Slide 1: A step in the right direction
A step in the right direction Q224 Webcast | august 7, 2024
Slide 2: Change in Boreo's management team
change in boreo’s management team Jesse petäjä appointed as a new cfo - effective as of 1 september 2024 As of 1 September 2024, Boreo’s Management Team will consist of: ▪ Kari Nerg, CEO ▪ Jesse Petäjä, CFO ▪ Mari Katara, SVP, People & Sustainability ▪ Tomi Sundberg, SVP, Head of Electronics ▪ Richa
Slide 3: Agenda
AGENDA • Q224 highlights • Q224 financials • Q&A
Slide 4: Q224 highlights
Q224 | highlights Decent result Cost actions & strong gross margins Operational EBIT 2.4m€ (Q223: 2.4m€) Fixed costs declined as expected Profitability up to 7.0% (Q223: 5.6%) Minimum 1m€ annual cost savings from Q224 onwards Decline of sales to 34m€ (Q223: 42m€) Successful management of margins Ope
Slide 5: Q224 temporarily far away from long-term targets
Q224 | temporarily far away from long-term targets Profit generation & deleveraging in short-term focus Operational ebit (€) & ebit%, r12 Roce% net debt/operational ebitda Q224 * -18% 9.2% 2.8x (15%) (15%) (2-3x) minimum annual average minimum net debt / operational EBIT growth ROCE operational EBIT
Slide 6: Q224 Sales under pressure
Q224 | Sales under pressure Challenging market conditions since mid-2023 Commentary Sales -20% or -8.5m€ vs. Q224 ▪ Organic growth -8.5m€ ▪ Sales under pressure in particular in construction related businesses Acquisitions & exits ▪ +0.5m€ impact due to Delfin Technologies ▪ -0.5m€ SANY Finland & Sw
Slide 7: Q224 strong gross margins & improved profitability
Q224 | strong gross margins & improved profitability Costs declined in Q224 as planned – expectation to reach a minimum 1m€ savings from q224 onwards Commentary Gross margin ▪ Successful management of margins throughout the portfolio ▪ Impact of sales mix ▪ Resiliency – support from aftermarket acti
Slide 8: Q224 cash flow impacted by seasonal increase of working cap
Q224 | cash flow impacted by seasonal increase of working cap Cash flow in Q1 extraordinarily strong (6.1m€) – h124 operational cash flow 4.2m€ Commentary ▪ Continued successful management of working capital, adapting to lower level of activity ▪ Trade Working Capital at c. 28m€ in Q224 ▪ Inventory
Slide 9: Q224 stable but mediocre returns
Q224 | stable but mediocre returns Profitability trailing in both business areas Commentary ▪ Weak profitability in the recent quarters impacting returns negatively ▪ Strong cash generation in the last 2- years not enough to offset the profitability impact 9
Slide 10: Q224 decent performance outlook
Q224 | decent performance outlook supported implemented cost actions – order books focused on Q424 1 2 3 order books Cost declined as planned Continued positive outlooks slight decline of order books vs q124 minimum 1m€ cost savings from Q224 continued stable outlooks for Higher level compared to ea
Slide 11: Agenda
AGENDA • Q224 highlights • Q224 financials • Q&A
Slide 12: Q224 net sales and operational EBIT
Q224| net sales and operational eBIT Profitability improved and operational ebit intact despite of low sales Net sales * Operational ebit & ebit% * -20% 7.7 % 6.9 % 7.1 % 7.0 % 6.3 % 5.8 % 5.6 % 5.6 % 4.9 % 5.0 % 4.9 % 5.1 % 3.6 % 1.8 % 0% 43.3 45.0 41.0 42.3 41.0 39.2 40.4 37.1 3.0 2.9 31.7 32.6 33
Slide 13: Q224 direct cost ratio and indirect cost ratio
Q224| direct cost ratio and indirect cost ratio Direct Cost efficiency continued to improve, indirect cost ratio up because of low sales Direct costs (R12) and Direct cost ratio (%)* Indirect costs (R12) and Indirect cost ratio (%)* *Adjusted for continued operations 13
Slide 14: Q224 Electronics
Q224 | Electronics Moderate result - operational ebit at 8.7% & rotwc at 43% Comments – q2 2024 Net sales and operational ebit% • Finnish operations (Yleiselektroniikka, Noretron, Milcon, Infradex, SSN, Delfin) ▪ Yleiselektroniikka: successful completion of reorganizations in Q124, good profitabilit
