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Beijer Electronics Group Interim / Quarterly Report 2024
3007_10-q_2024-10-25_bad2d031-70e8-4af7-ba0f-6c82810b4ec7.pdf
Interim / Quarterly Report
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Ependion AB Interim Report January—September 2024
Investing in a secure and connected world
Margin protection and growth focus in a challenging market
The third quarter
- Order intake decreased to 456 MSEK (514).
- Net sales decreased to 493 MSEK (619).
- EBIT amounted to 50.8 MSEK (89.2).
- EBIT margin was 10.3% (14.4).
- Profit after tax amounted to 31.1 MSEK (52.5).
- Earnings per share reached 1.08 SEK (1.81).
- Free cash flow tripled to 55.6 MSEK (17.5).
- Cost control and strengthened gross margin resulted in maintained EBIT margin compared to the second quarter of 2024.
Nine months
- Order intake decreased to 1,467 MSEK (1,829).
- Net sales amounted to 1,680 MSEK (1,881).
- EBIT was 185.4 MSEK (260.2).
- EBIT margin amounted to 11.0% (13.8).
- Profit after tax amounted to 122.1 MSEK (166.2).
- Earnings per share was 4.22 SEK (5.75).
Comments from the CEO, Jenny Sjödahl
As expected, the third quarter remained challenging for
Ependion, where weak demand during the past twelve-month period continued to negatively impact our sales and order intake pace. The uncertainty in the global economy and high interest rates have slowed down customers'
pace of investment. I maintain my view that the current downturn is temporary and linked to a weaker economic cycle. We are working diligently to strengthen our position for when the economy recovers. During the period, we have continued to balance offensive investments in line with our growth strategies with short-term measures to mitigate the impact of the downturn on the Group's results.
Order intake decreased to 456 MSEK in the third quarter, with no major new orders recorded. Westermo's order intake remained relatively stable at 278 MSEK, while Beijer Electronics' order intake declined to 180 MSEK, primarily driven by lower bookings in Display Solutions which is being phased out. Although the economic downturn is now evident across all focus segments, except for the marine sector, we see significant potential for the future. During the period, a large number of forward-looking market initiatives were carried out. Westermo participated in Innotrans, the world's leading exhibition for the transport sector, and continued its efforts to establish operations in India, with a planned operational launch in the fourth quarter of 2024. Beijer Electronics also showcased the web-based interface WebIQ and the new HMI family X3 at the important marine exhibition SMM.
As a result of lower order intake pace in recent quarters, the Group's sales decreased to 493 MSEK for the period. For Westermo, sales dropped to 269 MSEK compared to the exceptionally strong third quarter last year, mainly due to an unusually weak order book in the rail segment during this period. For Beijer Electronic, sales decreased slightly to 225 MSEK. Beijer Electronics is driving an extensive
transformation aligned with the new strategy, focusing on three focus segments: the marine sector, machine builders in manufacturing industries, and applications for demanding environments. A review of the business entity's portfolio is ongoing, with the ambition to gradually phase out lowermargin products and contracts.
Ependion's EBIT for the period amounted to 51 MSEK, with an EBIT margin of 10.3%, negatively impacted by total currency effects amounting to -14 MSEK. Although the EBIT margin is clearly lower than during the strong comparison period, it remains stable compared to the previous quarter. Westermo's gross margin, which was pressured during the component crisis, is now significantly improving despite lower volumes, which gives reason for optimism. Compared to the previous quarter, the Group's gross margin increased by 1.7 percentage points. Both business entities have maintained a strong focus on cost control, while also making strategic investments for future profitable growth. This combination positions us well to take the next step toward our financial targets when demand recovers.
The Group's financial position was further strengthened during the period, and free cash flow increased to 56 MSEK. The equity ratio rose to 46.1%. During the period, Ependion extended its financing agreement until 2027, providing the capacity to continue executing complementary acquisitions in line with the Group's active acquisition agenda.
Ependion's product development expenses amounted to 14.5% of the Group's revenue during the period, reflecting continued significant investments for future growth within the business entities' focus segments. For Westermo, this involves further developing its offering within rail, railway, energy and services, where a substantial portion of development projects are linked to concrete business opportunities, particularly within the important cybersecurity area. Beijer Electronics is in the final stages of developing the next generation of HMIs, with the first products in the new X3 family set to launch in the fourth quarter of this year.
"We have balanced continued offensive investments in line with our growth strategies with short-term measures to mitigate the impact of the downturn on our results."
Jenny Sjödahl, President and CEO
During the period, a double materiality analysis for the Group was completed, defining the Group's priorities for future sustainability reporting. At the same time, the Group's scope 1 and 2 emissions were mapped, enabling the establishment of clear, science-based targets for emissions reduction, to be set during the fourth quarter. The mapping of scope 3 emissions is ongoing. I am pleased that the Group's and business entities' important sustainability work is now advancing rapidly.
With three-quarters of the year completed, we can conclude that 2024 is somewhat of a transitional year for Ependion after a record-breaking 2023. External factors remain uncertain, and we continue to see caution among many of our customers. The interest rate cuts now taking place are expected to contribute to increased activity, but it will take time for their effects to materialize. In the short term, this negatively affects the Group's business conditions, and we anticipate a relatively weak order book for the fourth quarter as well. In the medium to long term, however, the prospects for profitable growth are very strong, given the structural growth in our focus segments, combined with our clear positioning to meet customer needs. The business entities' efforts to mitigate the effects of the short-term downturn mean that the Group's EBIT margin today demonstrates greater stability across an economic cycle than what has historically been the case, and we see potential for margin improvements as demand increases. We are optimistic about the future."
