Bufab Group has reported Quarter 3 interim results, showing net sales for the quarter had risen 10% to SEK 735 million. Nine month sales also rose by the same percentage, reaching SEK 2.373 billion.
Organic sales growth for both the quarter and year to date was 6%. Operating profit for the quarter rose to SEK 68 million (2016: SEK 66 million), with an operating margin of 9.3% (down on 9.8% in same quarter 2016). For the nine months operating profit rose to SEK 235 million (2016: SEK 219 million) with the operating margin at 9.9% (2016: 10.2%). Order intake increased 12% in the quarter and was higher than net sales.
President and CEO Jörgen Rosengren commented: “Bufab reported growth of 10% and strong order intake in the third quarter. Organic growth was solid as a result of continued favourable underlying demand and higher market shares. While an increase was noted in operating profit, the operating margin declined compared with the preceding year.”
International net sales increase by 13% in the quarter, of which organic growth accounted for 8%. “Underlying demand was strong and we grew our market share in most markets,” said Rosengren. “The gross margin was in-line with the preceding year, while the operating margin was negatively impacted by higher operating expenses. We are continuing to expand and strengthen the sales organisation in the segment. These initiatives are important for Bufab in the long-term, but we are nonetheless dissatisfied with the cost trend in the segment during the year.”
Swedish sales rose by 4%, driven entirely by organic growth, so was slightly lower than earlier in the year. Gross margin for the quarter deteriorated compared with the preceding year. “The decline is the result of rising purchasing prices in recent quarters, which have now impacted our income statement,” explained Rosengren. “This in turn is the result of higher prices for raw materials. We are continuing to work to offset these cost increases by raising the prices for customers, but the results to date have been insufficient. We have intensified efforts during the quarter in light of the margin trend and the risk of further increases in raw material prices.”
Concluding, he said: “Overall for the third quarter, Bufab reported strong growth and increased operating profit but somewhat weaker margins. Strong order intake in the two most recent quarters, and positive signals from customers and industry, provide a basis for optimism ahead of the remainder of 2017. In the years ahead, we intend to grow organically with healthy margins and to make additional value-generating acquisitions. For example, Bufab has now opened a subsidiary in Mexico to leverage growth opportunities in the country. Our ambition is to be the leading player in our industry by 2020. To reflect this ambition, Bufab’s management and board of directors has decided to raise the Group’s target for average annual growth to 10%.”
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