Development over the year

Operations

BE Group AB (publ), Corp. Reg. No. 556578-4724, which is listed on the Nasdaq Stockholm exchange, is a trading and service company in steel, stainless steel and aluminium. BE Group offers efficient distribution and value-adding production services to customers primarily in the construction and manufacturing industries. In 2023, the Group reported sales of SEK 5.3 billion. BE Group has approximately 680 employees, with Sweden and Finland as its largest markets. The head office is located in Malmö, Sweden. Read more about BE Group at www.begroup.com.

Alternative performance measures

BE Group has defined a number of alternative performance measures. The alternative performance measures that BE Group considers to be significant are underlying operating result, working capital, net debt and capital employed. Under Alternative performance measures, you can read more about how these are calculated.

Market and business environment

In Europe (EU27), 126.3 million tons of raw steel were produced during the year according to the World Steel Association, which is the global trade association for the steel producers. This is a decrease by about 7 percent compared to 2022. The surrounding world was spared major events in 2023 and European steel prices were consequently guided by supply and demand, which resulted in less price volatility than earlier years, however, led to considerable changes. Different kinds of steel had different trends.

Long products (beams, rebar and so on) are largely consumed by the construction sector and the decline there most likely pushed down the spot prices that fell in the first half of the year and was stable and slightly recovered during autumn, but they were about 20 percent lower at the end of the year compared to the beginning. Spot prices in Europe for flat products (hot and cold rolled sheets) rose during the first quarter, since distributors tried to fill their inventories while producers had limited their capacity. Then they fell until the end of October when the distributors yet again started to fill their inventories and by the end of the year, prices had recovered to levels close to the beginning of the year.

Group structure and organization

The Group consists of two business areas, Sweden & Poland and Finland & Baltics, with a focus on the Group’s main markets. Parent Company & consolidated items include the Parent Company and Group eliminations.

Net sales and business performance

During the year, the Group’s net sales decreased by -23 percent compared to last year and amounted to SEK 5,328 M (6,875). The decrease is explained by negative price and mix effects of -15 percent, negative organic tonnage growth of -12 percent, partly counteracted by positive currency effects of 4 percent. Tonnage to the construction industry decreased by -28 percent, which mainly affects the Swedish operations, while the manufacturing industry decreased by -5 percent. Organic tonnage growth within business area Sweden & Poland decreased by -15 percent and Finland & Baltics delivered -8 percent less. Mainly, sales of long and flat products decreased compared to last year.

Gross profit amounted to SEK 544 M (1,009) with a gross margin of 10.2 percent (14.7). Adjusted for inventory losses and items affecting comparability, the underlying operating margin amounted to 11.4 percent (15.6).

The operating result amounted to SEK -52 M (418), corresponding to an operating margin of -1.0 percent (6.1). Adjusted for inventory losses of SEK -76 M (-70) and items affecting comparability of SEK -6 M (-), the underlying operating result amounted to SEK 30 M (488). The underlying operating margin amounted to 0.6 percent (7.1).

Business area Sweden & Poland

Business area Sweden & Poland accounted for 49 percent (49) of the Group’s net sales during the year. The business area includes the Group’s operations in Sweden consisting of BE Group Sverige AB, BE Group Produktion Arvika AB and the joint venture ArcelorMittal BE Group SSC AB as well as the Polish operations BE Group Sp.z o.o. Net sales for the year decreased by -23 percent compared to last year, amounting to SEK 2,641 M (3,408). The operating result amounted to SEK -24 M (217). Adjusted for inventory losses of SEK -59 M (-19) and items affecting comparability of SEK -4 M (-), the underlying operating result amounted to SEK 39 M (236). In the result, intra-group expenses invoiced from the Parent Company have been eliminated except for expenses for IT and business systems.

Business area Finland & Baltics

Business area Finland & Baltics accounted for 51 percent (51) of the Group’s net sales during the year. The business area consists of the Group’s operations in Finland and the three Baltic States. Net sales decreased by -22 percent compared to last year, amounting to SEK 2,729 M (3,497). The operating result amounted to SEK -22 M (217) and adjusted for inventory losses of SEK -17 M (-50) and items affecting comparability of SEK -2 M (-), the underlying operating result amounted to SEK -5 M (267). In the result, intra-group expenses invoiced from the Parent Company have been eliminated except for expenses for IT and business systems.

