Continued strong growth in sales and profit. Acquisition of Rudhäll Industri AB in October. Board proposes raised dividend.
Fourth quarter of 2018
- Net sales rose by 17 percent to SEK 966 million (828), of which 4 percent was organic
- Order intake increased by 14 percent and was higher than net sales
- Operating profit (EBITA) rose to SEK 82 million (72), corresponding to an operating margin of 8.5 percent (8.7)
- Earnings per share was SEK 1.65 (1.39)
- Rudhäll Industri, with sales of approximately SEK 210 million in Sweden and China, was acquired
Full-year 2018
- Net sales rose by 18 percent to SEK 3,786 million (3,201), of which 8 percent was organic
- Order intake increased by 17 percent and was higher than net sales
- Operating profit (EBITA) rose to SEK 367 million (311), corresponding to an operating margin of 9.7 percent (9.7)
- Earnings per share was SEK 6.79 (5.61)
- The Board of Directors proposes raised dividend to SEK 2.50 (2.25) per share
The Group in brief
| Quarter 4 | Δ | Jan-Dec | Δ | ||||||||||||||||
| SEK million | 2018 | 2017 | % | 2018 | 2017 | % | |||||||||||||
| Order intake | 982 | 863 | 14 | 3,798 | 3,256 | 17 | |||||||||||||
| Net sales | 966 | 828 | 17 | 3,786 | 3,201 | 18 | |||||||||||||
| Gross profit | 271 | 238 | 14 | 1,088 | 917 | 19 | |||||||||||||
| 28.1 | % | 28.7 | % | 28.7 | % | 28.6 | % | ||||||||||||
| Operating expenses* | -189 | -166 | 14 | -721 | -606 | 19 | |||||||||||||
| 19.6 | % | 20.0 | % | 19.0 | % | 18.9 | % | ||||||||||||
| Operating profit (EBITA)* | 82 | 72 | 14 | 367 | 311 | 18 | |||||||||||||
| 8.5 | % | 8.7 | % | 9.7 | % | 9.7 | % | ||||||||||||
| Operating profit | 79 | 69 | 14 | 358 | 304 | 18 | |||||||||||||
| 8.2 | % | 8.3 | % | 9.5 | % | 9.5 | % | ||||||||||||
| Profit after tax | 62 | 53 | 17 | 255 | 213 | 20 | |||||||||||||
| Earnings per share, SEK | 1.65 | 1.39 | 19 | 6.79 | 5.61 | 21 | |||||||||||||
| Dividend per share, SEK | - | - | 2,50** | 2.25 | 11 | ||||||||||||||
Strong end to a good year
Bufab reported 17-percent growth during the quarter. This was primarily due to strong contributions from acquisitions, but also exchange rates and market shares. Demand was unchanged compared with the third quarter, but lower than in the strong fourth quarter of 2017. Accordingly, Bufab’s organic growth for the quarter ended at 4 percent.
We saw no signs of a substantial slowdown in the economy, but did note increased caution among our customers. This drove a certain postponement of volumes until after the end of the year, which, on the other hand, led to a healthy start for sales in January 2019.
The gross margin was considerably weaker than in the same period last year, and also weaker than in the third quarter. This is entirely due to the performance of segment Sweden. For the entire year, the segment was under the pressure of high purchasing prices and a weak Swedish krona. During the fourth quarter, the segment was also impacted by a lower gross margin in a newly acquired subsidiary. However, despite there being explanations, the performance is not good enough. We are determined to change this trend in 2019.
The consolidated gross margin remained unchanged in 2018. We have implemented major price increases for our customers in both segments, thereby fully offsetting the higher purchasing prices. At the end of 2018, the increases in the prices of raw materials levelled off. The prerequisites are thus favourable for purchasing savings to be made this year. As always, our ambition is to present a stable gross margin over time.
Overall, Bufab had a strong end to a good year. For the third consecutive year, we were able to note Bufab’s highest ever full-year sales, operating profit and net profit. Since we launched our growth strategy in 2012, our sales have increased by an average of 11 percent per year and operating profit by 14 percent. We see this as a clear indication that our strategy is working.
Two years ago, we established a new long-term target for Bufab - ”Leadership 2020”. This implies that we will become the strongest player in our industry and thus the preferred choice for customers, suppliers, acquisition candidates and talents. This was our highest priority in 2018, and will remain so in 2019.
We captured market shares throughout 2018. This was not a matter of a few random successes, but of many hundreds of new customers across all of our markets. Such a broad increase would not have been possible without the focus in prior years on recruitment, personal development, processes and tools in our sales organisation. We also significantly increased the pace of our purchasing by appointing a person in Group management in charge of this and, under her leadership, invest in our organisation, tools and processes.
In parallel, we continued our work on digitalisation, thereby making the knowledge and work approach contained in “Bufab Best Practice” simpler to use, more efficient and more precise. Our digital integration with customers and suppliers increased. The work on sustainability issues advanced. We have financed all of these, to some extent costly, measures using organic growth, thereby retaining a stable operating margin.
“Leadership” is also important for acquisitions. Our newly acquired companies gain access to our global platform and also performed strongly in 2018. Toward the end of the year, we made an additional acquisition, Rudhäll Industri, and, as usual, we have our sights set on others acquisitions.
Ahead of 2019, there is unusually large macro-economic uncertainty. However, regardless of how the market performs, we will continue to work towards our goal: to be the strongest company in our industry in 2020.
Jörgen Rosengren
President and CEO
Conference call
A conference call will be held on 8 February 2019 at 10:00 a.m. CET. Jörgen Rosengren, President and CEO, and Marcus Andersson, 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: +44 2071 928 000, UK 08 445 718 892, Sweden 08 506 92 180 or the US 163 151 074 95. Conference code: 2188974.
Please dial in 5–10 minutes ahead in order to complete the short registration process.
CONTACT
Jörgen Rosengren
President and CEO
+46,370 69 69 00
jorgen.rosengren@bufab.com
Marcus Andersson
CFO
+46,370 69 69 66
marcus.andersson@bufab.com
This information is such that Bufab AB (publ) is obliged to disclose in accordance with the EU’s Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication by the aforementioned contacts on 8 February 2019 at 7:30 a.m. CET.
