BUFAB AB (PUBL) Interim report January-June 2023
Interim report January - June 2023
Strong operating profit and improved cash flow in the second quarter
Second quarter of 2023
- Net sales increased by 2 percent to SEK 2,280 million (2,241). Organic growth was -5 percent and order intake was in line with net sales
- Operating profit (EBITA) increased by 37 percent to SEK 319 million (233) and the operating margin was
14.0 percent (10.4). Adjusted for remeasured additional purchase considerations amounting to SEK 12 million (-80), operating profit (EBITA) decreased by -2 percent to SEK 307 million (313), corresponding to an operating margin of 13.5 percent (14.0) - Earnings per share increased by 54 percent to SEK 5.41 (3.51)
- Operating cash flow amounted to SEK 488 million (-23), corresponding to a cash conversion ratio of 147 percent (-1).
January - June 2023
- Net sales increased by 10 percent to SEK 4,666 million (4,235). Organic growth was -4 percent and order intake was somewhat lower than net sales
- Operating profit (EBITA) increased by 35 percent to SEK 642 million (476) and the operating margin was 13.8 percent (11.2). Adjusted for remeasured additional purchase considerations amounting to SEK 10 million (-95), operating profit (EBITA) increased by 11 percent to SEK 632 million (572), corresponding to an operating margin of 13.5 percent (13.5)
- Earnings per share increased by 38 percent to SEK 10.74 (7.76)
- Operating cash flow amounted to SEK 824 million (-45), corresponding to a cash conversion ratio of 123 percent (-9).
THE GROUP IN BRIEF (FOR DEFINITIONS, SEE PAGE 20) | ||||||||||||
12- | ||||||||||||
Quarter 2 | Δ | Jan-Jun | Δ | months | Full year | |||||||
rolling | ||||||||||||
SEK million | 2023 | 2022 | % | 2023 | 2022 | % | 2022/23 | 2022 | ||||
Order intake | 2,263 | 2,249 | 1 | 4,584 | 4,290 | 7 | 8,747 | 8,453 | ||||
Net sales | 2,280 | 2,241 | 2 | 4,666 | 4,235 | 10 | 8,862 | 8,431 | ||||
Gross profit | 649 | 645 | 1 | 1,324 | 1,205 | 10 | 2,508 | 2,389 | ||||
% | 28.5 | 28.8 | 28.4 | 28.5 | 28.3 | 28.3 | ||||||
Operating expenses | -331 | -411 | -20 | -682 | -729 | -6 | -1,352 | -1,399 | ||||
% | -14.5 | -18.3 | -14.6 | -17.2 | -15.3 | -16.6 | ||||||
Operating profit (EBITA) | 319 | 233 | 37 | 642 | 476 | 35 | 1,156 | 990 | ||||
% | 14.0 | 10.4 | 13.8 | 11.2 | 13.0 | 11.7 | ||||||
Operating profit | 301 | 223 | 35 | 607 | 455 | 33 | 1,082 | 930 | ||||
% | 13.2 | 9.9 | 13.0 | 10.7 | 12.2 | 11.0 | ||||||
Profit after tax | 205 | 132 | 55 | 406 | 298 | 36 | 717 | 609 | ||||
Earnings per share, SEK | 5.41 | 3.51 | 54 | 10.74 | 7.76 | 38 | 19.21 | 16.23 | ||||
Net sales, SEK million | |||||||
3 500 | 14 000 | ||||||
3 000 | 12 000 | ||||||
2 500 | 10 000 | ||||||
2 000 | 8 000 | ||||||
1 500 | 6 000 | ||||||
1 000 | 4 000 | ||||||
500 | 2 000 | ||||||
0 | 0 | ||||||
Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 | |||||||
21 | 21 | 22 | 22 | 22 | 22 | 23 | 23 |
Quarter | Rolling 12 month |
Operating profit (EBITA), SEK million
350 | 1 400 | ||||||
300 | 1 200 | ||||||
250 | 1 000 | ||||||
200 | 800 | ||||||
150 | 600 | ||||||
100 | 400 | ||||||
50 | 200 | ||||||
0 | 0 | ||||||
Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 | |||||||
21 | 21 | 22 | 22 | 22 | 22 | 23 | 23 |
Quarter | Rolling 12 month |
SALES GROWTH
2%
OPERATING MARGIN (EBITA)
14.0%
BUFAB AB (PUBL) Interim report January-June 2023
CEO's overview
Bufab had a continued favourable development during the second quarter and reported a very strong operating profit and cash flow development.
