Ladies and gentlemen, thank you for standing by, and welcome to the, sorry, presentation of the Q3 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. I must advise you that this conference is being recorded today, Friday, the twenty-fifth of October, two thousand nineteen. I would like now to hand over the conference to your speaker today with, sorry, Jörgen Rosengren. Please go ahead, sir.
Thank you, operator. My name is Jörgen Rosengren. I'm the CEO of Bufab, and I have with me here Marcus Andersson, Bufab's CFO. Thank you all, ladies and gentlemen, for joining this presentation of our third quarter 2019 results, which were released this morning at 7:30 A.M. CET. Throughout this conference call, we will be referring to a PowerPoint presentation, which is available on our corporate website, bufab.com, in the investor relations section. And we'll continually refer also to page numbers in that presentation. So let's talk about and summarize the third quarter. A quarter where we had, despite slightly tougher market condition, good growth and good growth, and in fact, an excellent cash flow.
Growth on the top line, so to start with, was up 17%. The market itself, the underlying market, as we refer to it, was slightly weaker than in the second quarter and in the first half, and also slightly weaker than in the third quarter of last year. It was a noticeable slowdown sequentially, but more of a flattening out than a falling off a cliff. That is also noticed in the order intake development, where the order intake in the quarter was in line with net sales. Usually, if there is a very strong slowdown, we see stronger slowdown of the order intake than the sales, but that was not the case in this quarter. So slowdown is noticed.
As a result of this, we had only slightly positive growth, and it's been driven by increased market shares, so that the market was slightly down. We were able to compensate for that with increased market shares and achieve a very slight positive organic growth. The rest of the growth was made up primarily by acquisitions. We made 2 acquisitions since the third quarter of last year, and both contributed well to the result development and of course, also the sales. And turning then to profitability, our operating profit was up 30%, and our net profit was up approximately 15%, if I remember correctly. And that was compared to a relatively strong quarter three in 2018.
Looking down the P&L, we had a slightly lower gross margin, but we also had a lower percentage of operating costs, and this was, these key ratios were influenced also by the acquisitions, both of which have a slightly different profile in that respect. The operating profit, however, in money terms, increased, and the main contributor to that were, in fact, these two acquisitions that we had made. Relative to our segments, in our Segment International we had organic growth, but the operating profit was slightly down, over strong comparables, Q3 2018. In Sweden, by contrast, we had negative organic growth, but the operating profit was up quite a bit, mainly due to acquisitions, but also as a result of good cost control in face of an adversarial market.
As I said before, the contribution from our acquisitions was quite good in the quarter, and we do continue to work on our acquisition pipeline, which looks quite okay in fact. We think that there may be possibilities for more acquisition candidates coming online in this current market climate, and that's of course something that we hope to capitalize on. We have in the quarter and also year to date a very strong cash flow. It's a little bit easier to achieve that, of course, in a low growth environment. But it's also quite good for us because it means that we get help with financing the recent acquisitions from our operating cash flow. And our focus is unchanged, in fact, going forward.
We're focusing on share gain, as we have been for the last many years now, at least since at least since 2012. We hope to be able to continue that. We are focusing on implementing our leadership strategy, and there we're focusing a bit more on the implementation of the initiatives and on generating results from the initiatives. But we're also looking into the many opportunities presented by a slightly different market climate, at the same time as we're endeavoring to adjust our cost base to deal with this market climate. So all in all, a good result in the quarter in terms of sales, a good result in terms of profit development. Unchanged strategy going forward is what's characterized this quarterly report.
Now I would like to turn over to Marcus Andersson, our CFO, who will take you through the P&L for the third quarter and for the year. Please, Marcus. So now we're turning then to page 3 of the presentation.
Thank you very much, Jörgen. As said, please go to page 3, and you will see the financial highlights for the group. As you can see, the order intake came in about 17% higher than last year, in line with net sales for the same period. Net sales grew with about 17%, mainly driven by lower demand, you can say, compared to the comparable quarter, but instead, increased market share gains. The gross profit came in at 26.7%, which is about 1.2%, two—sorry, 2.1%, lower than last year. The main reason for this is due to the acquisitions made in Segment Sweden, namely Rudhäll and HT Bendix , which have lower gross margin than the remainder of the group, but on the other hand, a comparable EBITDA margin.
So, you should know that adjusted for these acquisitions, the gross margin was 28.1% compared to 28.9% last year. If we take a look at the operating costs, portion of the operating costs declined during the period, mainly driven by the acquisition of Rudhäll and HT Bendix. So, actually, the organic share of the cost actually increased, and this was mainly due to the low level of growth, and measures implemented under our Leadership 2020 initiative. We are looking through the cost level of the company, and we are focusing on cost control going forward. Operating profit increased with about 10%, but however, the EBITDA margin went down with about 0.6 percentage points, compared to last year.
