Q4 2019 Presentation February 11, 2020 Fourth quarter Q4 2019 in - - PowerPoint PPT Presentation

February 11, 2020

Q4 2019 Presentation

Fourth quarter

Q4 2019 in Brief

• Sales up +16%
• 18% acquired, -5% organic and 3% currency. Order intake higher than net sales
• Lower underlying demand but slightly higher market share
• Operating profit unchanged, adjusted for acquisition cost. Operating margin

unsatisfactory, mainly due to low demand in the quarter

• International: significant profit and margin decline over strong comparable, due to

negative organic growth, unfavorable business mix and insufficient sourcing savings

• Sweden: slight operating profit increase over weak comparable, due to

acquisitions and good cost control, despite negative organic growth

• Strong cash flow – FY doubled vs PY
• Continued focus on sourcing savings. Global efficiency program aims at 40 MSEK
• pex savings by 4Q20. New organization for continued strong growth
• Acquisition of American Bolt & Screw in North America: 500 MSEK, 11% EBITA
• Board proposes increased dividend

2

EBITA Q4 2018 82 Currencies +2 Volume

• 18

Price/cost/mix/other +4 Acquisitions +12 EBITA Q4 2019, continuing business 82 Acquisition cost

• 9

EBITA Q4 2019, as reported 73 3

Fourth quarter

Financial highlights, Group

Quarter 4 Δ Jan-Dec Δ SEK million 2019 2018

%

2019 2018

%

Order intake 1 148 982

17

4 354 3 798

15

Net sales 1 124 966

16

4 348 3 786

15

Gross profit 297 271

10

1 183 1 088

9 % 26,4 28,1 27,2 28,7

Operating expenses

• 224
• 189

19

• 799
• 721

11 %

• 20,0
• 19,6
• 18,4
• 19,0

Operating profit (EBITA) 73 82

• 11

384 367

5 % 6,5 8,5 8,8 9,7

Net profit 39 62

• 37

253 255

• 1

Operating cash flow 94 63

49

351 175

101

Financial development, Group

• 10
• 5

5 10 15 20 25

Percent

Quarterly Net Sales growth

Organic growth Total growth

50 100 150 200 250 300 350 400 450 500 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000

LTM EBITA, SEK million LTM Net Sales, SEK millions Net Sales EBITA 4

Fourth quarter

Fourth quarter

Segment International

• Net sales up by 9%, all contributed by latest acquisition
• Organic growth -5%: considerably lower underlying demand but

somewhat higher market share

• Gross margin down to 28.8%, 50/50 due to mix in quarter

and insufficient sourcing savings

• Focus on sourcing savings and cost control going forward

EBITA Q4 2018 68 Currencies +4 Volume

• 13

Price/cost/mix/other

• 10

Acquisitions +6 EBITA Q4 2019 55

5 Quarter 4 Δ Jan-Dec Δ SEK million 2019 2018

%

2019 2018

%

Order intake 715 668

7

2 838 2 648

7

Net sales 699 644

9

2 836 2 615

8

Gross profit 201 197

2

833 788

6 % 28,8 30,6 29,4 30,1

Operating expenses

• 147
• 129

14

• 545
• 498

9 %

• 21,0
• 20,0
• 19,2
• 19,1

Operating profit (EBITA) 55 68

• 19

288 290

• 1

% 7,8 10,6 10,2 11,1

Fourth quarter

Financial development, International

50 100 150 200 250 300 350 500 1 000 1 500 2 000 2 500 3 000 3 500

LTM EBITA, SEK million LTM Net Sales, SEK millions Net Sales EBITA

• 10
• 5

5 10 15 20 25 30 35

Percent

Quarterly Net Sales growth

Organic growth Total growth 6

• Net sales up by 32%, all contributed by acquisition of HT Bendix
• Organic growth -5%: Lower underlying demand and

unchanged market share

• Gross margin down year-on-year, mainly attributable to acquisitions

(adjusted for acquisitions, gross margin was 24.9% (25.1))

