Comments on the report

Second quarter

The Group’s consolidated net sales for the period increased by 46 percent compared to last year, amounting to SEK 2,044 M (1,403). The increase is explained by positive price and mix effects of 54 percent, acquisitions of 4 percent and positive currency effects of 2 percent counteracted by negative organic tonnage growth of -14 percent. After demand rose markedly towards the end of the first quarter due to Russia’s invasion of Ukraine, demand was more moderate in the second quarter. The tonnage was relatively strong in the second quarter of the previous year when demand among OEM customers and subcontractors to the automotive industry recovered and they built up inventories in the face of future price increases.

Higher steel prices contributed to an increased gross profit of SEK 458 M (296) which resulted in a gross margin of 22.4 percent (21.1). The operating result increased to SEK 313 M (158), corresponding to an operating margin of 15.3 percent (11.3). Adjusted for inventory gains of SEK 22 M (25), the underlying operating result increased to SEK 291 M (133). The underlying operating margin during the period increased to 14.2 percent (9.5) and the improvement is mainly attributable to high steel prices and strengthened gross margin.

In the beginning of March, BE Group acquired the assets of Hercules Rebar in Norrköping from Hercules Grundläggning AB. The acquisition include machines, inventory, employees and rental agreement for the reinforcement facility and a multi-year cooperation agreement on reinforcement with NCC. The business is a smaller manufacturing unit which today employs about 20 people, own employees and temporary workers. The acquisition has been consolidated into BE Group Sverige AB during the second quarter. With the acquisition, BE Group will strengthen its offering within reinforcement in Sweden and production and storage capacity will be added close by the current facility in Norrköping.

First six months

During the first six months, the Group’s net sales increased by 55 percent compared to last year and amounted to SEK 3,889 M (2,503). Tonnage in business area Sweden & Poland decreased by -5 percent including aquisitions and Finland & Baltics delivered -3 percent less. Gross profit increased to SEK 785 M (503) and the gross margin improved to 20.2 percent (20.1).

The operating result increased to SEK 497 M (244), corresponding to an operating margin of 12.8 percent (9.7). Adjusted for inventory gains of SEK 26 M (43), the underlying operating result increased to SEK 471 M (201). The underlying operating margin amounted to 12.1 percent (8.0) during the period.

The sanctions directed at Russia, a shortage of input materials and rising energy costs caused considerable price increases among producers at the end of the first quarter. Before the war began, about 10 percent of the Group’s steel purchases came from Russia and Ukraine, which mainly affected the Finnish and Baltic operations. BE Group immediately ceased orders and payments to companies subject to global sanctions and immediately re-allocated to other suppliers in Europe and Asia, resulting in a higher price level for these materials. Deferred supplier payments as a consequence of imposed sanctions on Russian-controlled companies were settled with the Finnish authorities in the second quarter. The company acts in accordance with the decisions and recommendations of the governments and authorities in each market.

BE Group is also affected directly and indirectly by transport difficulties, higher fuel costs and energy prices, as well as the risk of shortages of electricity and gas. BE Group is continuing to closely monitor developments and is prepared to take actions where necessary to reduce the negative impact on the business.