Fortaco Group Holdco Plc’s Half-Year Review January–June 2024: Strategy implementation continues – core business and efficiency improvements progressing as planned

Fortaco Group Holdco Plc  |  Half-Year Review  |  26 August 2024 at 5:00 p.m. EEST

This release is a summary of Fortaco Group Holdco Plc’s Half-Year Review for January–June 2024. The full release is attached and available on our website at https://investors.fortacogroup.com.

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period of the previous year.

Financial highlights: April–June 2024

Reported financials

Note: Comparison figures do not include MauserCABS and Buisard Cabins that were acquired
in Autumn 2023.

• Order intake was EUR 98.7 (92.7) million.
• Net sales were EUR 101.0 (95.9) million.
• Recurring EBITDA was EUR 6.5 (8.7) million, i.e. 6.5 (9.1)  per cent of net sales.
• EBITDA was EUR 2.8 (7.4) million, i.e. 2.8 (7.7) per cent of net sales.

Financials excluding businesses under strategic review

Note: The financials presented below are based on the “New Fortaco” scope, i.e. excluding the marine, energy and heavy project business that are under strategic review. Comparison figures are not shown as MauserCABS did not report intra-year financials prior to the acquisition by Fortaco.

• Order intake was EUR 91.1 million.
• Net sales were EUR 92.0  million.
• Recurring EBITDA was EUR 7.1 million, i.e. 7.7 per cent of net sales.
• EBITDA was EUR 2.8 million, i.e. 3.0 per cent of net sales.

Financial highlights: January–June 2024

Reported financials

Note: Comparison figures do not include MauserCABS and Buisard Cabins that were acquired
in Autumn 2023.

• Order intake was EUR 208.4 (188.8) million.
• Net sales were EUR 206.8 (192.1) million.
• Recurring EBITDA was EUR 11.1 (16.9) million, i.e. 5.3 (8.8) per cent of net sales.
• EBITDA was EUR 6.1 (14.8) million, i.e. 2.9 (7.7) per cent of net sales.

Financials excluding businesses under strategic review

Note: The financials presented below are based on the “New Fortaco” scope, i.e. excluding the marine, energy and heavy project business that are under strategic review. Comparison figures are not shown as MauserCABS did not report intra-year financials prior to the acquisition by Fortaco.

• Order intake was EUR 190.5 million.
• Net sales were EUR 188.7 million.
• Recurring EBITDA was EUR 12.5 million, i.e. 6.6 per cent of net sales.
• EBITDA was EUR 7.0 million, i.e. 3.7 per cent of net sales.

Operational highlights

• In February, Fortaco announced having started a strategic evaluation of its marine, energy, and heavy project businesses, as these businesses are no longer considered strategic.
• In March, Fortaco successfully placed a subsequent bond issue of EUR 25.0 million and received an equity injection of EUR 10 million from One Equity Partners, the company’s owner.
• In May 2024, the first part of the strategic review was completed with the sale of the company’s heavy project business in Jászberény, Hungary, to Cyclus GmbH and Ask US Management s.r.o. The transaction was completed on 28 June 2024.
• After the review period on 22 July 2024, Fortaco announced having signed an agreement to sell its marine and energy business in Kalajoki and Sepänkylä in Finland to Componenta, an international technology company and a Finnish contract manufacturer of metal components. The transaction is subject to some customary closing conditions, and the companies aim to close it on 1 October 2024.

Key figures

Fortaco Group key financials

*Financials include MauserCABS since September 2023 and Buisard Cabins since 24 October 2023.

Guidance for 2024

Fortaco does not provide guidance for the financial year 2024.

President & CEO Lars Hellberg’s comments

I am satisfied with Fortaco’s performance in the second quarter of the year. Despite the continuing soft market demand, our net sales increased 5.3 per cent to EUR 101.0 (95.9) million, driven by the acquisitions of MauserCABS and Buisard Cabins in autumn 2023. At the same time, strategic initiatives and actions to increase operational efficiency continued to bear fruit, and we saw a positive change in underlying relative profitability. In the second quarter, our recurring EBITDA was EUR 6.5 million or 6.5 per cent of our net sales, improving from 4.0 per cent in the first quarter this year. Excluding the marine, energy, and heavy project businesses that are under strategic review, our recurring EBITDA was EUR 7.1 million, or 7.7 per cent of net sales. Our order intake was EUR 98.7 million, reflecting the soft market conditions.