• EBITA improvement despite negative organic growth

due to acquisitions and good cost control

• Focus on sourcing savings and cost control going forward

EBITA Q4 2018 28 Currencies

• 2

Volume

• 5

Price/cost/mix/other +1 Acquisition +7 EBITA Q4 2019 29

Segment Sweden

7

Fourth quarter

Quarter 4

Δ

Jan-Dec

Δ

SEK million 2019 2018

%

2019 2018

%

Order intake 433 314

38

1 516 1 149

32

Net sales 424 322

32

1 512 1 172

29

Gross profit 100 81

23

371 323

15 % 23,5 25,1 24,5 27,6

Operating expenses

• 71
• 53

34

• 239
• 198

21 %

• 16,7
• 16,5
• 15,8
• 16,7

Operating profit (EBITA) 29 28

4

132 126

5 % 6,8 8,7 8,7 10,7

Fourth quarter

Financial development, Sweden

• 10

10 20 30 40 50 60

Percent

Quarterly Net Sales growth

Organic growth Total growth

50 100 150 200 500 1000 1500 2000 LTM EBITA, SEK million

LTM Net Sales, SEK millions Net Sales EBITA 8

Fourth quarter

Challenges and opportunities in a weaker market

9

• Adapt cost base to

weaker underlying growth…

• …while continuing

investment in Leadership 2020

•  more focus on

improving internal efficiency

Challenges

• Customers more

focused on efficiency  new business leads

• Low demand for

suppliers  sourcing savings

• Some competitors

challenged or failing

• Potentially, more

acquisition candidates

Opportunities

Fourth quarter

Gross margin development

10

22,0% 24,0% 26,0% 28,0% 30,0% 32,0% Q1 19 Q2 19 Q3 19 Q4 19

Group

GP%-development

Group, excl. HT Bendix & ABS Group, as reported 22,0% 24,0% 26,0% 28,0% 30,0% 32,0% Q1 19 Q2 19 Q3 19 Q4 19

Segment Sweden

GP%-development

Segment Sweden, excl. HT Bendix Segment Sweden, as reported

Fourth quarter

Despite weak ending, 2019 showed all-time high sales and operating profit, fourth time in a row

EBITA, MSEK

11 50 100 150 200 250 300 350 400 450 2012 2013 2014 2015 2016 2017 2018 2019

CAGR = 12,8%

Fourth quarter

New organization for continued growth and improved efficicency

12

2  4 Operating Segments

To better reflect the Group’s international reach and

• pportunities, Sweden/International will be replaced by

West, North, East, and UK/US

6  10 Business Units

To increase focus on growth opportunities and operational improvement, and to allow for future scalability, the existing 6 regions will be replaced by 10 business units

Efficiency project

• New organization fully operational by April 2020
• Efficiency project launched in Q3 2019, expected to save

40 MSEK on full-year basis, full effect by Q4 2020

• No significant restructuring costs incurred or expected

Fourth quarter

Acquisitions since 2014

13

Acquisition of American Bolt & Screw in North America in November

• Strategic footprint for further growth in North America
• Annual sales of SEK ~500m, EBITA ~11%

Fourth quarter

EBITA Bridge

14

Group International Sweden Other

EBITA Q4 2018 82 68 28

• 15

Currency +2 +4

• 2

Volume

• 18
• 13
• 5

Price/cost/mix/other +4

• 10

+1 14 Acquisitions +12 +6 +7 EBITA Q4 2019, continuing business 82 55 29

• 1

Acquisition costs

• 9
• 9

EBITA Q4, 2019 73 55 29

• 10

Group International Sweden Other

EBITA YTD 2018 367 290 126

• 49

Currency +5 +11

• 6

Volume +19 +27

• 8

Price/cost/mix/other

• 23
• 46

+1 +23 Acquisitions +28 +6 +19 EBITA Q4 2019, continuing business 397 288 132

• 23

Acquisition costs

• 12
• 9

EBITA Q4, 2019 385 288 132

• 35

Outlook

Summary and outlook

Fourth quarter: EBITA unchanged, but unsatisfactory margin

• Organic growth negative for first time since 2013: lower underlying demand, and

production and inventory adjustments by customers

• EBITA unchanged before acquisition costs, but margin too low due to low demand

Full year: important step forward, but margin needs to improve

• Good growth in challenging market
• Improved market share, and good progress in Leadership initiatives
• Two large acquisitions drive growth and strengthen offering, reach
• All-time high net sales and EBITA, but margin not good enough

Outlook: continued market uncertainty, but Q1 has started better than Q4 ended Priorities 2020

• Increased focus on new business generation
• Profit improvement: sourcing and opex savings, and contribution from acquisitions
• Continue building Leadership platform

15

16

www.bufab.com

Q&A