Boreo Q1 2025 slides: second consecutive quarter of growth with EBIT up 128%

Boreo Oyj (HEL:BOREO) shares jumped 10.32% on Tuesday after the company presented its Q1 2025 results showing a second consecutive quarter of growth and significant profitability improvement. The Finnish industrial conglomerate reported organic sales growth of 4% year-over-year and a 128% increase in operational EBIT.

Quarterly Performance Highlights

Boreo reported Q1 2025 sales of €34 million, representing 4% organic growth compared to Q1 2024. The company’s operational EBIT more than doubled to €1.3 million, with the EBIT margin expanding to 3.9% from 1.8% in the comparable period. Gross margin improved substantially to 32%, up from 29% in Q1 2024.

"Continued improvement in results - Back to Growth plan progressing well," stated the company in its presentation, highlighting that this marks the second consecutive quarter of growth after a challenging period.

As shown in the following quarterly performance overview:

The company’s return metrics also showed improvement, with Return on Capital Employed (ROCE) reaching 8.8% (vs. 7.9% in Q4 2024) and Return on Trade Working Capital (ROTWC) increasing to 27.6% (vs. 25.2% in Q4 2024). However, leverage increased slightly to 3.1x Net Debt/Operational EBITDA, compared to 2.8x at the end of 2024.

The presentation highlighted the significant improvement in financial trends over recent quarters:

Boreo’s operational net cash flow was €0.3 million in Q1, representing a 22% cash conversion rate. The company noted this moderate cash flow was expected due to an increase in working capital, which grew by approximately €1 million to €26.5 million.

Segment Analysis

Boreo’s Electronics segment delivered particularly strong results, with operational EBIT doubling from €0.5 million in Q1 2024 to €1.0 million in Q1 2025. The segment achieved 10% quarter-on-quarter sales growth, with exceptional performance from SSN, which benefited from significant investments by its largest customer.

The company’s defense industry exposure through Milcon also contributed positively, with sales exceeding the comparison period and order books developing favorably.

The following chart illustrates the Electronics segment’s performance:

Meanwhile, the Technical Trade segment showed decent profit growth despite challenging market conditions. While sales remained flat compared to Q1 2024, improved margins and cost reductions led to better profitability, with operational EBIT at 4.8% and ROTWC at 25.0%.

Putzmeister reported a strong quarter in Finland and Sweden, with sizable new orders in Q2 expected to increase the order book. However, FNB fell short of expectations due to production-related challenges, and Machinery experienced some delayed deliveries affecting profitability.

The Technical Trade segment’s performance is illustrated here:

Strategic Growth Initiatives and Acquisitions

Boreo announced two strategic acquisitions during the quarter as part of its "Back to Growth Plan." The company signed an agreement to acquire Elfa Distrelec sales activities in Finland and the Baltics from RS Group, creating a growth platform called "YE RS." The transaction, valued at €5.5 million (approximately 5x EV/EBIT), is expected to close in Q3 2025 and will add €15 million in annual sales and €1.1 million in EBIT based on 2024 figures.

The details of this acquisition are shown here:

Additionally, Boreo signed an agreement to acquire Spetselektroodi, an Estonian distributor of premium welding machine and automation products. Founded in 1995, Spetselektroodi generated €3.6 million in sales and €0.4 million in EBITDA in 2024. The acquisition is expected to close on May 1, 2025.

The Spetselektroodi acquisition details are presented here:

Boreo’s strategic plan for returning to growth emphasizes several key initiatives, including organic growth opportunities within the existing portfolio, potential market rebounds in Finland and the Baltics, and acquisitions targeting higher margins and returns.

As shown in the company’s strategic roadmap:

Forward-Looking Statements

Boreo expressed optimism about its growth prospects, noting "significant improvement potential as market conditions improve," though acknowledging that "tensions in trade and geopolitics create uncertainty." The company highlighted well-functioning decentralized operating models and solid returns for acquisitions as foundations for long-term growth.

The company’s order books grew compared to Q4 2024, with new sizable Putzmeister orders secured in April 2025. Boreo identified significant improvement potential in several portfolio companies, including Machinery, Torno Kone, pm nordic, YE International, and HM Nordic, particularly in a stronger demand environment.

Regarding financial targets, Boreo maintains its long-term goals of minimum annual average operational EBIT growth of 15%, minimum ROCE of 15%, and Net Debt/Operational EBITDA of 2-3x. Current performance (Q1 2025) shows annual average operational EBIT growth of -5%, ROCE of 8.8%, and leverage of 3.1x, indicating room for improvement to reach these targets.

The stock closed at €15.50 on April 29, 2025, up 10.32% following the presentation, reflecting investor optimism about the company’s growth trajectory and strategic initiatives. Boreo’s shares have traded between €9.12 and €22.90 over the past 52 weeks.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.