Good morning and welcome to Boreo's Q1 2025 trading update. My name is Kari, and together with our CFO Jesse, we will discuss in the next 30 to 45 minutes the events of Q1 2025 and outlook going forward. Agenda is as normal as usual. I will discuss first the highlights, a bit of longer-term trends of the company. Jesse will then dive deeper into business performance, some further financials after that, and then we will recap or finish off with a couple of points related to the back-to-growth plan we've been working with the last year in the company. As normal, please use the Q&A function if you want to ask any questions, and we will then address those at the end of the session. Q1 highlights: the start of the year has been very close to and in line with our own expectations.
We are pleased with the fact that now, two consecutive quarters, we've been able to record organic growth. During the first quarter, 4% organic sales growth and a strong gross margin of 32%, both contributing to the profitability uplift we saw. Result Q1 quarter on quarter improving from EUR 0.6 million last year now to EUR 1.3 million. Looking at the markets and developments during the first quarter, we saw an increase and improvement in our order books. Compared with the end of 2024, our order books grew, providing a decent outlook now for Q2. As we all know, there is uncertainty in the world with regards to geopolitics and trade discussions, tariffs. The uncertainty there for sure is for the rest of the year, but so far the impacts of that or the signals, direct signals to our operations have been limited.
With regards to our order book, it's also good to note that now in Q2, our Swedish Putzmeister business, PM Nordic, has also recorded and managed to finalize a bunch of sizable orders for concrete melting pumps for this year and the next year. Even though the construction sector continues to be in a tough situation overall, our Swedish Putzmeister business shows strong performance and strong outlook going forward. We are an acquisitive firm. Latest acquisitions, the last acquisition we've completed in mid-2023. We were happy and pleased to announce during the quarter one acquisition of Spetselektroodi AS, a welding technology distributor in Estonia, on the last day of the quarter. On the first day of Q2, a bit more sizable acquisition from our longstanding partner, RS Group, acquiring the Elfa Distrelec sales activities in Finland and the Baltics.
We do expect the Spetselektroodi acquisition to close in the second quarter of this year and then the Elfa Distrelec acquisition in the third quarter of the year. Looking at where we are, we are still not where we think, not where we think that the portfolio and the group overall can be in terms of results. As said, happy to see that we bottomed in our profit generation and expect, I'm seeing. As a result of the organic sales growth primarily, but now going forward, expect to also be able to deliver quite decent results going forward. With regards to our strategic targets, now you see too much red on the slide and hopefully in the coming quarters and years to come, we are moving and trending more closer to the targets we've set.
With regards to our leverage, now you see a bit of a peak or an upward tick in our leverage, mainly as a result of the payback of our existing or old hybrid bond raised in 2024, so roughly EUR 4 million. In addition to that, hybrid bond interest and senior debt interest payments in Q1. Looking at a bit more in detail, the performance, now you can see from the left-hand side on the slide that the sales trend has changed. Last year we landed at EUR 134 million. Now we are rolling 12-month basis are at EUR 135 million, primarily driven by the positive development of our electronics business area. As we would typically see in a sort of economic cycles like this, the electronics businesses of ours do react first as opposed to our technical trade businesses.
Electronics has already been performing quite strongly the second half of 2024 and now recorded a good quarter for the first quarter of 2025 as well. With regards to our technical trade businesses, we now sort of bottomed in terms of our sales in the last couple of quarters. Going forward, expect an uptick on that side as well, then contributing overall to the development of group figures. Slide and looking at our gross margins and profits. First of all, I'm pleased to see that if you look at the last three to four years, we've been able to improve the quality of our revenues, meaning improving the gross margin profile quite significantly. From 2021, 25% of gross margin, now we are looking at somewhat above 30% gross margins. This is a result, of course, of acquisitions we've completed during the last years.
Quite a lot of organic, quite a lot of development actions in the existing portfolio as well. Stop and accelerate decisions we've done in many of our companies. Going forward, we do expect that the gross margin profile somewhat sort of dilutes due to the fact that there will be sizable machine deliveries that will come through in the coming quarters. Definitely, we do expect to remain on a much higher level compared to where we were, say, three, four years ago. The profitability improvement, again, driven by the electronics business area, the sales growth compared to last year, the gross margin improvement of roughly 3% compared to last year's first quarter, and then the cost actions implemented in 2024. Those are the sort of impacting factors behind the improvement now seen in the result of roughly 130% compared to the first quarter of 2024.
