Earnings call transcript: Boreo’s Q4 2024 revenue growth amidst challenges

Boreo Oyj reported a mixed financial performance for Q4 2024, with net sales increasing by 6% despite a 17% decline in full-year revenue to €133.6 million. The company’s operational EBIT remained stable at €2.1 million for the quarter. According to InvestingPro data, Boreo’s last twelve months revenue declined by 21.62%, with a market capitalization of €26.38 million. The company’s stock surged by 21.28% following the earnings announcement, reflecting investor optimism about the company’s strategic initiatives and market resilience.

Key Takeaways

• Boreo’s Q4 net sales rose by 6%, indicating some recovery despite annual revenue decline.
• The company successfully reduced fixed costs by €2 million and optimized working capital.
• Boreo’s stock price increased significantly by 21.28% in response to the earnings report.
• Strong performance was noted in the electronics and defense sectors.
• The company closed its consumer business in Estonia as part of restructuring efforts.

Company Performance

Boreo’s overall performance in 2024 was marked by a 17% decline in revenue, attributed to challenging conditions in the construction and industrial sectors. However, the company managed to grow its Q4 net sales by 6%, signaling potential recovery. The electronics and defense sectors showed resilience, contributing positively to the company’s performance. Boreo’s strategic cost-cutting and working capital optimization also provided some financial stability.

Financial Highlights

• Full Year 2024 Revenue: €133.6 million, down 17% year-over-year
• Q4 Net Sales: 6% increase compared to Q4 2023
• Q4 EBIT: €2.1 million, stable year-over-year
• Operational Cash Flow: €20 million over the last two years
• Leverage Ratio: 2.8x (Net Debt/Operational EBITDA)

Market Reaction

Boreo’s stock price experienced a notable increase of 21.28% following the earnings announcement. This surge reflects investor confidence in the company’s strategic restructuring and growth potential, particularly in the electronics and defense sectors. The stock’s movement positions it closer to its 52-week high of €27.2, a significant rebound from its 52-week low of €9.12.

Outlook & Guidance

Looking forward, Boreo expects improvements in 2024 and 2025, with order books significantly higher than the previous year. The company aims to continue optimizing working capital and investing in growth opportunities. Boreo’s focus on companies with positive growth potential is anticipated to drive future performance.

Executive Commentary

CEO Karim Erk expressed optimism, stating, "We do think that we have bottomed now in our profit generation." CFO Jesper Bette added, "In the short term, we continue executing on our back to growth plan," highlighting the company’s strategic focus on recovery and growth.

Risks and Challenges

• Construction and industrial markets remain challenging, potentially impacting future revenue.
• Continued technical trade difficulties could affect the company’s operational margins.
• Macroeconomic pressures, such as inflation and interest rate fluctuations, pose risks to cost management.

Q&A

During the earnings call, analysts inquired about the outlook for the SSN segment, with positive expectations noted for the Polish and Finnish markets. Boreo also indicated a modest working capital buildup in early 2025, reflecting strategic investments and selective recruitment in growth areas.

Full transcript - Boreo Oyj (BOREO) Q4 2024:

Karim Erk, CEO, Borio: Good morning, and a warm welcome to Borio’s year twenty twenty four financial review webcast. My name is Karim Erk. I’m the CEO of the firm and together with our CFO, Yesse Bette, we will recap the happenings of 2024 and more specifically, the latest quarter of twenty twenty four. Agenda is briefly as follows. So I’ll start looking at the entire year, painting a bit of the picture on the last five years.

And then, yes, we’ll take the review and discuss the Q4 events in a more specific manner. If you have any questions as normal, please use the chat function, which is there made available through the platform. Starting off first with some key highlights of 2024. Overall, it was a challenging year for the firm. Our priorities during the year were primarily on working with our existing portfolio of 22 companies.

The overall themes and the general themes throughout the year were controlling costs, managing our balance sheet, so focused on optimizing working capital and through that creating cash flow and also continuing to invest where the opportunities for growth continue to be positive, continue to invest in organic growth throughout our portfolio. We are an acquisition driven firm. We have completed in the last five years, seventeen acquisitions in 2024. We did not complete any transactions due to priorities to maintain a solid financial standing. So basically looking at the numbers, basically 24% represents with the exception of the half a year result from Delfin Technologies and the nine month result from an add on acquisition to Multicom we made in 2023.