The Group in the third quarter
The Group's order intake decreased by 11% to 456 MSEK (514) during the third quarter of 2024. Adjusted for currency effects, order intake decreased by 9%. Order intake decreased for both Westermo and Beijer Electronics. The order backlog amounted to 1,047 MSEK (1,399) at the end of the quarter.
The Group's turnover decreased by 20% to 493 MSEK (619) during the period. Adjusted for currency effects, turnover decreased by 19%. Both Westermo and Beijer Electronics reduced turnover compared to the corresponding period last year.
The Group's EBITDA decreased to 96.9 MSEK (128.1). Depreciation and amortization amounted to SEK 46.0 million (39.0). EBIT decreased to 50.8 MSEK (89.2), corresponding to an EBIT margin of 10.3% (14.4). EBIT was affected by total negative currency effects of 13.7 MSEK compared with the previous year. Total development expenditure amounted to 71.5 MSEK (64.7), equivalent to 14.5% (10.5) of the Group's sales.
Net financial items were -11.0 MSEK (-14.0). Profit before tax was 39.9 MSEK (75.1). Profit after estimated tax amounted to 31.1 MSEK (52.5). Earnings per share after estimated tax were 1.08 SEK (1.81).
The Group nine months
The Group's order intake decreased by 20% to 1,467 MSEK (1,829) during the first nine months of 2024. Adjusted for currency effects, order intake decreased by 19%. The Group's turnover decreased by 11% to 1,680 MSEK (1,881). Adjusted for currency effects and acquisitions, turnover decreased by 10%. Both Beijer Electronics and Westermo saw a decline in turnover.
The Group's EBITDA decreased to 317.7 MSEK (374.5). Depreciation and amortization amounted to SEK 132.3 million (114.3). EBIT fell to 185.4 MSEK (260.2), corresponding to an EBIT margin of 11.0% (13.8). Total development expenditure amounted to 228.2 MSEK (202.0), equivalent to 13.6% (10.7) of the Group's sales.
Net financial items were -30.6 MSEK (-32.3). Profit before tax was 154.8 MSEK (227.9). Profit after estimated tax amounted to 122.1 MSEK (166.2). Earnings per share after estimated tax were 4.22 SEK (5.75).
Business entity net sales and EBIT
| Sales, MSEK | EBIT, MSEK | EBIT margin, % | Sales, MSEK | EBIT, MSEK | EBIT margin, % | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter 3 | 9 mth. | |||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |
| Westermo | 269.2 | 379.5 | 37.4 | 66.7 | 13.9 | 17.6 | 969.4 | 1,082.1 | 137.3 | 182.0 | 14.2 | 16.8 |
| Beijer Electronics | 224.6 | 241.1 | 25.8 | 30.7 | 11.5 | 12.7 | 714.0 | 804.6 | 86.8 | 114.8 | 12.2 | 14.3 |
| Intra-group sales | -0.8 | -1.3 | -3.5 | -5.8 | ||||||||
| Group adjustments | ||||||||||||
| and parent company | -12.4 | -8.2 | -38.6 | -36.6 | ||||||||
| Ependion Group | 493.0 | 619.3 | 50.8 | 89.2 | 10.3 | 14.4 | 1,679.9 | 1,880.9 | 185.4 | 260.2 | 11.0 | 13.8 |
Group order intake
| MSEK | MSEK |
|---|---|
| Quarter | Rolling four quarters |
| 800 | 4.000 |
The bars and left-hand scale indicate quarterly order intake. The curve and right-hand scale show rolling four quarter order intake.
"Although the EBIT margin is clearly lower than during the strong comparison period, it remains stable compared to the previous quarter."
Jenny Sjödahl, President and CEO
Group net sales
| MSEK | MSEK |
|---|---|
| Quarter | Rolling four quarters |
| 900 | 4,000 |
The bars and left-hand scale indicate quarterly net sales. The curve and right-hand scale show rolling four quarter net sales.
Group EBIT
The bars and left-hand scale indicate quarterly EBIT. The solid curve and right-hand scale show rolling four quarter EBIT margin, the dashed curve and right-hand scale show quarterly EBIT margin.
Westermo
Business entity
Westermo's order intake was, similar to the previous quarter, affected by the weaker economic climate and amounted to 278 MSEK for the third quarter. The business entity had an order backlog of 861 MSEK at the end of the period. The underlying long-term demand within the focus segments is assessed to be robust, although the order booking rate was negatively impacted in the short-term by greater caution among customers.
Compared to the record-breaking third quarter of 2023—when Westermo reached an all-time high—sales for the period decreased to 269 MSEK due to an unusually weak order book for the rail segment in the quarter. During the period, Westermo has continued to position the business entity's products for reliable and secure data communication on trains, for railway infrastructure, and for customers in the energy segment, including participation in the major German railway exhibition Innotrans. The establishment efforts in India have progressed during the period. Key personnel have been recruited, and the legal structure is in place, aiming for operational startup in the fourth quarter of 2024. A number of Indian customers within rail and energy were visited during the quarter with positive response.
