Board of Directors’ Report

Development over the year


BE Group AB (publ), Corp. Reg. No. 556578-4724, which is listed on the Nasdaq Stockholm exchange, is a trading and service company in steel, stainless steel and aluminium. BE Group offers efficient distribution and value-adding production services to customers primarily in the construction and manufacturing industries. In 2018, the Group reported sales of SEK 4.8 billion. BE Group has approximately 670 employees, with Sweden and Finland as its largest markets. The head office is located in Malmö, Sweden. Read more about BE Group at

Alternative performance measures

BE Group has defined a number of alternative performance measures. The alternative performance measures that BE Group considers to be significant are underlying operating result, net debt, working capital and capital employed. Under Alternative performance measures, you can read more about how these are calculated.

Market and business environment

According to the steel producers’ industry organization, the World Steel Association, raw steel production decreased in Europe (EU28) by 0.3 percent in 2018 compared with last year. The largest decrease occurred in Germany, where production dropped 2 percent, mainly due to transport problems on the Rhine, which had abnormally low water levels as a result of drought. Demand continued to be high in many customer segments, including infrastructure, mining equipment, mechanical industry and automotive. In 2018, the EU introduced preliminary import quotas to avoid a large inflow of materials after the U.S. introduced protective duties of 25 percent on steel and 10 percent on aluminum. There is a generally good balance between supply and demand, even if there are exceptions. The information BE Group has regarding the development of the Swedish distribution market shows a market growth of 0.9 percent and the information on the Finnish market shows a market growth of 0.8 percent. Steel prices have also increased during the year.

Group structure and organization

The Group consists of two business areas, Sweden & Poland and Finland & Baltics, with a business focus on the Group’s main markets. Within respective business areas, there are separate business units that focus on Distribution and Production. The objective with this split is to get a clearer focus and higher transparency. Parent Company & consolidated items include the Parent Company, Group eliminations and also parts of the Group´s operations undergoing restructuring, BE Group Czech Republic, BE Group Slovakia, BE Group Produktion Eskilstuna and RTS Estonia. The restructuring of these operations, approved by the Board of BE Group partly in the first quarter of 2016, the second quarter of 2017 and the second quarter of 2018, are in all material aspects completed.

Net sales and business performance

During 2018, consolidated net sales increased by 10 percent compared with last year, amounting to SEK 4,803 M (4,348). Tonnage in business areas Sweden & Poland increased by 9 percent compared with last year while Finland & Baltic delivered 1 percent lower than last year. Higher average steel prices and mix effects have had a positive impact on net sales of 3 percent. The price trend also resulted in inventory gains of SEK 27 M (27).

Gross profit amounted to SEK 669 M (619), with a gross margin of 13.9 percent (14.2). In total, the year was impacted by items affecting comparability of SEK -12 M (-52) relating to the exit of the unprofitable operations in Prerov and the release of part of the provision booked at the end of 2017 relating to maintenance of the warehouse in Malmö. Apart from this, additional one-off costs of SEK -12 M related to adjustment of inventory and bad debt in the Baltics have affected the underlying operating result. The operating result increased to SEK 132 M (57), which is mainly explained by the maintained gross margin and 10 percent higher net sales of which 4 percent organic tonnage growth. Sales and administration expenses are in line with last year. Adjusted for items affecting comparability and inventory gains and losses, the underlying operating result increased to SEK 117 M (82). The operating margin amounted to 2.8 percent (1.3) and the underlying operating margin was 2.4 percent (1.9).

Business area Sweden & Poland

Business Area Sweden & Poland accounted for 52 percent (48) of the Group’s net sales in 2018. This business area includes the Group’s operations in Sweden consisting of the companies BE Group Sverige and Lecor Stålteknik, as well as the Polish operations BE Group Poland. Net sales for the year increased by 18 percent compared with last year, amounting to SEK 2,476 M (2,094). Operating result amounted to SEK 123 M (78). Adjusted for inventory gains of SEK 15 M (13) and items affecting comparability of SEK 4 M (-7), the underlying operating result was SEK 104 M (72). In the result, the intra-group expenses invoiced from the Parent Company have been eliminated. The joint venture ArcelorMittal BE Group SSC AB is reported in accordance with the equity method, with the participation in earnings for the year amounting to SEK 4 M (11).

