Quarterly Report • Oct 23, 2020
Quarterly Report
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| Quarter 3 | Δ | Jan-Sep | Δ | 12- months rolling |
Full year | |||
|---|---|---|---|---|---|---|---|---|
| SEK million | 2020 | 2019 | % | 2020 | 2019 | % | 2019/20 | 2019 |
| Order intake | 1,219 | 1,042 | 17 | 3,528 | 3,206 | 10 | 4,676 | 4,354 |
| Net sales | 1,181 | 1,044 | 13 | 3,518 | 3,223 | 9 | 4,643 | 4,348 |
| Gross profit | 320 | 279 | 15 | 929 | 886 | 5 | 1,226 | 1,183 |
| % | 27.1 | 26.7 | 26.4 | 27.5 | 26.4 | 27.2 | ||
| Operating expenses | -178 | -191 | -7 | -568 | -575 | -1 | -792 | -799 |
| % | -15.0 | -18.3 | -16.2 | -17.8 | -17.1 | -18.4 | ||
| Operating profit (EBITA) | 142 | 89 | 61 | 361 | 311 | 16 | 433 | 384 |
| % | 12.1 | 8.5 | 10.2 | 9.6 | 9.3 | 8.8 | ||
| Profit after tax | 91 | 59 | 55 | 223 | 214 | 5 | 262 | 253 |
| Earnings per share, SEK | 2.46 | 1.57 | 57 | 6.01 | 5.72 | 5 | 7.04 | 6.75 |
Net sales, SEK million Operating profit (EBITA), SEK million
SALES GROWTH 13 % OPERATING MARGIN (EBITA)
12.1%
During the third quarter of 2020, Bufab delivered its best ever net profit for a single quarter, as well as a strong cash flow.
Results were also the best ever for the first nine months of the year. This is a sign of strength, given the coronavirus pandemic, which continues unabated in most of the countries where Bufab operates. It has led to a negative organic growth of - 10 percent for the nine-month period, the largest sales decrease since 2009.
The strong earnings increase in spite of this is partly due to good contributions from our two most recent acquisitions. But there are also three other important reasons. First of all, we gained early knowledge of the coronavirus pandemic and how to handle it from our subsidiaries in Asia. When the pandemic subsequently arrived in Europe and North America, we were able to act rapidly, flexibly and decisively to protect our employees, our customers and our business. This was key to maintaining stable deliveries with good quality to our thousands of customers worldwide.
Secondly, we had already initiated a comprehensive efficiency and savings programme during the autumn of 2019. We were therefore able to rapidly expand it to SEK 100 million on a full-year basis, with full effect from January 2021. The programme is progressing according to plan and will achieve its targets with comparatively low restructuring costs.
The third and most important reason is that Bufab, as a trading company, has a flexible and agile business model, which has been an important asset throughout 2020. In practical terms, this was apparent when our 43 subsidiaries in a very short time initiated and implemented the measures necessary to adapt to the development.
During the third quarter, we noted a gradual recovery in demand in all segments. Toward the end of the quarter, sales were in line with 2019. Combined with an improved gross margin and sharply reduced costs, the recovery led to a strong increase in operating profit and operating margin. The cost level deserves special mention. The savings programme of SEK 100 million generated very good results during the quarter. The organization succeeded in delivering sales in line with last year despite an eight-percent reduction in the number of employees (adjusted for acquisitions). This was due to systematic work on
efficiency and investments in digitalization, a part of our Leadership strategy which we have accelerated during the year. Moreover, all business units displayed highly effective cost control. This resulted in major cost savings during the quarter, despite the fact that we almost completely abstained from government subsidies during the quarter.
Bufab is a growth company. We have reported growth for seven consecutive years and do not intend to break this trend. We are now working intensively to continue building strong customer relationships, despite the practical restrictions caused by the pandemic. We are also continuing to invest in our Sales Excellence programme, which is important for the motivation and development of the sales organization. These measures are included in our "Restart" theme, with a primary focus on driving continued growth.
Our acquisition strategy has also been a strong asset during the year with strong earnings contributions by our most recent acquisitions, HT BENDIX and American Bolt & Screw. The current market creates many business opportunities for strong companies with investment capacity. Bufab has this capacity and sees many opportunities in all markets. We are continuing to work with promising acquisition candidates.
The coronavirus pandemic is a unique event. We have to accept that it brings uncertainty and new risks. We are carefully monitoring the development, and we always prioritize health and safety. But we also want to offer our customers, employees and owners stability and security moving forward. Our lower cost base, stable margin and strong cash flow generate flexibility and strength. In this way, we stand well equipped for various potential market scenarios. And we can also continue the investments in our Leadership strategy.
The most important factor for our successful performance to date is obviously our employees, who comprise more than 1,300 "Solutionists" in 28 countries. I want to extend my warm thanks to all of you who have achieved outstanding results thanks to fantastic flexibility and a sound business sense. That's what enables us to focus on our customers and to look forward to continued profitable growth.
Jörgen Rosengren President and CEO
Order intake was SEK 1,219 million (1,042), which was higher than net sales.
Net sales rose by 13 percent to SEK 1,181 million (1,044). The market share is expected to have increased somewhat. Organic growth for the quarter was +1 percent: -10 percent in July, +4 in August and +4% in September, adjusted for number of workdays.
Gross margin rose to 27.1 percent (26.7), primarily driven by strong demand in segments East and UK/North America.
Operating expenses as a share of net sales noted a sharp decline to 15.0 percent (18.3) due to the expanded cost savings programme that the Group initiated during the second quarter. The programme will achieve savings of SEK 100 million on a fullyear basis, with full effect from January 2021, and is progressing according to plan in all segments.
The programme's success to date is due to effective cost control and flexibility in all subsidiaries, as well as efficiency measures implemented within the framework of Bufab's Leadership strategy.
Operating profit (EBITA) rose by 61 percent to SEK 142 million (89) and the operating margin to 12.1 percent (8.5)
Earnings per share rose by 57 percent to SEK 2.46 (1.57).