The business entity's EBIT amounted to 37 MSEK for the period, corresponding to an EBIT margin of 13.9%. Westermo's gross margin significantly increased despite lower volumes. This is due to several factors: lower material costs as the effects of expensive spot purchases fade, price increases that have now fully taken effect, and efficient management of staffing in our production facilities.
As a result of the review of the business entity's production structure aimed at increasing efficiency, a decision has been made to close the production of train products in Switzerland and relocate manufacturing to Westermo's facility in Sweden. The move will be completed during the first half of 2025. The business entity's technology center in Bubikon will remain as before.
Despite cost savings, Westermo continues its development work focused on new products and solutions for customers within selected segments. For the rail segment, cybersecurity was at the forefront with the launch of the new Viper 3000, and Westermo was certified according to the cybersecurity standard IEC 62443-4-1. During the period, a new version of the WeOS software, for increased functionality, was also launched. The collaboration with the partly owned Blu Wireless Technology on future communication solutions with increased bandwidth onboard trains continues as planned.
During the period, Westermo completed its first Environmental Product Declaration (EPD) for a train product in the Viper family. The EPD provides an overview of the product's environmental performance throughout its life cycle and helps the customer both consider sustainability aspects in procurement and meet regulatory requirements by providing data.
Net sales, Westermo
The bars and left-hand scale indicate quarterly net sales.
The solid curve and right-hand scale show rolling four quarter net sales, the dashed curve shows rolling four-quarter order intake.
"It is positive that Westermo's gross margin increased significantly despite lower volumes."
Jenny Sjödahl, President and CEO
Third quarter
Order intake decreased by 5% to 278 MSEK (292). Turnover decreased by 29% to 269 MSEK (380). EBITDA amounted to 60.8 MSEK (87.2). Depreciation and amortization amounted to 23.4 MSEK (20.5). EBIT amounted to 37.4 MSEK (66.7), which corresponded to an EBIT margin of 13.9% (17.6).
Nine months
Order intake decreased by 23% to 882 MSEK (1,144). Turnover decreased to 969 MSEK (1,082). EBITDA amounted to 205.6 MSEK (242.0). Depreciation and amortization amounted to 68.3 MSEK (60.0). EBIT amounted to 137.3 MSEK (182.0). This corresponded to an EBIT margin of 14.2% (16.8).
Beijer Electronics
Business entity
Beijer Electronics faced a continued challenging business climate during the third quarter of 2024. The order intake decreased to 180 MSEK, with all segments showing weaker performance except for the marine sector. Compared to the previous year, the difference is primarily driven by the phase-out of Display Solutions volumes, while order booking for HMI products remained stable. At the end of the period, the business entity had an order backlog of 186 MSEK, which results in short lead times from order to delivery and thus significant opportunities to act quickly.
Sales amounted to 225 MSEK, reflecting a relatively stable level considering the developments over the past year. Europe and Asia performed steadily, while sales decreased in North America. In line with the new strategy, the review of the product portfolio continued with the aim of phasing out products with lower margins. The goal is to strengthen profitability by focusing the offering on the areas where Beijer Electronics has the strongest position and provides the most value to customers.
The business entity's EBIT result amounted to 25.8 MSEK, slightly lower than in the comparative period. The EBIT margin was 11.5%, indicating that Beijer Electronics has partially managed to counteract the decline through efficiency improvements and good cost control. The result is already impacted by depreciation on parts of the capitalized development costs associated with the development of the next generation of HMIs.
The development of the new generation of HMIs, the X3 family, is progressing as planned, and Beijer Electronics has tested the product with selected customers with positive results. The first launch is scheduled for November this year, when X3 web will premiere. It is adapted to the software WebIQ, which is expected to strengthen the business entity's position for web-based visualization solutions. Software plays a larger role for the next generation of HMIs, meaning that
upgrades and new features can be continuously added to existing installations. The X3 family with new value-creating functionality will be launched gradually throughout 2025
The rollout of the business entity's new strategy, focusing on the marine sector, industrial machine builders, and applications for demanding environments, continues. The new global sales organization is now implementing new working methods to drive growth in the focus segments.
Net sales, Beijer Electronics
The bars and left-hand scale indicate quarterly net sales. The solid curve and right-hand scale show rolling four quarter net sales, the dashed curve shows rolling four-quarter order intake.
Third quarter
Order intake decreased by 20% to 180 MSEK (223). Turnover decreased by 7% to 225 MSEK (241). EBITDA amounted to 45.9 MSEK (46.9). Depreciation and amortization amounted to 20.1 MSEK (16.2). EBIT amounted to 25.8 MSEK (30.7), which corresponded to an EBIT margin of 11.5% (12.7).
Nine months
Order intake decreased to 588 MSEK (690). Turnover decreased to 714 MSEK (805). EBITDA increased to 143.1 MSEK (163.1). Depreciation and amortization amounted to 56.4 MSEK (48.3). EBIT amounted to 86.8 MSEK (114.8). This corresponded to an EBIT margin of 12.2% (14.3).
"The rollout of Beijer Electronics' new strategy, focusing on the marine sector, industrial machine builders, and applications for demanding environments, continues."
