Financial Statement 2023: Subdued demand ends record year

Fourth quarter

• Order intake decreased to 478.0 MSEK (602.8).
• Net sales amounted to 589.7 MSEK (588.6).
• EBIT was 61.5 MSEK (62.7).
• EBIT margin was 10.4 percent (10.7).
• Profit after tax decreased to 34.1 MSEK (51.1).
• Earnings per share decreased to 1.18 SEK (1.77).
• Free cash flow increased to 109 MSEK (57).
• The Westermo business entity decided to establish itself in India with a focus on growth in rail and energy.
• The Beijer Electronics business entity completed strategy review; a decision on a new strategy is expected in the first quarter of 2024.

Full year

• Order intake decreased to 2,307.0 MSEK (2,552.0).
• Net sales increased by 16 percent to 2,470.6 MSEK (2,128.4).
• EBIT rose to 321.7 MSEK (201.1).
• EBIT margin increased to 13.0 percent (9.4).
• Profit after tax increased to 200.4 MSEK (146.4).
• Free cash flow increased to 118 MSEK (35).
• Earnings per share improved to 6.93 SEK (5.07).
• The Board proposes a doubled dividend of 1.00 SEK (0.50) per share for 2023.
   

  

On March 5, from 13:00-16:00, Ependion is holding a Capital Markets Day in Stockholm which will also be able to be followed digitally. More information will be presented on www.ependion.com shortly.

 

COMMENTS FROM CEO JENNY SJÖDAHL

“With the fourth quarter of 2023 behind us, we can sum up a new record year for the group in terms of sales, earnings and cash flow. A lot has happened during the year, where the key events were the appointment of a new CEO for the Beijer Electronics business entity, the appointment of sustainability manager, the strategy work within Beijer Electronics and the name change of the group.

Ependion’s fourth quarter of 2023 landed on par with the corresponding period last year, which was in line with our expectation. The more mixed pattern in the development of our business that we saw already the second and third quarters also affected the past period. After some recordbreaking quarters, we are now seeing a period of weaker demand development, which reflects the uncertainty in the world economy. However, we still feel very confident that Ependion is on the right track, not least considering all the forward-looking activities in the business entities that have characterized both the period and the year.

The Group’s order intake decreased to 478 MSEK for the period and both business entities recorded a lower order booking rate. For the full year, order intake amounted to 2,307 MSEK and Ependion had an order backlog of 1,247 MSEK at the end of the year. For Westermo, order intake decreased to 277 MSEK in the quarter, which is mainly due to adjustments to the large order volumes for the rail segment that were booked during the second quarter, but also to a generally weaker demand in other segments. The order backlog decreased, but still amounted to 936 MSEK at the end of the period. For Beijer Electronics, order intake decreased to 201 MSEK, which is due to the same factors that had an impact in the second and third quarters of 2023: orders with a shorter time horizon in combination with weaker industrial conditions, especially in Asia. Europe developed stably, while North America was weaker during the period.

Ependion’s sales for the period amounted to 590 MSEK, which is on par with the corresponding period last year. For the full year, sales increased to a new record level of 2,471 MSEK. Westermo’s invoicing increased to 362 MSEK for the fourth quarter, driven by continued high delivery rates within all focus segments. During the period, the decision was made to establish a legal unit for sales and production in India, which provides a resence in the market that is judged to have the greatest future potential within the rail segment given the large infrastructure investments that are planned. For Beijer Electronics, sales decreased in the quarter to 228 MSEK in line with the lower order booking level that we have seen in recent quarters. The strategy review for the business entity that began in the third quarter is now completed. Decisions on a new strategy with a clearer focus are expected to be made in the first quarter of 2024.

The Group’s EBIT for the fourth quarter landed at 61 MSEK — marginally lower than for the corresponding period last year — with an EBIT margin of 10.4 percent. We are of course not satisfied with this somewhat weaker level of profitability. For the full year, Ependion increased its EBIT to a new record level of 322 MSEK, corresponding to an EBIT margin of 13.0 percent. This means that we are taking a big step in the direction of reaching the financial profitability goal, while at the same time continuing the work of sharpening the business to take further steps.

For Westermo, EBIT increased to 56 MSEK and the EBIT margin to 15.4 percent. The business entity was temporarily negatively affected by a less favorable mix in invoicing during the period, at the same time significant investments have been made to strengthen the supply chain. For Beijer Electronics, EBIT decreased to 19 MSEK, with an EBIT margin of 8.3 percent. Here, too, the EBIT margin was affected by a poorer product mix, with a higher proportion of older products approaching the end of their life cycle. The restructuring of operations in Asia initiated during the third quarter with the aim of lowering the cost level is complete and will have full effect with 20 MSEK on an annual basis from and including the first quarter of 2024.

Both business entities continue to maintain a high pace in product development work. In Westermo’s case, it is about continuing to strengthen the product portfolios within both railways and energy, but also about enabling a more developed service business. Beijer Electronics is finalizing the development of next-generation HMIs expected to be launched by the end of 2024.

As a result of reduced capital tied up, free cash flow developed positively to 109 MSEK for the period, and the group thereby strengthens its financial position.

During the year, our sustainability work has accelerated, and the sustainability aspect has been integrated as a natural part of our business strategies and processes. While we have been preparing to meet new reporting requirements, great focus has also been on training employees and creating forums to drive initiatives that contribute to a lower climate footprint. The core of our business, robust and efficient products with a long lifespan and low energy consumption, has a clear advantage when sustainability becomes an increasingly important decision criterion for customers.

Looking at 2024, the external factors are still uncertain and geopolitical and economic developments can go both in a more positive and in a more negative direction. Our Comments from CEO Jenny Sjödahl fundamentally positive view of growth in our focus segments remains, as the need for our products and solutions is driven by strong global trends such as digitization and the green transition. We have our focus on long-term growth and on what we can influence: during the period and the past year, we have made major investments in an even sharper offering, as well as in strengthening and streamlining our business entities. In conclusion, I would like to extend a big thank you to all employees for their very good  efforts during the past year!”
  

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: Thursday, January 25, 14:00 CET

To participate in the conference please dial:

From SE: +46(0) 0200 899 189
From UK: +44(0) 800 652 2435
  

To access the presentation please use this link:
http://momentum.adobeconnect.com/ependionfinancialstatement2023/
  

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 25-01-2024 13:00 CET.