business review january-march 2025
President & CEO Mika Mahlberg’s comments
Fortaco’s customer segments are showing positive signs of market activation, and some capacity allocations for the latter half of the year have already been made
The year 2025 began as expected in a challenging market environment. In the first quarter, our comparable order intake decreased by 6 per cent year on year, and our comparable net sales decreased to EUR 82.3 (98.1) million.
Operational profitability was below the comparison period’s level. Our comparable recurring EBITDA was EUR 1.2 (5.4) million or 1.4 (5.5) per cent of net sales. In addition to lower net sales, the result was burdened by the ongoing ramp-up of our business site in Gliwice in Poland, the costs of which will impact our profitability also in the second and third quarter. The result was also weakened by the performance of our Breitenau business site in Austria, which was lower than in the comparison period as the site’s turnaround process is still ongoing.
Fortaco’s business and margin improvement programme, Fortaco 25, is proceeding as planned, and its profitability impacts are expected to materialise from the second half of 2025 onwards. The programme has already had positive cash flow impacts during the first months of the year, and we are satisfied with its progress. We continue our strong efforts to improve the profitability of our core business.
Despite the challenging start of the year, some of Fortaco’s customer segments are showing positive signs of market activation, and some capacity allocations for the latter half of the year have already been made. The market situation appears favourable particularly in the mining and defence industries, although the unpredictability of the United States’ customs policy creates significant uncertainty in all industries, making it difficult to predict market development. Fortaco, however, operates mainly as a partner to European machinery manufacturers and has only a small amount of direct trade into the US. This reduces the direct impacts of US customs policy on the company.
Smart innovation advances strategy implementation
During the review period, Fortaco implemented its strategy by presenting a new SmartCabin product at the Bauma fair in Germany. The new cabin, which is designed by Fortaco and can be used in different vehicles, is targeted to customers who want to make use of pre-designed high-quality cabin technology. The SmartCabin reduces customers’ R&D needs through its integration possibilities and reduces expenses by, e.g., combining several different data feeds into a single display.
In connection with the written procedure, the company’s sole shareholder has made a EUR 20 million equity investment in the company, which together with the other changes to the terms and conditions of the bonds significantly strengthens the Group’s balance sheet and liquidity.
Importance of sustainability for customers continues to increase
In the first quarter of 2025, Fortaco continued to execute its sustainability programme. In March, we published our first Corporate Sustainability Reporting Directive (CSRD) compliant Sustainability Statement as part of our 2024 Annual Report. In 2025, key actions of our sustainability work include, among other things, reviewing our climate and environmental impacts and finalising our climate programme, developing our data collection and reporting, and continuing the integration of sustainability into supplier processes.
Our customers are showing increasing interest towards emission-free solutions, and defining a sustainable portfolio is one of our actions for 2025. This supports our strategic ambition to make the heavy off-highway equipment industry emission-free.
Our balance sheet strengthened significantly
After the review period in April, we carried out a written procedure regarding certain changes to the terms and conditions of Fortaco’s bonds. In connection with the written procedure, the company’s sole shareholder has made a EUR 20 million equity investment in the company, which together with the other changes to the terms and conditions of the bonds significantly strengthens the Group’s balance sheet and liquidity.
After the review period on 23 May, we also sold our subsidiary in Serbia and thereby our marine and energy focused Business Site Gruza to the Norwegian Entec Evotec AS. The sale of Business Site Gruza was the final step in the strategic evaluation of our marine, energy, and heavy project businesses, which has thereby been completed.
Despite the challenging market environment, my first quarter as the CEO of Fortaco has been rewarding, and I want to thank our customers and owner for their trust. At the same time, I extend my thanks to our partners for seamless cooperation and to the entire personnel of Fortaco for their hard work and commitment during the first months of the year.
