Bufab Group: Interim report January - March 2017
Continued healthy growth and improved operating margin, partly driven by calendar effects.
First quarter 2017
- Net sales rose by 13 per cent to SEK 815 million (718). Organic growth was 10 per cent, of which approximately half due to positive calendar effects.
- Order intake was slightly lower than net sales.
- Operating profit increased to SEK 90 million (71) and the operating margin rose to 11.0 per cent (9.9)
- Earnings per share rose to SEK 1.63 (1.30)
The Group in brief
|Quarter 1||D|| 12-months |
|Gross margin, %||29.2||28.6||29.2||29.1|
|Operating margin, %||11.0||9.9||9.9||9.6|
|Profit after tax||62||49||26||176||163|
|Adjusted profit after tax||62||49||26||200||187|
|Earnings per share, SEK||1.63||1.30||26||4.62||4.29|
|Adjusted earnings per share, SEK||1.63||1.30||26||5.25||4.92|
In the first quarter 2017, net sales increased 13 per cent, primarily due to strong organic growth. This, in turn, was largely due to strong demand and increased market share, and to the quarter having more working days than the year-earlier quarter.
We continued to gain market share in our largest operating segment, International. As in previous years, it was a question of winning many small new contracts with many customers in most of our markets. The contracts are a result of systematic sales work over a long period. Our market share is still very low in most countries where we have operations, which means there are plenty of business opportunities to cultivate moving forward. Higher market share in combination with more working days resulted in healthy organic growth. Growth was spread across most of our industries, with only the telecom and electronics segment remaining weak. Our units in Central Europe, Eastern Europe and Finland performed well, while we noted slightly weaker performance in Southern Europe and Asia.
Our market share in Sweden also increased in the quarter. This was particularly gratifying, as we had difficulty growing in our domestic market some years ago. We then implemented a major programme with a series of measures to improve the sales organisation and sales work. The programme has resulted in a stronger inflow of new business opportunities, which is now becoming visible in our invoicing. In the quarter, we also experienced a clear and broad-based increase in underlying demand in the Swedish market. No individual customer or customer group stands out, but rather it appears to be a general increase in the industry's order intake and production in the period, possibly reinforced by restocking. This corresponds with market signals, including a very high purchasing managers' index.
Gross margin strengthened significantly compared with the year-earlier quarter, but was weaker than the fourth quarter 2016. We continue to work with our programmes to consolidate our supplier base and to improve cooperation with our best suppliers. These programmes aim to lower sourcing prices, and to strengthen Bufab in other areas such as logistics, capital efficiency, quality and sustainability. As in previous quarters, we continued to benefit from cost savings in sourcing resulting from measures implemented over the past year. However, we can now clearly see that higher prices for important raw materials are creating a price pressure from our suppliers, which is beginning to impact our gross margin. Bufab will need to compensate for the increased costs through higher customer prices, a move that has already begun.
Healthy growth in combination with a higher gross margin resulted in a strong operating margin. The operating profit in the quarter, SEK 90 million, is Bufab's best one to date.
The acquisitions we have completed in recent years continue to develop well. Work is continuing to find other suitable acquisition candidates.
In general, we are satisfied with the beginning of the year. We can see that our strategy is working, which offers a particularly good return in a quarter with many working days and healthier underlying demand. However, there is no lack of challenges moving forward. For instance, hard work is needed to defend the gross margin in a situation with rising raw material prices, without impacting growth. In the second quarter, we have fewer working days than in the preceding year, which is also visible in order intake for the first quarter, but we remain optimistic for 2017 as a whole.
President and CEO
A conference call will be held on 27 April 2017 at 10:00 a.m. CET. Jörgen Rosengren, President and CEO, and Thomas Ekström, 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 1452 555566, UK: 08444933800, Sweden: 0850336434, or the US: 16315107498. Conference code: 99936526.
Please dial in 5-10 minutes ahead in order to complete the short registration process.
+46,370 69 69 01
CFO and IR Director
+46,370 69 94 01
Bufab AB (publ), Corporate Registration Number 556685-6240, is a trading company that offers its customers a full-service solution as Supply Chain Partner for sourcing, quality control and logistics for C-Parts (screws, nuts, etc.). Bufab's Global Parts ProductivityTM customer offering aims to improve productivity in the customers' value chain for C-Parts.
Bufab was founded in 1977 in Småland and is an international company with operations in 24 countries. The head office is located in Värnamo, Sweden, and Bufab has about 1,000 employees. Bufab's net sales for the past 12 months amounted to SEK 2.9 billion and the operating margin was 10 per cent. The Bufab share is listed on Nasdaq Stockholm, under the ticker "BUFAB". Please visit www.bufab.com for more information.
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 27 April 2017 at 7:30 a.m. CET