BE : Year-end

YEAR-END REPORT

BE Group AB (publ)

January - December 2020

Fourth quarter 2020

Full-year 2020

Net sales decreased by 11% to SEK 875 M (984)

The underlying operating result increased to SEK 12 M (9) The operating result increased to SEK 18 M (8)

Result a'er tax increased to SEK 13 M (7)

Cash flow from operating activities increased to SEK 152 M (85) Earnings per share increased to SEK 1.06 (0.57)

Net sales decreased by 16% to SEK 3,672 M (4,359)

The underlying operating result increased to SEK 96 M (94) The period was a ected by items a.ecting comparability of

SEK -40 M (-) related to centralization of warehouse and production operations in Sweden and the Baltics

The operating result amounted to SEK 39 M (88) Result a'er tax amounted to SEK 4 M (50)

Cash flow from operating activities increased to SEK 341 M (200) Earnings per share amounted to SEK 0.33 (3.87)

The Board of Directors proposes that no dividend will be paid for the financial year of 2020

	2020	2019		2020	2019
Results overview	Oct-Dec	Oct-Dec	Change	Jan-Dec	Jan-Dec	Change
Tonnage, thousands of tonnes	76	77	-1	307	340	-33
Net sales, SEK M	875	984	-109	3,672	4,359	-687
Underlying operating result, SEK M	12	9	3	96	94	2
Operating result, SEK M	18	8	10	39	88	-49
Profit/loss for the period, SEK M	13	7	6	4	50	-46
Earnings per share, SEK	1.06	0.57	0.49	0.33	3.87	-3.54
Cash flow from operating activities, SEK M	152	85	67	341	200	141

BE Group, which is listed on the Nasdaq Stockholm exchange, is a trading and service company in steel, stainless steel and aluminium. BE Group o+ers eicient 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 o ice is located in Malmö, Sweden. Read more about BE Group at www.begroup.com.

BE Group AB (publ) / Corp. Reg. No. 556578-4724 /Year-end report January-December 2020

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"We are now seeing a gradual market recovery combined with rising material prices"

Statement from the CEO

The weaker demand that characterised the whole year continued in the final quarter and net sales decreased by 11%. However, in recent months, we have hopefully seen a break in the trend and in December, for the first time during the year, we had net sales that were higher than last year. Despite lower sales during the quarter, the underlying operating result increased to SEK 12 M (9). This is the result of a higher gross margin in virtually all of the companies combined with good cost control.

Rising steel prices during the quarter resulted in an inventory gain of SEK 6 M, compared with an inventory loss of SEK 1 M the same period last year, and the operating result amounted to SEK 18 M. Good control of working capital resulted in a cash flow from operating activities of SEK 152 M (85).

Continued recovery

We are now seeing a gradual market recovery combined with rising material prices. In the main markets, the recovery is clear in the manufacturing industry while the construction industry is back to levels in line with the previous year. However, what will happen in 2021 as a result of Covid-19 and its development is still di'icult to predict. What I do know is that BE Group will handle the situation, with a focus on customers, hard work and a belief in our basic idea and readiness to quickly shi& gears both up and down.

Steel price development

The background to rising steel prices is a strong economy in Asia during 2020 with China as the net importer of steel for the first time in many years. Halfway through the year, the demand for automotive related products increased in Europe but by then, producers were cautious of building up their capacity. The alternative, to meet European demands with

imported steel, was not possible since the outside world had stronger demands and willingness to pay a significantly higher price.

With a limited availability and increasing lead times, customers started to accept rising prices during the autumn. By the end of 2020, the demand for steel accelerated further, and despite an increase in production capacity in Europe, we now see a shortage in several types of material, mainly automotive related. The shortage has led to rapid and large price increases in steel as well as raw material by the end of 2020 and the beginning of 2021.

Future outlook

We continue to focus on building a good company with a solid foundation for the future. Major projects, such as the investment in Norrköping, the centralization of warehouse and production operations to Norrköping together with the closure of the warehouse in Malmö, have been completed and will have a positive impact on 2021. The restructuring in the Baltics is running according to plan and our e-commerce portal will have a pre launch at the end of the first quarter with a full launch in the second quarter. In the fourth quarter, we also decided to broaden and increase our o*ering of laser-cut sheet metal in Finland through further investment in a state-of-the- art fiber laser.

