A very good morning from Vantaa, from the Boreo headquarters, and a warm welcome to Boreo's Q1 2024 earnings call. Myself, Kari Nerg, the CEO of the company, and Aku Rumpunen, our CFO. We will discuss the highlights of 2024, the first quarter, and followed up with the presentation, then we'll take any questions you may have. So please use the Q&A function that is there made available for you. So I will start with highlights as usual, and Aku will then discuss and go deeper into the business performance then afterwards. Well, the start of the year was challenging for us. So performance-wise, we recorded a weak result mainly due to decline of sales. So continued weak demand throughout our portfolio led to a negative organic growth of EUR 9 million and an operational EBIT of 2%, so EUR 0.6 million.
On the positive side during the quarter, as in the previous quarters as well, we've been successfully managing our balance sheet and working capital, a strong operational cash flow over EUR 6 million, which is partially impacted by some timings of working capital items at the end of the quarter, but nevertheless continued to release capital out of the balance sheet and to adjust the working cap levels at the lower level of activity we've experienced, especially in the last six months. Also on the positive side, the outlook is improving both as a result of the increase of our order books that we've seen in the first quarter of 2024 as well as the cost optimization actions we've taken during the last six months. One of the highlights of the quarter was also the completed refinancing of our EUR 20 million hybrid.
So successful completion of that transaction in March 2024. Good to note looking at the figures, we redeemed basically EUR 16 million of the old hybrid in connection with this process, EUR 4 million of the old hybrid is still on our balance sheet and impacting both the cash position and leverage that was at the end of the quarter at 2.4x. And finally, if we look at the short- term now, clearly focus is working as we've communicated in the last six months as well. The focus is on improving the performance of our existing portfolio, also kicked off processes to work with our companies to reach the 50% return on trade working capital KPI that we have communicated as part of our strategy update in February 2024. So I will discuss these points in the next slide a bit more in detail.
Before going there, a bit of an outlook or an update to longer-term performance. Now, after three years of significant earnings growth, also improvement of financial profile of the firm, clearly due to the low profitability in the first quarter, a slowdown or negative numbers we post now on profitability-wise, but then also impacting returns. So -18% operational EBIT growth during the last 12 months, leading then to soft performance or the weak performance in Q1 to return on capital employed decreasing below 10%. So clearly room to work to do to reach our targets. However, this is a Boreo is not the short-term game, but it's a long-term game. We remain confident in our ability to bring the company back on track and work towards our strategic targets. Now then going and diving a bit more deeper into the quarter performance.
So first of all, looking at sales, I think all these figures are all in 12-month numbers. The -20% decline in sales versus last quarter or the previous year is mainly a result of sales pressure and demand challenges that we've had throughout the portfolio. So it's not only about performance of one or two single companies, but let's say challenging times with regards to demand overall throughout the portfolio. Also so, if you look at it more geographically, more challenges in our Finnish businesses at the moment compared to, for example, the outlook that our businesses in Sweden have at the moment. There were one of the impacts, one could say, during the quarter as well. So due to the strikes which took place in Finland in March, around about EUR 2 million of sales was shifted towards Q2 this year.
Also, the exit we made last year of our SANY Excavator business in Finland and Sweden contributed by a bit less than EUR 1 million to the decline of sales. If you look at on the acquisition side, we were still active. The latest transactions have been completed in Q1 2023 and then the acquisition of Delfin Technologies in Q3 2023, a slight impact and positive impact of the acquisition to the quarters of EUR 0.5 million in the figures we're posting now. With regards to margins, so first of all, with regards to gross margins, the same story continues what we presented a couple of months ago in our Q4 call. So our company successfully continued to defend and improve margins as well. Two impacts, I would say, overall, a better management of margins, but also impact of sales mix, so less machine deliveries of higher volume.
Looking at our sales mix at the moment, higher share, for example, of our aftermarket businesses, so contributing positively to gross margins. With regards to profitability, now a downward trend in both of our two business areas. Good to note that from the cost optimization actions we've taken, there's very limited impact seen in the Q1 figures from those actions, and we expect from Q2 onwards a more visible or basically the numbers and actions starting to kick in to our result as well. As said in the very beginning, a continued strong cash generation on the positive side, looking at the way we performed in the beginning of the year. So, of course, as a result of adapting the business to a lower level of sales and activity overall.
But I would say also a great share of this track with regards to cash generation is a result of the actions and the focus we put on capital efficiency and cash flow generation in 2022, 2023, and now in 2024 as well. So the absolute trade working capital levels at the moment are at around EUR 25 million, round about the target we've communicated, the target in the short run during the last quarters. Now in the next or the start in Q2, we expect this level to somewhat increase temporarily, but to return back to these existing levels toward the end of the year. But overall, a good performance from our businesses and showcases that we are getting better and have gotten better in managing our balance sheet. The returns look temporarily to be of negative nature.