Sales growth was 2 percent driven by currency effects. Organic growth was -5 percent, mainly on account of a weaker demand from sectors that experienced a tailwind during the pandemic, such as the furniture, kitchen, outdoor recreation and health sectors, especially in Segment East and UK/North America, and strong comparative figures. Sectors that performed strongly during the quarter were energy, automotive, industry and defence. Segment West reported a good development during the quarter, supported by high demand and increased market shares. The order intake for the Group was in line with net sales.
The gross margin decreased somewhat, mainly due to the business mix. The share of operating expenses decreased during the quarter, but when adjusted for remeasured additional purchase considerations, which primarily impacted the second quarter 2022 negatively, the share of operating expenses was in line with last year. We have continued good cost control, despite high inflationary pressure.
Overall, operating profit (EBITA) rose by 37 percent and the operating margin was a strong 14.0 percent (10.4). Adjusted for the above mentioned items affecting comparability, operating profit declined by - 2 percent and the operating margin amounted to
13.5 percent (14.0). Segment UK/North America made a particularly good contribution to the operating profit during the quarter, where we noted a strong results development in American Bolt & Screw (ABS) despite a weaker market. Also TI Midwood (TIMCO) reported a strong result in the quarter.
Our focused work to strengthen the cash flow is continuing to yield results. Operating cash flow improved significantly year on year due to the strong results and a reduction in working capital. We anticipate continued strong cash flow during the year and our goal is to steadily reduce our key ratio Net debt/EBITDA, which in the quarter amounted to 2.9 (3.7)
We are seeing good results from the integration of the most recent acquisitions and the merger of subsidiaries in the Netherlands and Denmark. We are also continuing to integrate sustainability throughout our operations - an increasingly important area for us and our customers. We are seeing that more and more customers are placing higher demands on suppliers, and as an industry leader in sustainability, we foresee new and substantial business opportunities.
A highlight during the quarter was when we received with the prestigious "Quality Award" by Schneider Electric. Bufab was selected from among more than 13,000 other suppliers in Europe for our excellent quality results over the past two years, which we are extremely proud of.
There is still a great deal of uncertainty in the market and we are noting a slowdown in certain industrial segments. However, we have a large and well-diversified customer base and article portfolio, with a good spread of risk among various industries and markets. Our short-term priorities that we established in the third quarter of 2022 stand firm: to capture market share, maintain a good margin and improve the cash flow. These, combined with a gradual broadening of our offering and increased customer relevance, provide a favourable outlook for a continued long-term, sustainable, and profitable growth journey.
I look forward to welcoming Pär Ihrskog as new CFO of Bufab. Pär will take up his position in mid- August.
Finally, I want to thank all of our customers around the world for the trust they show in us and to extend a big thank you to our more than 1,800 "solutionists" worldwide, and wish you all a pleasant and restful summer.
Erik Lundén
President and CEO
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BUFAB AB (PUBL) Interim report January-June 2023
The Group in brief
SECOND QUARTER
Order intake increased to SEK 2,263 million (2,249) and was in line with net sales. Net sales increased by 2 percent to SEK 2,280 million (2,241). Of the total growth, 7 percent was attributable to currency effects, 0 percent to acquisitions and -5 percent to organic growth. The growth was impacted by a weaker underlying demand from industries that benefited during the pandemic and by strong comparative figures. The market share is estimated to be unchanged with the exception of Segment West, where the market share increased slightly.
The gross margin was 28.5 percent (28.8). The lower gross margin was mainly due to a sharp deterioration in the companies focusing on the furniture and kitchen sectors.
