BUFAB overcomes raw material price increases with net sales and profit growth

Order, net sales and profits all grew for Bufab in 2017 across the full year and in Q4.


Q4 2017 saw net sales rise up to SEK 828 million (18%) – 14% of which was organic. Kian Soon Mechanical Components was acquired in the same quarter. Order intake grew 16%, outstripping net sales, while operating profit rose to SEK 72 million.

Full year 2017

Net sales jumped to SEK 3,201 million (12%) – 8% of which was organic. Order intake was up 13%, again outstripping net sales. Operating profit rose to SEK 311 million.

Raw material prices, international growth & opportunities

BUFAB President and CEO Jörgen Rosengren noted raw material cost drivers and impact on margin in the financial statement: “Sales in the fourth quarter rose 18%, driven primarily by organic growth. The gross margin remained under pressure from higher raw material prices and was lower than in 2016. However, the margin recovered somewhat from the third quarter, mainly as a result of the price increases we implemented. Our ambition is to continue with these in 2018. Despite a lower gross margin, the strong growth generated a sharp increase in operating profit and an improved operating margin.

“Segment International performed very well during the quarter. Sales climbed 20%, the gross margin increased and costs declined as a percentage of sales. Both the operating profit and the margin thus increased sharply. The improvement occurred across a broad front – in addition to contributions from acquisitions, we noted favourable growth and improved earnings in most markets.

“Segment Sweden also displayed robust growth. The gross margin was somewhat stronger than in the preceding quarter but significantly lower than in 2016. While we see the results of the price increases we have implemented, we also see a clear need to implement further such measures. Despite this, growth in combination with a maintained cost level resulted in an improved operating profit and an operating margin in line with last year.

“Thus, the quarter marked a positive end to 2017. A key factor was the favourable development of industrial demand during the year. In parallel, we could clearly see that our strategy was delivering results. We captured market shares in nearly all markets – a result of a systematic focus on the sales organisation over many years. We continued to strengthen our purchasing organisation and supplier base. We made two additional value-generating acquisitions during the year and are continuously looking for new opportunities. Kian Soon, which was acquired during the quarter, also strengthens our position in a strategically important region, Southeast Asia. And last but not least, we have strengthened what we call Bufab Best Practice: our shared values, work methods, processes and IT systems. This will help us drive continuously improved precision, efficiency and sustainability in our operations.

“There is no shortage of challenges. For instance, we have to compensate for higher raw material prices using price increases and further streamlined purchasing processes. But we see even more opportunities. The strong development of industrial demand in 2017 was kept up during the latter part of the year, which was also evident in a favourable order intake in the last quarter. This is a positive signal as we head into 2018. Against this backdrop, we are continuing to work toward our “Leadership” target, which implies that we will be the preferred choice for customers, suppliers, acquisition candidates and talents in our industry in 2020.”

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