Interim Report January—March 2025: Progressive future investments and cost savings in uncertain times

First quarter

• Order intake increased to 550.6 MSEK (527.5).
• Net sales amounted to 545.1 MSEK (598.5).
• EBIT decreased to 49.2 MSEK (74.5).
• EBIT margin was 9.0 percent (12.4).
• Profit after tax amounted to 32.0 MSEK (51.3).
• Earnings per share reached 1.10 SEK (1.78).
• Free cash flow was -12.2 MSEK (-8.4).
• The Westermo business entity inaugurated its unit in Bangalore and secured an initial order worth 11 MSEK in the train segment.
• The Beijer Electronics business entity carried out a restructuring that reduces costs by 22 MSEK annually and affects the quarter negatively with 3.4 MSEK in restructuring costs.

Events after the end of the period

• The Westermo business entity strengthens its position in the energy sector through the acquisition of Welotec.
    

COMMENTS FROM THE CEO, JENNY SJÖDAHL

“Ependion began 2025 with an eventful first quarter, marked by intensive work on the acquisition of the technology company Welotec, continued launches of new operator panels in Beijer Electronics’ X3 series, and the inauguration of Westermo’s unit in India. At the same time, we are not satisfied with our profitability and continue to see challenges within Beijer Electronics, which prompted a cost savings program implemented during the period to strengthen profitability.

Order intake for the period increased by 5 percent, adjusted for currency effects, to 551 MSEK. In the train and trackside segments, order intake was slightly lower during the period, while the positive trend in the energy, marine, and manufacturing industry segments continued. Despite a turbulent global environment, we continue to see a high level of activity among our customers.

For the Westermo business entity, order intake increased by 2 percent to 317 MSEK, and the order backlog amounted to 835 MSEK at the end of the period. The entity’s newly opened unit in Bangalore secured its first order worth 11 MSEK for a local Indian train manufacturer. Beijer Electronics increased its order booking pace by 8 percent to 235 MSEK, where, encouragingly, growth was driven by rising demand for the entity’s core offering, operator panels, which grew by 18 percent. Beijer Electronics’ order backlog amounted to 143 MSEK at the end of the period.

The Group’s sales amounted to 545 MSEK for the first quarter, which was weaker than the corresponding period last year for both business entities. Earnings came in at a lower level, with an operating profit of 49 MSEK and a margin of 9.0 percent. The result was impacted by an unfavourable sales mix and negative currency effects for Beijer Electronics, as well as non-recurring cost items totalling approximately 10 MSEK for the Group.

Westermo’s operating profit remained stable at 50 MSEK. The business entity’s operating margin for the first quarter increased to 15.7 percent, thanks to improved gross margins and cost restraint. For Beijer Electronics, operating profit declined to 15 MSEK, with an operating margin of 6.7 percent (8.3 percent excluding restructuring costs). To strengthen profitability, the business entity implemented a cost savings program during the quarter. The action plan affected 33 positions — primarily in the U.S. and Taiwan — and will reduce costs by 22 MSEK annually.

Free cash flow, which is normally weak during the first quarter of the year amounted to minus 12 MSEK for the period.

Ependion’s spending on product development remains at a high level because of major forward-looking investments in new products. Development costs amounted to 13.5 percent of the Group’s sales during the quarter. Both business entities launched new products during the period, and Beijer Electronics received initial orders for X3 web, which is part of the new generation of operator panels.

At the end of the quarter, the Group’s Annual Report was published, featuring a significant expansion of sustainability data. Scope 3 targets were adopted for the Group, and subsidiaries have developed their plans to further address the environmental impact of their products. Scope 3 emissions cover the indirect emissions that occur in the value chain, and efforts to reduce these emissions also benefit the Group’s customers in several ways, primarily through reduced environmental impact during the products’ operational phase.

After the end of the period, we were pleased to announce a significant acquisition as the Westermo business entity entered into an agreement to acquire all shares in the technology company Welotec, headquartered in Laer, Germany. This transaction has very strong strategic logic: Westermo is stepping into a new but closely related technology area — Edge Computing — and accelerating growth in the energy segment, while also creating significant potential for sales synergies as the businesses are combined. Welotec will help strengthen our position in the digitalization of the power grid, a rapidly growing market expected to account for nearly a quarter of global grid investments by 2050. The purchase price amounts to 35.2 MEUR, plus a performance-based earn-out linked to the results for 2025–2026.

While we are seeing cautious signs of increasing customer demand, the uncertainty that has characterized the global economy for some time has intensified. Tariffs and trade barriers had no financial impact on the Group during the quarter, but we are closely monitoring developments and are prepared to mitigate any effects through, among other measures, price adjustments.

Ependion is well positioned in attractive markets. The strategic initiatives and continuous improvements we are driving make us well equipped for the future. In the medium- and long-term perspectives, our prospects for profitable growth are very strong, given the structural growth within our focus segments. In the short term, however, uncertainty remains high. In times of uncertainty, we focus on the factors we can influence. We balance cost discipline with strategic future investments and remain committed to creating value, regardless of market conditions.”
  

INVITATION TO PRESENTATION OF THE REPORT

Today a web and teleconference 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: Tuesday, April 29, 14:00 CET

If you wish to participate via webcast please use the link below.

https://ependion.events.inderes.com/q1-report-2025/register
  

If you wish to participate via teleconference please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.

https://conference.inderes.com/teleconference/?id=5004777
  

The report and the presentation will be available at the company’s website www.ependion.com. A recording of the webcast 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 29-04-2025 13:00 CET.