Bullish indicating open at $55-$60, IPO prices at $37
Boreo Oyj reported a 19% revenue growth in Q2 2025, with 17% stemming from organic growth. Despite this, the company’s stock dipped by 1.79% in pre-market trading, reflecting concerns over negative cash flow and a decline in operational EBIT. The stock has shown remarkable momentum, with a 76.47% return over the past six months and currently trades near its 52-week high of 20.33. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value calculations. InvestingPro has identified 10 additional investment tips for Boreo, available to subscribers.
Key Takeaways
- Boreo reported a 19% increase in revenue, with 17% organic growth.
- Operational EBIT fell compared to the previous year.
- The company’s stock price decreased by 1.79% post-earnings call.
- Boreo reduced its leverage ratio from 3x to 2.3x.
- The electronics market remains weak, impacting customer investments.
Company Performance
Boreo Oyj demonstrated strong revenue growth in Q2 2025, achieving a 19% increase, with 17% attributed to organic growth. This marks the third consecutive quarter of sales growth, underscoring Boreo’s resilience in a challenging market. Despite these gains, the company reported a decline in operational EBIT, which may have contributed to the negative market reaction.
Financial Highlights
- Revenue: 19% growth, with 17% organic growth.
- Operational EBIT: €2.2 million, below the previous year.
- Gross Margin: Stable at approximately 31%.
- Cash Flow: Negative €0.5 million in Q2.
- Leverage Ratio: Reduced from 3x to 2.3x.
Market Reaction
Following the earnings call, Boreo’s stock fell by 1.79%, closing at 16.8. This decline reflects investor concerns over negative cash flow and operational EBIT. The stock remains closer to its 52-week high, indicating some confidence in the company’s long-term prospects.
Outlook & Guidance
Looking ahead, Boreo expects profit improvements in upcoming quarters, driven by strategic acquisitions and potential operational leverage as markets recover. The company plans to maintain its leverage ratio at or below 3x and is targeting acquisitions with a €10 million convertible hybrid bond. Analysts maintain a bullish stance on the company, with EPS forecast to reach €3.74 in FY2025. InvestingPro subscribers can access detailed research reports and financial forecasts, part of the platform’s coverage of over 1,400 stocks.
Executive Commentary
CEO Karin Erck emphasized Boreo’s acquisitive nature, stating, "We are an acquisitive firm. We should be acquiring companies on a frequent basis." CFO Jesse Peteya expressed optimism, noting, "The outlook remains quite decent," despite current challenges.
Risks and Challenges
- Negative cash flow presents a short-term financial challenge.
- Decline in operational EBIT may impact profitability.
- Weakness in the electronics market could affect future growth.
- Potential for increased competition in key segments.
- Economic uncertainties in the Baltic markets.
Q&A
During the earnings call, analysts inquired about the stability of Putsmeister deliveries and the impact of management bonuses on Q2 results. Boreo confirmed stable deliveries and noted that bonuses had a significant effect on the quarter’s financials.
Full transcript - Boreo Oyj (BOREO) Q2 2025:
Karin Erck, CEO, Borreo PLC: Good morning from Vanta from the Borreo headquarter, and welcome to this webcast session where, myself, Karin Erck, and, our CFO, Jesse Peteya, will discuss the second quarter twenty five highlights of Borreo PLC. Agenda is as normal. I will discuss the key financial and strategic highlights of the second quarter and the first half of the year. And then, yes, I will dig into further numbers and business area specific performance. If you have any questions, please use the Q and A tool made available.
Starting off with a kind of key commentary on the second quarter. First, financial point from of view, we continue to grow now for third consecutive quarter. So strong organic sales growth of 19%, of which 17% was organic. Gross margins remained stable. Now our businesses in the recent quarters, we’ve been trading at around 30% gross margin levels.
