development in a challenging environment

Third quarter of 2021

  • Net sales rose by 21 percent to SEK 1,425 million (1,181). Organic growth was 20 percent and order intake was higher than net sales

  • Operating profit (EBITA) increased to SEK 164 million (142) and the operating margin was 11.5 percent (12.1)

  • Adjusted for acquisitions and remeasured additional purchase considerations, operating profit (EBITA) increased to SEK 182 million (142) and the operating margin to 12.8 percent (12.0)

  • Earnings per share rose by 18 percent to SEK 2.90 (2.46)

  • Staffan Pehrson was appointed new President and CEO and joins the company in February 2022

  • Component Solutions Group, with annual sales of about SEK 280 million, was acquired

  • Jenny | Waltle GmbH and Tilka Trading AB with annual sales of about SEK 190 million and SEK 50 million respectively were acquired after the end of the quarter

January-September 2021

  • Net sales rose by 22 percent to SEK 4,279 million (3,518). Organic growth was 25 percent and order intake was higher than net sales

  • Operating profit (EBITA) increased to SEK 526 million (361) and the operating margin was 12.3 percent (10.2)

  • Earnings per share rose by 56 percent to SEK 9.40 (6.01)

The Group in Brief

Quarter 3

Δ

Jan-Sep

Δ

12-months
rolling

Full year

SEK million

2021

2020

%

2021

2020

%

2021/20

2020

Order intake

1,454

1,219

19

4,461

3,528

26

5,760

4,827

Net sales

1,425

1,181

21

4,279

3,518

22

5,517

4,756

Gross profit

405

320

27

1,195

929

29

1,518

1,252

%

28.4

27.1

27.9

26.4

27.5

26.3

Operating expenses

-241

-178

35

-669

-568

18

-872

-771

%

-16.9

-15.0

-15.6

-16.2

-15.8

-16.2

Operating profit (EBITA)

164

142

16

526

361

46

647

482

%

11.5

12.1

12.3

10.2

11.7

10.1

Operating profit

157

135

16

505

338

49

618

452

%

11.0

11.4

11.8

9.6

11.2

9.5

Profit after tax

113

91

24

355

223

59

431

299

Earnings per share, SEK

2.90

2.46

18

9.40

6.01

56

11.43

8.04


CEO’s overview

The good demand that we saw during the first half of the year continued in the third quarter. Bufab delivered a high organic growth and strong earnings, despite a continued very challenging operational situation following the strained supply chains. During the quarter, we acquired the US company Components Solutions Group, and after the quarter end Jenny | Waltle and Tilka Trading.

Organic growth amounted to 20 percent which, alongside a weak comparative quarter, was primarily due to continued strong underlying demand in all segments, but also due to continued captured market shares.

The economic recovery and strong increase in demand after the pandemic created major challenges for the industry globally. This is primarily in the form of an extremely strained supply chain and higher prices for raw materials and freight, but also because there is now a shortage of capacity at many stages of the supply chain. Overall, this creates uncertainty and consequently, additional work throughout our organisation, which is expected to continue for at least the first half of 2022.

Similar to most other companies, we have been affected by large price increases for raw materials and freight, but have succeeded to date in offsetting this by passing these costs on to the customer. This work, together with the higher volumes relative to the comparative quarter, resulted in a good gross margin in the quarter.

The proportion of operating expenses increased during the quarter but adjusted for acquisitions and remeasured additional purchase considerations it is nonetheless at a historically low level. As society has started to open up in most markets, we have begun, for example, to increase the pace of recruitment and investments in our own operations to secure future growth. These investments will not only lead to increased growth, but also to enhanced efficiency, which in turn, will generate positive and sustainable profitability for us going forward. Adjusted for acquisitions and remeasured additional purchase considerations our operating profit and the operating margin increased significantly relative to the comparative quarter.

We have a continued focus on acquisitions and we have a strong pipeline of potential acquisition candidates in several geographies. During the quarter, this resulted in our acquisition of Components Solutions Group, a company we have been monitoring since 2013. The company, which has annual sales of approximately MSEK 280 million and 85 employees, will strengthen our position in the North American market, which we regard as one of our potentially large growth markets going forward. Through many meetings in recent years, we have become very familiar with the company and we can see many similarities with Bufab.

After the reporting period we also acquired Jenny | Waltle and Tilka Trading with annual sales of MSEK 190 and 43 employees and net sales of MSEK 50 and 18 employees respectively. The companies have operations in Austria and Sweden, and we have followed them for some years and also here we see several similarities with Bufab.

During the quarter, the Board of Directors appointed Staffan Pehrson as new CEO of Bufab effective from 1 February 2022. Staffan has long and solid experience of senior positions, primarily at Nefab Group and Ericsson Group, and his proven leadership ability, technical expertise and business acumen are well matched with Bufab’s future needs. We all look forward to welcoming him in February.

The challenge going forward will be to address the normalisation of the cost level by further increasing productivity and to continue to manage the strained supply situation in the market, as well as continuing to pass on the higher costs of raw materials and freight to customers. I do however take a positive view of the future. This is because Bufab’s offering, in times such as these, should be perceived as even more relevant in terms of securing the companies’ own supply of C-parts. In addition, the healthy demand looks to continue in the fourth quarter. Combined with continued low inventory levels throughout the manufacturing industry in Europe and North America, I foresee good conditions for a favourable development also going forward.

Overall, we are very proud that we, despite a challenging environment, have succeeded in maintaining supplies to our customers in a favourable manner. I want to sincerely thank all of our 1,450 solutionists for the incredible focus and flexibility they demonstrated during the year.

Johan Lindqvist
President and CEO

Conference call

A conference call will be held on 27 October 2021 at 10:00 a.m. CEST. Johan Lindqvist, 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: 9265615.

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


Contact

Johan Lindqvist
President & CEO
+46 370 69 69 00
johan.lindqvist@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 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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