Press release 7/20/2022

Interim report January-June 2022

Sales growth remains high in the interim report for VBG Group, January-June 2022.

Second quarter of 2022

  • Consolidated sales increased by 23.3% to SEK 1,141.3 M (925.5).
  • Adjusted for exchange rate changes and acquired volume between the years, organic growth was 10.3%.
  • Gains from the sale of Mobile Climate Control’s property in Indiana (US) had a positive impact on operating profit (EBITA) of SEK 18.8 M.
  • Mobile Climate Control incurred non-recurring costs of SEK 6.7 M in conjunction with moving the US production facility.
  • Operating profit (EBITA) amounted to SEK 147.1 M (137.5).
  • The operating margin (EBITA) was 12.9% (14.9).
  • Profit after financial items amounted to SEK 132.9 M (126.5).
  • Earnings per share increased to SEK 4.02 (3.75).

First half of 2022

  • Consolidated sales increased by 25.7% to SEK 2,296.9 M (1,826.9).
  • Adjusted for exchange rate changes between the years,
  • actual organic volume growth was 14.0%.
  • Net profit from the sale of Mobile Climate Control’s property (SEK 18.8 M) and non-recurrent costs pertaining to the move (SEK -10.9 M) had a positive impact on operating profit (EBITA) of SEK 7.9 M.
  • Operating profit (EBITA) increased to SEK 311.2 M (287.1).
  • The operating margin (EBITA) was 13.5% (15.7).
  • Profit after financial items increased to SEK 280.8 M (262.5).
  • Earnings per share increased to SEK 8.60 (7.88).

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

In the second quarter of 2022, VBG Group’s quarterly sales increased to SEK 1,141 M with an EBITA result of SEK 147 M. The high rate of sales growth is attributable to continued high levels of demand for the Group’s products in combination with favorable currency effects and the price increases that we have implemented.

During the second quarter, Mobile Climate Control’s property in Indiana was sold given that our bus operations are relocating and the operations are being consolidated in Pennsylvania. The Group’s total consolidated operating profit (EBITA) for the first half of 2022 was positively impacted by SEK 8 M. This is the net result from the sale of the property (SEK 19 M) and non-recurring costs pertaining to the move (SEK –11 M).

Like the first quarter of the year, the Group’s EBITA margin of 12.9% (14.9) was pushed downward as a result of stresses in the supply chains and price increases in the market. We are working actively on our pricing in order to counteract the effects of this but there is a time lag, which means that the price increases that we have implemented have not yet had a full effect.

Continued disruptions in the production system

The global supply chain remained unstable in the second quarter of 2022, marked by disruptions, unpredictability and a shortage of shipping capacity. The war in Ukraine and its effects on global markets are putting additional pressure on the already burdened supply chain and on the production system.

To ensure deliveries to customers, costs for extra staff, freight and materials have increased. Unpredictability has also resulted in increases to our stock levels. All our employees have put in tremendous effort to cut delivery times to our customers.

The pandemic had less of an effect on our operations in the second quarter compared with the first quarter. Our sales to Russia, Ukraine and Belarus are very low, and even indirect sales comprise a limited portion of total sales. The Group’s operations are impacted primarily by the continued disruptions in the supply chain and rising prices for raw materials, energy and freight, as well as the cost inflation that the war is contributing to.

Our divisions

All three divisions posted strong sales during the second quarter and operating profit remained favorable despite the challenges.

Mobile Climate Control’s operating margin is under some pressure, since the division incurred extraordinary costs in meeting customer deliveries. Our bus operations are dealing with the continued effects of the pandemic, which had a tremendous impact on the entire bus market. During the second quarter, the division continued with its long-term plan to consolidate our bus operations in Pennsylvania. The move will be completed in August. Co-locating the operations enables additional steps for improving the operation and increasing profitability to be taken.

Sales for Ringfeder Power Transmission remained strong during the quarter. However, the division had lower sales in the US, which negatively impacted the product mix and operating margin. The integration of Carlyle Johnson Machine proceeded in accordance with plans during the second quarter, and the process is expected to be completed during the fourth quarter of 2022.

Demand in Truck & Trailer Equipment and the truck industry remained good during the second quarter, but demand is slowing once again due to vulnerabilities in the supply chain. After the pandemic-related lockdowns in 2021, truck manufacturers in 2022 were once again compelled to limit production owing to shortages of components caused by the war in Ukraine and temporary lockdowns in China. Despite this, Truck & Trailer Equipment had high levels of sales during the second quarter, posting a healthy operating profit.

Growth, profitability and sustainability are the goals for all divisions going forward. Our brands will once again physically participate in trade fairs in the autumn, and we are preparing for the launch of several new customized and sustainable products.

In the autumn, we will train all our employees in sustainability, and work even more actively on circularity and our impact on greenhouse gases.

The future

Tragically, it appears that the conflict in Ukraine will be a lengthy one; cost inflation and the threats to the climate are increasing. Despite these worrying factors, I still look forward to the remainder of 2022 with confidence.

Order bookings for our products remain strong. New orders increased by 14% in the first half of 2022 compared with the year-earlier period, which shows that the need for transportation and industry solutions remains significant. The price of steel and other raw materials appear to be stabilizing, and our organization is working actively to reduce stock levels and increase productivity in the system.

Many employees are now on well-deserved vacation for several weeks. Once again, I would like to thank all our employees for their excellent work during the quarter despite all the challenges.