BE : Interim report January - June 2021

INTERIM REPORT

BE Group AB (publ)

January - June 2021

Second quarter 2021

First six months 2021

Net sales increased to SEK 1,403 M (935)

The underlying operating result increased to SEK 133 M (28) Inventory gains and losses amounted to SEK 25 M (-2) and items afecting comparability to SEK 0 M (-5)

The operating result increased to SEK 158 M (21) Result afer tax increased to SEK 127 M (18)

Cash flow from operating activities amounted to SEK 81 M (95) Earnings per share increased to SEK 9.74 (1.34)

Net sales increased to SEK 2,503 M (2,053)

The underlying operating result increased to SEK 201 M (70) Inventory gains and losses amounted to SEK 43 M (-13) and items afecting comparability to SEK 0 M (-40)

The operating result increased to SEK 244 M (17) Result afer tax increased to SEK 190 M (-5)

Cash flow from operating activities amounted to SEK 141 M (188) Earnings per share increased to SEK 14.62 (-0.40)

	2021	2020		2021	2020
Results overview	Apr-Jun	Apr-Jun	Change	Jan-Jun	Jan-Jun	Change
Tonnage, thousands of tonnes	98	77	21	186	167	19
Net sales, SEK M	1,403	935	468	2,503	2,053	450
Underlying operating result, SEK M	133	28	105	201	70	131
Operating result, SEK M	158	21	137	244	17	227
Profit/loss for the period, SEK M	127	18	109	190	-5	195
Earnings per share, SEK	9.74	1.34	8.40	14.62	-0.40	15.02
Cash flow from operating activities, SEK M	81	95	-14	141	188	-47

BE Group, which is listed on the Nasdaq Stockholm exchange, is a trading and service company in steel, stainless steel and aluminium. BE Group ofers eficient distribution and value-adding production services to customers primarily in the construction and manufacturing industries. In 2020, the Group reported sales of SEK 3.7 billion. BE Group has approximately 630 employees, with Sweden and Finland as its largest markets. The head ofice is located in Malmö, Sweden. Read more about BE Group at www.begroup.com.

BE Group AB (publ) / Corp. Reg. No. 556578-4724 / Interim Report January-June 2021

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"…rising steel prices and increased gross margins, means that BE Group provided very strong earnings for the second quarter"

Statement from the CEO

Afer last year's decline in the second and third quarters, demand gradually began increasing at the end of the year. An increase that continued in 2021 and which, combined with rising steel prices and increased gross margins, means that BE Group provided very strong earnings for the second quarter. The underlying operating margin amounted to 9.5 percent and is the best since the stock exchange listing in 2006.

In terms of tonnage, the first half of the year is in line with 2019 and 7 percent below 2018 so there is definitely room for further recovery. More and more people are getting vaccinated and the hope is that the pandemic is beginning to near its end, but some uncertainty remains about how it may affect development in the future.

Sales in the second quarter increased by 50 percent and the underlying operating result ended up at SEK 133 M (28). Sales for the first half of the year increased by 22 percent and the underlying operating result increased to SEK 201 M (70).

Steel prices are continuing to rise and led to inventory gains of SEK 25 M, compared with an inventory loss of SEK -2 M in the same period last year, and the operating result increased to SEK 158 M (21). For the first half of the year, inventory gains amounted to SEK 43 M (-13) and the operating result was SEK 244 M (17). In this context, it should be noted that the operating result in the first half of 2020 was charged with items afecting comparability of SEK -40 M concerning the centralization of the warehouse and production to Norrköping as well as the restructuring project in the Baltics.

Continued recovery

The market is continuing to recover and material prices that rose quickly and by a lot at the end of last year have continued to improve during both the first and second quarter. In our main markets, the recovery is clear in both the construction and manufacturing industry.

Steel price trend

Steel prices will continue to rise in the third quarter and possibly even the fourth quarter. Analyst firms have constantly been moving back their forecasts of when the peak will be reached. Demand is expected to be high in the coming year and a higher price level is supported by continued protective duties. The transition to sustainable production of steel will also demand a more sustainable price situation for the steel producers.

