A STRONG YEAR THAT PROVIDES STRENGTH FOR THE FUTURE

In 2021, BE Group delivered the best operating margin since the stock exchange listing in 2006. The recipe behind this is good employees who work hard, a focus on the customer experience and sales clearly seasoned with high material prices together with the major structural changes of recent years.

In total, sales increased by 47 percent and the underlying operating result improved strongly, amounting to SEK 529 M (96). Rising steel prices led to inventory gains of SEK 92 M (-17) and the operating result rose to SEK 621 M (39), which is also the best since 2006.

Steel price trend

At the beginning of 2021, there was a rapid and strong recovery in the European manufacturing and construction sectors. In the first quarter, more materials were in demand than planned and a shortage arose, particularly for products linked to the automotive industry. This pushed steel prices up sharply. The trend in the second half of the year was somewhat different for various products, but prices can essentially be said to have stabilized at entirely new levels by the end of the year.

A continuation of a generally high price level is supported by high costs for input materials and energy prices together with strong demand where customers have real needs and a good market for their products. The transition to sustainable steel production will require major investments, which in the longer term must lead to more sustainable prices for steel producers.

Sustainability

BE Group’s business model is essentially sustainable. Steel is one of the world’s most recycled materials and can be recycled over and over again without losing its characteristics. As steel distributors, we buy steel in large quantities and deliver a specific need, such as steel cut to specific lengths, to each individual customer. With this, we can optimize both transports and material utilization.

As an independent steel distributor, BE Group continuously conducts discussions with multiple steel producers throughout Europe and 100% climate-compensated steel is already part of the offering to our customers. Another step in the sustainability work was taken through a signed letter of intent with H2 Green Steel regarding cooperation and distribution of fossil-free steel in the Nordic market from 2025.

We have a good history in the work with sustainability, but in the future, these efforts will be further intensified in various ways. An important part of this work is helping small and medium-sized companies, which most often buy steel in smaller quantities, to buy sustainable steel at competitive prices.

The impact of the Ukrainian war on BE Group

Russia and Ukraine are major producers of iron ore and other inputs and it is clear that the war will have a major impact on the European steel market with material shortages and sharp price increases as a consequence. About 10% of BE Group’s total steel purchases in 2021 came from Russian-controlled steel producers. We expect that this geopolitical situation will affect global supply chains and are therefore reviewing what can be done proactively to secure the delivery of steel and our ability to support our customers during these challenging times.

Focus in the future

In an industry with standardized products and paper-thin margins, it is important to work hard with continuous improvements. First and foremost, the customer offering must be the sharpest and most attractive in terms of competence, availability and delivery accuracy. After that, I usually visualize it with a coin worth SEK 0.10. In 2021, SEK 0.10 per kg was equivalent to about SEK 35 M. Slightly lower purchasing prices, a slightly better margin, slightly more efficient handling and the mentality that a penny saved is a penny earned. All of this has a positive impact on the bottom line and with good and well-motivated employees, we will continue on that path.

In conclusion, I would like to express my heartfelt gratitude to our customers, who repeatedly give us their trust, to our owners who believe in us and to all of our employees who recurrently struggle to make BE Group a better and better company.

Peter Andersson
President and CEO