Jenny Sjödahl, President and CEO
Other financial information
Group investments, including capitalized development expenses and acquisitions, amounted to 207.6 MSEK (181.9) during the first nine months of 2024, which includes the acquisition of a minory stake in Blu Wireless. During the corresponding period last year, Smart HMI was acquired. Cash flow from current activities was 302.1 MSEK (164.2). Equity amounted to 1,236 MSEK (1,178) as of September 30, 2024. The equity ratio was 46.1% (43.1). Cash and cash equivalents amounted to 164 MSEK (147). Net debt was 768 MSEK (823). The average number of employees was 863 (864).
Issuance of class C-shares and conversion to ordinary shares
The Board decided in April 2024, in accordance with the decision at the 2023 Annual General Meeting, to issue 102,918 class C shares with a quota value of 0.33 SEK. The issue was directed to a financial institution and was immediately repurchased by the company. The repurchased class C shares are intended, upon delivery to the participants in 2026, to be converted into ordinary shares, in accordance with the terms of the incentive program LTI 2023/2026.
The Board decided in May 2024, in accordance with the decision at the 2021 Annual General Meeting, to convert 108,809 own class C shares into the corresponding number of ordinary shares to execute the transfer of ordinary shares to the participants in LTI 2021/2024 and to sell ordinary shares on Nasdaq Stockholm for cash flow hedging of social security contributions linked to LTI 2021/2024. After completed repurchase of class C shares and conversion to ordinary shares, the number of shares amounts to 29,344,214, of which 29,050,025 ordinary shares and 294,189 class C shares, corresponding to a total of 29,079,443.9 votes.
Significant events
At the Annual General Meeting on May 14, it was decided to elect Peter Nilsson as a new board member and chair of the board, as well as to appoint the registered auditing firm KPMG AB as the company's auditor until the end of the Annual General Meeting in 2025.
In June, the legal entity Westermo India Private Limited was established as part of the entry into the Indian market.
In September, the financing with Danske Bank and Swedish Export Credit was extended to October 2027 under the same terms as before.
No significant events have been identified following the end of the interim period.
Financial targets
The Group's financial targets consist of three goals for growth, profitability, and dividends. The growth target means an annual organic growth of at least 10%. Acquired growth is added. The profitability target means that the Group must reach an EBIT margin of at least 15%. The Group shall be a distributing company.
Outlook for 2024
Ependion operates in attractive markets with good underlying growth and, in the mid-term, has good prospects for reaching both the growth and profitability targets. Investments in critical infrastructure such as trains, railways, energy production and electricity distribution will increase over time. At the same time, there is still a great deal of uncertainty about the development in 2024, both in geopolitical and economic terms. Therefore, the weaker demand we have observed for some time is expected to persist throughout 2024.
Malmö on 25 October 2024 Jenny Sjödahl President and CEO
For more information, please contact: President and CEO Jenny Sjödahl, tel +46 (0)725 89 60 80 or EVP and CFO Joakim Laurén, tel +46 (0)703 35 84 96
Review report Ependion AB Corp. id. 556025–1851
Introduction
We have reviewed the condensed interim financial information (interim report) of Ependion AB as of 30 September 2024 and the nine-month period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.
Malmö October 25, 2024
KPMG AB
Jonas Nihlberg
Authorized Public Accountant
The Group's Financial Reports
Consolidated Income Statement in summary
| SEK 000 | Quarter 3 2024 |
Quarter 3 2023 |
9 mth. 2024 |
9 mth. 2023 |
Full Year 2023 |
|---|---|---|---|---|---|
| Net sales | 493,033 | 619,334 | 1,679,908 | 1,880,916 | 2,470,647 |
| Cost of goods sold | -237,775 | -305,756 | -827,380 | -947,134 | -1,247,715 |
| Gross profit | 255,258 | 313,578 | 852,528 | 933,782 | 1,222,932 |
| Sales expenses | -79,774 | -82,757 | -250,553 | -254,606 | -341,063 |
| Administration expenses | -73,430 | -84,424 | -253,239 | -262,656 | -342,461 |
| Research and development expenses | -50,890 | -52,985 | -167,099 | -156,694 | -213,366 |
| Other operating revenue and operating expenses | -330 | -4,242 | 3,768 | 384 | -4,358 |
| Operating profit | 50,834 | 89,170 | 185,405 | 260,210 | 321,684 |
| Financial income/expense | -10,960 | -14,038 | -30,633 | -32,274 | -46,389 |
| Profit before tax | 39,874 | 75,132 | 154,772 | 227,936 | 275,295 |
| Tax | -8,768 | -22,617 | -32,635 | -61,704 | -74,918 |
| Profit for the period | 31,106 | 52,515 | 122,137 | 166,232 | 200,377 |
| Attributable to equity holders of the parent | 31,412 | 52,498 | 122,676 | 166,450 | 200,508 |
| Attributable to non-controlling interests | -306 | 17 | -539 | -218 | -131 |
| Basic earnings per share, SEK | 1.08 | 1.81 | 4.22 | 5.75 | 6.93 |
Statement of Comprehensive Income
| SEK 000 | Quarter 3 2024 |
Quarter 3 2023 |
9 mth. 2024 |
9 mth. 2023 |
Full Year 2023 |
|---|---|---|---|---|---|
| Profit for the period | 31,106 | 52,515 | 122,137 | 166,232 | 200,377 |
| Actuarial gains and losses | -22,309 | 7,698 | -31,146 | 13,840 | 7,010 |
