Bufab AB (publ)

Good morning and good afternoon everyone and a warm welcome to this Q1 report from Bufab. My name is Erik Liljen, President and Senior of the Bufab Group and together with me here I have Marcus Sørenberg, our Group CFO. This presentation will be recorded and by attending to the meeting you agree to the recording. i will start this presentation to give you the highlights of the quarter after that i'll leave the word over to marcus for some financial highlights and then i will take you through the different regions performance and at the end we will have time for sum up and the q a if we start then with the highlights of the quarter uh i would say that it's a good quarter from our side i'm overall very pleased with our performance we delivered organic growth and clear improvements in both gross margin and operating margin i think we execute very well on our strategy with clear focus on improved value creation for our customers through our offering and also solutions and this work has clearly started to pay off in the quarter The organic growth was 2.2% with positive development in three of the five regions, driven by mainly higher volumes. The underlying demand remained cautious in the market. We saw good demand in industries like energy, agriculture and food and defense, while demand in construction, furniture and interior design continued to be on a low level. Both the gross margin and the operator margin increased compared with the comparative quarter and reached all-time high levels. The gross margin improved to 32.9% versus 30.3% last year. And we have now delivered 11 quarters with improved gross margin compared to comparison quarter. Our underlying cost level was slightly lower than last year and we continue to maintain a good focus on cost control while at the same time we invest in growth where it makes sense. All in all, we delivered a strong adjusted EBITDA margin of 15.3%. It's up compared to last Q1 in 2025, there was 12.7. And it's also very encouraging to see that all regions and the vast majority of our sister companies contributed positively to this result by improving their performance versus last year. I will now leave the word over to Marcus for some financial highlights.

Thank you a lot, Erik. So we'll start looking at the growth during the quarter. We did see organic growth, but still see the underlying demand to remain a bit cautious. But in total, the growth in the quarter amounted to 1.7%. We continue to see a gradual improvement of the organic growth, which is good, which came in on 2.2%. It's now actually the third consecutive quarter in which we see a gradual improvement of the organic growth rate, which we're very glad to see. The acquisition of Norvia that had a solid development in the quarter contributed with 6.5 percentage points to the overall growth in the quarter, while the strengthened Swedish Krona had a negative impact currency-wise of minus 6.5 percentage points. There was a small effect also coming from the during 2025 communicated investment of within component solutions group that had a negative impact of 0.5 percentage points. In terms of order intake, it should also be said that in the quarter, order intake exceeded net sales. Gross margin wise, we are very satisfied with the gross margin development in the quarter. It increased compared to the comparative quarter and reached a high level of 32.9% versus 30.3% in the comparative quarter, an increase of 2.6 percentage points. The increased gross margin is a result of our continuous focused work to improve both our customer and product mix, landed purchase savings in the quarter, some price adjustments, as well as the strength of Swedish Kronan effect on the Swedish entities. Over the past 11 quarters, like Erik said, we have seen strong momentum in our gross margin and we expect this development to continue throughout the year. In terms of operating expenses, operating expenses as percent of net sales increased slightly compared to the comparative quarter and amounted to 17.6% versus 17.2%. But if we adjust for the acquisition of Norvia made in Q4-25 and the revaluation of contingent purchase considerations in the comparative quarter, the operating expenses as percentage of net sales actually decreased slightly. So still good cost control. The lower underlying operating expenses is also a direct result from continuous strong focus on exactly cost controls throughout the whole organization. And while maintaining a good cost control, we also continue to invest in various growth activities, such as investing in our sales organization, etc. So. Clear improvement in operating margin. We are well on track to reach our overall margin target as a summary. And as I said, strong gross margin in combination with the good cost control that we saw in the quarter led to a clear improvement in the operating margin that landed in on a strong level of 15.3% compared to 12.7% in the comparative quarter. Adjusted operating profit increased with 62 million SEK, meaning a growth rate of 22% to 340 million SEK versus 278 million SEK in the comparative quarter. It's nice to see that all segments increased its operating margin and the vast majority of our operating entities actually improved their overall results as well, which is also very nice to see. Given the strong start of the year, we are now well on track to reach our morning target for the full year of 2026. Cash flow wise, cash flow increased versus the comparative quarter, actually a direct result of the improved underlying result. There is one thing standing out a bit in the cash flow statement and that is the non-cash item figure in the cash flow statement that is considerably higher versus the comparison quarter. And the main driver behind this is that we build up approvals for the future payment of CBAM that is EU's new carbon border adjustment mechanism, which affects all our European companies with start of January 1st, meaning affecting all our purchases in the European countries from January 1st. And the payment for those costs will be due in 2027. So we accrue for those due the 26th. um other things worth mentioning is that we as you can see we've been slight um slightly slightly more networking capital in this quarter relative to the comparable quarter but the development of that is naturally due to that we are now back in organic growth phase which is good so solid cash flow in the quarter If you take a look at the balance sheet, we can continue to strengthen the balance sheet throughout the quarter. Debt-wise, the group took good steps in the right direction, driven by a solid cash flow in the quarter. We reduced the overall debt level of approximately 90 million SEK, despite the fact that we have a strengthened Swedish balance sheet. loans for the acquired companies negatively in the quarter but still we were able to reduce debt with approximately 90 million SEK. Reduced debt in a combination with strong development of our operating underlying result in the quarter also led to an improved net debt to EBITDA multiple. Net debt EBITDA decreased with 0.2 multiple points down to multiple of 2.4 which is well within our financial target range long term. so i guess you can say that we continue to strengthen our balance sheet after acquisition of novia already meaning we are ready for new value-adding acquisitions when the right opportunities appeal with that said i'll leave the world over to you eric again thanks marcus and i will then take you through the regional highlights and i would like to start with the region europe north and east