Cash flow, we communicated in our Q4 report that we expect some buildup of working capital. This happened not quite as much as we expected, but the working cap overall in the group increased by roughly EUR 1 million, resulting in a cash conversion, operating cash conversion of 22% for the quarter. Now going forward, we expect in the beginning of Q2 some buildup of working cap to happen. As we are operating in these levels, roughly the EUR 25 million level plus minus a few million euro is a reasonable number to look at. We do expect some sales growth to happen and expect that we are able to improve the efficiency of working capital in relative terms going forward. Working capital overall is managed way better compared to a couple of years back in the company.
Returns are on the rise again, sort of mainly main contributor. Looking at our return on trade working capital metric, the electronics business area return on trade working cap steadily now upwards for a couple of quarters thanks to the significant uplift in operational EBIT. We've seen now two quarters in a row. Roughly an improvement of EUR 1 million in rolling 12-month numbers. Electronics business area currently operates at a very good 57% return on trade working cap, considering our targets for our companies being in the mid to long term at around 50%. The same goes with our technical trade business area, somewhat of an improvement now in the recent history, but there we have work to do and work made primarily with the objective to improve profitability and through that then also to see an uptick in those return metrics.
Finally, before handing over to Jesse for further review, overall, if we look at where we stand, as I said in the beginning, there is a way to go to where we think that the group can be, considering the potential of our existing businesses. There is a significant rebound potential and an earnings improvement potential once the market conditions improve. Overall, we're happy with the fact that the company functions very well. Looking at the long term, on a long-term basis, the foundation we've created, the strong foundation for our decentralized operating model, the solid returns we've achieved so far for the acquisitions and the money deployed to acquisitions during the last years, those sort of give us conviction that we are on the right path. I think a strong and a big thank you goes to our organization on the short-term execution.
Basically, as we launched a year ago, the back-to-growth plan, which I will discuss a bit more in detail, this has enabled us to manage in tough times rather well with regards to our profitability. Cash flow generation has been strong. Now during the first quarter, very happy to see that three projects, the sale of the Tallinn real estate, the acquisition of Spetselektroodi AS, and then the acquisition of Elfa Distrelec operations from RS Group came through. Basically, we have reached the majority of the targets we have set for the company in early 2024. The order books, which I noted in the beginning, that they have improved compared to the year end, they of course provide us with comfort level that we continue to operate in a decent way in the short run. Many of our companies do have a positive outlook going forward.
As you all know, we don't have a crystal ball in our hands and what happens then in the second half of the quarter is a bit more uncertain. As said, so far, the signals from the portfolio companies we today have are rather limited in terms of the. That comes out of the uncertainty in the world. With that said, I hand over to Jesse for further Q1 review and then I finish up with the back-to-growth plan topics.
Thank you. Having a look at quarterly figures, as Kari mentioned, Q1 saw a growth in both sales and profits. This was our second consecutive sales growth quarter, keeping in mind that Q1 is typically a slower season for us. In terms of profitability, we managed to increase operational EBIT by 128% to EUR 1.3 million.
This was supported by increased or improved gross margins compared to last year, as well as cost actions taken during 2024. Having a look at the business areas on a closer level, electronics continued with a strong performance. They grew 10% on a quarter-to-quarter basis compared to last year, with their operational EBIT for the quarter doubling to EUR 1 million and the business area continuing their strong trend of improving rolling 12-month operational EBIT as well. Due to this, operational or the return on trade working capital also increased to 57%, which was also supported by successful working capital management during the quarter and the end of last year as well. Operationally, key factors behind the performance, we could lift up an excellent quarter by SSN. They have continued strong demand through their largest customer, having an investment program going. Milcon had strong sales exceeding last year's quarter.