| Net investment hedge effects | 683 | 6,300 | -3,889 | -9,064 | -1,366 |
| Change in fair value of equity instruments | -3,871 | -3,871 | |||
| Translation differences | -21,829 | -25,652 | 14,024 | 25,078 | -30,864 |
| Comprehensive income for the period | -16,220 | 40,861 | 97,255 | 196,086 | 175,157 |
| Attributable to equity holders of the parent | -15,813 | 40,964 | 97,870 | 196,306 | 175,418 |
| Attributable to non-controlling interests | -407 | -103 | -615 | -220 | -261 |
Consolidated Balance Sheet in summary
| ASSETS Fixed assets Intangible assets 1,319,706 1,261,397 Property, plant and equipment 100,060 87,493 143,184 108,483 Right-of-use assets 110,131 69,894 Financial fixed assets 1,673,081 1,527,267 Total fixed assets Current assets Inventories 435,983 524,815 Accounts receivable 355,271 483,236 Other receivables 62,027 60,063 Cash and cash equivalents 164,281 146,526 Total current assets 1,017,562 1,214,640 Total assets 2,690,643 2,741,907 EQUITY AND LIABILITIES 1,236,036 1,178,086 Equity attributable to equity holders of the parent 3,996 4,652 Equity attributable to non-controlling interests Total equity 1,240,032 1,182,738 Long-term liabilities Borrowings 436,249 481,484 Lease liabilities 96,934 64,366 Other long-term liabilities 196,008 163,941 Deferred tax liabilities 100,022 80,398 Total long-term liabilities 829,213 790,189 Current liabilities Borrowings 189,637 260,941 Lease liabilities 47,202 45,350 Accounts payable—trade 140,484 197,426 Other liabilities 244,075 265,263 Total current liabilities 621,398 768,980 |
SEK 000 | Sept 30, 2024 | Sept 30, 2023 | Dec. 31, 2023 |
|---|---|---|---|---|
| 1,257,203 | ||||
| 85,797 | ||||
| 99,119 | ||||
| 41,695 | ||||
| 1,483,814 | ||||
| 486,628 | ||||
| 407,004 | ||||
| 52,478 | ||||
| 142,486 | ||||
| 1,088,596 | ||||
| 2,572,410 | ||||
| 1,159,082 | ||||
| 4,611 | ||||
| 1,163,693 | ||||
| 462,631 | ||||
| 59,766 | ||||
| 167,354 | ||||
| 88,830 | ||||
| 778,581 | ||||
| 167,668 | ||||
| 39,319 | ||||
| 194,650 | ||||
| 228,499 | ||||
| 630,136 | ||||
| Total equity and liabilities | 2,690,643 | 2,741,907 | 2,572,410 |
Consolidated Statement of Changes in Equity and Number of Shares
| SEK 000 | Sept 30, 2024 | Sept 30, 2023 | Dec. 31, 2023 |
|---|---|---|---|
| Attributable to equity holders of the parent | |||
| Opening balance, 1 January | 1,159,082 | 989,241 | 989,241 |
| Paid-up capital after deducting for transaction expenses | -276 | -69 | -69 |
| Re-purchase of treasury shares | -34 | -63 | -63 |
| Sale of treasury shares | 3,089 | 3,108 | 3,108 |
| Dividend | -28,941 | -14,419 | -14,419 |
| Share-based payment | 5,246 | 3,982 | 5,866 |
| Comprehensive income | 97,870 | 196,306 | 175,418 |
| Closing balance, shareholders' equity | 1,236,036 | 1,178,086 | 1,159,082 |
| Attributable to non-controlling interests | |||
| Opening balance, 1 January | 4,611 | 4,872 | 4,872 |
| Comprehensive income | -615 | -220 | -261 |
| Closing balance, shareholders' equity | 3,996 | 4,652 | 4,611 |
The number of ordinary shares amounts to 29,050,025 and the number of class C-shares amounts to 294,189. Dividend amounts to SEK 1 per ordinary share (28,941,216 at the time of the dividend).
Consolidated Cash Flow Statement in summary
| SEK 000 | Quarter 3 2024 |
Quarter 3 2023 |
9 mth. 2024 |
9 mth. 2023 |
Full Year 2023 |
|---|---|---|---|---|---|
| Cash flow from operating activities before | |||||
| changes in working capital | 86,157 | 122,051 | 271,874 | 324,547 | 428,751 |
| Changes in working capital | 36,721 | -50,901 | 30,240 | -160,322 | -94,133 |
| Cash flow from operating activities | 122,878 | 71,150 | 302,114 | 164,225 | 334,618 |
| Cash flow from investments in tangible and | |||||
| intangible assets | -52,620 | -42,647 | -159,068 | -123,772 | -173,663 |
| Cash flow from acquisition of subsidiary and investment in other companies |
-3,294 | -49,565 | -58,560 | -58,560 | |
| Cash flow from other investing activities | -505 | 473 | 1,079 | 470 | 22 |
| Cash flow from investing activities | -56,419 | -42,174 | -207,554 | -181,862 | -232,201 |
| Cash flow from interest-bearing liabilities* | -61,784 | -39,887 | -46,324 | 13,668 | -99,945 |
| Dividend paid to equity holders of the parent | -28,941 | -14,419 | -14,419 | ||
| Cash flow from other financing activities | -126 | 713 | 2,778 | 2,977 | 2,976 |
| Cash flow from financing activities | -61,910 | -39,174 | -72,487 | 2,226 | -111,387 |
| Cash flow for the period | 4,549 | -10,198 | 22,073 | -15,411 | -8,971 |
| Cash and cash equivalents at beginning of year | 165,352 | 160,044 | 142,486 | 159,864 | 159,864 |
| Exchange difference in cash and cash equivalents | -5,620 | -3,320 | -278 | 2,073 | -8,407 |
| Cash and cash equivalents at end of year | 164,281 | 146,526 | 164,281 | 146,526 | 142,486 |
| Free cash flow | 55,630 | 17,548 | 107,392 | 8,463 | 117,573 |
| *of which amortization of lease liabilities | -14,123 | -11,427 | -36,733 | -32,460 | -43,404 |
Notes to the financial statements in summary
Note 1
General information
Ependion AB (the "Company"), Corp. Id. No. 556025-1851, is a company with its registered office in Malmö, Sweden. This consolidated interim report for the Group (the "Interim Report") for the period January–September 2024 includes the Company and its subsidiaries, referred to jointly below as Ependion. The Group's consolidated accounting currency is SEK. All amounts are presented in thousands of SEK (SEK 000), unless otherwise stated.
