Press release 2/21/2023

Year-end report 2022

In its year-end report 2022, VBG Group reports a strong fourth quarter concluding a record-setting year.

Fourth quarter 2022

  • Consolidated sales increased by 27.3% to SEK 1,191.5 M (936.0).
  • Organic growth amounted to 11.5%, adjusted for currency effects and acquired volume between the years.
  • Net impact on Ringfeder Power Transmission’s operating profit (EBITA) was positive SEK 18.6 M after completion of the co-location in the US.
  • Consolidated operating profit (EBITA) totaled SEK 134.7 M (79.4), with an operating margin (EBITA) of 11.3% (8.5).
  • Operating profit (EBITA) was negatively impacted by the failure of Mobile Climate Control’s new production facility in the US to reach the normal productivity level.
  • Profit after financial items amounted to SEK 105.6 M (71.6). Earnings per share amounted to SEK 3.62 (2.32).

Full-year 2022

  • Consolidated sales increased by 26.8% to SEK 4,580.0 M (3,611.2).
  • Organic growth amounted to 13.4%, adjusted for currency effects and acquired volume between the years.
  • Net earnings from sale of property and relocation costs had a net positive impact on operating profit (EBITA) of SEK 13.0 M during 2022.
  • Operating profit (EBITA) increased to SEK 557.5 M (484.1), with an operating margin (EBITA) of 12.2% (13.4).
  • Profit after financial items increased to SEK 487.8 M (441.4).
  • Earnings per share amounted to SEK 14.73 (13.48). The Board of Directors proposes an increase in the dividend to SEK 5.50 (5.00), corresponding to 37.1% (37.1) of profit after tax.

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

VBG Group’s net sales for full-year 2022 rose to SEK 4,580 M (3,611) and operating profit increased to SEK 558 M (484). These results are a historical best for the Group. The operating margin totaled 12.2% (13.4).

These results were achieved despite the geopolitical situation and a macroeconomic headwind, particularly in Europe, with rising inflation and interest rates as well as an energy crisis. I regard this as proof of our strength.

Strong fourth quarter

The growth of the previous quarters continued in the fourth quarter of 2022, and net sales increased 27% to SEK 1,191 M. This meant an all-time high in single-quarter sales for the Group. Exchange rate changes were a positive factor in growth, but the underlying growth – 11.5% – was good, largely driven by implemented price increases. Profitability also strengthened continually in the latter half of the year, reaching an operating profit of SEK 135 M (79) in the fourth quarter.

Despite energy and materials costs remaining high, the operating margin strengthened during the year and reached 11.3% (8.5) in the fourth quarter. A high level of capacity utilization in large parts of the operation, and price adjustments that were implemented, contributed to this strengthening. The bus operations in Mobile Climate Control had an adverse effect on profitability.

Cash flow strengthened in the fourth quarter, which provides us with a good platform for future organic and structural growth.

 Historic quarter

Sales in Truck & Trailer Equipment were the best ever for a single quarter, and the results are the strongest historically for both a fourth quarter and a full year. This is proof that we have a solid business model with product offerings that create value for drivers, haulers and body builders.

Demand for our solutions remained extremely strong during the fourth quarter, and the operating margin strengthened to 20.9% (15.7). Owing to our strong brands, we were able to implement price increases and strengthen our profitability. A high level of operational capacity utilization also made a positive contribution.

Continued integration

Ringfeder Power Transmission delivered a strong fourth quarter, with record sales for a single quarter. Rising raw materials prices, a lag in price increases and profitability that was lower than expected for Carlyle Johnson Machine brought the operating margin down.

During the quarter, Ringfeder Power Transmission’s property in the US was sold and the operation was co-located with Carlyle Johnson Machine. The sale of the property had a positive effect on the operating margin, but the consolidation has also entailed certain costs, for example, for workforce cutbacks. The operating margin for the quarter was 21% (12.5).

Integration of the operations will continue in 2023, and activities to increase the profitability of Carlyle Johnson Machine are ongoing.

Action plan for bus operations

Net sales in Mobile Climate Control totaled SEK 559 M; adjusted for exchange rate changes, we are seeing increased demand in North America.

The offroad business had robust growth and profitability, but profitability for the division as a whole was weak with an operating margin of 2.1% (3.3). The low level of profitability was due to low productivity in the division’s new bus plant in the US. An action plan has been initiated where the goal is to restore earnings in the second half of 2023.

Sustainable business

In the fourth quarter, the efforts at collecting and consolidating sustainability data were concluded. Our new sustainability goals run from 2023 to 2030, with 2022 as the base year. Training initiatives in sustainability – such as our partnership with University West – have continued, and more training groups have been started.

The future

To conclude, I can state that all key figures in the fourth quarter have moved in the right direction owing to strong commitment from employees, suppliers, and partners. Apart from the weak performance in Mobile Climate Control’s bus operations, I am satisfied with the strengthening margin and cash flow trend.

The disruptions in the supply chain will continue in the short term, but we are looking to the future with a strong order book. Order bookings increased 48% in 2022 compared with 2021.

We are in an uncertain macroeconomic environment and are continually prepared to act in the event of a downturn in the same way as we have done in previous cyclical fluctuations. Today, VBG Group is a balanced industrial Group with a great deal of capacity. As the new President and CEO, I am very much looking forward to 2023 and all the future opportunities.