Welcome to the Ependion Q3 2022 report. For the first part of the call, all participants will be in listen only mode, so there's no need to mute your own individual lines, and afterwards there'll be a question and answer session. Today, I am pleased to present Jenny Sjödahl, President and CEO, and Joakim Laurén, Executive Vice President and CFO. Speakers, please begin.
Thank you very much for that. Hi everyone, and welcome to our quarterly report session for Q3 2022. As the headline of our report indicates, we are happy to share with you that we have a record quarter when it comes to both sales and earnings. Hold on a second, I'll just show the agenda first. First of all, I will go through a general business update, and then Joakim Laurén will go a little bit deeper into our financial performance. After that we'll have some concluding notes and also outlook, and after that we'll open up for questions. With that, let's move into the situation after the third quarter. As I mentioned before, we came in with the best quarter ever for the group when it comes to sales and earnings, so we are of course very pleased about that.
What was especially nice in the quarter was that both business entities actually performed on a good level at the same time, which is, of course, the reason why we as a group show a very strong result this quarter. When it comes to the customer demand, we can see that it continues on a good level. We are closing our seventh quarter in a row now with increased order growth. We came in with another quarter above SEK 600 million, SEK 621 million to be exact. That corresponds to a growth of 24%. The sales number came in at record high SEK 567 million or 38% versus last year.
That was the result of the Beijer Electronics business entity continuing to invoice on a high level and the Westermo business unit, which was really struggling in quarter two, as you may remember, managed to increase their deliveries quite significantly in the quarter, which led to this good level. However, we do see a challenging situation still on the supply of semiconductors, and that is still affecting our deliveries, especially on the Westermo side. What is positive there is that for the first time, we are hearing some positive signs from our suppliers of electronic components that they do see a light in the tunnel, consumer demand going down on electronics components.
Even though we don't really see any result of that right where we are right now, we do believe that there will be a softening and an improvement in the supply chain in the next, let's say, 6 months or so. The earnings for the quarter came in at 12.2%, again, a record number for the group. Again, both business entities contributed nicely to that. Westermo, who had a very low level last quarter or quarter two of this year, I mean, actually came back to a good level of 14.5%, driven by a stronger volume. Beijer Electronics had another strong quarter at 14.2%. When it comes to the macro situation, we all read the papers.
It is a bit challenging out there, and we of course monitor that closely. However, we do still see a very high customer activity. We see a strong pipeline, especially in the Westermo business entity. Where we stand right now, we don't see a softening in demand, even though we do believe that the Beijer Electronics business entity will see a somewhat lower order intake level in the coming quarters. If you look a little bit closer on the business entities on this slide here, as I mentioned before, Westermo sees really good demand still, and that demand is driven by our focus segments, train and energy. We see the fourth quarter in a row now above SEK 300 million.
What is interesting in the quarter as well is that we didn't receive any larger orders as we sometimes do in some months and quarters. It was a strong demand built up of many medium-sized orders, you can say. I mentioned the supply situation. It improved in this quarter compared to quarter two, which was a bit of a disaster. This quarter we managed the component situation better, which meant that we managed to ship out a significantly higher volume in the Westermo business entity. The profitability, as I mentioned, is now approaching the target levels that we have earlier communicated of 15%. As I mentioned as well, the supply situation is still challenging.
We would have liked to ship a lot more out of the Westermo factories in the quarter, but we are still hampered by the component situation. The balance between order intake and sales is still not quite there. If we move on to the Beijer Electronics business entity, we are happy that they present another strong quarter, continued high order booking above SEK 300 million, again, spread out through a lot of regions and a lot of customers. We are happy to see continued orders for applications such as EV charging for electric vehicles, and so on, a very interesting segment for Beijer Electronics. We can also mention that the order intake passed SEK 1 billion now after three quarters.
In this business entity, we are seeing now a balance between the deliveries and the order intake, which is a good thing. Delivery times are coming down, so that's really positive. If we then move on to a more graphical visualization of our orders and sales, as you can see here, as I mentioned, strong order intake still, however, a little bit lower than the past couple of quarters, which have been extremely strong, but still above the SEK 600 million mark. If you look at the right-hand side, you can see the improvement in sales that we achieved in the quarter. There are some favorable translation parameters adding to this, of course, and Joakim will go more into details around that.
I can also mention that we do have an all-time high backlog of SEK 1.5 billion in the group. Okay. With that, I'll hand over to you, Joakim, for a little bit more of a deep dive into the numbers.