The share of operating expenses declined to 14.5 percent (18.3). The decline was essentially due to remeasured additional purchase considerations, which amounted to SEK 12 million for the period compared with SEK -80 million in the corresponding period of 2022. Adjusted for the remeasured additional purchase considerations, the share of operating expenses amounted to 14.9 percent (14.8).
Operating profit (EBITA) increased by 37 percent to SEK 319 million (233) and the operating margin was
14.0 percent (10.4). Adjusted for remeasured additional purchase considerations, operating profit (EBITA) decreased by -2 percent to SEK 307 million (314), corresponding to an operating margin of 13.5 percent (14.0).
Earnings per share increased by 54 percent to SEK 5.41 (3.51).
JANUARY - JUNE
Order intake increased to SEK 4,584 million (4,290) and was slightly lower than net sales. Net sales increased by 10 percent to SEK 4,666 million (4,235). Of the total growth, 7 percent was attributable to currency effects, 7 percent to acquisitions and -4 percent to organic growth.
Underlying demand was somewhat lower and the market share was unchanged in all of the Group's segments.
The gross margin was in line with the preceding year and amounted to 28.4 percent (28.5).
The share of operating expenses declined to 14.6 percent (17.2). The decline was essentially due to remeasured additional purchase considerations, which amounted to SEK 10 million for the period compared with SEK -95 million in the corresponding period of 2022. Adjusted for the remeasured additional purchase considerations, the share of operating expenses amounted to 14.8 percent (15.0).
Operating profit (EBITA) increased by 35 percent to SEK 642 million (476) and the operating margin was
13.8 percent (11.2). Adjusted for remeasured additional purchase considerations, operating profit (EBITA) increased by 9 percent to SEK 632 million (572), corresponding to an operating margin of 13.5 percent (13.5).
Earnings per share increased by 38 percent to SEK 10.74 (7.76).
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BUFAB AB (PUBL) Interim report January-June 2023
The Group in brief, continued
FINANCIAL ITEMS AND TAX
The Group's net financial items amounted to SEK -36 million (-19) for the second quarter, of which exchange-rate differences accounted for SEK 18 million (3).
During the six-month period, net financial items amounted to SEK -77 million (-31), of which exchange-rate differences accounted for SEK 22 million (-1). The Group's profit after financial items was SEK 265 million (204) for the quarter and SEK 530 million (424) for the six-month period.
The deterioration in net financial items compared with the comparative periods is attributable to higher interest rates and higher borrowings.
The tax expense for the quarter was SEK -61 million (-73), entailing an effective tax rate of 22,9 percent (35,8). The tax expense for the six-month period was SEK -125 million (-126), entailing an effective tax rate of 23,5 percent (29,8). The decrease in the effective tax rate relative to the comparative period is attributable to costs during the comparative quarter for the remeasurement of additional purchase considerations, which are not tax deductible.
CASH FLOW, WORKING CAPITAL AND FINANCIAL POSITION
Operating cash flow was strong during the quarter and the six-month period, which was attributable to a strong improvement in working capital. The reduction in working capital was a direct result of the Group's focus on optimising working capital.
Quarter 2 | Jan-Jun | |||||||
SEK million | 2023 | 2022 | 2023 | 2022 | ||||
EBITDA, adjusted | 332 | 246 | 670 | 502 | ||||
Other non-cash | 9 | 81 | 13 | 113 | ||||
items | ||||||||
Changes in working | 177 | -341 | 184 | -633 | ||||
capital | ||||||||
Cash flow from | 518 | -14 | 867 | -18 | ||||
operations | ||||||||
Investments | ||||||||
excluding | -30 | -12 | -43 | -27 | ||||
acquisitions | ||||||||
Operating cash | 488 | -23 | 824 | -45 | ||||
flow | ||||||||
Cash conversion | 147% | -1% | 123% | -9% | ||||
Average working capital of the past four quarters in relation to net sales amounted to 41.2 percent (32.8). The deterioration was due to the Group increasing its inventory in 2022 in response to the longer lead times created by the strained supply chain.
