Q2 2020 Presentation July 16, 2020
Second quarter Stable result in a very weak market • Sales down -6% 20% acquired, -25% organic and -1% currency o o Overall, strong impact of the COVID-19 pandemic. Segment North and West were the hardest hit, while segment East had a strong development. • Extensive measures taken to meet demand drop… o Short-time work schemes and some layoffs Significant reduction of cost and capex o Action program prioritizes speed and retained flexibility o • …resulting in a stable operating result and margin, and a strong cash flow in the quarter • Gradual recovery during quarter Adj organic growth: 30% in April, -25% in May, -15% in June o • Increased cost savings program from 40 to 100 MSEK, with full effect from January 2021 • Continued focus on growth and increased market share 2
Second quarter Financial highlights, Group 12- months Quarter 2 Jan–June rolling Full year Δ Δ SEK million 2020 2019 % 2020 2019 % 2020/19 2019 Order intake 987 1,080 -9 2,308 2,164 7 4,498 4,354 Net sales 1,022 1,089 -6 2,337 2,180 7 4,505 4,348 Gross profit 258 303 -15 609 607 0 1,185 1,183 % 25.2 27.8 26.1 27.8 26.3 27.2 Operating expenses -165 -200 -391 -385 -805 -799 -18 2 % -16.2 -18.4 -16.7 -17.6 -17.9 -18.4 Operating profit (EBITA) 92 103 218 222 379 384 -10 -2 % 9.1 9.5 9.3 10.2 8.4 8.8 Profit/loss after tax 46 71 132 155 230 253 -35 -14 Earnings per share, SEK 1.24 1.91 3.54 4.14 6.15 6.75 -35 -14 EBITA Q2 2019 103 Currencies 0 Volume -100 Cost reduction + price/mix/other +70 Acquisitions +19 EBITA Q2 2020 92 3
Second quarter Financial development, Group Quarterly Net Sales growth Net Sales EBITA Organic growth Total growth 5 000 500 30 4 500 450 20 4 000 400 LTM Net Sales, SEK millions 3 500 350 LTM EBITA, SEK million 10 3 000 300 Percent 2 500 250 0 2 000 200 -10 1 500 150 1 000 100 -20 500 50 0 0 -30 4
Second quarter Segment North Rolling 12 Quarter 2 Jan–June months Full year Δ Δ SEK million 2020 2019 % 2020 2019 % 2020/19 2019 Order intake 437 450 -3 1,001 901 11 1,966 1,866 Net sales 448 454 1,001 907 1,960 1,865 -1 10 Gross profit 94 121 -22 231 240 -4 465 474 % 20.9 26.7 23.1 26.5 23.8 25.4 Operating expenses -55 -74 -25 -137 -143 -4 -294 -300 % -12.3 -16.2 -13.7 -15.8 -15.0 -16.1 Operating profit (EBITA) 39 48 -19 94 98 -4 170 174 % 8.7 10.5 9.4 10.8 8.7 9.3 Strong impact of the Covid-19 pandemic on the segment However, gradual recovery during the quarter Gross margin significantly down Manufacturing units in Sweden (automotive industry; fixed cost absorption) Acquisition of HT BENDIX A/S Short-time work support credited to Opex even for personnel costs in COGS Substantially lower cost had positive impact on operating profit and margin 5
Second quarter Segment West Rolling 12 Quarter 2 Jan–June months Full year Δ Δ 2020 2019 % SEK million 2020 2019 % 2020/19 2019 Order intake 188 300 -37 487 610 -20 1,034 1,157 Net sales 202 309 503 617 1,041 1,155 -35 -18 Gross profit 49 83 125 167 264 306 -41 -25 % 24.4 26.8 24.8 27.1 25.3 26.5 Operating expenses -33 -55 -85 -106 -188 -207 -40 20 % -16.4 -17.7 -17.0 -17.2 -18.0 -17.9 Operating profit (EBITA) 16 28 -43 39 62 -37 76 99 % 7.9 9.1 7.8 10.0 7.3 8.6 Strong drop in demand, especially Germany, the Netherlands and France and among customers within the automotive industry Gradual recovery during the quarter, but from low levels Gross margin significantly lower mainly due to lower volumes and a poorer business mix However, lower gross margin mitigated by a lower share of operating expenses 6