And on the operational EBIT side, profitability was somewhat below last year, 2,200,000.0 in absolute terms in the second quarter, below due to somewhat higher fixed cost, which we expect to be partially periodic for this quarter and also the fact that last year’s result was boosted by more significant earn out provision releases. So operationally, our businesses performed better than a year ago, but the accounting related adjustments impacted the quarter to quarter comparison. Our leverage as a financial standing improved quite significantly during the quarter from to the end of the quarter, mainly as a result of the issuance of a convertible hybrid bond, a €10,000,000 to Norwegian insurance company, Protector for Sikring. So leverage came down from roughly 3x to 2.3x at the end of so toward the end of the quarter. Cash flow operationally was negative in Q2.
Our sales grew especially toward the end of the quarter quite significantly leading to rising receivables, which we then expect to come back into somewhat slower summer months, so expecting positive cash flow then in Q3 and towards the 2025. Looking ahead, I mean, books remained quite stable even though we grew on a net sales basis quite significantly, so quite good order intake during the quarter. So that provides us some certainty and some visibility for trading in the coming months. However, I think a longer term outlook is a bit more shadow depending on what what’s going on overall in the world at the moment and and a bit more a bit more unclarity toward next year and then end of the year, but coming months and order book support quite decent performance in the coming months and then the quarter. On the strategic side, very pleased to see a couple of activities, the issuance of the convertible hybrid that I already mentioned, a bit more of that in the coming slides, and also the fact that we returned to acquisition track again since mid two thousand and twenty three.
So closed during the quarter one acquisition, an acquisition of Spez Electrovik AS in Estonia, a welding product distributor in in in the Estonian market. And then now in in q three, we have closed, August 1, the acquisition of Elfa Distrolek activities here in Finland and and in the Baltics. So really happy of these strategic developments. With regards to our long term strategic targets, we we still are not there where we where we would like like us to be. I think operationally performance wise, are trending in the right direction.
Three consecutive quarters of sales growth start to point us to the right direction. We do expect profits to improve in the coming quarters as well, so expecting the bottoming of our result, having happened in year 2024. Returns continued to be rather, I would say, mediocre at around eight to 9% on a return on capital employed basis, but definitely room for significant improvement mainly while we succeed in bringing profits back and revenue back to historical levels. And development on the positive when it comes to leverage, positive development now, so a significant downward trend or a downward movement in our leverage ratio, so now at 2.3x considering the impact of the convertible issued now at the end of Q2. In addition to, I would say, rather positive development of results, I think the key positive developments from the firm are is basically the fact the work started one point five to two years ago in, number one, protecting the profitability of the company, reducing working capital, generating cash flow with an and with an objective to return impact to growth.
Now we start to see the results of those actions, and we’ve started we’ve seen a significant amount of strategic priorities met during the ’25. So they announced two acquisitions, which I already mentioned, the consecutive three quarters of organic sales growth, and then also, the issue of the hybrid bond, which provides us firepower for completing, acquisitions in the future, and and a lot of other, actions and development, actions we’ve taken in the portfolio. So for example, the sale of sale of the real estate in Tallinn in Q1 twenty twenty five, the separation of our largest business machinery into two companies in Q4 twenty twenty four and a lot of other development actions in the businesses, which we do expect to yield positive results going forward. So I think we do the company is in a much better shape than it was one point five to two years ago as a result of the actions taken not only in the group, but in our businesses and in the portfolio as well. And on the back of that, we are well positioned to improve the performance and remain on a positive trend as we’ve now seen the last two to three quarters.
On the acquisitions, briefly noting, so as I mentioned in the beginning, during Q2, we closed the acquisition of Spez Electrode, a company focused in the distribution of premium welding machine and automation products, a business that has been built on the back of the FRONIUS relationship since, I would say, the 1990s. So we do own already since 2022, the sole distributor of FRONIOZ products in the Finnish market. So this was an expansion of the relationship with Thronios to the Estonian market as well. So a strong, good, reputable business, which had been in the market in a good market position for decades, operating at roughly 10% operating margins and employing 12 employees in the country. So the transaction was closed now in in May 25, and onboarding is as as is ongoing as as we speak.