Note 2
Accounting principles
Ependion's consolidated accounts are prepared in accordance with International Financial Reporting Standards (IFRS) and with the same accounting principles as described in the Financial Statement for 2023.
In May 2024, Ependion acquired a minority stake in the unlisted British company Blu Wireless Technology Ltd. The shares are measured at fair value in the balance sheet and the Group has chosen to present changes in fair value in other comprehensive income (OCI).
Reporting for the Parent follows the Swedish Annual Accounts Act and RFR 2 Reporting for Legal Entities.
Ependion's Interim Report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable provisions of the Swedish Annual Accounts Act. Disclosures in accordance with IAS 34.16A are provided not only in the financial statements and related notes but also in other parts of the Interim Report. The Interim Report for the parent company has been prepared in accordance with the Swedish Annual Accounts Act's chapter 9, Interim Reporting.
Related party transactions have taken place to the same extent as in the previous year and the accounting policies described in the Financial Statement for 2023 apply.
Ependion uses a number of financial key ratios that are not defined in the accounting regulations used by the company, so-called alternative performance measures (APM). For definitions of financial key figures, see page 19 of this report.
Note 3
Risks and uncertainties
Ependion is an international group and as such, it is exposed to several strategic, business and financial risks. Risk management is therefore an important process relative to the goals set by the Group. Throughout the Group, efficient risk management routines are an ongoing process within the framework of the Group's operational management and a natural part of the continual follow-up of activities.
Risk management within Ependion starts with an assessment in the business entity teams where the material risks to the business are continuously identified, followed by an assessment of the likelihood of the risks materializing and their potential impact on the Group. Once the material risks have been identified and assessed, decisions are made on activities to eliminate or reduce the risks.
In addition to the risks and uncertainties described in Ependion's Annual Report for 2023, pages 51-52 and 91, the ongoing risk management has not resulted in additional risks or uncertainties.
Note 4 Consolidated Key Financial Ratios
| SEK 000 | Sept 30, 2024 | Sept 30, 2023 | Dec. 31, 2023 |
|---|---|---|---|
| Operating margin, % | 11.0 | 13.8 | 13.0 |
| Profit margin, % | 7.3 | 8.8 | 8.1 |
| Equity ratio, % | 46.1 | 43.1 | 45.2 |
| Equity per share, SEK | 42.5 | 40.7 | 40.0 |
| Basic earnings per share, SEK | 4.22 | 5.75 | 6.93 |
| Diluted earnings per share, SEK | 4.18 | 5.69 | 6.86 |
| Return on equity after tax, % | 12.9 | 20.3 | 18.6 |
| Return on capital employed, % | 11.7 | 16.2 | 16.6 |
| Return on net operating assets, % | 15.5 | 22.5 | 23.1 |
| Financial net debt in relation to EBITDA | 1.4 | 1.5 | 1.2 |
| Average number of employees | 863 | 864 | 869 |
Note 5 Reconciliation of Consolidated Net Debt
| SEK 000 | Sept 30, 2024 | Sept 30, 2023 | Dec. 31, 2023 |
|---|---|---|---|
| Borrowings | 625,887 | 742,425 | 630,299 |
| Pension provisions | 161,957 | 117,355 | 125,777 |
| Liabilities attributable to right-of-use assets | 144,136 | 109,716 | 99,085 |
| Total interest-bearing liabilities | 931,980 | 969,496 | 855,161 |
| Total cash and cash equivalents | 164,281 | 146,526 | 142,486 |
| Net debt | 767,699 | 822,970 | 712,675 |
Note 6 Allocation of Net Sales
| Quarter 3 | Quarter 3 | 9 mth. | 9 mth. | Full Year | |
|---|---|---|---|---|---|
| SEK 000 | 2024 | 2023 | 2024 | 2023 | 2023 |
| Net sales by geographical market | |||||
| Nordics | 91,857 | 118,646 | 317,082 | 372,688 | 477,834 |
| Rest of Europe | 223,429 | 294,303 | 806,323 | 837,314 | 1,096,413 |
| Americas | 78,361 | 92,412 | 227,848 | 296,867 | 376,724 |
| Asia | 98,997 | 113,203 | 324,317 | 370,000 | 511,223 |
| Rest of world | 389 | 770 | 4,338 | 4,047 | 8,453 |
| Total Group | 493,033 | 619,334 | 1,679,908 | 1,880,916 | 2,470,647 |
| Net sales by category | |||||
| Operator panels and accessories | 180,209 | 188,332 | 560,291 | 622,366 | 795,251 |
| Network equipment | 242,860 | 335,905 | 881,743 | 957,095 | 1,284,113 |
