If you then also look at the cash flow, we had a strong cash flow in the quarter. Our operating cash flow improved to SEK 359 million, corresponding to a cash conversion of 188%. Overall, we strengthened our financial position, and we have put ourselves in a good position for acquisitions going forward. Okay, it seems like we have some problems with the sound, so let's take it all over from the beginning then, because it seems like we missed at least a part of the sessions. Okay, so once again, a warm welcome, everyone, to Bufab's Q4 and year-end report. My name is Erik Lundén, President and CEO of Bufab Group, and together with me here, I have Pär Ihrskog, our CFO.
I will start to go through our Q4 results and highlights, and then also our full year performance. Then I will leave over to Pär for some financial details. So let's start to sum up the quarter. I think we made a strong performance in a challenging market throughout the Q4. We start with the top line. Our net sales amounted to -6%, and our organic growth was -9%, driven by low demand in some industries segments that had a favorable development throughout the pandemic, and also partly due to customers destocking at the year-end. We had also some industries that has favorable development, like energy, automotive, and defense, but they were not compensating enough for industries that had a lower demand in the quarter.
Our order intake was slightly lower year-over-year, but still on a high level. If you look at our margin, it was a strong margin in the quarter. We continued to improve our gross margin.
Yeah.
-that ended up on 29.3% versus 28.1% last year, due to good work with our product and, and customer mix. And also, if you look at our adjusted operating margin improved in the quarter, ending up at 11.8% versus 11.5%. We saw a strong EBITDA contribution from segment North, however, some negative impact from segment East. And what we saw also in the quarter was a quite big impact due to good performance of our TIMCO acquisitions last year. So remeasurement for additional purchase consideration was SEK 48 million, impacting our operating expenses for the quarter.
If we then look at our cash flow, it continues to be strong and end up on SEK 359 million for the quarter, corresponding to a cash conversion of 188%, which I'm very pleased with, and we put ourselves in a strong financial position to do more acquisitions going forward. If we then sum up full year 2023, it was all in all a record year for Bufab. If you look at the top line, we had a strong top line during the year, despite weaker underlying demand. Net sales increased by 3%, organic growth was down 6%, and order intake increased by 2% and was in line with net sales.
What I'm pleased to see is that our journey with improving our operating margin continues, and I think we demonstrated our resilience throughout 2023 to performing a strong operating margin despite a more challenging market. Our EBITDA increased by 5% over SEK 1 billion for the first time in the group's history, and operating margin on 12%, reaching our target, financial target for the year. Adjusted operating margin on 12.9% for the full year. As I mentioned before, we have a strong cash flow throughout the year, amounted to total SEK 1.6 billion, and corresponding to a cash conversion of 146% in the year. And the board proposes a raised dividend of SEK 5 per share for 2023.
If you look at some highlights throughout the year, we've been working throughout the year to put our new strategy in place, and I think we start off with a strong execution of the new strategy. We launched a new strategy to the market at our Capital Markets Day in December, and we call the new strategy Discover Next Solution, which focus on continuing creating even more value to our current and new customers. And we saw a good execution during 2023 so far, with improved margin and also a strong cash flow. And as I see it, I think Bufab is a much more robust company today than it was one year back, and our C-parts offering that we have to our customer becoming more and more relevant.
I look forward to continue this journey during 2024. I will now hand over the word to Pär for some financial highlights. Please, Pär.
Yep. Good morning. Okay, some more details then, on the financials. As mentioned, order intake was slightly higher than net sales in the quarter, amounting to SEK 2,036 million, but was 3% lower than last year. Our quarter four net sales amounted to SEK 1,943 million, which was a decline by 6%. 9% coming from negative organic growth, 3% from a positive currency effect, and no effect from acquired companies in this quarter. For the full year, we increased by 3%, and there we had -6% organic growth, +5% currency effect, and 4% from acquisition. Our gross margin was 29.3%, compared to 28.1%, quarter four last year.