They represent basically organic development of our portfolio. So in 2024, our revenues declined quite drastically, primarily in construction related businesses of Bultsmaster operations in three countries, as well as in some of the Finnish construction oriented companies. In addition to that, also the development or the demand environment for some of our primary quite significant share of our firm with industrial exposure on the demand and customer side were tough, resulting in overall a 17% decline of sales throughout the year. We managed to secure and defend our profitability through actions taken both on pricing and improving gross margins, but also significantly reducing fixed costs and thereby achieved a €6,800,000 operational EBIT, 5.1% in relation to sales, which we think is a decent achievement in a tough environment. Clearly, the positive part of not only of 2024, but also the last two years, including 2023, was that we’ve been able to manage our balance sheet well and creating an operating cash flow of over EUR 20,000,000 in the last two years and now especially in the last quarter of twenty twenty four, a strong EUR 7,000,000 operative cash flow.

Our financial standing continues to not be where we exactly want it to be. Leverage is to elevated even though it came down from Q3 twenty twenty four, but now landing at the end of the year to 2.8x measured looking at our leverage ratio, so net debt divided by operational rolling twelve month EBITDA. This is something we continue to manage in the coming quarters and throughout the year intend to improve and target to improve our financial standing. Brief look at our strategic targets. As the headline says, we have work to do to reach the levels where we want to be.

We do think that we have bottomed now in our profit generation. So we came down in the last couple of years from roughly a level of EUR 10,000,000 in operational EBIT down to roughly EUR 7,000,000 now in FY 2024. We do expect the 2024 and 2025 to be a better year compared with 2024 on the back of the investment or the back of the actions we have taken in improving our cost competitiveness, taking cost out and also the improved order books we’ve seen compared to last year. However, if we look at the returns, return on capital employed being at 8x, 8% and leverage being closer to 3x, taking into consideration that we have a EUR 20,000,000 hybrid on our balance sheet, a leverage is clearly too elevated compared to the stand to the position where we would like to be as a firm. Now showing a couple of slides on from the last five years, so developments in from 2020 to 2024 and focusing on some of the key developments in the last year.

As I already mentioned, the big headlines, sales decline, gross margin decline in terms of absolute euros, but an improvement on gross margins from 28% to 30% in 2024 percent and a decrease of fixed costs roughly by EUR 2,000,000. That basically brings us that brought us to the operational EBIT of EUR 6,800,000.0. The most positive developments in the portfolio throughout the year, I mean, were overall seen within our electronics business area, which improved profitability compared to ’23, especially single solutions. Nordic had a extremely strong second half of the year and was able to go above the expectations we had going in the year. So we developed a positive year after a somewhat over challenging 2020.

Three with SSN in the similar way with FNB, our timber truck mounting business in Sweden, we had a tough 2023, a really strong operational development thereafter throughout the latter part of 2023 already, but also now throughout 2024. So reaching record sales in 2024 and very importantly also being able to reduce working capital and thereby generating good cash flow in 2024. The challenges we experienced in the portfolio are primarily in the businesses which have been part of the firm for a long period of time. So the YE businesses, our electronic component trading businesses here in Finland, but also in the Baltic countries, machinery and then our Bultsmaster businesses with exposure on the construction market. So overall, a decline of over EUR 30,000,000 out of these portfolio companies.

There, on the other hand, we succeeded rather well in defending profits through cost efficiency measures, but also then on the balance sheet side, managing working cap well. One note I brought to the slide is the last comment there on the slide bottom right corner. I mean, if we look at the profitability levels in our portfolio, the The portfolio is a healthy one from a profitability point of view. Probably one third of the companies operate at plus 10% EBIT levels. The other one third of the businesses around 5% to 10% EBIT levels a few closer I mean, between 0% to 5% and only a few companies on the smaller side, which generated a loss measured on EBIT terms.

So even though overall the picture is not something we’re happy with, the portfolio generates a plus seven roughly a 7% operational EBIT in a tough market like that, which is a good sign of the quality of the portfolio and the improved trend it has also seen throughout the last couple of years. As already mentioned a few times, a very strong operative cash flow not only in 2024, but also in 2023. So overall, close to €24,000,000 operative cash flow in the last two years, basically, and largely driven by the fact that we reached our target. We’ve been communicating the last twelve to fifteen months, I believe. So basically, we were able to bring working capital to a level of EUR 25,000,000 at year end ’24.

