Comment from VBG Group´s President & CEO, Anders Birgersson:
All in all, 2019 was an excellent year for VBG Group – in fact, the best year ever in terms of operating profit. In addition to sales growth of 6.7%, we are reporting both record profits and a healthy cash flow, which continued to help strengthen our stable financial position. As a result, the Board of Directors has chosen to propose an increased dividend from SEK 4.50 to SEK 5.00.
In accordance with a decision by the Board, a change in the Group’s monitoring and reporting structure was implemented in the fourth quarter of 2019, which means that the two divisions, VBG Truck Equipment and Edscha Trailer Systems, will form one segment under the name of Truck & Trailer Equipment. This decision was taken in light of the fact that both divisions are working on their product and service offerings with a strategic orientation toward the truck and transport sector. Compared with the equivalent earnings in the preceding year, earnings for the new Truck & Trailer Equipment segment were impacted negatively in the fourth quarter, primarily since the trailer industry trended negatively during the second half of the year.
In the first quarter of 2019, Truck & Trailer Equipment signed a strategically important agreement to acquire all the rights to BPW’s drawbar program. The whole of 2019 was marked by integration efforts, and sales commenced in January 2020.
2019 began with a record strong first quarter and impressive growth for all of our operations. The strong growth then gradually leveled off, and fourth-quarter performance was down from the year-earlier period. The explanation lies above all in two circumstances: low demand in the trailer industry and a calendar quarter with fewer working days, which contributed to lower sales levels. It is still worth mentioning that most of our operations are still reporting sales at historically high levels.
The Group’s earnings for the fourth quarter were lower, and the primary reason for this was non-recurring costs in the Mobile Climate Control and Ringfeder Power Transmission divisions. Mobile Climate Control increased its sales in the quarter by 4.5%, but costs related to the division’s robust sales growth during the year – such as new product launches and increased quality costs – contributed to lower profits in the quarter. Ringfeder Power Transmission was also affected by a high level of non-recurring costs. As a measure, we reviewed the division’s customer structure and made changes to the product offering. As regards sales, Ringfeder Power Transmission reported that levels remained stable for the quarter. The Group’s Truck & Trailer Equipment segment also reported a stable trend.
For the full year, the Group’s sales increased by 6.7% and operating profit by 4.2%. This is a confirmation of our strength and a firm base from which we can work further.
A great deal of uncertainty prevailed around the world in 2019 as regards trade policy and security policy. We noted a cooling off in markets such as Germany and Turkey during the year. Our portfolio strategy, differentiated business structure and international presence has helped the Group to become less sensitive today than previously to decreased demand in individual markets. A positive performance in Australia and Brazil during the year compensated in part for the stagnation we observed in Europe. Despite continued international uncertainty, we have seen no signs in 2020 of a general economic downturn, and our order books for drawbar couplings still look good for the first quarter.
In 2019, we continued moving our positions forward, establishing ourselves in new markets and new product segments, which is important work. During the year, for example, we developed new products, electrified MCC’s offering for buses, and started up sales of drawbar couplings in Brazil.
All in all, I can state that 2019 was an excellent year for VBG Group. We reported our highest profits ever and an extremely good cash flow. With a strong base, a stable financial position and our efforts in market and product development, I am looking forward with confidence to 2020 and VBG Group’s continued development.