In the year-end report for 2023, VBG Group reports a strong fourth quarter that concludes a record-setting year.
Fourth quarter 2023
- Consolidated sales increased by 21.7% to SEK 1,449.9 M (1,191.5).
- Organic growth amounted to 15.4% (11.5), adjusted for acquired sales and currency effects between the years.
- Consolidated operating profit (EBITA) totaled SEK 217.5 M (134.7), with an operating margin (EBITA) of 15.0% (11.3).
- Profit after financial items amounted to SEK 183.4 M (105.6).
- Earnings per share amounted to SEK 5.18 (3.62) before and after dilution.
Full-year 2023
- Consolidated sales increased by 25.3% to SEK 5,739.8 M (4,580.0).
- Organic growth amounted to 18.2% (13.4), adjusted for acquired sales and currency effects between the years.
- Operating profit (EBITA) increased to SEK 858.0 M (557.5), with an operating margin (EBITA) of 14.9% (12.2).
- Profit after financial items increased to SEK 761.9 M (487.8).
- Earnings per share amounted to SEK 22.74 (14.73). The Board of Directors proposes an increase in the dividend to SEK 7.00 (5.50), corresponding to 30.8% (37.1) of profit after tax.
Comment from VBG Group's President & CEO, Anders Erkén
The growth of the previous quarter continued in the fourth quarter of 2023, and net sales increased to SEK 1,450 M (1,192). The operating margin (EBITA) was 15.0% (11.3).
VBG Group's net sales for full-year 2023 rose to SEK 5,740 M (4,580) and operating profit increased to SEK 858 M (558), which is the best earnings in the history of the Group. The operating margin was 14.9% (12.2).
We grew as a Group by just over 25% and strengthened our profitability, a sign of strength in a highly turbulent period, macroeconomically speaking. Earnings per share amounted to SEK 22.74 (14.73) and operating cash flow rose to SEK 705 M. This is a record for the Group, which has resulted in a proposal from the Board of Directors for an increase in the dividend to SEK 7.00 (5.50), corresponding to 30.8% (37.1) of profit after tax.
Strong fourth quarter
Growth in the fourth quarter rose 21.7%, driven primarily by high demand for Mobile Thermal Solutions' products in North America. Currency effects were a positive factor in growth, but the underlying growth - 15.4% - was also good. Profitability strengthened, and we achieved an operating profit of SEK 218 M (135). This is attributable primarily to increased volumes, price adjustments and increased productivity in our plants.
Earnings per share increased 43% compared with the fourth quarter of 2022, totaling SEK 5.18 (3.62). Cash flow strengthened in the fourth quarter, which provides us with a good platform for future organic and structural growth.
Good profitability for truck solutions
Demand for our solutions for trucks remained high during the fourth quarter but we can see demand flagging in the trailer segment, primarily in Europe. Net sales for the Truck & Trailer Equipment division totaled SEK 412 M. Price adjustments and a favorable product mix led to a operating margin that remained high, at 20.8% (20.9).
The division has a solid business model with product offerings that create value for drivers, haulers and body builders.
Integration of acquisitions
Ringfeder Power Transmission delivered a stable fourth quarter, with net sales totaling SEK 243 M. The operating margin for the quarter was 13% (21).
A project aimed at restructuring the US operations was carried out during the year. One property was divested, and staff reductions were implemented. Personnel costs and impairment losses on stock in the fourth quarter adversely impacted the operating margin.
The acquisition of the Indian company Rathi Transpower Pvt. Limited was finalized on November 9, 2023. Integration has proceeded as planned since then. The fact that we now have production units in India is strategically important for the company.
Record-high demand
Net sales in Mobile Thermal Solutions totaled SEK 795 M, an increase of 42% compared with the fourth quarter of 2022. It is positive that profitability strengthened in conjunction with growth, and the division's operating margin rose to 13.7% (2.1).
Action programs that were previously initiated for the bus operations have begun to have an effect, and the operations now account for a stable and rising operating margin - which positively affects profitability for both the division and the Group.
We are seeing a favorable market for climate control systems in North America. Climate control systems for electric vehicles represents a growing share of sales. We have also initiated sales of innovative systems for managing battery tempering in vehicles.
Sustainable business
The Group continued its solid preparatory work in the fourth quarter ahead of new regulations such as CSRD. A double materiality assessment was carried out. Preparations for reporting more comprehensive sustainability data took place in the form of training courses for employees and by developing procedures and new system structures for reporting. Ringfeder Power Transmission's plant in Brazil has been certified under ISO 14001.
The future
In conclusion, I can confirm that we followed up three very good quarters with a fourth. 2023 was thus the most successful year in VBG Group's history, with all key figures developing in the right direction. I am extremely proud of how we expanded our operations while simultaneously strengthening profitability and cash flow.
Looking forward, we see a fragmented market with demand that will level off - in specific segments - falling in Europe but increasing sharply in North America. Our order book remains good, and order bookings increased 22% in 2023 compared with 2022.
Regardless of how the market develops, I see that as a Group we are well equipped to cope with the prevailing macroeconomic turbulence. The high rate of growth, in combination with robust profitability and a very good cash flow, gives us plenty of scope to manage future challenges.
The objective over the next year is to further improve our profitability and continue our journey of growth - not only organically, but above all through supplementary acquisitions. I am convinced that, with our industrial know-how, we can contribute to - and continue to develop and grow - both new and existing industrial companies sustainably.
In conclusion, I would like to thank all our employees, suppliers, partners and customers for job well done in the fourth quarter and full year. With everyone's commitment and know-how, we can develop sustainable industrial solutions that promote a safer society.
Contact
Anders Erkén
President & CEO VBG Group
Telephone: +46 521 27 77 88
E-mail: anders.erken@vbggroup.com
About Us
VBG Group AB (publ), domiciled in Vänersborg, is the Parent company of an international engineering Group with wholly owned companies in Europe, North America, Brazil, South Africa, India, Australia and China. The Group's operations are divided into three divisions - Truck & Trailer Equipment, Mobile Thermal Solutions and Ringfeder Power Transmission - with products that are marketed under strong, well-known brands. VBG Group AB's Series B share was introduced on the stock exchange in 1987 and is listed today on the Nasdaq Stockholm Mid Cap list.
This information is information that VBG Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-02-20 14:30 CET.