The high gross margin was mainly due to the more favorable customer and business mix, but also partly due to that, we start to see lower purchasing prices. For the full year, the gross margin was slightly higher than in the previous year and amounted to 28.7% versus 28.3%. And then our operating expenses, they increased to SEK 388 million versus SEK 341 million, quarter four last year. The increase was due to the remeasured additional purchase consideration, which amounted to SEK 48 million. Adjusted for this revaluation, we end up at SEK 340 million operating expense, which is in line with last year. But in percent of net sales, we ended up at 17.5% versus 16.6%.
The higher share is explained with the decline in sales in Q4 versus last year. And then we move on to the adjusted EBITDA. It decreased by 4% to SEK 229 million versus SEK 239 million, corresponding to an operating margin of 11.8% versus 11.5%. And for the full year, we had an increase in operating profit, adjusted operating profit, reaching SEK 1.121 billion, and operating margin of 12.9%, which is the same level as last year. And then if we move to our profit after tax in the quarter, it was decreased to SEK 71 million versus SEK 135 million. And the difference here is mainly coming from the revaluation of the additional purchase consideration.
If we adjust for that, the reduction in profit before tax is -10%, and that 10% is explained by the lower sales in the quarter. For the full year profit before tax, it was reduced by 6%, reaching SEK 574 million. And the main reason for the difference compared to last year is the higher interest rate we are facing during the year compared to last year. Our earnings per share in the quarter ended up at 1.87 per share, versus 3.58 last year, and for the full year it was 15.17 crowns per share, versus 16.23. Next slide. So, let's look at this graph to the left. It's net sales growth per quarter.
The line, the yellow line explains the total growth, and the bars, the orange bars explain the currency effect, and the blue bar, the organic growth, and the gray bar, the acquired growth. And as we can see, that we have no acquired growth the last couple of quarters, the three last quarters, and the currency effect is also having lower impact gradually being reduced, but still positive. All in all, this is ending up at a negative growth of 6% in the quarter. And then if you look at the graph to the right, this shows the 12 months rolling net sales and 12 months rolling EBITDA.
With the lower demand and no recent additional acquired growth, we see a flattening in our 12 months rolling net sales, as well as our EBITDA earnings. So next slide, please. Let's look at the cash flow to the left. Our cash flow continues to be very strong. We have shown record levels of operating cash flow the last four quarters, coming from strong profits and high focus on net working capital reduction, mainly in our inventories throughout the year. And to the right, the net debt, EBITDA, or the leverage KPI, it continues to improve, now reaching 2.6, versus 3.2 last year, quarter four, and 2.7 last quarter. Yeah.
Thanks, Pär. We'll then go through some highlights from the different segments, and I would like to start with segment North. Segment North had a total growth of -6%, with organic of -8% in the quarter. The negative organic growth was due to market downturn in Finland and also some specific sectors that had challenges in the quarter, for example, kitchen and bathroom sector. But also a strong demand in defense industry throughout the quarter. Strong development of the gross margin compared to last year, mainly due to a favorable product and customer mix, some purchasing savings, and also that we have been working on renegotiations on all contracts that gradually improve our margin for the segment.
So all in all, a strong adjusted operating profit and operating margin to 13.1% versus 11.9% last year. We continue with the segment West. That had a strong development throughout the year, but in Q4, there was zero growth and -5 organic. And what we see is a mixed bag in the quarter for the segment. Still favorable development within energy, automotive, and defense, but this growth was offset by a general slowdown in other industries. Looking for a counterpoint to you, a strong development in France, Czech Republic, and Germany, while we struggle a little bit with the growth in Austria and the Netherlands due to weaker market.
Good to see gross margin was lower than last year due to product customer mix, driven by Netherlands, and operating margin decreased slightly to 10.3% versus 10.5% last year. If you look at segment East, a big decline, -9%, and -12% organic in the quarter. And this is due to weaker trend mainly in Asia, and particularly biomedicine sector. They had a very strong development throughout pandemic and a strong quarter, Q4 2023. Eastern Europe maintained its growth by capturing market share, mainly in Hungary and Turkey, and the order intake for the segment was slightly lower than net sales.
