Welcome everyone to ABG Investor Days. My name is Henric Hintze, and I'm an equity research analyst here at ABG. With me now, I have a company which I cover, namely Inission. Here to present for us today is the CEO of the company, Fredrik Berghel. With that, go ahead, Fredrik.
Thank you, Henric. Welcome to the presentation of Inission Group. I am Fredrik Berghel. Me and Olle Hulteberg, we started this company 16 years ago, and we are still both active, myself as the CEO, and Olle as chairman. Inission Group today consists of two business areas. We have old Inission, which is contract manufacturing of industrial electronics, and then we have Enedo, which is a OEM company. They have their own IPR, and they are in power supply. I will revert to Enedo shortly. First, a little bit about Inission. We are a contract manufacturer of industrial electronics, and we are in the segment of high-mix, low-volume industrial electronics. We are very much a Nordic company.
We have nine factories here up in the north, and they group together as six business unit or companies, producing companies, and then we have an engineering company called Innovate with a engineering consultant. We think, and our customer very much appreciate our proximity, so that's why we are spread out like this. We see upon ourself as total supplier. We take care of, of everything from starting of the product to the end of the life cycle. Inission is very much an acquisition story. As I said, we started this 16 years ago. Our first full year was in, in Munkfors alone, 2008, with a turnover of SEK 74 million. So now on SEK 2.2 billion, on these 15 years, we have been growing 30 times.
And we have acquired about a company per year, that has been our speed. Not extremely fast, but then, anyhow, with a steady pace like that. Worth mentioning here, it's not on this timeline, but that is, our part ownership of Incap. So 2013 and 2014, we took part of the turnaround of Incap, and our idea was actually to merge these companies, but we never managed to get the relative valuation Inission, Incap, with the other main owners there. So we gave it up and divested it to our shareholders.
As a curiosity, selling those shares because I got them privately, that was my worst stock sale ever, I can tell you that, because after that, Incap has, as you perhaps are aware of, done tremendously well. There are a lot of similarities with Incap and Enedo, that's why I'm mentioning this. So, we are not focusing on any special segment. We are... Our focus is high-mix, low-volume industrial electronics. And as I said, we are a total supplier, meaning that we have development services. We are, of course, producing, and then we also take care of life cycle guarantee at the end of the product's life cycle.
We early realized that doing as much as possible for the customer, there is a clear correlation between the more we do for the customer, the more pleased they are in our surveys, and the more pleased they are, the more value we do for them. Also, our chances of having a better margin is there, so it's really important. We have a fantastic customer portfolio. We have 73 key accounts. The largest key account we have, that is ABB, about 10% of what we are doing going to ABB. But that is not one ABB company. We are selling from four of our factories to seven different ABB companies. So we think there is a very good risk spread here.
Looking at the segments, actually lately, the last few years, and we don't know much about the future, everyone is saying now that we are in, in a bad economy, but our customer is doing still very well because they are keep on buying in a very high speed. But there are two areas here, especially defense, three areas: defense, connectivity, and electrification. They are really, really booming now. So we, we see a strong, strong growth there. So then, if we shift to, Enedo, as I said, they are not a contract manufacturer, they are an OEM company. They develop their own products. They are producing, marketing, and selling, power supply. And for those of you that are not engineer, the easiest way to explain a power supply, that is that little black box that you charge your mobile with.
But this is for industrial applications, totally different demands, totally different powers, and so forth. But it's about transforming current from one form to another. No electronic application can use what you get from the socket, 220 AC. It's always converted to something else, very often from AC to DC, and you take down the voltage quite a bit to be able to run them on electronics. In difference to Inission, Enedo has a global approach. They are spread out over the world with sales representation. They also are a lot of similarities. They are the same as Inission, they are high-end customized products. They also have, as I said, industrial applications.
So there are a big difference, contract manufacturing, OEM company, but the type of customers we have, they are very much alike. I will revert to that. So some history of Enedo. They started a long time ago, telecom-related, Nokia-related in Finland. They realized that being here in this part of the world with telecom electronics was perhaps not really doable, so they divested the telecom portion of their business, and they invested then in an Italian company, Italian Tunisian company, which was ROAL. And then a few years later, they acquired a company called Powernet, a Finnish company also in the same type of line. We took part of a rescue operation, spring 2021. So Inission acquired... They were a listed company at that time, so we acquired half.
There was a directed share issue, so it was fresh money from new shareholders, but also old shareholders put money into this rescue operation. Then we, from the board, we have worked with a turnaround of this company. Our judgment is that one year ago, Q3 last year, then the turnaround was over, and now we are going into a new phase with Enedo, more developing phase. As I talked about Inission customer, also Enedo has a fantastic customer portfolio. Very, they are, they have bigger and fewer accounts, but they have very nice, few, American customers or U.S.-based customers. That is really, extremely interesting. There are also the fact that all, all Inission customer need power supply, and, and a lot of Enedo customers are actually using OEM, using EMS services.