As per 30 June 2023, adjusted net debt totalled SEK 3,497 million (3,150) and the debt/equity ratio was 113 percent (139).
EBITDA, adjusted & Operating cash flow
600 | |||||||||||||||
500 | |||||||||||||||
400 | |||||||||||||||
300 | |||||||||||||||
200 | |||||||||||||||
100 | |||||||||||||||
0 | |||||||||||||||
-100 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
19 | 20 | 20 | 20 | 20 | 21 | 21 | 21 | 21 | 22 | 22 | 22 | 22 | 23 | 23 | |
EBTIDA adj. SEK millions | Operational cash flow SEK millions |
The key figure net debt/EBITDA, adjusted, was a multiple of 2.9 (3.7) on 30 June 2023.
Net debt / EBITDA, adjusted, multiple
4,0
3,5
3,0
2,5
2,0
1,5
1,0
0,5
0,0
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BUFAB AB (PUBL) Interim report January-June 2023
Segment North
Segment North comprises Bufab's operations in Sweden, Finland, Norway and Denmark, as well as a purchasing office in China, which is affiliated to one of the Swedish subsidiaries. The companies' operations mainly comprise trading companies, but also certain manufacturing of particularly demanding components.
SECOND QUARTER
Total growth was 1 percent, of which -3 percent was organic growth. The negative organic growth was due to a slowdown in underlying demand, primarily in the furniture and kitchen sectors. Order intake was in line with net sales.
The gross margin was lower than in the comparative quarter as a result of an unfavourable business mix and lower volumes, but was somewhat offset by price reductions for freight.
The share of operating expenses was in line with the comparative quarter.
Overall, operating profit decreased due to the lower gross margin, mainly on account of the weak results in the segment's companies focused on the furniture and kitchen sectors in a market with significantly lower demand after the pandemic.
Rolling | ||||||||||
Quarter 2 | Δ | Jan-Jun | Δ | 12 | Full year | |||||
months | ||||||||||
SEK million | 2023 | 2022 | % | 2023 | 2022 | % | 2022/23 | 2022 | ||
Order intake | 769 | 761 | 1 | 1,558 | 1,442 | 8 | 2,932 | 2,815 | ||
Net sales | 764 | 758 | 1 | 1,585 | 1,452 | 9 | 2,970 | 2,837 | ||
Gross profit | 195 | 206 | -5 | 410 | 388 | 6 | 758 | 737 | ||
% | 25.5 | 27.2 | 25.9 | 26.7 | 25.5 | 26.0 | ||||
Operating expenses | -103 | -102 | 1 | -201 | -193 | 4 | -393 | -384 | ||
% | -13.5 | -13.4 | -12.7 | -13.3 | -13.2 | -13.5 | ||||
Operating profit (EBITA) | 92 | 104 | -11 | 209 | 195 | 7 | 366 | 352 | ||
% | 12.0 | 13.8 | 13.2 | 13.4 | 12.3 | 12.4 | ||||
Net sales, SEK million
1250 | 5 000 | ||||||
1000 | 4 000 | ||||||
750 | 3 000 | ||||||
500 | 2 000 | ||||||
250 | 1 000 | ||||||
0 | 0 | ||||||
Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 | |||||||
21 | 21 | 22 | 22 | 22 | 22 | 23 | 23 |
Quarter | Rolling 12 month |
Operating profit (EBITA), SEK million | SHARE OF TOTAL SALES |
125 | 500 | |||||||
100 | 400 | 34% | ||||||
75 | 300 | |||||||
50 | 200 | SALES GROWTH | ||||||
25 | 100 | 1% | ||||||
0 | 0 | OPERATING MARGIN (EBITA) | ||||||
Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 | ||||||||
12.0% | ||||||||
21 | 21 | 22 | 22 | 22 | 22 | 23 | 23 | |
Quarter | Rolling 12 month |
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Bufab AB published this content on 13 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 July 2023 07:30:05 UTC.