Parent Company & consolidated items

Parent Company & consolidated items include the Parent Company and Group eliminations. The effects regarding IFRS 16 were reported under Parent Company & consolidated items and have not been allocated to the two business areas.

Parent Company

Sales for the Parent Company, BE Group AB (publ), amounted to SEK 128 M (148) during the period and derived from intra-Group services. These intra-Group services mainly include licensing fees regarding the subsidiaries’ use of the BE Group brand and central expenses for IT and Finance, etc. The expenses are distributed and invoiced to all subsidiaries in the Group. In the result follow-up of the business areas, intra-group expenses were eliminated except for expenses for IT and business systems. Out of the total costs for the Parent Company, of SEK -64 M (-68), SEK 54 M (55) was distributed to the subsidiaries.

The operating result amounted to SEK 64 M (81). Net financial items amounted to SEK 97 M (266). The result before tax amounted to SEK 63 M (386) and the result after tax was SEK 70 M (360). At the end of the year, Parent Company equity amounted to SEK 1,077 M (1,163). Investments in the Parent Company amounted to SEK 44 M (0). At the end of the period, cash and equivalents in the Parent Company amounted to SEK 64 M (31).

Net financial items and tax

Consolidated net financial items amounted to SEK -23 M (-18) and net interest accounted for SEK -25 M (-18), of which SEK -10 M (-10) is related to leasing according to IFRS 16. Tax amounted to SEK 15 M (-76). Result after tax amounted to SEK -60 M (324).

Cash flow

Cash flow from operating activities was strong and increased to SEK 491 M (204) as a result of the release of working capital. The cash flow from investing activities amounted to SEK -145 M (-56) of which SEK -44 M is related to a new business system. Cash flow after investments thereby amounted to SEK 346 M (148).

Capital, investments and return

At the end of the period, consolidated working capital amounted to SEK 683 M (1,130) and average working capital tied-up was 16.2 percent (15.5). Of the year’s investments, totalling SEK 146 M (54), investments in intangible assets accounted for SEK 44 M (1) and investments in tangible assets for SEK 102 M (53). The return on capital employed excl. IFRS 16 was negative and amounted to -3.1 percent (20.3). The negative operating result was due to declining steel prices, sales volume and inventory losses.

Financial position and liquidity

At the end of the period, consolidated cash and equivalents, including overdraft facilities, were SEK 224 M (200) and consolidated interest-bearing net debt excl. IFRS 16 amounted to SEK 259 M (357). At the end of the period, equity amounted to SEK 1,424 M (1,637).

Employees

The employees are BE Group’s most important resource and there is a high correlation between the company’s future success and its ability to recruit, retain and develop qualified personnel. In order to meet expectations of the employees, a major focus is required on areas such as health and safety, leadership, influence opportunities, diversity and working conditions including culture and values. The corporate culture is based, among other things, on what BE Group has defined as its core values. These values act as guidance in the day-to-day work of everyone within the Group. They address how the employees behave towards one another, as well as towards customers, suppliers and others with whom they come into contact. These are: Dynamic, Transparent and Sustainable.

The number of employees amounted to 657 compared to 665 at the same time last year and the average number of employees during the year amounted to 678 (654).

Sustainability report

BE Group has established a sustainability report pursuant to the Annual Accounts Act. The Group’s sustainability report includes pages 17-25, disclosures in accordance with the EU Taxonomy Regulation on pages 26-29, the section on risks and risk management in the Board of director’s Report on page 16 and the business model on page 4.

Environmental policy and environmental work

BE Group is working with environmental issues as an integrated part of its operations. The company is working to continuously improve its own facilities’ energy consumption, emissions and waste management.

Overarching environmental policy

A comprehensive environmental policy forms the basis of BE Group’s environmental work. The policy states among others that BE Group shall:

• As a minimum comply with current environmental legislation and requirements from local authorities.
• Be economical in the use of energy and natural resources.
• Work to decrease the amount of waste and emissions from the facilities.
• Identify opportunities to make adjustments benefiting the environment when making investments and changes in processes and facilities.
• Maintain a high level of awareness on environmental issues through ongoing training.
• Document and communicate environmental work to employees and provide open and objective information to external stakeholders.

BE Group is engaged in operations at one site in each country in Sweden and Finland for which environmental permits are required. Group companies have obtained special permits to engage in operations in the countries where such permits are required. All operations within the Group are certified under the ISO 14001 environmental management system.