Bufab Group

Interim report January – March 2021 - Seite 2

CEOs OWERVIEW

The first quarter of 2021 was operationally very challenging for Bufab. Despite this, we achieved our best-ever sales and operating profit and increased our profitability significantly.

Already during the end of 2020, we saw a return to healthy growth with most of our customers. This trend continued into the first quarter. Organic growth was 14 percent, albeit in relation to a weak first quarter in 2020, mostly in Asia. We saw both good underlying demand and continued market share growth.

During the end of last year, the growth was mainly driven by our customers regaining lost production volumes from the beginning of the year. We believe the growth at the beginning of 2021 to be more solid, and mainly driven by stronger demand from end customers. This is particularly true for industries that have for various reasons benefited from the coronavirus pandemic.

The dramatic shifts in demand caused difficulties during the quarter in the global supply chains. Raw materials and production capacity were affected by bottlenecks and sharp price increases. Certain categories of components have been difficult to obtain at all. Transport systems experienced major capacity problems, particularly in container freight from Asia to North America and Europe. Bufab has been hit with significant increases in the cost of components and freight, which in turn has led to an increased workload as all prices with both suppliers and customers need renegotiation. Overall, the supply situation and corresponding workload at Bufab were under immense strain during the quarter.

We are therefore particularly proud that, under such challenging circumstances, we have been able to keep our customers supplied with the billions of components featuring more than a hundred thousand unique specifications that we manage on their behalf. We are convinced that this strengthens our customer relationships in the short and long term, while laying the foundation for further growth going forward.

Under these circumstances, it is also further satisfying that Bufab achieved a really strong result. Sales increased by 8 percent and operating profit by a full 40 percent to SEK 177 million, which is our best-ever operating profit in a single quarter, by a wide margin. This in turn is due to strong demand combined with very low operating expenses. We have significantly increased the efficiency in our operations during the last two years, and thus were able to implement last year’s cost savings programme of SEK 100 million without compromising on quality or delivery precision, and without slowing down our sales initiatives. Earnings improved on a broad front: all operating segments increased their sales, profit, and margins. Our newly acquired companies performed particularly well.