This is the return on trade working capital metric that we track and steer in all of our businesses. So you can see that now after an increase and improvement in the figures until the mid-H2 pretty much or H1 of 2023, a decline of returns, the positive impact of reducing working capital is not enough to offset basically the decrease of operational EBIT that we've seen. Overall, if we describe the situation with regards to working capital levels, now, of course, we've come way more downwards with regards to delivery times. Our businesses are able to operate at lower levels of working capital given that delivery times from our suppliers are way shorter than they were a year ago, also giving us the opportunity to flexibly adapt and react to changing market environments.
Then going a bit of also more on the positive side and taking a view towards the remaining of this year, we expect that the improved order books and the implemented cost actions we've already taken will support the profit generation of the company now in 2024 and going forward. So we saw that the order books reached their bottom at the end of 2023. As a result, we also took a significant amount of actions to adjust the cost base accordingly. Now in Q1, as said, a positive trend that we are seeing, that we saw in our order books, especially in some of our largest businesses like Machinery in the power business, a good development in the order book in Q1 2024. Also at PM Nordic, our Putzmeister business in Sweden, a sizable single order that we received, deliveries expected in Q3, Q4, also then next year.
Pretty much securing revenues for this year in line with recent practices. Also at Floby Nya Bilverkstad, FNB, our timber truck mounting business, a strong start in the year, good development of order books followed up a challenging 2023. Cost actions, as we've already noted beforehand, we've taken a significant amount of action in the various companies where the outlook was deteriorating more significantly. So both actions taken on the HQ business areas, but also then in the businesses, these actions pretty much have been now completed and we expect the positive impact of result to be visible from Q2 onwards. Then even though Q1 overall in our companies was a tough one, there is a number of companies in the portfolio which continue to have a positive outlook towards the future.
Milcon supported by the defense industry developments, Delfin Technologies, Filterit in process industry, and also ESKP in our logistics business. Overall, a part of the portfolio that perform stably, expect to also do so and improving going forward. Last two slides with regards to a bit of more longer-term perspective. Even though we live now a tough time in the company with regards to short-term profit generation, however, if we look at what our vision is, how we operate today, what our strategic targets are, we continue to be confident in the value creation potential that the firm has. The businesses are managed from a leadership point of view better than they have been managed before.
The rules and the framework that we created as an owner is better understood than before, and I think we are on the right track in developing a successful business going forward. Now times are tough. We are taking action to secure short-term profitability to be there for the longer- term. And finally, if we look at kind of short-term priority, I would summarize that clearly our number one priority is to bring the company back to growth track. If we look at the update strategy that we communicated in Q1 2024, three pillars: acquiring the types of companies we pretty much acquired in 2023, investing to the companies where there's significant room for growth at attractive return profiles, and number three then in the short-term run, completing reorganizations in those businesses which are not performing in accordance with the criteria that we set for our businesses.
Now today we are in a situation due to short-term performance challenges. The balance sheet pretty much that we're not able to fully capitalize on number one. So acting on the acquisition side, and clearly the priority is in the coming quarters to continue to work with our companies to ensure profit and cash flow generation, and then working with the companies to implement the actions in order to make the companies more competitive in the longer run. So all resources pretty much focused to do this work and confident that both results in the short and then on a more medium- term will be there, and then we are able to fully utilize the playbook that we use to generate value in the longer run. So I end up with that and head over to Aku for more review of all the businesses. Thank you.
Let's move on when the slide changes. Just a second. If not, then I will. Oh, it's there. So still a bit recapping the sales and operational EBIT performance during the past quarters. We have now highlighted there are 2 quarters, Q4 last year and Q1 this year against the comparison periods. And as we can see there, basically during the past 2 quarters, the lower demand has impacted on the sales numbers and with that also negatively on the operational EBIT levels, especially now in Q1. So sales drop by 20% quarter-on-quarter and due to that, operational EBIT by 72% into EUR 0.6 million level. And also with that operational EBIT margin came down to 5.2% level. Then looking a bit more on the cost structures or development that we have shown also in the previous quarters.
On the left, we have direct cost ratio rolling 12-month figures, so longer time period, and on the right, indirect cost ratio. If we start from the left, still good development as Kari showed from the gross-margin side continued. There we have, of course, several different factors impacting on the numbers. One is overall good management of the direct cost and pricing, and the second is also the sales mix and company mix. The newcomers in the group, if we can say so, Filterit, Delfin, and [Sematic] that have been acquired during the past year or so have structurally higher gross-margin profile, which then, of course, impacts on the direct cost ratio. On the other hand, on the right-hand side, indirect cost ratio, that is basically driven by the lower sales.
