Continued challenging market conditions

During the year, market conditions, particularly for the construction sector, remained challenging at the same time as material prices continued to fall. This caused a decrease in sales of 12 percent and pressured gross margins, resulting in an underlying operating margin of 1.1 percent (0.6). This result is far from the ambition, but at the same time, good progress has been made in many parts of the company. Some examples:

• Maintained tonnage in the home markets despite the economic situation and a decline in tonnage from top customers by nearly 15 percent. This shows the strength of our systematic sales efforts and the broad customer base.
• Number of orders through the e-trading platform rose by 25 percent and sales ended up at approximately SEK 250 M.
• Sales and administration expenses decreased by nearly 10 percent.
• Safety efforts at our facilities have been further intensified and refined since the start of the project Safety First in 2019. The number of accidents with absence amounted to 36 at that time and has since decreased by 97%. A fantastic improvement and I strongly believe that a safe and sound workplace is the foundation for good business. If we can’t take care of our employees and offer a safe workplace, we can’t reasonably take care of our company’s business and customers either.

Structural changes towards a better company

In the first quarter, BE Group announced that it will close its Baltic operations. Despite extensive efforts, the operations in recent years averaged a loss of about SEK 10 M per year. The closure proceeded according to plan during the year and the shares in the company were divested at the end of the year.

At the end of November, it was announced that BE Group would be streamlining by moving operations from Poland to Sweden and Finland. The Polish operations have largely been suppliers to Swedish customers and the change entails a considerable cost rationalization. The non-recurring cost of SEK -28 M is expected to have a payback period of less than one year. During the year, great emphasis has been placed on preparing the introduction of a new business system, which will be implemented in 2025. This future-proof business platform will create the conditions for continued increased digitalization, growth and efficiency.

Steel market trends

Over the year, we saw continued price declines as a result of decreased demand at the same time that European steel producers maintained their capacity. Why? A cynic might suspect that this is due to the allocation of free emissions allowances which are based on historical production statistics. For example, spot prices on flat products (hot- and cold-rolled steel) rose in Europe at the beginning of the year to then have a decline with a full-year decrease of just under 20 percent.

Looking ahead – the President of the United States recently signed a presidential order on the introduction of punitive tariffs of 25 percent on all imports of steel and aluminium, where the date of introduction is not determined by the time of this writing. The last time this happened, in 2017, the EU reacted with punitive tariffs on steel against Asia and there was a better balance between supply and demand in Europe. In addition to the current global trade tensions, the European steel industry is facing considerable challenges. Investments in green steel production, rising production costs and decreased demand in certain sectors have led to, and will reasonably lead to, additional measures. Recently, a major steel producer announced that they were temporarily withdrawing from the market and another withdrew its price lists.

Outlook and focus in the future

2025 has begun on par with 2024, with the difference being that it is now the construction sector that is up and the industrial sector that is somewhat lagging. Our most important focus is to maintain momentum in our strategic efforts to continue improving earnings. This means increasing and deepening our cooperation with our customers to win as much business as possible, streamline the supply chain and continue to work with the cost side to achieve a healthy margin throughout the business. Our ambition is for the company to always be profitable regardless of external factors. Given the structural changes initiated and implemented in 2024, with all else being equal, 2025 is expected to be better.

In conclusion, I would like to express my heartfelt gratitude to our customers, who repeatedly and sometimes for three or four generations give us their trust, to our owners who believe in us and to our employees who daily strive to make BE Group a better and stronger company.

Peter Andersson
VD och koncernchef