During the third quarter of 2020, Bufab Group 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.
Order intake for the third quarter of 2020 was SEK 1.219 billion a 17% increase on the same quarter in 2019 (SEK 1.042 billion). Net sales for Q3 also increased by 13% to SEK 1.181 billion (Q3 2019: SEK 1.044 billion).
Jörgen Rosengren, President and CEO at Bufab Group, commented: “This is a sign of strength, given the coronavirus pandemic, which continues unabated in most of the countries where Bufab operates. 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.”
Jörgen continues: “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 organisation 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 digitalisation, 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’s acquisition strategy has also been a strong asset during the year with strong earnings contributions by its 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.”
Jörgen concludes: “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 prioritise health and safety. However, 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.”
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