Healthy growth and strong increase in profit. Strong cash flow.
Third quarter of 2020
The Group in brief (for definitions, see page 20)
|Operating profit (EBITA)||142||89||61||361||311||16||433||384|
|Profit after tax||91||59||55||223||214||5||262||253|
|Earnings per share, SEK||2.46||1.57||57||6.01||5.72||5||7.04||6.75|
During the third quarter of 2020, Bufab delivered its best ever net profit for a single quarter, as well as a strong cash flow.
Results were also the best ever for the first nine months of the year. This is a sign of strength, given the coronavirus pandemic, which continues unabated in most of the countries where Bufab operates. It has led to a negative organic growth of -10 percent for the nine-month period, the largest sales decrease since 2009.
The strong earnings increase in spite of this is partly due to good contributions from our two most recent acquisitions. But there are also three other important reasons. First of all, we gained early knowledge of the coronavirus pandemic and how to handle it from our subsidiaries in Asia. When the pandemic subsequently arrived in Europe and North America, we were able to act rapidly, flexibly and decisively to protect our employees, our customers and our business. This was key to maintaining stable deliveries with good quality to our thousands of customers worldwide.
Secondly, we had already initiated a comprehensive efficiency and savings programme during the autumn of 2019. We were therefore able to rapidly expand it to SEK 100 million on a full-year basis, with full effect from January 2021. The programme is progressing according to plan and will achieve its targets with comparatively low restructuring costs.
The third and most important reason is that Bufab, as a trading company, has a flexible and agile business model, which has been an important asset throughout 2020. In practical terms, this was apparent when our 43 subsidiaries in a very short time initiated and implemented the measures necessary to adapt to the development.
During the third quarter, we noted a gradual recovery in demand in all segments. Toward the end of the quarter, sales were in line with 2019. Combined with an improved gross margin and sharply reduced costs, the recovery led to a strong increase in operating profit and operating margin. The cost level deserves special mention. The savings programme of SEK 100 million generated very good results during the quarter. The organization succeeded in delivering sales in line with last year despite an eight-percent reduction in the number of employees (adjusted for acquisitions). This was due to systematic work on efficiency and investments in digitalization, a part of our Leadership strategy which we have accelerated during the year. Moreover, all business units displayed highly effective cost control. This resulted in major cost savings during the quarter, despite the fact that we almost completely abstained from government subsidies during the quarter.
Bufab is a growth company. We have reported growth for seven consecutive years and do not intend to break this trend. We are now working intensively to continue building strong customer relationships, despite the practical restrictions caused by the pandemic. We are also continuing to invest in our Sales Excellence programme, which is important for the motivation and development of the sales organization. These measures are included in our “Restart” theme, with a primary focus on driving continued growth.
Our acquisition strategy has also been a strong asset during the year with strong earnings contributions by our most recent acquisitions, HT BENDIX and American Bolt & Screw. The current market creates many business opportunities for strong companies with investment capacity. Bufab has this capacity and sees many opportunities in all markets. We are continuing to work with promising acquisition candidates.
The coronavirus pandemic is a unique event. We have to accept that it brings uncertainty and new risks. We are carefully monitoring the development, and we always prioritize health and safety. But we also want to offer our customers, employees and owners stability and security moving forward. Our lower cost base, stable margin and strong cash flow generate flexibility and strength. In this way, we stand well equipped for various potential market scenarios. And we can also continue the investments in our Leadership strategy.
The most important factor for our successful performance to date is obviously our employees, who comprise more than 1,300 “Solutionists” in 28 countries. I want to extend my warm thanks to all of you who have achieved outstanding results thanks to fantastic flexibility and a sound business sense. That’s what enables us to focus on our customers and to look forward to continued profitable growth.
President and CEO
A conference call will be held on 23 October 2020 at 10:00 a.m. CET. Jörgen Rosengren, President and CEO, and Marcus Söderberg, 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: Standard Intl. +44 (0) 2071 928000, UK 08 445 718 892, Sweden 08 506 921 80 or the US 1 631 510 74 95. Conference code: 8845399.
Please dial in 5–10 minutes ahead in order to complete the short registration process.
+46 370 69 69 00
+46 370 69 69 66
This information is such that Bufab AB (publ) is obliged to disclose in accordance with the EU’s Market Abuse Regulation. The information was submitted for publication by the aforementioned contact on 23 October 2020 at 7:30 a.m. CET.
Bufab AB (publ), Corporate Registration Number 556685–6240, is a trading company that offers its customers a full-service solution as Supply Chain Partner for sourcing, quality control and logistics for C-Parts (screws, nuts, etc.). Bufab’s Global Parts ProductivityTM customer offering aims to improve productivity in the customers’ value chain for C-Parts.
Bufab was founded in 1977 in Småland and is an international company with operations in 28 countries. The head office is located in Värnamo, Sweden, and Bufab has about 1,350 employees. Bufab’s net sales for the past 12 months amounted to SEK 4.6 billion and the operating margin was 9.3 percent. The Bufab share is listed on Nasdaq Stockholm, under the ticker “BUFAB”. Please visit www.bufab.com for more information.