The gross margin in the quarter was slightly higher compared to last year, due to improved customer and product mix and some price adjustments that were made in the quarter. Looking at the margin then, was decreased to 11.7% versus 13.4 in last year, Q4. Look at segment U.K. North America, also declined -8%, organic down -10%. And this is mainly driven by stainless steel in U.K., but also our RV industry in U.S., that had a very strong development throughout the pandemic, but also full year, 2023. And also a little bit longer production breaks in different customers throughout the Christmas and holiday season.
Good gross margin due to favorable customer and product mix, but also some price adjustments in the quarter. And as Pär pointed out before, we had the share operating expenses increased due to those remeasured additional purchase considerations. TIMCO that we acquired last year had a very strong development throughout the year, and therefore we had to do those re-measurement on our purchase considerations for the segment. And if you look at the adjusted operating margin for the segment, we were up and ended up on 11.5% versus 10.5% last year. And then look at our M&A, that I would say is a natural part of our DNA. We want to continue to be a consolidator in a very fragmented market.
As I mentioned initially, we have throughout 2023 done a good job with our cash flow and lower our inventory throughout the group, and now put ourselves in a position where we have a lower leverage, and we are ready to do acquisitions. I can say that activity in the market is increasing now. I think buyers and sellers start to find a common ground. We expect that there will be some acquisitions made in the industry throughout the year, and we're also looking actively now to find some good acquisitions to make throughout 2024.
If you then take or sum up the quarter and also look ahead, but before we do that, just a few words about our Capital Markets Day that we had in December last year. At the event, we had a pleasure to talk about our new strategy that we call Discovering the Next Solution. And what we are trying to do is to build on our success in Bufab and ensure that things are doing well, we continue doing and, of course, addressing areas that we can do better. As we see it, we have a very strong position in the market and offering that gets more and more relevant every day. But also, if you look at the different companies in Bufab, we have different companies with different potential.
What we have said going forward is that our trading business and niche companies, we see as core going forward. The board have decided that our manufacturing business should be evaluated for different strategic alternatives, as it's not seen as core anymore in Bufab. We also decided, throughout 2023, that we will raise our bar when it comes to profitability, to reach at least 14% on EBITDA margin by 2026. In that journey, I think we started already last year, and we have gradually shown that we are resilient in more challenging market and that we have in our control to gradually improve our margin with good customer and product offering development, to reach our EBITDA margin of at least 14% by 2026.
Another part of our new strategy is also that we have a new regional structure, that will be Europe, North and East, Europe, West, U.K., Northern Ireland, Americas, and Asia Pacific, that will be ported effectively from quarter one 2024. So if you then sum up the quarter and look ahead and start with the summary then, we've shown in the quarter improved margin and strong cash flow in a weaker market. Our sales were down 6%, organic 9%, driven by sectors that had a very favorable tailwind during the pandemic. Pleased to see that we continue doing a good step in the right direction when it comes to our gross and adjusted EBITDA margin, ending up on 11.8% for the quarter.
Also that we managed to continue having a strong momentum when it comes to our operating cash flow, ended up on SEK 359 million. Looking ahead, there are a lot of uncertainty in the market. Geopolitical uncertainty, but also unrest in the Middle East that impacting the supply chain and somewhat longer shipping times. But we have a strong position in the market, and hiccups and supply chain constraints is often actually something that can help a big player like Bufab. We have a broad supplier base, alternatives, transport routes for our customers, and so far, we have had seen limited impact for our customers, and we aim to take this opportunity to show the strong position that we have and to continue to try to grab market share also in 2024.
On top of that, we have a large and well-diversified customer article portfolio that we're continuing to strengthen all the time, and also what we aim to do, organically, but also through acquisition, ensure that we have a good diversification, of risk in various industries and markets also going forward. If you look at, what we aim to do now going forward, that is continue to execute on our strategy, focus on profitable growth, by creating even more value for our current and new customers, obviously. The short-term priorities that we set the end of our Q3 2022, we, stand firm, and we'll continue doing also the coming quarters.
