Boreo Plc, INTERIM REPORT JAN. 1 TO MAR. 31, 2025
April 29, 2025 at 9:00 EET
Continued improvement in results, the Back to Growth Plan is progressing well
January-March 2025
- Net sales increased by 4% to EUR 34.0 million (2024: 32.6).
- Operational EBIT increased by 128% to EUR 1.3 million (2024: 0.6) and was 3.9% of net sales (2024: 1.8%).
- EBIT rose to EUR 1.5 million (2024: -0.4).
- The profit for the period increased to EUR 0.8 million (2024: -0.9).
- Net cash flow from operating activities was EUR 0.3 million (2024: 6.1), which was negatively affected by an expected increase in working capital of EUR 1.1 million (2024: decrease of 5.0).
- Operational EPS was EUR 0.05 (2024: -0.15).
- EPS was EUR 0.10 (2024: -0.45).
- On March 6, 2025, Boreo announced the sale of its Estonian property, the capital gain of EUR 0.7 million was reported as a non-operational item in the Q1 result.
- On March 31, 2025, Boreo announced that it had signed an agreement to acquire the entire share capital of a welding technology distributor Spetselektroodi AS.
- On April 1, 2025, Boreo announced that it had signed an agreement to acquire the sales operations of Elfa Distrelec in Finland, Latvia, Estonia and Lithuania from RS Group plc.
Financial guidance and business model
Boreo's primary objective is sustainable long-term profit generation. This is achieved with a business model that is based on the acquisition, development and ownership of great entrepreneurial companies with the ability to generate sustainable long-term earnings growth and strong cash flows. The profits generated by the portfolio of companies are re-invested back to operations or to acquisitions with attractive expected returns on capital. The decentralized operating structure promoting a culture of ownership and release of entrepreneurial energy is a core pillar of the company's business concept and sustainable earnings growth is ensured through the support and coaching of companies and the personnel.
Boreo's focus is on earnings growth with attractive return on capital. The company's long-term strategic financial targets are:
- Minimum 15% average annual operational EBIT growth
- Minimum 15% Return on Capital Employed (ROCE)
- Net debt to operational EBITDA between 2 and 3 (including acquired businesses as if they had been held for 12 months at the reporting date)
Boreo's dividend policy is to pay an annually increasing dividend per share, considering capital allocation priorities.
The above-mentioned strategic financial objectives still serve as the company's financial guidelines. In line with its guidance policy, the company does not give separate short-term financial guidance.
Group's key figures
Key figures
EUR million | Q1 2025 | Q1 2024 | Change | Q1-Q4 2024 |
Net sales | 34.0 | 32.6 | 4 % | 134.0 |
Operational EBIT | 1.3 | 0.6 | 128 % | 6.8 |
relative to the net sales % | 3.9 % | 1.8 % | - | 5.1 % |
EBIT | 1.5 | -0.4 | - | 4.1 |
Profit before taxes | 0.7 | -1.0 | - | 1.3 |
Profit for the period | 0.8 | -0.9 | - | 1.2 |
Operational net cash flow | 0.3 | 6.1 | -96 % | 12.0 |
Cash conversion, % | 22 % | 1407 % | - | 180 % |
Equity ratio, % | 36.2% | 38.2% | - | 39.2% |
Interest-bearing net debt | 35.4 | 29.3 | 21 % | 30.0 |
Interest-bearing net debt relative to | 3.1 | 2.4 | - | 2.8 |
Return on Capital Employed (ROCE %), R12 | 8.8% | 9.3% | - | 7.9% |
Return on Trade Working Capital (ROTWC %), R12 | 27.6% | 27.6% | - | 25.2% |
Return on equity (ROE %), R12 | 6.5% | 3.4% | - | 2.8% |
Personnel at end of the period | 325 | 338 | -4 % | 336 |
Operational EPS, EUR** | 0.05 | -0.15 | - | 0.51 |
EPS, EUR** | 0.10 | -0.45 | - | -0.30 |
Operational net cash flow per share, EUR | 0.10 | 2.29 | -96 % | 4.45 |
* Calculated in accordance with the calculation principles established with financiers. The formula for calculating the indicator is presented later in this report.
**The effect of the interest rate of the hybrid bond recorded in equity adjusted by the tax effect is considered in the calculation of the EPS starting from 2022. In Q1 2025, this net effect was EUR 0.17 per share, in Q1 2024, the net effect was EUR 0.13 per share and in Q1-Q4 2024, it was EUR 0.69 per share.