Exchange-rate fluctuations impacted operating profit by SEK -8 million, volumes positively by SEK +2 million, cost savings and the price/mix and other factors positively by SEK +31 million and acquisitions by SEK +28 million.
The cost savings were impacted by; restructuring costs by SEK -7 million and subsidies for short-time work and similar measures by SEK +2 million.
Order intake was SEK 3,528 million (3,206), which was in line with net sales.
Net sales rose by 9 percent to SEK 3,518 million (3,223). Organic growth was -10 percent as a result of the corona pandemic during the second quarter. The market share increased somewhat.
Gross margin declined to 26.4 percent (27.5). The decrease was essentially attributable to the second quarter and was due to lower volumes in the manufacturing companies, a poorer business mix in segment West and the acquisition of HT Bendix A/S.
However, operating expenses as a share of net sales declined to 16.2 percent (17.8), which was attributable to the cost savings programme (see above), as well as good flexibility and cost control during the second and third quarters.
In total, operating profit (EBITA) rose to SEK 361 million (311), equal to an operating margin of 10.2 percent (9.6).
Earnings per share amounted to SEK 6.01 (5.72).
Compared with the preceding year, exchange-rate fluctuations impacted operating profit negatively by SEK -14 million, volumes negatively by SEK -114 million, cost savings and the price/mix/other positively by SEK +105 million and acquisitions positively by SEK +73 million.
The cost savings were impacted by; adjustments of conditional additional considerations of SEK +10 million, restructuring costs by SEK -12 million and subsidies for short-time work by SEK +27 million.
During the second quarter, the Group expanded its existing cost savings programme from SEK 40 million to SEK 100 million, on a full-year basis relative to 2019. The programme is progressing according to plan and is expected to achieve full effect from January 2021. It is expected to generate restructuring costs of approximately SEK 15 million, of which SEK 5 million and SEK 7 million, respectively, was charged to the second and third quarters and the remainder is expected to be charged to the fourth quarter of 2020. The savings will mainly be achieved through increased efficiency, general cost savings and natural attrition, and will extend across all of the Group's segments. A small number of layoffs will be required in certain subsidiaries. The cost savings programme will not affect the Group's growth ambitions.
During the second and third quarters, several of the Group's subsidiaries took part in various forms of government support programmes, which were initiated in several countries in the wake of the coronavirus pandemic, mainly in the shape of shortterm work schemes. The earnings effect of these support programmes during the third quarter amounted to approximately SEK +2 million, whereof SEK 0 million was government support applied for in Sweden. For the nine-month period, these support programmes amounted to SEK 27 million globally, of which approximately SEK 7 million pertained to government support in Sweden.
The Group's net financial items amounted to SEK - 16 million (-10) for the third quarter, of which exchange-rate differences accounted for SEK -3 million (+0).
During the nine-month period, net financial items amounted to SEK -46 million (-29), of which exchange-rate differences accounted for SEK -4 million (+4). The Group's profit after financial items was SEK 118 million (74) for the quarter and SEK 292 million (273) for the nine-month period.
The decline in net financial items year-on-year was attributable to the financing of the acquisitions in recent years, interest expenses for leases in the newly acquired companies and somewhat higher market interest rates at the beginning of the year.
The tax expense for the quarter was SEK -27 million (-15), implying an effective tax rate of 23 percent (22). The tax expense for the nine-month period was SEK -69 million (-59), which implies an effective tax rate of 24 percent (22).
| Quarter 3 | Jan-Sep | |||||
|---|---|---|---|---|---|---|
| SEK million | 2020 | 2019 | 2020 | 2019 | ||
| EBITDA, adjusted | 152 | 99 | 391 | 341 | ||
| Other non-cash items |
2 | 2 | -6 | 2 | ||
| Changes in working capital |
54 | 31 | 37 | -36 | ||
| Cash flow from operations |
208 | 132 | 422 | 306 | ||
| Investments excluding acquisitions |
-18 | -10 | -31 | -51 | ||
| Operating cash flow |
190 | 122 | 391 | 255 | ||
| Cash conversion ratio |
125% | 84% | 100% | 75% |
Operating cash flow improved significantly during the third quarter and the nine-month period, supported by good development of operating profit and working capital.
Average working capital in relation to net sales amounted to 34.5 percent (35.6) for the third quarter. The improvement is primarily attributable to lower tied-up capital in the companies acquired in 2019.
On 30 September 2020, adjusted net debt totalled SEK 1,392 million (1,496) and the debt/equity ratio was 98 percent (106). The reduced net debt and debt/equity ratio were directly attributable to the favourable cash flow during the year.
The performance measure ND/EBITDA, adjusted, was a multiple of 2.9 (3.5) at the end of the quarter. The ratio improved by 1.0x during the first three quarters of 2020 as a result of strong cash flow and a favorable earnings trend.
Segment North comprises Bufab's operations in Sweden, Finland, Norway and Denmark, including the new acquisition HT BENDIX A/S, and one of the purchasing offices in China, which is affiliated to one of the Swedish subsidiaries. The business mainly comprises trading companies, but also some manufacturing of particularly demanding components in proprietary plants.
Most of the segment's companies experienced a gradual improvement in demand during the quarter. The recovery was most apparent in Sweden and Denmark. The segment's manufacturing units, which have greater exposure to the automotive industry, also experienced a gradual recovery during the quarter, although from low levels. Organic growth was -2 percent. Order intake was slightly higher than net sales.
The gross margin for the quarter was lower than in the comparison quarter, despite the favourable contribution from purchasing savings. The decline was attributable to the segment's manufacturing companies and was mainly due to lower coverage of fixed costs due to reduced volumes.
The lower gross margin was more than mitigated by a significantly lower share of operating expenses, which in turn, were due to cost savings. Overall, operating profit increased relative to the comparison quarter.
