Press release 10/22/2018

Interrim report January-September 2018

Third quarter of 2018:

  • Consolidated sales increased by 21.6 per cent to SEK 874.8 M (719.2).
  • Operating profit rose to SEK 107.3 M (81.7), with a margin of 12.3 per cent (11.4).
  • Profit after financial items amounted to SEK 100.9 M (75.1), with a profit margin of 11.5 per cent (10.4).
  • The Group’s profit after tax amounted to SEK 71.2 M (53.2).
  • Earnings per share* amounted to SEK 2.85 (2.13).

First nine months of 2018:

  • Consolidated sales increased by 15.8 per cent to SEK 2,623.7 M (2,265.0).
  • Operating profit rose to SEK 329.7 M (282.9), with a margin of 12.6 per cent (12.5).
  • Profit after financial items amounted to SEK 292.0 M (263.0), with a profit margin of 11.1 per cent (11.6).
  • The Group’s profit after tax totalled SEK 212.5 M (189.8).
  • Earnings per share** amounted to SEK 8.50 (8.43).

* The average number of shares during the third quarter was, in thousands, 25,004 (25,004).
** The average number of shares during the first nine months of the year was, in thousands, 25,004 (22,504).

Comment from VBG Group's President & CEO Anders Birgersson: 

Continued growth with contributions from all divisions

VBG Group’s main markets remain strong. In line with our ambitious expectations, we can also see a sizeable increase in year-on-year profit for the third quarter. The growth is primarily due to Mobile Climate Control, and its solid strong sales growth in North America. Mobile Climate Control’s strongest quarters are the second and third, which is not the case for the Group’s other divisions. In summary, it is now clear that the business structure the Group has following the acquisition provides more uniform sales and profit throughout the year.

Our divisions are still grappling with various challenges arising from the positive economic situation. Above all, this concerns the considerable pressure on internal processes and among subcontractors. Determined efforts are underway within the divisions to deal with these challenges, though it naturally takes time and this is one reason why, for example, Mobile Climate Control’s volume and profit is growing and not its margin, but it remains stable. The economic situation also entails cost increases for the divisions, both for raw materials and components. To date, this has partly been compensated through price increases and there are plans to continue with these, if we deem it necessary.

VBG Truck Equipment – well-informed investments making a mark
VBG Truck Equipment reported stable profit, not least given the division’s continued well-informed investments in product development and marketing. As already mentioned in earlier reports, the initiatives are progressing as planned and will also continue in 2019. Just over one year ago, the division signed an agreement with a major distributor in China, which opened an opportunity to sell couplings in the Chinese market. It is worth mentioning that we can now see steady growth for the division’s Chinese market, albeit from a fairly low level. I am following the progress of these developments with particular interest.

Edscha Trailer Systems – back to a normal level
Edscha Trailer Systems contributed a sizeable increase in profit compared with last year’s weak third quarter. The division is back to a normal level in this quarter, though still lower than the two previous quarters in 2018. The decline was calendar-related and expected, as several of the division’s largest customers are located in Germany, which has its main holiday period in August.

Mobile Climate Control – substantial contribution to profit growth
As I mentioned in the introduction, Mobile Climate Control has made a substantial contribution to the Group’s profit increase in the third quarter. One important reason for this increase is the favourable global performance of the division’s segment for off-road vehicles. Mobile Climate Control also opened a new production facility near Bengaluru in September and thereby established operations in the Indian market. So far, sales volumes are small, but the division has taken an important strategic step, entirely in line with the Group’s strategy for internationalisation.

Ringfeder Power Transmission – major step in right direction
Ringfeder Power Transmission established itself at a higher level of profitability following the implemented restructuring, which was part of the action programme we launched in autumn 2016. However, I have seen a potential for further improvements in profitability. With an EBITA margin of just over 17 per cent in the third quarter, the division has taken a major step in the right direction, which is very gratifying.

VBG Group – well placed for growth
Less than two years after the acquisition of Mobile Climate Control, VBG Group’s financial situation is very strong, which is reflected, for example, in its well-balanced net indebtedness. Our main markets also remain strong and we see no indications of change in any direction. Overall, we are in a good position for growth, both structurally and organically.