“Increased gross margin and good cost control”
Statement from the CEO
The third quarter is normally a weaker quarter for BE Group and this year was no exception. It feels as if the holiday period was more drawn out than usual and the market’s recovery is and has been slow. In total, sales decreased by 24 percent during the quarter, but when we sum things up, we nonetheless achieved somewhat better underlying result than last year at SEK 14 M (13). This is the result of a higher gross margin in all of the companies and good cost control.
Good control of working capital also resulted in a cash flow of SEK 1 M (-14) in the quarter and generated a continued positive cash flow of SEK 189 M (115) for the first nine months.
In addition to the impact of Covid-19, this should be viewed in light of the decline in demand that already began in the second quarter of 2019 and continued into 2020.
Recovery in manufacturing industry but decline in construction industry
Right now, we are seeing a continuous recovery, but there is still extensive uncertainty about the effects of Covid-19 on future quarters. In our main markets, we can see a recovery in the manufacturing industry, while the construction industry is slowing down. We are carefully monitoring developments and are prepared to take the necessary measures, at the same time that we are prepared to shift into high gear at short notice to meet demand from both new and old customers.
The development in Sweden in the third quarter was somewhat dampened, partially by delivery problems caused by a small fire in the new production line and partially by start-up problems, as we only delivered from our Norrköping unit after the holiday period. The Finnish market has not been as affected by Covid-19, but the decline is nonetheless significant. Here, we are clearly compensating with a higher gross margin.
Although the third quarter was worse than expected for Lecor Stålteknik, the company have had a positive development during the year and, right now, we see no reason that this will not continue.
We are continuing to focus on building a good company with a solid foundation for the future. The investment in Norrköping is in full operation and the centralization of warehouse and production operations to Norrköping together with the closure of the warehouse in Malmö is largely completed. The restructuring in the Baltics is running according to plan and our e-commerce portal is expected to be finalized in the first quarter 2021.
Finally, I would like to express my gratitude to our employees. They have shown commitment, perseverance and flexibility in a different time. With everything else we are doing, this guarantees that we will come out stronger when the market turns around.
President and CEO
Bridge 2019-2020 operating result SEK M
|Brygga resultatutveckling 2019–2020. MSEK||Q1||Q2||Q3||Q4||jan-sep|
|Operating result 2019||Rörelseresultat 2019||34||32||14||8||80|
|Reversal of inventory gains (-)/losses (+)|| |
Återläggning lagervinster (-)/förluster (+)
|Items affecting comparability||Jämförelsestörande poster||–||–||–||–||–|
|Underlying operating result 2019|| |
Underliggande rörelseresultat 2019
|Change in sales||Försäljningsförändring||-12||-35||-32||–||-79|
|Change in underlying gross margin|| |
|Change in overhead costs||Omkostnadsförändring||-7||19||22||–||34|
|Underlying operating result 2020|| |
Underliggande rörelseresultat 2020
|Reversal of inventory gains (+)/losses (-)|| |
Återläggning lagervinster (+)/förluster (-)
|Items affecting comparability||Jämförelsestörande poster||-35||-5||–||–||-40|
|Operating result 2020||Rörelseresultat 2020||-4||21||4||–||21|