My name is Fredrik Berghel. I am the founder and principal owner of Inission. Me and Olle started this company 17 years ago. We are still both active. I am there as the CEO and Olle as the chairman. Wrong direction. Sorry. I will give you an introduction to our company, talk a little bit about our acquisition strategy, some Q3 performance, and something about our financial targets. Inission, for now, is both old Inission, EMS contract manufacturing, and also the OEM company Enedo. We are organized into business areas. We are a strong believer in a value-driven company, and we put quite a bit of effort into educating both old and especially then also new employees of Inission about our core values. We put all the way from the board to all our employees.
We are working quite a bit now to comply with this EU regulation, CSRD. Down in Brussels, they have created a regulatory monster, I can tell you, but we have to comply, and we are putting effort into that. Myself, I think we should really focus on our CO2 footprint, and there Inission is doing very well. We have a very clean factory. A lot of that is electrified, and the last portion that we actually are not able to take out yet, we are compensating for. So we are doing well when it comes to sustainability, and especially environmental sustainability then. So Inission, in brief, we are a contract manufacturer of industrial electronics, and we are in that segment of industrial electronics, which is called high mix, low volume, meaning that we are running comparatively complex products in smaller volumes. So that is what we're doing.
We are organized in nine factories and six companies, and then we have an engineering company in Västerås. As you can see on the map here, we are quite distributed, not being bigger than we are, and we are a strong believer in proximity. We like to be close to our customer. Here you can see our sales split, and it's very much a Nordic company, half to Sweden, a lot in Norway, and then in Finland, and then only about 10% to the rest of the world. That is where we have our customer. The products that we produce for our customer, they are distributed worldwide. The company history of Inission is really an acquisition story.
We started, as I said, 17 years ago, me and my business partner, and we started in Värmland, Munkfors, and we have acquired about a company per year. One company that is not in this timeline is Incap, a Finnish EMS company that we acquired 13 or a bit of, and we really wanted to merge this company. We made a turnaround out of Incap, and then we tried to merge them, but we never got the rest of the big shareholders, the relative valuation there. So unfortunately, I sold those shares a little bit later, and we made a divestment to the shareholders, and then I got privately a lot of Incap shares. Unfortunately, I sold them because later on they have really, really gone through the roof. But we are constantly acquiring companies. The latest acquisition we did was a company in Halden, Norway, called AXXE.
We did that in January this year. We are a total supplier in that meaning that we do everything from product development with our own resources, prototypes, industrialization, and then, of course, manufacturing. That is the core of what we're doing. There you will find 90%-95% of the revenue, and then also we have interesting aftermarket projects for Volvo Penta, for example. We are doing their spare parts, and if we would run new parts for Volvo, that would be too big volumes for us, but the spare part project for Volvo, that is exactly where we are. Very, very good example of a niche market for us. We have a fantastic customer portfolio, and we have clear growth potential for sad reasons within defense. We have also electrification increasing rapidly and also communication, a lot of Internet of Things applications, machines talking to machines.
There we have clear growth, even though industry is our biggest and most, of course, important segment here. We are not dependent on one big customer. We have the largest key account is ABB, and they buy from about 10% of Inission EMS portion. But there you will find seven various ABB companies buying from four of our different factories. So we don't really feel that we are dependent in that sense or too concentrated at any customer. We also really want to make as much to the customer as possible. So we prefer not to ship PCBAs only. We want to do what they call in the business or the industry for box build, ready-made products that we preferably can send directly to the customer's customer and also take care of logistics solutions. So enough about Enedo. Inission, over to Enedo.
In difference to Inission, Enedo is a product company. They develop their own products, their own IPRs in that sense. And what they do, they do power supply, and that is power conversion. Electricity from the main socket of 220 AC transformed to something else. When I try to explain it for non-electric engineers, I say that is a small box that you use when you charge your mobile phone, but this is for industrial applications. So in many sense, Enedo customer are very lookalike to Inission customer. So that is really where we have the synergy. They are a Finnish-Italian company with their production in Tunis. And here we are running a big project now together, Inission and Enedo, actually moving this factory, the organizational home for that factory from Enedo to Inission. So it will become an ordinary EMS factory later.
The plan is to hand it over early Q2 next year. So then from the Inission perspective, we will have a low-cost factory, which we don't have today. Then we can offer our customer a wider product offering or production offering in that sense. Also, Enedo is small in scale. They are advanced, customized, high-end power supplies to their customer. So very much on the customer side, lookalike compared to Inission. And also in difference to Inission, if Inission is a Scandinavian or Nordic company, this is not a global company, but it's a global approach. They have 10% of the sales, Finland, Sweden, Norway, and the rest to the rest of the world. So that is just an inversion of the Inission leg then, where we really have 90% of the sales to Sweden, Norway, and Finland.