However, we still have a really good cash flow, SEK 102 million, compared to SEK 50 million last year, which is, of course, very good. If you take a look at the lower left corner, you can see the EBITDA bridge from Q3 2018 to Q3 2019, and you can see that currency affected EBITDA negatively by SEK 2 million, volumes positively by SEK 2 million, price, cost mix and other, negatively by SEK 4 million, and acquisitions of Rudhäll and HT Bendix added about SEK 12 million to the quarter results than last year.
If we turn to page number 4, and we can look at the graphs, and see the development of the group, we can now see that we have seen growth, and not only growth, but also organic growth, the last 25 consecutive quarters, even though we have low levels of organic growth in Q3 2016, and also in Q3 2019. The organic growth in Q3 2019 was just slightly positive. If you look at the right graph, you can see that we have had a really good development in general. If you look at the net sales development in the blue dotted line, really good development during the last 25 consecutive quarters.
Also, the result development has been very good, but due to a low gross margin in the period, together with slightly higher operating cost initiatives in mainly leadership, EBITDA margin was down, compared to the comparable quarter. If we turn to page 5 and take a look at the financial development of Segment International, you can see that the order intake increased with about 2% compared to last year, and came in more or less in line with net sales. Net sales increased with 5%, where 2% was organic. The gross margin was down about a percentage point, mainly due to a mix and a strong comparable quarter.
On the other hand, a nice positive development when it comes to OpEx, due to good operational leverage, which means that operating expenses in percentage of net sales was down slightly. But if you look at the bottom row, due to the weaker development in the gross margin, the EBITDA came in about SEK 4 million lower than the comparable quarter, 2018. If you take a look on the lower right corner, you have the bridge for Segment International. Currency added about SEK 2 million. Volumes added about SEK 5 million. Price, cost mix and other, -SEK 11 million, and there were no acquisition in this segment during this quarter. So EBITDA came in on SEK 69 million.
If we turn to page 6, you can now see, you see that we have seen growth for 24 consecutive quarters. It's actually 26 consecutive quarters, if you look, further back. Not only growth, but also organic growth together with strong, acquired growth during the last couple of years. As you can see on the right graph, Segment International has had a really good development, a strong development net sales wide, but an even stronger development, when it comes to EBITDA, improvement. But as explained earlier, due to a lower gross margin and, also slightly lower also [uncertain] , the EBITDA margin was down comparably compared to last, last year's comparable quarter.
If we turn to page 7 and look at Segment Sweden, you can see that the ordering sales increased with 6%-7%, and came in more or less in line with net sales as well. All of the increase in both ordering sales and in net sales is attributed to the acquisition of Rudhäll and HT Bendix. The organic growth was -4% in the period. The underlying demand and the market share is deemed to be unchanged in this segment, fourth quarter. The gross margin was down year-on-year, fully attributable to the acquisitions. Adjusted for acquisitions, the gross margin was actually slightly better, with 0.3 percentage points compared to the previous quarter.
Good cost control as planned, driven mainly also here by the acquisition of Rudhäll and HT Bendix. But all in all, a strong addition to the bottom line EBITDA of about SEK 6 million, or an increase with 28%, even though the operating margin went down from 8.9% to 7.6%. If you take a look on the right corner, right, right-hand corner, you can see that the EBITDA bridge goes from SEK 22 million, and currency added -SEK 4 million, volumes -SEK 2 million. Price, mix, and other +SEK 5 million, and acquisition or acquired companies added about SEK 7 million.
If we turn to page 8, you can see that we come from a period where we have seen actually pretty good growth, both, both organically and through acquisition in Segment Sweden. But the last 2 quarters, we have seen a negative organic growth. But however, we had good acquired organic growth in those 22 quarters. If you take a look on the right growth, you can see that growth-wide, it's going in the right direction, good growth the last couple of quarters. When it comes to profit development, of course, it's a bit up and down, and Segment Sweden has been mainly due to weak Swedish krona and also due to raw material prices historically.
But as you can see, the profit is going the right direction, and it's not really keeping up with the net sales development, but it's going the right direction. So of course, cost focus important going forward, but also, we need to make sure that we actually realize those purchase savings, which is actually important in Segment Sweden going forward. If you turn to page nine, the acquisitions we have made the last couple of years, mainly Rudhäll and HT Bendix, we felt the need to present how the organic development of the GP percentage has been in the last four quarters.
