Ependion (EPEN) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw order intake and sales decline year-over-year due to weak market demand and macroeconomic uncertainty, but market share was maintained and free cash flow doubled, driven by reductions in working capital.

• Cost-saving measures were implemented alongside selective investments in future growth, including a minority stake in Blu Wireless and the establishment of Westermo India.

• Both Westermo and Beijer Electronics reported lower sales and EBIT, but Westermo secured a significant order in the Indian train market and acquired a stake in Blu Wireless Technology.

Financial highlights

• Q2 2024 order intake: SEK 483 million (down 31% year-over-year); sales: SEK 588 million (down 8%); EBIT: SEK 60.1 million (10.2% margin, down from 13.4%).

• Net income: SEK 40 million (vs. 58 million last year); EPS: 1.37 SEK (vs. 2.00 SEK); free cash flow doubled to SEK 60 million.

• FX had a positive impact of SEK 6 million; backlog remains solid at SEK 1.1 billion.

Outlook and guidance

• Market conditions remain challenging, with weak order intake expected to persist through 2024 due to macroeconomic and geopolitical factors.

• Long-term growth and profitability targets (10% organic growth, 15% operating margin) are maintained, but require market recovery.

• Underlying growth prospects in key segments remain positive, driven by trends like sustainability, electrification, and digitization.