Slide 1: Decent profitability & excellent cash flow
decent profitability & excellent cash flow Q323 Webcast | november 2, 2023
Slide 2: Agenda
AGENDA • Q3 2023 highlights • Q3 2023 financials • Q&A
Slide 3: Q3'23 Highlights
Q323 Highlights Decent profitability Excellent cash generation 2.9m€ operational EBIT (Q322: 3.0m€) Cash conversion** 208% (Q322: 23%) Uplift in margin to 7.1% (Q322: 6.8%) ROCE at 11.2% (Q223: 11.2%) Good gross margin development, sales in ROTWC* at 30.1% (Q223: 29.0%) pressure acquired growth +0.5
Slide 4: Decent earnings growth & capital efficiency in R12
Decent earnings growth & capital efficiency in r12 Without sany: operational ebit 5.9%, earnings growth 19% & ROCE 11.8% Operational ebit (€) & ebit%, r12 Roce% net debt/operational ebitda 2.5 X 2.5 X 2.4 X 2.4 X 2.4 X 13.5 % 2.2 X 5.7 % 5.8 % 5.9 % 5.4 % 5.4 % 5.4 % 5.4 % 5.7 % 5.6 % 5.7 % 12.3 % 1
Slide 5: Good performance in the two largest business areas
Good performance in the two largest business areas Stable gross margins & improved profitability demonstrating resiliency of our companies 40 % Commentary Gross Margin%, R12 EBIT%, R12 Electronics BA 35 % ▪ Decent profitability despite weakening demand 30 % 30 %31 % 30 % 29 %29 % ▪ Delfin with a goo
Slide 6: Excellent cash conversion driven by release of working capital
Excellent cash conversion driven by release of working cap Successful management of working capital during the past quarters Commentary 151 % 15m€ of operative cash flow in R12 ▪ Cash conversion of 151% in R12 14.8 ▪ C. 8m€ of working capital reduced since 8/22 96 % Q323 cash conversion 208% ▪ Worki
Slide 7: Capital efficiency continues to improve
Capital efficiency continues to improve Rotwc without Sany 32.4% 60 % Commentary ROTWC%, R12 Return on capital –mindset 50 %50 % ▪ Good steps in rooting the return on 49 % 50 % capital & capital efficiency –mindset 43 % 44 % 44 %44 % to the organization 42 % 43 % 43 %42 %43 % 40 % ROTWC up from 27%
Slide 8: Focus on earnings generation and cash flow
Focus on earnings generation and cash flow Companies showing resiliency in challenging times 1 2 3 Confidence in our ability to Continued efforts to optimize deliver over 15% average annual Target to maintain leverage at the working capital in the coming operational ebit growth low end of the 2-3x l
Slide 9: Distribution of the 2nd part of the dividend for 2022
Distribution of the 2nd part of the dividend for 2022 Continuation on the path of paying increasing dividend per share dividenD per share development, 2015-2022 Dividend policy ▪ ‘Target to annually increase dividend per share, taking into consideration capital allocation priorities’ 0.22 0.42 0.40
Slide 10: Agenda
AGENDA • Q3 2023 highlights • Q3 2023 financials • Q&A
Slide 11: Q3 2023 | Net sales & operational EBIT
Q3 2023| Net sales & operational ebit Operational ebit growth slightly below strategic target level Net sales, r12 * Operational ebit&ebit%, r12 * STR target > 15% p.a. +9% +14% 5.7 % 5.8 % 5.9 % 5.4 % 5.4 % 5.4 % 5.4 % 5.7 % 5.6 % 5.7 % 4.7 % 170 172 169 9.6 155 160 9.6 9.6 140 8.4 8.7 122 130 7.2
Slide 12: Q3 2023 | Net sales and operational EBIT
Q3 2023| net sales and operational eBIT Profitability above comparison period Net sales * Operational ebit & ebit% * 6.8 % 7.1 % 5.1 % 5.6 % 4.9 % 45.0 3.0 2.9 43.3 42.3 2.2 2.4 2.1 41.0 41.0 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2022 2022 2023 2023 2023 2022 2022 2023 2023 2023 *Adjusted for continued oper
Slide 13: Q3 2023 | Net sales growth
Q3 2023| net sales growth Sales growth negatively impacted BY SANY, FNB AND ssn net sales bridge -5% growth Q3/23 vs. Q3/22 *Adjusted for continued operations
Slide 14: Q3 2023 | EBIT growth
Q3 2023| EBIT growth ebit growth contributed by acquisitions, orgaNIC ebit development negative EBIT bridge -3% growth Q3/23 vs. Q3/22 *Adjusted for continued operations
Slide 15: Q3 2023 | Direct cost ratio and indirect cost ratio
