Business Area Sweden & Poland
Anders Martinsson
Business Area Manager Sweden & Poland
| Key data | 2016 | 2015 |
| Shipped tonnage, thousands of tonnes | 166 | 166 |
| Net sales, SEK M | 1,941 | 2,042 |
| Change, % | -5.0 | 2.2 |
| Operating result (EBIT), SEK M 1) | 25 | -79 |
| Operating margin, % | 1.3 | -3.9 |
| Underlying operating result (uEBIT), SEK M 2) | 14 | 27 |
| Underlying operating margin, % | 0.7 | 1.3 |
| Investments, SEK M | 6 | 7 |
| Average number of employees | 364 | 360 |
1) The operating result for 2015 has been impacted by write-down of assets of SEK -104 M. The operating result 2016 has been impacted by restructuring cost of SEK -3 M related to the organizational change implemented during second quarter.
2) Including as a part of BE Group’s alternative performance measures, see also tab Alternative performance measures.
Business Area Sweden & Poland accounted for 50 percent (49) of BE Group’s net sales in 2016. The business area includes the Group’s operations in Sweden, consisting of the companies BE Group Sverige, BE Group Produktion Eskilstuna and Lecor Stålteknik as well as the Polish operations, BE Group Poland. The roughly 2,000 customers in the engineering and construction industry receive deliveries from warehouse and production facilities in Malmö, Kungälv, Norrköping and Eskilstuna in Sweden and Trebaczew in southern Poland. Apart from these facilities BE Group Sverige has local sales offices in a total of seven cities. The size and needs of the customers vary widely; the ten largest customers account for about 14 percent of the business area’s sales. Local presence, a high level of service and good understanding of customers are prerequisites for serving the market.
BE Group owns 50 percent of the company ArcelorMittal BE Group SSC AB, a steel service center where metal coils is cut and slit. The competitors in the market include SSAB-owned Tibnor and Stena Stål, which is a part of the Stena Group.
Sales and business performance
Net sales fell by 5 percent compared with the preceding year, amounting to SEK 1,941 M (2,042). The operating result amounted to SEK 25 M (-79). Adjusted for inventory gains and losses of SEK 14 M (-2) and non-recurring items of SEK -3 M (-104) the underlying operating result amounted to SEK 14 M (27). Non-recurring items for the year were attributable to the restructuring carried out during the second quarter. The non-recurring items in 2015 were related to impairment of asset values.
The Distribution business in Sweden has a tonnage in line with the previous year and significantly improved earnings. The lower underlying earnings for the business area can be attributed to the development in BE Group Produktion Eskilstuna and Lecor Stålteknik, in which the overall loss increased to SEK -32 M (-12). New managers have been appointed for both businesses and measures have been initiated. The joint venture ArcelorMittal BE Group SSC AB is reported in accordance with the equity method and BE Group’s participation in earnings for the year amounted to SEK 8 M (2).
Continued development
In 2016, the focus has been on improving margins in our business, which has had a positive effect. The recovery that we have seen in prices during the year have also led to inventory gains after several years of losses. Many things have fallen into place internally but the work to strengthen our margins will continue in 2017. This will be achieved through active efforts to enhance and clarify the values we create and price these correctly, but also by streamlining of the purchase process. The customer segmentation which was developed in 2016 will lead to a better customer offer and enable us to more effectively control the sales process internally. Overall, this should lead us to achieve our goal to grow faster than the market in 2017 and to do so with maintained or improved margins.
Regarding Lecor Stålteknik and BE Group Produktion Eskilstuna measures are initiated to deal with the losses generated in 2016.
In our joint-venture ArcelorMittal BE Group SSC, we have during the year decided to invest in an upgrade of an existing cutting line and a new slitting line for metal coils. This means that we in the coming years will be able to offer better quality and a broader product range to our customers. With this, we expect continued good growth and a positive profitability development in the Company.
* The operating result for Q3 2015 is impacted by write-down of assets of SEK -104 and Q1 2016 by cost related to restructuring of SEK -3 M.
* Underlying operating result (uEBIT) is the reported operating result (EBIT) before non-recurring items and adjusted for inventory gains and losses (deductions for gains and additions for losses). See also tab alternative performance measures.