BE : Company Report 2022

QUALITY, FLEXIBILITY AND MORE CAPACITY

COMPANY REPORT 2022

CONTENTS

HIGHLIGHTS 2022

2022 in brief 3

Key data 2

Statement from the CEO 4

This is BE Group 6

Offering 8

Digitalization 9

Business Area Sweden & Poland 10

Customer Case - Sweden 12

Business Area Finland & Baltics 13

Customer Case - Finland 15

Sustainability 16

Safety 18

Market and business environment 19

The share 20

Group Management 21

Board of Directors and Auditors 22

Addresses 24

KEY DATA 2022

Net sales

SEK 6,875 M

(2021: SEK 5,388 M)Underlying operating result

SEK 488 M

(2021: SEK 529 M)

Profit after tax

SEK 324 M

(2021: SEK 495 M)

Cash flow from operating activities

SEK 204 M

(2021: SEK 32 M)

BE Group acquires Hercules rebar in Norrköping from NCC.

The factory is one of Europe's most modern. With the acquisition, the com­pany is strengthening its offering in rebar and at the same time adding production and warehousing capacity close to the other facility in Norrköping.

New sales office in Norrland

In 2022, several strategic investments were made in the production facilities in Finland. These are included in a long­term plan to continue to be at the forefront and to accomodate customers' wishes and needs. During the year we have, among other things, invested in fiber lasers in Lahti and Lapua as well as a saw and processing line in Lahti which will be taken into operation in 2023.

BE Group is opening a new sales office in Skellefteå.

The background to the investment in northern Sweden is the positive develop­ment that the region is currently expe­riencing, with major new investments, particularly on the industrial side.

BE Group sells Lecor Stålteknik to EAB in Småland.

Lecor Stålteknik has developed positively in recent years but is significantly diffe­rent from BE Group's core business." BE Group and EAB have worked to­gether for a long time. In connection with the transfer, a letter of intent was signed regarding continued close and trusting cooperation.

Strategic investments

BE Group acquires Goodtech Solutions Manufacturing AB in Arvika.

The principal focus of the business is contract manufacturing in machining. Through the acquisition, BE Group is strengthening its ready­to­weld offering in Sweden. The company has changed its name to BE Group Produktion Arvika AB.

Move of the headquarters in Malmö

At the beginning of December, BE Group's headquarters in Malmö moved to new premises. Ever since BE Group was founded in 1885, the headquarters has been located in the Scanian capital. The new premises are located in Hus1, the old Sydsvenskan building, a classic Malmö property, which has become a well­known landmark at the northern entrance to the city.

The new offices offer many advan­tages. One positive aspect is that all the employees will now be on one floor, in bright and open offices, with good oppor­tunities for meetings and collaboration.

Operating result

SEK 418 M

(2021: SEK 621 M)Earnings per share

SEK 24.96

(2021: SEK 38.10)

THIS HAPPENED IN THE WORLD

2022 was an eventful year. Here are some of the events that we remember:

February: Russia invaded Ukraine and an almost unified world responded with extensive sanctions against Russia.

March: A period with high steel prices begins due to the invasion.

April: The month began with the corona­virus no longer being classified as a disease that poses a danger to society.

September: Russia halts its deliveries of natural gas to Europe through Nord Stream 1.

September: The steel mills begin to reduce capacity by closing blast furnaces.

In a turbulent year with a large portion of external circumstances, BE Group delivers both its best and worst quarters measured in underlying result since the IPO. Regardless, the year is totaled as strong and the underlying operating result amounted to SEK 488 M (529), corresponding to an operating margin of 7.1% (9.8). The operating result including inventory losses amounted to SEK 418 M (621), corresponding to an operating margin of 6.1% (11.5). It is pleasing that cash flow from operating activities improved towards the end of the year, amoun­ting to SEK 204 M (32) for the full year.

STEEL PRICE TREND

At the beginning of 2022, the trend in European spot prices for flat products was stable, while prices for long products such as beams and rebar moved upwards as a direct consequence of rising scrap prices. The market hung in the balance, but a slightly better supply of components mainly affected the automotive industry positively and the need for steel increased. After Russia invaded Ukraine, the market reacted quickly. Large consumers and stock holders tried to secure their steel needs, resulting in most producers leaving the market to analyze the situation regarding the supply of raw materials and energy. It became clear that the availability and cost situation would change, creating a shortage situation and steel prices escalating upwards.