Q3 2023| direct cost ratio and indirect cost ratio Direct Cost efficiency improved, indirect cost ratio up due to decreased sales and new companies Direct costs (R12) and Direct cost ratio (%)* Indirect costs (R12) and Indirect cost ratio (%)* 20.2 % 76.2 % 75.5 % 75.0 % 75.0 % 74.8 % 74.8 % 75.2 %
Slide 16: Electronics
Electronics operational ebit at 6.3%, Positive development in capital efficiency. outlook remains moderate Comments – q3 2023 Net sales and operational ebit% • Finnish operations (Yleiselektroniikka, Noretron, Milcon, Infradex, 7.8 % 8.3 % 5.9 % 6.4 % 6.3 % SSN, Delfin) ▪ Yleiselektroniikka’s result
Slide 17: Technical trade
Technical trade Operational EBIT at 12.5 % - stable outlook and improved capital efficiency Comments – q3 2023 Net sales and operational ebit% • Machinery Power 12.2 % 8.8 % 8.8 % 10.3 % 12.5 % ▪ Strong operating profit above comparison period ▪ Decent order backlog supporting outlook 13.5 15.8 13.2
Slide 18: Heavy machines
Heavy machines Stable performance in the putzmeister business, continued availability and delivery challenges in FNB Comments – q3 2023 Net sales and operational ebit% • Putzmeister business 2.3 % 3.6 % 1.5 % 4.0 % ▪ Steady performance in all operating countries and strong -0.8 % aftermarket busines
Slide 19: Other operations
Other operations stable performance in a challenging environment, margin pressures continue Comments – q3 2023 Net sales and ebit% of operational companies 15 % 12 % 10 % 10 % • In the third quarter, ESKP’s and Vesterbacka Transport’s net sales 4% were affected by declining volumes in express transp
Slide 20: Q3 2023 | ROCE & ROE
Q3 2023| ROCE & ROE Roce intact despite of weak performance in ssn and FNB. Roe impacted by higher interest expenses Roce% * STR target > 15% Roe% * 13.5 % 33.2 % 27.8 % 28.6 % 12.3 % 12.2 % 25.8 % 11.4 % 10.9 % 10.9 % 11.3 % 11.2 % 11.2 % 9.7 % 10.4 % 13.7 % 11.4 % 13.1 % 12.1 % 12.3 % 11.3 % 8.4 %
Slide 21: Q3 2023 | Net debt and cash conversion
Q3 2023| net debt and CASH CONVERSION leverage intact despite of delfin acquisition, very good cash conversion in the quarter Net debt & net debt/operational ebitda* STR target 2-3X Cash flow (R12) AND CASH CONVERSION, % (R12) ** 2.5 X 2.5 X 2.4 X 2.4 X 2.4 X 2.2 X 151 % 1.6 X 14.8 96 % 74 % 9.5 46
Slide 22: Q3 2023 | EPS and cash flow
Q3 2023| eps and cash flow Strong operational cash FLOW supported by working capital release Cash flow and earnings per share* CASH FLOW* 1.83 2.6 2.2 1.44 1.36 4.9 3.6 3.9 0.6 0.83 0.8 0.8 (2.9) (1.1) (3.9) (1.7) (4.3) 0.48 0.32 0.39 (2.1) (3.2) 0.30 0.28 0.28 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2022 202
Slide 23: Agenda
AGENDA • Q3 2023 highlights • Q3 2023 financials • Q&A
Slide 24: yy yj
We, yy yj Wa e “
Slide 25: Grow & prosper
BOREGS GROW & PROSPER
Slide 26: Our business model
OUR 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 retu
Slide 27: We own great entrepreneurial companies in three sectors
WE OWN Great entrepreneurial companies in three sectors Electronics Technical trade Heavy machines 62M€ 2022 Sales 136 Professionals 53M€ 2022 Sales 116 Professionals 42M€ 2022 Sales 65 Professionals Markets 7 1 Market 3 Markets Other operations 5m€ 2022 Sales (Illustrative) 31 Professionals 3 Marke
Slide 28: 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 29: 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 30: We look for great entrepreneurial companies
WE LOOK FOR Great entrepreneurial companies 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 conversi
Slide 31: Earnings growth via support & coaching of companies
Earnings growth via support & coaching of companies
Slide 32: Dedicated board and management with significant ownership
Dedicated board and management with significant ownership Simon Hallqvist, Camilla Grönholm, Jouni grönroos, Ralf Holmlund, Michaela von Noora neilimo- Chairman chair of Remco chair of audit board member Wendt, board kontio, board committee member member Board of 1,785 shares 701 shares 245 shares D
Slide 33: Grow & prosper
BOREGS GROW & PROSPER