CEO statement

Focusing on the future in uncertain times

The dark clouds that gathered in 2022 in the form of the Russian invasion and a poorer economic outlook continued to shape business sentiment. But despite our business environment still being impacted by geopolitical conflicts and significant economic uncertainty in 2023, Ependion can look back on a record year for sales, earnings and cash flow. Meanwhile, the past year involved an extensive internal change process where we laid the foundation for profitable growth.

In 2023, we underscored our capability to deliver growth and profitability on the road to the financial targets we adopted in late-2022. Our minimum organic growth should be 10%, with an EBIT margin at group level of 15% over time. Sales in the year were up by 16% to 2.5 billion SEK, which means we are above target both for the year and on average for the period 2020–2023. Our EBIT increased by 60% to 322 MSEK, equivalent to an EBIT margin of 13%, implying our goal of a 15% margin is within reach given the change processes ongoing in our business entities. 

The uncertainty we encountered in the year continued in certain segments and some geographical markets, and combined with altered ordering patterns, were contributors to annualized order intake reducing by 10%. Beijer Electronics’ order intake was down compared to a record 2022, while Westermo’s order intake increased. The group’s order backlog was 1.2 billion SEK at year-end. Cash flow progressively improved in the year, as did the supply of components. At its peak, the component shortage compelled us to increase our inventories of critical components, and long lead-times on many semiconductor components meant the negative impact on our inventory levels persisted almost right through the year.

Our AGM in 2023 resolved to change our group corporate name to Ependion, a name taking inspiration from the Greek word for investments, and reminiscent of our mission: to invest in people, technologies and products that contribute to a more secure, connected world. Our corporate name-change firstly reduces the risk of confusion, and gives us the opportunity to retell the story of our group and what we stand for.

Today, Ependion is a global technology group, in industrial data communication, visualization and control in harsh environments, where quality standards are critical. We work close to our customers, and are skilled at understanding their needs and transforming them into solutions that generate profitable business and long-term relationships.

Ultimately, the demand for our proprietary hard ware and software, as well as future services needs are driven by digitalization, with growing data volumes, and a more pressing need for cybersecurity, but also by the accelerating rate of electrification and accentuating requirements for sustainability, which are involving enormous investments for wider society and businesses.

The group’s strategy is founded on autonomous business entities that grow organically with good profitability. Our Westermo and Beijer Electronics business entities have their own strategies. Westermo has a clear focus on the Train, Trackside and Energy sectors, and is now the global market leader in on-board communication solutions for trains. After appointing a new CEO, Beijer Electronics—which traditionally has had more breadth—started a strategic review which after year-end generated an updated strategy, focusing on three segments: the marine sector, OEMs in manufacturing, as well as applications for harsh environments. In every case, the green transition is a consistent theme in terms of customer needs. The common denominator for our business entities’ focus segments is their combination of great growth potential and high quality requirements, enabling us to get paid accordingly.

The role of the group is to support and monitor the work of each business entity to ensure they’re heading in the right direction, finance operations, and to pursue an active acquisition agenda in close partnership with each business entity’s management. The group continuously screens acquisition candidates, mainly companies with the potential to complement existing business entities by either bringing new technology, new know-how and new products, or expanding our presence in new geographies or adjacent segments. In 2023, Beijer Electronics acquired the German software company Smart HMI, which has developed the web-native HMI solution WebIQ. This acquisition brought new technology and know-how that has already helped open new business opportunities.

Ependion is making significant investments in R&D in close collaboration Ependion is making significant investments in R&D in close collaboration with its customers to ensure that we can satisfy their functionality requirements. In 2023, the group invested a total of 283 MSEK in customer-focused product development. Westermo focuses on developing solutions for the Train and Energy segments, and is laying the foundation of its services offering. For Beijer Electronics, developing the next generation of HMIs in the X3 family was the top priority, to increase functionality, flexibility, and cybersecurity. Upgrading performance from a sustainability perspective is a key aspect of all our development work.

In 2023, we increased the pace of our sustainability work. The group’s first Head of Sustainability joined us in the spring, and in tandem with our business entities, has ensured that sustainability has been integrated end to end in our value chain. By working closely with our suppliers, we can drive the transition to more sustainable materials and solutions. By delivering robust products with high energy performance, backed by a services offering to guarantee long useful-lives, we’re helping our customers realize their sustainability ambitions.

A stronger Ependion

Going into 2024, the substantial uncertainty about how markets will develop is persisting, which combined with geopolitical concerns and ongoing wars and conflicts, makes the future hard to predict. As previously, we’re focusing on profitable growth, and factors we can actually influence. By pursuing clear goals and strategies, keeping a sharp focus on our customers and their needs, as well as continuing to invest in people, technologies and solutions, we’re building a sustainable and successful concept. I’m convinced that against the backdrop of all the important and future-oriented initiatives we launched last year, Ependion is even better prepared to face its future! 

Ependion’s business entities are dependent on attracting talented people across a raft of different functions. By offering attractive and multifaceted roles and duties in an international environment with high technological skills levels and a strong corporate culture, we have been very successful in attracting and retaining skilled professionals. In closing, I’d like to thank all my coworkers for their great performance in a challenging year. I’m proud of what we’ve achieved together, and am looking to the future with confidence.

Jenny Sjödahl
President & CEO