Interim report January - September 2021
In the interim report for January to September, VBG Group reports continued strong sales and increased focus on growth.
Third quarter 2021
- Consolidated sales increased 11.7% to SEK 848.3 M (759.6).
- Adjusted for exchange rate changes between the years, actual organic volume growth was 19.5%.
- Operating profit amounted to SEK 110.5 M (113.0).
- The operating margin was 13.0% (14.9).
- Profit after financial items increased to SEK 107.4 M (100.0).
- Earnings per share amounted to SEK 3.29 (2.95).
Nine months 2021
- Consolidated sales increased by 12.1% to SEK 2,675.2 M (2,387.2).
- Adjusted for exchange rate changes between the years, actual organic volume growth was 18.2%.
- Operating profit increased to SEK 383.9 M (267.1).
- The operating margin increased to 14.3% (11.2).
- Profit after financial items increased to SEK 369.8 M (246.1).
- Earnings per share amounted to SEK 11.16 (7.03).
Comment from VBG Group´s President & CEO, Anders Birgersson:
The third quarter of 2021 was marked by continued strong demand for our products in combination with effective cost control. Net sales increased to 848 SEK M (760) and the operating margin totaled 13% (14). Comparison with the year-earlier period is obstructed by the impact of the pandemic on VBG Group’s sales and the receipt of state support in 2020. The operating profit (EBIT) of SEK 384 M for the first nine months of 2021 is the best in our history.
Demand for both transportation and infrastructure remained high during the quarter. In parallel with the strong demand for our products and services, the quarter was characterized by continued high pressure in our supply chains as well as by rising prices for raw materials. All divisions have had to work actively in order to meet delivery times and to compensate for rising materials and transportation costs. Owing to the strong market positions of our products, we have been able to offset these cost increases through price adjustments.
Profitable industrial segment
Ringfeder Power Transmission delivered a stable, high level of profitability with an EBITA of 22% (21) in the third quarter. The division is working against rising costs of raw materials and more expensive transportation that have had a negative impact on profitability, but the division’s solid focus on increased productivity and effective cost control measures balanced these out.
Ringfeder Power Transmission’s strong and stable earnings performance confirms for me that VBG Group’s strategic orientation – being a balanced industrial group, rather than a supplier of products for commercial vehicles – is the right way forward.
The next generation of couplings
A shipping market with increased freight volumes and rising prices continues to create strong demand for both new products in Truck & Trailer Equipment and to increase aftermarket business.
One positive development during the quarter was the launch of new products by VBG and Ringfeder, our brands in the couplings segment. Refining the mechanics in combination with new digital technology further increases safety and reliability while opening doors to new future functions. VBG Group’s goal is to make society safer, and both brands are now further boosting driver safety through various innovations. Field tests have been conducted in several countries in Europe for more than two years, and certification tests under UNECE R55 have been approved, which meant we could start serial production of both Ringfeder’s and VBG’s couplings during the third quarter.
The product updates are the largest the company has carried out in the last 15 years, and I am proud of how the organization pursued the projects during the prevailing pandemic. Having the next generation of products in place creates conditions for continued growth and profitability.
Continued streamlining
The review of Mobile Climate Control continued at a high rate of intensity during the third quarter. The division was the hardest hit by the pandemic. Now that demand has begun to rise, the bus market is impeded by supply chains that are under pressure, with problems such as semiconductor shortages and drastically rising prices for raw materials and goods. Mobile Climate Control is also experiencing an overheated labor market in locally in North America, where access to manpower is a challenge.
Despite negative external circumstances, the division’s profitability is back to pre-pandemic levels with an EBITA of nearly 12%. This is attributable to the internal efficiency initiatives under way in Mobile Climate Control, and to the fact that the division’s off-road solutions are offsetting the weaker bus market.
Sustainability in focus
Our sustainability initiatives intensified in the third quarter. We have begun a materiality analysis in which we are interviewing our key stakeholders such as customers, suppliers, owners, government authorities and employees around the sustainability topics they consider to be the most important. This analysis will form the basis of our new sustainability targets.
Moreover, we have begun measuring and surveying our impact as regards greenhouse gases. We have established an organization, trained employees, and purchased support for measuring and monitoring greenhouse gases in a structured manner.
Growth on the agenda
VBG Group’s acquisition agenda was partially put on hold during the pandemic. Our strategy going forward – of growth through acquisitions – stands firm and we are now focusing on our acquisition process.
In August 2021, a minor asset acquisition was completed of the Insta-Chain brand. The company behind Insta-Chain manufactures tire chains and competes with our brand Onspot in the North American market. The acquisition fits in well with our operation, and the combination of these two brands yields internal efficiency and know-how for designing the best products possible at the highest level of service. All this to create a safer society and increase safety for all drivers and passengers.
Ready for the future
Looking back at the third quarter of 2020, I remember that we were cautiously beginning to see the light at the end of the tunnel after the pandemic. Today, one year, later, the situation remains positive. The vaccination programs around the world have had an effect, and in our key markets, society has opened up and restrictions have been removed.
There is, as always, uncertainty around the future, and the situation with rising raw materials prices and pressure on supply chains remains. Despite all this, I feel optimistic. Demand for our products is high. VBG Group is a balanced industrial group with stable growth and profitability. The next generation of coupling solutions has been launched, and we are well prepared to meet new challenges in all our divisions. We have a strong financial position that provides us with a solid platform for continued growth.
Contact
Anders Birgersson, President and CEO
Telephone: +46521-27 77 67
E-mail: anders.birgersson@vbggroup.com
VBG Group AB (publ), domiciled in Vänersborg, is the Parent company of an international engineering Group with wholly owned companies in Europe, North America, Brazil, South Africa Australia, India and China. The Group’s operations are divided into three divisions – Truck & Trailer Equipment, Mobile Climate Control and Ringfeder Power Transmission – with products that are marketed under strong, well-known brands. VBG Group AB’s Series B share was introduced on the stock exchange in 1987 and is listed today on the Nasdaq Stockholm Mid Cap list.
