Bufab AB

Quarterly Report • Apr 27, 2016

Interim report January – March 2016 Q1

Interim report January – March 2016

Stronger profit, margins and cash flow. Acquisition of Magnetfabriken AB.

First quarter 2016

• Net sales rose by 18 percent to SEK 718 million (609). Adjusted for currency effects and acquisitions, net sales increased by 2 percent.
• Order intake exceeded net sales.
• Operating profit rose to SEK 71 million (49) and the operating margin increased to 9.9 percent (8.0).
• Earnings per share rose to SEK 1.30 (0.88).
• Magnetfabriken AB was acquired.

GROUP IN BRIEF (FOR DEFINITIONS, SEE PAGE 16)

				12 month	Full
	Quarter 1		Δ	rolling	year
SEK millions	2016	2015	%	2015/16	2015
Order intake	738	616	20	2,586	2,463
Net sales	718	609	18	2,568	2,458
Gross profit	206	170	21	713	677
Gross margin, %	28.6	28.0		27.8	27.5
Operating expenses	-135	-121	11	-494	-480
Operating profit	71	49	46	219	197
Operating margin, %	9.9	8.0		8.5	8.0
Profit after tax	49	33	48	141	125
Earnings per share, SEK	1.30	0.88	48	3.69	3.27

QUARTERLY DEVELOPMENT NET SALES,

DEVELOPMENT

OPERATING MARGIN

9.9%

CEO´S OVERVIEW

During the first quarter, net sales rose by 18 percent to SEK 718 million, Bufab's highest net sales ever for a single quarter. Most of the increase stems from the three acquisitions carried out since February 2015. All acquisitions report good growth in market shares, net sales and profitability for the quarter. Moderate organic growth of 2 percent due to higher market shares in the segment International contributed to the Group's increase in net sales.

The quarter's gross margin strengthened to 28.6 percent (28.0). This increase is a direct result of our focus on improved sourcing prices and higher customer prices which counteracted negative currency effects. These measures, paired with good contributions from the acquired companies, increased sales volumes and good cost control have enabled us to considerably improve our operating margin to 9.9 percent (8.0). We still have a way to go before we reach our operating margin target of 12 percent, but we are moving in the right direction.

We have long worked systematically to improve our tied-up capital, particularly in terms of trade payables and inventory. Consequently, it was very satisfying to see that we together with the improvement in tied up capital were able to convert the good operating profits into a robust increase of our operating cash flow, from SEK 8 to 44 million.

Segment International performed well. Adjusted for currency effects and acquisitions, net sales increased by 5 percent. The organic growth rate was lower than during 2015, particularly at the start of the quarter. However, we estimate that our market shares increased during the period. Weaker sales growth in Norway, Finland and Asia was compensated for by strong growth in the rest of Europe. Due to good cost control, the higher net sales generated a stronger operating margin. Better sourcing prices and higher customer prices also contributed. We continue to reinforce the segment's organisation in both sales and sourcing, and feel that we have excellent potential to further expand our market share moving forward.

In segment Sweden, net sales declined by 3 percent, primarily the result of low demand in the telecommunications sector. Our ambition is to gradually expand our market share for segment Sweden from what is already a good level. We continue to work intensively to increase new sales in Sweden but have not yet reached sufficient growth levels. Despite weak sales growth, we managed to reinforce both gross and operating margins and increase the segments' operating profit. This was accomplished through sourcing savings, higher customer prices and lower operating expenses.

In March, we acquired Magnetfabriken AB, one of the leading suppliers of magnets and magnet systems in the Nordic region with annual sales of around SEK 20 million. As previously, we are continuously evaluating additional acquisition opportunities.

We face some important challenges: to continue to achieve organic growth, also in Sweden, and to further improve our operating margin. But the year has started well for Bufab. Our ambition level is high, and we look ahead with confidence on the conditions for the remainder of 2016.

Jörgen Rosengren President & CEO

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

Bufab was founded in 1977 in Småland and is an international company with operations in 23 countries. The head office is located in Värnamo, Sweden and Bufab has about 935 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." For more information visit www.bufab.com.

