BE GROUP INTERIM REPORT JANUARY JUNE 211 Roger Johansson, President & CEO Torbjörn Clementz, CFO & Executive Vice President Slide 1
Q2 A quarter with continued growth Financial Highlights Net sales increase of 14% Delivered tonnage increase of 7% Operating result of 66 MSEK with an operating margin of 4.2% Slide 2
Q2 Good sales despite weakened steel market Market highlights Operational highlights Overall good demand on our products Continued phasing in of operational Strong activity it in engineering i sector investments Improved activity in construction sector Started transformation of Polish Increased sales prices in all three business with a unit for production business areas service The bullish price development from High focus on inventory management steel producers in Q1 turned to decline to be well balanced for Q3 Several internal initiatives launched to improve gross margin Slide 3
Slide 4 FINANCIALS IN DETAIL
Continued growth in sold tonnage Tonnage ( tons) 15 125 6 Increased tonnage despite weak start of the quarter 5 q 1 75 5 4 3 2 Sold tonnage 7% higher than Q2 21 In total tons best quarter since Q2 28 25 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 29 21 211 Quarterly Rolling 12 months Slide 5
Price volatility not fully reflected in average sales prices Average sales price (SEK/kg) 13, Q2 average sales price increase of 7% 12, 11, 1, 9, 8, 7, 6, 5, 4, 3, 2 2, 1,, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 29 21 211 Quarterly Rolling 12 months Increase of 3% compared to Q1 Adjusted for currency effects, average sales price increased by 3% vs last year and 2% vs Q1 Slide 6
Q2: Higher sales with result not on par with last year Q2 Q2 Change Q1 SEK M 211 21 211 Net sales 1,597 1,399 +198 1,519 Underlying EBIT 43 46-3 47 % of Sales 2.7% 3.3% -.6% 3.1% Inventory gain/loss 23 4-17 2 EBIT 66 86-2 45 % of Sales 4.2% 6.2% -2.% 2.9% Earnings before tax 57 59-2 36 Net earnings 44 46-2 23 EPS (SEK).89.92 -.3.46 Cash-flow before change in net debt -52-3 -22 63 Net debt 851 832 +19 783 Net debt / Equity 98% 14% -6% 96% Slide 7
EBIT improved vs latest quarter Sales, EBIT and uebit (SEK M) Sales 1 6 1 4 1 2 1 8 6 4 2-2 1 519 1 597 1 399 1 383 1 273 86 66 48 45 46 47 32 7 43-8 Q2 1 Q3 1 Q4 1 Q1 11 Q2 11 EBIT 16 14 12 1 8 6 4 2-2 EBIT of 66 MSEK below last year due to lower inventory gains Underlying gross margin pressure by production ramp-up Leverage from acquisitions not fully achieved Inventory gains of 23 MSEK (4) EBIT margin of 4.2% (6.2) Net sales, SEK M Underlying EBIT, SEK M EBIT, SEK M Slide 8
8 Well managed working capital supports cash-flow Working capital (SEK M) 11,7 Working capital increase due to higher business volume 1,4 6 9,2 Tight working capital management 8,2 8,2 contributes to positive YTD cash-flow 4 2 557 632 519 478 569 Q2 1 Q3 1 Q4 1 Q1 11 Q2 11 Period end working capital, SEK M Working capital tied up, % Cash-flow from investment activities -37 MSEK (-1) during the quarter Net debt of 851 MSEK (832) Unused credit facilities and available cash of 435 MSEK Gearing of 98% (14) Slide 9
H1: All in all an improvement vs last year H1 H1 Change SEK M 211 21 Net sales 3,116 2,473 +643 Underlying EBIT 9 36 +54 % of Sales 2.9% 1.4% +1.5% Inventory gain/loss 25 22 +3 EBIT 111 58 +53 % of Sales 3.6% 2.3% +1.3% Earnings before tax 93 27 +66 Net earnings 67 21 +46 EPS (SEK) 1.35.42 +.93 Cash-flow before change in net debt 11-9 +11 Net debt 851 832 +19 Net debt / Equity 98% 14% -6% Slide 1
Slide 11 BUSINESS AREAS STATUS Q2 211