Business area Finland & Baltics

In 2018, the business area accounted for a total of 48 percent (49) of the Group’s net sales. This business area consists of the Group’s operations in Finland and the three Baltic States Estonia, Latvia and Lithuania. Net sales for the year increased by 9 percent compared with the previous year, amounting to SEK 2,299 M (2,114). The operating result amounted to SEK 81 M (105) and, adjusted for inventory gains of SEK 13 M (16), the underlying operating result decreased to SEK 68 M (89). In the result, the intra-group expenses invoiced from the Parent Company have been eliminated.

Parent Company

Sales for the Parent Company, BE Group AB (publ), amounted to SEK 108 M (92) during the period and derived from intra-Group services. These intra-Group services mainly include licensing fees regarding the subsidiaries’ use of the BE Group brand and central expenses for IT, Finance and Purchasing, etc. These expenses are distributed and invoiced to all subsidiaries in the Group. In the result follow-up of the business areas, these intra-group expenses were eliminated. Out of the total costs for the Parent Company, of SEK 58 M, SEK 43 M was distributed to the subsidiaries.

The operating result amounted to SEK 50 M (38). Net financial items amounted to SEK 2 M (-22). The result before tax amounted to SEK 85 M (0) and the result after tax was SEK 69 M (-1). At the end of the year, Parent Company equity amounted to SEK 626 M (557). Investments in the Parent Company amounted to SEK 1 M (0). At the end of the year, cash and equivalents in the Parent Company amounted to SEK 71 M (44).

Net financial items and tax

Consolidated net financial items amounted to SEK -16 M (-23), of which net interest accounted for SEK -12 M (-17). On an annual basis, the consolidated net interest corresponded to 2.5 percent (3.2) of the average interest-bearing net debt. Tax amounted to SEK -36 M (-10). Result after tax increased to SEK 80 M (24) including items affecting comparability of SEK -12 M (-52). As the Group´s profitability continues to improve the capitalized deferred tax assets referring to loss carryforwards are utilized. The deferred tax asset has decreased during the year, amounting to SEK 33 M (56).

Cash flow

Cash flow from operating activities amounted to SEK 86 M (95). The cash flow from investing activities amounted to SEK -32 M (5). Cash flow after investments thereby amounted to SEK 54 M (100).

Capital, investments and return

At the end of the period, consolidated working capital amounted to SEK 572 M (492) and average working capital tied-up was 11.7 percent (11.8). Of the year’s investments, totalling SEK 35 M (22), investments in intangible assets accounted for SEK 2 M (0) and investments in tangible assets for SEK 33 M (22). The return on capital employed increased in comparison with that in last year and amounted to 9.4 percent (4.2).

Financial position and liquidity

At the end of the period, consolidated cash and equivalents, including overdraft facilities, were SEK 208 M (161) and consolidated interest-bearing net debt amounted to SEK 440 M (478). At the end of the period, equity totalled SEK 892 M (802) and the debt/equity ratio improved to 49 percent (60).

BE Group’s core values act as a guide in the day-to-day work of everyone within BE Group. They address how the employees act towards one another, as well as towards customers, suppliers and others with whom they come into contact.


BE Group considers the employees to be the Group’s most important resource. They are the face towards customers and suppliers and it is therefore important that everyone who works at BE Group contributes to the Company being perceived as an economically, socially and ethically responsible company. It is the people at BE Group who make things happen and make it possible for the Company to keep its promises. The corporate culture is based, among other things, on what BE Group has defined as its core values. These values act as guidance in the day-to-day work of everyone within BE Group. They address how the employees behave towards one another, as well as towards customers, suppliers and others with whom they come into contact. These are: Dynamic, Transparent and Sustainable. Read more in Vision, Business Idea and Values. The number of employees amounted to 667 compared with 665 at the same time last year and the average number of employees during the year amounted to 668 (700).

Environmental policy and environmental work

BE Group is working with environmental issues as an integrated part of its operations. With its position between steel producers and customers, it is in the area of transport in particular that BE Group is able to help lessen the environmental impact. In addition, BE Group works continuously to improve its own facilities’ energy consumption, emissions and waste management.

