Solid profitability and stable cash flow despite softer demand
First quarter of 2024
- Net sales declined by -9.9 percent to SEK 2,149 million (2,386). Organic growth was -10.6 percent and order intake was in line with net sales
- Adjusted operating profit (EBITA) was SEK 259 million (325), corresponding to an operating margin of 12.1 percent (13.6)
- Operating profit (EBITA) was SEK 259 million (323) and the operating margin was 12.1 percent (13.5)
- Earnings per share decreased by 28 percent to SEK 3.82 (5.33)
- Cash flow from operating activities amounted to SEK 259 million (301), corresponding to a cash conversion ratio of 95 percent (89)
- The key figure net debt/EBITDA, adjusted, was 2.7 percent (2.7)
CEO's overview
We have started the year with an improved gross margin, solid profitability and a stable cash flow despite weaker demand.
The general market situation remains challenging, and we have seen a wide variation in demand among different sectors. The strongest demand was seen in energy and defence, while sectors that experienced tailwinds during the pandemic, such as construction, bath, kitchen and outdoor recreation, reported a weak development. Demand in general industry was also weaker.
Order intake was in line with net sales. Net sales growth amounted to -10 percent in the quarter and organic growth to -10.6 percent. Growth was impacted by strong comparative figures and lower demand across all regions. Some cost adjustments were made during the quarter to meet the lower demand.
Our focused efforts to strengthen our gross margin continued to show result. The gross margin improved by 0.8 percentage points compared to previous year due to a better customer and product mix and purchasing savings. The share of operating expenses increased compared to the comparison quarter last year as a result of the lower volumes but also due to inflationary effects, restructuring costs and investments to promote market growth.
The adjusted operating margin amounted to 12.1 percent (13.6), which is a stable level given the lower demand in the quarter. All regions reported a stable operating margin except Region Europe North & East, which was impacted by a higher share of operating expenses.
Cash flow from operating activities amounted to SEK 259 million (301) for the quarter. Net debt/EBITDA was 2.7 (2.7). Bufab's strengthened financial position in recent quarters presents opportunities for value-creating acquisitions moving forward. We have noted a greater M&A activity recently and are evaluating several potential candidates.
The market outlook for the quarters ahead remains uncertain and we are faced with challenging comparative figures next quarter as well.
During the quarter, we have adjusted our cost base in several of our companies and are well positioned if demand decreases further with situationally adapted measures for each Bufab company. At the same time, we have a well-diversified customer base and article portfolio, with a good spread of risk among various sectors and markets, and a strategy that is well-adapted for the future. Our offer to customers is becoming increasingly relevant and we are well positioned to take additional market shares in the coming quarters.
In 2024, we will continue to implement our strategy according to which our short-term priorities stand firm: to capture market share, gradually improve our margin and deliver a stronger cash flow. The strategic review of our manufacturing companies is proceeding as planned.
As of January 1, Bufab has a new reporting structure that will enable more effective governance of the Group. The new structure comprises five regions: Europe North & East, Europe West, Americas, UK/Ireland, and Asia-Pacific. We have also welcomed Mathias Torstensson to the Group Management as Director Region Asia-Pacific.
Finally, I would like to thank all our customers, partners and employees for a great job in the first quarter.
Erik Lundén
President and CEO
Conference call
A conference call will be held on 25 April 2024 at 9:00 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
This information is information that Bufab is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-04-25 07:30 CEST.
For further information, please contact:
Erik Lundén
President & CEO
+46 370 69 69 00
erik.lunden@bufab.com
Pär Ihrskog
CFO
+46 370 69 69 00
par.ihrskog@bufab.com
About Bufab
Bufab is a trading company that offers its customers a full-service solution as Supply Chain Partner for sourcing, quality control, sustainability and logistics for C-Parts. Bufab was founded in 1977 in Småland, Sweden, and is an international group that today consists of more than 50 companies. The group has 1,800 employees in some 28 countries and annual sales of SEK 8.7 billion in 2023. The share is listed on Nasdaq Stockholm since 2014. Read more on www.bufabgroup.com.
