Welcome, everyone. My name is Henric Hintze. I'm here to moderate the Capital Markets Day of Inission today. I'm an analyst at ABG covering the company. With me to start us off, I have Fredrik Berghel, CEO of Inission. Fredrik will start by talking a bit about the company, then we'll move on to the business area managers and the CFO to give some comments as well. After the presentation is done in approximately an hour, we'll move on to a Q&A session. You will all have the opportunity to type questions in the Q&A chat, and I will read out your questions for Fredrik and the others to answer. With that, I hand it over to you, Fredrik.
Thank you very much, Henrik. Welcome to Inission Capital Market Day. I am Fredrik Berghel. I and Olle Hulteberg, we started this company, founded this company, soon to be 18 years ago. We are still main owners, and we are still both active in the company, myself as the CEO and Olle as the chairman. Inission Group today consists of Enedo Power Supply Company. They develop, marketing, and selling and manufacturing power supply. And old Inission, contract manufacturing of industrial electronics. Both these business areas are into high-end customized industrial electronics. All Inission customers use power supply for their electronic applications. And a lot of Enedo customers are actually using EMS services to produce their products. That is how we see the logic that these two business areas work together. As Henrik said, I will talk about the group.
Our business area manager, Mathias Larsson, will talk about Inission EMS. Kalle Huittinen will talk about Enedo OEM. I will revert and talk a little bit about our growth and acquisition strategy. At the end, there will be John, our CFO, John Granlund, telling you about our financial performance and our financial targets. Also, of course, at the end there, there will be a Q&A session. Both myself and Olle, my business partner, we are strong believers in a value-driven company. We think that if the noses of our 1,000-plus employees are directing somewhat in the right, in the same direction, we will have an enormous force. Our set of values was created when we launched our brand name, Inission, in 2011. At that time we were not that big a company, so we actually talked to each and every employee of Inission.
How do we want to be perceived against suppliers, against customers? How do we want to act against each other? These four values, they were the condensed of all those discussions, all these workshops during 2011. It crystallized their flexibility, trust, precision, and attitude. We tried to live by those values, not only as posters on the walls. Really, we tried to, that should be our backbone. All new companies that come into the group are educated in this. All new employees are educated in this. We do an education program all the way from the board down to each and every employee of Inission. Even on the level that in the daily steering morning meeting in Munkfors, the boys and girls, before they start the shift there, they discuss, what did we do yesterday that was really in line with our values?
Did we do something that was not in line with our values? If we can get there in a lot of our factories, I think we have come far. Sustainability is getting increasingly important. I, myself, think especially carbon dioxide is, of course, the most critical one. Inission, both Enedo and Inission EMS production is quite environmentally friendly. We do not have so many issues there. We have a lot of electrical processes. We do not use up too many chemicals. Our transportations are not that heavy after all. The environmental side of sustainability, we have reached quite far. Of course, sustainability is a lot more than environment.
Here we have created goals and sustainability goals that are lining with our business goals, meaning that we are in our annual reports telling you about how we develop our customer satisfaction, employee engagement, health present, and also environmental parameters. What we have been focusing on the last few years is to become CSRD compliant. There are some discussions now how this will move forward, but our ambition is actually to be fully CSRD compliant during 2025, being able to report that early 2026. I really see Inission as a growth company. Our first full year when we were Munkfors only, we were doing SEK 74 million in 2008. Now last year, close to SEK 2.2 billion, meaning that we have been growing 29 times since. If we measure only the part that we have been public in 2015, our average growth rate has been about 25%.
We are really proud that this quite rapid growth, we have maintained profitability. We have been profitable about 5% EBIT level. You see, of course, 2021 there. I regard this somewhat technical because the annual report we handed in, we were K3 at that time, so we only took our portion of the Enedo losses. When we recalculated using IFRS, consolidating the full Enedo figures, it became a minus. Still, I think we have made a fantastic journey here. Looking at our shareholder value creation, we started at the IPO there at SEK 100, and we have done some split, but this is normalized to 100 with index. I think we have a decent development over these almost 10 years now. On top of this share price development, we also have made cash dividends.