We do expect in the early twenty twenty five some buildup of working capital to happen, but going into ’25, intend to maintain a well optimized working capital throughout the portfolio. Returns, I mean, basically, I mean, we follow the two key metrics looking at the return profile. On the group side is return on capital employed and the return on trade working capital metric that we use to measure all of our businesses in the group. Looking at, as I will show later on, the electronics portfolio is operating at a very healthy plus 50% return on trade working capital level, whereas now due to challenges with profitability on the technical trade side, our returns have come down quite significantly in 2024. The balance sheet is managed quite rather properly, but the key focus is clearly on investing in growth, creating and aiming to create sales growth and through that then also improving profitability, which in turn then will improve the return profile going forward as well.

Last two slides, we brought something new, I think, which we haven’t looked at before. Now we start to have some years of track record. So we start to be able to also sort of look at somewhat of larger trends or longer trends and of how we not how we not only have developed in terms of P and L and balance sheet, but then also looking at developments and our track record from a capital allocation point of view. So basically, here on this slide, you see a summary of cash outflows or cash outflows and cash inflows starting from the mid of twenty twenty, which basically we see as a start of the Borreo era. So starting from the Multicormio acquisition we did in Q3 twenty twenty, we have altogether invested around about EUR 50,000,000 to acquisitions, including the earnout payments as payments we have made throughout the years.

Looking at the uses of cash, CapEx doesn’t represent too big of a share of our cash outflows given that we are a capital light firm overall and have the requirements to make capital expenditure quite modest. And then looking at basically the funding side of things, roundabout closer to EUR 40,000,000 has been funded with operative cash flow. We’ve also issued equity as part of transactions, also made a personal share issue in 2025. Those combined close to EUR 6,000,000 from a financing point of view are the sources of cash and what we’ve used. And then at the end of twenty twenty four, we still had a EUR 24,000,000 of two hybrid instruments on our balance sheet.

But now as we speak, February 30, we paid the EUR 4,000,000, the old hybrid back. So now in ’20 now basically continuing with the 20,000,000 hybrid on our balance sheet. If we look at the desired state and our goal, clearly, the primary goal is to be able to fund majority of acquisitions and all other cash outflows with operative cash flow. Why indebtedness has gone up is primarily due to the fact that compared to our own expectations, it is basically the loss of our Russian business and the impacts thereafter, which put pressure on our balance sheet from late twenty twenty two onwards. But in any case, a good sign of the fact that the portfolio has generated operative cash flow, which we’ve as we should have been primarily allocating into acquisitions throughout the last four to five years.

And finally, before handing over to Jesper for Q4 review, looking at the acquisition track related to the SEK550 million roughly invested since Q2 twenty twenty. I mean, if you look at in 2024 in terms of operational EBIT, the new companies you see being acquired since 2020 generated roughly somewhat a bit over EUR 5,000,000 of operational EBIT in year 2024. So nowadays already, especially now the more cyclical part of our business being the heritage portfolio. Basically, the acquisitions we made have supported our profit generations and the companies have supported our profit generation very significantly. Looking at the return side of things, in average, looking at three year average returns, we have generated a return of 15% for the EUR 50,000,000 invested throughout the last years.

Not quite where we expect it to be. So the multiple or the way of looking at it, the return expectation has been at 20%. Now we are at 15%. However, once market conditions improve and the development actions we’re taking in the companies, they start to kick in over time. We do expect that once we look at these sort of graphs in some years down the line, we have a good chance of reaching those initial investment targets we have set at the point of acquisitions.

So overall, a rather decent track of acquiring companies being able to operate and transform from an entrepreneurial world to continuing in an entrepreneurial world, but in a different ownership setup and also then creating confidence of the fact that the business model works and we are able to allocate capital with good expected returns for investments. So that’s it from my side. And then I hand over to Jesper for Q4 review, please. Yes. Thank you.

Jesper Bette, CFO, Borio: So looking at Q4 a bit more closely. In general, the quarter went quite as we expected. After several weaker quarters, we returned to growth. So net sales grew by roughly 6% from the comparison period. Gross margin levels were a bit lower in Q4 due to some higher volume deliveries, but EBIT was at €2,100,000 which was on the level of Q4 ’twenty three.

This was in addition to the sales growth supported by our cost measures, which we took earlier in the year, which in Q4 realized at roughly €800,000 in lower fixed costs compared to the previous year. In addition to decent profit generation, we also managed to generate strong operational cash flows of roughly million. This was supported by our working capital management. We achieved our targets for inventory levels and bringing working capital down to year end. We were at €25,500,000 And this increased profitability and then the strong cash flows also decreased the leverage from the previous quarter.