The a bit of a larger transaction, we announced on the first of April, was the acquisition of AlphaDistrolek sales activities in Finland and The Baltics. So this was an acquisition done transaction signed with the long term partner of ours, RS Group, from The UK. This transaction was now closed on the August 1, so basically last last Friday, and and then we have welcomed a couple of days ago 10 new colleagues to to, to the markets and and to our facilities. So happy to see the team growing, growing and and and and a business with a lot of growth prospects going forward also being integrated into into the business. So overall, very important that since the Delphin Technologies acquisition in mid-twenty three, we were now able to return back to the acquisition track.
We are an acquisitive firm. We should be acquiring companies on a frequent basis. And given now the issuance of the hybrid as well, we are well positioned to continue doing that in the future as well.
Jesse Peteya, CFO, Borreo PLC: With
Karin Erck, CEO, Borreo PLC: regards to the hybrid or the convertible hybrid that we issued, I wanted to bring a few points. I mean, first of all, the instrument is, as the name says, a convertible hybrid bond, and it’s an equity classified instrument under IFRS. It carries a $10,000,000 paper carrying a 4% fixed interest rate for the next four years, providing an option for the holder of the Bonso Protector to convert the €10,000,000 to shares in Borreo at the price of €19 per share. And we also do have a right to redeem the bond after year four should the bond not be converted. But definitely, we do expect this to be I mean, we see this as an equity instrument even though it has a interest rate component to it and and and perceive this as as a as a really important sign from a reputable investor believing in the and who has been following the company for a long time, believing in the long term value creation potential of of OREO as well.
So happy to have completed transaction, the rationale behind the with the transaction primarily being this providing support for us to be able to continue doing what we’re supposed to do, so acquiring companies and developing the existing ones and supporting investments into the existing portfolio. It does it did, of course, improve our financial position quite significantly leading to lower financing cost because the issue and the classification under the equity classification basically pushes pushes down our senior debt financing terms and also lowers the amount of use of leverage and other debt facilities at the point of issuance of that type. So overall, a really strong, compelling instrument and the transaction, which we believe to be both good for the existing shareholders of Dorea, but the investor protector in the long term as well. And finally, taking a bit of a look at what we intend to do and sort of not financial guidance, but more of a focus priority focus guidance toward So on the back of the now completed actions, our focus will, of course, as always, be in the continuous development of our portfolios of the existing companies that we own for the development of those businesses.
At the same time, also considering, as we’ve said, if there are some companies in the portfolio which do not meet the demand or the criteria of ownership considering potential divestitures of such companies. This is ongoing work, and and this is always what we what what is entailed in our playbook. Number two, given the the increased firepower and the the stable position from a financing financing point of view, we look forward to exploring new opportunities and and and and seeing and then potentially executing then on additional acquisition in the coming coming quarters. With regards to trading of the underlying portfolio and existing portfolio, as I said in the beginning, the order books remain quite stable from q I mean, remain stable from the end of q one and are on a level which is higher compared to a year ago. So they do support a decent performance in the coming months.
What happens at the end of the year is a bit of a question mark toward next year. However, looking at the demand trends, there’s some positive movements on the industry side. Construction overall, from our point of view, remains quite modest and stable, not showing short term, let’s say, movements upwards. But overall, the significant part of the portfolio, which is related to industrial activities, seem there’s there’s a bit more positive, signs, at least the way way we see them. But, but, but let’s see how we things go, and and and and we will, of course, act in in case of significant movements up or downwards quickly to to make sure that that profitability remains on a decent level.
So quite happy being able to being able to continue on the path that that that basically executing the strategy that that we have set in place. Currently, not absolute on an absolute basis where we where we should be, but we have already started to trend in the right direction, and I think we will be able to do so in the in the coming in the short term future as well. With that said, I will hand over to Jesse for further review of figures. Yes.
Jesse Peteya, CFO, Borreo PLC: So looking at the big picture on the financial side, as as mentioned, we had a growth of 19% on a quarter to quarter basis, of which 17% was organic and two percentage points coming from the Speztselectrode acquisition in the technical trade business area. The market conditions remain quite moderate still throughout the quarter, But looking at the rolling twelve month figures for the group, we can see that we have turned the corner, and the positive trend is becoming visible in the in the sales figures there. For the business areas, electronics, bit of a mixed performance within the business area, but both Milkon and SSN continued with good results. Technical trade, a good quarter as well, and especially the Swedish Putsmeister business continued its strong performance. Then if we look at the gross margin and profitability side of things, gross margins were at roughly 31%, remaining quite stable at previous quarters.
