- Net sales fell by 11 percent, amounting to SEK 978 M (1,104).
- The underlying operating result amounted to SEK 9 M (12).
- Operating result, affected by non-recurring costs of SEK -45 M (0), amounted to SEK -45 M (10).
- The result after tax was SEK -53 M (0).
- Cash flow from operating activities was SEK 51 M (-54).
- Earnings per average number of shares amounted to SEK -0.20 (0.00).
- Decision to close the unprofitable parts of the operations in the Czech Republic and Slovakia.
Comments on the period
Development in the first quarter was largely characterized by the sharp decline in steel prices that occurred at the end of 2015. The current price level is significantly lower than just a year ago. Generally lower prices, combined with sales in the Czech and Slovakian markets having declined by about 40 percent, mean that the Group’s overall sales have fallen by 11 percent compared with the same quarter last year.
The decline in sales and continued losses, combined with the weak market outlook, has resulted in a decision to restructure the Group’s operations in the Czech Republic and Slovakia. This entails that the operations in Slovakia will be closed, as will flat carbon steel and aluminium in the Czech Republic. The profitable part of our operations in the Czech Republic, which successfully supplies the market with cut round bars, is not affected by the change.
Shipped tonnage in the main markets Sweden and Finland are largely on the same level as last year, despite the fact that the quarter is seasonally affected by the Easter holiday, which unlike last year, occured during the first quarter. With improved underlaying margins and lower overheads we show a result in line with last year in these markets, despite lower prices.
In total, the quarter’s underlying result decreased to SEK 9 M, compared with SEK 12 M last year. The decline is mainly due to a lower result in the Czech Republic and Slovakia. The sharp fall in prices in late 2015 led to inventory losses, totaling SEK -9 M in the first quarter of this year. Combined with non-recurring costs of SEK -45 M, mainly related to restructuring in the Czech Republic and Slovakia, this means that we also reported a lower operating result. The Group shows a strong cash flow from operating activities during the first quarter, which means that the cash flow for the last twelve months is positive.
Structure and organizational change
To improve conditions for a stronger and more profitable BE Group, we have, in addition to the cutbacks in the Czech Republic and Slovakia, also performed an organizational change in order to decentralizing responsibility for results on the basis of two new business units, Distribution and Production, on our main markets Sweden and Finland respectively. In concrete terms, this means that the business areas will be divided into business units focused on distribution and production respectively. The full measures were announced in April and are presented in the section Significant events after the end of the period, in this report.
With the changes in the Czech Republic and Slovakia and an organization that clearly reflects and supports our business models, we will improve the conditions for a stronger market position.
Looking ahead, the price situation appears to have stabilized following the sharp decline at the end of last year. Our assessment is that prices have reached bottom and that the trend going forward will be positive. At the same time, the view is that market demand will remain at the current level.
Source: BE Group