Bufab AB (publ)

Good morning and good afternoon everyone and warm welcome to Bufab's Q1 report. My name is Erik Lindén and I'm president and CEO of the Bufab Group and together with me here today I have Per Iskog, our CFO. I will start this presentation and give you a highlight of the quarter and then I will move over to Per for some financial highlights. at the end i will give you some details about the different regions and then at the end we'll open up for q a this presentation will be recorded and by attending to this meeting you agree to the recording but before we jump into the first quarter i would like to share with you guys that we have a new video setup effective from 1st of january 2024 uh as communicated our capital markets day in december last year we have decided to go from a segment set up to a regional setup in bufab in order to in a more efficient way execute our new strategy discovering the next solution um we uh will with a new region have a new setup have five regions Region North and East will be the biggest, approximately 3.4 billion in turnover. That will be 39% of the total sales in Bufab and consists of 10 countries in Northern Europe and Eastern Europe. The second biggest region will be West Europe, almost 2 billion turnover, 22% of the group's total turnover and eight countries in Western Europe. UK and Ireland, 1.7 billion in turnover, almost 20% of total sales in the group and two countries. Americas, 1.2, 14% of total sales and two countries. And then regional Asia Pacific, 440 million in turnover and 5% of total sales and consists of seven countries in Asia Pacific region. And the new regional setup are effective from 1st of January. So let's continue with some Q1 highlights then. If we sum up the quarter we think we delivered a solid profitability and stable cash flow in a challenging market. If we start to look at the demand in the market it is tougher now and we see lower demand year on year. uh total growth was minus 9.9 percent and our organic growth was minus 10.6 and we can see the lower demand across all regions and we should also have in mind that we're up against very strong comparative numbers uh we see a mixed bag when it comes to demand uh we still still very favorable development in energy oil and gas and defense while we see weaker development and lower demand in sectors such as construction, kitchen and bathroom, outdoor and also general industry. Our order intake in the quarter was in line with the net sales. If we look at the margin, I'm very pleased to see that we continue our journey with our gross margin with a strong improvement to 29.1% versus 28.3% in Q1 last year. and the improvements in all regions. And the main reason behind this improvement is that we are continuing to do a good job when developing our product and customer mix in the different regions, but also we start to see some sourcing savings coming in as well. When it comes to our operating expenses, the share of those increased compared to last year, obviously due to the low demand, but also inflation pressure we have seen in the quarter. some restructuring costs and then also in some companies we see big growth potential in the coming quarter and we continue to invest for further market share growth. We have also taken some actions in some companies on the cost side to adjust to a lower demand and also in some cases we'll receive room for improvement. So some cost adjustments are made in the quarter and you see at the operating margin level adjusted went up on 12.1 percent of course impacted by the lower volumes in the quarter. If you look at the cash flow we will deliver a strong or solid at least cash flow in the quarter. Our operating cash flow amounted to 259 million SEK and corresponding to a cash conversion of 95 percent. What we've seen now for a few quarters is that we continue to strengthen our financial position and that we have now a balance sheet ready for acquisitions in the coming quarter. I will now leave the word over to Per for some financial highlights.

Yes. Hello. Good morning. Good afternoon. So let's look at some more numbers and graphs. Let's start with the net sales, the graph to the left. Our net sales in the quarter was 2 billion 149 million SEK, which is a reduction of 9.9% compared to Q1 last year, but somewhat better than the last two quarters. If you break down the 9.9%, minus 10.6 came from organic growth and we had a positive currency effect of 0.7% and no effects from acquisitions this quarter. If you look at the gross margin, we ended up on 29.1% in gross margin, an improvement of 0.8 compared to Q1 last year. A stable improvement throughout the last couple of years. If we move over to the EBITDA, we had a 259 million SEK EBITDA profit adjusted in the quarter. reduction compared to q1 last year the operating margin adjusted was 12.1 compared to 13.6 but slightly improved from q4 last year and then we look at the opex operation operating expenses um we ended up on an opex of 365 million second a quarter a share in percent of sales of 17 percent that should be compared to then q1 last year an increase of 14 million sec the increase is mainly coming from inflation but also minor restructuring costs in the quarter but also some additional cost as eric mentioned that we invest in growth If you compare the OPEX in percent of share, it's a slight improvement from Q4 and Q3. And then we go to cash flow. We believe we had a stable cash flow in the quarter, 259 million SEK. It's 42 million SEK lower than Q1 last year. The main difference is from the underlying earnings. The cash flow was positively affected by 15 million positive change in net working capital. And then looking at the net debt and the leverage, we continue to reduce our net debt compared to Q4 last year, we reduced it by 106 million SEK. And compared to Q1 last year, we reduced the net debt with 242 million SEK. The leverage ends up at 2.7 compared to 2.7 last year, Q1.

Thanks Per.