Milcon also successfully grew their order book as the defense industry demand continues. YE Finland performed in line with expectations and had their profitability supported by cost measures taken in 2024 as well. On the flip side, the Baltic countries, our Baltic companies were still impacted by the challenging operating environment in the countries. All in all, looking at electronics, the quarter was very positive and we see good signals from across the companies, with the Baltics being a challenging exception at the moment in terms of operating environment. Moving on to technical trade, the business area managed a decent operating EBIT for the quarter, reaching EUR 900,000, which was roughly a 41% increase to last year's Q1.
This was done in a challenging market environment where sales remained flat compared to last year's Q1, and profitability was improved through work done on the gross margins and then cost savings as well, which were implemented during last year. In terms of return on trade working capital, the business area reached a slight increase from the end of the year up to 25%, but on a rolling basis, EBIT levels and trade working capital returns are lagging from the rolling 12-month figures a year ago. Operationally, highlights for the quarter, Putzmeister both in Finland and Sweden had a solid quarter. As Kari discussed in the earlier section, the Swedish Putzmeister business received sizable orders now in April, which will strengthen the order books considerably in Q2. On the other hand, FNB fell a bit short of expectations in Q1.
The company had some challenges related to production, but there we see a stable demand continuing and order books supporting the rest of the year. Machinery, similarly, some delivery delays in their largest unit on the motor side, which impacted profitability, but otherwise a positive start to the year for the other machinery business units and outlook remains decent for machinery as a whole going forward. In terms of positive signals that we see in the companies, we have a lot of good things going on. Filterit had a strong start to the year, both performing strongly in Q1, but then also growing order books significantly and receiving positive messages from the market. JMatic, solid quarter and significantly improved outlook from last year. ESKP performing up to expectations and also securing new routes at the end of Q1, which will lead to going forward for ESKP.
Technical trade, a bit more mixed than electronics, but all in all going in a positive direction. Here we see a lot of work to be done to still improve profitability and reach more of the historical levels that this portfolio has historically been able to do. Jumping over to our debt facilities and loan maturity structure. To start off, recapping a bit what Kari mentioned as well. In Q1, we redeemed our old remaining hybrid of roughly EUR 4 million, and then we had our first interest payment on the hybrid bond, which was issued last year. We also announced two acquisitions, which will be mentioned more in detail soon after these slides. One signed in the end of Q1, one at the beginning of April. Both will close later this year, so in Q2 and Q3.
These will, or our plan to be financed through our acquisition loan facility. This is still not visible in the graphs you have on the page, so this is showing end of Q1 figures. At the end of Q1, we had a total facilities available to us of EUR 69 million, of which we had EUR 53.8 million in use. On the maturity schedule for these, we have EUR 2.5 million of upcoming loan repayments in 2025 and EUR 5 million in 2026. The remaining utilized facilities are maturing in 2027 in combination with our hybrid bond, which has a reset date in March 2027. At the moment, we are comfortable with the debt maturity schedule and facilities which we have.
On top of this, we have at the end of Q1 liquidity in terms of short-term facilities and cash of roughly EUR 14.4 million, which we are also comfortable with at the moment. We, of course, are keeping a close eye on both cash flows and order books going forward and any changes in the operating environment. All in all, things looking stable and we feel good with the facilities. Handing back over to Kari.
Okay, thank you. Thank you, Jesse. Just a couple of words finally of what we've been basically working with the last year and finishing off with some words on the two acquisitions. Basically on this slide, sort of with the headline how to return back to growth, this is something we basically an operational short-term plan we put in place in early 2024.
This plan overall is comprised of, of course, performance-related metrics. Primarily last year, as you've seen, reduction of fixed cost to adjust the cost level to the activity levels of 2024. Secondly, release of working capital, making sure the financial standing of the firm remains decent. We did close to meet our targets last year on these two fronts. Also in the portfolio, we worked a lot with our companies to make them stronger for the long run. As an example, within our largest business machinery, we took a decision to spin off the business and break it to two with the sort of mindset of smaller is more beautiful and better, breaking the company into two parts, making sure the sort of decentralized mindset and local decision mindset goes through in those two companies. Also making sure the strategy execution becomes more efficient.