So as we have reported, we have several cost initiatives ongoing and have been executing already, which are not yet visible in the numbers. But also if we look at the absolute bars, then the impacts of those measures should be visible during the next quarters and also then impact positively on the indirect cost ratio going forward. Then if we go to the businesses a bit more, we have reported now two segments from the beginning of 2024 onwards. So we have electronics and technical trade going forward. First, electronics, the operational EBIT margin came down to 3.6% level, which definitely is not the satisfying level. And overall, we can say that basically the negative or the moderate sales and demand environment impacted on the profit and profitability.
However, return on trade working capital was still in a relatively good level, coming down from 44% to 42% year-over-year. However, if you look at the previous quarters, there is a bigger drop from the end of last year because of the demand environment. In Finnish operations, especially in Yleiselektroniikka in Finland, we executed quite material reorganization measures in Q1, and the positive impact of those should be visible then from the second quarter onwards. Overall, moderate outlook, however, these cost initiatives will support the performance going forward. Pretty much same situation in Noretron, in Infradex, moderate outlook because of the soft demand. On the other hand, as Kari mentioned, Milcon, despite the relatively slow start for the year, the outlook is positive going forward. In SSN, we actually managed to grow sales a bit from Q1 2023.
However, one of costs impacted negatively on the profitability in the company, and still the challenging situation with one of the main customers, demand continues. However, the outlook also there is moderate and stable going forward. In Delfin, pretty much performance as expected. We are ongoing quite material investment into the new platform, their product platform, and also ongoing strategic evaluations in the business. In Baltic companies, sales came down over 30% year-over-year. So generally, weakish demand environment, which impacted, of course, on the profitability also. But in those companies, especially in Estonia also, cost initiatives ongoing and restructuring measures to support the development and performance going forward. If we move on to Technical Trade. So basically same message there. Operational EBIT came down to 3.4% level from 6.8% from Q1 2023.
But despite the drop in EBIT, we managed to be on par with the return on trade working capital on the 32% level, which is not satisfactory level. But the low EBIT development was offset by very good actions and results in the working capital release, especially in Machinery during the past six to nine months. In businesses, Machinery power business continued very good performance, still EBIT clearly above the comparison period, especially our auxiliary generator or the power business and also engine sales supported the performance. And order backlog is still decent and will also support this year performance going forward. On the other hand, in Machinery's construction equipment business, and also in Muottikolmio due to the fact that the Finnish construction market has been very soft already some quarters, also the demand has been very soft in the businesses.
But also there in both businesses, we have initiated cost improvement actions that should be visible now going forward from the second quarter onwards. In welding and metal machines businesses in Fronius and Machinery, metal machines on the other hand, the outlook is uncertain. However, in Fronius, our good market position supports the performance throughout the year and going forward. In metal machines, in Machinery side, due to the fact that especially the second half of last year was very silent and soft, also the sales for the Q1 was very low. However, now we are seeing gradually improving order books and order intake, which supports the performance during the year. In [Sematic] and Filterit, especially in Filterit, good profitability despite of the fact that quite significant project was delayed a bit and moved to Q2, so that will support Q2 performance on the other hand.
Then continuing still with technical trade, now we are moving to the old heavy machines businesses. So Putzmeister business first in Sweden, good strong result in the first quarter of the year, and the performance was supported by the deliveries of the machines. And also going forward, we were able to get one sizable order that was won during the quarter, and that basically secures the deliveries for 2024 on a 2023 level. On the other hand, in Finland, situation is quite different. We have lower demand in Finland. On the other hand, if we take some positive from that one, we have some machines in the inventory, which then on the other hand supports very quick deliveries when the market turns more positive. FNB, on the other hand, had very material struggles during the previous year.
We had ERP implementation delays in that one and different challenges, cost challenges also in the delivery capabilities. However, that have now solved, and the Q1 was very strong and actually above Q1 2023 level. And also there, the order book is strong, which definitely backs up the performance for the year. In our logistic businesses, ESKP and Vesterbacka, on the other hand, solid, stable volumes in the transports, and that also stabilizes the profitability and cash generation in the businesses. Then finally, to earnings per share and return on equity pictures, on the left, we have operational EPS figure on gray there. And as we can see in Q1 2024 now, turned to negative, minus EUR 0.15 compared to positive EUR 0.28 year ago.
However, operational net cash flow per share was very strong, mainly because of the very good release from the working capital, which supported and backed up and drove operational cash flow strongly in the quarter. On the other hand, in the right-hand side, return on equity, we have there a negative trend basically from one year ago, from Q1 2023 onwards. And there, the higher interest rate environment has been impacting on the net profit, but also now generally the soft market and pressures in the profits have driven return on equity down to 3.4% level. Also one factor which impacted on the number is the a bit increased equity level due to the recent hybrid tender process and the refinancing process that was initiated in Q1. So that was all from Finland side also.
