BE Group Q2 2016 – improved earnings and continued strong cash flow

• Net sales decreased by 5 percent to SEK 1,047 M (1,104).
• The underlying operating result improved to SEK 21 M (12).
• The operating result improved to SEK 31 M (10).
• The result after tax was SEK 19 M (-13).
• Cash flow from operating activities was SEK 36 M (-28).
• The number of shares was reduced following a reverse share split based on one
new share for every 20 existing shares.
• Earnings per average number of shares amounted to SEK 1.47.

CEOs Message
Comments on the period
The effects of both rising prices and underlying margin improvements were seen
in the second quarter of 2016. The sharp decline in prices that affected the
market at the end of 2015 resulted in a lower average price level compared with
the same period last year. This had a negative impact on sales, but a higher
underlying gross margin resulted in an improvement in the underlying operating
result to SEK 21 M (12). In addition to the improvements in margins, the Group’s
results also increased as a result of the recovery in prices during the year.
The gradual rise in prices had positive inventory effects in the form of
inventory gains of SEK 10 M (-2) in the quarter, leading to the operating result
improving to SEK 31 M (10).

Market demand is assessed to have been stable or slightly up. Business area
Sweden & Poland’s shipped tonnage was in level with the same period last year,
while business area Finland & Baltics showed volume growth of a significant 11
percent. Growth in volumes in business area Finland & Baltics was so strong
that, despite lower average prices, net sales for the business area grew by 4
percent. However, the Group’s total tonnage was negatively affected by
developments in the Czech Republic and Slovakia, where the ongoing restructuring
process led to a halving of shipped tonnage. Overall, consolidated net sales
decreased by 5 percent to SEK 1,047 M (1,104).

The positive result and good control of working capital has led to continued
positive cash flow. Cash flow from operating activities improved in the quarter
to SEK 36 M (-28), which means the corresponding figure for the last 12 months
is SEK 76 M.

Structural and organizational changes
The previously announced structural process to close unprofitable units in the
Czech Republic and Slovakia is continuing according to plan. The operations in
Slovakia are being closed, along with sales of flat carbon steel and aluminium
on the Czech market. The inventories concerned sold out in the quarter, and the
number of employees was reduced. The employees affected have in an exemplary
way, contributed to a successful process. The restructuring, for which costs of
SEK -45 M impacted the first quarter, will be completed in the second half of
2016.

During the second quarter a new Group structure- and organization based on the
Group´s business models was launched. As a result of this and the ongoing
restructuring of the Group’s operations in the Czech Republic and Slovakia, the
Group is now operating according to the structure set out below:
• Business area Sweden & Poland comprises the Group’s operations in Sweden and
Poland and is operated in two business units focused on distribution and
production, respectively.
• Business area Finland & Baltics comprises the Group’s operations in Finland
and the Baltic States and is operated across three business units; distribution
Finland, distribution Baltics and production Finland.
• While the Group’s operations in the Czech Republic and Slovakia are undergoing
restructuring, these operations are reported under the Parent Company and
Consolidated Items segment.

In the second quarter, BE Group recruited a new Sourcing director who will be
part of Group Management and responsible for the implementation of the Group's
purchasing strategy.

Outlook
Steel prices are expected to continue to increase slightly in the third quarter,
while demand is expected to remain at the current level, accounting for vacation
effects in July and August. The restructuring and improvement measures relating
to the new organizational structure are expected to proceed according to plan
and gradually improve consolidated earnings.

Anders Martinsson, President and CEO

For further information, please contact:
Anders Martinsson, President and CEO tel.: +46 (0)706-21 02 22 e-mail:
anders.martinsson@begroup.com
Andreas Karlsson, CFO tel.: +46 (0)709-48 22 33 e-mail:
andreas.karlsson@begroup.com

This information is information that BE Group AB (publ) is obliged to make
public pursuant to the EU Market Abuse Regulation and the Securities Markets
Act. The information was submitted for publication, through the agency of the
contact persons set out above, at 7.45 am CET on July 20, 2016.

BE Group, listed on Nasdaq Stockholm, 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
engineering sectors. In 2015, the Group reported sales of SEK 4.2 billion. BE
Group has about 750 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.