BE : Interim report January - September 2021

INTERIM REPORT

BE Group AB (publ)

January - September 2021

Third quarter 2021

First nine months 2021

Net sales increased by 85% to SEK 1,375 M (744)

The underlying operating result increased to SEK 193 M (14) Inventory gains and losses amounted to SEK 26 M (-10) The operating result increased to SEK 219 M (4)

Result after tax increased to SEK 175 M (-4)

Cash flow from operating activities increased to SEK 6 M (1) Earnings per share increased to SEK 13.49 (-0.32)

Net sales increased by 39% to SEK 3,878 M (2,797)

The underlying operating result increased to SEK 394 M (84) Inventory gains and losses amounted to SEK 69 M (-23) and items affecting comparability to SEK 0 M (-40)

The operating result increased to SEK 463 M (21) Result after tax increased to SEK 365 M (-9)

Cash flow from operating activities amounted to SEK 147 M (189) Earnings per share increased to SEK 28.10 (-0.73)

	2021	2020		2021	2020
Results overview	Jul-Sep	Jul-Sep	Change	Jan-Sep	Jan-Sep	Change
Tonnage, thousands of tonnes	77	64	13	263	231	32
Net sales, SEK M	1,375	744	631	3,878	2,797	1,081
Underlying operating result, SEK M	193	14	179	394	84	310
Operating result, SEK M	219	4	215	463	21	442
Profit/loss for the period, SEK M	175	-4	179	365	-9	374
Earnings per share, SEK	13.49	-0.32	13.81	28.10	-0.73	28.83
Cash flow from operating activities, SEK M	6	1	5	147	189	-42

BE Group, which is listed on the Nasdaq Stockholm exchange, is a trading and service company in steel, stainless steel and aluminium. BE Group offers efficient 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 office 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-September 2021

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"BE Group once again provide a strong quarter"

Statement from the CEO

Normally, the third quarter is a weak quarter for BE Group, but continued higher demand combined with rising steel prices and higher gross margins means that BE Group once again provide a strong quarter. The operating margin amounted to 15.9%, which is by far the best since the stock exchange listing in 2006.

In relation to the corresponding quarter last year, sales increased by 85% and the underlying operating result ended up at SEK 193 M (14). Steel prices continued to rise and led to inventory gains of SEK 26 M, compared with inventory losses of SEK -10 M in the same period last year, and the operating result increased to SEK 219 M (4). Despite the sharp price increase, we continue to have good control of working capital and this led to a positive cash flow in the period.

Continued recovery

The market is continuing to recover and material prices that rose rapidly and by a lot at the end of last year have continued to rise throughout the year with a sharp increase in some product types in the third quarter. The recovery is evident in both the construction and manufacturing industries.

Counted in tonnage, the quarter's increase is 21% compared to last year, but in relation to 2018, which was a good year in terms of tonnage, it is still a decrease by around 10% so there is absolutely room for continued

recovery. We are now seeing this recovery primarily among our larger customers.

Steel price trend

In total, steel prices will continue to increase in the fourth quarter, but in no way close to the price increases in the third quarter. Demand for steel is expected to be high in the coming year and the assessment is also that the transition to green steel production will require more sustainable prices for the steel producers. As prices stabilize, it is possible that a certain marginal contraction occurs when more expensive newly purchased material is sold.

Future outlook

Although we are humbly enjoying the good results for a short while, we are also continuing our hard work on constant and recurring improvements. The ambition is to continue to build a good company that is profitable in the long term with a stable foundation for the future by focusing on customer experience and sales culture. Commercial steel comprises standardized products and whoever offers the best customer experience within sustain- ability, competence, delivery performance and availability is on the fore- front. The working name is in short customer experience. Another means of competition is service level, business integrity and proactivity. This is what we call sales culture.

Peter Andersson

President and CEO

Bridge 2020-2021 operating result SEK M	Q1	Q2	Q3	Q4	Jan-Sep
Operating result 2020	-4	21	4	18	21
Reversal of inventory gains (-)/losses (+)	11	2	10	-6	23
Items affecting comparability	35	5	-	-	40
Underlying operating result 2020	42	28	14	12	84
Change in sales	-3	70	97	-	164
Change in underlying gross margin	16	66	90	-	172
Change in overhead costs	13	-31	-8	-	-26
Underlying operating result 2021	68	133	193	-	394
Reversal of inventory gains (+)/losses (-)	18	25	26	-	69
Items affecting comparability	-	-	-	-	-
Operating result 2021	86	158	219	-	463

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

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Comments on the report

Third quarter

The Group's consolidated net sales for the period increased by 85 percent compared to last year, amounting to SEK 1,375 M (744). The increase is mainly explained by organic tonnage growth of 21 per- cent, positive price and mix effects of 65 percent and negative currency effects of -1 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 third quarter as a result of the pandemic. The positive price effect is due to sharply rising steel prices.