Slide 15: Q224 Technical trade
Q224 | Technical trade Decent profitability - Operational EBIT at 8.2% & rotwc stable at 32% Comments – q2 2024 Net sales and operational ebit% • Machinery Power ▪ Decent result in Q2 – H1 on par with last year ▪ Moderate outlook – orderbooks below Q1, up from beginning of the year • Construction (M
Slide 16: Q224 Technical trade (cont'd)
Q224 | Technical trade (cont’d) Decent profitability - Operational EBIT at 8.2% & rotwc stable at 32% Comments – q2 2024 Net sales and operational ebit% • Putzmeister business ▪ Sweden: Good result supported by strong aftermarket business. Outlook positive with a strong orderbook ▪ Finland: weak res
Slide 17: Q2 2024 EPS and ROE
Q2 2024| eps and ROE negative operational cash FLOW in the quarter due to working cap timings. Roe still negatively impacted by weak net profit and increased equity Cash flow and earnings per share ROE 2.29 13.7 % 11.4 % 13.1 % 12.1 % 12.3 % 11.3 % 8.4 % 6.7 % 1.83 3.4 % 3.0 % 1.44 0.85 0.39 0.48 0.
Slide 18: Agenda
AGENDA • Q224 highlights • Q224 financials • Q&A
Slide 19: yy yj
We, yy yj Wa e “
Slide 20: Grow & prosper
BOREO GROW & PROSPER
Slide 21: A long-term owner of great entrepreneurial companies
A long-term owner of great entrepreneurial companies 161m€ 9.5m€ (5.9%) 330 NET SALES 2023 Operational ebit 2023 Employees 21 companies 11.0% 2.8x Return on capital employed Net debt / operational EbitDA 2023 Q2 2024 Map excluding USA 21
Slide 22: Diversified industrial portfolio in 7 countries
Diversified industrial portfolio in 7 countries Electronics Technical trade 62M€ 2023 Sales 130 Professionals 100M€ 193 2023 Sales Professionals 7 Markets 3 Markets Net sales adjusted for continued operations New organizational structure effective as of 1.1.2024 22
Slide 23: Capable & committed leadership in a decentralized structure
Capable & committed leadership in a decentralized structure Simon Hallqvist, Camilla Grönholm, Jouni grönroos, Ralf Holmlund, Noora neilimo- Jussi vanhanen, Chairman chair of Remco chair of audit board member kontio, board board member committee member Board of Directors 1,913,433 shares 1,277 share
Slide 24: Boreo's business model
Boreo’s business model We own and acquire Great entrepreneurial companies with strong profits and cash flows Ultimate objective is We enable earnings growth by Sustainable profit Supporting & generation coaching in the long-term our companies & developing people we Re-invest capital with attractive
Slide 25: Our acquisition & ownership criteria
Our acquisition & ownership CRITERIA asset light industrial businesses with strong cash generation, proven track record and a management fit with boreo culture Industrial characteristics financial characteristics organisational characteristics investment characteristics B2b high Cash conversion Stro
Slide 26: Our philosophy – Sustainable long-term profit generation
Our philosophy – Sustainable long-term profit generation Decentralization Capital allocation Culture of ownership and release of Focus on earnings and capital efficiency entrepreneurial energy Broad universe of investment Aligned interest of shareholders and opportunities – discipline in capital emp
Slide 27: What's in it for the companies?
What’s in it for the companies? A Long-term owner Leadership development • Stability • Best practice sharing • Continuation • Support from ’Coaches’ • • MD peer group • Credibility Access to funding boreo companies • Boreo Academy Balance P&L sheet Business development Personnel • Board of Directors
Slide 28: Focus on earnings growth and return on capital
Focus on earnings growth and return on capital Updated long-term strategic financial targets to better reflect shareholder value creation minimum annual minimum net debt / average operational ROCE operational EBITDA EBIT growth 15% 15% 2-3x Dividend policy Target to annually increase dividend per sh
Slide 29: Grow & prosper
BOREO GROW & PROSPER