We actually were one of the main owners of Incap a few years back. When we realized we were not able to merge those companies as we wanted, we paid it out as a dividend to our shareholders. All Inission shareholders actually got 1.44 Incap shares. Those that were smart enough to keep those have created more than double of this, 365% here really. They have been doing good. Maybe you saw our press release Friday that Nasdaq has approved our application to change list, moving from Nasdaq First North to Nasdaq main list here in Stockholm. We think this is a very natural step for us now when we are where we are. The original idea being a public company really came from me and Olle being entrepreneurs. We wanted our coworkers also to be able to be shareholders.
Being public is perhaps the only reasonable way of achieving that. We also had the idea that the market is fragmented. It should be a possibility to make acquisitions. If we can use our share as a currency doing acquisitions, that would be something smart. We also had the idea that being public should create more visibility, which would be people in media should recognize us more. Now, 10 years later, we can perhaps, yeah, our employees to be shareholders. We have really achieved that. We have an annual warranty program. All of our managers, more or less, are shareholders. A lot of the rest of our employees are also shareholders. We achieved that. Using the share as a payment in acquisitions, it's a bit difficult. Small share, bad liquidity, and we have problems there.
By going to the main list, we think that will improve liquidity, better liquidity, we will have smaller spread. Smaller spread, we will have a less volatile situation. By doing this, we should create confidence, actually, so that the share could be that currency that we once had the idea of. We also think going to the main list will give us more recognition in the media so that we are seen, we're heard and seen a little bit more, especially vis-à-vis customers, but also vis-à-vis suppliers. We think that will be a gain for our commercial benefits. Now I will hand over to our Business Area Manager, Mathias Larsson, to talk about our EMS side of our business.
Okay, thank you, Fredrik. My name is Mathias Larsson, and I joined Inission in 2023. Since 2024, in April, I'm the head of the business area Inission EMS, which is one of the two business areas within Inission Group. I started my career in the aerospace industry, so that's where I've got my professional training, so to speak, working within manufacturing management and project portfolio management, which I would say is my professional background. In the last 14 years, I've been working within different managing director roles in various industries, such as electronic manufacturing services, hydropower business, and supply chain to the automotive industry. My educational background is a Master of Science in Production Engineering. I'm very pleased in joining Inission EMS. It's been a company that I actually worked for a couple of years in the beginning from 2011 to 2014.
A lot has happened with the company since I left in 2014. I'm really happy to be back. I believe in building structures to add simplicity and to build a culture with an attitude to win that goes through the organization. I'll just briefly take you through Inission EMS as the business area. Inission EMS is a total supplier, meaning that we are striving to add as much value as we can in our customers' supply chain. We provide manufacturing services within the electronic manufacturing service industry, but also in sheet metal fabrication. Today, we are approximately 700 employees. We do believe in a strong proximity to our customers. That's how we have built the company, and that's why we have this spread that we do have with factories in the south in Sweden, factories in the western part of Sweden, and factories in the Stockholm area.
It all started, as Fredrik said, in Munkfors. That is the first and the mother plant, so to speak. We have similar capabilities in Løkken, Norway, and in the western part of Sweden. In Helsinki or Loja, outside of Helsinki, and in Estonia, we do have our sheet metal factories. I should also mention that we are about to add Tunis. As you see, Tunis is an Enedo factory at the moment, but will be an Inission EMS factory starting May 2025, in just a couple of weeks. That will add something new to our manufacturing. In Tunis, we are aiming to build high volume, low mix, whereas in the other factories, we are building high mix and low volumes. This will open up new segments and new markets for Inission EMS, which we really look forward to.
Our customers are Scandinavian-based, but with a global footprint, and typically within the industry sector. That means that we are shipping all over the world. We are aiming to get more work added to our customer products, moving from printed circuit board assemblies to more box build and more logistical services. We know from experience that the more we do to our customers' products, the happier the customer. Talking about customer satisfaction, which is, of course, one of our main focuses, we also know that building strong relations with our customers is key as well to understand our customer needs. Of course, performance is also key: on-time delivery, quality, and efficiency. We want to be part of our customers' success and to enable them to be strong on their markets. Inission EMS is very much an acquisition story.
