Market conditions remained difficult, particularly in the construction sector, causing net sales in the third quarter to decline by 22% to SEK 1,187 M (1,514). Combined with pressured gross margins, the underlying operating result decreased to SEK 4 M (67). Inventory losses amounted to SEK -40 M and, in addition, non-recurring costs of SEK -6 M were charged to earnings, meaning that the operating result amounted to SEK -42 M (40). Cash flow from operating activities amounted to SEK -17 M (-183) and net debt was at SEK 251 M (475). For the first nine months, cash flow amounted to SEK 341 M and over the past 12 months, it amounted to SEK 493 M.

Non-recurring costs relates to efficiency enhancement of the organization. Combined with cost rationalizations, this is expected to generate an annual savings effect of more than SEK 40 M. To enhance efficiency and reduce the distance between company management and its customers, I have during the quarter also assumed the role as MD for the Swedish operations.

The reason for the weak result is a continuous drop in prices and tonnage, which pressures the gross margin. The decline in tonnage originates exclusively from the Swedish part of the operations, which is mainly attributable to greater exposure to the construction sector.

Outlook

Demand in the fourth quarter is expected to be in line with the third

quarter. In general, few or no negative signals are coming from the industrial sector, while the construction sector is expected to continue at low levels of activity.

Spot prices have fallen into Q4 and, according to analyst firms, are expected to bottom out in November and then increase slightly into 2024. A lower price level does not reasonably work for steel producers and they are likely to further reduce their capacity if they do not get at least the current levels.

Our focus

When the market situation is tough, it is important to keep your head cool. A lot of steel is needed even in worse times and now it is important to secure as many deals as possible at healthy margins. This, together with the ongoing adaptation of the organization and costs, will in the long term result in a stronger BE Group. Our ambition for the company is to be profitable regardless of economic trends and external factors.

Peter Andersson
President and CEO