We have had significant improvement in the previous years due to our both acquisition profile and then some product portfolio decisions made in the business units. But despite this, the sales mix varies a bit from quarter to quarter. And now especially through the partial recovery of sizable machine deliveries, the margins have been diluted somewhat from from what they have been. On the EBIT side, relative profitability decreased slightly from the comparison period. This was both due to the aforementioned sales mix, then a higher fixed cost base in in q two, which was a result of both recruitments, some OpEx investments in some companies, management bonuses, and then looking at the comparison period, the twenty four q two had some earn out provisions released in a more significant matter than than what we had this year.
Looking at the cash flow pro cash flow profile, the rolling twelve month cash flow as we define it, cash flow prior to debt service and m and a CapEx was at a healthy €9,400,000 and cash conversion at 95%. The reported operative net cash flow was a half a million euros negative in the quarter. This was mainly due to increase in trade working capitals of roughly three and a half million euros excluding the Spets Electricity acquisition. And the increase from increase in trade working capital was a result of strong revenue growth at the end of the quarter, which increased the level of receivables significantly. But all in all, we expect to take down the working capital level in in h two, and the working capital management has been been on a solid level so far.
Then looking at the return side of things, return on trade working capital decreased a bit to 26%. This was both due to the slightly diluted margins, but then especially the increased receivables at the end of q two. All in all, the working capital management has been been on good levels. And although we see improvement potential there as well, our main focus for improving the returns is is on the profitability side where we see a clear potential to improve in our current portfolio and driving up the returns. When looking at business areas, electronics had a sales growth of 17% on a quarter to quarter basis.
Operational EBIT was below last year’s quarter at roughly €800,000 with EBIT margins decreasing to 5.6%. This was partly due to sales mix, so lower margins in the quarter, and then there’s been some recruitments and OpEx investments in some of the companies. Working capital management has been been on a solid level in the business area, and the rolling installment EBIT in the bottom right corner at €4,500,000 has been improving during 2025. The market conditions for the business area overall remain quite weak. The uncertainty in the electronics component business has led some customers postponing investments and affecting the demand environment.
Order books grew slightly from q one, though, and they are in a good level going forward. And, especially Milkon and SSN have, continued their their strong performance. The acquisition side, got it already discussed, so we signed the Alfa DIS RelX SPA in in April, and their completion was now in August 1 with onboarding going on as as we speak. Technical trade had a good good quarter with sales growth of 20% quarter to quarter basis. Operational EBIT grew to €1,800,000.
The EBIT margin declined slightly to 7.1%. This was due to larger machine deliveries, which diluted margins somewhat. The return on trade working capital also decreased slightly to 24%, mainly due to the increase in receivables at the end of the quarter, but the rolling twelve month EBIT continued its positive trend since the 2024 and reached €4,900,000 now in q two. Performance wise, the Buschmeister Sweden business continued its positive trend, strong quarter there. Order books declined slightly from q one mainly due to deliveries and timings for machinery and machinery MT, but the order books overall remain at a good level going forward.
And then on the m and a side, we had the special authority acquisition company joining the group in in May with the onboarding progressing and proceeding well so far. And finally, a word on our improved financial position. So as as discussed, the convertible hybrid bond of €10,000,000 was issued in at the toward the end of the quarter, which due to its equity classification, it’s strengthened our balance sheet significantly and has taken our existing financing costs down. We are currently in a position where we have 59,000,000 of total facilities in use, including the convertible hybrid bond out of 6 €76,000,000. We have a strong liquidity position, and now our balance sheet is in a position where we are capable of pursuing further acquisitions once again.