When the material was delivered a few months later following the hoarding wave of the spring, demand began to weaken. Construction projects were postponed due to increased costs and the automotive industry faced new challenges in acquiring components. Full inventory and declining needs led to lower spot prices. The steel produ­

"Full inventory and declining needs led to lower spot prices. The steel producers responded by reducing blast furnace capacity more than the actual need decreased, which had an effect."

cers responded by reducing blast furnace capacity more than the actual need decreased, which had an effect. At the beginning of 2023, European steel producers are seeing an increase in real needs and prices for flat pro­ducts will rise into the second quarter. The trend in long products is somewhat more uncertain. What we know for certain is that steel prices are volatile and that the external circumstances are a little more uncertain than normal.

ACQUISITIONS AND DIVESTMENTS

In the spring, the assets of Hercules rebar was acquired from Hercules Grundläggning AB, a subsidiary of NCC. The acquisition strengthened BE Group's rebar offering in Sweden and added additional production and storage capacity.

At mid­year, Lecor Stålteknik AB was divested to EAB AB. Lecor has developed positively in recent years but is signifi­cantly different from BE Group's core business. EAB is a long­standing partner to both BE Group and Lecor and, in connection with the transfer, a letter of intent was also sig­ned regarding continued close and trusting cooperation. At the beginning of September, all shares in Goodtech Solutions Manufacturing AB, now BE Group ProduktionArvika AB, were acquired. The acquisition strengthens BE Group's ready­to­weld offering and adds competence and production capacity.

FOCUS IN THE FUTURE

An important focus area for 2023 is the impact of the strategic investments made and ongoing in Finland re­garding, among other things, fiber laser technology and automated processing of long products, both of which clearly strengthen BE Group's offering to new and exis­ting customers.

In the past three years, BE Group has reduced the number of accidents with absences by more than 75% over a 12­month rolling period. Personally, I am convin­ced that companies that work for a safe workplace and take care of their employees are also more profitable over time. The results do not come on their own, but are the result of dedicated work over many years. This is how BE Group works and intends to continue working. Our focus areas continue to be the sales culture, custo­mer experience and digitalization, and our values are dy­namic, transparent and sustainable. Safety efforts run like a unifying theme through all of them.

In conclusion, I would like to express my heartfelt gratitu­de to our customers, who repeatedly give us their trust, to our owners who believe in us and to all of our employees who untiringly strive to make BE Group a better company.

Peter Andersson

President and CEO

The history of BE Group began at the end of the 19th century, when Malmö brothers Hans and Jöns Edstrand established the family business Bröderna Edstrand. Based in Malmö, the business mainly offered steel to local in- dustry. At the same time, the foundation for the Finnish operations was laid when Starckjohann & Co was esta- blished in Viborg, Finland.

LEADING IN NORTHERN EUROPE

Today, BE Group is one of northern Europe's leading tra- ding and service companies in steel, stainless steel and aluminum. With the help of modern production facilities,

efficient processes and unique experience and expertise, the company offers inventory sales, production service and direct deliveries of very high quality. Operations are mainly located in the countries surrounding the Baltic Sea, with sales offices in several locations in Sweden, Finland and the Baltics, as well as production and ware- housing facilities in Norrköping and Arvika in Sweden, Trebaczew in Poland and Lapua, Lahti and Turku in Finland. In addition to these, there is also a warehouse facility in Maardu, Estonia, just outside Tallinn.

TWO BUSINESS AREAS

Today, the organization is divided into two business areas: Sweden & Poland and Finland & Baltics. Business Area Sweden & Poland also includes the joint venture Arcelor Mittal BE Group SSC AB, which specializes in cutting and slitting thin sheets and coils.

In 2006, the company was listed on the Stockholm Stock Exchange under the common Group name BE Group AB.

The company's customers are mainly in the construc- tion and manufacturing industries.

Operations shall be characterized by transparency, sus- tainability and a high level of service towards partners, suppliers, customers and the company's own personnel.

Today, BE Group operates in several countries around the Baltic Sea. Since the beginning, the headquarters has been located in Malmö, Sweden. In recent years, warehousing and production in the Swedish part of the operations have been centralized to Norrköping. The recently acquired rebar opera- tions is also located here.

During the year, a new sales office was opened for northern Sweden in Skellefteå and the produc- tion facility in Arvika was acquired.

Today, BE Group Finland is Finland's largest steel distributor with production facilities in Lahti, Lapua and Turku. In recent years, there has been a cen- tralization of the operations in the Baltics that led to the consolidation of warehousing to Estonia.

BE Group's Polish operations consist of a ware- house and production facility in Trebaczew.