In addition to the above, a lot is now about the fact that we must continuously and repeatedly implement small improvements in every part of the company. It is my absolute belief that our sta, with their commitment, persistence and flexibility, are ready to take on this task.

Peter Andersson

President and CEO

Bridge 2019-2020 operating result SEK M	Q1	Q2	Q3	Q4	Jan-Dec
Operating result 2019	34	32	14	8	88
Reversal of inventory gains (-)/losses (+)	6	0	-1	1	6
Items a.ecting comparability	-	-	-	-	-
Underlying operating result 2019	40	32	13	9	94
Change in sales	-12	-35	-32	-15	-94
Change in underlying gross margin	21	12	11	6	50
Change in overhead costs	-7	19	22	12	46
Underlying operating result 2020	42	28	14	12	96
Reversal of inventory gains (+)/losses (-)	-11	-2	-10	6	-17
Items a.ecting comparability	-35	-5	-	-	-40
Operating result 2020	-4	21	4	18	39

BE Group AB (publ) / Corp. Reg. No. 556578-4724 /Year-end report January-December 2020

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Comments on the report

Fourth quarter

Consolidated net sales for the period decreased by 11 percent compared to last year, amounting to SEK 875 M (984). The decrease is explained by price and mix eects of 8 percent, negative currency eects of 2 percent and slightly lower tonnage. Volume decreased sharply in the second and third quarters both in the manufacturing and construction sectors, mainly as a result of Covid-19. In the fourth quarter, the market recovered, mainly in the manufacturing industry, and the quarter ended strongly.

Gross profit amounted to SEK 135 M (138), with a stronger gross margin compared to last year of 15.5 percent (14.0). The operating result increased to SEK 18 M (8), corresponding to an operating margin of

2.1 percent (0.8). Adjusted for inventory gains and losses of SEK 6 M (-1), the underlying operating result increased to SEK 12 M (9). The underlying operating margin during the period increased to 1.4 percent (0.9).

Full-year 2020

During the year, consolidated net sales decreased by 16 percent compared to last year amounting to SEK 3,672 M (4,359). Tonnage in business area Sweden & Poland decreased by 14 percent compared to last year, while Finland & Baltics delivered 5 percent less. Net sales were negatively impacted by price and mix e(ects of 5 percent and currency eects of 1 percent. The period was also a'ected by inventory losses of SEK -17 M (-6).

Gross profit amounted to SEK 548 M (605) with a gross margin of 14.9 percent (13.9). Adjusted for inventory gains and losses gross margin increased to 15.3 percent (14.0).

The operating result amounted to SEK 39 M (88), corresponding to an operating margin of 1.1 percent (2.0). Sales and administration expenses were SEK 36 M or 7 percent lower than last year. Adjusted for inventory gains and losses of SEK -17 M (-6) and items a.ecting comparability of SEK -40 M (-), the underlying operating result increased to SEK 96 M (94). The underlying operating margin for the period increased to 2.6 percent (2.1).

Covid-19 summary

The full scope and duration of the on-going pandemic are not yet known, which means, as previously reported, that it is not possible to fully quantify its future impact on BE Group. The uncertain market situation has led BE Group to take several measures necessary to mitigate the e#ects of Covid-19. This primarily concerned the operations in Sweden and the company made use of Government grants, such as the introduction of short-termlay-o's, for example. Government grants linked to Covid-19 contributed around SEK 3 M during the fourth quarter and around SEK 10 M during the year. These grants are recognized as cost-reductions of the items the grants pertains to. As a precautionary measure, the company has also applied for and been granted a deferral of tax payments of approximately SEK 30 M during the year. All of the companies in the Group focus extensively on cost control, savings and e)iciency enhancements and report developments to Group Management weekly.

Net sales were, primarily in the second and third quarters, negatively impacted by Covid-19, but some recovery took place in the fourth quarter.

BE Group is monitoring the development closely and is prepared to take further steps 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																%
50																								50
40																								40
30																								30
20																									20
10																							10
0																							0
-10																									-10
-20																									-20
-30																								-30
-2018	-2019	-2019	-2020	-2020
Q4	Q2	Q4	Q2	Q4

uEBIT, SEK M

Sales growth, %

The comparative figures for 2018 are prepared according to previous accounting principles regarding leasing (IAS 17).

