Comments from Lars Hellberg, President & CEO
Strategic initiatives and actions to increase operational efficiency continued to bear fruit, and we also saw a positive change in underlying relative profitability.
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.
We will continue to monitor the market and customer outlook and work closely with our customers to help them grow their business.
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.