The focus during the autumn will be on sales and increased market shares, particularly in the segment's many profitable companies.
| Quarter 3 Δ |
Jan-Sep | Δ | Rolling 12 months |
Full year | ||||
|---|---|---|---|---|---|---|---|---|
| SEK million | 2020 | 2019 | % | 2020 | 2019 | % | 2019/20 | 2019 |
| Order intake | 486 | 450 | 8 | 1,487 | 1,351 | 10 | 2,002 | 1,866 |
| Net sales | 470 | 451 | 4 | 1,471 | 1,358 | 8 | 1,978 | 1,865 |
| Gross profit | 110 | 111 | -1 | 341 | 351 | -3 | 464 | 474 |
| % | 23.5 | 24.6 | 23.2 | 25.8 | 23.5 | 25.4 | ||
| Operating expenses | -65 | -73 | -11 | -201 | -216 | -7 | -285 | -300 |
| % | -13.8 | -16.2 | -13.7 | -15.9 | -14.4 | -16.1 | ||
| Operating profit (EBITA) | 45 | 38 | 20 | 141 | 135 | 4 | 180 | 174 |
| % | 9.7 | 8.4 | 9.6 | 9.7 | 9.1 | 9.3 |
400 500 600
Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20
Segment West comprises Bufab's operations in France, the Netherlands, Germany, the Czech Republic, Austria and Spain.
.
The segment noted a gradual recovery in demand during the quarter, although from low levels. The operations in France and the Netherlands, in particular, continue to report reduced volumes, mainly among customers in the aerospace and automotive industries. In total, organic growth amounted to -6 percent. Order intake was higher than net sales.
The gross margin was considerably lower than in the comparison quarter, which was due to lower volumes and a poorer business mix in the segment's companies. However, the lower gross margin was mitigated by a lower share of operating expenses due to cost savings and various forms of short-term work schemes.
Overall, there was a slight decline in operating profit. The decline was attributable to cost savings not fully offsetting the loss of volume and to a poorer business mix. The focus on cost savings remains, while the work on sales and increased market shares will be intensified during the autumn.
| Quarter 3 | Δ | Jan-Sep | Δ | Rolling 12 months |
Full year | |||
|---|---|---|---|---|---|---|---|---|
| SEK million | 2020 | 2019 | % | 2020 | 2019 | % | 2019/20 | 2019 |
| Order intake | 271 | 282 | -4 | 758 | 892 | -15 | 1,023 | 1,157 |
| Net sales | 251 | 279 | -10 | 754 | 896 | -16 | 1,013 | 1,155 |
| Gross profit | 63 | 74 | -15 | 188 | 241 | -22 | 253 | 306 |
| % | 25.0 | 26.7 | 24.9 | 26.9 | 24.9 | 26.5 | ||
| Operating expenses | -40 | -50 | -20 | -125 | -155 | -19 | -177 | -207 |
| % | -15.9 | -17.9 | -16.6 | -17.3 | -17.5 | -17.9 | ||
| Operating profit (EBITA) | 23 | 24 | -4 | 62 | 86 | -28 | 75 | 99 |
| % | 9.1 | 8.8 | 8.2 | 9.6 | 7.4 | 8.6 |
Segment East comprises Bufab's operations in Poland, Hungary, Romania, the Baltic States, Russia, Slovakia, Turkey, China, Singapore and other countries in Southeast Asia, and India.
.
The segment reported a very strong performance during the third quarter. The operations in China and Southeast Asia experienced strong demand and earnings development. Poland also achieved healthy growth and earnings, while the operations in the rest of Eastern Europe and India continued to note lower volumes. In total, organic growth amounted to 14 percent, primarily driven by healthy growth in Poland and China. Order intake was in line with net sales.
The segment succeeded in increasing its gross margin for the period due to favourable contributions from purchasing savings. Operating expenses were sharply reduced within the framework of the Group's cost-savings programme. Together with effective operational leverage, a significant improvement in operating profit was achieved during the quarter.
| Quarter 3 | Jan-Sep Δ |
Δ | Rolling 12 months |
Full year | ||||
|---|---|---|---|---|---|---|---|---|
| SEK million | 2020 | 2019 | % | 2020 | 2019 | % | 2019/20 | 2019 |
| Order intake | 188 | 179 | 5 | 542 | 556 | -3 | 707 | 721 |
| Net sales | 187 | 179 | 5 | 538 | 555 | -3 | 706 | 723 |
| Gross profit | 60 | 57 | 5 | 172 | 176 | -3 | 226 | 230 |
| % | 32.0 | 31.8 | 31.9 | 31.7 | 32.0 | 31.8 | ||
| Operating expenses | -26 | -31 | -16 | -85 | -99 | -15 | -120 | -134 |
| % | -13.9 | -17.3 | -15.7 | -17.8 | -16.9 | -18.5 | ||
| Operating profit (EBITA) | 34 | 26 | 31 | 87 | 77 | 13 | 107 | 97 |
| % | 18.1 | 14.5 | 16.2 | 13.9 | 15.2 | 13.4 |
Segment UK/North America comprises Bufab's operations in the UK, Ireland, the US and Mexico, including the new acquisition of American Bolt & Screw Mfg. Corp.
Several of the segment's companies reported a gradual recovery in demand in the third quarter. The operations in North America performed very strongly during the quarter through the acquisition of American Bolt & Screw. This was mainly due to customers in the mobile home segment, which was favoured by the "staycation" trend that followed from the coronavirus pandemic. The UK operations also had significantly higher volumes in the third quarter. Order intake was in line with net sales.
