Slide 1: Weak result, performance outlook improving
Weak result, performance outlook improving Q124 Webcast | April 30, 2024
Slide 2: Agenda
AGENDA • Q124 highlights • Q124 financials • Q&A
Slide 3: Q124 highlights
Q124 | highlights Weak result Improving outlook Decline of sales to 33m€ (Q123: 41m€) Order books at a low level in Q423 Organic growth -9m€ Improving order intake in Q124 Operational EBIT 0.6m€ (1.8%) Profit generation supported by cost optimization actions (+1m€), Q224 onwards Strong operational c
Slide 4: Q124 temporarily far away from long-term targets
Q124 | temporarily far away from long-term targets After 3-years of significant earnings growth, slow-down of growth Operational ebit (€) & ebit%, r12 Roce% net debt/operational ebitda Q124 * -18% 9.3% 2.4x (15%) (15%) (2-3x) minimum annual average minimum net debt / operational EBIT growth ROCE ope
Slide 5: Q124 continued decline of sales
q124 | continued decline of sales weak sales because of generally low demand and shift of deliveries Commentary Sales -20% vs. Q123 ▪ Sales under pressure throughout the portfolio ▪ Poor demand environment especially in Finland Organic growth ▪ Negative -9m€ ▪ Shift of deliveries by c. -2m€ (impact
Slide 6: Q124 steady gross margins, cost actions not visible yet
q124 | steady gross margins, cost actions not visible yet Cost actions taken to ensure profit generation with lower volumes 35 % Commentary Gross Margin%, R12 EBIT%, R12 Gross margin 29 %30 % ▪ Successful management of margins 30 % 28 % 28 % 27 % ▪ Impact of sales mix 26 % 26 % 26 % 26 % 25 % 25 % 2
Slide 7: Q124 continued strong cash generation
q124 | continued STRONG CASH GENERATION 6m€ of operative cash flow – working capital reduced to 25m€ Commentary ▪ Successful management of working capital, adapting to lower level of activity ▪ Working capital down by c. 13m€ from the peak in 2022 ▪ Trade Working Capital at c. 25m€ in Q124 ▪ Expecte
Slide 8: Q124 poor profitability hits returns on capital
Q124 | poor profitability hits returns on capital Profitability trailing in both business areas 60 % Commentary ROTWC%, R12 ▪ Significant decline of profits impacts returns negatively 50 % 50 % 50 % 46 % ▪ Working capital managed better than 43 % 44 % 42 % 42 % in history – short delivery times 40 %
Slide 9: Q124 Improving performance outlook
Q124 | Improving performance outlook supported by the development of order books and implemented cost actions 1 2 3 Order books have improved Cost reductions made Continued positive outlooks low point at the end of 2023 minimum 1m€ cost savings from H224 continued stable outlooks for part of the inc
Slide 10: Confidence in the value creation potential
confidence in the value creation potential The vision, business model and strategic targets are clear vision Business model & philosophy Strategic targets Boreo’s long-term strategic financial targets Boreo is a long-term owner of great entrepreneurial companies The companies generate sustainable ea
Slide 11: Goal to bring the company back to growth-track
Goal to bring the company back to growth-track short-term on existing portfolio, objective to return back to creating value incl. M&A 1 2 3 Acquisitions Investments Re-organizations of companies with ability to in the growth of our companies which in companies operating below the 50% generate earnin
Slide 12: Agenda
AGENDA • Q124 highlights • Q124 financials • Q&A
Slide 13: Q124 net sales and operational EBIT
Q124| net sales and operational eBIT Significant drop in sales in Q423 & q124 resulting in pressure on profitability Net sales * Operational ebit & ebit% * -72% -20% *Adjusted for continued operations 13
Slide 14: Q1 2024 direct cost ratio and indirect cost ratio
Q1 2024| direct cost ratio and indirect cost ratio Direct Cost efficiency improved, indirect cost ratio up mainly because of low sales Direct costs (R12) and Direct cost ratio (%)* Indirect costs (R12) and Indirect cost ratio (%)* *Adjusted for continued operations 14
Slide 15: Q124 Electronics
Q124 | Electronics operational ebit at 3.6% & rotwc at 42%, poor result in Q124 Comments – q1 2024 Net sales and operational ebit% • Finnish operations (Yleiselektroniikka, Noretron, Milcon, Infradex, SSN, Delfin) ▪ Yleiselektroniikka: decline in sales and profitability. Result below comparison peri
Slide 16: Q124 Technical trade
Q124 | Technical trade weak profitability - Operational EBIT at 3.4% & rotwc at 32% Comments – q1 2024 Net sales and operational ebit% • Machinery Power ▪ Strong operating profit above comparison period ▪ Decent order backlog supporting outlook • Construction (Muottikolmio and Machinery’s Constructi
Slide 17: Q124 Technical trade (cont'd)
Q124 | Technical trade (cont’d) weak profitability - Operational EBIT at 3.4% & rotwc at 32% Comments – q1 2024 Net sales and operational ebit% • Putzmeister business ▪ Sweden: strong result supported by strong aftermarket business. Outlook positive with a strong orderbook & sizeable order won durin
Slide 18: Q1 2024 EPS and ROE
Q1 2024| eps and ROE Strong operational cash FLOW supported by working capital release. Roe impacted by weak net profit and increased equity Cash flow and earnings per share* ROE *Cash flow adjusted for continued operations since Q2/22 18
Slide 19: Agenda
AGENDA • Year 2023 • Strategic review • Q4 2023 • Q&A
Slide 20: yy yj
We, yy yj Wa e “
Slide 21: Grow & prosper
BOREGS GROW & PROSPER
Slide 22: A long-term owner of great entrepreneurial companies
A long-term owner of great entrepreneurial companies 161m€ 9.5m€ (5.9%) 338 NET SALES 2023 Operational ebit 2023 Employees 21 companies 11.0% 2.4x Return on capital employed Net debt / operational EbitDA 2023 Q1 2024 Map excluding USA 22
Slide 23: Diversified industrial portfolio in 7 countries
Diversified industrial portfolio in 7 countries Electronics Technical trade 62M€ 2023 Sales 133 Professionals 100M€ 199 2023 Sales Professionals 7 Markets 3 Markets Net sales adjusted for continued operations New organizational structure effective as of 1.1.2024 23
Slide 24: 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 1,911,586 shares 818 shares
Slide 25: 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 26: 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 27: 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 28: 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 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: Grow & prosper
BOREGS GROW & PROSPER