Year-end 2014 Presentation Värnamo, February 20, 2015
Fourth quarter Bufab Group Established Approx 2 200 MSEK in turnover in 1977 Around 800 Headquarters in 120 000 employees Värnamo, Sweden articles 12 000 30 wholly owned Listed on the In-house stock exchange customers subsidiaries in production 23 countries 2
Fourth quarter Volume vs. value 3
Fourth quarter Bufab´s Strategy Quality and Customer First! Accelerated organic Improved cost/capital Value-adding 2 Growth Efficiency Acquisitions • New Business Growth - • Consolidate Sourcing • Good Base Performance Customer Value Creation Growth Synergies • • Logistics Productivity • Products All of Bufab, All the Time • • Geography • Common Tools and • Customer • Global Parts Productivity ™ Processes Shared Value Creatio n • 4
Fourth quarter Financial targets Sales growth Bufab’s goal is to achieve average annual organic growth over a +3 ppt business cycle exceeding the growth of the manufacturing industry in countries where Bufab is active by three percentage points. In addition, Bufab intends to grow through acquisitions. Profitability ACCELERATED 12 % Bufab targets an average operating margin of 12 percent over a ORGANIC GROWTH business cycle. Capital structure IMPROVED Bufab’s capital structure shall provide a high degree of financial EFFICIENCY <80% flexibility and make acquisitions possible. The net debt/equity ratio should not exceed 80%. Net working capital VALUE-ADDING 30% Bufab’s long-term goal is to achieve a net working capital/net ACQUISITIONS sales ratio of 30 percent. Dividend policy Bufab’s target is to pay 50 percent of its net profit in dividends. 50% However, the company’s financial condition, cash flow, acquisition opportunities and future prospects will be taken into account in any dividend decision. 6
Fourth quarter Summary 2014 � Growth strategy proven, but need better leverage – Second highest sales ever… – ..despite weak underlying demand, especially in second half and in Sweden – Excellent market shares gain in International - now 57% of sales – However, investments in sales organization puts pressure on margins. Starting 3Q 2014, opex increase has leveled out. � Efficiency - satisfying results so far but need for intensified focus – Continued purchasing savings – Headwind toward end of year in mix, currency combined with weak demand in Sweden � Focus area for 2015 - direct and indirect cost + price � Acquisitions – pipeline established � IPO 6
Fourth quarter Financial highlights, Group Δ Δ Quarter 4 Jan-Dec SEK millions 2014 % 2014 % 2013 2013 533 2,195 Order intake 519 2.7 2,072 5.9 Net sales 532 512 4.0 2,198 2,031 8.3 Gross margin, % 28.1 30.3 29.2 29.3 Adjusted operating profit* 33 55 -40.2 192 203 -5.3 6.2 8.7 Adjusted operating margin, % 10.8 10.0 * Excluding IPO costs of 18 MSEK in Q1, 2014 Operating margin Fourth quarter � Negatively affected by higher costs for sales Net sales - weak ending 2014 � Order intake in line with net sales organization – levelling out � Negative impact from currencies– 6 MSEK in Q4 � Weaker net sales growth compared to earlier � Strong comparable Q4 2013 quarters - adjusted for currency translation 1.6 % � Continuing growth in International with increased market shares � Lower underlying demand, especially in Sweden 7
Fourth quarter Financial development, Group Quarterly year-on-year net sales growth, %* 2500 250 15 10 2000 200 10 8 LTM Net sales, SEK millions 6 6 4 1500 150 5 MSEK 2 1000 100 0 -1 500 50 -5 -6 -8 0 0 -10 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2013 2013 2013 2014 2014 2014 2014 2012 2013 2013 2013 2013 2014 2014 2014 2014 *Adjusted for currency translation effects LTM Net sales 12 M, MSEK LTM Adj Op Res, MSEK 8
Fourth quarter Segment Sweden Δ Δ Quarter 4 Jan-Dec SEK millions 2014 % 2014 % 2013 2013 Order intake* 232 241 -3.7 968 998 -3.0 Net sales* 229 243 -5.6 982 970 1.2 Adjusted operating profit 27 40 -33.9 144 143 0.2 Adjusted operating margin, % 11.7 16.7 14.6 14.8 * Pertains to net sales and order intake from external customers Fourth quarter Weaker operating margin Order intake in line with net sales • Lower volumes Net sales decreased • Adverse exchange rates • Weak underlying demand, likely worsened by • Higher operating costs “long Christmas”, inventory adjustments • Unchanged market shares, except one customer to manufacturing subsidiary 9
Fourth quarter Financial development, segment Sweden Quarterly year-on-year net sales growth, % 2000 200 15 10 1500 150 LTM Net sales, SEK millions 6 5 MSEK 3 2 1000 100 1 0 -2 500 50 -5 -6 -6 -7 -9 0 0 -10 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2013 2013 2013 2014 2014 2014 2014 2012 2013 2013 2013 2013 2014 2014 2014 2014 Net sales LTM, MSEK LTM Adj Op Res, MSEK 10
Fourth quarter Segment International Δ Δ Quarter 4 Jan-Dec SEK millions 2014 2013 % 2014 2013 % Order intake* 301 277 8.6 1,227 1,074 14.3 Net sales* 303 269 12.7 1,217 1,061 14.7 12 75 Adjusted operating profit 19 -36.0 83 -10.0 Adjusted operating margin, % 4.0 7.0 6.2 7.8 * Pertains to net sales and order intake from external customers Fourth quarter Operating margin � Negatively by higher cost for stronger sales organization Order intake in line with net sales � Q4 2013 strong comparable Strong sales growth � Adjusted for currency effects 7.9 % � Strategic initiatives showing results � Higher market shares – underlying demand somewhat weaker than in 1H 11
Fourth quarter Financial development, segment International Quarterly year-on-year net sales growth, %* 2000 200,0 15 14 14 13 10 10 8 1500 150,0 LTM Net sales, SEK millions 6 5 5 MSEK 1000 100,0 0 500 50,0 -5 -5 -7 0 0,0 -10 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2013 2013 2013 2014 2014 2014 2014 2012 2013 2013 2013 2013 2014 2014 2014 2014 *Adjusted for currency translation effects Net sales LTM, MSEK LTM Adj Op Res, MSEK 12
Fourth quarter Net working capital 1000 50,0% 800 45,0% As of % of net sales 600 40,0% SEK millions 400 35,0% 200 30,0% 0 25,0% Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Net Working Capital As of % of net sales 13
Fourth quarter Challenges faced toward end 2014 - and focus areas for 2015 Challenges Focus areas • Implementing new cost savings package of 15 MSEK yearly, full Weak demand, effect from Q3: especially Sweden Merger two subsidiaries, streamlining backoffice, staff reduction one manufacturing subsidiary • Continued investments and efforts in sales - some promising signs • Weak SEK: Price increases being implemented since mid-Q4 Adverse currencies: Strong USD: Increased efforts in purchasing – organization weak SEK, strong USD strengthened and tools improved – helped by good outlook for raw material prices • Investments made 2014 are “good cost”, … Insufficient leverage • …but we are holding back increases from level of Q3, 2014 until on growth we see positive margin effects from growth in International • Strong focus on landing and ramping up business already awarded 14
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