Comments on the report
Consolidated net sales for the period decreased by 22 percent compared to last year, amounting to SEK 935 M (1,193). The decrease is mainly attributable to the negative volume development in the Swedish operation as an effect of Covid-19 and lower steel prices. Gross profit amounted to SEK 138 M (164), with a gross margin of 14.7 percent (13.8). The operating result amounted to SEK 21 M (32), corresponding to an operating margin of 2.2 percent (2.7). Adjusted for inventory gains and losses of SEK -2 M (0) and items affecting comparability of SEK -5 M (-), the underlying operating result amounted to SEK 28 M (32). The underlying operating margin during the period was 3.0 percent (2.6) and the increase is mainly due to improved efficiency in the production operations, positive mix effects and cost savings.
First six months
During the first six months, the Group’s net sales decreased by 14 percent compared to last year and amounted to SEK 2,053 M (2,398). Tonnage in business area Sweden & Poland decreased by 17 percent compared to last year, while Finland & Baltics delivered 5 percent less. Gross profit amounted to SEK 308 M (330) and the gross margin amounted to 15.0 percent (13.8).
The operating result amounted to SEK 17 M (66), corresponding to an operating margin of 0.8 percent (2.7). Adjusted for inventory gains and losses of SEK -13 M (-6) and items affecting comparability of SEK -40 M (-), the underlying operating result amounted to SEK 70 M (72). The underlying operating margin amounted to 3.4 percent (3.0) during the period.
The scope and duration of the on-going pandemic are not yet known, which means, as previously reported, that it is not possible to fully quantify its future impact on BE Group. The uncertain market situation has led BE Group to take several measures necessary to fend off the effects of Covid-19. This primarily concerned the operations in Sweden and the company made use of Government grants, such as the introduction of short-term lay-offs, for example. Government grants linked to Covid-19 contributed around SEK 5 M during the quarter and this grant is recognized as a cost-reduction of the items the grant pertains to. As a precautionary measure, the company has also applied for and been granted a deferral of tax payments of approximately SEK 30 M. All of the companies in the Group focus extensively on cost control, savings and efficiency enhancements and report developments to Group Management weekly.
Net sales were primarily negatively impacted by Covid-19 during the second quarter. The Swedish operations were negatively impacted by a lower demand from the manufacturing industry, mostly from subcontractors in the automotive industry. Generally speaking, our business is affected by how our customers and suppliers are affected by the situation and how they manage it. Some customers are pausing production and projects while others intend to continue at the same rate as before.
BE Group is monitoring the development closely and is prepared to take further steps where necessary to reduce the negative impact on the business. The company acts in accordance with decisions and recommendations from governments and authorities in the respective markets and with the health and well-being of its employees as a top priority.
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The comparative figures for 2018 are prepared according to previous accounting principles regarding leasing (IAS 17).
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