C-parts supplier, Bufab has released its interim report for the first half of 2024. The report shows the group experienced weaker demand but had an improved gross margin and stable cash flow. The results follow the divestment of its manufacturing companies.
For Q2 the group’s net sales declined by -6.0% to SEK 2,142 million (2,280). Organic growth was -6.6% and order intake was somewhat higher than net sales. The adjusted operating profit (EBITA) was SEK 261 million (307), corresponding to an operating margin of 12.2% (13.5).
For the period from January to June 2024, net sales declined by -8.1% to SEK 4,292 million (4,666). Organic growth was -8.4% and order intake was somewhat higher than net sales. The adjusted operating profit (EBITA) was SEK 520 million (632), corresponding to an operating margin of 12.1% (13.5).
President and CEO, Erik Lundén, said in his overview, “During the second quarter, Bufab reported negative growth, strong gross margin coupled with stable profitability and cash flow. Bufab Lann and Hallborn Metall were divested at the beginning of July as part of our updated strategy.
“The organic growth continued to be negative in the second quarter. As in previous quarters, the organic decline in sales was mainly in the construction, bath, kitchen and outdoor recreation sectors, while a positive trend was noted in energy and defence. We also observed continued weak demand from general industry, albeit with indications that a turnaround is in sight.
“The work we initiated last year aimed at strengthening our gross margin continues show result, which I am particularly pleased with. The gross margin improved 1.3 percentage points year-on-year due to our focus on enhancing our customer and product mix and developing the added value we deliver to customers, in addition to purchasing savings.
“The share of operating expenses increased year-on-year on account of the falling volumes and inflationary effects during the first half of the year. We purposefully continue with cost reduction activities throughout the organisation with the aim of strengthening the operating margin. The activities mainly include staff reductions, but also reduced overheads. At the same time, we continue to invest in our operations in order to drive growth and improve profitability in the long term.
“The adjusted operating margin was 12.2% (13.5), which is stable given the challenging market environment and a strong comparative quarter. All regions reported a stable operating margin except Americas and Asia-Pacific.
“We will continue to implement our strategy according to which our short-term priorities stand firm: to capture market share, gradually improve our margin and deliver a stronger cash flow.
“In summary, a weaker economy creates favourable conditions for a strong player such as Bufab to take new market shares. This, together with our focused work on strengthening our gross margin and on cost savings, will put us in a strong position once the market rebounds.”
