Release Date: April 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bufab AB (STU:29B, Financial) reported a sales growth of 1.6% in Q1 2025, marking a positive trend after several quarters of negative growth.
- The company achieved a strong gross margin of 30.3%, an improvement from 29.1% in Q1 2024, driven by its trading business.
- The Asia Pacific region showed impressive organic growth of 17.2%, primarily led by strong performance in China.
- Bufab AB (STU:29B) successfully reduced its net debt leverage to 2.5%, aided by loan reductions and positive currency effects.
- The company maintained a strong focus on cost control, resulting in a lower underlying cost base after adjustments for one-offs and restructuring costs.
Negative Points
- Organic growth was slightly negative at -0.1%, indicating challenges in achieving consistent organic expansion.
- The automotive industry in the US faced lower demand, impacting Bufab AB (STU:29B)'s CSG operations negatively.
- The company's cash flow decreased to 164 million SEK in Q1 2025, primarily due to less reduction in inventories compared to the previous year.
- The UK and Ireland region experienced a decline in gross margin by 0.5 percentage points, driven by price pressure in stainless steel.
- Bufab AB (STU:29B) anticipates additional minor restructuring costs in upcoming quarters, which may impact financial performance.
Q & A Highlights
Q: The general market has shown signs of stabilization but remains cautious. Given the positive organic growth trend, do you expect this to continue?
A: Yes, we expect this trend to continue. We don't anticipate any major differences compared to the last few quarters, and we foresee a similar trend moving forward. (Eric Lian, President and CEO)
Q: Regarding the US tariffs, growth in the America segment was negative but improved compared to previous quarters. Was there any pre-buying effect in Q1, and how did this shift in April?
A: It's difficult to quantify the impact, but there might have been some positive effect on sales numbers at the end of the quarter linked to US tariffs. However, the underlying trend was already moving in the right direction for the RV industry before the tariffs. We don't expect any significant short-term impacts. (Eric Lian, President and CEO)
Q: The gross margin continued to improve year-on-year. How satisfied are you with this development, and what remains to be done?
A: I am pleased with the development. We aim for gradual improvement by enhancing our offering and value to customers. I expect continued improvement in gross margin in the coming quarters. (Eric Lian, President and CEO)
Q: There was a bad debt expense in the quarter. Was this adjusted for in the financials?
A: No, the bad debt expense is considered a one-off and is not part of the adjustments. (Pat Ekog, CFO)
Q: With the stronger SEK, how will this affect your purchasing prices, and are you positioned to benefit from it?
A: The currency rates have fluctuated, and it's hard to predict future movements. If the SEK remains strong, it could positively impact purchasing prices, especially from China. (Pat Ekog, CFO)
Q: Have you raised prices in the US to offset tariffs, and will this affect margins in Q2?
A: We didn't adjust prices in Q1, but starting in Q2, we have made adjustments to ensure no negative impact on margins. (Eric Lian, President and CEO)
Q: In the US, do you expect large price increases due to tariffs to lead to better organic growth or reduced demand?
A: It's difficult to predict. Customers are dependent on Asian sourcing, and this won't change in the short term. Price increases related to tariffs will be reflected in organic growth. (Eric Lian, President and CEO; Pat Ekog, CFO)
Q: Can you provide more details on the strong performance in the Asia Pacific region?
A: The main driver is China, where the team has successfully captured market share. Additionally, regions like India and Southeast Asia are bouncing back from lower demand, contributing to the strong performance. (Eric Lian, President and CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
