Note 1 – Operating segments

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.

The 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 financial information per segment is based on the same accounting principles as those that apply for the Group, except for the effects regarding IFRS 16 which are reported under Parent Company & consolidated items and are not allocated to the two business areas. 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 BE Group Produktion Arvika AB and the operations in Poland under the name BE Group Sp.z o.o. The operations in Sweden offers sales and distribution of the 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 cut to length, 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. The polish operations are providing production services to Polish and Nordic customers. Lecor Stålteknik AB was previously a part of the business area but was divested during the year.

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 name BE Group OÜ, Estonia, with the branches BE Group OÜ filiāle Latvijā, Latvia and BE Group OÜ Lietuvos filialas, Lithuania. Sales and distribution of the 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 and BE Group Slovakia. The restructuring of these operations are in all essence completed.

The effects regarding IFRS 16 have been reported under Parent Company & consolidated items and have not been allocated to the two business areas. In total, the effect of IFRS 16 amounted to SEK 10 M (9) on the operating result.