Senior Vice President, Corporate Communications. Presenting the report today are Bulten's President and CEO, Tommy Andersson, and our Executive Vice President and CFO, Helena Wennerström. After the presentation, it will be possible for you to ask questions both on the web as well as in the telephone conference. Please go ahead, Tommy.
Thank you, Camilla. We start here. Car sales within EU has been extremely volatile during September due to new regulations with the Worldwide Harmonized Light Vehicles Test Procedure, in short, WLTP. Bulten continued to ramp up new contracts, manage the situation well, and are still on a strong growth. Before that, we come to the agenda of the day, which is Bulten brief, market development, third quarter 2018, and our plans going forward. Going on to page three, Bulten brief. Bulten's business concept is getting stronger every day. During the year, we have been involved in successful launches of several new cars and model shifts with flawless execution. Investments in quality, engineering, logistics, as well as dedicated people are key to this performance. As mentioned, this is the reason for maintaining strong growth also in a volatile market.
Bulten's vision to support the global automotive industry with state-of-the-art fastening technology and services, as well as developing the FSP concept into perfection, has been the main reason for Bulten to be a winner in this highly competitive industry. Going on to page four. Bulten has a lean and well-positioned operation. Entering to the U.S. market will open doors into new customers, but more important, strengthening Bulten's position on global platforms to customers we're already supplying. There are not so many in our industry that can offer local content in Europe, USA, China, and Russia. We have today the largest fastening operation in the industry in a low-cost country, Poland. We are planning to expand it further. We have also a big portion of outsourced production, approximately 40%, which also creates flexibility.
Regarding volumes, Bulten has proven that we can adjust to volume fluctuation both up and down. Going on to page five. Bulten has many customers with potential for further growth when consolidation and need for strong FSP suppliers will be required to assemble the cars and engines the most cost-effective way. Cars are the main fastener market within automotive as it is also for Bulten. Bulten's three largest customers are Ford, JLR, and Volvo. Once again, raw material prices increased in Q3. However, Bulten has, despite difficult raw material situation, maintained good customer relations. Raw material prices will remain on the same level as in Q3 during the fourth quarter. No further increases are announced. Into market development. Going on to page seven, market shares. Bulten is growing. Continue to take market shares.
Bulten market share was 17% during 2017. Bulten is defending its position as the leading FSP supplier well with a 60% share 2017. The growth we are planning for 2018 and 2019 is the largest then coming from FSP contracts. Going to page eight, market developments. Car sales within EU dropped with 23% during September. LMC Automotive is reporting a forecast for 2018 for light vehicle production in Europe of 0.6% growth. Heavy commercial vehicles forecasted to grow 1.6%, which is, with Bulten's mix, a forecasted market growth of 0.7%. The LMC forecast has been lower since the Q2 report with the influence from WLTP and also Brexit. Still growth of car sales in our home market Europe, with sales growth of 2.5% for the first nine months 2018, according to ACEA. However, it's been a volatile market for the last few months, and more about that later.
Going on to page nine. Looking in the longer perspective, LMC Automotive estimated a gradual improvement of production of cars in Europe years to come with an increase of 0.7% in 2019. First quarter of 2017. This is, of course, challenging for many players in the value chain. However, raw material prices will remain the same level as in Q3 during the fourth quarter, and no further increases are announced. Going to the third quarter and to page 10, operational highlights. Bulten is growing faster than the market with the continued ramp-up of new contracts in the quarter. This has also affected our order intake positively, even though the order intake in the Q3 last year is a tough comparable. The profitability decreased somewhat during the quarter due to both irregular production caused by a volatile market and high prices on raw material.
We have received the reward for the best annual report in Sweden in the mid-cap segment. After the quarter, Bulten won an electric vehicle drivetrain technologies and FSP contract. Today, we also announced that we will relocate our production in China, and more about that on the next page, on page 13. As we announced today, Bulten has decided to relocate its plant in China from Beijing to Tianjin. The aim is to expand in the local Chinese market, where volumes and growth opportunities increase considerably from a previous relatively low level for Bulten. The plant will be relocated to Tianjin Industrial Park, which is about 150 kilometers from our existing plant in Beijing. The relocation will start in 2018 and be finalized in the end of 2019.
The relocation includes an investment of approximately SEK 25 million. The cost is estimated to amount to SEK 16 million-SEK 20 million, distributed over the moving period and the main part in 2019. I will now hand over to Helena for some financial data.
Thank you, Tommy. We go to page 14. Bulten shows a sales of SEK 722 million in the quarter, up 14.5% compared to comparable quarter last year. Our EBIT amounted to SEK 38 million. Operating margin was slightly lower compared to comparable quarter last year. However, we met our earnings target on a rolling 12 months basis, and our EPS increased this quarter. More comments on earnings to follow. Page 15. Some comments on the net sales and order intake. Sales for the quarter were up 14.5%. This quarter, once again, was positively affected by currency in the top line. Adjusted for that, the organic growth was at 5.8%. Growth comes from gradually increasing volumes related to previously announced contract wins and overall good demand from our customers. The market is, however, rather volatile and differs from customer to customer.
