Strengthened gross margin and improved operating profit in the second quarter

Second quarter of 2025
• Net sales decreased by 4.8 percent to SEK 2,039 million (2,142). Organic growth was -0.3 percent, and order intake was slightly below net sales.
• Adjusted operating profit (EBITA) amounted to SEK 268 million (261), corresponding to an operating margin of 13.1 percent (12.2).
• Operating profit (EBITA) totalled SEK 267 million (263), with an operating margin of 13.1 percent (12.3).
• Earnings per share were SEK 0.80 (0.79).
• A share split was carried out during the period, whereby each share was divided into five new shares (share split 5:1).
• Cash flow from operating activities amounted to SEK 245 million (427), corresponding to a cash conversion of 89 percent (154).
• Net debt/EBITDA, adjusted, was 2.5 (2.8).
 
January – June 2025
• Net sales decreased by 1.6 percent to SEK 4,224 million (4,292). Organic growth was -0.2 percent, and order intake was slightly below net sales.
• Adjusted operating profit (EBITA) amounted to SEK 546 million (520), corresponding to an operating margin of 12.9 percent (12.1).
• Operating profit (EBITA) totalled SEK 554 million (523), with an operating margin of 13.1 percent (12.2).
• Earnings per share were SEK 1.76 (1.56).
• A share split was carried out during the period, whereby each share was divided into five new shares (share split 5:1).
• Cash flow from operating activities amounted to SEK 409 million (686), corresponding to a cash conversion of 72 percent (125).
 
CEO’s overview

Bufab reported a strengthened gross margin and improved operating profit in the second quarter, despite lower demand compared to the previous year.

I am pleased with our performance during the quarter, despite tariffs and geopolitical tensions. We are actively working to seize opportunities in an uncertain market and have secured several new major customer projects during the quarter. Our efforts to develop our value creation for customers and gradually reduce our cost base have continued to yield positive results, leading to an improved gross margin and a strong operating margin in the quarter.

Total revenue for the quarter decreased by 4.8 percent, largely due to currency effects. Organic growth remained slightly negative at -0.3 percent. The region Asia-Pacific showed the strongest performance, while the UK/Ireland was the weakest. Demand continued to vary across companies and segments, with customers in the defence sector showing the strongest overall growth.

The gross margin strengthened during the quarter and amounted to 31.1 (29.8) percent. The increase is a result of our efforts to enhance customer value creation and lower purchasing prices during the quarter, and is a key driver in achieving our profitability target.

Operating expenses decreased by SEK 8 million compared to the previous year, thanks to our focused cost-control efforts but also positive currency effects. As a share of net sales, the cost level increased slightly. We continue to maintain a strong focus on costs throughout the organisation, and the effects are expected gradually during 2025/2026.

The adjusted operating margin was strong at 13.1 (12.2) percent. This result is a step in the right direction towards our margin target of 14 percent. The regions North & East, Americas and Asia-Pacific delivered solid results during the quarter, while West and UK/Ireland showed a weak performance.

After the end of the quarter, a small manufacturing unit within Component Solutions Group in the USA was divested. The divestment aligns with our strategy to focus on trading operations and complementary niche companies as our future core business. The manufacturing unit generates approximately SEK 36 million in revenue, and the divestment is expected to have a positive impact on the profitability in the region Americas going forward.

During the quarter, we secured several major customer projects in key segments such as defence, agriculture and general industry. One example is Kverneland in Norway, an international company producing agricultural machinery, where we have been appointed new supplier of C-parts and where the customer particularly value our offering in sustainability, logistics and our global presence.

The ongoing negotiations on trade tariffs are creating uncertainty in the market. We are closely monitoring developments and are actively working with both customers and suppliers to manage the situation.

Our focus going forward is on gaining market share, gradually improving our margin, and delivering a strong cash flow. This puts us in a strong position when the market turns and provides a solid foundation for continued long-term, sustainable, and profitable growth.

Finally, I would like to thank all our customers, partners, and fantastic employees for their excellent cooperation during the second quarter.

Erik Lundén
President and CEO

Conference call
A conference call will be held on 15 July 2025 at 10:00 a.m. CEST. Erik Lundén, President and CEO, and Pär Ihrskog, CFO, will present the results. Analysts and investors who wish to ask questions are asked to connect to the presentation via the following Teams link:  Click here to join the meeting  and use the “Raise Your Hand” function during the Q&A session.

Bufab AB (publ)
Box 2266
SE-331 02, Värnamo, Sweden
Corp. Reg. No. 556685-6240
Phone: +46 370 69 69 00
www.bufabgroup.com