Second quarter Segment East Rolling 12 Quarter 2 Jan-June months Full year Δ Δ SEK million 2020 2019 2020 2019 2020/19 2019 % Order intake 165 194 354 378 697 721 -15 -6 Net sales 162 191 351 376 698 723 -15 -7 Gross profit 53 61 112 119 223 230 -13 -6 % 32.7 31.9 31.8 31.6 32.0 31.8 Operating expenses -26 -35 25 -58 -67 -13 -124 -134 % -16.0 -18.3 -16.5 -17.8 -17.8 -18.5 Operating profit (EBITA) 27 25 8 53 51 4 99 97 % 16.7 13.1 15.1 13.6 14.2 13.4 Positive development despite a continued weak market China and Southeast Asia developed strongly, while Eastern Europe experienced a bigger drop in demand Strong contributions from purchasing savings and good cost control led to strong EBITA and record margin 7
Second quarter Segment UK/North America Rolling 12 Quarter 2 Jan–June months Full year Δ Δ SEK million 2020 2019 2020 2019 % 2020/19 2019 % Order intake 197 134 47 465 272 795 602 71 Net sales 210 134 57 481 277 74 803 598 Gross profit 64 42 150 87 247 185 52 72 % 30.5 31.3 31.1 31.4 30.8 30.9 Operating expenses -45 -30 -50 -101 -60 -68 -179 -138 % -21.4 -22.4 -21.0 -21.7 -22.2 -23.1 Operating profit (EBITA) 19 12 58 49 27 81 69 47 % 9.1 8.9 10.1 9.8 8.6 7.9 Substantially lower demand towards end of March when restrictions started. However, as from end of May strong recovery, especially in North America Lower gross margin due to lower volumes. Good cost control. Strong EBITA improvement due to acquisition of American Bolt & Screw in November 2019 8
Second quarter Stable operating margin thanks to cost savings Organic growth, % COVID-19 resulted in very weak demand in 15% Q2-20 in all segments, 5% …sending organic -5% growth down to –25% -15% -25% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 However, fast and EBITA% flexible cost savings during Q2 protected 15% operating margin 10% Mid-term cost savings 5% program increased from 40 to 100 MSEK 0% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 9
Second quarter Strengthened financial position Operating cash-flow and Cash conversion Net debt/EBITDA adj. 400 100% 4,5 (3) (1) 4,0 350 (2) 80% 3,5 300 3,0 250 60% 2,5 200 2,0 40% 150 1,5 100 1,0 20% 50 0,5 0,0 0 0% 2017 2018 2019 H1 2019 H1 2020 Operating cash-flow, LTM Cash conversion, % Net debt/EBITDA adj, x (1) = Acquisition of APEX (appr 300 MSEK cash) (2) = Acquisition of HT BENDIX (appr 215 MSEK cash) (3) = Acquisition of ABS (appr 200 MSEK cash) 10
Second quarter Acquisitions since 2014 11
Second quarter EBITA Bridge EBITA Q2 2019 103 Currencies 0 Volume -100 Price/cost/mix/other +70 Acquisitions +19 EBITA Q2 2020 92 EBITA Q2 2019 103 North -9 West -12 East +2 UK/North America +7 Group/Other +2 EBITA Q2 2020 92 12
Second quarter Priorities 2020-2021 Jan-June 2020 July-Dec 2020 January 2021 Restart Invest Protect Health, Customers Profitable In and Bufab Growth Leadership 13
Outlook Summary and outlook Second quarter: significant drop in sales, but stable result and cash flow • Overall, strong impact of the Covid-19 pandemic. • Extensive measures taken to mitigate negative impact Outlook: • Gradual recovery during 2Q expected to continue during second half of 2020 • In view of remaining uncertainty, cost program increased from 40 to 100 MSEK Priorities 2020 • So far during 2020: successful program to Protect Health, Customers and Bufab • Second half 2020: Restart Profitable Growth • Quickly adjust cost base • Renewed efforts to increase market share—”Get out there and sell!” • By January 2021, in position to continue investment in Leadership strategy 14
Q&A 15 www.bufab.com
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