Note 1 – Operating segments

2018 Sweden & Polen Finland & Baltics Parent Company &
consolidated items
Group
2018 Sverige &
Polen
Finland &
Baltikum
Moderbolaget &
koncernposter
Koncernen
External sales Extern omsättning 2,466 2,290 47 4,803
Internal sales Intern omsättning 10 9 -19
Net sales Nettoomsättning 2,476 2,299 28 4,803
Participation in earnings of joint venture Andelar i joint ventures resultat 4 4
Underlying operating result Underliggande rörelseresultat 104 68 -55 117
Inventory gains/losses Lagervinster/-förluster 15 13 -1 27
Items affecting comparability 1) Jämförelsestörande poster 1) 4 -16 -12
Operating result Rörelseresultat 123 81 -72 132
Net financial items Finansnetto -16
Profit/loss before tax Resultat före skatt 116
Taxes Skatter -36
Profit/loss for the year Årets resultat 80
Underlying operating margin Underliggande rörelsemarginal 4.2% 2.9% neg 2.4%
Operating margin Rörelsemarginal 5.0% 3.5% neg 2.8%
 
Shipped tonnage (thousands of tonnes) Levererat tonnage (tusentals ton) 187 190 0 377
 
Operating capital Operativt kapital 749 581 2 1,332
Investments Investeringar 16 18 1 35
Depreciation/amortization of tangible/intangible assets Avskrivningar av materiella och immateriella anläggningstillgångar 13 18 7 38
Other non-cash flow items Övriga icke kassaflödespåverkande poster 1 2 1 4
Total non-cash flow items Summa ej kassaflödespåverkande poster 14 20 8 42
1) During the year, the result has been impacted by items affecting comparability totaling SEK -12 M, of which, SEK -16 M is attributable to the exit from the business in Czech Republic and SEK 4 M is attributable to the release of part of the provision related to maintenance of the warehouse in Malmö.
2017 Sweden & Polen Finland & Baltics Parent Company &
consolidated items
Group
2017 Sverige &
Polen
Finland &
Baltikum
Moderbolaget &
koncernposter
Koncernen
External sales Extern omsättning 2,090 2,107 151 4,348
Internal sales Intern omsättning 4 7 -11
Net sales Nettoomsättning 2,094 2,114 140 4,348
Participation in earnings of joint venture Andelar i joint ventures resultat 11 11
Underlying operating result Underliggande rörelseresultat 72 89 -79 82
Inventory gains/losses Lagervinster/-förluster 13 16 -2 27
Items affecting comparability 1) Jämförelsestörande poster 1) -7 -45 -52
Operating result Rörelseresultat 78 105 -126 57
Net financial items Finansnetto -23
Profit/loss before tax Resultat före skatt 34
Taxes Skatter -10
Profit/loss for the year Årets resultat 24
Underlying operating margin Underliggande rörelsemarginal 3.4% 4.2% neg 1.9%
Operating margin Rörelsemarginal 3.7% 5.0% neg 1.3%
 
Shipped tonnage (thousands of tonnes) Levererat tonnage (tusentals ton) 172 191 0 363
         
Operating capital Operativt kapital 693 531 55 1,279
Investments Investeringar 10 12 0 22
Depreciation/amortization of tangible/intangible assets Avskrivningar av materiella och immateriella anläggningstillgångar 14 16 11 41
Other non-cash flow items Övriga icke kassaflödespåverkande poster -6 0 28 22
Total non-cash flow items Summa ej kassaflödespåverkande poster 8 16 39 63
1) During the year, write-down of assets and restructuring costs totaling SEK -52 M have been made.

BE Group is a trading and service company in steel, stainless steel and aluminium. Customers are primarily in the construction and manufacturing industries. Since customers’ needs vary widely, BE Group offers different sales solutions: inventory sales, production service sales, and direct sales. The cooperation between BE Group and a particular customer can comprise of one or more of these sales solutions.

BE Group’s basic products are of a similar nature, regardless of the customers or markets to which they are distributed. Part of BE Group’s strategy is also to further process materials at its own production facilities through various types of production services, which in some cases result in completed components being delivered straight into customers’ production lines.

