Bufab Group started off 2019 with a strong first quarter result for the overall Group, reporting continued healthy growth and increased profit. The International segment delivered but Sweden turned in a poorer performance.
Net Group sales increased 15% to SEK 1.091 billion (€102.2 million), driven by acquisitions, increased market share and stable demand. Organic growth was 6%. Operating profit (EBITA) rose to SEK 119 million (2018 Q1: SEK 106 million) and the operating margin was 10.9 percent (2018 Q1: 11.2%).
Bufab’s largest operating segment, International, enjoyed a particularly strong performance. It continued to take market share, capturing new contracts with many customers. Segment organic was 8%. Growth was particularly strong in central Europe, the UK, northern Europe and southern Europe, but somewhat weaker in eastern Europe. President and CEO Jorgen Rosengren noted: “Price increases secured a stable gross margin. Through an effective cost control and increased efficiency, it was possible to translate this into an operating margin that was the segment’s best ever. Accordingly, operating profit rose by a full 20%.”
The quarterly result from Sweden, in contrast, was “poorer than last year”, attributed to a significant weakening of gross margin. Price increases implemented in 2018 and early 2019 were insufficient in light of the continued weakening of the Swedish krona. For the second consecutive quarter, organic growth was “limited”. Despite effective cost control, operating profit and operating margin were therefore considerably lower than in 2018. Rosengren emphasised: “This development is entirely unsatisfactory” and committed to further price increases for end customers, combined with purchasing savings, aimed at restoring gross margin during the year.
Despite the Swedish result, Rosengren expressed satisfaction with the Group’s earnings for the quarter. “Our newly acquired companies are contributing to increased sales and profits, while also significantly strengthening our customer offering, something we see concrete evidence of in our daily sales. It is part of our strategy to make additional value-adding acquisitions also in the future.”
The CEO concluded: “We are satisfied with the start to the year. The macroeconomic uncertainty has not diminished, but we are optimistic about the remainder of 2019.”
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.