Second quarter of 2023

• Consolidated sales increased by 27.1% to SEK 1,450.2 M (1,141.3).
• Organic growth amounted to 20.2%, adjusted for currency effects and acquired volume between the years.
• Consolidated operating profit (EBITA) totaled SEK 212.2 M (147.1), with an operating margin (EBITA) of 14.6% (12.9).
• Profit after financial items amounted to SEK 181.2 M (132.9).
• Earnings per share amounted to SEK 5.53 (4.02).

First half of 2023

• Consolidated sales increased by 24.1% to SEK 2,850.1 M (2,296.9).
• Organic growth amounted to 17.3%, adjusted for currency effects between the years.
• Operating profit (EBITA) increased to SEK 414.8 M (311.2), with an operating margin (EBITA) of 14.6% (13.5).
• Profit after financial items increased to SEK 361.6 M (280.8).
• Earnings per share amounted to SEK 11.21 (8.60).

Comment from VBG Group´s President & CEO, Anders Erkén

In the second quarter of 2023, VBG Group’s net sales increased by 27%, reaching SEK 1,450 M (1,141). Rolling 12 months, sales totaled over SEK 5,000 M for the first time, a milestone for the Group.

EBITA increased to SEK 212 M (147), which is the best single-quarter earnings in the Group’s history, and the margin strengthened to 14.6% (12.9). Earnings per share increased by 38% compared with the second quarter of 2022.

The Group’s high rate of growth is due primarily to significant demand in North America, price increases and currency effects. Adjusted for currency effects, growth for the quarter was 20%. VBG Group is a balanced industrial group, and despite the geopolitical situation and a macroeconomic headwind – particularly in Europe – with inflation and rising interest rates, the Group strengthened profitability in all its divisions.

The effects of action programs in North America, a high level of capacity utilization at our facilities, and price increases that have begun to have an effect are the prime factors behind the increase in profitability. The operating cash flow in the second quarter of 2023 was strengthened in comparison with 2022.

Continued high levels of profitability

The Truck & Trailer Equipment division continues to deliver at a stable level, reaching sales of SEK 438 M (388). A high level of capacity utilization in its production units and the implementation of price increases yielded healthy profitability despite increased costs for energy and materials. The EBITA margin amounted to 20.2% (17.8).

Demand for commercial vehicle solutions varied during the second quarter. The need for truck equipment remained high while demand for trailers weakened.

Increased volumes in North America

Mobile Thermal Solutions posted highly favorable sales during the quarter, primarily in North America. Net sales rose 43% and sales for the quarter reached a record high of SEK 820 M (575).

The Inflation Reduction Act that was enacted in the US had a positive effect on sales, since the stimulus package encourages the switch to fossil-free energy, thereby increasing demand for electric vehicles. Since Mobile Thermal Solutions is a leader in electrification, offering climate control systems for both electric buses and off-road vehicles, this has benefited the division.

Profitability in the division has improved, totaling 12.3% (9.9) in the second quarter. Good levels of capacity utilization, an attractive product portfolio for new and existing customers, and the action program that was initiated at the beginning of the year for bus operations have all had a positive effect.

Strengthened profitability for industry solutions

Ringfeder Power Transmission’s net sales totaled SEK 192 M (178). Growth was lower than for the other divisions, and weaker demand was noticeable – especially in Europe – in a number of industry segments during the second quarter of the year.

The consolidation of the American operation for Ringfeder Power Transmission continued in accordance with plans during the second quarter. Measures to increase profitability in conjunction with the consolidation have begun to have an effect. The EBITA margin for the division was 16.3% (14.4).

Increased sustainability requirements

The Group’s focus on sustainability continued during the second quarter. Sustainability data for 2022 has been compiled, and forms the basis for future improvements and targets. In addition to the measurements of CO2 for Scope 1 and 2, we have initiated a number of activities to begin measuring our impact in Scope 3.

The focus has been on transport, materials, and waste. Planning has begun for compliance with new regulations and requirements such as CSRD.

The future

I am extremely pleased and proud of VBG Group’s second quarter. I am particularly proud of all our dedicated, capable employees who have really done a great job. Our planned activities and measures have been implemented, and have yielded results.

Profitability has been strengthened, we have gained new customers and a broader customer base, we are expanding our sustainability commitments and we are offsetting increased inflation with price increases. All this has led to the Group’s highest level of sales and best earnings in its history for a single quarter. Following the all-time high in the first quarter of 2023 with an even better second quarter is highly gratifying.

I feel positive about the future despite the macroeconomic turbulence. Order bookings increased by 23% in the first half of the year compared with the year-earlier period, and demand – primarily in North America – is not showing any signs of slowing.

The business environment is continually changing, but through our balanced business portfolio, our strong brands, our skilled employees and our strong financial earnings we are creating the flexibility we need to meet future challenges and create profitable, sustainable growth.

I would like to thank all our employees and partners for their excellent work during the quarter.