We have added one company every year since the start in 2008. The most recent acquisition is AXXEL in Halden, and then Tunis that will be acquired from our sister business area to Enedo. We have a structured process for adding new companies to our family, which is key since we're doing this now every year. What we do is that we apply our business model, which is our mission is to have the most satisfied customers by acting through our values, which is precision, attitude, flexibility, and trust. By applying our principles in every decision that we make every day from the shop floor up to the board. Our principles that we are applying are standardized work, quality, flow, customer value, meaning that we should always add value to our customers. Maybe the most critical one that applies to everything, which is the learning organization.
Acquisition is part of our strategy and will be, but of course, organic growth is also very important. We do have an organic growth as per today of 4%, and we are not satisfied by that. We are aiming to reach at least 10% organic growth, which we do not think is achievable. As I said before, we are striving towards taking a larger and larger part in servicing our customer. We have added resources for development within the Inission EMS system so we could help our customers with design for manufacturing and design for sustainability. We could also help our customers with managing their product portfolio. In all our factories, we do have prototype. Prototype is key in order to achieve new business. That is where it all starts when it comes to customer relation.
Coming into the customer values with efficiency and quality and on-time delivery, industrialization is key and something where we would like to be involved a lot with our customers. The lion part of our sales, of course, comes from manufacturing, but we see that we are receiving more and more opportunities within the aftermarkets driven partly by sustainability requirements where it is better for the environment if we take the products back and refurbish them instead of building new ones. We are very proud of our customer portfolio. We see that we have many customers and not that much exposure to really, really big accounts. Our largest account is only 10% of the total sales, and we have 37 key accounts that stand for 61% of the total sales. We are also in a lot of different segments, so we are resilient to any fluctuations in certain areas.
Looking to the future, we would, of course, like to take more part of the really, really strong growth that we see in the defense sector at the moment, and we are working to take a bigger part of that. In the longer term, as Fredrik mentioned, there are mega trends in electrification, in communication, and I would say also in [Amentic]. I would like to go through a few or just two customer cases just in order for you maybe to more understand what we are doing. Falcom is a Danish customer owned by GN. They are a company that started 2021 that will supply or are already supplying special forces all around the world with communication equipment. Being a startup, there are requirements on industrialization, customer adaptations, and a very high ramp-up.
In this customer case, we are working in close cooperation with the customer in order to fulfill their manufacturing needs. The products going to special forces will be put into really harsh environments, of course, and will put the highest quality standards for us. This type of equipment cannot or will not fail in the field. Another harsh environment is mines, and this is my next example. Epiroc is a Swedish supplier of mining equipment where we supply control systems, computers, RF boards, etc., at least 250 different unique part numbers that go into their mining machines that are shipped all over the world. Electronics in a mine, for these people who know electronics, that's maybe possibly the most harsh environment that you can think of for electronic equipment. It puts a really, really, really quality standard high for us.
Epiroc also, of course, a Swedish industrial customer that puts the highest requirements on on-time delivery and efficiency. They help us to improve. Another future customer will be Enedo. We will supply Enedo products from our Tunis factory. I will welcome Kalle.
Thank you. Hello everyone. Nice to be here. And thank you, Mathias, for introducing me. My name is Kalle Huittinen. I am the business area head for Inission Enedo business. I'm a Finnish citizen, 53 years of age, and I've been in this electronic and electrical engineering business for roughly 25 years in various leadership positions. As an educational background, I have an MSc on industrial engineering and management. To my professional experience, as a way of introduction, I've been working for a company called ABB for many, many years.
From 1996 to 2023, I worked there in a number of local and global management positions in many different businesses, such as high-voltage power systems, medium-voltage products, distribution automation businesses, motor and generators, and drives businesses. In the fall of 2023, I had the pleasure of joining Enedo, and I took my role, my current role there as the Business Area Head for the Enedo business. Now, Enedo is a business and company which is designing and manufacturing power supplies for industrial and utility and infrastructure customers. The power supplies, they are a really, really critical part of electrical systems and electronic systems. What they do, they supply electricity to different kinds of electrical equipment, and they also convert the electricity into the way that is required by those equipments. It is really a crucial part, a reliability-centric part of a power train, as we say.