The Group in brief

FIRST QUARTER

Order intake amounted to SEK 738 million (616) and exceeded net sales.

Net sales rose by 18 percent to SEK 718 million (609). This represented a 2-percent increase when adjusted for currency effects and acquisitions. Adjusted accordingly, the growth was +5 percent for segment International and -3 percent for segment Sweden.

Magnetfabriken AB, with annual sales of approximately SEK 20 million, was acquired during the quarter. For more information, see page 15.

Underlying demand is deemed to be basically unchanged, and the market share slightly higher compared with the year-earlier period.

Gross margin strengthened during the quarter, both compared with last year and sequentially. The acquired companies have a higher gross margin and accounted for approximately half of the increase. The remaining increase can be attributed to higher customer prices and cost savings in sourcing, which counteracted negative currency effects during the quarter. Operating expenses have increased by SEK 14 million compared with the previous year, largely due to the acquired companies.

Operating profit increased to SEK 71 million (49), corresponding to an operating margin of 9.9 percent (8.0).

Exchange-rate fluctuations had a negative impact of SEK 4 million on operating profit, volumes had a positive impact of SEK 3 million, the price/cost/mix a positive impact of SEK 5 million, acquisitions a positive SEK 16 million and acquisition cost of a positive SEK 2 million.

FINANCIAL ITEMS AND TAX

The Group's net financial items amounted to SEK -5 million (-6) for the first quarter. During the quarter, exchange-rate differences had a positive impact of SEK 2 million (1) on net financial items.

The Group's profit after financial items amounted to SEK 66 million (44).

The tax expense was SEK 17 (11) million, which implies an effective tax rate of 25 (25) per cent.

CASH FLOW, WORKING CAPITAL AND FINANCIAL POSITION

	Quarter 1
SEK millions	2016	2015
Operating profit	71	49
Depreciation/amortisation and impairment	11	8
Other non-cash items	0	-1
Changes in working capital	-32	-41
Cash flow from activities	50	15
Investments excluding acquisitions	-6	-7
Operational cash flow	44	8

Operating cash flow amounted to SEK 44 million (8). The increase compared with the previous year is due both to improved operating profit and more favourable growth in working capital.

Average working capital in relation to net sales during the past 12 months amounted to 36.6 percent (36.6). A reduction in tied-up inventory and increase in payables had a positive impact on key figures, while the higher tied-up capital in the acquisition of Apex Stainless Fasteners had a negative impact. Excluding this acquisition, average working capital in relation to net sales during the past 12 months amounted to 35.1 percent (36.6).

On 31 March 2016, the Group's net debt totalled SEK 879 million (654). Net debt has increased mainly due to loans taken in conjunction with the acquisition of Apex Stainless Fasteners and Magnetfabriken. On 31 March 2016, the Group's debt/equity ratio was 71 percent (55).

Segment Sweden

First quarter

Order intake amounted to SEK 251 million (257) and exceeded net sales.

Net sales amounted to SEK 244 million (251), down 3 percent. Magnetfabriken AB was acquired in March 2016 and was included in net sales in the amount of SEK 2 million. Adjusted for the acquisition, net sales declined by 3 percent. Underlying demand during the period is deemed basically unchanged, with the exception of customers in the telecommunications sector that demonstrated a sharp drop in demand. Moreover, as in previous quarters, growth was burdened by customers' relocation of production from Sweden to other countries, primarily Eastern Europe, corresponding to around 1 percent of the segment's sales. The segment International benefits from these production relocations. The market share in

Sweden is otherwise assessed as being unchanged.

Gross margin rose to 29.6 percent (28.9). Cost savings in sourcing and higher customer prices together with, to a lesser degree, the acquisition had a positive impact on the gross margin that surpassed the negative currency effects.