| Software | 7,094 | 8,633 | 24,575 | 24,658 | 27,294 |
| Servicing and other services | 11,562 | 9,434 | 43,395 | 41,201 | 61,365 |
| Third-party products | 51,308 | 77,030 | 169,904 | 235,596 | 302,624 |
| Total Group | 493,033 | 619,334 | 1,679,908 | 1,880,916 | 2,470,647 |
| Net sales by segment | |||||
| Train | 86,394 | 133,246 | 342,904 | 381,829 | 506,889 |
| Trackside | 35,472 | 54,184 | 130,368 | 136,588 | 190,120 |
| Energy | 87,984 | 113,037 | 315,912 | 359,782 | 474,796 |
| Manufacturing | 80,317 | 101,019 | 273,022 | 338,112 | 431,056 |
| Marine | 74,679 | 60,801 | 205,131 | 191,680 | 244,430 |
| Other | 128,187 | 157,047 | 412,571 | 472,925 | 623,356 |
| Total Group | 493,033 | 619,334 | 1,679,908 | 1,880,916 | 2,470,647 |
Not 7 Operating Segments
| SEK 000 | Quarter 3 2024 |
Quarter 3 2023 |
9 mth. 2024 |
9 mth. 2023 |
Full Year 2023 |
|---|---|---|---|---|---|
| TOTAL GROUP | |||||
| Order intake | 456,345 | 513,944 | 1,466,617 | 1,828,934 | 2,306,956 |
| Net sales | 493,033 | 619,334 | 1,679,908 | 1,880,916 | 2,470,647 |
| Operating profit excl. depreciation | 96,856 | 128,143 | 317,680 | 374,493 | 473,955 |
| Depreciation | -46,022 | -38,973 | -132,275 | -114,283 | -152,271 |
| Operating profit | 50,834 | 89,170 | 185,405 | 260,210 | 321,684 |
| Operating margin, % | 10.3 | 14.4 | 11.0 | 13.8 | 13.0 |
| Investments in intangible and tangible assets | 52,620 | 42,647 | 159,068 | 123,772 | 173,663 |
| of which capitalized development expenditure | 43,081 | 30,050 | 128,726 | 98,504 | 141,936 |
| Product development expenditure, % | 14.5 | 10.5 | 13.6 | 10.7 | 11.4 |
| Backlog | 1,046,896 | 1,399,094 | 1,247,328 | ||
| WESTERMO | |||||
| Order intake | 277,623 | 292,174 | 882,197 | 1,144,274 | 1,421,647 |
| Net sales | 269,203 | 379,541 | 969,417 | 1,082,075 | 1,443,994 |
| Operating profit excl. depreciation | 60,824 | 87,182 | 205,628 | 242,035 | 316,930 |
| Depreciation | -23,420 | -20,474 | -68,346 | -60,040 | -79,208 |
| Operating profit | 37,404 | 66,707 | 137,282 | 181,995 | 237,722 |
| Operating margin, % | 13.9 | 17.6 | 14.2 | 16.8 | 16.5 |
| Investments in intangible and tangible assets | 25,349 | 19,676 | 80,611 | 54,568 | 77,606 |
| of which capitalized development expenditure | 20,840 | 11,246 | 59,956 | 43,553 | 63,673 |
| Product development expenditure, % | 16.1 | 10.7 | 14.6 | 11.5 | 12.1 |
| Backlog | 861,146 | 1,045,369 | 935,812 | ||
| BEIJER ELECTRONICS | |||||
| Order intake | 179,507 | 223,086 | 587,963 | 690,425 | 891,524 |
| Net sales | 224,615 | 241,109 | 714,035 | 804,606 | 1,032,867 |
| Operating profit excl. depreciation | 45,894 | 46,869 | 143,119 | 163,133 | 198,565 |
| Depreciation | -20,100 | -16,192 | -56,357 | -48,309 | -64,819 |
| Operating profit | 25,794 | 30,676 | 86,762 | 114,824 | 133,746 |
| Operating margin, % | 11.5 | 12.7 | 12.2 | 14.3 | 12.9 |
| Investments in intangible and tangible assets | 27,271 | 22,090 | 77,695 | 66,218 | 91,639 |
| of which capitalized development expenditure | 22,241 | 18,804 | 68,770 | 54,951 | 78,263 |
| Product development expenditure, % | 12.2 | 9.8 | 11.8 | 9.5 | 10.2 |
| Backlog | 185,750 | 353,725 | 311,516 | ||
| PARENT COMPANY AND GROUP ADJUSTMENT | |||||
| Order intake (elimination) | -785 | -1,316 | -3,543 | -5,765 | -6,214 |
| Net sales (elimination) | -785 | -1,316 | -3,543 | -5,765 | -6,214 |
| Operating profit excl. depreciation | -9,862 | -5,908 | -31,067 | -30,675 | -41,540 |
| Depreciation | -2,502 | -2,307 | -7,572 | -5,934 | -8,244 |
| Operating profit | -12,364 | -8,213 | -38,639 | -36,609 | -49,784 |
| InvsteInvestments in intangible and tangible assets | 881 | 762 | 2,986 | 4,418 |
Parent Company Financial Reports
Parent Company Income Statement in summary
| SEK 000 | Quarter 3 2024 |
Quarter 3 2023 |
9 mth. 2024 |
9 mth. 2023 |
Full Year 2023 |
|---|---|---|---|---|---|
| Income Statement | |||||
| Net sales | 10,047 | 8,931 | 30,142 | 26,792 | 35,723 |
| Administration expenses | -21,926 | -17,427 | -67,107 | -63,286 | -84,435 |
| Operating profit | -11,879 | -8,496 | -36,965 | -36,494 | -48,712 |
| Financial income/expense* | 16,331 | 59,154 | 9,395 | 55,821 | 45,500 |
| Profit before tax | 4,452 | 50,658 | -27,570 | 19,327 | -3,212 |
| Appropriations | 112,805 | ||||
| Tax | 2,585 | 2,048 | 8,479 | 9,845 | -9,952 |
| Profit for the period | 7,037 | 52,706 | -19,091 | 29,172 | 99,641 |
*Includes dividends received from subsidiary of 20 MSEK (66 MSEK).