But as Kari mentioned earlier, the level is still elevated at 2.8 times. If we then look at the trading outlook and order books, order books decreased slightly from the previous quarter. But looking at the comparison period a year ago, we are at significantly higher levels going into 2025. We had some sizable orders postponed to 2025, which we expect will materialize in the first half of the year as well. And if we look closer on the business area levels, Electronics, they had a very strong end of the year.

Their sales growth was 31% compared to the previous quarter in ’23 on the comparable quarter. This was largely due to SSN. As Kari mentioned, they had significant investments from their largest customer materializing. And then Milcon had a very strong year, both full year compared to 2023 and then quarter four also achieved net sales growth compared to the year 2023. In general, Milken, we expect this will continue going into 2025 as well with strong demand on the defense industry side.

Margins, as I said, they were a bit lower on the group level and this comes largely through the electronics side of the business where SSN had the high volume deliveries in the last quarter. The business area managed to reach 8.5% in EBIT margins, which was a very strong level. EBIT itself was €1,700,000 in euro terms, which represented a growth of almost 50% from the comparison period. And this shows in the rolling twelve month EBIT figures then in the bottom right corner. The profitability has increased on a rolling basis and then combined with successful working capital management, the return on trade working capital has increased quite meaningfully from 43% to roughly 52% in Q4.

And if we look at businesses outside of SSN and Milcon, the performance was a bit varied in Q4. So YE businesses, for example, Finland exceeded forecast in the last quarter but had a challenging year in total in a difficult environment. Then especially the Baltic countries continued facing difficult market conditions and continued with decreasing sales compared to the comparison periods. There we don’t see any immediate changes in the operating environment. But the companies have done a good job of managing working capital in these environments.

Due to these operating challenges and then a broader review of operations, we in Tallinn or our Estonian operations, we closed our consumer business and did a reorganization of YEA International in Estonia. And this resulted in decreased need for space for the company to operate in. And we have initiated a sales process of the company on premises in Tallinn, which we expect will materialize in the coming months. Then for the other businesses, still varied. No Retron underperforming.

Infratix meeting expectations. Delfin, our health technology company, had a challenging quarter. But the company continued its product platform reform, which was initiated last year. They’ve done work with renewing their global distribution network, continue developing their selected future strategic paths, and in general have a quite positive outlook going forward with the opportunities with the business. But as a whole, Electronics performed well for both Q4 and full year.

Then on the other hand, if we look at technical trade, we had a modest performance in the last quarter, challenging operating environment continued. Sales declined by roughly 11% compared to Q4 ’twenty three. As Kari mentioned, for the full year as well, this was largely due to the machinery businesses and Bultsmuister businesses. Here, profitability for the business area reached 4.5. This was reflected also in the quarter to quarter results, which was 900,000 for Q4 for the total.

This was roughly 45% decrease from the comparison period. So really tough quarter. If you look at the R12 rolling EBIT figures, these have been declining this year and reflected in the return on trade working capital, which was at 24% at year end. Even though the business area here as well did a very good job with working capital management and bringing inventories down to our targeted levels. On a more business unit specific side, the business, Bultsmaster business is suffering still in Finland from a tough market.

This was both in Q4 and during the whole year. We expect the demand outlook to remain uncertain going forward as well. Sweden fell a bit below expectations in Q4, but had a solid year all in all. They defended profitability very well through their strong aftermarket sales. And then they have developed a strong order book for 2025, part of which we have communicated earlier large orders from a customer.

In other businesses, F and B was mentioned in Kari’s overview. They had a very successful end of the year as well. High sales in the quarter and all time high sales for the full year ’24. They have managed to get their ERP implementation done, which has presented challenges previously. For the operations, they’ve done a successful reduction of inventory levels and developed a solid order book into ’25 in addition to already reaching record higher sales in 2024.

Then for the other businesses, going quickly through the largest business unit in the business area, machinery power, performed decently in Q4. Machinery also completed the separation of the metal machining business into its own unit machinery MT, which had a challenging quarter at the year end. This was as opposed to ProNius, which is in the welding product business. They have also had a challenging environment but performed well in the last quarter and has been defending profitability during the year very well also due to their strong market position. On other businesses, machinery construction, for example, performed up to expectations, but the environment is very tough.

Multicolomeo construction side, Same thing, they had a tough Q4 and demand outlook still continues to be quite moderate. But Motikolomeo did a good job doing the full year defending profitability as well. Both on the business sales mix side, defending margins and then cost measures during the year. The remaining businesses varied performance, filtered, performing up to expectations and taking growth investments, finding good opportunities to grow the business going forward. JMatik having a tough year due to demand from the largest customer, but also working on expanding the business and finding good opportunities.

