Fortaco Group Holdco Oyj: Fortaco Group Holdco Plc's Interim Review January-September 2023 (Unaudited, IFRS)

Fortaco Group Holdco Plc Stock Exchange Release 29 November 2023 at 20:30 EET

Despite softening market, Fortaco stays committed for building long-term growth through acquisitions

This release is a summary of Fortaco Group Holdco Plc's Half-Year Review January-September 2023. The full release is attached and available on our website at https://investors.fortacogroup.com.

In this report, figures in parentheses refer to the corresponding period from the previous fiscal year, except where explicitly noted otherwise. Formulas for calculating alternative performance metrics, along with their respective reconciliations, are outlined at the end of this report.

The terms 'comparable net sales', 'comparable EBITDA', 'comparable EBITA', 'comparable recurring EBITDA', and 'comparable recurring EBITA' are utilized specifically in relation to the financial performance of Fortaco Group, which was acquired by Fortaco Group Holdco in 2022. Consequently, these metrics diverge from the officially consolidated financial statements of Fortaco Group Holdco for the year 2022.

For the avoidance of doubt, no adjustments for comparability have been applied to the financial data presented for the year 2023.

Highlights: July-September 2023

• Net sales was EUR 79.9 million (comparable net sales decline 1.0 per cent).
• Recurring EBITDA was EUR 2.5 million (3.1 per cent of net sales, comparable decline in recurring EBITDA 53.1 per cent). EBITDA was EUR 0.0 million (-0.1 per cent of net sales).
• Recurring EBITA was EUR -0.5 million (-0.7 per cent of net sales). EBITA was EUR -3.1 milllion
  (-3.9 per cent of net sales).
• Non-recurring items amounted to EUR 2.5 million. The amount of non-recurring items is driven by M&A activities, and the extensive business development as well as performance improvement agenda currently undertaken.
• Fortaco closed the acquisition of MauserCABS, which has been included in Fortaco Group's financials since September 2023 onwards. Net sales and EBITDA of the acquired company were EUR 43.8 million and EUR 4.3 million respectively, based on the last audited financials statements in 2022.
• Net debt was EUR 81.5 million and net debt to comparable recurring EBITDA 3.3x. Net debt was increased driven by acquisition of MauserCABS, whereas comparable recurring EBITDA is including MauserCABS EBITDA only in September 2023.
• Order intake during the review period was reasonable, given softening market demand. The order book at the end of the period was EUR 61 million, declining EUR 11 million from the end of the previous reporting period.

• Profitability was negatively impacted by low profitability in certain business sites suffering from low customer demand, especially in the marine industry. Fortaco is currently planning and executing several measures to structurally improve the performance of these businesses. The improvement measures include rightsizing and restructuring the operations as well as renegotiating key commercial terms with customers and suppliers. Also, other potential measures are being considered. Additionally, the profitability was negatively impacted by certain material cost issues during the review period, as well as seasonally low deliveries and profitability in July.
• The equity of Fortaco Group was strenghtened by EUR 19.0 million. After the review period, the equity has been further strenghtened by EUR 14.3 million. Together with the bond tap issue of EUR 27.5 million closed in July, these funds have been used to acquire MauserCABS and subsequent to the review period to increase the ownership of Buisard to 100 per cent by acquiring the remaining shares, financing the transaction costs, as well as for general corporate purposes.
• Connected to the bond tap issue, the Finnish Supervisory Authority approved the listing prospectus of the bonds, and trading with the additional bonds commenced in August. After the tap issue, the total bond principal outstanding amounts to EUR 102.5 million, of which EUR 3.6 million is held by Fortaco Group itself reducing the balance sheet value of the loan.
• A capacity expansion project in Narva, Estonia, was announced. The expansion consists of extending the operations into new premises with floor space of 8,000m², as well as relevant equipment to support the business expansion.

Highlights: January-September 2023

• Net sales was EUR 272.0 million (comparable net sales increase 14.5 per cent).
• Recurring EBITDA was EUR 19.4 million (7.1 per cent of net sales, comparable decline in recurring EBITDA 0.4 per cent). EBITDA was EUR 14.8 million (5.4 per cent of net sales).
• Recurring EBITA was EUR 11.2 million (4.1 per cent of net sales). EBITA was EUR 6.6 milllion
  (2.4 per cent of net sales).
• Non-recurring items amounted to EUR 4.6 million. The amount of non-recurring items is driven by M&A activities, business development, and other performance improvement programme currently undertaken.

Key Figures

Fortaco Group key financials

The comparable figures in this report refer to the comparable financial metrics of the Group in 2022, which are derived from the financial performance of Fortaco Group in 2022, following its acquisition last year. For the avoidance of doubt, no adjustments to the comparability have been made to the financial information for the year 2023.