Ensure now that we take the opportunity in a more challenging market, with a lot of cost pressure, from our customers to actually secure new business and taking market share. Turbulent times in the C-parts industries is actually something positive. Then often our customers do a consolidation of the number of C-parts suppliers and open up for market share opportunities. So that is a full focus for us also in the coming quarter. As we already said, we see an opportunity to gradually improve our margin, and that is what we aim to do. Continue to working on the product and customer mix, and gradually also improve our offering to our customers, also going forward, and showing that in gradually improve the operating margin.
And then, of course, continue to focus on net working capital reduction to ensure also that we can have strong cash flow also going forward. That was our presentation for today. We will now leave the room open for Q&A. So please.
So welcome to this Q&A session. I would like to ask you to use the function, raise your hand, if you have a question, and don't forget to unmute when it's your turn. We start with the first question from Johan Skoglund at DNB. Please ask your question.
Good morning, Erik. Good morning, Pär. Johan from DNB here. So a few questions for me. The first one being, if you could comment on the pacing of organic growth through the quarter, I mean, was there a difference between the beginning and end of the quarter? And could you perhaps comment on how Q1 has started?
Hi, Johan. Good morning, and thanks for your question. Yes, we saw the strongest start of the quarter versus the end of the quarter, and that is quite typical for us and our industry, I would say. And you can also see that in the number that we had a little bit bigger gap between the order intake and net sales in the quarter, and a little bit the trend is often that in December, you see a little bit bigger gap between order intake and net sales. So that's what we see. And often, there's some destocking taking place in the end of the year.
We don't guide anything on the beginning of the year, but what we can say is that we believe that the trend that we have seen will continue, that we will have a challenging market. We're up against strong comparable numbers, and that the industries that had a favorable development after the pandemic, more or less, will continue to having lower demand now also in the beginning of 2024, but be offset by other industries are doing, doing well.
So there are uncertainty out in the market, and what we do is to try to impact what we can, can impact, so to say, and we try to grab market share and, of course, put ourselves from a cost point of view in a good position to managing a little bit weaker demand. So, we think that this uncertainty and will continue also in the beginning of 2024.
Okay, understood. Although order intake, it is down year-over-year, but it is stronger quarter-over-quarter, and book-to-bill is above one. I mean, could you help us a bit here? Are you seeing any changes in customer order behavior, seasonal effects in play? You mentioned an impact from the Red Sea situation, placing orders upfront with longer lead times, et cetera.
Yeah, what we see is that also, as I mentioned before, that there are some destocking taking place in Q4. That was clear. That is impacting. When it comes to the situation in the Red Sea and those things, the only impact we see is a little bit longer lead times, and but not really impacting our customers really more than these longer lead times, and of course, the freight prices will get impacted. So here, of course, we are monitoring this closely, ensure that we can continue supporting our customers in best possible way. That is what we have seen so far.
Other than that, there is a same pattern as we've seen, now for a few quarters, with a very mixed bag in, in the behavior in different industries, and, also more linked to segments than geographical, areas, actually. So, as you can see in the numbers, we have a weaker demand in, in U.S., for example, that is linked to the RV industry. We have weaker demand in the U.K., to that extent, that is stainless, and then the same thing when it comes to, to Asia and, and East, that is also had this very strong, development in end of last year.
We're up against strong competitive numbers in a few companies now, and we don't offset that completely with the strong demand within other industries like energy, defense, and automotive, and so on.
Okay, thank you. A question on margins. For our gross margins, they are strong. You mentioned better customer product mix, some price adjustments. Would you be able to split out the price and volume components in the organic growth figure?
Yes. The price effect getting less and less. So it, it's not much in the quarter at all. And yeah, and as you pointed out, we are working, I think, throughout 2023 to improve our gross margin yeah, across Bufab Group. And I think that we are on a good pattern here. We taking the right actions, and good to see the development continue also in Q4. But we aim to continue work on this also throughout 2024.