OFFERING

QUALITY AND FLEXIBILITY WITH A FOCUS ON THE CUSTOMER

BE Group offers steel, stainless steel and aluminum. The company serves as a link between producers and customers and thereby compensates for the gap between the steel mills' occasionally large and heavy production processes and the customers' need for rapid, flexible delivery solu­tions. This is achieved through sales and distribution from the company's own production and warehousing facilities, as well as direct deliveries from mills where BE Group con­veys and takes responsibility for the transaction. The product range is characterized by both width and depth. Besides steel, stainless steel and aluminum, the range includes engineering steel, rebar and materials for foundation work. BE Group works closely with the market and the range is adapted to the needs of each customer segment (construc­tion and industry).

PRODUCTION SERVICE

An important part of BE Group's offering consists of production service. With modern production facilities in Sweden, Finland and Poland, we offer cost­efficient and flexible solutions adapted to the customers' needs.

PRODUCTS

In a competitive environment where demands on quality, cost efficiency and sustainability are growing,we ensure that customers receive the service and assistance they need. We shall be an active and attractive partner.In this way, we strengthen and develop both our own and our customers' offering.

EFFICIENT PROCESSES

Thanks to efficient processes for warehousing, processing and transport, we contribute to increasing both our own and our customers' profitability. At the same time, we minimize our joint impact on the environment and climate, making everyone winners.

In recent years, we have made several important invest­ments, including in a new high­speed cutter for engineering steel in Sweden and in new fiber laser machines and band saws in Finland. For customers, this means considerable efficiency and cost benefits when they can focus on their core business and also avoid investing in their own cutting equipment. In connection with the investment, the concept "cut and ready" was launched as a way of strengthening our customers' competitiveness.

LONG STEEL PRODUCTS

Beams, hollow sections, bars and tubes. Used in every construction imaginable, such as steel framework, trusses, bridges, vehicles, and machines.

FLAT STEEL PRODUCTS

Plates and sheets in various forms, such as hot­rolled, cold­rolled or metal­coated. Used in construction, the automotive, machinery and process industry.

STAINLESS STEEL

Plates, sheets, bars, tubes and tube parts. Used in corrosive environments and deman­ding structures, including in the construction, machinery, medical and process industries.

ENGINEERING STEEL

Alloyed and unalloyed construction steel, surface­treated bars and hollow cast blanks. Used where there is a need for materials with improved cut­tability, strength, hardenability or durability.

ALUMINUM RANGE

Plates, sheets, profiles, bars and tubes. Used by subcontractors and OEMs for construction, signs and road signs, as well as in the avia­tion, automotive and packaging industries.

REBAR AND FOUNDATION WORK

Straight steel, reinforcement mesh and prefa­bricated reinforcement. Used to reinforce con­crete to increase strength and prevent crack­ing in construction and infrastructure.

In 2021, BE Group launched its new webshop, BE Online. The goal was to create a modern e-commerce solution where, using a number of new functions, customers can order materials and view detailed information on everything from material properties, qualities and dimensions to prices, inventory status and deliveries.

"We talk a lot about customer satisfaction and customer expe- rience, which simply means that customers who use the service should feel that they want to come back and do more business."

A QUESTION OF ACCESSIBILITY

"In 2022, more and more customers discovered the advantages of using the webshop for purchasing and planning," explains Lukas Baranauskis, Online Sales and Marketing Specialist at BE Group in Sweden.

In addition to ordering materials in the webshop, customers can check inventory levels and follow an order from order to delivery. A new service that many appreciate is the opportunity to download certificates from the website.

"This is once again a question of accessibility. You can do so at any time, which is a good service to our customers."

CONTINUED DEVELOPMENT

Since the launch, he and his colleagues are able to follow everything that happens in the webshop month by month.

"This may involve, for example, the number of active customers, new customers, the number of order lines and sales in tons per month. All of this is important information to enable us to continue developing the webshop."

Just like in Sweden, 2022 was the first full year of the new e-commerce solution in Finland. Evaluations show a threefold increase in both the number of users and the number of order lines," explains Mikko Parkkila, Business Intelligence Manager at BE Group in Finland.

Since the launch of the new BE Online, the number of customers using the webshop has increased by around 70 percent. One of the things customers seem to appre- ciate is the accessibility. The webshop is open 24 hours a day, seven days a week. At the same time, it should not be seen as a substitute but as a complement to personal service and sales.

Customers appreciate being able to easily check inventory levels and prices. At the same time, the amount of adminis- trative work for BE Group's sales personnel has decreased considerably.

According to Mikko Parkkila, the major challenge has been getting customers who are used to personal service to recog- nize the advantages of the digital solution. In 2023, BE Group in Finland and Sweden will develop the service to further improve customer satisfaction.

Simplicity has been a key word in the development of the new e-commerce solution. Customer experience was another.

"We will embrace the input we receive from our customers. After all, we developed this solution for them," concludes Mikko Parkkila.