The company story of Enedo is, yeah, you could call it a tragedy. We came around 2021. It has been poorly managed, poorly financed, and everything has been, yeah, it was a listed company when we came around it, and we took part of a turnaround action. We bought new shares for about SEK 70 million. Some of the old shareholders also contributed. There was a haircut from the banks, and it was like a financial rescue operation. That is one thing, but then you also have to right-size the cost compared to the income, which they really never have done, and they have done a lot of strange things. I could talk the rest of the day about that, but I will not. We think now that we have turned it around and we have a stable platform.
Unfortunately, though, the market is a little bit against us now. So we have headwind there. Enedo more than Inission in a way. De-stocking customers that bought too much 2022, 2023, buying a lot less now. So it's challenging. From a customer perspective, they are a fantastic company. They have a much more concentrated customer portfolio, but there are fantastic large multinational companies that build up the core of the Enedo sales, which we can build on later. Then to our, I said earlier here that Inission is very much an acquisition story. We have acquired a company per year, and we really look for the customer portfolio. So that is as complementary as possible. Of course, the management and the culture are important, financial position, but then also geography is important for the Inission leg. We want to distribute ourselves further down in Europe.
We have a very simple and very clear, and by now then, 17 years later, quite proven model how we do this, how we scout the target companies when we are doing the DD process. We are listing down improvements that we see. We are listing down the changes that we want to do immediately, and those that we plan on a little bit longer horizon. And there are normally clear synergies. We have the same machine suppliers. We have the same component suppliers. So we can normally draw out synergies from there, but when we compute the price that we are willing to pay, we are never sort of including those synergies. So that will always be an add-on the way we see it. And we have also now the prices on target companies have become a little bit higher the last few years.
Maybe we have not been that super active, and we have also been involved in Enedo quite a bit from our management perspective. But it's moving now. Prices are coming down, and we have an interesting pipeline of potential acquisitions. And now when I talk about acquisition, that would be for the Inission portion of the company for now. Later on, and as I said, we want to geographically go down into Denmark, northern part of Germany, Poland maybe. That is sort of where we are targeting. On the Enedo side, we still think it will be another one or two years so that they have stabilized financially, profit, cash flow, but then also in the Enedo portion of the Inission group will grow by acquisitions.
Something about the mega trends that are driving this industry. There are various analysts having various ideas about the growth, the underlying growth rate, but 6%-8% is a very common idea about how much the EMS business in Europe is growing. So we are in a good industry from that point of view. And of course, you can think about it yourself. It is more and more electronics in everything. If you think about a car for 10 or 20 years ago and the amount of electronics included in that. And then also we have the electricity driving this. And these mega trends that are driving the use of industrial electronics, they have been there for quite a while. And some of those were reinforced by COVID. Some of those were even more reinforced by this tragic war that is going on from energy prices, not the least.
Here we see when we have these drivers that are growing the market and compare that how Inission, Inission EMS then is positioned. We really think that we are well positioned to take care of this growth. Then of course, we have to remember 2024 is a dip now. I'm coming to that right now. This is our Q3 numbers. We sold for SEK 468 million, which is 9% less than last year. The industry was oversold, especially 2022, but also 2023. A lot of our customers had far too much on the shelves. We made a decent Q1 because we were still delivering out on our old order book. But then now Q2, Q3, it's clearly breaking. It is challenging. Of course, also this 9% reduction here, if you include Axe, it is of course even worse.
Then we have a decline here, organic decline of even 15%. And to try to maintain then our profit, profit in real numbers and also measured as a margin, that is of course a challenge. But we are breaking on cost level. And we are breaking also with a balance there. So we are not just slashing it down. We are breaking with a balance. However, I think looking at this chart, remember we started here, 2008 was our first year, 74 million SEK Munkfors alone. Now we are about 30 times as big. So that has been the journey. And we have been really proud of earning money, even though we have been growing quite rapidly. And we have had an EBIT level about five-ish. And we really have been trying the last few years to have to push it up.
I think 2023 sort of proves that if we do it right, step by step, we focus more on organic growth rather than acquired growth. And we have larger units. We do a little bit of more central initiatives. So we actually reached 80 in the EMS leg last year. And now we are down to 70 year-to-date numbers. But the long trend here we are very proud of. We have a dip there 2021, and that is when we included Enedo in the numbers. So I see it more as a technical thing. Yeah, here we have the isolated business area Inission then. And here you can see the development. And I think year-to-date numbers and thinking of that we are in a breaking environment for our customer. We are doing it reasonably well. Q1 was, as I said, very good. So year-to-date numbers come out okay.