The higher gross margin was primarily due to a very strong contribution from American Bolt & Screw and purchasing savings. The significantly lower share of operating expenses was due to the successful efforts related to the Group's cost-savings programme and generally good cost control.
| Quarter 3 Jan-Sep Δ |
Δ | Rolling 12 months |
Full year | |||||
|---|---|---|---|---|---|---|---|---|
| SEK million | 2020 | 2019 | % | 2020 | 2019 | % | 2019/20 | 2019 |
| Order intake | 275 | 138 | 99 | 740 | 410 | 80 | 932 | 602 |
| Net sales | 273 | 134 | 104 | 755 | 410 | 84 | 943 | 598 |
| Gross profit | 88 | 42 | 109 | 238 | 130 | 83 | 293 | 185 |
| % | 32.3 | 31.5 | 31.5 | 31.7 | 31.1 | 30.9 | ||
| Operating expenses | -46 | -31 | 48 | -147 | -92 | 60 | -193 | -138 |
| % | -16.9 | -23.2 | -19.5 | -22.4 | -20.5 | -23.1 | ||
| Operating profit (EBITA) | 42 | 11 | 282 | 91 | 38 | 139 | 100 | 47 |
| % | 15.4 | 8.3 | 12.0 | 9.3 | 10.6 | 7.9 |
Net sales, SEK million
| Quarter 3 | Jan-Sep | |||
|---|---|---|---|---|
| SEK million | 2020 | 2019 | 2020 | 2019 |
| Net sales | 1,181 | 1,044 | 3,518 | 3,223 |
| Cost of goods sold | -861 | -765 | -2,589 | -2,337 |
| Gross profit | 320 | 279 | 929 | 886 |
| Distribution costs | -119 | -140 | -416 | -416 |
| Administrative expenses | -69 | -57 | -215 | -174 |
| Other operating income | 17 | 11 | 89 | 30 |
| Other operating expenses | -15 | -9 | -48 | -25 |
| Operating profit | 135 | 85 | 338 | 302 |
| Profit/loss from financial items | ||||
| Interest income and similar income items | 1 | 1 | 2 | 5 |
| Interest expenses and similar expenses | -17 | -11 | -48 | -34 |
| Profit after financial items | 118 | 74 | 292 | 273 |
| Tax on net profit/loss for the period | -27 | -15 | -69 | -59 |
| Profit after tax | 91 | 59 | 223 | 214 |
| Quarter 3 | Jan-Sep | |||
|---|---|---|---|---|
| SEK million | 2020 | 2019 | 2020 | 2019 |
| Profit after tax | 91 | 59 | 223 | 214 |
| Other comprehensive income | ||||
| Items that may be reclassified subsequently to profit or loss |
- | |||
| Translation differences / Currency hedging net after tax | -9 | 20 | -51 | 60 |
| Other comprehensive income after tax | -9 | 20 | -51 | 60 |
| Total comprehensive income | 82 | 79 | 172 | 274 |
| Total comprehensive income attributable to: | ||||
| Parent Company shareholders | 82 | 79 | 172 | 274 |
| Quarter 3 | Jan-Sep | |||
|---|---|---|---|---|
| SEK | 2020 | 2019 | 2020 | 2019 |
| Earnings per share | 2.46 | 1.57 | 6.01 | 5.72 |
| Weighted number of shares outstanding before dilution, thousands |
37,169 | 37,358 | 37,167 | 37,431 |
| Diluted earnings per share, SEK | 2.42 | 1.57 | 5.97 | 5.72 |
| Weighted number of shares outstanding after dilution, thousands |
37,752 | 37,358 | 37,361 | 37,431 |
| SEK million | 30 Sept 20 | 30 Sept 19 | 31 Dec 19 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 1,982 | 1,581 | 2,034 |
| Property, plant and equipment | 577 | 565 | 633 |
| Financial assets | 33 | 27 | 37 |
| Total non-current assets | 2,591 | 2,173 | 2,704 |
| Current assets | |||
| Inventories | 1,364 | 1,411 | 1,494 |
| Current receivables | 964 | 882 | 836 |
| Cash and cash equivalents | 319 | 179 | 216 |
| Total current assets | 2,647 | 2,473 | 2,547 |
| Total assets | 5,239 | 4,645 | 5,250 |
| EQUITY AND LIABILITIES | |||
| Equity | 1,926 | 1,733 | 1,750 |
| Non-current liabilities | |||
| Non-current liabilities, interest-bearing | 1,884 | 1,843 | 2,109 |
| Non-current liabilities, non-interest bearing |
482 | 153 | 497 |
| Total non-current liabilities | 2,366 | 1,996 | 2,606 |
| Current liabilities | |||
| Current liabilities, interest-bearing | 175 | 177 | 175 |
| Current liabilities, non-interest-bearing | 771 | 739 | 719 |
| Total current liabilities | 946 | 916 | 894 |
| Total equity and liabilities | 5,239 | 4,645 | 5,250 |
| SEK million | 30 Sept 20 | 30 Sept 19 |
|---|---|---|
| Equity at the close of the preceding year | 1,750 | 1,600 |
| Adjustment resulting from the introduction of IFRS 16 | - | -18 |
| Equity at beginning of year | 1,750 | 1,581 |
| Comprehensive income | ||
| Profit after tax | 223 | 214 |
| Other comprehensive income | ||
| Items that may be reclassified in profit or loss | ||
| Translation differences / Currency hedging net after tax | -50 | 60 |
| Total comprehensive income | 173 | 274 |
| Transactions with shareholders | ||
| Issued call options | 3 | 3 |
| Repurchase of own shares | - | -31 |
| Dividends | - | -94 |
| Total transactions with shareholders | 3 | -122 |
| Equity at end of period | 1,926 | 1,733 |
| Quarter 3 | Jan-Sep | |||
|---|---|---|---|---|
| SEK million | 2020 | 2019 | 2020 | 2019 |
