Bufab Group : Year-end report 2015

In 2015, net sales rose by 12 percent to SEK 2,458 million, which is the highest full-year sales in our history.

The gross margin was subject to intense pressure from unfavourable exchange rates for the company during the year. The action program that we announced at the start of 2015, in the form of price increases, a strengthened focus on improved purchase prices and a cost-savings program of SEK 15 million, has generated effects and was crucial for our success in gradually turning around earnings to an improved operating profit.

However, the performance of our two operating segments was unevenly distributed. Net sales for segment Sweden declined by 4 percent during the year. This decline was primarily the result of a customer of one of the manufacturing units taking over production. Furthermore, the main portion of currency effects impacted this segment, which is why profit fell sharply. Naturally, our aim for 2016 is to turn around this negative trend in both growth and margin. The latter will be achieved primarily on the basis of purchasing savings.

On the other hand, segment International reported a favourable performance for the year. Net sales for the segment increased substantially by 25 percent, of which 9 percent organically, showing the strength of the global business model. Operating profit and the operating margin also improved, mainly driven by higher sales, and we succeeded in offsetting unfavourable exchange rates by cutting costs and increasing prices.

We directed focus to enhancing efficiency during the year. In addition to achieving a healthy operating cash flow, we succeeded in making significant purchasing savings. This took place through systematic work on supplier consolidation and negotiations that were carried out by the global organization that we have built up in recent years. These efforts were further strengthened and focus during the year, which, when combined with the favourable prices of raw materials, means that we have ambitious targets for continued savings in 2016.

It is particularly pleasing that we carried out two significant acquisitions in 2015 ­- Flos B.V and Apex Stainless Fasteners Ltd ­- following a period of inactivity for a number of years. Both of these companies are well-managed and profitable and hold strong market positions in attractive niches. The two companies add joint annual sales of slightly less than SEK 500 million. We now have an effective acquisition process and we are continuously evaluating additional candidates.

Demand and the economic climate in 2016 are uncertain. However, at Bufab we have a confident outlook for the year. Our ambition is to continue our organic growth, including changing to growth in our important home market of Sweden. Systematic efforts are in place for making additional purchasing savings. These initiatives will help us to improve our margins, which is a key focus area for 2016. We are also working on developing our two new acquisitions and on realising synergies.

All in all, we have a solid platform to stand on and have a positive view of the conditions for both growth and improved margins in 2016. For this reason, the Board has proposed a 13 percent increase in dividends to SEK 1.70 per share.

Jörgen Rosengren, President and CEO