Overarching environmental policy

A comprehensive environmental policy forms the basis of BE Group’s environmental work. The policy states that BE Group shall

  • As a minimum comply with current environmental legislation and requirements from local authorities.
  • Be economical in the use of energy and natural resources.
  • Work to decrease the amount of waste and emissions from the facilities.
  • Identify opportunities to make adjustments benefiting the environment when making investments and changes in processes and facilities.
  • Maintain a high level of awareness on environmental issues through ongoing training.
  • Document and communicate environmental work to employees and provide open and objective information to external stakeholders.

BE Group is engaged in operations at two sites in Sweden for which environmental permits are required. In Finland, operations in one site require environmental permits. Group companies have obtained special permits to engage in operations in the countries where such permits are required. All operations within the Group, with the exception of the operations in Lithuania and Lecor Stålteknik, are certified under the ISO 14001 environmental management system.

Risks and risk management in BE Group

BE Group’s profits and financial position are affected by a large number of factors. Several of these are beyond the Company’s own control. The Group operates in several countries and is therefore exposed to various risks as a consequence of differences in legislation, regulations and guidelines. Risk management within the Group is guided by established policies and procedures that are revised by the Board of Directors and/or Group Management on an ongoing basis. The most important risks and factors of uncertainty for BE Group can be divided between:

  • Market risks (economic and steel price trend)
  • Operational risks (suppliers, customers, contractual relationships, personnel, product liability, legal and environmental liability)
  • Financial risks (currency risk, interest risk, refinancing risk and credit risk)

Market risks

Economic trend

BE Group has a large number of customers in different industries and is therefore affected by the general economic climate. A weak economic trend increases the risk of lower demand for the Group’s products, resulting in lower sales revenues. In addition, a weaker economy can lead to low inventory turnover, falling prices and inventory losses on existing inventories. BE Group’s strategy regarding inventory levels is to warehouse products based on estimated customer demand. The various companies in BE Group strive to maintain a level of inventory turnover suited to the market and local conditions of each company. The operational control of inventory levels is exerted by means of targets for the number of inventory days.

Steel price trend

The steel industry is influenced by economic developments. As a consequence, steel price trends are volatile and are affected by the balance between the production offering and demand for steel at the different points along the value chain. Steel prices affect BE Group such that higher market prices provide a greater contribution towards covering the Group’s costs given a constant gross margin. The steel price trend also affects final sales prices for products held in inventory, which for BE Group entails a financial impact in the form of inventory gains and losses. To limit these inventory effects, BE Group is working actively to reduce the number of inventory days while maintaining its level of service towards customers. Consequently, falling steel prices have a negative impact on BE Group’s operations and earnings, while increased prices have a positive impact. The table below shows the estimated effect on underlying operating result of changes in steel prices and sold tonnage. The sensitivity analysis is based on the outcome for 2018 and assumes a constant underlying gross margin.

Change Operating result effect
Steelprice +/-5 % +/-24 MSEK
Tonnage +/-5 % +/-26 MSEK

Operational risks

Insufficient deliveries

BE Group’s product range consists of materials from several different suppliers. The Group strives to establish relations with the best steel producers and to maintain sustainable, long-term cooperation. To safeguard access to materials on each individual occasion, the Group seeks to always maintain relations with several suppliers in each product group. Over the year, BE Group has cooperated with more than 500 suppliers. Before establishing new business relationships and entering into agreements, suppliers’ capacity to meet BE Group’s demands in terms of finance, quality, logistics, the environment and other aspects is ascertained.

In BE Group’s assessment, it is not dependent on any single supplier and all major suppliers are considered fully interchangeable, so disruption to deliveries by any one of them does therefore not entail long-term consequences for operations. In 2018, the largest single supplier accounted for 21 percent (15) of the Group’s purchases. Combined, the ten largest suppliers accounted for 56 percent (53) of the Group’s total purchasing. BE Group is exposed to the risk that deliveries from suppliers could be substantially delayed in the event of interrupted production, capacity shortage or transport issues, outside the control of BE Group. This can mean loss of income and/or more expensive actions to meet our commitments to customers.


