Year-end report 2021

Thu, Feb 24, 2022 16:00 CET

In its year-end report 2021, VBG Group reports a record year marked by high demand and pressure on supply chains.

Fourth quarter 2021

Consolidated sales increased by 23.2% to SEK 936.0 M (759.9).
Adjusted for exchange rate changes between the years, organic growth was 21.4%.
Operating profit amounted to SEK 72.1 M (86.2).
The operating margin was 7.7% (11.3).
Profit after financial items amounted to SEK 71.6 M (80.4).
Earnings per share increased to SEK 2.32 (2.04).
Carlyle Johnson Machine Co., LLC was acquired and consolidated as of 27 December 2021.

Full-year 2021

Consolidated sales increased by 14.7% to SEK 3,611.2 M (3,147.2).
Adjusted for exchange rate changes between the years, organic growth was 19.1%.
Operating profit increased to SEK 456.0 M (353.4).
The operating margin increased to 12.6% (11.2).
Profit after financial items increased to SEK 441.4 M (326.5).
Earnings per share increased to SEK 13.48 (9.07).
The Board of Directors proposes an increase in the ordinary dividend to SEK 5.00 per share (4.50). This means the proposed total dividend corresponds to 37.2% (49.6) of profit after tax.

Comment from VBG Group´s President & CEO, Anders Birgersson

VBG Group’s net sales for the full year rose to SEK 3,611.2 M (3,147.2) and operating profit totaled SEK 456.0 M (353.4), with an operating margin of 12.6% (11.2). Following 2020, a distinct recovery was noted in the market during the year, and demand for our products has been extremely high. In the aftermath of the pandemic, however, VBG Group struggled with delays in deliveries, rising raw materials prices, logistics problems and personnel shortages throughout 2021.

Arduous fourth quarter

Fourth-quarter sales for VBG Group were SEK 936.0 M and operating profit totaled SEK 72.1 M with an operating margin of 7.7%. The already strained delivery situation deteriorated further in the fourth quarter. There was another global flare-up of the pandemic, which caused further delays in the supply chain. This, in combination with our own personnel falling ill and being quarantined, put the organization to the test.

To prioritize our customer deliveries, we took extraordinary measures in the fourth quarter, such as engaging extra personnel, overtime and increased logistics costs, which had a negative impact on our profitability. We were able to offset rising raw material prices during the year, but in the fourth quarter there was a lag since our latest price increases will only take effect in early 2022.

All employees made a tremendous effort in the fourth quarter, and throughout 2021, to handle the delivery situation. I am extremely proud of how our organization took on these challenges.

Record-high demand

The need for transportation and industrial solutions continues to grow, and all divisions increased their sales in 2021.

Truck & Trailer Equipment posted the highest sales in its history – SEK 1,327.9 M (1,054.3) – and Ringfeder Power Transmission’s sales increased to SEK 520.5 M (475.2). Both divisions retained robust profitability despite price increases and imbalances in the supply chains. Henfel in Brazil posted the best quarter in its history.

The excellent earnings in the divisions show, once again, that our strategy of strong brands in distinct niches, a broad customer base and products with high customer value is the right way forward.

Restructuring of Mobile Climate Control continues

For Mobile Climate Control, the off-road segment experienced highly robust demand in 2021 while the bus segment – hardest hit by the pandemic – recovered more slowly. Sales in the division for 2021 increased, totaling SEK 1,762.7 M (1,617.7).

The drastic decrease in the use of buses during the pandemic is continuing to impact both new sales and aftermarket. We can see that the cost savings implemented by the division in 2020 and 2021 improved profitability, but increased costs for raw materials, freight, and extra personnel in order to ensure customer deliveries brought the margin down.

The efforts to restructure the division are continuing, and in order to further improve profitability in the bus business, the operations in the US will be consolidated and brought together into one location in 2022.

Growth via acquisition

In 2021, we carried out two acquisitions in the US. In August, we carried out a small asset acquisition of the tire chain manufacturer Insta-Chain, and Carlyle Johnson Machine was acquired in late December.

Carlyle Johnson Machine’s suite of products includes mechanical, electric and pneumatic clutches and braking systems as well as associated electrical controls and lubrication seals for medicine, aviation, industrial and defense product applications.

The acquisition of Carlyle Johnson Machine boosts our industrial business and means we can grow further as an industrial group. The Carlyle Johnson brand is associated with a high degree of product reliability in combination with high innovative capacity and is found in a number of different applications and segments that are new for us. For example, the products are used in surgical robotics.

We see a great deal of potential in using our industrial know-how and our existing sales channels to grow this business further. VBG Group’s acquisition process was adjusted, broadened and developed in 2021, and I look forward to continuing the initiatives related to our structural growth in 2022.

Sustainable growth

2021 – and the fourth quarter in particular – were extremely challenging. Under these conditions, we posted the best earnings in the Group’s 70-year history. I believe this is proof of our strength for the future.

It appears that the imbalances in the market will continue next year as well, and the pandemic and the prevailing geopolitical situation are creating uncertainty. Despite this, I see tremendous opportunities for VBG Group in 2022.

As a Group, we are financially strong, we have capable employees and we offer products with high customer value. In 2022, we will implement our in-depth sustainability initiatives and introduce new sustainability targets. We will continue our journey of growth and offer the market new products that increase safety for our customers and society.

We have an exciting year ahead of us!

Contact
Anders Birgersson, President & CEO
Telephone: +46 521-27 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.

The information in this report is of the type that VBG Group AB is obligated to disclose in accordance with the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication at 3:00 pm CET on February 24, 2022 in Swedish.