So there is the bridge over there. And also Enedo themselves are buying EMS services. This year, they will buy EMS services for about EUR 13 million. So a little bit about the industry for you that is not super-duper aware of that, but there is a strong underlying growing trend here. So the industry is growing. There are various opinions about that, but 7-ish. So if you think about it, there are electronics in almost everything these days. We have these mega trends of electrification, optimization, robotization, we have 5G coming, we have sensor technology, Internet of Things, machines talking to machines. So there are more and more electronic applications. And we really think and believe that Enedo is well positioned to capture from that growth.
And also what have happened the last few years, actually, that the consolidation in the industry, together with these mega trends, forgot to mention also nearshoring. Actually, we see clearly production coming home from Far East now. And those things together have actually made the market in balance. So today, we have a situation where capacity and demand is sort of balancing out, which is, which was not the fact when I started here 15 years ago. Then there was always someone needed to fill up their machines, and they were slashing the price to get at least the TV money there. So today it's a different story. We see a lot more of actually joining in with our customers as partners. Something about acquisition.
I said, Inission is really an acquisition story, and we will continue with that. We really think we are done in Sweden. We think, however, we could have something more in Norway, south part of Norway. We think also we could have something else in Finland to cover Finland a little bit better. Denmark is a wide spot for us, but then we also now are actually systematically scouting in northern Germany. So that's most likely where we're going to find our next acquisition. And we also see Enedo taking part of this acquisition journey, quite, maybe one or two year from now when they have stabilized a little bit further. So something about our last quarterly report, our Q3. This is our year-to-date numbers.
So our turnover year to date, Q3, was SEK 1.6 billion, which is 23% more than last year. All of that organically, which resulted in an EBITDA of SEK 131 million, 68 million better than last year, corresponds to a margin of 8%. And here is really the strong improvement; here is really the beauty of organic growth. On the same factories, the same system, you shoot through more orders and more business. So really, these 310 revenue on the top, resulting in net added value of +133, and the cost of producing those extra 103 was only SEK 55 million, meaning this EBITDA going up 68 million.
So, if you think about that, every second krona measured from net added value goes down to profit. So there are many reasons why organic growth is really, really, really important. If you see that our timeline a little bit longer, we have been growing fast, as I said, 30 times the last 15 years, and we have been very proud of always being profitable. 2021, there you see, we aren't, and that was when we consolidated and started to... We also changed the accounting method to IFRS, so we brought in all these Enedo losses. So the Inission annual report we handed in 2021, that was not negative, but then when we recalculated these numbers, it actually comes out as a minus.
But we also have a strong growth here now, and we have improved quite a bit when it comes to our margin levels lately. And with that, net sales SEK 2.2 billion, EBITDA SEK 259 million last 12 months. We are running on record level in sales and record level in profit. If we narrow it down to the business areas, Inission EMS made an extremely good quarter and an extremely good year to date. And here is really the component crisis. We are through that now, so we don't have these component problems. There are long lead times on some components, but we don't have the hiccups anymore.
We have also increased the capacities in our factories, and by doing that, initially, we took down the efficiency a bit, but now the new coworkers at Inission, they are picking up speed. So we can clearly see that quality and productivity is improving in our factory. And also, prices of component has flattened out because we are always second there. Prices goes up, and we have to increase to our customer, and that is putting our margins down. So now we have sort of caught up there, which is a good thing. If you look at the Enedo numbers, the OEM company, they have a tremendous improvement from being this, the turnaround story and then starting to perform a little bit better.
So, they are slower in Q3 compared to Q2, of course, but that is the vacation effect. So, also the production site that Enedo have in Tunis, there are also quite a bit of improvements being made. We are also now making investments in that factory, and that is the first investments in a long, long, long time. So end of this year, we will receive new pick-and-place machines, and they will be installed and up and running early next year. We have an internal slogan within Inission, 25 2025, where we have combined our midterm financial targets, doubling our turnover, doubling our profit, with the means to do so, higher flow, employee satisfaction, customer satisfaction. But also, why I'm showing this picture, we have the ambition to be carbon dioxide neutral 2025.
We are not far off, and we are tracking this, and we are doing energy-saving programs. We are switching over to electrical transports, and then it's about actually to Our factories themselves, they are very much run on electricity, and if we buy only clean electricity and top that up with some compensation program, we have all the chances of being there. January this year, nineteenth of January, we had a capital market day, where we presented our financial targets for 2023 and for midterm. Now with our speed, 2.2x in sales and 7.1x in EBITDA, we are extremely confident to reach our targets for 2023, only one and a half months to go.
We have also been able to shrink the balance sheet in our Q3, coming down SEK 70+ million, meaning that the equity ratio has come up. Also, our net debt EBITDA ratio with 2.3x, compared to our deal with our bank, the covenant 3.0x, meaning that there are some room here for investments, of course, but also to do acquisitions. Midterm goals, they are more stretched, of course, but thinking of the Q3, Q3 alone at 8.8x EBITDA, it's not super-duper far off. Also, the year-to-date number with 8.0x, it's also not that far off, and we really work systematically at Inission or within the Inission Group on our organic growth and our profitability. We like evolution at Inission, not revolution. So we take this really systematically.