Both of the firms, I believe, are on a good track now after six months of operation as independent companies to become better in the future. Similarly, with, for example, our YE electronic component trading business in Estonia, the closure of our B2C business, selling off the real estate, focusing on industrial B2B distribution. We have already seen positive impacts and expect that in the long run, this is the right thing to do. In addition to that, now we've said in the last year, the quarters, even though the financial standing is not of the firm, is not where we would ideally like it to be, that we maintain the flexibility to do acquisitions in case basically two things, two criteria are met.
Number one, they take the firm overall into the right direction with regards to the quality of the portfolio and the organic growth prospects that the new companies provide. Secondly, not jeopardizing the financial standing of the firm. Both of the acquisitions made, I think, meet these two criteria, and that's why we took a decision to enter into these acquisitions. Two good deals we hope to have made and believe we have made are important steps for us as a firm to not only show organic growth, but also growth through acquisition. As we've discussed here now during the last 30 minutes, even though we do see that generally still the demand environment in our portfolio is not where it sort of in a normal situation would be, there are some positive signs in Milcon in our defense industry business.
Filterit, as Jesse just mentioned, Putzmeister business within construction space, also the same thing. Then Delfin Technologies as an example, a life sciences business in Kuopio. Quite a lot of quite a good share of our companies do see a more positive short and, of course, mid and long-term future ahead of them. We do expect that these companies support the overall development of the group. Finally, as we said, market conditions, Finnish economy still not performing too well. The forecast for this year has been now on a country level taken downwards. However, we do think that once the situation normalizes or becomes somewhat better, there is a big rebound potential in our earnings potential and earnings as well.
Continuing to be confident on the long-term trajectory of the firm, things will not happen overnight, but quarter by quarter, year by year, I think we're moving and trending in the right direction. Two final slides. First of all, the acquisition of Elfa Distrelec sales activities in Finland and the Baltics. I mean, the company we acquired, or the businesses we acquired, roughly with the EUR 15 million sales, a bit more than EUR 1 million EBIT contribution we expect from this acquisition from Q3 this year onwards. I think it's an important transaction from a couple of points of view, from a couple of viewpoints to us. Number one, our long-standing partner, RS Group from the U.K., is placing their trust on continuing to work with us and develop the four markets in a distributing partner model.
Thirty years of joint cooperation continues and gets bigger following this acquisition. I am very pleased about that and the fact that we are becoming also more important for RS and the markets become more sizable. We do expect that this is a sort of a partnership model which enables us to create growth in the markets in the future. Also very important internally, the transaction from the point of view that basically we are breaking up the former YE business into two parts in four different countries at the same time. As I discussed earlier with the machinery breakup completed in 2024, this follows the same thinking. We take the existing RS business from YE, bring it to a new structure together with the acquired companies.
The fact that the existing YE businesses, component trading businesses become smaller, we do think they become stronger, more focused, more efficient in their sort of business plan and execution and provides opportunities for that business also or for those four businesses in four different countries as well. Internally, quite a big exercise creating new ERPs for the new business, establishing new four or new companies, bringing teams together. I believe we're creating for the YE RS a good and a modern platform that can continue to grow in the future and provide opportunities for our people as well. I look forward to then sort of providing updates on how this venture starts to develop in the coming and the first months then from operations and seeing how successfully we run the business in a new structure.
Finally, also an important transaction, also building on a bit of a partnership viewpoint as well. We announced to have signed the transaction with the entrepreneur of Spetselektroodi AS, Mr. Indrek Ranne in Estonia. Spetselektroodi is a distributor of welding technology in the market. We acquired in 2022 in Finland the distributor of Fronius, an Austrian technology leader in the welding space. Similarly to Fronius, Spetselektroodi is representing Fronius in the Estonian market. A good business we know in collaboration, a transaction done with our existing supplier business, a fact that provides a certainty for continuity of operations going forward and showcases that the trusted partners of ours on the supplier side are willing to continue and expand their relationship with us. I think something we are very pleased with and investing in this space overall.