The contracts that we are now ramping up also affect our order intake positively with an increase of 4.7%. The slower increase compared to the second quarter is due to the market volatility and a strong order intake in third quarter 2017 from earlier ramp-up of new contracts and model change. Page 16, earnings development. Our EBIT margin for the third quarter amounted to 5.2% compared to 5.5% comparable quarter last year. We were once again negatively affected by higher raw material costs during the quarter. A more volatile market also resulted in a more uneven production pace during the quarter. Additional to that, we also had a negative currency effect, about SEK 4 million. Adjusted for currency, EBIT margin was at 5.8% compared to 6.1% previous year.
As I mentioned a little earlier, our EPS increased this quarter. On an EPS level, the negative impact on the EBIT level from currency effect switched back, positively on our financial net. Adjusted for currency, our EPS were up to SEK 1.40 compared to SEK 1.04 comparable quarter 2017. Page 17, cash flow. The cash flow has been affected mainly by operational results and the growth. We are in a phase where we pay up some net working capital, mainly which has an impact on the cash flow. Higher investment level as we are in a phase preparing for growth. Our investment in efficiency continues as we aim to become the industry's most cost-effective fastener manufacturer.
Our balance sheet and financial position remain strong. We have a net debt by the end of the quarter of SEK 164 million, which is equal to 0.5 times EBITDA. Page 18, key indicators. We have a return on capital employed of 14%. The higher investment level have an impact as well as the modeling development. Also, our return on equity is impacted by this and amounts to 11.3%. The capital turnover times is slightly up compared to the full year 2017. The equity ratio was on a level of 65.1% at the end of the quarter. Page 19. On this slide, we continue to give you some short guidance regarding some key figures for Bulten. As always, these guidelines are not to be considered financial targets.
The average net working capital in relation to 12-month sales amounted to 21.8%, which though are going up, but it is due to increased volumes. Capital expenditures as percentage of 12-month sales, we are on a level of 4.9%. An evidence of that we invest in future growth activities. We predict that we would end up over this level in coming years. More about that in the next slide. Our depreciation of 2.8% of 12-month sales is within the range of our guidance as well as our average tax rate of 26.4% rolling 12 months. The tax rate will however vary from quarter to quarter. Page 20, investments going forward. I will just show you a short review of our investment strategy in the coming year. Our guidance is to invest 2%-3% of 12-month sales into daily business.
On top of that, to handle the growth phase, we will invest in more the years to come as previously announced. Until 2021, we will invest in new capacity, value-added production, as well as in new production plant in Poland. As we announced earlier today, we have also decided to move our production facility in China from Beijing to Tianjin with a purpose to catch growth opportunities. The move will be finalized by the end of 2019 with associated investment of SEK 25 million. These two investments will improve Bulten's production efficiency even further. All in all, we are continuing a clear investment phase to step up growth in the years to come. Page 21, financial targets. Our financial key ratios continues to be on a good overall level, close to or above our financial targets.
We are growing more strongly than the industry in average with a backlog of orders to underline this. We continue to have a solid profitability with an operating margin of 7% on a rolling 12-month basis, even though raw material prices and a volatile market has made the environment more challenging. Return on capital employed of 14%, or 16% if you adjust for goodwill. Our ordinary dividend increased to SEK 3.75, corresponding to 47% of 2017 earnings after tax. Back to Tommy again.
Okay. Thank you, Helena. We come into going forward. We will go on to page 23. Bulten continued to have a growth faster than the market in Q3, which confirms that we now have continued our phase of growth. The major part of this growth is coming from ramp-up from new contracts. On this slide, you can see different ramp-up contract and what phases of implementation they are in respectively. Moreover, contracts signed but not yet entered production will support Bulten's growth even further in the years to come. The market also Bulten's mix about 0.7%. To that, you have to add ramp-up on new contracts that have started as well as new business not yet started, together totaling over SEK 600 million yearly. Going on to page 24. Bulten will continue to grow during 2018.
Contracts already signed under ramp-up the coming years give us a long-term and very solid organic growth potential. In the quarter, we managed to grow even though the market was more volatile, which together with a tough comparable quarter reflected our order intake. We have a strong financial position and preparing for future growth through investments and continued streamlining to become the most cost-effective FSP supplier in the industry. Finally, we still see potential in taking on new business and contracts. The long-term trends toward hybrids and electric cars works in our favor. I hope you all got a clear picture of the opportunities within Bulten, and we are now ready for Q&As. Thank you.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypad and you will enter a queue. After you are announced, please ask your question. Please hold until we have the first question. Our first question comes from the line of Mats Liss of Kepler Cheuvreux. Please go ahead. Your line is open. Okay, please bear with me one moment. We have a technical issue.
Yeah, I think so too.