Future outlook

Records are made to be celebrated, and we will, but records are also made to be broken. We are tirelessly continuing to build a stable company that is profitable in the long term. Focus continued to be working on smaller and recurring improvements in every part of the company. In some cases, this involves digging where we stand and in some cases, it's about raking gently. The primary aim is nonetheless to improve the customers' experience of doing business with us. Among other things, this is about sustainability, ex- pertise, delivery reliability, ofering and availability, put simply a good customer experience.

Peter Andersson

President and CEO

Bridge 2020-2021 operating result SEK M	Q1	Q2	Q3	Q4	Jan-Jun
Operating result 2020	-4	21	4	18	17
Reversal of inventory gains (-)/losses (+)	11	2	10	-6	13
Items afecting comparability	35	5	-	-	40
Underlying operating result 2020	42	28	14	12	70
Change in sales	-3	70	-	-	67
Change in underlying gross margin	16	66	-	-	82
Change in overhead costs	13	-31	-	-	-18
Underlying operating result 2021	68	133	-	-	201
Reversal of inventory gains (+)/losses (-)	18	25	-	-	43
Items afecting comparability	-	-	-	-	-
Operating result 2021	86	158	-	-	244

BE Group AB (publ) / Corp. Reg. No. 556578-4724 / Interim Report January-June 2021

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Comments on the report

Second quarter

Consolidated net sales for the period increased by 50 percent compared to last year, amounting to SEK 1,403 M (935). The increase is mainly explained by organic tonnage growth of 28 percent, positive price and mix efects of 25 percent and negative currency efects of -3 percent. Tonnage increased strongly compared to last year when the OEM customers and subcontractors to the automotive industry sharply reduced their operations in part of the second quarter as a result of the pandemic. The positive price efect is due to rising steel prices.

Increased volumes, higher steel prices and inventory gains contributed to an increased gross profit of SEK 296 M (138) corresponding to a gross margin of 21.1 percent (14.7). The operating result increased to SEK 158 M (21), corresponding to an operating margin of 11.3 percent (2.2). Adjusted for inventory gains and losses of SEK 25 M (-2) and items afecting comparability of SEK 0 M (-5), the underlying operating result increased to SEK 133 M (28). The underlying operating margin during the period increased to 9.5 percent (3.0) and the improvement is mainly explained by higher tonnage and improved gross margin.

First six months

During the first six months, the Group's net sales increased by 22 percent compared to last year and amounted to SEK 2,503 M (2,053). Tonnage in business area Sweden & Poland increased by 13 percent compared to last year, while Finland & Baltics delivered 10 percent more. Gross profit increased to SEK 503 M (308) and the gross margin improved to 20.1 percent (15.0).

The operating result increased to SEK 244 M (17), corresponding to an operating margin of 9.7 percent (0.8). Adjusted for inventory gains and losses of SEK 43 M (-13) and items afecting comparability of SEK 0 M (-40), the underlying operating result increased to SEK 201 M (70). The underlying operating margin amounted to 8.0 percent (3.4) during the period.

Covid-19 summary

The pandemic continues to afect public health, economies and the financial situation worldwide and its full scope and duration is not yet known. The uncertain market situation has, during the past year, led BE Group to take several measures necessary to mitigate the efects of Covid-19. As the situation now gradually improves, the measures have been reduced. The Company has not received Government grants for the period afer the end of February 2021 and the previous granted deferral of tax payments of approximately SEK 30 M was refunded in April 2021.

BE Group is continuing to monitor the development closely and is prepared to take actions 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.