ASKP similar. Q4 was a bit tougher than the full year in whole, but they have also successfully won one new business to expand going into 2025. But in general, looking at the two business areas, electronics has been strong this year and technical trade has had a tougher operating environment, largely due to goods much their distances and then machinery and the construction related stuff. If we then jump over and take a look at our financial position, our debt facilities to be more accurate, we in December agreed to extend our credit facilities by one year, the maturity from 2026 to 2027. And simultaneously agreed to postpone loan repayments of roughly €2,500,000 from 2025 to 2027.

So now at the year end ’24, we had liquidity of €24,500,000 of which 9.7 was cash and the remainder was unused short term credit facilities. Going into ’twenty five, we have scheduled debt repayment of €2,500,000 And then as Kari mentioned, and we notified we have redeemed €4,000,000 of the old hybrid on the February 10, which was originally issued in 2022. So now we then have our maturity leading towards 2027, where we have at that $600,000 left of our term loan. Our acquisition facility of which $6,500,000 is of use today. Then we have a reset date of the new hybrid.

And then there’s a revolving credit facility up there showing us EUR 4,000,000, which is unused as of today. So if you look at the whole facilities, which we have 73,000,000 of at the year end 54,000,000 was in use, which includes €24,000,000 of the hybrids, 4,000,000 which now was redeemed. Then moving onwards into our outlook going forward. Order books, as mentioned, coming into 2025, we are at significantly higher levels than in the in the previous year. So decent start to the new year.

The cost measures we have taken during the year will support operational improvement on an annual basis. We have lowered fixed cost by roughly EUR 2,000,000. And then we have continued positive outlooks in several of our portfolio companies where they have interesting opportunities to grow that meet our criteria and the companies have been developing these even during the year where our focus has been to focus on profitability and working capital management. So to summarize, the message is the same as in q three. In the short term, we continue executing on our back to growth plan.

We have successfully managed the cost programs. We have managed the working capital release where the organizations are completed. We continue investing and developing our existing companies where we have opportunities to grow with projects that meet our criteria. And then where we see that companies do not meet our criteria in the short or midterm, we continue to evaluate if if we do reorganizations, which we have communicated that we are willing to do if the case be so. That’s it for my part for Q4.

Karim Erk, CEO, Borio: Okay. Thank you. Yes, We I think there is there are some questions. There’s a new platform in use, I think, not only not only in our case, but we try and cope with it. So looking at the questions here, not sure if you see them, but we’ll go them through one by one.

First question is, you’ve done rates like this. You’ve done some OpEx investments, including recruiters. Can you give some indication of the net impact from the cost cut actions and additional spending when thinking of ’25 compared to the year end 2024 situation? Yes, that’s it. It is correct that recruitments have been taken.

I mean, partially already in already at the end of twenty twenty four, but now going into 2025 as well. So some examples including, for example, Delfin Technologies, but during Q4, investments there into organization. Same thing with Machineries, auxiliary power business where the demand outlook on the back of data center industry developments and security of supply topics, for example, these sort of items we’ve and actions we’ve taken to prepare for growth. It is a partially now going into 2025, there is some pickup and overall inflation picking up to a certain extent when it comes to personal cost especially. And of course, in a year like 2024, the level of compensation bonuses are similar have also adjusted downward.

So going into 2025, there will be provisions on the balance sheet going forward expecting for somewhat different performance as compared to 2024. So there is some pickup, definitely not back to the levels where we were looking at fixed costs in total. But let’s say, increase of fixed costs overall is something we expect to happen in 2025. If then at the other hand, the market would not support us to the extent that we expect at this stage, then of course, there’s always an ability to flex downwards as well. So that broadly, I believe, answers the question.

The second question is that do you foresee the significant better development of SSN continuing this year? What does their order book look like? Overall, the outlook is positive, especially in Poland and in Finnish market. The outlook is rather positive, somewhat more challenging looking at The U. S.

Market and Sweden, but overall as SSN group rather positive. We do see that there is a chance to continue operating at close to levels of where we were in 2024. So which is closer to levels of ’22 as well and 2021, which was strong as opposed to a tougher ’23 we had in between. But looking at phasing and so forth, Q1, there was a certain backlog that was brought in successfully in Q4 twenty twenty four, taking something out from Q1 now 2025. So we do expect as in 2024 as well that the improvement the performance of SSN will gradually improve during the year.