Operating profit amounted to SEK 32 million (30), corresponding to a significantly better operating margin of 13.2 percent (11.9). Exchange-rate fluctuations had a negative impact of SEK 2 million on operating profit, volumes a negative impact of SEK 3 million and the price/cost/mix a positive impact of SEK 7 million and the acquisition of Magnetfabriken an impact of SEK 0 million.

		Quarter 1	Δ	12 month rolling
SEK millions	2016	2015	%	2015/16	2015
Order intake*	251	257	-2	926	932
Net sales*	244	251	-3	931	937
Gross profit	72	73	-1	268	269
Gross margin, %	29.6	28.9		28.8	28.7
Operating expenses	-40	-43	-7	-158	-161
Operating profit	32	30	8	110	108
Operating margin, %	13.2	11.9		11.8	11.5

*Pertains to net sales and order intake from external customers

QUARTERLY DEVELOPMENT

SHARE OF NET SALES NET SALES, DEVELOPMENT -3% OPERATING MARGIN 34%

Segment International

First quarter

Order intake amounted to SEK 487 million (359) and exceeded net sales.

Net sales rose by 33 percent to SEK 474 million (358). This was a 5 percent increase when adjusted for currency effects and acquisitions.The organic increase is primarily the result of higher market shares. Moreover, customers' production relocations from Sweden to mostly Eastern Europe had a positive impact of just under 1 percent on the segment's sales. Underlying demand is deemed to be slightly stronger than for the year-on-year quarter. Nonetheless, Bufab saw weaker demand in Norway, Finland and Asia.

Gross margin rose to 29.1 percent (28.0). The acquired companies have a higher gross margin and accounted for over half of the increase. The remaining increase is attributable to cost savings in sourcing and higher customer prices. Operating profit increased to SEK 47 million (27), corresponding to an operating margin of 9.8 percent (7.4). Exchange-rate fluctuations had a negative impact of SEK 2 million on operating profit, volumes a positive impact of SEK 6 million, the price/cost/mix an impact of SEK 0 million and the acquisition of Flos and Apex Stainless Fasteners a positive impact of SEK 16 million.

	Quarter 1		Δ	12 month rolling
SEK millions	2016	2015	%	2015/16	2015
Order intake*	487	359	36	1,660	1,531
Net sales*	474	358	33	1,637	1,521
Gross profit	138	100	38	457	419
Gross margin, %	29.1	28.0		27.9	27.6
Operating expenses	-91	-73	25	-318	-300
Operating profit	47	27	76	139	119
Operating margin, %	9.8	7.4		8.5	7.8

*Peratins to net sales and order intake from external customers

QUARTERLY DEVELOPMENT

SHARE OF NET SALES NET SALES, DEVELOPMENT +33% OPERATING MARGIN 66%

9.8%

Consolidated Income Statement

	Quarter 1
SEK millions	2016	2015
Net sales	718	609
Cost of goods sold	-512	-439
Gross profit	206	170
Distribution costs	-97	-83
Administrative expenses	-38	-36
Other operating income	8	8
Other operating expenses	-8	-10
Operating profit	71	49
Profit/loss from financial items
Interest and similar income	0	1
Interest and similar expenses	-5	-6
Profit after financial items	66	44
Tax on profit of the period	-17	-11
Profit for the period	49	33

Statement of Comprehensive Income

	Quarter 1
SEK millions	2016	2015
Profit after tax	49	33
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss	-	-
Items that may be reclassified subsequently to profit or loss
Translation differences/Hedging of net assets, net after tax	1	1
Other comprehensive income after tax	1	1
Total comprehensive income	50	34
Total comprehensive income attributable to:
Parent company shareholders	50	34

Earnings per share

	Quarter 1
SEK millions	2016	2015
Earnings per share	1.30	0.88
Weighted number of shares outstanding before dilution, thousands	38,110.5	38,110.5
Diluted earnings per share, SEK	1.30	0.88
Weighted number of shares outstanding after dilution, thousands	38,110.5	38,110.5