A steady good business, roughly EUR 4 million sales, long-standing successful history in Estonia in the market, strong market position backed up by a catalog of excellent suppliers supplying the company. This transaction we hope to sign or close in the next couple of days. You would see this flowing through our figures in Q2 2025 onwards. With that said, we finish off the presentation and go into Q&A. There are some questions here which have been presented. I think you will not see them, but we go through them. First of all, a couple of questions related to the construction sector and our Swedish businesses. First of all, can you talk about the drivers of working capital? What is the impact of PM Nordic's orders to working capital development? A good question.
I mean, as I think you will remember from the history, the Putzmeister business, even though we're dealing with big machines and sizable single orders with quite a high monetary value, the business has been designed in a way that from a working capital point of view, the business remains rather light. We do not expect, even though the volumes and sales numbers are expected to go up, we do expect some buildup of working capital as well, but not very material. There might be some swings on the short run, but overall, given that sort of the time those machines in our books is rather limited and we have arrangements with our suppliers then and the customers, which make it from a cash flow point of view quite favorable, I think we manage with those rather well.
The second question goes, what is behind FNB, so our timber truck mounting business in Sweden? What is behind the production issues and when do you expect these to be solved? Do you want to Jesse answer to that?
Yes, yes. I think Q1 is mainly due to, I mean, it's in combination with the end of 2024, which was very strong for the company. They put a lot of resources for deliveries, which were at the end of the year. This led to a lot of overtime with the production employees who then needed to take some of their overtimes as holidays in Q1. There were some delivery changes which coincided with this. We had a bit of a bottleneck in the production. This was also combined with the company currently recruiting a new constructor for planning and designing the structures.
They have a resource in place, but the timing of deliveries has led to a bit of a bottleneck during Q1. This is not a long-term issue, so we see that this has been solved. End of Q1 was already looking better, so the problem was more on January, February. We see the problem being solved going forward.
Yes, and next, we continue then with a couple of questions on Putzmeister business. I try and take them at the same time. There's a first question. Can you talk about the development in the construction-related businesses, excluding PM Nordic, and what kind of volume trends are you seeing there? Basically, we talk about companies directly exposed to construction. That's PM Nordic, that's Tornukone in Finland, HM Nordic in Estonia, and Mottikolmio and machinery construction in the Finnish market.
The outlook for the Putzmeister business in Finland and Estonia remains quite modest. We do see some uptick. We had already a good start in the year in Finland or a significantly better start compared to 2024. Also, quite a lot of interest and sort of inquiries and expectations from our customers that if and when they win some additional jobs on their side, this can then materialize quite quickly into new deliveries for us as well. Not a big sort of not something that has really quickly now turned totally different. PM Nordic situation is way better compared to the Finnish and Estonian part of it. In Finland overall, look at our machinery construction business, for example, the outlook remains rather moderate.
Of course, the seasonality as well now going into spring, interesting to see what happens, but nothing dramatic in terms of kind of a shift in paradigm there. From Mottikolmio, that business is supported, I think, from the sales side and sales mix and customer side a bit more. It's more stable on the renovation construction side and so forth. Rather stable there as well. As you surely know from other companies and the market, the construction business in Finland is not really booming yet. No, we expect that to happen in the next couple of months either. There were also some additional questions. I take these all Putzmeister questions at the same time. You received significant new orders in Swedish Putzmeister business. Roughly how big this is and when do you expect to deliver it? How much of the bigger earlier deliveries were delivered in Q1?
First of all, we delivered a handful of machines now already in Q1 from the earlier big sizable order we already won a year ago. We continue to deliver those in the coming quarters. The new orders, as we said, you will see that from communication from Putzmeister and PM Nordic, from social media and their websites as well. We sold to one customer 11 machines. We also launched in the world's largest construction fair in Bauma the fully electric pump on an electric chassis as well with one of our key customers, Swerock, in Sweden. In addition to that, we sold some machines in that fair as well. Those are sizable. I mean, when we talk about machines worth of, call it EUR 500,000 plus minus. You can do the math there on how sizable it is.