THE GROUP´S SALES GROWTH AND UNDERLYING OPERATING RESULT PER QUARTER

SEK M																%
150																							150
125
																						125
100																						100
75																						75
50																							50
25																							25
0																							0
-25																							-25
-2019	-2019	-2020	-2020	-2021
Q2	Q4	Q2	Q4	Q2

uEBIT, SEK M

Sales growth, %

THE GROUP´S GROSS MARGIN AND GROSS PROFIT PER QUARTER

SEK M								%
300								25
250								20
200								15
150
100								10
50								5
0								0
-2019-2019-2019-2020-2020-2020-2020-2021-2021
Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2

Gross profit, SEK M

Gross margin, %

BE Group AB (publ) / Corp. Reg. No. 556578-4724 / Interim Report January-June 2021

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BUSINESS AREA SWEDEN & POLAND

The business area includes the Group's operations in Sweden consisting of the companies BE Group Sverige and Lecor Stålteknik, as well as the Polish operation BE Group Poland.

Second quarter

Net sales increased by 57 percent in the second quarter compared to last year and amounted to SEK 702 M (447). The higher sales is explained by an increase in tonnage by 36 percent at the same time as steel prices were higher. The operating result increased to SEK 56 M (12). Adjusted for inventory gains and losses of SEK 16 M (-2), the underlying operating result increased to SEK 40 M (14).

The Swedish operations delivered a stronger underlying operating result compared to last year with strong volume growth, mainly among OEM customers and steel structure suppliers. Our joint venture AMBE provided a strong operating result due to increased demand and high prices on thin sheets and coils.

In the Polish operations and Lecor Stålteknik, profitability declined as a result of detoriated price and mix efect.

First six months

Net sales for the first six months increased by 25 percent compared to last year, amounting to SEK 1,252 M (1,005). Operating result increased to SEK 92 M (-13). Adjusted for inventory gains and losses of SEK 28 M (-7) and items afecting comparability of SEK 0 M (-35), the underlying operating result increased to SEK 64 M (30). Tonnage increased by 13 percent and the recovery was clear both within the construction and manufacturing industries.

BUSINESS AREA SWEDEN & POLAND, SALES GROWTH AND UNDERLYING OPERATING RESULT PER QUARTER

SEK M																%
60																							60
50																							50
40																							40
30																						30
20																						20
10																							10
0																							0
-10																									-10
-20																									-20
-30																							-30
-2019	-2019	-2020	-2020	-2021
Q2	Q4	Q2	Q4	Q2

uEBIT, SEK M

Sales growth, %

BE Group AB (publ) / Corp. Reg. No. 556578-4724 / Interim Report January-June 2021

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BUSINESS AREA FINLAND & BALTICS

The business area includes the Group's operations in Finland and the three Baltic countries.

Second quarter

Compared to the second quarter last year, net sales increased by 45 percent and amounted to SEK 710 M (490). Sales growth is mainly explained by an increase in tonnage by 21 percent and higher steel prices. The operating result increased to SEK 108 M (10). Adjusted for inventory gains and losses of SEK 9 M (0) and items afecting comparability of SEK 0 M (-5), the underlying operating result increased to SEK 99 M (15).

The Finnish operations provided a very strong underlying operating result compared to last year. The result development is explained by an increase in demand mainly from the manufacturing industry and higher steel prices.

The Baltic operations showed positive profitability through increased tonnage, higher steel prices and improved gross margin.

First six months

Net sales for the first six months increased by 20 percent compared to last year, amounting to SEK 1,266 M (1,052). The increase is mainly explained by organic tonnage growth of 10 percent, positive price and mix efects of 15 percent and negative currency efects of -5 percent. The operating result increased to SEK 160 M (33) and adjusted for inventory gains and losses of SEK 15 M (-6) and items afecting comparability of SEK 0 M (-5), the underlying operating result increased to SEK 145 M (44). This development is mainly attributable to increased gross margin and tonnage growth.

BUSINESS AREA FINLAND & BALTICS SALES GROWTH AND UNDERLYING OPERATING RESULT PER QUARTER

SEK M																%
120																							120
100																							100
80																						80
60																						60
40																							40
20																							20
0																							0
-20																							-20
-2019	-2019	-2020	-2020	-2021
Q2	Q4	Q2	Q4	Q2

uEBIT, SEK M

Sales growth, %

BE Group AB (publ) / Corp. Reg. No. 556578-4724 / Interim Report January-June 2021

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