Interim report January – June 2024

Second quarter of 2024
•Net sales declined by -6.0 percent to SEK 2,142 million (2,280). Organic growth was -6.6 percent and order intake was somewhat higher than net sales
•Adjusted operating profit (EBITA) was SEK 261 million (307), corresponding to an operating margin of 12.2 percent (13.5)
•Operating profit (EBITA) was SEK 263 million (319) and the operating margin was 12.3 percent (14.0)
•Earnings per share decreased by 27 percent to SEK 3.94 (5.41)
•Cash flow from operating activities amounted to SEK 427 million (453), corresponding to a cash conversion ratio of 153 percent (136)
•Net debt/EBITDA, adjusted, was 2.8 percent (2.9)

January – June 2024
•Net sales declined by -8.1 percent to SEK 4,292 million (4,666). Organic growth was -8.4 percent and order intake was somewhat higher than net sales
•Adjusted operating profit (EBITA) was SEK 520 million (632), corresponding to an operating margin of 12.1 percent (13.5) 
•Operating profit (EBITA) decreased by 19 percent to SEK 523 million (642) and the operating margin was 12.2 percent (13.8)
•Earnings per share decreased by 28 percent to SEK 7.76 (10.74)
•Cash flow from operating activities amounted to SEK 686 million (754), corresponding to a cash conversion ratio of 125 percent (105)

CEO’s overview
During the second quarter, Bufab reported negative growth, strong gross margin coupled with stable profitability and cash flow. Bufab Lann and Hallborn Metall were divested at the beginning of July as part of our updated strategy.

The organic growth continued to be negative in the second quarter. As in previous quarters, the organic decline in sales was mainly in the construction, bath, kitchen and outdoor recreation sectors, while a positive trend was noted in energy and defence. We also observed continued weak demand from general industry, albeit with indications that a turnaround is in sight.

Sales growth amounted to -6.0 percent in the quarter and organic growth to -6.6 percent, which is an improvement on the preceding quarter. Order intake was slightly higher than net sales.

The work we initiated last year aimed at strengthening our gross margin continues show result, which I am particularly pleased with. The gross margin improved 1.3 percentage points year-on-year due to our focus on enhancing our customer and product mix and developing the added value we deliver to customers, in addition to purchasing savings.

The share of operating expenses increased year-on-year on account of the falling volumes and inflationary effects during the first half of the year. We purposefully continue with cost reduction activities throughout the organisation with the aim of strengthening the operating margin. The activities mainly include staff reductions, but also reduced overheads. At the same time, we continue to invest in our operations in order to drive growth and improve profitability in the long term. In recent quarters, for example, we have invested in our global sales force, in new warehouses in the Czech Republic and the UK, and in our e-commerce solutions.

The adjusted operating margin was 12.2 percent (13.5), which is stable given the challenging market environment and a strong comparative quarter. All regions reported a stable operating margin except Americas and Asia-Pacific.

Cash flow from operating activities amounted to SEK 427 million (453) for the quarter. Net debt/EBITDA was 2.8 (2.9). We have noted greater M&A activity recently and are evaluating several potential candidates.

In line with our updated strategy, we divested our manufacturing companies Bufab Lann and Hallborn Metall to Arbona Industri at the beginning of July, for a purchase price of SEK 230 million. I am pleased that we have completed the strategic review initiated in December 2023 and I view the divestments as part of efforts to streamline Bufab’s offering and as a step towards achieving our updated profitability target.

We will continue to implement our strategy according to which our short-term priorities stand firm: to capture market share, gradually improve our margin and deliver a stronger cash flow. An area we will focus on as part of our strategy is leading the development of sustainability in our industry and continuing to strengthen our customer offering. As part of this, we organised a sustainability day during the quarter for our Swedish customers during which we discussed shared opportunities and challenges when it comes to structuring and maintaining a sustainable supply chain.

In summary, a weaker economy creates favourable conditions for a strong player such as Bufab to take new market shares. This, together with our focused work on strengthening our gross margin and on cost savings, will put us in a strong position once the market rebounds.

Finally, I would like to thank all our customers, partners and employees for your continued support and commitment.

Erik Lundén
President and CEO

Conference call
A conference call will be held on 11 July 2024 at 10:00 a.m. CEST. Erik Lundén, President and CEO, and Pär Ihrskog, CFO, will present the results. Analysts and investors who wish to ask questions are asked to connect to the presentation via the following Teams link: Click here to join the meeting and use the “Raise Your Hand” function during the Q&A session.

Bufab AB (publ)
Box 2266
SE-331 02, Värnamo, Sweden
Corp. Reg. No. 556685-6240
Phone: +46 370 69 69 00
www.bufabgroup.com