| Operating activities | ||||
| Profit before financial items | 135 | 85 | 338 | 302 |
| Depreciation/amortisation and impairment | 46 | 37 | 137 | 105 |
| Interest and other finance income | -1 | 0 | 0 | 1 |
| Interest and other finance expenses | -14 | -10 | -45 | -30 |
| Other non-cash items | 2 | 2 | -6 | 2 |
| Income tax paid | -28 | -17 | -78 | -77 |
| Cash flow from operating activities before changes in working capital |
140 | 96 | 346 | 303 |
| Changes in working capital | ||||
| Increase (-)/decrease (+) in inventories | 63 | 27 | 100 | 61 |
| Increase (-)/decrease (+) in operating receivables | -67 | 118 | -138 | -15 |
| Increase (+)/decrease (-) in operating liabilities | 58 | -114 | 75 | -82 |
| Cash flow from operating activities | 194 | 127 | 383 | 267 |
| Investing activities | ||||
| Acquisition of intangible assets | 0 | 0 | 0 | -11 |
| Acquisition of property, plant and equipment | -18 | -10 | -31 | -40 |
| Company acquisitions including additional purchase considerations |
0 | -335 | -15 | -337 |
| Cash flow from investing activities | -18 | -345 | -46 | -388 |
| Financing activities | ||||
| Dividend paid | 0 | 0 | 0 | -94 |
| Call options | 0 | 3 | 3 | 3 |
| Repurchase of own shares | 0 | -31 | 0 | -31 |
| Increase (+)/decrease (-) in borrowings | -103 | 271 | -235 | 273 |
| Cash flow from financing activities | -103 | 243 | -232 | 151 |
| Cash flow for the period | 73 | 25 | 105 | 30 |
| Cash and cash equivalents at beginning of period | 246 | 152 | 216 | 144 |
| Translation differences | 0 | 1 | -2 | 5 |
| Cash and cash equivalents at end of period | 319 | 179 | 319 | 179 |
| 2018 | 2019 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| North | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
| Net sales | 327 | 407 | 453 | 454 | 451 | 507 | 554 | 448 | 470 |
| Gross profit | 88 | 103 | 119 | 121 | 111 | 124 | 137 | 94 | 110 |
| % | 27.0 | 25.4 | 26.3 | 26.7 | 24.6 | 24.4 | 24.8 | 20.9 | 23.5 |
| Operating expenses | -60 | -69 | -69 | -74 | -73 | -85 | -82 | -55 | -65 |
| % | -18.5 | -16.9 | -15.2 | -16.2 | -16.2 | -16.7 | -14.8 | -12.3 | -13.8 |
| Operating profit (EBITA) | 28 | 35 | 50 | 48 | 38 | 39 | 56 | 39 | 45 |
| % | 8.5 | 8.5 | 10.9 | 10.5 | 8.4 | 7.7 | 10.1 | 8.7 | 9.7 |
| 2018 | 2019 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| West | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
| Net sales | 259 | 264 | 308 | 309 | 279 | 259 | 301 | 202 | 251 |
| Gross profit | 70 | 72 | 84 | 83 | 74 | 65 | 75 | 49 | 63 |
| % | 27.2 | 27.4 | 27.3 | 26.8 | 26.7 | 24.9 | 25.2 | 24.4 | 25.0 |
| Operating expenses | -47 | -49 | -51 | -55 | -50 | -52 | -52 | -33 | -40 |
| % | -18.1 | -18.5 | -16.6 | -17.7 | -17.9 | -20.1 | -17.4 | -16.4 | -15.9 |
| Operating profit (EBITA) | 24 | 23 | 34 | 28 | 24 | 13 | 23 | 16 | 23 |
| % | 9.1 | 8.8 | 11.0 | 9.1 | 8.8 | 4.8 | 7.7 | 7.9 | 9.1 |
| 2018 | 2019 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| East | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
| Net sales | 174 | 175 | 185 | 191 | 179 | 168 | 189 | 162 | 187 |
| Gross profit | 57 | 57 | 58 | 61 | 57 | 55 | 59 | 53 | 60 |
| % | 32.6 | 32.4 | 31.4 | 31.9 | 31.8 | 32.5 | 31.0 | 32.7 | 32.0 |
| Operating expenses | -33 | -33 | -32 | -35 | -31 | -35 | -32 | -26 | -26 |
| % | -18.7 | -18.6 | -17.3 | -18.3 | -17.3 | -20.8 | -17.0 | -16.0 | -13.9 |
| Operating profit (EBITA) | 24 | 24 | 27 | 25 | 26 | 20 | 27 | 27 | 34 |
| % | 13.9 | 13.8 | 14.2 | 13.1 | 14.5 | 11.7 | 14.1 | 16.7 | 18.1 |
| 2018 | 2019 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| UK/North America | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
| Net sales | 132 | 119 | 143 | 134 | 134 | 188 | 272 | 210 | 273 |
| Gross profit | 46 | 39 | 45 | 42 | 42 | 56 | 85 | 64 | 88 |
| % | 34.5 | 32.7 | 31.8 | 31.3 | 31.5 | 29.6 | 31.4 | 30.5 | 32.3 |
| Operating expenses | -28 | -30 | -30 | -30 | -31 | -47 | -56 | -45 | -46 |
| % | -21.2 | -25.3 | -21.0 | -22.4 | -23.2 | -24.8 | -20.6 | -21.4 | -16.9 |
| Operating profit (EBITA) | 18 | 9 | 15 | 12 | 11 | 9 | 29 | 19 | 42 |
| % | 13.4 | 7.4 | 10.5 | 8.9 | 8.3 | 4.7 | 10.8 | 9.1 | 15.4 |
| 2018 | 2019 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Other | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
| Net sales | 3 | 2 | 2 | 2 | 2 | 2 | 2 | 1 | 0 |
| Gross profit | -2 | 0 | -3 | -4 | -5 | -2 | -5 | -3 | -1 |
| Operating expenses | -10 | -9 | -2 | -6 | -6 | -6 | -2 | -6 | -1 |
| Operating profit (EBITA) | -12 | -9 | -5 | -10 | -11 | -8 | -7 | -8 | -2 |
*Other includes unallocated costs of a Group-wide nature and costs for the Sourcing offices in China and Taiwan.
