VBG : Interim report January- March 2023

In the interim report for January to March, VBG Group reports a record-setting quarter.

First quarter 2023

• Consolidated sales increased by 21.1% to SEK 1,399.9 M (1,155.5).
• Adjusted for currency effects between the years, organic growth was 13.2%.
• Operating profit (EBITA) amounted to SEK 202.7 M (164.1).
• The operating margin (EBITA) was 14.5% (14.2).
• Profit after financial items amounted to SEK 180.4 M (147.9).
• Earnings per share increased by 24.0% to SEK 5.68 (4.58).

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

In the first quarter of 2023, the Group achieved quarterly sales of SEK 1,400 M (1,156) with an EBITA of SEK 203 M (164). This is the best quarter in the Group's history as regards sales and earnings. The operating cash flow in the first quarter of 2023 was strengthened in comparison with 2022. Earnings per share increased 24% in the quarter.

Despite geopolitical turbulence, high inflation, and concerns over the world's banks, all divisions reported all-time high sales during the quarter. Our activities to strengthen profitability have begun to bear fruit, and the total EBITA margin was strengthened to 14.5% (14.2).

Growth in the quarter was high, at 21.1%. Currency effects were a positive factor in growth, but adjusted for currency between the quarters, underlying growth was good and totaled 13.2%.

Healthy demand for transportation solutions
Sales in Truck & Trailer Equipment - SEK 496 M - were once again the best ever for a single quarter, and the results are the strongest historically.

The division has a solid business model with product offerings that create value for drivers, haulers and body builders. The strong customer offering, in combination with efficient capacity utilization in our production, yielded a strong operating margin of 23.1% (21.5).

During the quarter, additional investments were made in the plant in Vänersborg to enhance efficiency in the production flow, and decisions were made to invest in our facility in Kamenice, in the Czech Republic, to reduce our dependence on Russian gas and our carbon footprint by 100 metric tons per year.

Mobile Thermal Solutions
Eberhard Wolters was appointed the new Chief Executive Officer of the division and took office in January. Moreover, the division changed its name from Mobile Climate Control to Mobile Thermal Solutions during the first quarter. In conjunction with the name change, a new brand for the bus operations was also launched: Bus Climate Control (BCC). The division thus has two brands - Mobile Climate Control, which is targeted at the off-road segment, and Bus Climate Control, which is now focusing its offering on bus customers.

Sales in Mobile Thermal Solutions reached record highs.

The action plan that was initiated to resolve the problems in productivity in the new production facility in York, PA (US) began to have an effect during the quarter. The operating margin for the division as a whole reached 10.5% (8.6) for the quarter. Mobile Thermal Solutions is also continuing to increase the share of projects for electric vehicles, for both off-road and buses.

Record despite price pressures
Ringfeder Power Transmission achieved record-high sales of SEK 193 M in the first quarter, but the division has lower growth than the other divisions and the operating margin was 11.6% (16.1). Fierce competition in combination with delivery problems at Carlyle Johnson Machine reduced the margin.

A new Head of Operations in the US was appointed during the quarter, and integration has continued. Activities to increase the profitability of Carlyle Johnson Machine are continuing.

The division will invest in new machinery for the operation in Jaboticabal, Brazil, in order to increase capacity and productivity.

The future
VBG Group leaves a quarter with record-high sales and an all-time high in earnings. It is deeply gratifying to lead an operation like this. I see that our activity-based method of working has been extremely successful. Many small activities toward our long-term goals are yielding results.

The future remains uncertain, but we have a strong order book. Order bookings increased by 22% compared with the year-earlier period, and an easing of the materials supply situation means we can once again focus on optimizing our production flow and further strengthening profitability.

Going forward, we will intensify our sustainability initiatives, and target investments and resources in order to achieve our sustainability goals and prepare ourselves for further requirements. Sustainable growth is our watchword.

In conclusion, I would like to thank all of the Group's employees for a quarter well done. It is our collective efforts that have enabled us to deliver record-high earnings, and together we will continue to develop VBG Group.