BE Group’s risks and opportunities differ between the different geographical markets to which its products are distributed. For that reason, BE Group has chosen geographical areas as its primary segments.

The operating structure and internal reporting to Group management and the Board of Directors are therefore based primarily on reporting of geographical business areas. Each segment´s result, assets and liabilities include operating items attributable to the ongoing activities of the segment.

The allocation of operating capital per segment is based on the location of the business and includes items directly attributable and items that can be allocated by segment in a reasonably reliable manner. Operating capital allocated by segment comprises tangible assets, goodwill and other intangible assets, participations in joint ventures, deferred tax assets and working capital less deferred tax liability and provisions. Financial assets and liabilities have not been divided by segment but are reported as other assets/liabilities. Capital expenditures for the segment include investments in intangible and tangible assets.

The financial information per segment is based on the same accounting principles as those that apply for BE Group. The Group is using a number of alternative performance measures (see Alternative performance measures for more information). One of those is the underlying operating result which is the operating result adjusted for items affecting comparability and inventory gains and losses. These represent the difference between the cost of goods sold at acquisition cost and the cost of goods sold at replacement value. BE Group applies an internal calculation model. The model has not been reviewed by the Company’s auditors. Internal prices between BE Group’s segments are based on the principle of “arm’s-length transactions”, that is, transactions between parties that are mutually independent, thoroughly informed and have an interest in the transactions. Prices of goods are based on current purchase prices plus an internal markup margin.

Data on products, services and geographical regions

BE Group consists of two business areas – Sweden & Poland and Finland & Baltics. BE Group’s other operations are gathered within Parent Company and consolidated items.

Sweden & Poland

Business area Sweden & Poland includes BE Group´s operations in Sweden, which are conducted under the name BE Group Sverige AB and Lecor Stålteknik AB and the operations in Poland under the name BE Group Sp.z o.o.. BE Group Sverige AB offers sales and distribution of BE Group’s products, such as commercial steel, stainless steel and aluminium. In addition to distribution of materials, production service is also provided, whereby the Company processes materials in various ways to meet specific customer requirements. Examples include cutting to length, shot blasting, painting, drilling and cutting in various forms. The Company provides additional services including advanced logistics solutions and material advisory services. In addition, BE Group Sverige AB owns 50 percent of the thin plate processing company ArcelorMittal BE Group SSC AB. Lecor Stålteknik AB provides steel construction solutions to customers in the Swedish construction sector and the polish operations are providing production services to Polish and Nordic customers.

Finland & Baltics

Business area Finland & Baltics includes BE Group’s operations in Finland, which are conducted under the name BE Group Oy Ab, and the operations in the Baltic States under the names BE Group AS, Estonia, BE Group SIA, Latvia and UAB BE Group, Lithuania. Sales and distribution of BE Group’s products, such as commercial steel, stainless steel and aluminium, are offered in all operations. In Finland, production services are also provided on a large scale. Examples include cutting to length, shot blasting, painting, drilling and cutting in various forms. In addition, the company in Finland offers its customers logistics solutions, advisory services and financing of working capital.

Parent Company & consolidated items

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) are reported under Parent Company & consolidated items. The restructuring of these operations, approved by the Board of BE Group in the first quarter of 2016, the second quarter of 2017 and the second quarter of 2018, are largely completed.

Group

Sales by country based on customer’s domicile Försäljning per land utifrån kundens hemvist 2018 2017
Sweden Sverige 2,431 2,170
Finland Finland 1,935 1,756
Other countries Övriga länder 437 422
Total Totalt 4,803 4,348
Tangible, intangible and financial assets by country Materiella, immateriella och finansiella anläggningstillgångar per land 2018 2017
Sweden Sverige 476 490
Finland Finland 308 296
Other countries Övriga länder 9 9
Total Totalt 793 795

Parent company

Sales of intra-group services by country based on domicile of subsidiary Försäljning av interna tjänster per land utifrån dotterbolagens hemvist 2018 2017
Sweden Sverige 50 42
Finland Finland 45 39
Other countries Övriga länder 13 11
Total Totalt 108 92