It, of course, is so that with these deliveries, the gross margin profile is different as opposed to looking at our group numbers overall. Gross margins are way higher when we do aftermarket service and spare part sales and so forth. For sales, it will provide us support going into this year. We do expect some of the new orders also to be delivered this year, but partially then in 2026 then as well. I think let me discard some of these questions so that we get this done. I think there were a few order book questions. Yes, there's one sort of on outlook. One question goes, can you comment the magnitude of growth in order books in group level? Are we talking about mid or high single digit levels? In Q1, we were talking about roughly, I would say, high single digit levels.
That's the answer to that. There was another question that we showed in the growth bridge in the presentation. One of the last slides said that improving market conditions was only the fourth step. Do you think that you can remain at organic growth path even if the economy in general would not improve? Yes, we do. I mean, if the market conditions remain as they are at the moment, we do expect sales to grow because of the reason that the order book is there. As said before, H2 is more uncertain, but we have some solid fixed order book in our businesses, for example, PM Nordic, for example, Milcon, for example, Filterit into second half as well. Continuing, still on sort of general market commentary. Have you seen change in operating environment after trade war escalation in the beginning of Q2?
As we commented in the webcast, the signals are still quite limited. There are some signals in a few of our businesses. We've heard commentary from our key people in the businesses saying that some hesitancy around investments. We have seen communications from our suppliers on actions that are sort of referring to that preparatory actions are being taken in case the tariffs materialize. Given that sort of the situation is sort of on hold for some time, at least we haven't seen a sort of dramatic change now during the month of April. That's how I would comment that. There was another question also on tariffs. There's a question in Finnish, [Foreign language] ? In English, the question goes, what are the impacts of possible tariffs into the operations of Delfin Technologies?
First of all, Delfin's sales to the U.S. market is around about, call it 20%, depending on the year, to the U.S. market. Secondly, the majority of those sales are for the scientific part of the business or cosmetics mainly. Not as much on the medical side. As we've communicated, we are in the process of renewing our global distribution network, working in a number of countries at the moment in looking at new alternatives and ways to go to market, including potential new partners. Especially for the U.S. market, we are currently evaluating different options, including, for example, establishment of own subsidiaries and operations in the country to mitigate the potential impacts of possible increased tariffs going forward. So far, we haven't seen pretty much any impact out of those, but it's sort of in the plans.
Currently, as we speak, we are looking at ways and, of course, monitoring the situation, but looking at ways to mitigate any potential impacts out of those on Delfin. Still some additional questions. Have you seen one question on YE International AS, I believe? This is for YE International AS, yeah, Estonian business. Have you seen all the top line impact from rationalizing YE International business already now, or do you expect more going forward? Yes, we have seen everything already to date. I would remind that this is not something of quite material nature on the profit and loss statement side. The impact was more on the balance sheet side. We have been able to take working capital down, and then also the sale of the real estate were more material than the profit and loss statement impacts.
You had been during the past one to two years focusing on profitability improvement more than acquisitions. What was the trigger to change this and return back to acquisition path considering the current balance sheet structure? I can repeat what I already said during the webcast. We have communicated consistently during the last quarters, I think last year, that in case we find transactions meeting two criteria. One, new companies improving the quality of the portfolio, taking the firm on a longer-term basis into the right direction. Number two, being able to acquire businesses in arranging financing so that we do not take or make the financial standing worse. We have been sort of consistent on that, that we might take those actions as well.
Of course, two acquisitions and referring to what I said in the sort of partnership aspect to both of these acquisitions as well. We know these businesses. We know we are in these businesses already today. Makes us confident that we knew what we were getting into. I believe we found also a way to structure purchase price payments and so forth, providing cushion and buffers for the group's financial standing as well. Some additional questions. Do we expect any synergies from the recently announced acquisitions? How much and when? Not commenting on any numbers. What I would say in general in both of those acquisitions, these are not cost-driven. There are some synergies, but these are not cost-driven business cases. In YE RS, we're combining two businesses to create the platform for growth.
We are investing in a fully new digital setup, which we expect to enable us to be more efficient, provide a better service for our customers, and through that increase and grow in the future. Now, I would not call them as much of synergies. It's basically something we're creating a totally new firm, putting two companies and good businesses together. Out of that, I think we get a good platform going forward. With regards to Spetselektroodi , the opportunity there are opportunities between the two countries of Finland and Estonia. There are some, for example, new suppliers in Estonia of which we potentially can take advantage of in the Finnish market. Vice versa, for example, in Finland, not only in Fronius, but also in Machinery MT, there are suppliers with whom we potentially in the longer run could work in the Estonian market.