On the debt maturity structure on the left hand side of the page, a majority of our, debts have a maturity date in 2027. This shows the total facilities, maturing then. So 13,000,000 of, RCF, which is currently unused completely. Then we have 12,000,000 of our acquisition facility, of which 8,000,000 is in use currently, and then our 13 and a half million in in in our term loans. Our €20,000,000 hybrid bond also has a reset date in q one twenty seven, meaning that unless it’s redeemed, there’s a step up in interest rates.
And then finally, the convertible hybrid bond, which which was now issued as a restake in 2030 unless converted to equity prior to that or redeemed by Pareto in in four years time. That’s it from the financial side of things.
Karin Erck, CEO, Borreo PLC: Okay. Very good. Thank you. Thank you, Jess. And we continue with the quick questions.
I published all all of the questions here, so I think you can you can see and follow them. I’ll I’ll try not to start regrouping them, but rather just take take them one by one. I hope that’s that’s fine. Starting from the bottom, I mean, number one, on what on what level are are we expecting the putsmeister deliveries to continue in q three and h overall compared to Q2 level? I think it’s quite I mean, overall, if we look at our Putsmeister businesses, so meaning Sweden, Finland and Finland and Estonia, we’re looking at the development or the the trading levels should be rather stable h two to h one in an h two to h one comparison this year.
The the Swedish market, the Nordic is supporting the entire sort of so so to say operation quite significantly given a much more brighter outlook and a strong order book at the moment as well. We do expect a few deliveries of concrete mounted pumps to happen in Estonia as well as well as in Finland. But but but clearly looking at the the markets, Sweden is is in a better position compared with with Finland, especially Finland, which which continue to be a tough environment. But but an answer straightforward answer to your question, quite quite stable considering the three markets. Number two, this is in Finnish related to management performance bonuses.
If I try and translate it, the question roughly goes that do the increased levels of management performance bonuses only impact this quarter, or do they are they divided into a number of quarters? The question is or the the the answer is that they they impact most significantly q two. So clearly, so higher bonuses compared with the with the prior year where basically there were no bonuses, paid. So that that was a significant impact on the performance now in q two. Then what the level of management performance is for the rest of the year will be dependent on the trading of the business and the group overall toward the end of the year and then sort of normal procedures related to to to provision doing provisions and releasing those and and and so forth.
But yeah, this is one of the periodic items that we commented during the presentation, which impacted the profitability of the quarter. Continuing, it sounds that the outlook for your business in the q two report is rather similar compared to what we said in q one report. Is that the right interpretation? Yes. It is.
Of course, we we would like like these sort of comments to come more that that that we say the same things in quarter after quarter. But to provide a bit more color behind the the the answer, I think the outlook we were sort of expecting and then we were not expecting, we were on alert seeing what the tariff related hassles will cause and what the impact will be in Q2. We did see very little impact out of that. So it didn’t really impact these things didn’t really impact our second quarter. I mean and nor do we expect those to have direct significant impacts to our portfolio.
Of course, we we trade, we buy a lot of components machines from different parts of the world, and there will, for sure, be some tariffs imposed to products supplied to us and partially to to to products that we sell. But but we don’t expect this to be major. It’s more around the the general uncertainty in the world that sort of shadows the the development of our businesses in in in short term, which, you know, is is quite difficult to say what the what the impacts will be. But but but so far, order books are where they are. They are quite decent.
They’re better than a year ago, and and that’s why we sort of say that that the coming months, expect to be at least quite decent. I I think I discarded one. Sorry. I think there was a question on priority capital allocation priorities. For the next twelve months.
Okay. Yeah. Sorry sorry for that. Well, I think the priority, as we said, as both of us, but yes, we commented, I mean, the issue of the hybrid was, of course, I mean, it was the convertible was driven by both the strengthening of the balance sheet, lowering financing costs, but basically, the big reason behind being that we are able to continue on the acquisition path. So assuming we will find businesses which fit our ownership criteria at valuation levels we are comfortable with and at the same time, the the the financial standing of the company remaining on a decent level, then we would be happy to allocate more money into acquiring new companies.