| 2018 | 2019 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Group | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
| Net sales | 895 | 967 | 1,091 | 1,089 | 1,044 | 1,124 | 1,316 | 1,022 | 1,181 |
| Gross profit | 259 | 271 | 304 | 303 | 279 | 297 | 351 | 258 | 320 |
| % | 28.9 | 28.0 | 27.8 | 27.8 | 26.7 | 26.4 | 26.7 | 25.2 | 27.1 |
| Operating expenses | -177 | -189 | -184 | -200 | -191 | -224 | -226 | -165 | -178 |
| % | -19.8 | -19.6 | -16.9 | -18.4 | -18.3 | -19.9 | -17.2 | -16.2 | -15.0 |
| Operating profit (EBITA) | 81 | 82 | 119 | 103 | 89 | 73 | 126 | 92 | 142 |
| % | 9.1 | 8.5 | 10.9 | 9.5 | 8.5 | 6.5 | 9.5 | 9.1 | 12.1 |
| For definitions, see page 20 | Quarter 3 | Δ | Jan-Sep | Δ | 12- months rolling |
Full year |
||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | % | 2020 | 2019 | % | 2019/20 | 2019 | |
| Order intake, SEK million | 1,219 | 1,042 | 17 | 3,528 | 3,206 | 10 | 4,376 | 4,354 |
| Net sales, SEK million | 1,181 | 1,044 | 13 | 3,518 | 3,223 | 9 | 4,643 | 4,348 |
| Gross profit, SEK million | 320 | 279 | 15 | 929 | 886 | 5 | 1,226 | 1,183 |
| EBITDA, SEK million | 181 | 122 | 48 | 475 | 407 | 17 | 585 | 517 |
| EBITDA, adjusted, SEK million | 152 | 99 | 53 | 391 | 341 | 15 | 476 | 426 |
| Operating profit/loss (EBITA), SEK million | 142 | 89 | 61 | 361 | 311 | 16 | 433 | 384 |
| Operating profit/loss, SEK million | 135 | 85 | 59 | 338 | 302 | 12 | 404 | 368 |
| Profit/loss after tax, SEK million | 91 | 59 | 54 | 223 | 214 | 4 | 262 | 253 |
| Gross margin, % | 27.1 | 26.7 | 26.4 | 27.5 | 26.4 | 27.2 | ||
| Operating margin (EBITA), % | 12.1 | 8.5 | 10.2 | 9.6 | 9.3 | 8.8 | ||
| Operating margin, % | 11.4 | 8.1 | 9.6 | 9.4 | 8.7 | 8.5 | ||
| Net margin, % | 7.7 | 5.6 | 6.3 | 6.6 | 5.6 | 5.8 | ||
| Net debt, SEK million | 1,882 | 1,841 | 2 | 2,068 | ||||
| Net debt, SEK million, adjusted | 1,392 | 1,496 | -7 | 1,666 | ||||
| Debt/equity ratio, % | 98 | 106 | -7 | 118 | ||||
| Net debt / EBITDA, adjusted, multiple (1) | 2.9 | 3.5 | 3,9 | |||||
| Working capital, SEK million | 1,584 | 1,608 | -2 | 1,654 | ||||
| Average working capital, SEK million | 1,631 | 1,544 | 6 | 1,586 | ||||
| Average working capital in relation to net sales, % |
34,5 | 35.6 | 35.3 | |||||
| Equity/assets ratio, % | 37 | 37 | 33 | |||||
| Operating cash flow, SEK million | 190 | 122 | 56 | 391 | 255 | 53 | 351 | |
| Earnings per share, SEK | 2.46 | 1.57 | 57 | 6.01 | 5.72 | 5 | 7.04 | 6.75 |
(1) Paid purchase prices have been charged in full to adjusted net debt while EBITDA, adjusted, has only been credited from the respective acquisition date.
| Quarter 3 | Jan-Sep | |||
|---|---|---|---|---|
| SEK million | 2020 | 2019 | 2020 | 2019 |
| Administrative expenses | -4 | -4 | -12 | -11 |
| Other operating income | 2 | 2 | 5 | 5 |
| Operating profit | -2 | -2 | -7 | -6 |
| Profit/loss from financial items | ||||
| Interest expenses and similar expenses | - | - | - | - |
| Earnings from shares in Group companies | - | - | - | 150 |
| Profit after financial items | -2 | -2 | -7 | 144 |
| Tax on net profit/loss for the period | - | - | - | - |
| Profit/loss after tax | -2 | -2 | -7 | 144 |
| Other comprehensive income | - | - | - | - |
| Total comprehensive income | -2 | -2 | -7 | 144 |
| SEK million | 30 Sept 20 | 30 Sept 19 | 31 Dec 19 |
|---|---|---|---|
| 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 | 49 | 80 | 72 |
| Other current receivables | 50 | 26 | 31 |
| Cash and cash equivalents | - | - | - |
| Total current assets | 100 | 106 | 103 |
| Total assets | 944 | 951 | 948 |
| EQUITY AND LIABILITIES | |||
| Equity | 827 | 824 | 830 |
| Untaxed reserves | 100 | 122 | 100 |
| Non-current interest-bearing liabilities | |||
| Other non-current liabilities | - | - | - |
| Total non-current liabilities | 0 | 0 | 0 |
| Current non-interest-bearing liabilities | |||
| Other current liabilities | 18 | 6 | 18 |
| Total current liabilities | 18 | 6 | 18 |
| Total equity and liabilities | 944 | 951 | 948 |
This interim report has been prepared pursuant to IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The Parent Company's financial statements 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 an measurement principles presented in the 2019 Annual Report. The 2019 Annual Report is available at www.bufab.com.
Exposure to risk is a natural part of business activity and this is reflected in Bufab's approach to risk management. Risk management aims to identify and prevent risks and to limit any loss or damage from these risks. The main risks to which the Group is exposed relate to the impact of the economy on demand. For further information regarding risks and risk management, see Note 3 of the 2019 Annual Report.
