CEO statement

CEO, JENNY SJÖDAHL, COMMENT ON THE FINANCIAL STATEMENT 2024

“After an extended period of weaker demand, Ependion’s fourth quarter of 2024 exceeded expectations, with order intake increasing by 20 percent to 572 MSEK. The increase covered both business entities and all focus segments: train, trackside, and energy for Westermo, as well as marine applications, manufacturing industry, and solutions for demanding environments for Beijer Electronics. In particular, a strong order intake was noted from several of Westermo’s train customers. Despite the improvement during the period, our cautious approach to costs remains, combined with a focus on key forwardlooking investments. For the full year, order intake amounted to 2,039 MSEK, and the Group had an order backlog of 1,026 MSEK at the end of the year.

The improved order booking in the quarter contributed to stable sales, despite the order backlog at the beginning of the quarter being relatively weak. Ependion’s sales amounted to 578 MSEK, which was in line with the corresponding period last year and an increase of 17 percent sequentially. The business entity Westermo’s sales decreased slightly to 347 MSEK, while Beijer Electronics increased marginally to 232 MSEK. The level of market activity remained high. Westermo’s focus on establishing a presence in India, a market with significant potential within train, trackside, and energy due to ongoing investments, continued as planned. For Beijer Electronics, the completion of the next-generation HMIs has been the focus. For the full year 2024, the Group’s sales amounted to 2,258 MSEK, of which Westermo accounted for 1,317 MSEK and Beijer Electronics 946 MSEK.

Ependion’s EBIT for the fourth quarter increased to 66 MSEK, with an EBIT margin of 11.3 percent, also better than the comparison period. For Westermo, EBIT increased to 62 MSEK, with an EBIT margin of 17.7 percent, marking the highest operating margin the business entity has ever recorded for a single quarter. The profit improvement is due to a combination of gross margin improvement and continued restraint regarding ongoing costs. Lower material costs and a series of measures to gradually streamline production have yielded results, which is encouraging. For Beijer Electronics, EBIT remained stable at 19 MSEK, with an EBIT margin of 8.3 percent. The business entity’s result and margin were weighed down by an unfavorable mix, with a higher share of low-margin products under phase-out, as well as depreciation on R&D investments aimed at renewing and improving the portfolio.

For the full year 2024, Ependion achieved an EBIT of 251 MSEK and an EBIT margin of 11.1 percent. Westermo’s EBIT amounted to 199 MSEK, with an EBIT margin of 15.1 percent, while Beijer Electronics’ EBIT was 106 MSEK, with an EBIT margin of 11.2 percent. Although the full-year result for 2024 is lower than in 2023 due to a weaker economic climate, the Group demonstrates greater stability in earnings over an economic cycle than has historically been the case. While we are of course not satisfied with the result level, we continue working relentlessly with the goal of steadily achieving our financial target of 15 percent EBIT margin for the Group.

Free cash flow amounted to 80 MSEK for the period, despite a high investment pace. For the full year, Ependion reached 187 MSEK in free cash flow. This makes 2024 the best cash flow year ever, thanks to efforts in the business entities to reduce working capital, primarily through lower inventory levels.

Ependion’s expenses for product development remained at a high level due to the significant investments in new products currently underway within the Group. For the quarter, development costs amounted to 14.7 percent of the Group’s revenue. During the quarter, both business entities made important progress towards meeting IEC62443-4 – a standard for cybersecurity requirements in industrial systems. Both Westermo and Beijer Electronics are also continuously working to strengthen the cybersecurity functionality in their offerings. Beijer Electronics is in the final stages of developing the next generation of operator panels (HMIs). The first product in the new X3 family – X3 web – was launched in the fourth quarter and will gradually be followed by additional variants throughout 2025.

Sustainability is a driving force for investments in the green transition, benefiting Ependion, while the Group’s own sustainability focus is an important argument in both sales and recruitment. Ependion has overall very low direct emissions in the so-called Scope 1 and Scope 2. Nevertheless, we are determined to contribute our part to the necessary reduction of greenhouse gas emissions, and in the fourth quarter of 2024, targets were set for the Group’s own emissions. The work to prepare the Group to meet the EU sustainability reporting requirements that enter into force in 2025 is ongoing, and we have made significant progress toward compliance during the year. Our conviction that sustainability is important for Ependion, both now and in the future, remains firm, and we are pleased with the progress in this area.

As we now review 2024, I can conclude that the year has presented several challenges linked to a hesitant approach among our customers and a weaker industrial economy. It remains my assessment that, as a Group, we are well-positioned in attractive markets and that we have defended our market share during the year. The strategic initiatives and continuous improvements we drive have equipped us well for the future. In line with the Group’s growth strategy, we are actively working on evaluating various acquisition opportunities.

The fourth quarter marked a shift from the hesitant pattern that characterized much of 2024. It is too early to say whether this represents a general trend reversal, as external factors continue to create uncertainty about the future development. In the medium and long-term perspective, Ependion’s prospects for profitable growth are very strong, given the structural growth within our focus segments. We are cautiously optimistic about the outlook for the full year 2025.”

Jenny Sjödahl
President & CEO