Successful implementation of the strategy and acquisition of VITAL in Italy
Fourth quarter of 2024
- Net sales declined by -4.1 percent to SEK 1,863 million (1,943). Organic growth was -1.5 percent and order intake was somewhat lower than net sales
- Adjusted operating profit (EBITA) was SEK 201 million (229), corresponding to an operating margin of 10.8 percent (11.8)
- Operating profit (EBITA) was SEK 179 million (181) and the operating margin was 9.6 percent (9.3)
- Earnings per share amounted to SEK 2.96 (1.87)
- Cash flow from operating activities amounted to SEK 125 million (321), corresponding to a cash conversion ratio of 68 percent (168)
- Net debt/EBITDA, adjusted, was 2.8 (2.6).
- Acquisition of VITAL S.p.A with annual sales of approximately EUR 48 million
Full year 2024
- Net sales declined by -7.4 percent to SEK 8,035 million (8,680). Organic growth was -5.4 percent and order intake was lower than net sales
- Adjusted operating profit (EBITA) was SEK 959 million (1,121), corresponding to an operating margin of 11.9 percent (12.9)
- Operating profit (EBITA) decreased by 8.0 percent to SEK 959 million (1,043) and the operating margin was 11.9 percent (12.0).
- Earnings per share amounted to SEK 14.57 (15.17)
- Cash flow from operating activities amounted to SEK 1,101 million (1,446), corresponding to a cash conversion ratio of 111 percent (132)
- The Board of Directors proposes a dividend of SEK 5.25 (5.00) per share
CEO's overview
Bufab reported an increased gross margin in the fourth quarter, in a continued cautious market. The acquisition of VITAL, with net sales of EUR 48 million, strengthens Bufab's position on the Italian market.
2024 was another good year for Bufab. We delivered a record-strong gross margin and a stable operating margin, despite lower demand. During the year, we have successfully implemented our strategy across the business. We strengthened the added value we deliver to customers by an expanded service and product portfolio. One example is the implementation of a record number of new logistics solutions during the year that strengthen our customer relationships and provide us with an increased growth rate. We also acquired VITAL, a leading Italian distributor of C-parts, and divested the manufacturing companies Bufab Lann and Hallborn Metall. In conclusion, we are in a good position to be able to deliver on our profitability target.
During the fourth quarter, the market trend continued to be cautious, resulting in organic growth of -1.5 percent. However, the organic growth showed an improvement compared to the third quarter, when it was -2.6 percent. We continue to see large variations between different sectors. As earlier in the year, strongest development was noted in the energy and defence secors. Market conditions in the important mobile home and trailer segment remained challenging, although it looks brighter ahread, and the trend was also weak in the construction, automotive, bath, kitchen and outdoor recreation sectors. Region Asia-Pacific continued to report strong organic growth of a full 27.4 percent.
The gross margin increased by 0.4 percentage points during the quarter to 29.7 percent, driven mainly by our trading business. For the full year, the gross margin amounted to 29.7 (28.7) percent, the highest level ever for a single year. This improvement is a result of the long-term work that started in 2023 to develop our value proposition to customers, improve our customer and product mix and achieve purchasing savings.
Operating expenses declined relative to the comparative quarter but adjusted for remeasured additional purchase considerations in the comparative period, operating expenses increased. The increase is mainly due to one-off costs but also currency effects. Our work with cost control continues throughout the organisation. The adjusted operating margin was 10.8 (11.8) percent.
Region West and Asia-Pacific recorded good results,while Europe North & East, Americas, and UK/ Ireland noted a weaker trend during the quarter.
Cash flow from operating activities amounted to SEK 125 million (321) for the quarter and was negatively impacted by investments in inventories. Net debt/EBITDA was 2.8 (2.6).
We continue, according to plan, to implement our strategy and our short-term priorities remain: to capture market share, gradually improve our margin and deliver a strong cash flow.
A focus area for in our strategy is to broaden our customer base and offering to new and adjacent market segments through organic growth and strategic acquisitions. I am very pleased that we during the year, were able to finalise the acquisition of VITAL, a leading Italian distributor of C-parts, with net sales of EUR 48 million and an operating profit margin above Bufab's 2026 profitability target. We see VITAL as a great opportunity to build up our presence in Italy and increase our service level to the customers we are currently supporting there. VITAL is a stepping stone of a suitable size with a great reputation that in the future can be used as a platform for add-on acquisitions and drive market consolidation in a highly fragmented market.
2024 was a challenging year in terms of demand. If we look ahead, uncertainty remains, but at the same time, we see indications of improved demand from the general industry.
However, increased tariffs from the US may impact Bufab's operations in the US in the short term while in the longer term we may benefit as we are a large and stable supplier that handles these disturbances better than smaller players. We follow the development carefully and will work actively together with both customers and suppliers to handle the situation.
Our efforts to strengthen the gross margin and our focus on cost control, will put us in a strong position once the market rebounds. That said, we take a bright view of the future and the direction our company is taking.
Finally, I want to thank all our customers around the world the world for the trust you have shown us during the year and send a big thank you to our 1,800 "solutionists" worldwide for a great job during 2024.
Erik Lundén
President and CEO
Conference call
A conference call will be held on 6 February 2025 at 10:00 a.m. CET. Erik Lundén, President and CEO, and Pär Ihrskog, CFO, will present the results. Analysts and investors who wish to ask questions are asked to connect to the presentation via the following Teams link: Click here to join the meeting and use the "Raise Your Hand" function during the Q&A session.
Bufab AB (publ)
Box 2266
SE-331 02, Värnamo, Sweden
Corp. Reg. No. 556685-6240
Phone: +46 370 69 69 00
www.bufabgroup.com
This information is information that Bufab 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 2025-02-06 07:30 CET.
For further information, please contact:
Erik Lundén
President & CEO
+46 370 69 69 00
erik.lunden@bufab.com
Pär Ihrskog
CFO
+46 370 69 69 00
par.ihrskog@bufab.com
About Bufab
Bufab is a trading company that offers its customers a full-service solution as Supply Chain Partner for sourcing, quality control, sustainability and logistics for C-Parts. Bufab was founded in 1977 in Småland, Sweden, and is an international group that today consists of more than 50 companies. The group has 1,800 employees in some 29 countries and annual sales of SEK 8.0 billion in 2024. The share is listed on Nasdaq Stockholm since 2014. Read more on www.bufabgroup.com.