Enedo's product portfolio is covering a number of products. We have the AC and DC power supplies, LED drivers, and DC power systems as our main product lines. The power supplies are devices that, again, they supply the electrical equipment. The LED drivers, as you could expect, in turn, they are a special type of power supplies that are used in the lighting applications, driving the LED lighting systems. The DC power systems, the third leg of our business, are systems that consist of many individual power supply devices, and they are installed in the systems in cabinets or racks, which then provide a fully functional system for the customer. Business volume-wise, Enedo's revenue in 2024 was approximately SEK 450 million.
If we look at how we are located in terms of our footprint, you could see that we have two R&D and sales centers, which are located in Finland and in Italy. We do have a customer support and sales organization in the U.S. We also, as Mathias was mentioning, have a factory in Tunisia, which is now being transformed into the Inission part of business. As a result of that, Enedo will become a clearly focused product company focusing on R&D, sales, and customer support along our product lines. Looking at our customer base, we do have a strong presence in the EU and in the U.S. Around 60% of our sales go into the European Union or the European region, while another 30% is attributable to the U.S.
Product line-wise, we could say that in the range of 80% of our business is power supplies and LED drivers. In this business, typically, our customers are product owners. They are OEMs who are manufacturing their own products. What they do, they integrate our devices as an integral part of their own production systems. The remaining around 15% of our business has to do with the DC systems. There, our customers typically are end users of the systems or system integrators. These customer types, they use our engineered systems in the electrification projects or in their electrical installations in different critical power-related applications. Enedo has been around in this power supply business for 50 years. The company is rooting from a Finnish company called Finlandia Interface back in 1975. The company became Efore then in around mid-1990s.
At that time, the focus of the company really was on serving the telecommunications sector with the power supply solutions. In 2013, Efore then acquired Royal Electronics of Italy. The purpose of the acquisition was to enter into the industrial segments and to diversify away from the pure telecom at that time. The next acquisition took place some years later when Efore then acquired PowerNet, a company of Finland, and that helped Enedo to get further into the industrial power supply space. Efore took the decision to exit the telecom business, and this is when Enedo was formed as a standalone company focusing on the industrial power supply. Some years later, Inission became a shareholder in 2021. Since 2024, Enedo has been fully owned by Inission Group.
Today, Enedo is one of the two business areas operating under the helm of the Inission Group. Like with our colleagues in the EMS side, also we have a very diversified customer portfolio. If we look at our customers, they are spanning across many different applications and in different geographies. If you look at 10 of our largest OEM customers, they bring us around just 60% of our sales. There are a number of other customers, emerging customers in our portfolio, which we are serving as well, obviously. If we look at the customer markets, we could see that around half of our sales go into the industrial space, into which we would include here the industry and automation segments, the display and the test and measurement systems.
This industrial area is such where there are many customers and many interesting applications and subsegments where we can provide value with our customized products. Such an application could include, for instance, automation systems for process industries. It could be medical devices needing a power supply. It could be large video displays. It could be vending machines and so on and so forth. Another important customer segment are the ones who are dealing with the lighting. Lighting business is around 25% of our sales. This lighting business is a very large customer, obviously, for our LED drivers, but they do also purchase some other products from us. When we talk about the lighting business and the LED in the context of Enedo, it's good to notice that we are working in the high power segment, which is a niche segment.
These lead installations are typically used in demanding applications with a large scale, being those sports arenas, for instance, airports, other large public spaces like that. Infrastructure makes up some 20% of our customer base. That is really a stronghold for our DC system business. What we typically do there, we supply these fully engineered systems to customers' critical power supply applications. One example could be a power grid where the automation of the critical power grid is backed up by systems provided by us. On the transportation, a few words. It is a very interesting and emergent segment. For us, there is a strong development towards the electrification of trains. There we are present with our products, both in the rolling stock or the train applications, but also in the track side applications as such.
The electrification trend of trains is for new builds, obviously, but it also includes a very interesting retrofit market where we are also present with many of our prestigious customers in the rail area. Looking at our customer base a bit more holistically, we could say that the common nominator with many of our customers is that they require highly reliable supply. This is what they do. This is why they turn on to us, and this is why we design these products together with our customers to match that application. A large part of our business is about custom design business. The reason being that in many cases, our customers see that having a purpose-built device is the best way to achieve the best integrated performance and reliability for their own application.
