BUSINESS REVIEW JANUARY – DECEMBER 2024
President & CEO Mika Mahberg’s comments
Our delivery accuracy and our quality have remained on a high level, for which we have received positive feedback from our customers.
The year 2024 was challenging for Fortaco due to continued market headwind. In most of our market segments, order intake decreased clearly from 2023 due to general uncertainty in the market as well as high interest rates impacting end customers’ willingness to invest.
Our comparable net sales for the full year decreased by 21 per cent from the previous year to EUR 338 (429) million. Our comparable net sales for the fourth quarter decreased by 23 per cent to EUR 76 (100) million.
Our comparable recurring EBITDA for 2024 amounted to EUR 20.3 (36.1) million or 6.0 (8.7) per cent of net sales. EBITDA weakened primarily due to decreased net sales and postponement in ramping up a certain new investment and low profitability of a certain lately acquired business. In addition, the company had a significant amount of non-recurring items related to, among other things, the strategic evaluation of our marine, energy, and heavy project businesses, our profitability improvement programme, and growth-focused investments we made in 2024. These non-recurring items also burdened our cash flow. We foresee substantially lower amount of non-recurring items in 2025. After having completed the structural organic investments in Poland, Estonia and Slovakia, we foresee getting back to a normalised level of investments enabling further increasing productivity and maintenance of our asset base.
Our customers trust our quality and delivery accuracy
Regardless of the decline in net sales and lower profitability, I am happy that our delivery accuracy and our quality have remained on a high level, for which we have received positive feedback from our customers. The dip in volume has had different impacts on different business units, and in some business sites, earnings capacity developed positively despite the decreased volumes.
We further intensified our profitability improvement programme due to the market situation.
Profitability improvement continues
In early 2024, we launched an extensive business and margin improvement programme targeting reductions in fixed costs, improved pricing and volumes as well as EBITDA and working capital, and other improvements in profitability and cash flow.
In June, we sold our heavy project business in Jászberény, Hungary, to Cyclus GmbH and Ask US Management s.r.o, and in October, our marine industry and energy businesses located in Kalajoki and Sepänkylä, Finland, were sold to Componenta. With these divestments, we finalised the strategic evaluation of our marine, energy and heavy project businesses announced in February 2024.
During the last quarter of the year, we further intensified our profitability improvement programme due to the market situation, which continued to be challenging. The intensified Fortaco 25 programme did not yet impact our result for 2024; the impact of the additional measures will become visible as the year 2025 progresses. Relying on our strong main owner, we will continue our efforts to improve Fortaco’s profitability in 2025. Additionally, we and our main owner are assessing options to further improve our liquidity and strengthen our capital structure.
Sustainable development programme
In 2024, we have prepared Fortaco Group’s climate programme and prepared for EU’s corporate sustainability reporting (CSRD). We also expanded our Zero Emissions product portfolio and took a major step towards the role of an integrated solution provider by expanding our operations into integrated thermal management (ITM). We are active in the green transition, and one of our strategic targets is to make the heavy off-highway industry emission-free. Our customers continue to show increasing interest in sustainability matters.
We expect the market to remain weak
We expect the market demand to remain weak at least till the latter part of the second half of 2025 except for certain market segments such as the mining and defence industries. We are focusing on improving the earnings capacity and profitability of our current business. We continue to be committed to our strategy and have expanded our customer base in line with our strategy while making use of our entire offering for our customers. We are now primarily focusing on improving our profitability during the current market downturn. We are therefore for the time being only very selectively engaging in M&A activities.
Trust in the future
I have now been the President & CEO of Fortaco for two months. The industry the company operates in is already familiar to me, and I look forward to working together with our customers and developing new business opportunities for Fortaco’s future success. Heavy off-highway equipment manufacturers want more and more to rely on business partners in the production of different cabins and steel structures or assembly operation as they improve the efficiency of their own production. When the market eventually turns towards growth, Fortaco will be well-positioned to grow alongside its customers.
My predecessor Lars Hellberg retired on 1 January 2025 and became a member of Fortaco’s Supervisory Board, participating in the company’s strategic initiatives. I want to thank Lars for his commitment and excellent work in steering Fortaco for the past 11 years. The company has established its position as the European technology leader in off-highway vehicle cabins and steel structure components.
My warmest thanks to our customers and our owner for the trust they have shown us and for the entire Fortaco personnel for their efforts in the challenging year 2024.
Mika Mahlberg
President & CEO
