Continued strong underlying profit in the third quarter

Press Release
2007-10-26

BE Group’s underlying earnings for the third quarter remained at the same high levels as in the year-earlier period. Operating profit was however adversely affected by falling market prices for stainless steel, a price development which is expected to stabilize towards the end of the year.

• Underlying EBITA, excluding exceptional items and adjusted for stock profits and losses, was SEK 122M (125). Operating profit was SEK 85M (164) after one-time impairments of the stock value of stainless steel. The 2006 figure included stock profits and exceptional profit items.

• Net sales increased by 8.1% to SEK 1,709M in the third quarter, compared to SEK 1,581 in the same period last year.

• Profit after tax was SEK 55M for the quarter (118) corresponding to earnings per share of SEK 1.10, after dilution (2.25).

• Falling nickel prices triggered a sharp downturn in market prices for stainless steel during the quarter, which pressured the underlying gross margin. But excluding stainless steel, the underlying margin was on par with the same period in 2006. The stainless steel market is expected to remain weak in the fourth quarter due to continued stock liquidation, but prices should gradually stabilize towards the end of the year.

• BE Group decided during the quarter to centralize the product supply function.

Comments on the report from Håkan Jeppsson, president and chief executive officer of BE Group:

“The world market for steel and metals remained buoyant during the nine-month period, with high demand from China a key market driver. Overall performance during January-September was the best in the company’s history, despite the slower growth rate in the third quarter.”

Net sales increased by 23.3% to SEK 5,848 (4,743) in the nine-month period and profit after tax rose to SEK 299M (270). Earnings per share after dilution increased to SEK 5.98 kr (5.14).

“The powerful influence of China as a demand driver contributed to our decision to open an office in Shanghai. It is important to BE Group to have local representatives who can monitor the Asian market, act as a purchasing centre in the region and further develop relationships with local suppliers.”

“In parallel, BE Group has continued evaluating potential acquisitions and alliances in other markets. We expect the consolidation of Eastern European markets to continue and BE Group is working actively to participate in the development.”

“Further steps towards efficient growth will be taken on 1 January 2008 when the purchasing organizations are merged in a corporate product supply function managed from the head office in Malmö. The new organization will strengthen BE Group's negotiating position vis-à-vis suppliers and streamline product flows and capital management.”


If you have any questions, please contact:

Håkan Jeppsson, President and Chief Executive Officer, tel. +46 (0)705 50 15 17, e-mail hakan.jeppsson@begroup.com

A press conference by telephone will be held in English, at 09.00 (CET), on the telephone number below. Hosting the conference: Håkan Jeppsson, CEO, and Torbjörn Clementz, CFO, at BE Group.

To take part in the conference, please register online beforehand by using the following registration link:
https://eventreg1.conferencing.com/webportal3/reg.html?Acc=597224&Conf=150416

If you don't have access to internet, please register your participation a few minutes before the conference is due to start on +46 8 5052 0110.

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The information in this press release is such that BE Group is required to make public under the Swedish Securities Exchange and Clearing Operations Act and/or the Swedish Financial Instruments Trading Act. The information was sent out to be made public on 26 October 2007 at 7.30 a.m. CET.