And as you can see, if you look at the green line, which is Segment Sweden, excluding Rudhäll and HT Bendix, you can actually see that we have been able to keep the gross margin on a pretty steady level, actually. But as those companies, due to that they have a lower gross margin, affect the segments with at least two percentage points, even more in Q3 also, I think [uncertain ]. You also can see on the right graph, which is for the group as a total, you can also see the effect, slightly down on the gross margin, of course, as I said, very much focused on purchase savings going forward.
But as you can see, we've been able to keep it pretty steady, even those the challenges with the weak Swedish krona in Segment Sweden. With that said, we can turn to page 10, and I will leave the word to Jörgen Rosengren to run again.
Okay. So, it's clear for us that there's been a slight slowdown of the market, and we have thought a bit about what that means for us. And we see, in fact, some challenges, of course, with slower market growth rate than what we've been able to enjoy in 2017 and also in 2018, also some opportunities, and those are outlined on page 10. When it comes to the challenges, it's important to understand that it's very much a part of this business model to be able to navigate both very strong market conditions and very weak market conditions.
In strong market conditions, we're typically faced with other challenges, such as ensuring supply to our customers, such as making sure that the organization is able to deliver high quality and high precision in a very high-demand situation. Those are some of the challenges which we've successfully navigated in the past two years. Now, however, we have a different set of challenges. Firstly, of course, we do need to adapt our cost base to a weaker underlying growth. Fortunately, we're able to take market share, or we have been able to take market share, and we certainly intend to take market share also going forward, which is a great challenge in tackling this.
Therefore, we are not foreseeing wholesale cost cuts, but rather, somewhat slight slower growth rate of the organization in the past, than in the past few years, in the next 12 months. And that is important for us, because we intend to continue to invest in Leadership 2020, albeit with a slightly different focus, as I said before, now more on implementation and generating results. And as an example of that, we can mention our sourcing organization, which we have built up quite a bit now over the past 18 months or so. And, that's very timely, because now is a good time for the sourcing organization to generate good results, which I will get back to in a minute.
All of this taken together means that we are focusing more on internal efficiency, and that's something that we think is going to be helped by, and we now see the first examples of that, is going to be helped by the investments that we have made over the past years in various processes and digital tools for improving the precision and efficiency of the internal work that we do. And that enables us, we think, to continue to invest in strategic areas while slightly drawing down the spend that we have of time and money in areas that are more automatic or administrative in nature. In this market condition, in these market conditions, there are also many opportunities.
Firstly, we see already now that customers are starting to become more focused on efficiency, whereas in the last three years they have been mainly focused on deliveries. Now they want to explore solutions to make their supply chains more efficient, and this, for sure generates more business leads for Bufab, which we then intend to capitalize on. We see that, in our supplier bases, especially in China, but also in other places, there is now significantly lower demand, driven, of course, by a slowdown, not least by the global automotive industry, and not least by the European automotive industry, but also to some extent, exacerbated by the tariffs imposed by the U.S. on imports from China.
This lower demand, of course, creates for us very good opportunities to generate sourcing savings from our existing supplier bases, which we are now aggressively pursuing. We see that some competitors, less fortunate than us, are finding it hard to navigate this adjusted landscape. We have also seen some first examples of some especially manufacturing companies with low margins getting into difficulties or even failing, which again, generates business leads for us. Last but not least, perhaps, we also find that the current market climate generates more leads for acquisition candidates, which is, of course, also quite interesting for us. Speaking of acquisitions, then and turning to page 11, we now count 8 acquisitions since 2014, in fact, since 2015, I believe.
The latest one we made in July of this year, a company called HT Bendix, which has roughly SEK 500 million. So for us, one of the larger acquisitions and already a strong contributor to our results, sales and results in this quarter. We also are quite hopeful, actually, for the growth synergies that can result from combining the forces of HT Bendix with all the other forces in the Nordics. So that looks quite promising. To summarize then, the quarter, let's turn to page 12. We have made an EBITDA bridge, which bridge is not required on the year-to-date figures. Looking at the year-to-date figures, you can see that last year's EBITDA was SEK 285 million, and this year's EBITDA is SEK 311 million.
That's approximately 9% up. And that improvement is then split more or less 50/50 between organic improvement of the EBITDA and acquired improvement of the EBITDA, where the acquisitions have generated 14 and the organic improvement has generated, I suppose, 12 of the EBITDA improvements. We would not have minded a slightly bigger profit growth in this, but in the current market climate, we also think that we can be content with this as long as we are able to continue to invest in future growth for Bufab, which we are doing. So to summarize, and turning back to the outlook also, let's turn to page 13. This last quarter, the third quarter of 2019, was characterized by continued execution of our strategy.