There was a question which I take at the same time that what is our what is the leverage range we are comfortable with after potential new acquisitions. So looking at the 2.3x leverage at the moment, given I mean, as it is impacted by the hybrid, the €20,000,000 hybrid we have on the balance sheet plus the convertible, of course, then we’d rather remain on the lower end of that figure or sometimes even below that. But it’s all I mean, I think it’s it’s when we look at we make significant capital allocation decisions. We look at the standing where we are as a as a group. So group as a whole, we look at the trading outlook of our businesses.
We look at the potential returns of that new venture, whether that being organic investment opportunity or an acquisition opportunity, and sum that all up and see what’s what’s the the the best alternative and what’s what’s the best way going forward. Sometimes that might mean that, you know, we assuming you are at 2.3 x, you might be willing to take a view that we we gear the balance sheet rather towards three x if the case is really strong and we believe we can delever downwards. It all depends on a number of items, but I would say as a guidance at this stage, looking at our leverage target to three x, given that we have those hybrid and convertible hybrids on the balance sheet, we’d rather remain on the lower end of that range or even below. Continuing, I’ll publish a few other questions here as well at the same time because there were a few maybe you, Jesy, want to take a few of the business part business questions. So on the technical trade side, there are questions for our why our fixed costs were up, especially on the technical trade?
How much was driven by SpecSelector, and should we expect clear organic increases also in the coming quarters? How would you comment that?
Jesse Peteya, CFO, Borreo PLC: I would say well, first of all, spent selector didn’t affect the fixed costs too much. It was part of the Single €100,000. Yeah. $100,150,000 euros, give or take. Otherwise, there were more of one time items.
So, for example, on the Bootsmaster side of things, there were investments in Baum affairs and this type of nonrecurring or once in a year type of costs, which we didn’t have in in previous years necessarily. At the same time, there’s been some growth recruitments and investments on the OpEx side as well. We’ll talk about systems and these type of things, which we don’t see increasing going forward on a cumulative basis rather that we have now now taken taken some steps when we have seen growth in in in revenues and demands, but not not a trend that we would expect that the fixed costs are increasing on the technical trade side.
Karin Erck, CEO, Borreo PLC: Yes. And maybe to complement that, there was another question that the number of employees have increased in technical trade. I’ll take that away at the same time. So, of course, the major contributor to that was the Spencer Electrode acquisition. But on the technical trade side, we have invested made investments into especially a few businesses, one being machinery’s auxiliary power business, so basically the business where we sell generators.
Many of you know that there’s a strong trend behind data centers and overall sort of sec supplier security security topics in the world. So that business has a positive trend. We’ve made at the beginning of the year a couple of recruitments to that business. We are also building on organization, for example, in where there’s a strong development or a strong trend at the moment, And a couple of other businesses, the same the same situation. On the electronics side, which doesn’t directly answer the question, but also the same especially the same trend is at the moment going on in Milkon, where we look to to to to invest more into meeting and and so meeting the demand that the defense industry currently poses and also quite significant investments made in Delphi Technologies related to our ventures in The U.
S. Market growth in China and also in the European markets. So there are quite many businesses and quite many businesses where we’ve done decisions to grow or to to put upfront investment. I mean, investments in our case are not that much CapEx, but but investments in organization and systems. And and these things all, of course, add up not a single big thing, but a number of number of items of impact.
A few questions on electronics, if you like to take those as well. There’s one, what is the reason for the decline in electronics earnings despite sales growth? And and the second one, which is in Finnish, that there was a bit of a soft profitability of electronics business area in q two. Do we see a improvement in the trend? So maybe, too, if you can comment what was the reason behind the core or, let’s say, somewhat of a soft result and then outlook going forward.
Yes. So sales growth, first of all, came through, as as mentioned,
Jesse Peteya, CFO, Borreo PLC: a few places in the business area, and then we had mixed performance in others. So sales mix led to a bit lower margins, especially some deliveries on the SSN side. On the cost side and why why the fixed costs are higher, there’s been recruitments in in a few companies. Delphin, for example, has has made recruitments now executing their strategy. There’s been a recruitment in Milkon and a few other organizations where where there’s a clear growth path, and these fixed costs we are now taking in.
