2025-03-27
CEO Kari Nerg
"We are building long-term value through decentralized ownership and disciplined capital allocation."
For someone who hasn’t heard about Boreo before – how would you describe the company, your business model, and the markets you operate in?
Boreo is a long-term owner of entrepreneurial small businesses, primarily in the industrial B2B space. Our model is simple: we own, acquire, and develop companies. While the model itself is straightforward, we apply sophistication through our decentralized operating model and disciplined capital allocation. We currently operate in Northern Europe, with about two-thirds of our portfolio in Finland and the rest split between Sweden and the Baltics.
How has Boreo evolved over the last five years, and what strategic shifts have shaped the current portfolio?
Boreo, in its current form, was shaped in 2020 when we adopted our present strategy and operating model. We’ve shifted from lower-margin distribution businesses to higher-margin, more value-adding companies. Our acquisition criteria have evolved to focus on more resilient, higher-quality companies, typically valued in the 5–7x EBITDA range. The acquisitions has improved the industrial and financial quality of our portfolio.
Your Q4 2024 report showed improvements in EBIT and operating cash flow. What were the key drivers behind these results?
After several challenging quarters, we saw profitability improvement in Q4 by early cost-cutting measures and favorable timing in revenue recognition. Our cash flow improvements stemmed from a strong focus on reducing working capital, especially inventory, with a successful year-end target of €25 million in trade working capital.
Can you elaborate on the ”Back to Growth” plan and how it’s progressing?
The plan addresses both operational and strategic levers. Operationally, we focused on cost control and gross margin improvement, which yielded good results in 2024. Strategically, we sold our Estonian real estate, worked on potential M&A opportunities, and evaluated exits for underperforming businesses. All initiatives aim to position Boreo for resumed growth, both organically and through acquisitions.
Your long-term financial targets include 15% ROCE and strong EBIT growth. What actions are being taken to reach these targets?
Over the past four years, we’ve achieved a 20% EBIT growth annually, largely through acquisitions. ROCE dropped recently due to profit pressure, but our historical average remains around 13–14%. Going forward, we expect margins to improve with market recovery, supported by cyclical rebounds and value-focused acquisitions. We believe we have a clear playbook to reach our targets.
Where do you see Boreo one year from now in terms of financial performance, portfolio structure, and strategic positioning?
Our goal this year is to return to growth. Our order book supports this, and we see opportunities for selective acquisitions and potential capital market activity to strengthen our balance sheet. A year from now, we aim to be in a stronger financial position, with a more focused, high-quality portfolio and continued progress on our strategic roadmap.
Finally, could you share three reasons why Boreo is an attractive investment today?
Firstly, we offer a unique industrial ownership model in the Finnish market with strong local insight.
Secondly, we have a capable, entrepreneurial team and a refined operating model that supports decentralized execution.
Thirdly, following a challenging period, we’re demonstrating resilience and are well-positioned to show improvements in earnings as market conditions normalize.