MEUR, IFRS	7-9/23		7-9/22		1-9/23		1-9/22		1-12/22**		Last 12 months
Reported
Net sales	79.9		0.0		272.0		0.0		94.9		366.9
EBITDA	0.0		-1.3		14.8		-1.3		0.6		16.7
% of net sales	-0.1 %		N/A		5.4 %		N/A		0.7 %		4.6 %
EBITA	-3.1		-1.3		6.6		-1.3		-2.0		5.9
% of net sales	-3.9 %		N/A		2.4 %		N/A		-2.1 %		1.6 %
Non-recurring items	2.5		1.3		4.6		1.3		4.5		7.8
Recurring EBITDA	2.5		0.0		19.4		0.0		5.1		24.5
% of net sales	3.1 %		N/A		7.1 %		N/A		5.4 %		6.7 %
Recurring EBITA	-0.5		0.0		11.2		0.0		2.5		13.7
% of net sales	-0.7 %		N/A		4.1 %		N/A		2.6 %		3.7 %
Comparable*
Comparable net sales	79.9		80.7		272.0		237.5		332.4		366.9
Comparable EBITDA	0.0		5.1		14.8		18.5		22.8		19.1
% of net sales	-0.1 %		6.3 %		5.4 %		7.8 %		6.9 %		5.2 %
Comparable EBITA	-3.1		2.6		6.6		11.2		13.0		8.4
% of net sales	-3.9 %		3.2 %		2.4 %		4.7 %		3.9 %		2.3 %
Comparable non-recurring items	2.5		0.2		4.6		1.0		1.8		5.4
Comparable recurring EBITDA	2.5		5.3		19.4		19.5		24.7		24.6
% of net sales	3.1 %		6.6 %		7.1 %		8.2 %		7.4 %		6.7 %
Comparable recurring EBITA	-0.5		2.8		11.2		12.2		14.8		13.8
% of net sales	-0.7 %		3.5 %		4.1 %		5.1 %		4.5 %		3.8 %
Balance sheet ratios
Return on Capital Employed % (ROCE)	-1.1 %		7.5 %		7.8 %		10.7 %		10.1 %		7.2 %
Equity ratio %	24.2 %		25.0 %		24.2 %		25.0 %		24.3 %		24.2 %
Net debt	81.5		57.9		81.5		57.9		52.0		81.5
Net gearing	125.2 %		97.9 %		125.2 %		97.9 %		93.0 %		125.2 %
Net debt / last 12 months comparable recurring EBITDA	3.3x		2.5x		3.3x		2.5x		2.1x		3.3x

*) The comparable figures in this report refer to the comparable financial metrics of the Group in 2022, which are
derived from the financial performance of Fortaco Group in 2022, following its acquisition last year. For the avoidance
of doubt, no adjustments to the comparability have been made to the financial information for the year 2023.

**) Period 12.4.2022-31.12.2022 for reported figures.

Financials are including MauserCABS since September 2023. Buisard financials will be consolidated into
Fortaco Group since closing of the acquisition of 100% of the shares. See events after the reporting period.

Guidance for 2023

For 2023, net sales are expected to exceed EUR 350 million (comparable net sales in 2022: EUR 332.4 million) and recurring EBITDA higher than comparable recurring EBITDA in 2022 (comparable recurring EBITDA in 2022: EUR 24.7 million).

Comments by Lars Hellberg, President & CEO

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.

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.

Events after the reporting period

On 24 October 2023, Fortaco closed the acquisition and acquired the remaining shares of Buisard thus reached 100 per cent ownership. In this connection, the equity of Fortaco Group was increased by EUR 14.2 million.

The inauguration of TATA AutoComp's manufacturing facility for vehicle cabins took place in November 2023. TATA AutoComp and Fortaco Group will provide safe and ergonomic vehicle cabins to the Indian- and Asian markets. Safety cabin manufacturing is made by TATA AutoComp, and it is based on Fortaco's cabin design and manufacturing technology, creating future revenue streams for Fortaco.

The ground-breaking ceremony of Fortaco's new business site located in the Gliwice region of Poland took place on 21 November 2023. As announced in June 2023, operations are expected to start during H2-2024.

On 23 November 2023, Fortaco received a EUR 5 million shareholder loan from the sole shareholder of the company, OEP 81 B.V. The loan is subordinated to the bond financing. The funds have been used to repay in full a temporary local financing facility in MauserCABS, which was related to the acquisition.

Financial information

Full-year financial statements for January-December 2023 will be published by the company on Thursday,
29 February 2024.

Fortaco Group Holdco Plc
Board of Directors

Further information

Lars Hellberg, President & CEO

[phone]

[e-mail]

Kimmo Raunio, Senior Executive Vice President & CFO

[phone]

[e-mail]


Distribution

Nasdaq Helsinki Oy

Main media
investors.fortacogroup.com

Fortaco Group

Fortaco is the leading strategic partner in Europe to the heavy off-highway equipment and marine industries, providing premium offerings, like zero-emission solutions and technology, vehicle cabins, steel fabrications, and assemblies. Fortaco Group has operations in multiple European and Asian business sites and technology hubs, which support our global customers. www.fortacogroup.com