Yes, thank you. Thank you, Aku. I think there are a few questions here. I have published them also, so they should be visible for you. Let's start off with a question that relates to our own expectations. So how did Q1 go compared to our expectations in terms of sales and order intake? In terms of sales, we were not too far away from what we expected going in the year, pretty much taking into consideration the shifts of deliveries both through the strikes, but also especially the project that Aku mentioned with regards to Filterit. Without those, sales was pretty much as we expected for the quarter. Now, with regards to order intake, I mean, I think the outlook was rather, I would say, foggy at the end of the year.
I mean, as we mentioned, toward the end in Q4, order books overall and intake went down, continued at somewhat low levels in the beginning of the year, at the very beginning of the year, and started to improve towards the end of Q1. So, of course, there's seasonality included here. I mean, if you look at our quarters, Q1 has always been the toughest of our quarters overall, and accordingly, the performance has been lower compared to the coming quarters. But overall, I mean, order intake, I think now if we look at where we are, we didn't have a, I would say, we had a hard expectation on where the order intake is, but clearly seeing a positive trend compared to Q4 where we were. Then there are a few questions with regards to strikes. I'll bundle those.
So how was the impact of strikes divided between the businesses? So first, I think mainly the deliveries we are referring to here are shifts of deliveries related to Machinery. And the largest ones of those are in the Machinery metal machines business. The delivery of the sizable Filterit project is not because of strikes, but we expect that to be finalized in May of this quarter. But in electronics, yes, there were some shifts of deliveries, but not to a great extent. I think more the impact was on order intake at the end of March.
So process industry customers, for example, limited amount of customers actually working during those months and clearly seeing on a weekly basis a trend in order intake there. But nevertheless, the main impact was on our Technical Trade businesses. Then there is a continuing question on strikes. How big was the impact of strikes on operational EBIT? We mentioned the EUR 2 million that was pretty much related to sales. I mean, if we bundle the impact of the strikes and the shifts of deliveries altogether, we're talking about roughly EUR 500,000 about on profit.
Exactly, with roughly a bit less than 30% cross margin. So that will be the impact, roughly.
Yes. Then I'll continue with PM Nordic. There are two questions related to the PM Nordic, so our Swedish Putzmeister business order book. So number one, you mentioned that order book is good. Can you repeat how long it was going forward, this big order? And another one relates to the same order. Is this from an old or a new customer? Well, it is from an old customer. So in Sweden, the customer base is in a way concentrated that many of the big construction companies operate their own fleets in truck-mounted pumps. And so this is a customer which has been a longstanding customer of ours with a majority share of Putzmeister pumps from the total fleet.
Delivery schedules for this order start from Q3 this year. The largest bunch is for Q4 as planned now, and part of it goes to Q1 2025 as well. So no deliveries in Q2, but starting in Q3, accelerating in Q4 and partially then in Q1 next year also. Then there is one question, Aku. You mentioned that in the report that one of cost items, there was one of cost items in SSN. Can you give some color on the size of this item?
Size of the cost item, EUR 150,000, roughly.
Yes. And then finally, last question we have is that we said that our order books increased during Q1. On what level were your order books in end of Q1 compared to Q1 2023? And how was the order intake in Q1 2024 compared to Q1 2023? Well, I mean, the presenter of the question knows that we are not disclosing our exact order books. It's a very different sort of order. I mean, if we look at what the order book actually contains, there are hard orders. There are different forms of orders there. So it's a bit of a definition wake on what we actually look at. But definitely now, if we look at Q1 2024, sorry, we are on a higher level compared to where we were at the end of 2023.
We're talking about not 10%, but much more, so tens of percentages higher order book compared to beginning of the year. We are on a lower level compared to a year ago. So at the end of Q1 2023, there are inputs, for example, that although our Swedish Putzmeister business posts as a strong order book going forward, for example, in our Finnish businesses, we are on a lower level compared to a year ago. Another point when discussing the order books is good to keep in mind that the delivery times and last year's order book was way higher than also historically due to long delivery times from our suppliers. So it was not the normal level of order book we're looking at.
But I would say that at the end of Q1, we were pretty much at the levels of what were comparable before, let's say, the challenges into supply chains started a couple of years ago. So overall, a decent level and expecting and hopefully going to improve gradually over time. Yes, and order intake in Q1 2024, Q1 2023, I think overall, I think the start has been quite similar compared to a year ago. Last year, the challenges with regards to demand, they pretty much started at the end of Q1 and going into Q2 last year. But a decent start from that perspective to the year. And I think that's it. So that was the last question this time. If no other questions, then I'd like to thank you for your time and wish you all a good Labor Day celebration if we're starting, at least in the Nordic countries, quite shortly. So thank you and see you next time.
Thank you.