Then there’s a third question of what kind of working capital buildup do we expect in the near future. I mean, we’re I think the in general, I would say that if we would remain close to the current activity levels where the business is running from a net sales point of view, We’re looking at a couple of million trade working capital swings in the business. Of course, some timings of larger deliveries and machines can deviate and increase the swings as well. But the EUR 25,000,000 mark is roughly I mean, we don’t see significant opportunities with this portfolio to squeeze much more without jeopardizing our ability to serve our customers well. But basically, I would see in the beginning of the year some buildup as we communicated to be happening.

Jesper Bette, CFO, Borio: I think it will obviously grow a bit once we hit the growth we target. But I think in general, we run a tighter ship now. So the absolute or the relative level will be lower going forward than has been historically. Yes. Yes, for sure.

Karim Erk, CEO, Borio: Then continuing, can you provide an update on the timing of Budsmeister deliveries in Sweden? We do as we see the world today, there is a possibility that first deliveries will happen during Q1. Now looking at the delivery schedules, the first deliveries of a significant batch V1 would be timed during Q2 and Q3 this year. However, due to challenges on the supply of chassis to the pumps we’re about to deliver, it has taken some time and it’s not 100 certain yet what the timing will be. But as we speak, hopefully starting from Q1, then going into Q2 and Q3, being able to complete already a good sizable chunk of those deliveries.

Then we will continue. I think now we’re coming into electronics related questions. The question goes, your electronic sales increased significantly in Q4, especially driven by a couple of companies. Could you comment that a bit more where there’s something exceptional? For example, SSM was quite much in 2024, will this level continue?

And do we see this demand level? Well, I commented already part of that SSN. Q4, looking at Q4, Milken has historically been a company that has always been generating majority of its profits in age result in the second half of the year and especially going into Q4, and this happened as well this year. So there’s clear tendency to do that with SSN, which was now a major contributor to the result, there’s no similar type of typical seasonality in the business, but it’s more on how timings of investments will happen in different years. So but overall, I would comment that the outlook for electronics businesses is quite stable.

Positive signs on the defense side, in particular, the industry side continues to be stable. We do not see a decline, but not either a broad positive trend as we speak, looking at the market. But given that we have somewhat better order books compared to and order books which are in the level of the last six months roughly, that provides us some confidence for the performance in 2025. Then a detailed question on Baltic consumer electronic businesses, how visible will this be in sales? Well, it is not materially.

You cannot you can it’s so small importance in terms of profit and loss statement that that is something not something I would advise not to consider. The impact is more on the balance sheet side. So us being able to reduce working capital as a result of ending that business and lowering inventories, which we have already done to quite a good extent so far. Then this question on order book still continuing, how much are we up? How much of this how much of the growth in order book on a year on year basis is the PM business.

It plays a role. It has a good share of that, but it’s not the entire growth. So we do see overall in the portfolio a positive development. So order books are up in both business areas excluding PM Nordic. So electronics up versus Q4 ’twenty three and also technical trade up without if Bjorn Nordic is excluded.

Then on the financing side, a question to yes, how did changes in debt repayment schedules affect your debt conditions? Does this bring increased costs? Did covenants change?

Jesper Bette, CFO, Borio: Yes. Well, as you most well know, we don’t comment on our specific covenants and and, debt conditions. But, the changes did not affect the the current debt terms we have. So no material effects.

Karim Erk, CEO, Borio: On the cost side, no changes there. Always some cost related to topics of changes as part of senior facility agreements, but not going forward. So rather one time impacts. Then there’s a question on fixed cost. It’s fixed expenses developing 25%.

I think I answered that question already before, so increase versus 24% but not back to 23% levels. Then last question, which we have here. Are there businesses where you still see demand going downwards? Not really. I think the sharpest declines have been seen, I mean, especially on construction side where it’s been tough in all markets.

But if we look at the development the situation now, basically, our expectations is that we are seeing growth in these businesses, even though modest in some of the cases, but anyways, growth going forward. I don’t think we have any single business that comes in the portfolio where the expectation would be or the signs as we see the world today that there will be demand going downwards. Of course, there’s plenty of uncertainty in the world and things might happen during the year, but overall, that gives a feeling that sort of there’s a basis to believe that we would have bottomed in terms of demand now. But let’s hope for the best and continue executing on things we can influence. So I think that was all.

If there are no new questions, then we would, as always, thank you for taking the time. And in case of any additional questions, then just feel free to reach out directly. But appreciate the time and all the best for ’25 when we speak again latest after the Q1 results are out. So thank you. Thank you.

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