Interim Review January – September 2023
Comments from Lars Hellberg, President & CEO
Fortaco continues to attract new business resulting in increased market share, new customers, and the introduction of new products.
Fortaco continued its consistent strategic path during the period under review. We further strengthened our position as a leading brand-independent strategic partner to the heavy off-highway equipment- and marine industries in Europe by carrying forward and completing planned acquisitions. Uncertainties in the global operating environment are reflected in our businesses during the period as the market started to soften. In particular, the marine segment profitability was negatively impacted during the period.
We completed the acquisition of MauserCABS as planned, and the company is reported as part of Fortaco Group beginning September 6, 2023. MauserCABS is an Austrian company that manufactures high-quality safety cabins and operates on the international market. At the end of 2021, we established a strategic alliance with a minority share of 35 percent of Buisard Cabins, and after the review period on 24 October 2023 Fortaco acquired the remaining part of the shares and reached 100 per cent ownership. In addition, we announced the inauguration of the Tata AutoComp manufacturing facility for state-of-the-art vehicle cabins in Pune, India. The inauguration ceremony took place on 7 November 2023. Together we will provide safe and ergonomic vehicle cabins to the Indian and Asian markets. Safety cabin manufacturing is done by TATA AutoComp and is based on Fortaco’s cabin design and manufacturing technology. The product offering will include low to high-volume operator cabins for Indian agriculture, construction equipment, and other off-highway applications, and products for export, as well.
Together with our premium brands – Buisard, Fortaco, MauserCABS, TATA AutoComp – we offer high-quality vehicle cabins and technology development to off-highway equipment OEMs (Original Equipment Manufacturers) worldwide. Fortaco’s vehicle cabin business sites are located in Austria, Finland, France, India, and Slovakia.
After these acquisitions, Fortaco is one the leading players in the vehicle cabin business in the European market having more capacity to expand our vehicle cabin offerings.
The change of net sales was -1 per cent in Q3-2023, compared to the corresponding period in the previous year, and totalled EUR 80 (81) million. Recurring EBITDA decreased 53 per cent in Q3-2023, compared to the corresponding period in the previous year, and was EUR 2.5 (5.3) million. The balance sheet key indicator of net debt versus EBITDA was at 3.3x, reflecting the somewhat declining last 12 months of EBITDA, as well as completion of the acquisition of MauserCABS during the reporting period. The indicator includes MauserCABS EBITDA in September 2023 only.
We see growth in customers’ needs in the US market, and as earlier communicated, we plan to expand our business in this market area in the near future.
The ongoing project with the aim of increasing production capacity of steel fabricated components is progressing as planned in Gliwice, Poland, though some delays have taken place in regard to the start of the real estate construction work.
Alongside softening market demand, our order book declined during the review period and was EUR 61 million at the end of the period. Depending on the market and customer segment, retailers and OEMs continue to adapt their warehouses as the distribution situation in the supply chain normalizes after the Covid pandemic. Along with the normalization of inventories in various industries, a general weakening in customer demand has also been seen in several industry segments.
We see growth in customers’ needs in the US market, and as earlier communicated, we plan to expand our business in this market area in the near future. In accordance with our strategy, we plan to offer the same business portfolio in the US and Europe.
The development of our internal processes continued in Q3-2023. The SAP S4/Hana project is progressing as planned, and the first deployment is expected in Q1-2024. In the review period, a Sustainability Manager started at Fortaco, whose task is to move forward with our sustainability development plan. Sustainability is on a focus of our operations, and we develop solutions to reduce global warming, among other things.
Fortaco continues to attract new business resulting in increased market share, new customers, and the introduction of new products. We have a solid, established market position, quality performance, and excellent delivery performance, which makes us an interesting strategic partner to our current and new customers.
We closely follow global, local, and several other indices and have a constant dialogue with our customers to anticipate market developments. Additionally, Fortaco is executing capacity adjustments warranted by the changing demand situation. The outlook for the near future is colored by the uncertainties of the global economy. In the longer term, the outlook is good for companies like Fortaco. Fortaco’s diversified industry exposure provides protection from cyclicality. We have a good cash position, which enables sustainable business development.