Bufab AB (publ)

Hi everyone and a warm welcome to this Q4 and year-end report for Bufab. My name is Erik Lundén and I am president and CEO of the Bufab Group and together with me here today I have Per Iskog, my CFO. This presentation will be recorded and by attending to this meeting you agree to the recording. I would like to start this presentation to give some group news today before I jump into the full year highlights and the Q4 results.

So let's start with some group news.

And the first thing I would like to talk about today is the acquisition of Vital, a leading Italian sea parts distributor. In November last year, we acquired Vital. That is one of the leading players in the Italian market with a head office in Milan. They have a net sales of 48 million euros last year. Here, sorry, in 2023 and operating profit above Bufab's 2026 profitability target. We see Vital as a platform acquisition. We have two types of acquisitions in Bufab, platform and add-on. And this is a typical platform acquisition. By acquiring Vital, we have deepened our presence now in a very important market for us in Southern Europe. And by doing this, we can increase our service level to current customers that we have, that have operations in Italy, but of course also help new customers in Italy market. And we believe that Vital is a perfect fit to Bufab. They can learn from Bufab and the other way around, and therefore we think that this partnership will be successful. adding a lot of value to Bufab shareholders. The former owners will stay in management positions, and we have an earn-out structure linked to this acquisition. If we then jump into the full-year highlights and Q4 results, and I would like to start to talk about the full-year performance. If we sum up, 2024 is another good year for Bufab. We delivered a stable result despite weak demand in the market overall. And I think this year we're demonstrating our resilience in that challenging market. Total growth was minus 7.4% on the full year and organic growth was minus 5.4%. We delivered a record strong gross margin reaching 29%, sorry, 29.7%. And this is a good indicator that the value that we create to our customers We delivered also stable adjusted operating margin at 11.9 and also solid cash flow. And the board proposed a dividend of 5.25. This increased versus 5 sec per share last year. If we then also look back on the execution of a strategy that we launched at our Capital Markets Day at the end of 2023, I am overall pleased with the execution of our strategy. First of all, I would like to mention how we have strengthened our value proposition. We have expanded our service and product portfolio, becoming more of a full-range supply C parts provider to our customers. One example is for example, that we have during 2024 delivered a record number of logistics solutions for our customers. We are convinced that this value we provide to our customers will help us to increase our organic growth rate. And I think also what was seen in the GP development in the last couple of quarters is an indicator that we do the right things here when it comes to value selling to our customers. We also have a clear focus on profitable growth. We aim to gradually improve our customer product mix, and I think we're taking good steps in the right direction throughout 2024. But more to come here. I think also we have stepped up when it comes to sustainability and gone to our next level when it comes to sustainability. From a lot of internal focus to actually now go over to how we can add value to our customers through sustainability. We have improved our offering when it comes to inability, and we can see that this is a driver for us to take market share, especially in Europe as of today. And more and more offering within this area will be developed in the coming quarters. I also like the way we have improved our operating model in Bufab. As you all know, we are running with full P&L in the different sister companies, and we are very keen to have tailor-made plans for each sister's needs. So a decentralized operating model with strong performance management. And I think we're taking good steps in 2024 and have a more solid platform and better positioned sister companies than one year back. Another big milestone is, of course, how we have decided to focus on what we call trading and niche businesses. In 2024, we divested with Abland & Halborn, our manufacturing companies, and instead acquired Vital. And this is an example of how we will also do going forward by investing in companies that we think have bigger potential for profitable growth going forward. And all in all, I think we put ourselves in a strong position to deliver on our financial targets in the coming years. If we then jump over to the fourth quarter of 2024 and start to talk a little bit about the market situation, we still continue to see a cautious market out there, and there's large variations across industries. The strongest development was noted in energy and defense, like previous quarters. The important mobile home and trailer industry for our U.S. market remains challenging. And also we see still a challenging trend when it comes to construction, automotive, bath and kitchen, and outdoor. But having said that, we see some lights in the tunnel, and organic growth is improving. In Q4, we end up on organic growth of minus 1.5%, and that is an improvement over Q3. Q3 had organic growth of minus 2.6%. Another positive thing is that we continue to do a good job when it comes to our gross margin. It improved by 0.4 percentage points, reaching 29.7 in Q4. And this is mainly driven by our trading business that had really solid development in also Q4. If you look at our operating expenses, it was higher in Q4, driven by one-offs and currency effects. If we look at the underlying cost base, it's actually a reduction in Q4 versus Q4 last year. All in all, then, we ended up on an adjusted operating margin of 10.8%. I will then leave the word over to Per for a few financial highlights. Please, Per.