Bufab sees “strong demand” in Q3 & opens Mexico subsidiary

Bufab saw growth in net sales, orders, market share and operating profit in Q3, but operating margin slipped slightly during the quarter. 

Bufab reported growth of 10% in net sales to SEK 735 million (668), with organic growth at 6%, in Q3 2017.  

The quarter also saw strong order intake, up 13% and higher than net sales. Most markets saw higher market shares too. Favourable underlying demand meant organic growth was solid, and operating profit increased to SEK 68 million (66). However, higher operating expenses meant a decline in operating margin to 9.3% (9.8). 

The International part of the business increased net sales 13%, with organic growth accounting for 8%. Bufab said it was continuing to expand and strengthen the sales organisation in the segment. 

Sweden

On its home turf, Bufab Sweden net sales rose 4%, driven entirely by organic growth, so growth 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 (and higher prices for raw materials) in recent quarters, which have now impacted Bufab’s income statement.

Bufab said: “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.”

Overall for the third quarter, Bufab reported strong growth and increased operating profit but somewhat weaker margins.

Targets raised

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, said President and CEO Jörgen Rosengren: “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%.”

January – September 2017

Taken as a whole, the first three quarters of the year saw net sales rise 10% to SEK 2,373 million (2,148). Organic growth was 6%, order intake was up 12% (and higher than net sales), while operating profit rose to SEK 235 million (219) and operating margin reached 9.9% (10.2).

Bufab Denmark recently named its new Managing Director.

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