Strong start to the year with continued healthy growth in both sales and operating profit, and a robust improvement in cash flow

First quarter of 2023

• Net sales increased by 19 percent to SEK 2,386 million (2,002).
  Organic growth was 0 percent and order intake was somewhat lower than net sales
• Operating profit (EBITA) increased by 33 percent to SEK 323 million (243) and the operating margin was 13.5 percent (12.1). Adjusted for items affecting comparability related to the closure of the Russian operations of SEK 0 million (-15), remeasured additional purchase considerations of SEK -2 million (-15) and acquisition costs of SEK 0 million (-8), operating profit increased by 16 percent to SEK 325 million (281), corresponding to an adjusted operating margin of 13.6 percent (14.0)
• Earnings per share increased by 21 percent to SEK 5.33 (4.42)
• Operating cash flow amounted to SEK 336 million (-22), corresponding to a cash conversion ratio of 99 percent (-8)
• Bufab once again achieved its highest ever sales, operating profit and earnings per share for a single quarter
  
  

The Group in brief

Strong start to the year

We had a very positive start to the year, despite challenging market conditions. Bufab once again achieved its highest ever sales, operating profit and earnings per share for a single quarter.

The sales growth for the quarter amounted to a strong 19 percent, driven by the latest year’s acquisitions and currency effects. Organic growth was 0 percent, positively impacted by a healthy performance in Segments West and North but offset by strong comparative figures and weak demand in Segments East and UK/North America. Order intake was slightly lower than sales.

The gross margin increased somewhat, primarily driven by a positive business mix. The share of operating expenses decreased during the quarter, but when adjusted for items affecting comparability in the first quarter of 2022 related to the discontinuation of our Russian operations, remeasured additional purchase considerations and acquisition costs, the share of operating expenses increased somewhat.

We have continued good cost control within the Group, despite increased inflationary pressure. This, combined with good contributions from the recent year’s acquisitions, explains the good result in the quarter. Overall, operating profit rose by 33 percent and the operating margin was a strong 13.5 percent (12.1). Adjusted for the above-mentioned items affecting comparability, operating profit increased 16 percent and the operating margin amounted to 13.6 percent (14.0). All segments contributed to the earnings development, but especially Segment North and Segment West.

Our efforts to improve our cash flow have paid off and operating cash flow improved significantly during the quarter as a direct result of the strong earnings development combined with inventory reductions. We expect continued strong cash flow coming quarters.

We continue to undertake the intensive work of integrating the recent acquisitions, with the sustained priority of realising growth synergies high on the agenda. We also continue with the long-term development of our business by, integrating sustainability throughout the whole organisation, broadening our customer offer, as well as increasing our degree of both digitalisation and productivity. In addition to the this, we also continue to work with efficiency activities to compensate for the realised inflationary pressure and have situationally adapted plans in place for each company within the Group.

Given the geopolitical and macroeconomic situation, there is great uncertainty, and we are seeing a continued cautionary approach among our customers in certain industrial segments. However, we have a large and a well-diversified customer- and article portfolio, with good diversification of risk in various industries and markets. At the same time, a weaker economy creates favourable conditions for a strong player such as Bufab to take new market shares as customers increase their focus on reducing indirect costs such as C-parts. These possibilities combined with our broad customer offer and increased customer relevance give us a favourable outlook for a continued long-term, sustainable, and profitable growth journey.

Finally, I would like to thank our customers for the trust they show us and extend a big thank you to our approximately 1 800 “solutionists” worldwide. Without your commitment and effort, we would not have been able to deliver such a strong quarter.

Erik Lundén
President and CEO

Conference call

A conference call will be held on 20 April 2023 at 9:00 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: +44 (0) 33 0551 0202, Sweden +46 (0) 8 5051 0086 or the US +1 786 496 5601. Conference code: 4123660#.

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

Contact

Erik Lundén
President & 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 contacts on 20 April 2023 at 7:30 a.m. CEST.