Ependion (EPEN) Q3 2024 earnings summary

Executive summary

• Q3 2024 was marked by continued weak demand across all segments, with order intake down 11% to 456 MSEK and net sales down 20% to 493 MSEK year-over-year; both Westermo and Beijer Electronics experienced similar patterns and no large orders were booked.

• Gross margin improved significantly, especially in Westermo, due to normalized costs, labor adjustments, and price increases, with a sequential gain of 1.7 percentage points.

• EBIT for Q3 was 50.8 MSEK (10.3% margin), down from 89.2 MSEK (14.4%) last year, but margin was maintained sequentially from Q2 2024.

• Free cash flow tripled to 56 MSEK, and the equity ratio improved to 46.1%.

• The year is considered transitional after a record 2023, with confidence in medium- and long-term growth prospects.

Financial highlights

• Order intake: 456 MSEK, down 11% year-over-year and 5% sequentially; sales: 493 MSEK, down 20% year-over-year and 16% sequentially.

• EBIT: 50.8 MSEK (10.3% margin), down from 89.2 MSEK (14.4%) last year.

• Net income: 31 MSEK; EPS: 1.08 SEK (1.81 SEK last year).

• Free cash flow improved to 56 MSEK for the quarter; net debt reduced to 768 MSEK.

• FX impact on EBIT: -14 MSEK, mainly from transactional variances.

Outlook and guidance

• Order book for Q4 remains weak, and 2024 is expected to remain challenging with persistent lower demand due to geopolitical and economic factors.

• Medium- and long-term outlook is positive, with confidence in profitable growth driven by global trends and margin improvement potential as demand recovers.

• Financial targets remain: 10% average annual organic growth, 15% group margin, and healthy dividend policy.

• Interest rate cuts are anticipated to gradually improve market activity.