Increased volumes, high steel prices and inventory gains contributed to an increased gross profit of SEK 316 M (105) corresponding to a gross margin of 23.0 percent (14.1). The operating result increased to SEK 219 M (4), corresponding to an operating margin of 15.9 percent (0.5). Adjusted for inventory gains and losses of SEK 26 M (-10), the underlying operating result increased to SEK 193 M (14). The underlying operating margin during the period increased to 14.0 percent (1.8) and the improvement is explained by increased tonnage in combination with high steel prices and improved gross margin.

First nine months

During the first nine months, the Group's net sales increased by 39 percent compared to last year and amounted to SEK 3,878 M (2,797). Tonnage in business area Sweden & Poland increased by 26 percent compared to last year, while Finland & Baltics delivered 17 percent more. Rising steel prices and mix effects have affected net sales positively by 27 percent and the price trend has resulted in inventory gains. Gross profit increased to SEK 819 M (413) with a gross margin of 21.1 percent (14.8).

The operating result increased to SEK 463 M (21), corresponding to an operating margin of 11.9 percent (0.7). Adjusted for inventory gains and losses of SEK 69 M (-23) and items affecting comparability of SEK 0 M (-40), the underlying operating result increased to SEK 394 M (84). The underlying operating margin amounted to 10.1 percent (3.0) during the period.

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

SEK M																%
200																							200
175																							175
150																						150
125																							125
100																							100
75																							75
50																							50
25																							25
0																							0
-25																							-25
-2019	-2020	-2020	-2021	-2021
Q3	Q1	Q3	Q1	Q3

uEBIT, SEK M

Sales growth, %

THE GROUP´S GROSS MARGIN AND GROSS PROFIT PER QUARTER

SEK M								%
350								35
300								30
250								25
200								20
150								15
100								10
50								5
0								0
-2019-2019-2020-2020-2020-2020-2021-2021-2021
Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3

Gross profit, SEK M

Gross margin, %

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

Third quarter

Net sales increased by 86 percent in the third quarter compared to last year and amounted to SEK 629 M (338). The higher sales is explained by an increase in tonnage by 26 percent at the same time as steel prices were higher. The operating result increased to SEK 94 M (-8). Adjusted for inventory gains and losses of SEK 17 M (-4), the underlying operating result increased to SEK 77 M (-5).

The Swedish operations delivered a strong underlying operating result compared to last year. The result development is mainly explained by increased demand from OEM customers and steel structure suppliers, higher steel prices and improved gross margin. 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 improved as a result of higher occupancy.

First nine months

Net sales for the first nine months increased by 40 percent compared to last year, amounting to SEK 1,881 M (1,343). Sales growth is explained by increase in tonnage of 17 percent and higher steel prices. Operating result increased to SEK 186 M (-21).

Adjusted for inventory gains and losses of SEK 46 M (-11) and items affecting comparability of SEK 0 M (-35), the underlying operating result increased to SEK 141 M (25). The recovery in demand was clear both within the construction and manufacturing industries.

BUSINESS AREA SWEDEN & POLAND, 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
-40																								-40
-2019	-2020	-2020	-2021	-2021
Q3	Q1	Q3	Q1	Q3

uEBIT, SEK M

Sales growth, %

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

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BUSINESS AREA

FINLAND & BALTICS

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

Third quarter

Compared to the third quarter last year, net sales increased by 85 percent to SEK 753 M (408). Sales growth is explained by an increase in tonnage by 17 percent at the same time as steel prices were higher. The operating result increased to SEK 126 M (13). Adjusted for inventory gains and losses of SEK 9 M (-6), the underlying operating result improved to SEK 117 M (19).

The Finnish operations provided a very strong underlying operating result compared to last year, despite limited availability of flat and thin products. The result development is explained by increased demand mainly from the manufacturing industry, higher steel prices and improved gross margin.

The Baltic operations provided a positive result through increased tonnage, higher steel prices and improved gross margin.

First nine months

Net sales for the first nine months increased by 38 percent compared to last year, amounting to SEK 2,019 M (1,460). The increase is explained by tonnage growth of 12 percent at the same time as steel prices were higher. The operating result increased to SEK 286 M (46) and adjusted for inventory gains and losses of SEK 24 M (-12) and items affecting comparability of SEK 0 M (-5), the underlying operating result increased to SEK 262 M (63). The development is attributable to high steel prices, strong 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	-2020	-2020	-2021	-2021
Q3	Q1	Q3	Q1	Q3

uEBIT, SEK M

Sales growth, %

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

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