Interim report January–June 2019
Second quarter of 2019:
- Consolidated sales increased by 5.2% to SEK 979.4 M (931.2).
- Operating profit rose to SEK 123.3 M (117.3), with a margin of 12.6% (12.6).
- Profit after financial items amounted to SEK 109.6 M (105.6), with a profit margin of 11.2% (11.3).
- The Group’s profit after tax amounted to SEK 83.2 M (77.8).
- Earnings per share amounted to SEK 3.32 (3.11).
- Restating in accordance with IFRS 16 had a positive impact on operating profit of SEK 0.7 M.
First half of 2019:
- Consolidated sales increased by 12.6% to SEK 1,969.0 M (1,748.9).
- Operating profit was SEK 258.8 M (222.5), with a margin of 13.1% (12.7).
- Profit after financial items amounted to SEK 231.3 M (191.1), with a profit margin of 11.7% (10.9).
- The Group’s profit after tax totaled SEK 172.2 M (141.3).
- Earnings per share amounted to SEK 6.88 (5.65).
- Restating in accordance with IFRS 16 had a positive impact on operating profit of SEK 1.1 M.
Comment from VBG Group´s President & CEO, Anders Birgersson:
A stable second quarter made this our best half-year ever
VBG Group’s core markets have been strong for a long time, and our divisions are performing at historically high levels. As an example, Mobile Climate Control reached a milestone during the second quarter by passing one billion Swedish kronor in sales for the first half-year. We note, however, that the robust rate of growth began to slacken during the second quarter, but demand remains high with stable order books for large sections of VBG Group’s operations.
The exception is Edscha Trailer Systems, which with 7% of the Group’s sales has started to feel the effects a slight slowdown in the European trailer industry. This is the result of the lack of similar increase in the need for transportation as well as the need for vehicle fleet renewal slowing down and coming more into balance. That said, VBG Group continued to grow; its margins for the quarter were stable, which shows that our portfolio strategy is working. The diversified business structure we now have as a result of the acquisition of Mobile Climate Control is a major strength for VBG Group.
We refinanced our operations during the quarter. Refinancing is the final step in the structural transformation of the Group, which commenced with the acquisition of Mobile Climate Control in 2016, and it means that the new VBG Group now has a highly stable platform and the right conditions for continued positive performance.
One significant event during the quarter linked to Mobile Climate Control is that Division Manager Clas Gunneberg, also the Executive Vice President of VBG Group, has chosen to resign his position. Clas has played a significant role in Group Management and in the integration of Mobile Climate Control into the VBG Group, a task he carried out to his great credit. For the division, which now has a well-functioning organization with an effective strategy and a strong momentum in its business, the short-term consequences will be a change in management where I will step in as acting Division Manager for a while, moving forward. It is a task I both look forward to and regard as a natural step in this situation.
VBG Truck Equipment – continued growth with stable margins
VBG Truck Equipment maintains a high level of activity on a market that remains strong; it reported increased sales year-on-year while the division showed stable margins. The acquisition of BPW’s drawbar products in the first quarter follows the plan that was set, with a positive financial impact expected at the end of the year at the earliest. The acquisition will strengthen VBG Truck Equipment’s strategic position on the market, and provide the division with a more complete offering.
Edscha Trailer Systems – an important milestone reached with the Tipper Roof product line
Edscha Trailer Systems reported reduced sales year-on-year, which is an effect of the receding trailer market and of the fact that no rail products were delivered. The division shows stable margins, however, through profitable sales and strong cost control. It is also gratifying to note that during the quarter, Edscha Trailer Systems began product deliveries in the new Tipper Roof product line.
Mobile Climate Control – strong growth and improved operating margin
Mobile Climate Control continued to deliver growth, with stable margins during the quarter, and we see that the trends in the North American market remain strong. We can also confirm that the operating margin is moving in the right direction for the division, even though I expect even higher margins in the future.
Ringfeder Power Transmission – stable sales and improved profitability
Ringfeder Power Transmission reported stable sales in the second quarter that remained high, but it is clear that the rate of growth has begun to slacken. With more efficient delivery and production processes as a result of the restructuring that took place within the division, costs will continue to slowly decrease and profitability improve. It is clear that things are moving in the right direction for the division.
VBG Group – a good starting point for structural growth and increased focus on cost and profitability
After a successful integration of Mobile Climate Control and renegotiation of banking agreements, and with the strong organic growth we have experienced over a prolonged period, I feel now that there are excellent conditions for also creating structural growth in the future. At the same time, we will continue to focus in the Group on trimming our costs and improving our profitability.
Anders Birgersson, President & CEO
Telephone: +46 521-27 77 67, +46 702-27 77 78
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 four divisions – VBG Truck Equipment, Edscha Trailer Systems, 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.