Bufab Group: Interim report January - June 2016

Growth, improved profitability and strong cash flow in an uncertain environment


Second quarter 2016

  • Net sales rose by 15 percent to SEK 762 million (661).
    The organic growth was 5 percent
  • Order intake was lower than net sales
  • Operating profit rose to SEK 82 million (58) and the operating margin to 10.8 percent (8.8)
  • Earnings per share rose to SEK 1.55 (1.04)

January - June 2016

  • Net sales rose by 17 percent to SEK 1,480 million (1,270).
    The organic growth was 4 percent
  • Order intake was on par with net sales
  • Operating profit rose to SEK 153 million (107) and the operating margin to 10.3 percent (8.4)
  • Earnings per share rose to SEK 2.84 (1.92)

The Group in brief

  Quarter 2  D Jan-June D Rolling 12 months Full year
SEK million 2016 2015 % 2016 2015 % 2015/16 2015
Order intake 739 64814 1,478 1 26317 2,677 2 463
Net sales 762 66115 1,480 1 27017 2,669 2 458
Gross profit 223 18123 429 35122 755 677
Gross margin, % 29.3 27.4  29.0 27.6  28.3 27.5
Operating expenses -141 -12315 -276 -24413  -511 -480
Operating profit/loss 82 5841 153 10743 244 197
Operating margin, % 10.8 8.8  10.3 8.4  9.1 8.0
Profit after tax 59 4048 108 7348 160 125
Earnings per share, SEK 1.55 1.0448 2.84 1.9248 4.20 3.27


CEO'S OVERVIEW

During the second quarter, net sales rose by 15 percent to SEK 762 million. Most of the increase stems from our acquisitions, but we also grew organically in both operating segments due to higher market shares and, to a certain extent, calendar effects.

The quarter's gross margin improved to 29.3 percent (27.4). For some time, we have been working systematically to improve our sourcing toward gradually consolidated volumes to fewer and better suppliers. Paired with a favourable sourcing market, these efforts have generated good results. The improved gross margin and a good contribution from acquired companies led to a considerably stronger operating margin of 10.8 (8.8) percent. The operating profit of SEK 82 (58) million is Bufab's best-ever quarterly result.

Better capital efficiency resulted in a strong operating cash flow of SEK 118 (64) million. 

Segment International performed well. Net sales rose by 23 percent. The organic growth of 8 percent was primarily due to higher market shares - many small won customer contracts in most of our geographic markets. Negative growth in for instance Norway and China was more than compensated for by strong growth in the rest of Europe. The acquisition of Apex Stainless, better gross margin and operating leverage on the organic growth led to a substantially improved operating margin. We continue to enhance the segment's organisation in both sales and sourcing, and feel that we have a good potential for further market share gains ahead.

In segment Sweden, net sales rose by 4 percent driven both by a recent acquisition and by organic growth. The market share was unchanged or slightly up. Margins improved. Our efforts to increase our market share continue.

Around 10 percent of Bufab's sales and 15 percent of the operating profit are generated in the UK. The result of the Brexit vote had a negligible effect on Bufab's earnings in the period. All else being equal, should the British pound and demand in the UK weaken for an extended period, the effect for Bufab would be negative. However, we feel that we can compensate higher import prices in this market with higher sales prices. While uncertainty in terms of demand in the UK and Europe has increased, we have yet to see any concrete effects.

As previously, we are continuously evaluating possibilities for further value-generating acquisitions.

Bufab has developed well this year to date, with both organic and acquired growth, higher margins, improved earnings and a healthy cash flow. Growing uncertainty in the business environment, a slightly weaker order intake and the prevailing currency rates are challenges that we will face during the rest of 2016 and in 2017. Our ambition remains unchanged. We aim to increase market shares, carefully control of our margins, and make value-generating acquisitions, and thereby secure a good development also going forward.

Jörgen Rosengren
President and CEO


CONFERENCE CALL

A conference call will be held on 19 July 2016 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, please use one of the following numbers: +44 1452 555566, UK: 08444933800, Sweden: 0850336434, or US: 16315107498. Conference code:39516122.

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


CONTACT


Jörgen Rosengren

CEO
+46 370 69 69 01
jorgen.rosengren@bufab.com

Thomas Ekström
CFO and IR Director
+46 370 69 94 01
thomas.ekstrom@bufab.com


ABOUT BUFAB

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 Productivity TM customer offering aims to improve productivity in customers' value chain for C-Parts.

Bufab was founded in 1977 in Småland, Sweden and is an international company with operations in 23 countries. The head office is located in Värnamo, Sweden and Bufab has about 940 employees. Bufab's net sales for 2015 amounted to SEK 2.5 billion and operating margin was 8 percent. 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 and the Swedish Securities Market Act. The information was submitted for publication by the aforementioned contacts on 19 July 2016 at 8.00 a.m. CET


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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Bufab Group via GlobeNewswire

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