And we have also continued to invest quite significantly in our leadership initiatives, which we have explained elsewhere. There was a lower underlying demand, a lower market demand, and that was actually spread over both segments during the year, but the slowdown was, of course, a bit more marked in Sweden. And that led to our organic growth, which was only a very small number, despite the fact that we continued to increase our market share. However, it's important to note that the order intake was in line with net sales, which we find comforting and a sign that this is not a very dramatic change in the market climate, at least from cash flow.
Looking ahead, we see a market situation that does bring some challenges, but also many opportunities, which we can talk about. And therefore our approach is going forward, unchanged from the second quarter. We are going to focus on continuing our market share gains. We are going to continue our investment in Leadership 2020, but we will focus now more on implementation and results, and less on innovation. And as examples of such results, we can see the sourcing savings that we consider to be possible now in the existing demand situation, but also in terms of efficiency. We need to capture the opportunities that are generated, and not least on the sales side, and this somewhat meet with the market climate. And we need to make sure our cost does not outgrow our demand.
Sorry that our cost does not outgrow our sales. And we have actually quite good confidence in being able to generate a good development also going forward in this current market situation. And with that, that concludes our prepared comments. But operator, can you please open up for questions from the participants this evening?
Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. This will only take a few moments. If you wish to cancel your request, please press the hash key. Once again, please press star one if you wish to ask a question. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. It is star one, please, if you have a question. So the first question comes from the line of Robert Redin.
Hi. Two questions, if I may. Well, there's lots of positive to take home. Of course, the margin in International and strong cash flow and the potential savings you see going forward. But I have two questions. One focused on the negative, but the first one on International. You talked about mix being sort of a negative in Q3, and I see that the price cost mix in the EBIT bridge for International was quite a sizable sort of negative number. So I wonder what are the comparisons like looking into Q4, Q1 in International?
Yeah, that's just one question, Robert. Good morning to you. How are you? Yeah, in International, it's true that we had a tough comparable, I think, when it comes to gross margin. If you look over a longer time, you will see that the margin, the gross margin that is, varies between the quarters, but has had overall a favorable term in International over several years. But now was, of course, significantly down. But you have to understand that, one percentage point in a quarter down is not it easily happens easily, so to speak, depending on the like in this case, and the business mix, and we did have a good quarter Q3 last year.
Looking ahead for International, I guess the, it's so that we don't make forecasts for the gross margin, as you know, but it is definitely our ambition in International and in, Sweden, by the way, to capitalize on the weaker demand situation in order to generate sourcing savings, which of course are intended to help the gross margin going forward. So even though we have what historically is a relatively good gross margin in International, our ambition is to, in fact, improve it further, all things being equal.
Right. Okay, cool. And the second question then would be on the profitability in the acquired units. Because, of course, you give us EBIT bridge number for how much acquisitions contributed to EBIT. And it seems like if I work out the numbers that maybe margins were 5% or something in the acquired units, or are there any one-off costs or something in those?
No, I don't think it's correct to say that the margin was 5% in the acquired units. Again, we don't give out profitability numbers on acquired companies. But first, regarding the Danish acquisition, it's important to note that it only affected two months out of the three in the quarter. So that may help you work that out. But it's so definitely that the While the Danish acquisition has contributed very well to the results in the two months that's counted, we've had less favorable development in Sweden, generally, of the margin, and that also involves the acquisition. So somewhat lower profitability than last year in that acquisition, organically, if we look like that.
However, I think 5% sounds like a very low number, so I don't think that is accurate.
Okay. And, finally, on the gross margins in Sweden, where you have seen a lot of headwind, over the past couple of years, I saw that adjusted for the acquisitions, the gross margins in Sweden were now up in the quarter. So, how do you see that going forward? Have
Well, I mean-
Are the actions-
This graph, which... Yeah, it's a good question. The graph, which shows the adjusted margins then for the acquisitions, does show an organic improvement year-over-year. But we can of course not be happy with that, because if you look further back in time, the margins were significantly higher. And we have had the ability to withstand this further decrease of the SEK ratio in this year, which has been quite noticeable. I don't know what the latest number is, but it's something like slightly below 10%, right? By price increases. But nevertheless, we still have some grounds to recover relative to earlier years when it comes to gross margin. And that is definitely our ambition.
If the ambition is to improve the gross margin in international sourcing savings, that is much more so the case for us in Sweden, where we have significantly lost ground to recover. So definitely, we are not happy with that gross margin level, and we do need to improve it.
All right. Sounds good. Thanks. That's my questions.
Thank you.
Thank you. There are no further questions at this time. Please continue.
Okay. If that's the case, then I'd like to thank everybody for attending this conference this morning, and wish you a good continuous Friday and a nice weekend. Thank you, bye.
That does conclude our conference for today. Thank you for participating. You may all disconnect.