Bufab has announced net sales for the first three quarters of 2018 increased by 19% to SEK 2.82 billion, of which 10% was organic growth.
Net sales in the third quarter grew 22% year on year, and order intake increased 19%, in line with net sales. Operating profit (EBITA) for the quarter rose to SEK 81 million (2017 Q3: SEK 70 million) but the operating margin declined to 9.1% (2017 Q3: SEK 9.5 million). For the first nine months of the year EBITA rose to SEK 285 million (2017: SEK 240 million) with an operating margin in line with the previous year at 10.1%.
CEO Jörgen Rosengren reported that Bufab experienced the same favourable level of demand in the third quarter as earlier in the year. Bufab’s International segment recorded an improved earnings performance, even compared with a very strong second quarter. Increased market shares and successful acquisitions contributed to growth of 28%, of which 10% was organic. Gross margin strengthened further due to price increases and favourable currency effects despite cost increases driven by raw material prices. Jörgen Rosengren noted: “We also succeeded in achieving growth without a corresponding increase in operating expenses. Overall, operating profit increased by more than 60%, primarily as a result of a very healthy organic growth.”
Segment Sweden had a poorer earnings trend during the quarter, as it did in the second quarter. Growth was good, but the gross margin was far too low. “Despite significant price increases”, Mr Rosengren said. “We did not succeed in fully offsetting the weak Swedish krona combined with high raw materials prices”. He added: “The segment's earnings were not good enough. We continue the work on price increases and have intensified our focus on cost savings for sourcing. Earnings were also burdened by high operating expenses. Operating profit fell overall compared with 2017, an unsatisfactory trend that we intend to reverse.”
During Quarter 3, Bufab completed the acquisition of Rudhäll Industrier AB, described by Jörgen Rosengren as “a well-managed group of companies with a combination of trading and in-house production, which will strengthen Bufab's offering of special products”.
Bufab has not yet seen any clear impact of uncertainty in economic development. It continues to monitor the signals but is mainly focused on continuing to increase market shares at the same pace as previously.
Profit for the period rose by 16% despite acquisition costs of SEK 5 million: without these costs, profit would have risen 27%. Mr Rosengren concluded: “Looking at Bufab overall, we are satisfied with the quarter and optimistic about the rest of the year.”
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 15 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.