“During the year, BE Group has made strategic investments and acquisitions that have added additional storage and production capacity”

A YEAR OF LARGE FLUCTUATIONS

In a turbulent year with a large portion of external circumstances, BE Group delivers both its best and worst quarters measured in underlying result since the IPO. Regardless, the year is totaled as strong and the underlying operating result amounted to SEK 488 M (529), corresponding to an operating margin of 7.1 percent (9.8). The operating result including inventory losses amounted to SEK 418 M (621), corresponding to an operating margin of 6.1 percent (11.5). It is pleasing that cash flow from operating activities improved towards the end of the year, amounting to SEK 204 M (32) for the full year.

Steel price trend

At the beginning of 2022, the trend in European spot prices for flat products was stable, while prices for long products such as beams and rebar moved upwards as a direct consequence of rising scrap prices. The market hung in the balance, but a slightly better supply of components mainly affected the automotive industry positively and the need for steel increased. After Russia invaded Ukraine, the market reacted quickly. Large consumers and stockholders tried to secure their steel needs, resulting in several producers leaving the market to analyze the situation regarding the supply of raw materials and energy. It became clear that the availability and cost situation would change, creating a shortage situation and steel prices escalating upwards.

When the material was delivered a few months later following the hoarding wave of the spring, demand began to weaken. Construction projects were postponed due to increased costs and the automotive industry faced new challenges in acquiring components. Full inventories and declining needs led to lower spot prices. The steel producers responded by reducing blast furnace capacity more than the actual need decreased, which had an effect. At the beginning of 2023, European steel producers are seeing an increase in real needs and prices for flat products will rise into the second quarter. The trend in long products is somewhat more uncertain. What we know for certain is that steel prices are volatile and that the external circumstances are a little more uncertain than normal.

Acquisitions and divestments

In the spring, the assets of the Hercules rebar factory was acquired from Hercules Grundläggning AB, a subsidiary of NCC. The acquisition strengthened BE Group’s rebar offering in Sweden and added additional production and storage capacity.

At mid-year, Lecor Stålteknik AB was divested to EAB AB. Lecor has developed positively in recent years but is significantly different from BE Group’s core business. EAB is a long-standing partner to both BE Group and Lecor and, in connection with the transfer, a letter of intent was also signed regarding continued close and trusting cooperation.

At the beginning of September, all shares in Goodtech Solutions Manufacturing AB, now BE Group Produktion Arvika AB, were acquired. The acquisition strengthens BE Group’s ready-to-weld offering and adds competence and production capacity.

Focus in the future

An important focus area for 2023 is to get effect from the strategic investments made and ongoing in Finland regarding, among other things, fiber laser technology and automated processing of long products, both of which clearly strengthen BE Group’s offering to new and existing customers.

In the past three years, BE Group has reduced the number of accidents with absences by more than 75 percent over a 12-month rolling period. Personally, I am convinced that companies that work for a safe workplace and take care of their employees are also more profitable over time. The results do not come on their own, but are the result of dedicated work over many years. This is how BE Group works and intends to continue working. Our focus areas continue to be the sales culture, customer experience and digitalization, and our values are dynamic, transparent and sustainable. Safety run like a unifying theme through all of them.

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 untiringly strive to make BE Group a better company.

Peter Andersson
President and CEO