Those might be sources for creating growth in the future, both in the Finnish and in the Estonian market. I think importantly, on the strategic side of things, we have people now who are looking after similar companies in two countries, sharing best practices among those, working together toward our largest suppliers. I think those are sources of improvement and making the companies overall stronger. I would not, however, call them or we have not done the transaction on the back of expecting significant synergies, but this is long-term work that needs to be first done, and then we see what the potential positive impacts in the long run can be. Still three questions. There are some defense industry-related questions. What is the general opportunity?
This is not really defense, but what is the general opportunity for Fronius and Spetselektroodi regarding upcoming U.S. icebreaker orders if materialized? It's a good question. Specifically, what these potential icebreaker orders from the U.S. would mean, I do not have an answer. I would answer it this way that shipyards are important and overall the welding industry is, of course, important for both Fronius and Spetselektroodi . Any sizable investments taken in these countries in shipyards, similarly in the defense space, for example, provide, of course, opportunities for the two companies. Keeping in mind that we represent the clear global technology leader in these two markets and have solutions and products available which serve exactly these purposes. I think a general opportunity that we see, but what it specifically is to those orders, this I cannot comment further at this stage.
A second question related to defense cluster opportunities. The question goes, do you see an opportunity building a defense cluster on SSN, Milcon, and J-Matic? This is something we do not have specifically with these companies at the moment in play. However, given that we see in many of our businesses potential in defense industry-related customers, we are collaborating between the companies. For example, as I said, Milcon have worked together on customer projects or Milcon and some of the other group companies as well to provide a sort of larger package and a bigger solution as part to Milcon's customers through the collaboration. It opens up opportunities, but I would not call it at this stage, at least as a defense cluster as such, but opportunities within the portfolio and between the portfolio companies.
Can we elaborate more on the potential of Delfin's business globally in mid-long term going forward? At this stage, I think we've now owned the company for one and a half years or close to two years. There's quite a lot that has happened to date. We have sort of renewed the strategy, built capability into the organization, recruited new people. We still are ongoing. We still work with the product platform renewal, which was started, I think, in 2003 or 2002, if I'm not mistaken. Last year was a heavy investment year for that product platform project. It still continues this year, and we are entering toward the end of the year into regulatory approval processes as well on the medical side. FDA updates and MDR in Europe as well. That is one of the key things happening in addition to organizational buildup.
The renewal of the global distribution network is also a very important initiative taken to date. We have already renewed and introduced, I think, three new distributors in the Chinese market. As I mentioned before, we're working with the U.S. and some of the other key markets. We have renewed the brand in Q1, or I think maybe it was on the side of Q2. The company also came up with a new brand identity and more sort of a spot-on presentation of how the company positions itself within scientific and medical businesses. We have a lot of good potential sizable projects ongoing, potential sales opportunities, which may also materialize in the short run. I think we're getting more and more convinced that the company has sort of potential not only on the scientific side where the majority of the revenue comes from, but also on the medical side.
However, it's sort of maybe a bit too early still to comment on what the big opportunities will be. It's patient work. It's day-to-day work. I think we are sort of happy of the way that we're now working with the team to materialize those opportunities. We will revisit those once we then have something more to hopefully tell, some examples of larger scale collaborations or sales opportunities so that you can get a better grasp of that. Overall, I think the firm is moving in the right direction. It has great potential for the future and is operating on a sustainable basis comparing the history and growing sales as well. All good on that front. I think with that said, the presentation was a bit shorter this time. The Q&A was a bit more extensive. Thank you.
Thanks a lot for the participation and posting good questions. Yeah, I think with this said, we say thank you and look forward to seeing you then after the summer in the same format again. As always, if anything was not clear, please do reach out and we try and answer the best way we can. Wish you all a good spring and coming summer and happy Labor Day as well.
Thank you.
Thank you so much.