Bulten earnings hit hard in Q3 15 November 2019

Bulten AB confirmed automotive markets continued to decline into Q3, with weaker demand reflected in the company’s volumes. Earnings were hit hard by lower production levels, restructuring in Germany and relocation in China. Order books improved but president and CEO Anders Nyström remains cautious.

Bulten reported third quarter sales of SEK 718 million (€67.1 million), down -0.6% on the same period in 2018. Order bookings were up 7.3% on the same period last year and together with the marginal fall in sales were indicative, said President and CEO Anders Nyström, that deliveries of already contracted business had now begun.

Restructuring at Bergkamen, Germany, began during Q3 with costs burdening earnings by SEK 20 million. Restructuring is expected to bring annual savings of around SEK 25 million from 2020 calendar year. Relocation of Chinese production from Beijing to Tianjin is scheduled to complete in the fourth quarter. Expected to create new growth opportunities, in the short term it negatively affected Q3 operating earnings by SEK 7 million. As a result, EBIT was SEK -8 million (2018: SEK 38 million) equating to an operating margin of -1% (Q3 2018: 5.2%). Adjusted EBIT was SEK 19 million, equating to a 2.8% margin.

Bulten reported January to September sales at SEK 2.3 billion, a year-on-year decrease of -3.2%. EBIT totalled SEK 71 million (2018 nine months: SEK 162 million) equating to an operating margin of 3.1% (2018: 6.8%). Earnings after tax were SEK 44 million, down from SEK 113 million for the same period in 2018.

Anders Nyström commented: “Market development and balancing of inventory levels have resulted in a continued low production rate. The under absorption had a negative impact on earnings of approximately SEK 18 million during the quarter. Customers’ volume reductions at short notice have countered the impact of inventory reduction measures to some extent.”

He noted order bookings increased 7.3% during Q3 but cautioned that market uncertainty made development in coming months difficult to predict, so Q4 production could also be affected.

Bulten has previously announced new contracts worth just over SEK 500 million a year at full production in 2021. However, Anders Nyström said: “Ramp up of the new contracts is taking longer than previously announced but is expected gradually to compensate for the general market downturn over coming quarters.”

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