Here is an interview with Kari Nerg conducted by Analyst Group on March 27, 2025. The original interview can be found via the link and is in English. (link) I translated it into Finnish below.
Interview with Boreo’s CEO Kari Nerg
If one hasn’t heard of Boreo before – how would you describe the company, its business model, and the markets in which you operate?
Boreo is a long-term owner of entrepreneurial small businesses, primarily in the industrial B2B sector. 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 approximately two-thirds of our portfolio in Finland, and the remainder distributed across Sweden and the Baltics.
How has Boreo developed over the past five years, and what strategic changes have shaped the current portfolio?
Boreo took its current form in 2020 when we adopted our current strategy and operating model. We have shifted from low-margin distribution businesses to higher-margin, value-added companies. Our acquisition criteria have evolved to focus on more sustainable and higher-quality companies, typically valued at 5–7 times EBITDA. Acquisitions have 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 factors behind these results?
After several challenging quarters, we saw improved profitability in Q4 due to early cost-cutting measures and favorable timing of revenue recognition. Improvements in cash flow resulted from a strong focus on reducing working capital, especially inventory, and we achieved our year-end target of €25 million in working capital.
Could you elaborate on the ”Back to Growth” plan and its progress?
The plan addresses both operational and strategic factors. Operationally, we focused on cost management and improving gross margin, which yielded good results in 2024. Strategically, we sold our Estonian real estate, worked on potential acquisitions, and evaluated divestments of underperforming businesses. All initiatives aim to return Boreo to a growth trajectory, both organically and through acquisitions.
Your long-term financial targets include a 15% ROCE and strong EBIT growth. What actions have been taken to achieve these targets?
Over the past four years, we have achieved 20% annual EBIT growth, mainly due to acquisitions. ROCE recently decreased due to earnings pressure, but our historical average is around 13–14%. Going forward, we expect margins to improve as markets recover, supported by cyclical improvement and value-driven acquisitions. We believe we have a clear action plan to achieve our targets.
Where do you see Boreo in a year’s time regarding financial performance, portfolio structure, and strategic position?
Our goal this year is to return to growth. Our order book supports this, and we see opportunities for selected acquisitions and potential capital market actions to strengthen our balance sheet. In a year’s time, our goal is to be in a stronger financial position, with a more focused and higher-quality portfolio, and to continue progressing on our strategic roadmap.
Finally, could you mention three reasons why Boreo is an attractive investment target today?
First, we offer a unique industrial ownership model in the Finnish market, with strong local understanding.
Second, we have a skilled, entrepreneurial team and an operating model that supports decentralized business.
Third, after a challenging period, we demonstrate resilience and are well-positioned to improve results as market conditions normalize.