One big thing that we are doing is that we are creating these larger business units. So an average factory today within Inission is very much larger just compared to a few years ago, and that we do by co-organization. Borås and Malmö, for example, are working together, Inission Syd. In Lohja, we had two companies. They are now merged and co-located to Inission Lohja only. Our Västerås production is co-organized with the Stockholm production, so we are creating larger business units. We are also centralizing a little bit more. We are a very decentralized structure, but we are investing in central resources when it comes to sales and when it comes to sourcing, to draw out synergies from this system.
We also work together with part development for process development, and we constantly invest in new and more efficient machines to be more efficient. And then we have the external factors that I talked about, the mega trends, nearshoring, nearshore sourcing, the more use of electronics, the balance in the market has created an environment that we think is very beneficial for us. Thank you.
Thank you for that, Fredrik. Let's move on to some Q&A.
Yes.
Let's start off with Enedo. Could you just tell us a bit more about the progress there, what you've done, and what you still have left to do to raise profitability in Enedo?
When we came in, as I said, in this financial restructuring program, spring 2021, we put in some EUR 7 million. There were some other investors putting in money there, so there was a rescue program of EUR 13 million-ish. But that was good, and that was really needed, but then you also have to change the operational things. The big chunks, what is done there, that is actually right-sizing of the Italian operation. They were a bit over 100 people, 115, 120 people, and they could actually afford only to be 50 plus. So that we have done, we have right-sized the Italian operation. Then we have the Tunis factory, which is... If you come from outside, you know, you think it's extremely strange.
They were running a factory from Italy that was placed in Tunis. When I am in the factory here, you know, in Inission factory, I don't even like if people are on different floor levels, and they were sitting on two sides of the Mediterranean to run this factory. So we are now making. We are developing a project, Tunis standalone. So Tunis should be able to be an EMS factory, and that is our target at the end here, actually, to transfer Tunis into the Inission program. Those two items are the biggest one, but then we have also done quite a bit of customer portfolio management. Actually, those customers that was paying far too little for too much service, we have corrected that also. So that are the main things. But now...
That was really the turnaround program. But now we are more in an Inissification process, development. We have to manage our product portfolio in a new way. We have to get out there doing proper sales that haven't been done because the company has been in survival mode for quite some time. So now, with the new manager, Kalle Huittinen, from ABB, that is really the future for Enedo now, as we see it. Yes.
Thank you. Since you acquired Enedo, you've taken it easy on the M&A front. Could you talk a bit about how you have been thinking about M&A since then, how you're thinking now, what you're seeing in the market regarding price levels, and such?
Yeah, we at from Inission Group point of view, we regard acquiring Enedo, even though we did it in steps like this, we see upon that as an M&A. So thinking of that, we have been acquiring companies also. Yeah, we have been taking part in processes, but one, two, 2.5 years prices have been very high. And then we have actually been there bidding, but didn't win any bids because we were too cautious. Now, we see actually there are more movements, and we also have the feeling. We haven't done any deals yet, but we have the feeling that price expectations also from the seller have come down.
So we think there will be, and the market, both for power supply industry and the contract manufacturing industry, is extremely fragmented there. So there are a lot of companies to be able to approach. Yes.
Mm-hmm. All right. Interesting.
So yeah, we certainly think that we should continue our M&A or our acquisition story. What we have decided, though, and what we try to do, is to invest heavier on the organic side. So our idea is to grow 15%. That is our target, meaning every five years, we will double. Lately, we have been growing double that speed, so we have been doubling two times in five years. So we take down the growth speed here, and we weigh it over towards organic and a little bit less acquisition. That is-
Mm
... that is our, but then you also, as a good golfer, you have to play the ball where it lies also. When there is an opportunity, you have to either hit it or not. Yeah.
Yeah. Very good. And finally, could you talk a bit about this nearshoring trend you that you mentioned? Since we've seen a bunch of supply chain issues globally in the past few years, some companies have nearshored operations. What makes you think or not think that this is a long-term trend that won't reverse now that supply chains have normalized?
We saw this before COVID crisis. We saw it before, obviously, then also the Russian war in Ukraine. But those two things have reinforced that trend, regionalization, you know? We have to think differently when it comes to supply chains. They will be more regional. Things that will be used in Asia, that will be produced in Asia. But to produce in Asia and ship here, you know, or produce in China, if we have customer's customer that are dependent on U.S. customer, China is a red warning flag already. So they will be cautious actually bringing out things from China today. So there, we also think our Tunis operation will be a really good thing because the labor cost in Tunis is even lower than China.
It's the same time zone that we have here. It's only a few hours away with a plane. So we think that setup, having low-cost production here very close to Europe or in Northern Africa, then that will be better. Yeah, we think that will be the trend, really, because China is not for free anymore either, or Asia. Salaries is going up there also. Yes.
All right. Thank you very much for that. That's all we have time for.
Mm. Thank you, Henric.