Bufab’s second-quarter results fell short of expectations. The stock is down sharply following the earnings release, though the share price has risen considerably over the past few months.
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revenue +2% to 2,280 million (forecast 2,341 million)
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EBITA operating profit grew 37% to 319 million and the operating margin (EBITA) rose to 14.0%, but EBITA decreased by 2% on comparable figures
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EPS grew 54% to 5.41 SEK (forecast 5.10 SEK)
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operating cash flow 488 million SEK
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Slow revenue growth was mainly due to unfavorable exchange rates, but demand also weakened in sectors that benefited from COVID. Organic growth was -5%, although the figures for the comparison period were also strong. Weakness was seen in, for example, home interior-related sectors, while there was strength in areas like the energy sector. Operating expenses were at last year’s level, and despite inflationary pressure, the company aims to keep costs under control.
Cash flow remained good, which the company has focused on. For the remainder of the year, cash flow is expected to remain strong and net debt relative to EBITDA is expected to decrease. Currently, net debt/EBITDA was 2.9, which in itself is within the company’s target of below 3.
The latest acquisition integrations have progressed well. Sustainability also brings new opportunities to the business. On the other hand, there is uncertainty in the market and a slowdown is still visible in certain sectors, but the customer base is broad and operations span multiple industries, which reduces the significance of any single sector. In the short term, the company aims to maintain margins, gain market share, and increase cash flow.
Interest expenses grew to 56 million in Q2 (totaling 105 million for H1). Long-term debt was 3,456 million at the end of the quarter and short-term debt was 845 million; in absolute terms, long-term debt increased slightly compared to the previous quarter (2,950 million at the end of Q1).
Other noteworthy points:
- order intake remained at the level of the comparison period (+1%)
- no short-term guidance is provided, long-term financial targets remain unchanged