Thank you, Jenny. Good morning to all of you. I will go somewhat deeper into the numbers then, and we will start with the group. As Jenny has pointed out, it is a record quarter, and of course, we are very happy to present the numbers to you. We have an order intake of SEK 621 million, as Jenny said, sales of SEK 567 million, and an EBIT of SEK 69 million for the quarter, giving an EBIT percentage of 12.2%. Looking at the orders, another one above SEK 600 million. As said, it's all-time high on sales, and it's all-time high on EBIT. Of course, we know that we have a weaker Swedish krona, and we have an exposure in euros and in dollars. With this situation, we have a favorable FX impact.
It's about SEK 11 million, where about 4.5 is translation and SEK 7 million is transactional variances. With the challenges in the supply chain and sourcing components, it's still impacting our working capital, and it kind of limits the cash flow situation or the cash flow generation in the quarter. We came in positively at 27 million, but of course, we still sit with somewhat too high working capital levels compared to if we have a more normal situation. Bottom line, net income of a plus SEK 51 million compared to the SEK 21 million last year, and an earnings per share of 1.77 for the quarter. Let's go to Westermo. SEK 350 million in order intake or 8% growth.
I want to point out that looking into this quarter on the order side for Westermo, we have no larger orders than this. The quarter last year was actually a quarter that had a significant larger order. We booked a larger Stadler order in 2021 of SEK 50 million. If you compare without the Stadler order, we still have a good growth on the order side. It's about 30%. The comparison is quite tough, so you should not be too alarmed of the 8% compared to what we see on the other growth numbers. Sales managed to step up compared to last quarter in Q2 to SEK 263 million, giving an EBIT of 38 or 14.5% in the quarter.
I think Jenny pointed out already that the challenging component situation remains, and we will see continuous challenges when it comes to components. It's not over, but as Jenny said, there are signals of easing in 2023. We are working actively with price management. Of course, we do see cost inflation impacting, but we are compensating with active price management in Westermo, giving this kind of result level for the quarter. Let's go to Beijer Electronics. Here we have another quarter of orders above the SEK 300 million mark, SEK 308 million to be exact. We have sales of SEK 306 million, giving an EBIT of SEK 43 million or 14.2% for the quarter.
In Beijer Electronics in Q3, we in Europe tend to believe that the pandemic is not impacting, but we have impact in Asia. Our organizations in China and Taiwan are affected by COVID-19, and in China there has been partial lockdowns during the quarter. In Taiwan now we see an opening up of the opportunity to come in and travel to the country. It's been challenging for these organizations, but still they managed it in a very good way. Also in Beijer Electronics, we are working with price management to compensate for the cost inflation, and we believe that we are doing so, if you look at the results for the quarter. As you all know that we are integrating the Korenix business entity.
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I'll wrap up Beijer Electronics, and the integration work with Korenix continues, and there is more synergies to establish when it comes to the joint operations. That kind of conclude the details on the financials. Over to you, Jenny.
Okay. Thank you very much for that. To conclude, the message here, again, good order bookings and continued high customer activity levels. We are of course monitoring the situation closely, going forward. Good profitability in the quarter from both business entities. That is something that we are happy about, and it also confirms the volume leverage that we have been talking about for quite a while, and now we actually see that happening. Component situation, we have mentioned several times now. We are managing the situation to the best of our ability, and we do see some signals of ease in 2023. The global macroeconomics again creates uncertainties. You cannot really judge from history in this situation.
We'll continue to monitor the situation, but where we stand right now, we still see a positive demand outlook. If we look at the outlook for the group, this one is unchanged from last quarter. We do believe that we will achieve a significantly better financial performance in 2022 compared to 2021. With that, we'd like to open up for questions.
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Thank you. If you wish to ask a question, please dial zero one on your telephone keypad now to enter the queue. Once your name's been announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Once again, that's zero one to ask a question or zero two to cancel. Currently we have one question in the queue. That's from the line of Mark Sjöstedt of Redeye. Please go ahead, your line is open.
Hello and good morning, Jenny and Joakim. I have a few questions.
Hey, Mark.
Sorry. Hello. The new financing you informed about yesterday, could you talk more generally what you are looking for on the M&A front? Should we expect one larger acquisition or a few smaller add-on acquisitions? Have you seen private multiples decline in your markets thanks to the public market downturn?
As we have stated before, I mean, we have an active M&A agenda, and we are primarily looking at complementary acquisitions to the business entities, both Westermo and Beijer Electronics. We have also stated before that, if we believe that we have an opportunity for what we could call a third leg, that is also something that we are looking at. We are happy with the new financing agreement because it gives us more muscles to be more active when it comes to the financing side of the M&A. We are continuously working with it. We have a pipeline, we are working with that and let's see what happens going forward.