Bufab has no significant seasonal variation, but sales over the year vary based on the number of production days in each quarter for customers.
There were no related-party transactions during the period, except for the payment of fees to the Board of Directors and the remuneration of senior executives.
The 2020 Annual General Meeting resolved to adopt a long-term share-based incentive programme based on call options, comprising the CEO, senior executives and other key employees within the Group. The programme comprises a maximum of 350,000 call options, corresponding to approximately 0.9 percent of the total number of shares in the company. The purchase price for the call options has been set, using a Black & Scholes valuation, at SEK 12.12, corresponding to the market value of the options at the date of transfer. Each call option entitles the holder to acquire one share in Bufab during the period 15 May 2023–15 November 2023. The purchase price per share is SEK 90.20, corresponding to 115 percent of the volume-weighted average price paid for the
company's share on Nasdaq Stockholm during the period 5 May 2020–11 May 2020. During the interim period, a total of 277,500 call options were subscribed for.
To encourage participation in the programme, the Board of Directors has resolved on a subsidy in the form of gross salary additions to participants, which may correspond to not more than the price paid for the call options. Payment of the subsidy will occur in June 2023 and requires that participants remain at that date in their positions or in another corresponding position of employment within the Bufab Group.
To hedge Bufab's delivery of shares, the Annual General Meeting also resolved to authorise the Board of Directors to repurchase a maximum of 350,000 shares in the company, and to transfer a maximum of 350,000 of the repurchased shares to the participants of the programme. No shares were repurchased during the interim period.
Acquisitions made during 2018-2020.
| Date | Net sales* | Employees | |||||
|---|---|---|---|---|---|---|---|
| Rudhäll Industri AB |
5 October 2018 | 210 | 76 | ||||
| HT BENDIX | |||||||
| A/S | 16 July 2019 | 500 | 80 | ||||
| American Bolt | |||||||
| & Screw Corp. | 6 November 2019 | 500 | 90 | ||||
| *Estimated annual net sales at the date of acquisition |
EMPLOYEES
The number of employees in the Group at 30 September 2020 amounted to 1,329 (1,355).
There were no significant changes to the company's contingent liabilities during the interim period.
Year-end report 2020: 11 February 2021 Interim Report Q1 2021: 20 April 2021 Annual General Meeting 2021: 20 April 2021 Interim Report Q2 2021: 13 July 2021 Interim Report Q3 2021: 27 October 2021 Year-end report 2021: 10 February 2022
Värnamo, 23 October 2020
Jörgen Rosengren President and CEO
Bufab AB (publ), Corp. Reg. No. 556685-6240
We have conducted a review of the financial information in summary (interim report) for Bufab AB (publ) (556685-6240) as of 30 September 2020 and the nine-month period that ended on that date. The Board of Directors and the President are responsible for preparing and presenting this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express an opinion on this interim report based on our review.
We have conducted our review in accordance with the Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (ISA). The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that, in all material respects, the accompanying interim report has not been prepared for the Group in accordance with IAS 34 and the Annual Accounts Act and for the Parent Company in accordance with the Annual Accounts Act.
Gothenburg, 23 October 2020
Öhrlings PricewaterhouseCoopers AB
Fredrik Göransson Authorized Public Accountant
Gross profit as a percentage of net sales for the period
Operating profit before depreciation, amortisation and impairment
Operating profit before depreciation, amortisation and impairment, less amortisation on right-of-use assets according to IFRS 16 Leases. This key figure is intended to present a comparable EBITDA as though IAS 17 continued to be applied.
Gross profit less operating expenses.
Interest-bearing liabilities, lease liabilities according to IFRS 16, less cash and cash equivalents and interestbearing assets, calculated at the end of the period
Net debt divided by equity, calculated at the end of the period
Net debt, adjusted, at the end of the period divided by adjusted EBITDA in the last twelve months
Total distribution costs, administrative expenses, other operating income and other operating expenses excluding depreciation, amortisation and impairment of acquisition-related intangible assets
Total current assets less cash and cash equivalents less current non-interest-bearing liabilities, calculated at the end of the period
Average working capital calculated as the average of the past four quarters
Average working capital as a percentage of net sales in the last twelve months
Equity as a percentage of total assets, calculated at the end of the period.
EBITDA, adjusted, plus other non-cash items, minus changes in working capital and investments.
Profit after tax for the period divided by the average number of common shares
Bufab uses certain performance measures not defined in the rules for financial reporting adopted by Bufab. The purpose of these performance measures is to provide a better understanding of the performance of the operations. It should be pointed out that these alternative performance measures, as they are defined, are not fully comparable with other companies' performance measures with the same name.
Because Bufab has operations in many countries with different currencies, it is essential to provide an understanding of the company's performance without current effects when translating foreign subsidiaries. In addition, Bufab has an important strategic objective in carrying out value-generating acquisitions. For these reasons, growth is also recognised excluding currency effects when translating foreign subsidiaries and excluding acquired operations within the term Organic growth. This performance measure is expressed in percentage points of last year's net sales.
| Quarter 3 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2020, percentage points | Group | North | West | East | UK/North America |
|||
| Organic growth | 1 | -2 | -6 | 14 | 7 | |||
| Currency translation effects | -3 | -1 | -4 | -9 | -4 | |||
| Acquisitions | 15 | 8 | 0 | 0 | 101 | |||
| Recognised growth | 13 | 4 | -10 | -6 | 104 | |||
| Jan-Sep | ||||||||
| 2020, percentage points | Group | North | West | East | UK/North America |
|||
| Organic growth | -10 | -11 | -16 | 0 | -7 | |||
| Currency translation effects | -1 | -1 | 0 | -3 | 0 | |||
| Acquisitions | 20 | 20 | 0 | 0 | 91 | |||
| Recognised growth | 9 | 8 | -16 | -3 | 84 |
In order to improve its total cash flow, Bufab continuously measures the cash flow generated by operations in all its companies. This is expressed as Operating cash flow and defined below.
