Sales grew 57% for Bufab in Q2, reaching SEK 2,241 million (2021: 1,431) with organic growth a very healthy 16%.
Hailing the “robust” results, outgoing President and CEO Johan Lindqvist said Bufab was stronger than it was a year ago.
Q2 operating profit (EBITA) was up 26% to SEK 233 million (2021: 185) with operating margin at 10.4% (2021: 12.9). Adjusted for remeasured purchase considerations of SEK -80 million, operating profit increased 64% to SEK 313 million (2021: 192), with operating margin at 14% (2021: 13.4%).
Q2 highlights included the purchase of CDA Polska Sp.z.o.o. which sees annual sales of SEK 90 million. The TIMCO and Pajo-Bolte purchases fell in an earlier accounting period.
January-June 2022
Looking at the bigger picture, net sales were up 49% to SEK 4,235 million (2021: 2,854). Organic growth was 26% and order intake was slightly higher than net sales.
Johan Lindqvist said: "The second quarter was another strong quarter for Bufab. We reported continued strong growth, a stable gross margin, a robust result, and continued acquisitions.
"We noted strong growth of 57 percent in the quarter, of which 16 percent was organic growth. This organic growth was a result of price increases and healthy underlying demand in all segments. It is also gratifying that we continue to capture market shares and that our order intake is stable.
"The gross margin strengthened but the proportion of operating expenses increased sharply due to remeasurement of additional purchase considerations in previous acquisitions within Segment UK/North America.
"Adjusted for remeasured additional purchase considerations, Bufab’s operating profit increased by a full 64 percent and the margin was significantly strengthened.
"Although the quarter continued to be affected by supply chain disruptions, long delivery lead times and some component shortages, the situation has stabilized. We are seeing indications among our companies of improved availability and shorter lead times, which together creates fewer disruptions and thus a better flow.
"Cash flow was weak during the quarter as a direct result of a continued increase in working capital. It is mainly the longer lead times in the wake of the recent strained supply chains that have meant that we have had to increase our inventory. We expect the trend to reverse during the fall.
"In April, we acquired the Polish company CDA Polska, specialized in solutions and components to the Polish construction sector, with annual sales of approximately SEK 90 million. The acquisition is a strategic addition to our business in Segment East and, together with the previous acquisitions of Pajo-Bolte and TI Midwood (TIMCO), strengthens our offering in the construction industry.
"The process of integrating the recent acquisition is well under way. By applying our Best Practice model, this work strengthens both existing and newly acquired companies.
"We also continue to develop our operations in the long term by gradually broadening our customer offering and increasing our degree of digitalization and productivity. For example, we launched a new e-commerce solution during the quarter, implemented more logistic solutions, and improved the efficiency of several processes using Robotic Process Automation (RPA). Our sustainability program is an increasingly important aspect for our customers and us and is an area in which we can really make a difference for our customers. Our efforts have intensified significantly in recent times under the framework of the Science Based Target initiative.
"The geopolitical situation and rising inflation are causing an uncertainty concerning the future development. On the other hand, we have noted a certain improvement in the supply chain with shorter lead times and fewer disruptions. Bufab is also an entrepreneurial company with a history of tackling challenges in a flexible and dynamic manner. This, combined with the fact that we are significantly stronger today than we were a year ago, provides a solid basis for continued long-term, sustainable, and profitable growth.
"After the summer, I will hand over the reins to Erik Lundén as new President and CEO and I wish him a very warm welcome to Bufab.
"Without Bufab’s 1,800 “solutionists,” it would not have been possible to deliver these excellent results and I would like to take this opportunity to thank them for their great work in the first half of the year."