BE Group’s operations are conducted in several different markets and to numerous customer categories. The ten largest customers accounted for 13 percent (13) of total sales in 2018. BE Group has a large number of customers in different industries and consequently, a good risk diversification. The Company actively works to manage credit risks (see Note 31 for further information) by setting credit limits and focusing on collecting overdue debts.

Increased direct deliveries from steel producers

Users of steel have mainly two sources of purchases: directly from steel producers or from trading and service companies. Traditionally, many large-scale users have bought directly from producers, while small and medium-sized users have often made use of trading and service companies. There is, however, a risk that producers will try to extend their direct sales, reducing the use of trading and service companies as agents.

Contractual relations

The Group is custom to rely primarily on its good and often long-term relations with customers and suppliers, and on the normal practices that have been established between the parties. There are specific agreements with some of BE Group’s larger customers and suppliers.

Human Resources

BE Group depends on competent employees for its future development and success. The ability to recruit, retain and develop qualified employees and to be an attractive employer is important. The effect on the operations would be negative if key individuals were to quit and without it being possible to recruit suitable replacements. BE Group has compiled a number of values that reflect the spirit of the Group and pervade its management. BE Group’s commercial competence is continuously developed through training and recruitment. Training efforts include broad programs aimed at many employees, as well as specialized solutions for individuals.

Product liability

In the event of defect products, some of the products that BE Group sells could cause personal injury or other harm, thereby incurring a risk of claims for damages in accordance with the product liability laws of the country concerned. BE Group has taken out the conventional liability insurance policies on its operations.


Since BE Group maintains operations in several countries, the Group is exposed to different laws, regulations, agreements and guidelines, as well as to changes in the stipulations within these. Among other things, regulations include trade restrictions, such as customs duties and tariffs, requirements for import and export licenses, restrictions on movements of capital and tax regulations. In all commercial operations, disputes may arise as a consequence of differences of opinion on issues of responsibility and interpretations of contract terms. From a risk perspective, BE Group is not dependent on any individual commercial agreement that could significantly limit the Group’s operations.

Environmental legislation and responsibility for the environment

BE Group’s operations are subject to legislation pertaining to the environment, as well as regulations on emissions to the atmosphere and water, waste management and the workplace environment. BE Group could become liable for environmental damage caused by operations conducted, or that have previously been conducted by the Company. According to Swedish law, certain environmental liability is not subject to limitations of time. It cannot be ruled out that operations such as those that are conducted, or have been conducted, by BE Group could lead to liability for environmental impacts that do not appear until much later.

Financial risks

For an account of financial risks, see Note 31.

Share-related information

Ownership structure

The BE Group share has been listed on the Nasdaq Stockholm Exchange since the end of 2006. At the end of the financial year, BE Group had 5,151 shareholders, compared with 5,903 at the end of last year. AB Traction and Catella Småbolagsfond were the two largest owners with 22.3 percent and 7.3 percent of the shares, respectively. Information regarding other major owners is available under The Share. At the end of the year, the proportion of institutional ownership (legal entities) totalled 67 percent and foreign ownership was 7.5 percent.

At the end of the year, the four members of Group Management together held 61,700 shares in BE Group. At the same time, the Company’s directors together held 2,957,808 shares, including shares in close association. The disclosures regarding shareholdings in BE Group for the Board of Directors and Group Management refers to own and physically related owned shares, endowment insurance and legally owned shares which directly or indirectly is controlled by the person or its relatives. BE Group held 26,920 treasury shares at the close of 2018.

Share capital, shares outstanding and rights

The registred share capital amounted to 13,010,124 (13,010,124) common shares on December 31, 2018. Each share has a quotient value of SEK 20.00 (20.00). According to the Articles of Association, minimum share capital in the Company is SEK 150,000,000 and maximum share capital SEK 600,000,000, with a minimum of 10,000,000 and a maximum of 40,000,000 shares. Share capital is determined in Swedish kronor.

