Bufab Group: Year-end report 2017

Year-end report 2017

Strong growth and increased profit. Bufab acquires Kian Soon in Singapore.

Fourth quarter of 2017

• Net sales rose by 18 percent to SEK 828 million (699), of which 14 percent was organic
• Order intake increased by 16 percent and was higher than net sales
• Operating profit (EBITA) rose to SEK 72 million (55), corresponding to an operating margin of 8.7 percent (7.9)
• Earnings per share were SEK 1.39 (0.22)
• Kian Soon Mechanical Components was acquired

Full-year 2017

• Net sales rose by 12 percent to SEK 3,201 million (2,847), of which 8 percent was organic
• Order intake increased by 13 percent and was higher than net sales
• Operating profit (EBITA) rose to SEK 311 million (277), corresponding to an operating margin of 9.7 percent (9.7)
• Earnings per share were SEK 5.61 (4.29)
• The Board of Directors proposes raising the dividend to SEK 2.25 (2.00) per share

The Group in brief

Sales in the fourth quarter rose 18 percent, 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 percent, 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.

Jörgen Rosengren
President and CEO

Conference call

A conference call will be held on 9 February 2018 at 9:00 a.m. CET. Jörgen Rosengren, President and CEO, and Marcus Andersson, 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 1452 555 566, UK 08 444 933 800, Sweden 08 503 364 34 or the US 163 151 074 98. Conference code: 7899484.

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

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 27 countries. The head office is located in Värnamo, Sweden, and Bufab has about 1,100 employees. Bufab's net sales for the past 12 months amounted to SEK 3.2 billion and the operating margin was 9.7 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 and the Swedish Securities Market Act. The information was submitted for publication by the aforementioned contacts on 9 February 2018 at 7:30 a.m. CET.