Bufab first quarter sales up 13%
Bufab Group has reported that net sales for Quarter One 2017 increased 13% on the same quarter 2016 and also that it achieved its best operating profit to date.
Net sales in Q1 2017 increased to SEK 815 million (€84.6 million), primarily due to strong organic growth from a combination of strong demand and increased
market share, aided by additional working days in the quarter.
Order intake was slightly lower than net sales. Operating profit increased to SEK 90 million (2016: SEK 71 million) and operating margin rose to 11%
(2016: 9.9%). Bufab continued to gain market share in its largest operating segment, International, through “winning many small new contracts with
many customers in most markets”. The contracts, said Jörgen Rosengren, president and CEO at Bufab, “are a result of systematic sales work over
a long period”. Growth was spread across most industries, with only the telecom and electronics segment remaining weak.
Market share in Sweden increased, credited to continued improvement in the sales organisation. Central Europe, eastern Europe and Finland performed
well but Bufab noted slightly weaker performance in southern Europe and Asia.
Gross margin strengthened significantly compared with Q1 2016 but was weaker than Q4 2016. Bufab continued to benefit from cost savings in sourcing.
However, increasing supplier prices were beginning to impact gross margin. Jörgen Rosengren said: “Bufab will need to compensate for the increased
costs through higher customer prices, a move that has already begun.” Bufab continued to consolidate its supplier base and to improve cooperation
with its best suppliers, aiming to lower sourcing prices, strengthen logistics, capital efficiency, quality and sustainability.
Acquisitions completed in recent years continued to develop well and Bufab is working to find other suitable acquisition candidates.
Jörgen Rosengren concluded that Bufab was generally satisfied with the start of the year but recognised there is “no lack of challenges moving forward”.
These included defending the gross margin in a climate of rising raw material prices, without impacting growth.