All shares convey equal rights to a percentage of the Company’s net assets, profits and any surplus upon liquidation. Each share carries one vote and there is only one class of shares. There is no limit to the number of votes a shareholder may cast at the Annual General Meeting or with respect to transfer of shares. The Company is aware of no agreements between shareholders which may limit the right to transfer shares. Further information about the BE Group share is provided on

Authorization to the Board of Directors

The Annual General Meeting resolved to authorize the Board of Directors, on one or several occasions and not later than the 2019 Annual General Meeting, to make decisions regarding the transfer of treasury shares for the purpose of financing smaller corporate acquisitions. Transfers of at most 26,920 shares, corresponding to the company’s existing holding of treasury shares, may deviate from shareholders’ preferential rights. Transfers may be applied as payment of all or part of the purchase consideration in the acquisition of companies or operations or parts of companies or operations, in which case the payment shall correspond to the assessed market value of the shares. Alongside share transfers, payment may be effectuated through capital contributed in kind or by setting off claims against BE Group. Transfers may also be made on cash payment through sales on the Nasdaq Stockholm Exchange at a price within the price interval registered at any given time – that being the interval between the highest bid price and lowest asking price at the time of sale. The Board of Directors shall have the right to decide on other conditions for the transfer. However, the conditions shall be market-based. During the year, no treasury shares were transferred and BE Group held 26,920 treasury shares, corresponding to 0.2 percent of the share capital, which was acquired for a total amount of SEK 21 M.

Dividend and dividend policy

According to BE Group’s dividend policy, the Group will distribute at least 50 percent of profit after tax, over time. BE Groups financial positions and future outlook shall be taken into account in determining the payment of dividends. The Board of Directors proposes dividend of SEK 1.75 (-) per share for the financial year of 2018 which corresponds to approximately SEK 23 M.

Corporate governance

The Corporate Governance Report is presented on pages 84-88.

Remuneration principles for senior executives

The 2018 Annual General Meeting adopted guidelines for executive remuneration. The policies apply to remuneration and other terms of employment for the individuals who, while the policies are in effect, are members of Group management for BE Group. Group managment consist of four persons: the President and CEO, the CFO, Business Area Manager for Finland & Baltics and the Group Sourcing Director. The policies apply for agreements entered in accordance with Annual General Meeting resolutions and to amendments to existing agreements made after this date. The guidelines are reviewed annually.

The guidelines mainly state that remuneration for senior executives shall consist of fixed base pay, variable remuneration, pension benefits and other benefits. Total remuneration shall be market-based. Fixed pay shall be individual and differentiated based on the individual’s responsibilities and performance and set annually. Variable remuneration shall be related to the degree of meeting the annual predetermined, well-defined goals and shall amount to a maximum of 50 percent of fixed salary. Pension is to be defined-contribution-based and correspond to a maximum of 30 percent of fixed annual salary. Where notice of termination is issued by BE Group, fixed salary and severance pay shall not exceed an amount equivalent to 12 months’ fixed pay. The actual remunerations agreed during the year are detailed in Note 3.

The Board of Directors’ preparation and resolutions in business related to salaries and other terms of employment for senior executives

Due to its small size, the Board has found it suitable not to appoint a remuneration committee. This decision was made at the 2018 statutory meeting. Salaries and other terms of employment, pension benefits and the bonus system for the CEO and immediately subordinate managers are handled by the Chairman of the Board in dialogue with the CEO. The Chairman of the Board reports back to the Board who drafts the executive remuneration policies to propose to the Annual General Meeting for resolution. The Board has also been tasked with monitoring and assessing variable remuneration programs for senior executives that were ongoing or terminated during the year and with monitoring and assessing the application of the guidelines for remunerations for senior executives.

Provisions of the Articles of Association on appointment and discharge of directors and amendment of the Articles of Association

There are no provisions in the Articles of Association on appointment and discharge of directors and amendment of the Articles of Association. In accordance with the provisions in the Companies Act, directors are elected by the Annual General Meeting for the period extending until the close of the first Annual General Meeting after that at which they were elected, and amendments to the Articles of Association are determined by the Annual General Meeting in accordance with the regulations set out in the Companies Act.

Contingent liabilities

Consolidated contingent liabilities amounted to SEK 14 M (30).

Significant events after the end of the financial year

No significant events have taken place after the end of the period.

Accounting principles

As of January 2005, the consolidated accounts are prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Commission for application within the European Union. A more detailed explanation of accounting principles is available under “Accounting principles”.

Appropriation of earnings

The Board of Directors’ proposal for the appropriation of earnings is detailed under Appropriation of Earnings and in note 24.