THE GROUP´S GROSS MARGIN AND GROSS PROFIT PER QUARTER

SEK M								%
200								20
160								18
120								16
80								14
40								12
0								10
-2018-2019-2019-2019-2019-2020-2020-2020-2020
Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4

Gross profit, SEK M

Gross margin, %

BE Group AB (publ) / Corp. Reg. No. 556578-4724 /Year-end report January-December 2020

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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.

Fourth quarter

Net sales decreased by 10 percent in the fourth quarter compared to last year and amounted to SEK 439 M (489). The lower sales is explained by negative price and mix eects of 8 percent and a decrease in tonnage by 2 percent. The operating result amounted to SEK 7 M (9). Adjusted for inventory gains and losses and items a.ecting comparability of SEK 0 M (-2), the underlying operating result amounted to SEK 7 M (12).

The Swedish and Polish operations delivered a weaker underlying operating result compared to last year mainly as a result of negative price and mix eects but also a somewhat lower volume. The market recovered during the fourth quarter, mainly within the manufacturing industry and finished strong. Thanks to eiciency measures and improved gross margins, our joint venture AMBE provided a higher operating result compared to last year, despite a lower volume. Lecor Stålteknik provided an operating result of SEK 0 M (-2), due to increased volume and eiciency improvements.

Full-year 2020

Net sales decreased by 19 percent compared to last year, amounting to SEK 1,782 M (2,209). Operating result amounted to SEK -14 M (61) and was negatively impacted by items a.ecting comparability of SEK -35 M (-), related to the decision to centralize warehousing and production operations in Norrköping and to close the warehouse in Malmö, which was communicated during the first quarter. Adjusted for inventory gains and losses of SEK -11 M (-5) and the items a.ecting comparability, the underlying operating result amounted to SEK 32 M (67). Profit decreased mainly as a result of declining volume in the Swedish operations due to reduced activity among our largest customers as an eect of Covid-19. Lecor Stålteknik delivered a result of SEK 1 M (-11).

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

SEK M																%
40																							40
30																							30
20																							20
10																									10
0																							0
-10																									-10
-20																									-20
-30																							-30
-2018	-2019	-2019	-2020	-2020
Q4	Q2	Q4	Q2	Q4

uEBIT, SEK M

Sales growth, %

BE Group AB (publ) / Corp. Reg. No. 556578-4724 /Year-end report January-December 2020

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BUSINESS AREA FINLAND & BALTICS

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

Fourth quarter

Compared to the fourth quarter last year, net sales were 12 percent lower and amounted to SEK 436 M (496). The lower sales is explained by negative price and mix eects of 9 percent and negative currency

• ects of 3 percent. Tonnage was unchanged compared to last year. The operating result increased to SEK 17 M (5) despite lower sales. Adjusted for inventory gains of SEK 6 M (1), the underlying operating result improved to SEK 11 M (4).

The Finnish operations delivered an improved underlying operating result despite lower sales. Lower steel prices and slightly lower tonnage are compensated by a higher gross margin through an improved customer and product mix as well as continued increased e iciency in production operations. The Baltic operations delivered an improved underlying operating result as a consequence of increased volume and sales.

Full-year 2020

Net sales decreased by 12 percent compared to last year, amounting to SEK 1,896 M (2,157). The lower sales is explained by a decrease in tonnage of 6 percent at the same time as steel prices were lower. The operating result improved to SEK 63 M (53) and was impacted by items a.ecting comparability of SEK -5 M (-) related to the decision to centralize warehousing and production operations in the Baltics, which was communicated during the second quarter. Adjusted for the items a.ecting comparability and inventory gains and losses of SEK -6 M (0) the underlying operating result increased to SEK 74 M (52), which is mainly explained by an increased gross margin and improved e iciency in the production operations in Finland.

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

SEK M																%
40																									40
30																									30
20																									20
10																							10
0																							0
-10																									-10
-20																									-20
-30																									-30
-2018	-2019	-2019	-2020	-2020
Q4	Q2	Q4	Q2	Q4

uEBIT, SEK M

Sales growth, %

BE Group AB (publ) / Corp. Reg. No. 556578-4724 /Year-end report January-December 2020

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