“The work of developing BE Group into a long-term profitable and successful company is continuing in a more challenging market”
OUR IMPROVEMENT WORK CONTINUES
When we sum up 2019, we note that the work of developing BE Group into a long-term profitable and successful company is continuing in a more challenging market. We have focused on our main markets Sweden and Finland, which has given us a possibility to partly fend off the slowdown in the market that began after the first quarter.
When we develop the company, it is important to preserve the customer focus that has always been a part of BE Group’s backbone. During the year, we have continued the work of improving the offering to our customer segments and streamlining our processes. Some particularly important areas in this process continue to be our purchasing, inventory management and digitalization. In the latter part of the year, we also added development of our sales work.
The work to improve the units that are the furthest from our financial targets was intensified during the year and will continue going forward.
Strong cash flow and continued focus on efficiency improvements and investments
The financial downturn that began after the first quarter continued and was amplified in the second half of the year. This means that focus on improved profitability and taking market shares continues to be prioritized. The previously communicated investments in Norrköping, amounting to around SEK 60 M in total, are proceeding according to plan and will strengthen the Group’s competitiveness.
The weaker operating result was compensated by a decrease in working capital, which resulted in a strong cash flow during the year. At the same time, continuous capacity adjustments together with effects of previously implemented structural measures have meant that the number of employees continues to drop.
Challenging year for both business area Sweden & Poland and Finland & Baltics
The main explanation for the decline was an economic slowdown in the manufacturing industry. The decline in Sweden was somewhat larger than in Finland and is due to greater dependence on the automotive industry and the manufacture of heavy construction equipment. In Finland, the general decline was also somewhat compensated by a strong shipbuilding industry. Our market shares have marginally decreased in Sweden and marginally increased in Finland, which in total provides unchanged market shares.
Sales for business area Sweden & Poland decreased by 11 percent during the year and the underlying operating result amounted to SEK 79 M compared to SEK 104 M last year.
Sales for business area Finland & Baltics decreased by 6 percent during the year and the underlying operating result amounted to SEK 65 M compared with SEK 68 M in the previous year.
BE Group’s organization continues to be divided into two business areas, Business Area Sweden & Poland and Business Area Finland & Baltics. The former split into business units Production and Distribution was discontinued at year-end and the respective companies are operated as one business unit from 2020. The purpose of this change is to create an organization where every company is developed based on its own unique market position and to reduce the number management layers between our customers and the Group Management Team. With this decentralized organization, our subsidiaries are provided the possibility of acting more independently and decisions are made as close to the business as possible. The companies can work just like entrepreneurs, with a mandate to make the most effective decisions with a focus on their particular customers, businesses and profitability.
With fewer decision-making levels, the Group Management Team can be kept to a few people, who utilize insights, synergies and economies of scale. The final result will be an efficient company where both subsidiaries and Group can more quickly adapt to market changes, at the same time as the relationship with our customers will be further strengthened.
Focus going forward
The prevailing uncertainty in the world regarding what consequences of the spread of Covid-19 (coronavirus) will result in is currently significant and it may strengthen the economic slowdown we have already seen. In light of this, the Board of Directors of BE Group has decided to withdraw the previously communicated proposal to the Annual General Meeting concerning dividend.
Looking forward, we see that our continued focus on cost control and determined improvement work will strengthen the Group. With focus on our customer, we are continuing on the road to our vision to be the most professional, respected and successful steel service company in our markets.
Lastly, I would like to express our gratitude to our customers who continue to give us their trust and to all of our employees who do excellent work. Without you, it would not be possible! Let’s look forward to an exciting 2020 together.
President and CEO