Bufab Group reported third quarter net sales of SEK 1.044 billion (€97.6 million), an increase of 17% over the same period in 2018 but with only ‘slightly positive’ organic growth. Sales for the first nine months of the year grew by 14%, with organic growth at 3%.
Operating profit (EBITA) for the quarter rose to SEK 89 million (2018 Q3: SEK 81 million) with an operating margin of 8.5% (2018: 9.1%). At the beginning of the third quarter 2019, Bufab completed the acquisition of HT BENDIX A/S with annual sales of around SEK 500 million.
Net sales for the first nine months of 2019, increased 14% to SEK 3.223 billion, (2018: SEK 2.82 billion) including 3% organic growth. Order intake grew in line with sales. EBITA for the nine months rose SEK 311 million, from SEK 285 million for the same period in 2018. The operating margin over the nine months for 2019 was 9.6% (2018: 10.1%).
President and CEO, Jörgen Rosengren, commented: “During the third quarter, Bufab experienced a clearly weaker demand than earlier in the year and compared with 2018. Nonetheless, sales, operating profit and cash flow increased compared with a strong third quarter 2018. This development was mainly attributable to positive contributions from acquired companies.”
He went on to explain that weaker demand was particularly noticeable in Sweden, eastern Europe, and China, due to lower production among many customers, as well as customer destocking.
Bufab’s International segment increased market share but experienced lower growth. Operating profit and margin declined ‘somewhat’ during the quarter but increased over the first nine months of the year.
In Sweden, the slowdown was stronger and resulted in negative organic growth despite retained market shares. ‘Comprehensive’ price increases strengthened the Q3 gross margin compared with the first half of 2019 and 2018. Bufab’s two recent acquisitions “performed well, which, combined with effective cost control, facilitated a strong increase in operating profit despite the weaker market”.
Jörgen Rosengren said Bufab continued to “search for attractive acquisition candidates that can contribute with growth synergies, customer relations, supplier bases and expertise”.
Reflecting on market conditions he commented: “The former uncertainty regarding demand was replaced in the quarter by a clear, but nonetheless limited slowdown. This situation presents challenges and opportunities.” Stricter cost control and efficiency enhancement, including digital tools developed in recent years, are being deployed to address weaker demand. On the opportunity front, Jörgen Rosengren sees lower demand enabling purchasing savings, which will be a strong focus during the coming year. He also noted that requirements to improve customer productivity puts weaker competitors under pressure and makes acquisition candidates more inclined to sell.
Having held senior management roles in leading automotive and fastener businesses, Phil joined Fastener + Fixing Magazine as editor in 2002. Convinced there is no substitute for ‘being there’, over 17 years of visits and interviews around the world means he has accumulated an extraordinary knowledge and perspective of the global fastener industry, reflected in his incisive and thought provoking reporting.