Okay. Please go ahead, Mats. Your line is now open.
Thank you. Can you hear me?
Yeah. Hello, Mats. I can hear you.
I can hear you.
Thank you. Just coming back to China there, and you mentioned the cost involved with the move, and I guess you have some thoughts behind this move and how it sounds as if it's more like improving sales. It's not reducing your cost. Could you say something about this?
We're growing in China, so we need to have capability to grow. We need more space and so on. I think it's a step we need to. Brand new plant, a bit better that way. Helena, you want to add something?
No, I think it's
Basically, we need to scale up the volume. We are supporting one of the fastest growing car companies in China right now, and they need more products.
That's good. You talked about electric vehicles there, just to touch upon that. Again, you also have received a contract. I read about that. Do you still expect the supply to be substantially higher in an electric vehicle than in a combustion engine car?
Yeah, we do. I think in this case, if you look into it, all the new contracts we are signing right now on electric cars, there are more fasteners, and of course, it's also driven by there is a lot of hybrids, but there is a lot of fasteners in a car, in a battery, for example. If you're taking a mobile phone, you glue the parts together. In a car, it's 500 kilograms. You have to put a lot of fasteners into it to assemble the batteries and also put them in the car. Of course, there will be probably rationalizations coming, but as far as we can see with the products getting out in the next year and the next couple of years, there will be more fasteners. Mainly, of course, driven by hybrids. The volumes for pure electric cars is not that high yet.
That will take time to build up the battery capacity. As I say, for a battery, for a fully electric car, there is a lot of fasteners in it.
Do you think or do you aim at gaining more full-service contracts compared to what you already have in the combustion engine segment? Is it easier for you to leverage that business in a more electrified world?
I think right now, I think the whole industry is working on an electrified world. I expect more contracts to come on the electrified world. Probably a little bit of the old combustion engine is probably a little bit put on holds, but we are working with a number of different electric or hybrid projects right now that is in the pipeline.
Good. I'll just touch upon U.K., I guess you have a couple of large customers there. Do you have any sort of indication on how to handle a Brexit?
Of course, we have a plan how to handle it. We're coming to the end of March here when officially will be a Brexit. Of course, we can do small things to make sure we can continue for a while. To be honest, I think the whole industry is not absolutely sure. Nobody knows exactly what's going to happen, there is a big car industry in U.K. that will probably, some of them are protesting, of course, there need to be some sort of solution for it. Unfortunately, what we can do now is plan for more customs duty and so on, or customs procedures, so to say. We are planning for it and see what we can do. As I say, nobody can really tell exactly how Brexit will look in this case.
We have no production in U.K., of course, we of course, we sell a lot of products to the customer there, we have no production in U.K., which is probably making it a little bit easier.
Yeah. You mentioned raw material prices, I guess there are some steel tariffs involved in some markets. Are you able to pass those on as well?
As I obviously should do, it takes some time to pass them on. After all this so many quarters of increase, you're almost behind all the time. The positive side right now, Q4, there will be no increase, and with what we see in the market, I think there's going to be pressure on the raw material. We have had a number of years with increases right now in volumes, and that is probably flattening out a little bit. It will take some time for us to get full compensation on the raw material. Also, of course, we are out of material with many customers, as I mentioned for you, so many quarters in a row. I've never seen it before increasing like that, it's today and now. Hopefully we will catch up.
Just to follow up, do you have any impact of steel tariffs, or is it more?
Very limited. The tariff is, we produce the parts mostly in the continent where they are used. There are marginal effects there. There are some areas with some special material that we buy, very marginal.
Finally, you mentioned the volatility in car production during the quarter, and you have been affected. Could you make some indication how much, or is it difficult to assess that?
Of course, we have seen the effect. Reading the media and seeing what's happening in the car industry, it's of course, quite dramatic, but I think we have managed that pretty well with the growth we have in our pipeline and so on. Going forward, we see a small, the increase in the market is going down to 0.6%, but I think everybody is right now expecting it to come back when this WLTP thing is over, the market is coming back. I think it's also going to be cars with a lot of more content. I admit it has been quite turbulent in the last months, I would say, especially after this WLTP introduction in Europe, but which was expected to some extent, and it was not so extreme for Bulten. We were marginally affected by it.
Do you feel the market is coming back now? The WLTP is in place.
If we look into what LMC is reporting at, the market is still continuing on a reasonable level. LMC is not seeing any major drop. It's just as we can see it right now as to short term because it was very high in August. Of course, we have to follow this, but that's what we can see at the moment.
Okay. Well, thank you very much.
Okay. Thank you much. Thank you.
Thank you. Thank you. Just a reminder to everyone, if you want to ask a question, please press 01 on your telephone keypad. There are no further questions on the line, so please go ahead, speakers.
Okay, thank you for listening, and thank you for the update. Thank you, and goodbye.
Thank you. This now concludes our call. Thank you for attending. Participants, you may disconnect your lines.