If we take Q3 alone, of course, it actually dropped down, the margin dropped down here to 6.3%, but still thinking of that, that is, yeah, I think decent. Enedo then, it is more challenging here to save or cut cost for Enedo so that the profit margin increases because we have already cut against the bone in the turnaround project. And if we cut more now, it's a little bit about the story, the baby and the bathwater. So we are more careful here. And we think if we can manage to float now on 3%-4%-ish EBIT, we will let it be there. And we will not be tougher than that for now because, as I said earlier, we really are a strong believer in the trend here that industrial electronics is increasing steadily. So the market will, we are quite convinced that the market will come back.
It's not a matter of it will come back or not. It's a matter of when it will come back. So then about our financial targets, the board of Inission early November decided to revise the targets. So we brought it down from 2.4 in turnover to in between 2.1 and 2.2 when it comes to sales. And we also took down the EBIT target from 7 to 6. And then for the capital structure targets, we are well in line. Equity ratio are well in line. And here we also have to remember what we have done with the balance sheet. Stock and inventory coming down quite good. It is 130 million if you take Axe out compared to last year.
But we have gone away from selling invoices to a more cleaner financing structure, which makes it cheaper, cleaner, and better, but it increases the net debt EBITDA a little bit. Yeah. For the midterm targets, we haven't changed them. We are three, four years down the road. We really think that we can grow with 15%, 10% organic and 5% by acquisition, and that we will be able to reach above 9% EBITDA. Yes, thank you.
Thanks a lot for that, Fredrik. Let's move on to some questions then.
Yep.
So as you mentioned, the market has been a bit weaker in the past year or so now. But at least from my point of view, it seems like it's maybe flattening out a bit now. What are the current indications that you're getting from customers regarding when you might return to growth?
We have a mixed picture.
If we just look at book-to-bill, we were really low in Q4 last year. We were just above 0.5, and then we have step by step become better, so now Q3, we were almost on 1.99, so the market is, I agree with you, it has flattened out. It's not growing, but we think it has flattened out. We also have some leads out there, various customers raising their hands, starting to book again, so it's a mixed picture, but of course, as a total, and if we just mathematically look at how much they overspent 2022, 2023, our thinking is maybe H2 next year, that the growth will come back to this underlying growth, 6%, 7%, 8%. Yeah.
Okay, very good, and then digging into Enedo a bit more.
So since you acquired the company, you've successfully raised the margin from very negative figures to low to mid- single digits. And that's been accomplished by implementing quite a few organizational changes in the company and so. And now you say that you feel ready to maybe in Q2 move the factory over to the EMS part of Inission. Could you just explain what makes you ready now to make that move, how you've built up to this?
Yeah, you could argue whether we should have done this quicker or not. But the most acute things that had to be done with Enedo was right-sizing, and especially right-sizing of the Italian operation. They had an income there that was enough for 50 employees, maybe 60, and they were 120. So shrinking Italy has been the big chunk in the organizational thing.
It is so organized that the factory there was under the Italian management. It was even so that the production manager, the operational manager was sitting in Italy. We have to take it in this turn, organize up Italy, increase the competence in the factory step by step. Then also, since they have been doing so poorly, they were severely underinvested, both with machines and a lot of things, but also IT infrastructure. We have to change the IT infrastructure, and we also have to change the ERP system to become a modern EMS system. Those things, they take a while, and we are ready now. We have worked on that all the way. We think Enedo will be a lot more focused product development, marketing, and sales company now without the factory. They were not good at manufacturing.
We, Inission, are specialists in manufacturing. So they will gain, Enedo will gain, but also Inission will gain having this access to a low-cost factory. Typical operator cost, that is EUR 2 per hour in Tunis. Same time zone, it's only three hours away with a flight from here if you compare to going to India and China. And there are also a lot of customers in Europe that are not so happy about China anymore. So here we see a clear potential of actually some of the volumes that are coming back to Europe, maybe we can allocate them to our Tunis factory.
All right, very good. And you've said previously that long term, you think Enedo can have a higher margin than the Inission segment being an OEM company. Could you just explain what the more longer-term changes that need to be made to get to that point?
Yeah, that is coming from the logic that the product owner, if they develop their product in a good way, market and sell them in a good way, they should be able to have a technical advantage. And especially the Italian side of Enedo, they have really appreciated technical solutions that the customer really appreciates. And they are willing to pay premium for these skilled engineers there in Italy. So now it's a matter of management and scale. But on a higher level, a product company should be able to earn between 10 and 20 even maybe EBIT compared to a subcontractor like Inission. If we go too high in price, there will be Kitron there or there will be NOTE there. So it's more difficult really to shoot out and have a clear advantage. We have to take our advantage with customer contacts and process efficiency.
But Kitron is also very good at process efficiency, unfortunately. So that's where the logic is coming from. Not more scientific than that, no. All right.
Thanks a lot for that. That's all we have time for.
Thank you very much. Thank you.