The total growth of the region was minus 1.3 percent, of which organic growth was positive 1.7 percent. Market conditions continued to vary across countries and customer segments in the region. We saw positive development in Finland and Sweden, while demand in Denmark remained weak. The furniture and kitchen sector continued to face low demand, where defense and digital infrastructure remained strong in the quarter. The gross margin improved by 3.0 percentage points, driven by better customer and product mix and the consolidation of purchasing volumes. As in the previous quarters, currency effects also had a positive impact on the gross margin for the region. Operating expenses increased quarter to quarter, mainly due to remeasured additional purchase considerations in the comparable quarter. adjusted for those effects the share of cost increased only slightly compared to last year overall this resulted in improved adjusted operating margin of 16.1 percent compared with 14.2 last year if we then continue with the region west the region showed a strong growth of 24.7 percent This growth was largely driven by the acquisition of Novia Group, which contributed by 23.7%, while organic growth came in at a solid level of 6.3%. Organic growth was driven by strong development in France, Spain, Turkey and Czech Republic, and supported by increasing market shares and also better product mix in the region. The demand was particularly strong in sectors such mechatronics, aerospace and defense. Also, the gross margin had a positive development improved by 2.2 percentage points driven by better product mix and higher added value in the new projects. The cost level was in line with last year affecting continued cost discipline in the region despite higher activity in the market. As a result, the adjusted operating margin improved to 15.3% compared with 13.4% last year. Finally, worth mentioning is that the newly acquired NOVA Group developed according to plan during the quarter and contributed positively to the region. If you continue with Americas, the total growth for Americas in the quarter was minus 6.1%, mainly impacted by currency effects, which accounted for negative 13.4%. At the same time, the organic growth was strong at 11.6%. The organic growth was mainly driven by price increases, and demand in the RV and the trailer market, which is an important segment for ABS, remained stable, but on a low level. We also continue to see weak demand in the automotive industry, which particularly affected our sister company CSG in the US. The gross model improves significantly, increasing by 7.7 percentage points. This was mainly driven by general price adjustments and also very successful turnaround within our sister company CSG. Looking ahead we expect the gross model to come down slightly going forward but remain on a high level for the region. The cost level was lower compared with last year mainly due to the divestments of BGM within CSG combined with continued good cost control in the region. Overall, this resulted in a strong improvement in the adjusted operating margin, which increased to 21.7% compared with 12.5% in the comparative period. If we then continue with the region UK and Ireland, the total growth in the quarter was minus 12.2%, with organic growth of minus 3.8%. We continue to see a low demand in the manufacturing industry, impacting both BWK and Ireland, combined with lower market prices, which impact Apex. They're doing stainless. With also weak confidence within the UK construction market, combined with unfavorable weather in Q1, resulted in lower sales volumes for Timco. The gross margin improved by 2.0 percentage points, mainly driven by sourcing savings and lower freight costs. The cost level for the region was lower compared with last year. This is partly explained by the fact that the comparative quarter was negatively impacted by customer loss, as well as restructuring costs for mainly APEX. Overall, this resulted in an improvement in adjusted operating margin, reaching 11.7% compared with 9.5% in the comparative period. Finally, we have the region Asia-Pacific. The total growth for the region was minus 25.3%. Organic growth accounted for minus 14%, while currency had a negative impact of 11.3%. The decline in organic growth was mainly attributed to Singapore due to lower demand from some large customers and also termination of an unprofitable customer in that company. Bitcoin Shanghai saw a small decline due to a very strong competitive quarter in Q1 2025. The gross margin also improved in age specific by 3.4 percentage points. This was driven by our active work with value-based pricing together with purchasing savings in the region. The cost level was somewhat higher primarily as a result of lower volumes and currency effects. Overall, this results in improvement in adjusted operating margin, reaching 16.6 percent compared to 16.1 in the comparative quarter. Before we sum up the quarter, I will take us through some highlights in the market and I will talk about the Middle East conflict, trade barriers and also how we deal with that. While we had a strong start of the year, we have seen developers in Iran and Middle East have increased the uncertainty in the market. On top of that, we have trade policies around us impacting us and our customers. If we start to say a few words about the conflict in the Middle East, we have so far seen limited impact for our customers due to the conflict in terms of demand. Of course, a situation like this creates uncertainty in the market. But the only direct impact we've seen so far is higher cost level on air freight, which has a very limited impact on us as we use mainly sea freight. When it comes to trade barriers like tariffs in US, CBAM in Europe, we act proactively to mitigate any impact for our customers and for Bufab. We have clearly seen the last couple of years that turbulent times often create opportunities for a player like Bufab to take actually market share. As customers increase their focus on securing their supply chains and that uncertainty drives consultation, that benefits us as we can help out in turbulent times to impact, to minimize impact for our customers. I think it's also very clear that our decentralized operating model makes us fast and flexible and help us to support our customers in the best possible way when we have turbulent times. So all in all, I think we act proactively and are well positioned to grab market share in a certain market.