Consolidated Balance Sheet

SEK millions	31-mar-16	31-mar-15	31-dec-15
ASSETS
Non-current assets
Intangible assets	985	821	955
Property, land and equipment	134	142	138
Financial assets	25	27	26
Total non-current assets	1,144	990	1,119
Current assets
Inventories	844	721	856
Current receivables	642	584	571
Cash and cash equivalents	106	94	107
Total current assets	1,592	1,399	1,534
Total assets	2,736	2,389	2,653
EQUITY AND LIABILITIES
Equity	1,233	1,181	1,183
Non-current liabilities
Non-current liabilities, interest bearing	832	624	840
Non-current liabilities, non-interest bearing	83	56	72
Total non-current liabilities	915	680	912
Current liabilities
Current liabilities, interest bearing	153	124	151
Current liabilities, non-interest bearing	434	404	407
Total current liabilities	588	528	558
Total equity and liabilities	2,736	2,389	2,653

Consolidated Statement of Changes in Equity

SEK millions
Equity at beginning of year	1,183	1,147
Comprehensive income
Profit after tax	49	33
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss	-	-
Items that may be reclassified subsequently to profit or loss
Translation differences/ hedging of net assets, net after tax	1	1
Total comprehensive income	50	34
Owner transactions	-	-
Total owner transactions	0	0
Equity at end of period	1,233	1,181

31-mar-16 31-mar-15

Consolidated Cash Flow Statement

	Quarter 1
SEK millions	2016	2015
Operating activities
Profit before financial items	71	49
Depreciation/amortisation and impairment	11	8
Interest and other financial revenues	0	0
Interest and other financial costs	-7	-5
Other non-cash items	0	-1
Income tax paid	-12	-13
Cash flow from operating activities before changes in working capital	63	38
Changes in working capital
Increase (-)/decrease (+) in inventories	16	12
Increase (-)/decrease (+) in operating receivables	-80	-77
Increase (+)/decrease (-) in operating liabilities	32	24
Cash flow from operating activities	31	-3
Investing activities
Acquisition of property, plant and equipment	-5	-6
Company acquisitions *	-23	-86
Acquisition of intangible assets	-1	-1
Cash flow from investing activities	-29	-93
Financing activities
Increase (+)/decrease (-) of borrowings	-3	62
Cash flow from financing activities	-3	62
Cash flow for the period	-1	-34
Cash and cash equivalents at beginning of period	107	128
Exchange-rate differences	0	0
Cash and cash equivalents at end of period	106	94

*For further information, see page 15

The Group´s Segment Reporting

	2015					2016
Sweden	Q 1	Q 2	Q 3	Q 4	Q 1	Q 2	Q 3	Q 4
Net sales	251	262	206	218	244
Gross profit	73	75	60	62	72
Gross margin, %	28.9	28.5	29.2	28.3	29.6
Operating expenses	-43	-40	-36	-43	-40
Operating profit/loss	30	35	24	19	32
Operating margin, %	11.9	13.2	11.8	8.7	13.2

	2015					2016
International	Q 1	Q 2	Q 3	Q 4	Q 1	Q 2	Q 3	Q 4
Net sales	358	399	371	393	474
Gross profit	100	109	102	108	138
Gross margin, %	28.0	27.4	27.5	27.5	29.1
Operating expenses	-73	-78	-70	-78	-91
Operating profit/loss	27	31	32	30	47
Operating margin, %	7.4	7.8	8.5	7.6	9.8

	2015 2016
Other*	Q 1	Q 2	Q 3	Q 4	Q 1	Q 2	Q 3	Q 4
Net sales	-	-	-	-	-
Gross profit	-3	-3	-3	-3	-4
Operating expenses	-5	-5	-1	-8	-4
Operating profit/loss	-8	-8	-4	-11	-8
Operating margin, %	-	-	-	-	-

*Other includes undistributed shared

Group costs

	2015					2016
Group	Q 1	Q 2	Q 3	Q 4	Q 1	Q 2	Q 3	Q 4
Net sales	609	661	577	612	718
Gross profit	170	181	159	167	206
Gross margin, %	28.0	27.4	27.5	27.4	28.6
Operating expenses	-121	-123	-107	-129	-135
Operating profit/loss	49	58	52	38	71
Operating margin, %	8.0	8.8	9.0	6.2	9.9

