Financial targets and outcome
A long-term effort
In recent years, BE Group has implemented several important changes with the aim of increasing efficiency and lowering the structural costs in the company. These changes are part of a long-term effort to increase profitability and at the same time strengthen the company’s position in a market characterized by tough competition and thin margins. BE Group earnings should primarily be used to develop the business and generate returns for the owners. The Board of Directors of BE Group has set three financial targets that are to be achieved in order for earnings to be considered adequate. The fulfilment of these targets can vary over time, depending among other things on what phase of development the Company is in and the current state of the economy.
Sales growth that exceeds the market growth
To measure growth in BE Group’s markets, the market statistics that the company receives for the distribution markets in Sweden and Finland are used. By comparing tonnage growth year on year in this data, the growth in the market is estimated. BE Group’s growth is measured in delivered tonnes in the Swedish, Finnish and Baltic markets. For Sweden, deliveries for the joint venture ArcelorMittal BE Group SSC AB are included. The target is to grow more than the market. Complete market statistics is no longer available to compare the company’s growth with the market development, hence an estimation has been made.
-9% (-6)
The market is estimated to have decreased -9 percent (-6) compared to last year. During the full-year 2023, BE Group has had a similar development. The decrease in tonnage is mainly attributable to the weak demand from the construction sector.
A profit margin of at least 5 percent
Profit margin is defined as the underlying operating margin (uEBIT%) in the past 12 months. The target level is set to at least 5 percent measured over a longer period of time. This corresponds to approximately SEK 266 M in underlying operating result (uEBIT) at current sales. The underlying operating result, i.e. the operating result excluding the impact of inventory gains or losses and items affecting comparability, is used to put focus on how the operating activities perform and develop.
0,6% (7,1)
The underlying operating margin amounted to 0.6 percent (7.1) for 2023 and thus the target was not fulfilled.
At least 15 percent return on capital employed
As a measure of return, return on capital employed excl. IFRS 16 is used, defined as operating result excl. IFRS 16 in the past 12 months divided by the average capital employed excl. IFRS 16 (equity and interest-bearing liabilities). The target level is set to at least 15 percent. The measure is calculated based on recognized operating profit, i.e. including inventory gains and losses and items affecting comparability, to put focus on the actual returns to the owners.
-3,1% (20,3)
The return on capital employed amounted to -3.1 percent (20.3) during the year and thus the target was not fulfilled. The cause is the negative operating result as a result of declining steel prices and sales volumes as well as inventory losses.