Parent Company Balance Sheet in summary
| SEK 000 | Sept 30, 2024 | Sept 30, 2023 | Dec. 31, 2023 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible and tangible assets | 7,639 | 7,183 | 8,268 |
| Other financial assets | 1,200,612 | 1,167,451 | 1,135,072 |
| Total fixed assets | 1,208,251 | 1,174,634 | 1,143,340 |
| Current assets | |||
| Receivables from group companies | 51,132 | 28,608 | 144,455 |
| Other receivables | 15,161 | 13,142 | 11,291 |
| Cash and cash equivalents | 66 | 66 | 66 |
| Total current assets | 66,359 | 41,816 | 155,812 |
| Total assets | 1,274,610 | 1,216,450 | 1,299,152 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | 17,536 | 14,786 | 17,500 |
| Non-restricted equity | 278,667 | 248,706 | 318,663 |
| Total equity | 296,203 | 263,492 | 336,163 |
| Current liabilities | |||
| Borrowings | 436,249 | 481,484 | 462,631 |
| Provisions | 23,774 | 20,926 | 22,335 |
| Liabilities to Group companies | 342,143 | 197,767 | 318,897 |
| Total long-term liabilities | 802,166 | 700,177 | 803,863 |
| Current liabilities | |||
| Borrowings | 154,231 | 226,353 | 131,443 |
| Other liabilities | 22,010 | 26,428 | 27,683 |
| Total current liabilities | 176,241 | 252,781 | 159,126 |
| Total equity and liabilities | 1,274,610 | 1,216,450 | 1,299,152 |
Financial definitions
Average
Average values are computed as the median value of the current reporting period and the corresponding item in comparative periods 12 months previously.
Capital employed
Equity and interest-bearing liabilities.
Development expenditure
Expenditure on product development work, such as personal expenses and external consulting expenses. This also includes expenses that are capitalized as assets in the balance sheet.
Earnings per share
Net profit attributable to parent company shareholders divided by the number of shares at year-end.
EBIT
Earnings before interest and taxes.
EBITDA
Earnings before interest, taxes, depreciation, and amortization.
Equity per share
Equity attributable to parent company shareholders divided by the number of shares.
Equity ratio
Equity in relation to total assets.
Financial net debt in relation to EBITDA
Interest-bearing liabilities, excluding net pension provision, less cash and cash equivalents, in relation to EBITDA rolling 12 months adjusted for restructuring costs and acquired EBITDA.
Free Cash Flow
Cash flow from operating activities, cash flow from investing activities, excluding cash flow from acquisition of subsidiary and investment in other companies, and amortization of lease liabilities.
Net debt
Interest-bearing liabilities less cash and cash equivalents.
Operating assets
Equity and interest-bearing liabilities less financial assets.
Operating margin
EBIT in relation to net sales.
Profit margin
Net profit in relation to net sales.
Return on capital employed
Profit before tax plus financial expenses rolling 12 months in relation to average capital employed.
Return on equity after tax
Net profit rolling 12 months in relation to average equity.
Return on operating assets
EBIT rolling 12 months in relation to average operating assets.
Ependion AB
Ependion AB is an expansive global technology group delivering digital solutions for secure control, management, visualization and data communication for industrial applications in environments where reliability and high quality are critical factors. The Group's customers include some of the world's leading companies. Ependion consists of independent business entities with total sales of 2.5 billion SEK in 2023 and about 1,000 employees. The company is listed on Nasdaq Stockholm Main Market's Mid Cap-list under the ticker EPEN.
More Information
You can subscribe for financial information on Ependion via e-mail. Subscribe easily at our website, www.ependion.com. If you have any questions about Ependion, please call +46 (0)40 35 84 00, or send an email: [email protected].
Financial Calendar
| 31 January 2025Financial Statement | |
|---|---|
| 29 April 2025Three-month Interim Report | |
| 13 May 2025Annual General Meeting | |
| 15 July 2025Six-month Interim Report | |
| 21 October 2025Nine-month Interim Report |