Consolidated key figures

	Quarter 1		Δ
	2016	2015	%
Order intake, SEK million	738	616	20
Net sales, SEK million	718	609	18
Gross profit, SEK million	206	170	21
EBITDA, SEK million	82	57	43
Operating profit, SEK million	71	49	46
Profit after tax, SEK million	49	33	48
Gross margin, %	28.6	28.0
Operating margin, %	9.9	8.0
Net margin, %	6.9	5.5
Net debt, SEK million	879	654	34
Debt/equity ratio, %	71	55
Net debt / EBITDA*	3.4	3.0
Working capital, SEK million	1,051	901	17
Average working capital, SEK million	958	837	14
Average working capital in relation to net sales, %	36.6	36.6
Equity/assets ratio, %	45	49
Operating cash flow, SEK million	44	8
Earnings per share, SEK	1.30	0.88	48

*Paid purchase consideration for the acquired companies has been fully charged to net debt while EBITDA only has been credited from the acquisition date. For definitions, se page 16.

Parent Company Income Statement

	Quarter 1
SEK millions	2016	2015
Administrative expenses	-2	-2
Other operating income	1	1
Operating profit	-1	-1
Profit/loss from financial items
Interest and similar expenses	0	0
Profit after financial items	-1	-1
Appropriations	-	-
Tax on profit of the period	0	0
Profit for the period	-1	-1
Other comprehensive income	-	-
Total comprehensive income	-1	-1

Parent Company Balance Sheet

SEK millions	31-mar-16	31-mar-15	31-dec-15
ASSETS
Non-current assets
Financial assets
Participations in Group companies	845	845	845
Total non-current assets	845	845	845
Current assets
Receivables from Group companies	173	154	178
Other receivables	11	8	11
Cash and cash equivalents	1	14	0
Total current assets	185	176	189
Total assets	1,030	1,021	1,034
EQUITY AND LIABILITIES
Equity	926	937	928
Untaxed reserves	100	80	100
Non-current interest-bearing liabilities
Other non-current liabilities	-	-	-
Total non-current liabilities	0	0	0
Current non-interest-bearing liabilities
Liabilities to Group companies	-	0	-
Other current liabilities	4	4	6
Total current liabilities	4	4	6
Total equity and liabilities	1,030	1,021	1,034

Other information

ACCOUNTING POLICIES

This interim report has been prepared pursuant to IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The Parent Company's accounts were prepared in accordance with the Swedish Annual Accounts Act, Chapter 9 and the Swedish Financial Reporting Board's recommendation RFR 2.

The accounting policies applied correspond to the accounting policies and measurement principles presented in the 2015 Annual Report. The 2015 Annual Report is available at www.bufab.com.

RISKS AND RISK MANAGEMENT

Exposure to risk is a natural part of business activity and this is reflected in Bufab's approach to risk management. The aim is to identify and prevent risks and to limit any loss or damage from these risks. The main risks to which the Group is exposed are related to the impact of the economy on demand. For further information, see Note 3 of the 2015 Annual Report.

SEASONAL VARIATIONS

Bufab has no material seasonal variation, but sales throughout the year vary depending on the number of customer production days in each quarter.

RELATED-PARTY TRANSACTIONS

There were no related-party transactions during the period.

EMPLOYEES

The number of full-time employees in the Group as of 31 March 2016 was 934 (854), whereof 116 employees stem from the acquisitions of Apex Stainless Holdings Ltd and Magnetfabriken AB.

ACQUISITIONS

The following acquisitions were made during the period 2015 to 2016.

