“Continued improvement measures strengthen BE Group”

Important progress for a strong and profitable BE Group

When we summarize 2017, we note that the work of developing BE Group into a long-term profitable and successful company took a major step in the right direction. During the year, we continued the closure of unprofitable units and the organization, that is now focused on Distribution and Production, has continued working in a structured and targeted way to develop operations. Our strategy to focus on our main markets Sweden and Finland has also benefited from good demand in our largest segments, the construction and manufacturing industries. A more balanced market in terms of supply and demand has created a more sustainable price level that also benefited the company positively.

In the transformation of the company, it has been important to preserve the customer focus that has always been a part of BE Group’s DNA. We continued the work of improving the offering to our customer segments and streamlining processes in our efforts to be the most professional, respected and successful steel service company in our markets. Some strategic focus areas in this journey are our purchasing work, inventory management and digitalization. We have developed the organization further and today I can proudly say that we now have a good mix of experience, expertise and innovative thinking.

As a result of this, we can put the company’s most profitable year since 2008 behind us. We are continuing the journey to achieve our vision and our financial targets. I would therefore like to thank our customers who give us their trust every day and also thank all of the employees for your commitment and great desire to continue on this journey of change.

Stronger earnings and cash flow

BE Group’s sales in 2017 increased by 12 percent. Tonnage in our main markets, Sweden and Finland, increased by 4 percent in total. The underlying operating profit increased by more than 148 percent, which shows that our measures for improved profitability have continued to generate results. Cash flow also developed positively, due to a significantly better operating profit and lower capital tied-up. With the improved cash flow, we were able to continue reducing the net debt. Altogether, BE Group has a strong financial position with lower net debt and good liquidity.

Improved profitability for business area Sweden & Poland

Sales for business area Sweden & Poland increased by 15 percent in 2017, mainly as a result of higher average prices on steel.

The underlying operating profit improved to SEK 72 M compared with SEK 45 M in the previous year. The distribution business is improving its earnings at the same time the production unit in Norrköping is developing well, which contributed to the underlying operating result being better than previous year.

Good development for business area Finland & Baltics

Sales for business area Finland & Baltics increased by 18 percent compared to previous year. The underlying operating profit improved by 35 percent to SEK 89 M (66). Delivered tonnage increased by 4 percent during the year and the price was rising. In Finland, the market grew strongly, especially for the construction industry and our capacity utilization increased in the first half of the year. In the Baltic countries, the market was stable and BE Group held its position among the many other players.

Closure of unprofitable operations

During the year, the decision was made to close our production unit in Eskilstuna. The operation had been unprofitable for an extended period in spite of extensive improvement measures. The affected staff carried out the closure commendably and contributed strongly to a successful process, which went better than originally planned. Subsequently, some of the remaining provisions were reversed.

Outlook

Demand in the following quarter is expected to remain strong in the company’s main markets. The construction industry is continuing to do well even if growth has slowed somewhat. Within the manufacturing industry, several of our customers forecast continued growth for 2018. Customer demand and the increasingly regional steel market means that steel prices in the upcoming period are expected to be in line with the fourth quarter. Ongoing improvement measures together with the completed closure of unprofitable operations continue to strengthen the Group’s profitability.

Signatur_Anders-Martinsson_2

Anders Martinsson
President and CEO