Then simultaneously, there’s been OpEx investments in in systems. So ERP systems in a few companies now both in correlation with this alpha distro like acquisition. We have made investments in in the ERP side of things, and then we have also changed the systems in a in a few other companies, for example, Norretron, which has done a lot of work on on the systems side. Then finally, the margin margin effect on the profitability comes from the shifting shifting landscape in the different businesses. So correlating to one of the questions regarding the Baltics electronics business going forward.
There’s been a tougher market in in some of YE’s businesses now, for example, as well as in Poland for for the SSN Poland operations, which then in different quarters, different mixes affect the the EBIT a bit differently.
Karin Erck, CEO, Borreo PLC: Yep. And there’s one additional question which goes to what’s the outlook in the Baltics electronics business, and I guess this question has been asked because of the, let’s say, the increasing importance of that market to us. I mean, it’s been a tough market overall now already for a couple of years. I mean, since the war Baltic economies have not been performing well except for Lithuania, which has which has been now developing more positively in the last year, especially. But but looking at our businesses, we I think we started to see some we came down for a few years after a significant peak upwards and and growth trend, which was especially strong in Latvia.
Now we are sort of back at pre COVID levels. There were some positive movements in in the second quarter, but but not at least clearly indicating sort of big booms or or anything in that direction or or either a significant decline. But but we’re sort of at the moment at those levels, which are similar to pre COVID before the allocation situation and supply issues started in ’21 to 2022. A couple of final questions, we start to be to come toward the end. You indicated that you see clear profitability improvements in the current portfolio.
What are the most obvious profitability improvement opportunities? So we have now there’s a few different sort of categories in in the in in the group categories of companies. I mean, are those companies which have been trading quite positively throughout the tough times as well. I mean, businesses like Filterit, some of the other technical trade businesses also at electronics, Milkon, SSN, which have been sort of quite stable now for a few years and improving. I think there’s a good trend on those businesses going forward as well.
As we expected, we see that this year compared to 2024, we see a part of the portfolio improving due to two things, our own actions, but also somewhat of an improved market. But there will be a certain amount of our portfolio related to construction, for example, and industrial businesses, which will not be on historical levels this year, but say, the potential of being there in the next, I would say, to eighteen months. So the operating leverage of what we’ve been talking about before, which we still can’t even though fixed costs were a bit higher, now we saw organic and significant growth, we see there’s a significant upside in operational result once the market continues to support the rest of the business, which are still, from a market point of view, in a challenging situation. Continuing with final ones, organic growth jumps around, there are significant jumps. Well, why is that?
It is partially because there was I mean, we came let’s say, the cyclical part of our portfolio came down significantly in q in ’20 let’s say, from ’23 toward ’20 the ’24 and still continuing, I would say, q three twenty four. So we came significantly now. Now we’ve been building our way back to where we have historically been for a few quarters, we’re still not there. But I think that as we’ve said, the trend is right. There are pumps between the quarters, but the trend is right.
And the beginning if if this is a signal as the beginning of a turnaround, I think we’ve already seen the beginning of the turnaround, but the potential is is far away from being, so to say, utilized and captured. So we still have companies in the portfolio which generate altogether a few million euro of annual profit, which are really far away from where they have historically been. And the market and the markets where they operate, are overall down. So we haven’t lost, for example, concrete mounted pump business. We haven’t lost any market share in the last couple of years.
It’s just that there is no investment by the customers at the moment. And then once construction, for example, industry comes back in Finland, there’s for sure it is for certain that we will sell more machines than we sell today. And then finally, you mentioned some more investment to marketing and personnel. Is this higher level of OpEx investments expected to continue? I think we already answered this through a couple of answers provided.
So Yeah. There we had this. We did we did more investments. The low level of cost is higher compared to ’24, but it’s not that high on a year to year comparison as you saw now in the second quarter to second quarter comparison. So that’s the way we would frame it.
Okay. So that, I think, was the last question. Many thanks for for those as always. Appreciate staying on the line and following us. And overall, we would like to thank you for thank you for this session and and look forward to seeing you seeing you in a couple of months again.
Thank you very much.
Jesse Peteya, CFO, Borreo PLC: Thank you.
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