Okay, thank you. And then last question from me is on cash flow and inventory release. So could we expect that the main share of the post-pandemic inventory reduction to be done now, and instead the shift turns toward long-term working capital efficiencies, or do you still have some overstock to work down, if you know what I mean?
Yeah, I understand what you mean. Yes, I think that the majority of the stocking that we, the extra stocking, let's say, to managing a turbulent time, it's more or less gone now. Of course, there are some areas that things still could be done, but we're getting closer now to more working on improving our way of working with our inventory and net working capital across the group. So, gradually, that is disappearing, and now it's more up to us to ensure that we get more efficient and managing our inventory in a better way. So, that is clearly what is happening.
Okay, thank you so much. Those were all my questions, so, good luck with the Q1, and have a good rest of the day.
Thanks, Johan.
Karl Norén from SEB, welcome to ask your question.
Yes, good morning. A couple of questions here. So if we start with the gross margin, you mentioned here that you are seeing some lower purchasing prices from your suppliers. Is that anything that you would say have impacted the gross margin positively already in Q4, or is there that more to come, so to say?
Yeah. It is impacting a little bit in Q4, but hopefully more to come. It's something that we see as opportunity throughout 2024 to take advantage of the situation with the lower pricing mainly from Asia and offset, of course, the price pressure that we will face from some customers throughout the year. So, we've seen maybe some in the Q4 as we write in the report, but hopefully more to come.
Okay. And you're saying also on price pressure from your customers, how do you view that? I mean, previously, you said that you work very hard to keep up prices, but do you think it's reasonable to assume that you need to lower prices on average in 2024 versus 2023, or how should we think about that?
No, I think that we are in a very strong position to handle that across. I mean, our value to our customers is getting more and more relevant every day. And I think the offering that we have are very strong and our position are very strong. So yes, of course, in specific cases, we need to lower some prices, but then we should be able to offset that by other efficiency, like lower purchasing and so on. So all in all, I think we should be able to keep up the price levels at a good level and gradually, as I mentioned, improve our margin. So yeah, I'm positive.
Yeah, sounds good. And then here's the question on the segment in U.K., North America, which show very strong gross margins, despite quite negative sales. Is that driven by the mix with more sales coming from TIMCO, which I think has a better gross margin, or is there anything else you would like to highlight there, or is that fine?
No, but as I also mentioned before, and linked to the remeasurement of SEK 48 million, TIMCO have had a good development throughout 2023, are a strong contributor. And then also you have other companies in the segment that also do a good job with their product and customer mix. But TIMCO is a main contributor to the performance.
Okay. Is it possible to give any more color on how TIMCO performed in 2023 in terms of growth and margins?
No, not really.
Okay, but did they see growth year-over-year or...?
We had a strong development in TIMCO. We're pleased with TIMCO's performance. They are facing a tougher market in 2023, but I think they've been working well with the product development and offering, and also working well with the gross margin. So we're pleased with the performance, but we don't guide more details, specific details about TIMCO.
Okay, understood. And then just one question on the segments you mentioned, which had a strong development during the pandemic and has been weak for quite some time now. Are you seeing any signs of this turning around or seeing improvements in these segments, or is it still at very low levels? Because I guess it was around one year ago where we saw, like, the large drop in these segments, and now we've been through that, so it's in the comparable figures. So are you seeing any signs of improvements in these segments, like kitchen, for example, or RVs?
Yeah. There is a mixed bag. In some, we don't see any major change, more or less that we maybe reached the bottom, and others we start to see some light in the tunnel. So it's a mixed bag. But in some cases, yes, we see some improvements. But also, if you look at our comparable numbers, Q4 were strong, Q1 2023 was also a strong quarter, so we still had quite good. We had a very good development in many different industries, so we are up against strong competitive numbers. We need to have that in mind, when we look at Q4 and also Q1.
Yeah, sure. That's all from me. Good luck out there.
Thanks, Karl. Okay, that was all questions. So, thanks a lot for joining, and wish you all a nice day ahead. Thank you.