BA Sweden Improvement in demand Sales, EBIT and uebit (SEK M) Sales EBIT 8 8 7 6 5 4 3 2 1 673 4 23 573 28 668 16 74 748 21 18 17 11 32 24 Q2 1 Q3 1 Q4 1 Q1 11 Q2 11 Net sales, SEK M Underlying EBIT, SEK M EBIT, SEK M 7 6 5 4 3 Strengthened demand during the quarter after weak start Improvement from customers in both engineering and construction sector Net sales increase with 11% Operating margin improvement vs Q1 Integration of Lecor Stålteknik and RTS Produktion ongoing 2 g 1 Ongoing investment in new production facility for Lecor Stålteknik Slide 12
BA Finland Good margins despite production capacity ramp-up p Sales, EBIT and uebit (SEK M) Sales EBIT 6 6 5 4 3 2 1 57 48 33 474 479 29 21 15 7 546 33 33 574 44 29 Q2 1 Q3 1 Q4 1 Q1 11 Q2 11 Net sales, SEK M Underlying EBIT, SEK M EBIT, SEK M 4 Stable demand with certain weakening at the end of period 5 Net sales increase of 13% with a tonnage increase of 7% 3 2 Operating margin of 7.7% 7% Increased production capacity yet to have an impact on sales 1 Decision on extension of production facility in Lapua. Investment of 2 MSEK Slide 13
BA CEE Transformation in Poland started Sales, EBIT and uebit (SEK M) Sales 4 4 3 2 1-1 -2 254 8 265 258 264 1 37 3 1-2 -14-16 Q2 1 Q3 1 Q4 1 Q1 11 Q2 11 1 EBIT 3 2 1-2 Net sales, SEK M Underlying EBIT, SEK M EBIT, SEK M Continued increase in demand from engineering sector with certain weakening at the end of the quarter Increase in net sales of 21% due to increase in shipped tonnage EBIT weakened to 1 MSEK (8) due to declining price trend -1 Investment of 15 MSEK in new production service center in Trebaczew started Slide 14
Slide 15 OUTLOOK
BE Group outlook Signs of continued increase in demand during H2/11 based on customer forecasts Pricing development to customers will vary depending on product Buying market currently stable with no major movements Continued focus on improving margins and building the best modus operandi in the sector Slide 16
Business ambitions for the next few years Profitable growth Sustainable profitability in CEE Service sales 5% of total sales Follow customers internationally Create leverage within the Group Slide 17
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Slide 19 APPENDIX FINANCIAL INFORMATION
Appendix: Financial summary 21 211 Full year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 21 R12 Tonnage 114 133 116 126 14 143 489 525 Net Sales 1,74 1,399 1,273 1,383 1,519 1,597 5,129 5,772 Underlying EBIT -1 46 32 7 47 43 75 129 % of Sales -.9% 3.3% 2.5%.5% 3.1% 2.7% 1.5% 2.2% EBIT -28 86 48-8 45 66 98 151 % of Sales -2.6% 6.2% 3.8% -.6% 2.9% 4.2% 1.9% 2.6% Net earnings -25 46 26-18 23 44 29 75 Earnings/share 1 -.5.92.52 -.37.46.89.58 1.51 Cash flow 2-6 -3-51 3 63-52 -11-9 Working Capital 3 473 557 632 519 478 569 519 569 Underlying EBITA(%) -.8 3.4 2.9.8 3.3 3.1 1.7 2.6 Underlying ROOC(%) -3.8 21.3 15.8 5. 24.2 22.7 9.8 16.5 1 Earnings per share after dilution 2 Cash flow before change in Net Debt 3 Period end working capital Slide 2
Appendix: Sales per customer segment January-June Q2 OEM & partners 52 53 OEM & partners 52 53 Project 23 Project 23 22 23 17 16 Preprocessing Preprocessing 16 15 Retail 8 Retail 9 9 9 % 1% 2% 3% 4% 5% 6% % 1% 2% 3% 4% 5% 6% 211 21 211 21 Slide 21
Appendix: Sales per product area January-June Q2 Long steel +23 879 716 Long steel +13 45 399 Flat steel +28 1 122 879 Flat steel +18 575 489 Reinforce- ment Reinforce- ment 245 21 +22 134 13 +3 Stainless steel 541 446 +21 Stainless steel 271 245 +1 Aluminum 171 167 +2 Aluminum 86 91-6 Other 158 64 Other 81 45 % 5% 1% 15% 2% 25% 3% 35% 4% % 5% 1% 15% 2% 25% 3% 35% 4% 211 21 Change % 211 21 Change % Slide 22
Appendix: Sales per channel January-June Q2 Direct +1 555 54 Direct -1 283 286 Inventory +24 1 612 1 296 Inventory +14 83 729 Service 643 94 +41 Service +27 362 458 % 1% 2% 3% 4% 5% Sales outside scope of channels not included 211 21 Change % % 1% 2% 3% 4% 5% Sales outside scope of channels not included 211 21 Change % Slide 23