	Date	Net sales*	Employees
Flos BV	2015-02-26	160	52
Apex Stainless Holdings Ltd	2015-11-26	300	110
Magnetfabriken AB	2016-03-02	20	6

*Estimated annual net sales at the time of acquisition

On 3 March 2016, Bufab AB (publ) acquired 100 percent of the shares in Magnetfabriken AB. Magnetfabriken AB was founded in 1992 and has since become one of the leading suppliers of magnets and magnet systems in the Nordic region. The purchase consideration amounted to SEK 36 million, of which SEK 27 million has been paid unconditionally and the remaining portion of SEK 9 million is a conditional purchase consideration. The conditional portion of SEK 9 million comprises about 57 percent of the maximum payment outcome. Approximately half is dependent on the acquired company's earnings through to April 2016 and approximately half to future earnings thereafter.

The acquisition has positively impacted the Bufab Group's accumulated net sales by SEK 2 million since transfer. The net impact on accumulated operating profit amounted to SEK 0 million and the effect on profit after tax was SEK 0 million.Transaction costs for the acquisition amounted to SEK 0 million. The acquisition would have positively

impacted the Group's net sales by an estimated SEK 5 million, operating profit by about SEK 1 million and profit after tax for the period by about SEK 1 million if they had been implemented on 1 January 2016. The amounts of the assets and liabilities included in the acquisitions were as follows:

Magnetfabriken AB	Carrying amount at acquisition date	Adjustment to fair value	Fair value
Intangible non-current assets		8	8
Other non-current assets	0		0
Inventories	3		3
Other current assets	2		2
Liquid funds	4		4
Deffered tax liability		-2	-2
Other liabilities	-2		-2
Acquired net assets Goodwill	7	6	13 23
Consideration* Less: cash in acquired business			36
Less: conditional consideration			-4
Effect on the Group´s cash			-9 23

* The consideration is stated excluding acquisition expenses

Goodwill arising in connection with the acquisition is attributable to the knowledge accrued in the acquired company and the established and consolidated market positions and the anticipated profitability related to it.

CONTINGENT LIABILITIES

There were no material changes in contingent liabilities during the interim period.

AUDIT REVIEW REPORT

This interim report has not been examined by the compcompany´s auditors.

FINANCIAL REPORTING DATES

Interim report Q2 19 July, 2016 Interim report Q3 26 October, 2016 Year-end report 2016 21 February, 2017

Värnamo 27 April, 2016

Jörgen Rosengren President & CEO

Definitions of key figures

Gross margin, %

Gross profit as a percentage of net sales for the period

EBITDA

Operating profit before depreciation, amortisation and impairment

Operating margin, % Operating profit as a percentage of net sales for the period

Net debt Interest-bearing liabilities less interest-bearing assets, calculated at the end of the period

Debt/equity ratio, %

Net debt divided by equity, calculated at the end of the period

Net debt/EBITDA

Net debt at the end of the period divided by EBITDA in the last twelve months

Working capital

Total current assets less cash and cash equivalents less current non-interest-bearing liabilities, calculated at the end of the period

Operating expenses

Sum of distribution costs, administrative expenses, other operating income and other operating expenses

Average working capital

Average working capital calculated as the average of the past four quarters

Working capital/net sales, %

Average working capital as a percentage of net sales in the last twelve months

Equity/assets ratio, %

Equity as a percentage of total assets, calculated at the end of the period

Operating cash flow

Operating profit adjusted for depreciation/amortisation, impairment and other non-cash items less changes in working capital and investments

Earnings per share

Profit after tax dividend by the average number of common shares

CONFERENCE CALL

A conference call will be held on 27 April 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: 86378099.

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

This interim report is published in accordance with the Swedish Securities Market Act, the Swedish Financial Instruments Trading Act and/or the regulations of Nasdaq Stockholm. The information was submitted for publication at 27 April 2016 at 08.00 a.m. CET.

CONTACT

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

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

Boel Sundvall Communications & IR +46 370 69 69 61 boel.sundvall@bufab.com

Bufab AB (publ) Box 2266 331 02 Värnamo, org nr 556685-6240 Tel 0370 69 69 00 Fax 0370 69 69 10 www.bufab.com