All right. Thank you. In the Q2 report, you mentioned that Beijer Electronics had been very successful in mitigating the effects of component shortages and lockdowns, et cetera. It had been securing deals where competitors did not have the delivery capacity. I've had a few quarterly reports this morning, and maybe you have already written about this in your, you know, new Q3 report. Are you securing more large orders from OEM customers, and how is the capacity levels looking for your competitors now? Are they improving?
Yeah, that's a good question. We did see throughout this year actually that we were winning orders in the Beijer Electronics business entity because the competitors had problems delivering, so that was a very positive thing for us. We are starting to see the delivery capability of some competitors coming back to a higher level, so that advantage is somehow going away. However, the customers that we won, so to say, during this period, we believe that most of them will stay with us, so that it actually has led to us adding on to our customer base, thanks to the good delivery capability of the business unit.
These new customers, did you add some big OEMs that could give you volume for many years, or are they're mostly like smaller ones, or could you comment a bit on that?
Yeah. There aren't really any bigger OEMs among those customers. It's more smaller customers in different geographies that adds up, of course, to a nice volume, but no larger customers, I would say.
All right. Understood. Do you see any signs of an economic slowdown in your end markets? How much visibility do you actually have in your two business segments? I guess you have more in Westermo, for example.
Yeah. That is the question we are all thinking about a lot now, of course. If we start with the Westermo business entity, we are happy that we are focusing on segments that are less affected by economic downturns. We have seen that in the past as well with the 2008, 2009 crisis, and so on. There's a lot of activity going on right now in the infrastructure segment like train investment, railway investment, but also the energy sector, of course, where we see multi-billion-dollar investments by governments in basically all countries. We don't really see at this time a slowdown of the demand on the Westermo side, and I believe that it will be relatively stable going forward as we see it right now.
When it comes to the Beijer Electronics business entity, we know from the past that they are earlier in the business cycle, and they are typically a little bit more affected by general economic downturns. What I would like to point out, though, is that over the last, let's say, three, four, five years, there has been a slight change in the segments and the applications that Beijer Electronics is addressing. They are much more now into segments that are showing a nice growth like, for example, charging infrastructure for electric vehicles. We don't expect that to slow down in the coming 12 months. Yes, it's difficult to tell right now, but that's what we are seeing at this time.
All right. Is it possible to give some kind of overview of your sales? Like, how much would you expect to be like highly cyclical, medium cyclical or very, like, low cyclicality on it? Is it possible to say that?
I mean, we are giving you the exposure to the segment that we are working with. For us to speculate whether or not how it will turn out in going forward, it's not really for us to describe and give you some detailed guidance on that. The statement that we are giving is the situation as we see it right now, and it's quite hard to predict. I think no one can really say how it's gonna turn out in the coming half year or so when it comes to business climate. We are on our toes. We are monitoring it closely. We see, as Jenny pointed out, nothing of that right now happening.
All right. Could you talk a bit about the additional price adjustments when you're planning on implementing?
Yes. We have talked about it previously as well. Since let's say the beginning of 2021, when we saw the component prices starting to increase quite significantly, we also started to put in place price increases in both business entities. We have done it basically twice a year since then, so to say. Mid 2021, beginning of 2022, mid 2022, and then now we are implementing new price increases for 2023 as well. Even though it's hard to be on time, so to say, you're always a little bit late when implementing price increases because you have your order stock and so on. I do believe that overall we have managed quite well to pass on the higher costs to our customers. Yeah.
All right. One last question. You seem a little bit more upbeat this time on the component shortages side, although still, it's still impacting you. How is the, like, redesign program progressing, and how's the dialogue with your suppliers going?
Well, I think that most of the redesign work that we have had to do due to this, most of that is done, I would say, or in the finishing phase. That is mostly in the Westermo business entity, which means that some products that we have not been able to ship for quite a long time now, we will be able to start shipping again by the end of this year. Hopefully, we will not need to do any major redesigns again, since the situation seems to be improving slightly. I think we are past the worst part of this whole component crisis. Again, it's too early to say because we are still not seeing it in real deliveries.
We are still seeing pushouts from suppliers of critical components and so on. At least the messages that we are hearing are for the first time more optimistic from the suppliers.
All right. Yeah. Thank you very much for answering my questions, and have a nice day.
Thank you, Mark.
Thank you, Mark.
Thank you. Once again, if there are any further questions, please dial zero one on your telephone keypad now. Okay, there seems to be no further questions from the phones at this time, so I'll hand the floor back to our speakers for the closing comments.
Okay. Well, in that case, thank you very much for listening in, and have a good day.
Thank you.
Thank you. Bye.
Bye-bye.