• Order Intake: SEK456 million, down 11% year-over-year.

• Sales: SEK493 million, down 20% year-over-year.

• EBIT: SEK51 million, with an EBIT margin of 10.3%.

• Gross Margin Improvement: Increased by 1.7 percentage points.

• Free Cash Flow: SEK56 million for the quarter.

• Net Income: SEK31 million.

• Earnings Per Share (EPS): SEK1.08.

• Westermo Sales: SEK269 million, with an EBIT margin of 13.9%.

• Beijer Electronics Sales: SEK224 million, with an EBIT margin of 11.5%.

• Warning! GuruFocus has detected 4 Warning Signs with FRA:TW4.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ependion AB (FRA:TW4) reported a significant improvement in gross margins, particularly in the Westermo segment, due to normalized cost levels and adjusted labor costs.

• The company maintained a stable EBIT percentage sequentially, despite a drop in sales volumes, indicating effective cost control.

• The establishment of operations in India is progressing as planned, with positive customer feedback and expected full operational status by the end of the year.

• The launch of the new X3 family in Beijer Electronics is on track, with the first product set to be released in November, enhancing competitiveness.

• Ependion AB (FRA:TW4) achieved a positive free cash flow of SEK56 million for the quarter, showing improvement over the previous year.

Negative Points

• The company continues to face a challenging demand environment, with weak order bookings and sales across key segments.

• There was a significant sales drop compared to the previous year, attributed to a lower order book in the train segment of Westermo.

• The order intake and sales levels were negatively impacted by the phaseout of the Display Solutions product group in Beijer Electronics.

• Ependion AB (FRA:TW4) experienced a negative FX impact on EBIT, amounting to minus SEK14 million, primarily due to transactional variances.

• The external market situation remains weak and uncertain, with geopolitical and economic factors contributing to a cautious outlook for the rest of 2024.

Q & A Highlights

Q: Can you discuss the underlying demand and any signs of improvement, particularly in relation to interest rates and projects like trains? A: Jenny Sjoedahl, President and CEO, explained that while demand is currently weak, there are still ongoing projects such as train and infrastructure developments. She anticipates that the weak demand situation will eventually reverse, especially as interest rates decrease, which should stimulate economic activity. The company believes that the current hesitation in customer investments will not last indefinitely.