| Quarter 3 | Jan-Sep | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| EBITDA, adjusted | 152 | 99 | 391 | 341 |
| Other non-cash items | 2 | 2 | -6 | 2 |
| Changes in inventory | 63 | 27 | 100 | 61 |
| Changes in operating receivables | -67 | 118 | -138 | -15 |
| Changes in operating liabilities | 58 | -114 | 75 | -82 |
| Cash flow from operations | 208 | 132 | 422 | 306 |
| Investments excluding acquisitions | -18 | -10 | -31 | -51 |
| Operating cash flow | 190 | 122 | 391 | 255 |
EBITDA is an expression of operating profit before depreciation, amortisation and impairment. The performance measure is defined below.
| Quarter 3 | Jan-Sep | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Operating profit | 135 | 85 | 338 | 302 |
| Depreciation/amortisation and impairment | 46 | 37 | 137 | 105 |
| EBITDA | 181 | 122 | 475 | 407 |
The performance measure EBITDA, adjusted, is an expression of operating profit before depreciation, amortisation and impairment, less amortisation on right-of-use assets and interest expenses on lease liabilities according to IFRS 16. The performance measure is defined below.
| Quarter 3 | Jan-Sep | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Operating profit | 135 | 85 | 338 | 302 |
| Depreciation/amortisation and impairment | 46 | 37 | 137 | 105 |
| Less: amortisation on right-of-use assets according to IFRS 16 |
-26 | -21 | -75 | -60 |
| Less: interest expenses on lease liabilities according to IFRS 16 |
-3 | -2 | -9 | -7 |
| EBITDA, adjusted | 152 | 99 | 391 | 341 |
Bufab's growth strategy includes the acquisition of companies. For the purpose of illustrating the underlying operation's performance, management has chosen to monitor EBITA (operating profit before depreciation, amortisation and impairment of acquired intangible assets). The performance measure is defined below.
| Quarter 3 | Jan-Sep | |||
|---|---|---|---|---|
| SEK million | 2020 | 2019 | 2020 | 2019 |
| Operating profit | 135 | 85 | 338 | 302 |
| Depreciation and amortisation of acquired intangible assets |
7 | 3 | 22 | 9 |
| EBITA | 142 | 89 | 360 | 311 |
Operating expenses is an expression of operating expenses before depreciation, amortisation and impairment of acquired intangible assets. The performance measure is defined below.
| Quarter 3 | Jan-Sep | ||||||
|---|---|---|---|---|---|---|---|
| SEK million | 2020 | 2019 | 2020 | 2019 | |||
| Distribution costs | -118 | -140 | -416 | -416 | |||
| Administrative expenses | -69 | -57 | -215 | -174 | |||
| Other operating income | 18 | 11 | 89 | 30 | |||
| Other operating expenses | -15 | -9 | -48 | -25 | |||
| Depreciation and amortisation of acquired intangible assets |
7 | 3 | 22 | 9 | |||
| Operating expenses | -177 | -192 | -568 | -576 | |||
Because Bufab is a trading company, working capital represents a large share of the balance sheet's value. In order to optimise the company's cash generation, management focuses on the local company's development, and thereby the entire Group's development, of working capital as it is defined below.
| 30 Sept | 30 Sept | |
|---|---|---|
| 2020 | 2019 | |
| Current assets | 2,647 | 2,473 |
| Less: cash and cash equivalents | -319 | -179 |
| Less: current non-interest-bearing liabilities excluding liabilities for additional purchase prices |
-744 | -686 |
| Working capital on the balance-sheet date |
1,584 | 1,608 |
Net debt is an expression of how large the financial borrowing is in the company in absolute figures after deductions for cash and cash equivalents. The performance measure is defined below.
| 30 Sept | 30 Sept | |
|---|---|---|
| 2020 | 2019 | |
| Non-current interest-bearing liabilities | 1,884 | 1,843 |
| Current interest-bearing liabilities | 175 | 177 |
| Less: cash and cash equivalents | -319 | -179 |
| Less: other interest-bearing receivables | - | - |
| Net debt on balance-sheet date | 1,740 | 1,841 |
Net debt, adjusted, is an expression of how large the financial borrowing is in the company in absolute figures after deductions for lease liabilities according to IFRS 16 and cash and cash equivalents. The performance measure is defined below.
| 30 June | 30 Sept | |
|---|---|---|
| 2020 | 2019 | |
| Non-current interest-bearing liabilities | 1,884 | 1,843 |
| Current interest-bearing liabilities | 175 | 177 |
| Less: lease liabilities according to IFRS 16 |
-348 | -345 |
| Less: cash and cash equivalents | -319 | -179 |
| Less: other interest-bearing receivables | - | - |
| Net debt, adjusted, on the balance sheet date |
1,392 | 1,496 |
A conference call will be held on 23 October 2020 at 10:00 a.m. CET. Jörgen Rosengren, 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: Standard Intl. +44 (0) 2071 928000, UK 08 445 718 892, Sweden 08 506 921 80 or the US 1 631 510 74 95. Conference code: 8845399.
Please dial in 5–10 minutes ahead in order to complete the short registration process.
Jörgen Rosengren CEO +46 370 69 69 00 [email protected]
Marcus Söderberg CFO +46 370 69 69 66 [email protected]
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 contact on 23 October 2020 at 7:30 a.m. CET.
Bufab AB (publ) Box 2266 SE-331 02 Värnamo, Corp. Reg. No. 556685-6240 Tel: +46 370 69 69 00 Fax +46 370 69 69 10 www.bufab.com
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.
24 of 24 Bufab was founded in 1977 in Småland and is an international company with operations in 28 countries. The head office is located in Värnamo, Sweden, and Bufab has about 1,350 employees. Bufab's net sales for the past 12 months amounted to SEK 4.6 billion and the operating margin was 9.3 percent. The Bufab share is listed on Nasdaq Stockholm, under the ticker "BUFAB". Please visit www.bufab.com for more information.
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