Q1/2025 - CEO Kari Nerg:
Continued improvement in results
We delivered a solid first quarter for 2025 and reached the targets set for the beginning of the year. Revenue grew for the second consecutive quarter, and profitability improved significantly compared to the previous year. Organic growth was at 4%, and operational EBIT more than doubled to EUR 1.3 million. Profitability of both business areas improved vs. previous year, and the result uplift was driven not only by revenue growth but also by efficiency measures implemented in 2024 and the gross margin which improved by 3 percentage points.
Working capital increased as anticipated and in line with the seasonality of our business, by EUR 1.1 million. Consequently, operating cash flow for the first quarter was EUR 0.3 million, and cash conversion stood at 22%.
During the quarter, we redeemed the remaining portion (approx. EUR 4 million) of the hybrid bond issued in 2022 and paid the annual interest on the hybrid bond issued in 2024. As a result of these financing items and the increase in working capital, net debt relative to the last 12 months' operational EBITDA rose from 2.8 to 3.1.
Due to the improved profitability, operational EBIT over the past twelve months rose from EUR 6.8 million at the end of the previous year to EUR 7.6 million. Return on capital employed (ROCE) improved from 7.9% to 8.8% and return on working capital (ROTWC) from 25.2% to 27.6%.
'Back to Growth' Plan is progressing well: two signed acquisitions and sale of the Tallinn real estate
As part of the 'Back to Growth' Plan initiated in spring 2024, we announced the sale of a property in Tallinn and the acquisition of Spetselektroodi AS. In addition, on April 1, we announced the acquisition of Elfa Distrelec's sales operations in Finland and the Baltic countries.
These acquisitions are important steps for us to achieve the target to return back to growth with an expected annual contribution to operational EBIT of approximately EUR 1.5 million. Due to the business models, margin profiles, strong cash flows and capital-light nature, the businesses fit well with our target company profile and improve the quality of our portfolio. The sale price of the Tallinn real estate was EUR 1.3 million, and we recorded a capital gain of EUR 0.7 million in the first-quarter non-operational result.
Order books grew, trade and geopolitical tensions create uncertainty
Market conditions improved towards the end of the first quarter of 2025, and the order books of our companies increased from the end of 2024. We expect our profitability to remain at a good level in the second quarter of 2025, while the outlook for the second half of the year is more uncertain due to increased trade and geopolitical tensions. We continue to monitor the operating environment closely and will respond swiftly if necessary to safeguard the company's profitability and financial position.
Significant improvement potential when market conditions improve
In the recent years, we have significantly improved the quality of our portfolio, established a strong foundation for our decentralized operating model, and delivered solid returns on the capital deployed for acquisitions. We are pleased with how the company is managed today. Following two consecutive quarters of growth, improvements in order books, and strong execution of our Back to Growth Plan, the Group is well positioned for significant earnings growth when market conditions improve.
Briefing for investors, analysts and media
A webcast where CEO Kari Nerg and CFO Jesse Petäjä present the Financial Statements Bulletin will be held on the same day at 11:00 am EET. The presentation is in English and questions can be asked after the presentation. The presentation material is available before the webcast on Boreo's website: www.boreo.com/investors.
You can watch the webcast at: https://boreo.events.inderes.com/q1-2025. The event will be recorded and the recording will be available after the event at: www.boreo.com/investors.
Boreo Plc' financial reporting in 2025:
Half-year report 1-6/2025: August 6, 2025
Interim report 1-9/2025: October 29, 2025
Vantaa, April 29, 2025
BOREO PLC
Board of Directors
Additional information:
Kari Nerg
CEO
tel +358 44 341 8514
Jesse Petäjä
CFO
tel +358 40 706 9450
Distribution:
NASDAQ Helsinki Ltd
Financial Supervisory Authority
Principal media
www.boreo.com
Boreo in brief:
Boreo is a company listed on Nasdaq Helsinki that creates value by owning, acquiring and developing small and medium-sized companies in the long-term. Boreo's business operations are organized into two business areas: Electronics and Technical Trade.
Boreo's primary objective is sustainable long-term profit generation. This is achieved with a business model that is based on the acquisition and ownership of great entrepreneurial companies with the ability to generate sustainable long-term earnings growth and strong cash flows. The profits generated by the portfolio of companies are re-invested back to operations or to acquisitions with attractive expected returns on capital. The decentralized operating structure promoting a culture of ownership and release of entrepreneurial energy is a core pillar of the company's business concept and sustainable earnings growth is ensured through the support and coaching of companies and the personnel.
The Group's net sales in 2024 were EUR 134 million and it employs over 300 people in seven countries. The company's headquarter is in Vantaa.
