Bufab Group: Interim report January-September 2016

Continued healthy growth and improved operating margin in both segments.
Bufab opens subsidiary in Singapore.

Third quarter of 2016

• Net sales rose by 16 percent to SEK 668 million (577).
  Organic growth was 4 percent
• Order intake was slightly lower than net sales.
• Operating profit rose to SEK 66 million (52) and the operating margin rose to 9.8 percent (9.0)
• Earnings per share rose to SEK 1.22 (0.87)

January-September 2016

• Net sales rose by 16 percent to SEK 2,148 million (1,847).
  Organic growth was 4 percent
• Order intake was slightly lower than net sales.
• Operating profit rose to SEK 219 million (159) and the operating margin to 10.2 percent (8.6).
• Earnings per share rose to SEK 4.06 (2.78).

The Group in brief

CEO'S OVERVIEW

During the third quarter, net sales rose by 16 percent. The acquisitions we have completed over the past two years have had a good development and work well with the other subsidiaries. During the quarter, Bufab also achieved substantial organic growth in both operating segments thanks to an increased market share and slightly stronger underlying demand.

Gross margin for the quarter was significantly stronger year-on-year, primarily due to cost savings in sourcing. The stronger gross margin combined with a good contribution from acquired companies also led to an improved operating margin, despite operating expenses being somewhat high during the quarter.

In segment Sweden, net sales rose by 6 percent, driven primarily by organic growth. The market share is estimated to have increased slightly, which we see as a sign that our long-term and intensive focus on sales in our home market is beginning to pay off. The increase is particularly gratifying against the background of greater uncertainty among telecommunications customers. The gross margin and operating margin both increased.

Segment International performed well. Net sales rose by 21 percent, as a result of acquisitions and an increased market share. Organic growth was 4 percent, which was lower than earlier in the year due to weaker market growth. Despite this slackening, we continue to see growth in most major markets, with the exception of China and Norway. We have yet to see any negative effects on sales volumes connected to an impending Brexit. A strengthened gross margin during the quarter was offset in part by higher operating expenses, primarily for obsolescence and negative currency effects. We are continuing to strengthen the sales organisation in the segment. For example, Bufab established a subsidiary in Singapore during the quarter, in line with the aim of increasing our presence in Asia. In total, segment International increased its operating profit by 30 percent.

So far this year, Bufab has performed well with both organic and acquired growth, higher margins, improved earnings and a healthy cash flow. Growing uncertainty in the business environment, a slightly weaker order intake, the prevailing exchange rates and a risk of rising commodities prices are challenges that we face towards the end of 2016 and in 2017. Nevertheless, we intend to achieve continued favourable performance by means of increased market share and improved sourcing and logistics efficiency. We also see opportunities to make additional value-creating acquisitions.

Jörgen Rosengren
President and CEO

CONFERENCE CALL

A conference call will be held on 26 October 2016 at 10:00 a.m. CET. Jörgen Rosengren, President and CEO, and Thomas Ekström, CFO, will present the results. The conference call will be held in English.

To participate in the conference, use any of the following dial-in numbers: +44 (0) 1452 555566, UK: 08444933800, Sweden: 0850336434, or the US: 16315107498. Conference code:81029778.

Please dial in 5-10 minutes ahead in order to complete the short registration process.

CONTACT
Jörgen Rosengren 
CEO 
+46 370 69 69 01
jorgen.rosengren@bufab.com

Thomas Ekström
CFO och IR-direktör
+46 370 69 94 01
thomas.ekstrom@bufab.com

ABOUT BUFAB

Bufab AB (publ), Corporate Registration Number 556685-6240, is a trading company that offers its customers a full-service solution as Supply Chain Partner for sourcing, quality control and logistics for C-Parts (screws, nuts, etc.). Bufab's Global Parts Productivity^TM customer offering aims to improve productivity in the customers' value chain for C-Parts.

Bufab was founded in 1977 in Småland and is an international company with operations in 24 countries. The head office is located in Värnamo, Sweden, and Bufab has about 940 employees. Bufab's net sales for the past 12 months amounted to SEK 2.8 billion and the operating margin was 9 percent. The Bufab share is listed on Nasdaq Stockholm, under the ticker "BUFAB". Please visit www.bufab.com for more information.

This information is such that Bufab AB (publ) is obliged to disclose in accordance with the EU's Market Abuse Regulation. The information was submitted for publication by the aforementioned contacts on 26 October 2016 at 8.00 a.m. CET