Industry News

Bufab Group reported stable results for the second quarter of 2020 despite a very weak market in the wake of the Covid-19 pandemic. Order intake for the second quarter of 2020 was SEK 987 million (2019: SEK 1.08 billion) and net sales declined 6% to SEK 1.02 billion (2019: SEK 1.09 billion).

At an early stage of the outbreak, Bufab established three main goals – to protect its employees, its customers and the business from the effects of the pandemic. The Group’s 43 subsidiaries, in 28 countries, embraced these goals and took the actions required.

“We can now see the result of these efforts. We have avoided any spread of the disease in our workplace. We are also very proud that we have maintained unbroken precision deliveries with good quality to our thousands of customers throughout the world,” stated Jörgen Rosengren, president and CEO at Bufab.

“This has been achieved despite the major disruptions to global supply chains during the spring. From April onwards, the pandemic forced many of our customers to reduce their production, which led to a strong decline in organic growth. To address this, we rapidly introduced comprehensive short time work schemes and other cost saving measures in all our subsidiaries.”

As a result of these measures, Bufab retained a stable operating margin of 9%, despite negative organic growth of 25% for the quarter. The impact of the coronavirus varies across Bufab’s operations. “Subsidiaries with broad exposure to the automotive or energy industries, to southern Europe or the UK, and our manufacturing companies, were more severely affected, which is apparent in the relatively weak performance by our Segments West and North,” mentions Jörgen.

In Segment UK/North America, the weak market was offset by the strong contribution from Bufab’s most recent acquisition in the US. In Segment East, the Group achieved its best operating margin ever, over 16%, thanks to a strong recovery in China and Singapore, and effective cost control.

“We were pleased to see a gradual recovery in demand in all segments during the quarter. June was considerably stronger than April. Our view is that the stepwise recovery will continue successively during the second half of the year. However, there is still a great uncertainty and accordingly we have chosen to expand our cost savings programme from SEK 40 million to SEK 100 million on a full year basis, with full effect as from January 2021.”

“In most subsidiaries, this will be achieved through enhanced efficiency, general cost savings and natural turnover. Redundancies may be required in some subsidiaries. Thanks to significant investments made in the organisation, processes and IT in recent years, the programme can be implemented without any negative impact on the sales organisation.”

Bufab will also continue to focus even more on building strong customer relations during the second half of the year and onwards. “We have taken market share every year for several years and intend to increase the pace further. To help the sales organisation succeed in this, we will continue to invest in our ‘Sales Excellence’ programme. During the autumn, Bufab’s entire organisation will be fully focused on these activities, under the theme of ‘Restart’.”