Interim Report January—June 2023: New record for order intake, revenue, and profit in a mixed market

Second quarter

• Order intake rose by 5 percent to 698 MSEK (667).
• Net sales increased by 20 percent to 638 MSEK (533).
• EBIT doubled to 85.8 MSEK (40.8).
• EBIT margin rose to 13.4 percent (7.7)
• Profit after tax increased to 57.9 MSEK (28.1).
• Earnings per share rose to 2.00 SEK (0.97).
• New order strengthened business entity Westermo’s position with a major Swiss train manufacturer.
• The Beijer Electronics business entity acquired the German software company Smart HMI.
• Kristine Lindberg took office as CEO of the Beijer Electronics business entity.
• Lena Westerholm took office as Head of Sustainability for the Group.
• The Group changed its name to Ependion.
   

First half-year

• Order intake amounted to 1,315 MSEK (1,328).
• Net sales increased by 30 percent to 1,262 MSEK (973).
• EBIT increased to 171.0 MSEK (69.0).
• EBIT margin rose to 13.6 percent (7.1).
• Profit after tax rose to 113.7 MSEK (44.1).
• Earnings per share increased to 3.94 SEK (1.52).
   

COMMENT FROM THE CEO, JENNY SJÖDAHL

”For the second quarter of 2023, the Group reports for the first time under the new name Ependion. The name change is just one piece of the puzzle in the longterm plan that has fallen into place during the period: we have a new CEO of Beijer Electronics tasked with sharpening the business entity’s growth strategy, while the Group’s first sustainability manager has taken office to develop our important sustainability work. Last but not least, we have made the first complementary acquisition to Beijer Electronics in a decade.

For Ependion, the quarter meant new records for order intake, sales, and results, albeit based on a more fragmented picture regarding the development of the business entities. Order intake increased to 698 MSEK, which is a new record. This means that order bookings were over 600 MSEK for the sixth quarter in a row. Despite a high sales rate, the Group still has a record order book of 1,565 MSEK.

Westermo booked 496 MSEK in new orders, of which approximately 100 MSEK is a one-off effect attributable to an extension of the order horizon from a large customer. During the period, Westermo received a new strategic order from a Swiss train manufacturer, which consolidates our increasingly strong position with the customer and confirms the business entity’s leading position within the train segment.

For Beijer Electronics, the pattern we saw in the first quarter was reinforced: order intake decreased to 203 MSEK, driven by a continued normalization of order patterns in combination with increased uncertainty in the market. While the component shortage contributed to greatly increased order intake during the comparison period, better component supply now works in the opposite direction as customers reduce their inventories. It is still Asia that shows a sharp weakening in demand.

The Group’s sales for the second quarter increased by 20 percent to 638 MSEK. Thanks to an improved supply of components, Westermo was able to increase the pace further and reached a new record with 368 MSEK in sales. Thanks to large deliveries to the entity’s train customers, the delayed order backlog could be reduced. The Beijer Electronics business entity’s sales decreased slightly to 272 MSEK compared to the record period last year. Beijer Electronics can now deliver with short lead times on new orders in most cases, which ensures fast service to both existing and new customers.

The record-high sales contributed to a continued strong EBIT of 86 MSEK and an EBIT margin of 13.4 percent, which  is a strong improvement compared to the comparison period and on par with the margin for the first quarter of this year. The working capital is still high due to abnormally high inventory levels of input goods in the wake of the component shortage, but we were gratifyingly able to turn to a positive free cash flow of 30 MSEK for the quarter.

Westermo strengthened profitability with an EBIT margin of 16.5 percent. Even though component supply has improved compared to the corresponding period last year, the business entity was still affected by increased costs to secure access to key components, while the ongoing effort to strengthen the business entity’s delivery capability entailed certain one-off costs. Beijer Electronics succeeded well to offset the decline in sales through good cost control and delivered a strong result with an EBIT margin of 14.8 percent for the period. The price increases that have been implemented successively to compensate for increased costs have contributed to stable gross margins in both business entities.

During the quarter, Kristine Lindberg took over as CEO of Beijer Electronics. An important task for Kristine and her team is to review, clarify and sharpen the business entity’s long-term growth strategy, a job that will begin in the fall. The integration of the recently acquired company Smart HMI is proceeding according to plan, as is the work to create a second unit for the production and assembly of HMI:s in Malmö.

During the period, the Group’s first Head of Sustainability also took office. Lena Westerholm will contribute to a shift in both the Group’s sustainability work and sustainability reporting. Thanks to our products’ high quality and long lifespan, they contribute to reduced resource consumption and increased sustainability for our customers. We want to accelerate our work to concretely reduce our climate footprint, while at the same time we need to set goals, measure, and report more clearly on our work for a more sustainable world.

Ependion continues to work in line with the Group’s overall strategy to reach our financial goals. In the medium and long term, we see very good growth in the markets and in the segments in which we operate. We see a great willingness in most of the world’s countries to invest in important societal infrastructure such as trains, railways, energy production and electricity distribution, which benefits the Group. At the same time, the high inflation and interest rates continue to affect the global economy, which has a negative impact on demand above all in the manufacturing industry. The mixed picture we have seen for some time is therefore expected to remain.”
  

INVITATION TO PRESENTATION OF THE REPORT

Today, a conference call will be held for press and analysts, where President and CEO Jenny Sjödahl and CFO Joakim Laurén present the company and comment on the report.

Time: Friday July 14, 13:30 CEST

To participate in the conference please dial:

From SE: +46(0)200899189
From UK: +44(0)8006522435

To access the presentation please use this link: http://momentum.adobeconnect.com/ependion/
   

The report and the presentation will be available at the company’s website www.ependion.com. A recording of the conference call will also be available here after the event. 

Welcome to join!

This disclosure contains information that Ependion AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 14-07-2023 13:00 CET.

For more information please contact:

President and CEO, Jenny Sjödahl, tel +46 (0)725 89 60 80
Executive VP and CFO Joakim Laurén, tel +46 (0)703 35 84 96

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 sales of more than SEK 2.1 billion in 2022 and more than a thousand employees. The company is listed on Nasdaq Stockholm Main Market’s Mid Cap-list under the ticker EPEN. ependion.com