Strategic review continued – new home found for marine and energy operations in Finland and heavy project business in Hungary

The strategic evaluation of our marine, energy, and heavy project businesses, announced in February 2024, continued as planned. In May, we announced the sale of our heavy project business (Fortaco Zrt.) in Hungary to Cyclus GmbH and Ask US Management s.r.o. The transaction was closed in June. The business will continue its operations under the new owner under the name Steel Component Partners.

After the reporting period in July, we announced the sale of our marine and energy business in Kalajoki and Sepänkylä in Finland to Componenta. We estimate this transaction to be closed in October 2024. The strategic evaluation concerning our business in Serbia is on-going. During the first half of this year, the operations in Serbia have made an excellent turnaround. The business has reached a break-even in profitability and reached out to new customers requesting the technology and manufacturing our business in Serbia is offering.

We remain committed to our strategic agenda and are also continuously evaluating M&A opportunities to further expand our business. In accordance with our strategy, we plan to offer the same business portfolio in the US and Europe in the future.

Investments to ensure future competitiveness

The strategic expansion projects in our factories in Estonia, Slovakia and Poland have continued as planned. In Narva in Estonia, we have added 8,000 square metres additional floor space including best in class production equipment, as we plan to introduce new customers and increase the share of wallet and volumes within existing customers. In Slovakia, the construction of factory extension has been almost completed at the end of the review period with robot welding line arriving during the second half of the year to serve both new and existing customers. The new plant in the Gliwice region in Poland is expected to start production during the third quarter. These investments ensure that we can maintain our excellent delivery accuracy and have the needed capacity to fulfil our customers’ needs when the markets eventually pick up. We expect these investments, together with capacity alignments, cost adjustments and price increases, to have a positive impact on the Group’s profitability in the long run.

Continuous development of sustainability

Our sustainability actions continued in the second quarter. We expanded our Zero Emissions product portfolio and took a leap towards becoming an integrated solution provider by expanding our offering into integrated thermal management (ITM). Our target is to offer thermal management not only for cabins, but also vehicle electrification systems such as batteries and other subsystems. In preparation for the CSRD reporting, we finalised our double materiality assessment, conducted a gap analysis to understand the development needs and kicked off a preparational assurance process. We are also updating our policies and procedure documentation and developing our risk mitigation and controls.

Towards the second half of 2024 with confidence

We expect the overall market demand to remain soft also in the latter half of this year. However, there are certain market segments, such as mining, defence and forest industries with continued good demand. During the second half of 2024, we will continue to monitor the market and customer outlook and work closely with our customers to help them grow their business. We remain fully committed to delivering a solid financial performance also in 2024 by staying focused on improving our profitability through the ongoing strategic initiatives.

Events after the review period

On 22 July 2024, Fortaco announced the signing of an agreement concerning the divestment of its marine and energy business in Kalajoki and Sepänkylä in Finland to Componenta. The purchase price is approximately EUR 2.8 million. The transaction is part of the strategic evaluation of Fortaco’s marine, energy and heavy project business announced on 28 February 2024. The transaction is subject to some customary closing conditions, and companies aim to close it on 1 October 2024.

Financial reporting in 2024

Fortaco publishes the Interim Report for January–September 2024 on Thursday, 28 November 2024.

Fortaco Group Holdco Plc

Board of Directors
 

Further information

Lars Hellberg

President & CEO
+358 40 572 9488

lars.hellberg@fortacogroup.com 

Kimmo Raunio

Senior Executive Vice President & CFO

+358 40 593 6854

kimmo.raunio@fortacogroup.com

Fortaco Group

Fortaco is the leading strategic partner in Europe to the heavy off-highway equipment and marine industries, providing premium offerings, like zero-emission solutions and technology, vehicle cabins, steel fabrications, and assemblies. Fortaco Group has operations in multiple European and Asian business sites and technology hubs, which support our global customers. www.fortacogroup.com