Now, when we talk about the customer business, we see that it is actually our stronghold, the capability to design and deliver customized solutions to our customers in an industrial scale. There, the very first and very important element of being able to do that is to have the technology in-house that provides the track record in these demanding applications. Now, as mentioned, we are often working with very critical applications where the power just must stay on. We cannot take the risk of not being able to have a product that will work under any circumstances in the application. It is very helpful there to have technology elements in place, which have been pre-tested, pre-used, and customized and modified for the application.
Having the track record of a reliable technology and capability to adapt that, it's really a stronghold of our company, as seen by our customers. Now, as we develop these customer solutions to our customers, what it really means is that we are working side by side with the customers, with their technical specialists who really understand the customer's application inside out. For us, this is a great method of working because it provides us huge learning opportunity as well. In turn, the more we do the customs, the more we learn the specifics of different applications. This, in turn, makes us even more stronger in the specific niche applications where we are focused on.
Also, it's important to notice that the customer relationships are very long because as we do the products together with our customer, we typically continue with the business all the way throughout the entire lifecycle of the customer's product or application, which can be years or even in excess of 10 years. To be able to work there in an effective way in doing the custom business, it's very important that we have the product platforms which we can utilize because this, again, gives us a very high reliability from the very beginning. It also radically shortens the time to market for the new customer-specific application. We do the design work by our in-house R&D, which is focusing on the core of our products.
If need be, that can be also then supported with the external partners in R&D for doing the peripheral designs around the core that we keep in-house by ourselves. Finally, to our success, greatly contributes the fact that we are part of the Inission Group and we can tap directly on the manufacturing capabilities of Mathias' EMS business. This is something that our customers value for us being able to together provide a large comprehensive solution, not only for the design and custom, but also for the full-fledged manufacturing and supply operations. As mentioned a couple of times already, Enedo has this Tunisian factory, which now very soon will be part of Inission EMS. This will be a great step forward as well because it provides even better capabilities out of Tunisia for not only Inission EMS, but also Enedo's current and future customers.
I would also like to end with a couple of examples of applications to give a bit of a flavor of what we do. Here you will see a video screen, which is located in the sports arena. This screen is made out of many, many LEDs, and these LEDs are powered by our power supplies. In this case, for the customer, when this was built, it is very important that we were able to integrate our power supply seamlessly into the construction of the customer. Secondly, obviously, very important, once again, that the reliability is there under all circumstances because the customer and the customer's customer do not want to have the experience of the public to be ruined by not having the display working in the way that is intended. Another example of custom designs has to do with trains.
Here you can see a battery management system, which is managing all the critical automation, monitoring, and signaling systems on board a train. This power supply is also managing the battery system, which is needed there to keep the power flowing in the train while it's in movement. This is a very demanding specific application as well. As you could see, the device is installed on the top of the roof of the train, meaning that being a very, very harsh environment for electronics. With the custom designs together with the customer, we can come up with the solution that is actually making this reliable solution in the way that is serving the entire train with this very critical power. I would like to summarize by saying that the electrification trend is there and the world is going electric big time.
Enedo is right there at the core of this trend as we are supplying the solutions for the critical power supply of the electrical equipment. This electrification trend, along with the increase of the intelligent systems that are being installed all over the world, provides Enedo with many, many opportunities to business for years to come. With that, I would like to hand back to Fred.
Thank you, Kalle. I will talk a little bit about our growth strategy and our acquisition strategy. I said earlier that Inission is a growing company, but the industry that we are in is also growing, driven by mega trends. There are various analysts having different ideas about the long-term growth of the industry, but some consensus would end up at 7% ish. Some mega trends have been there for a while now.
Some of these mega trends were reinforced by COVID, regionalization, for example. It started before COVID, but it really got the push from the COVID experience. The same goes with the Russian war in Ukraine. Electrification used by heating really got the push when the Russian gas became really expensive. That has really pushed electrification also into heating buildings of various kinds. The point really here is that Inission is well equipped, well positioned to capitalize from these mega trends. Kalle talked here about electrification that might be the most important driver here, and it has been there for a while and will be there a long, long time in the future. Also, electronics by itself being an enabler, more and more various types of products have electronics integrated, and that is, of course, good for us. On top of this, you have the automation, robotization trend.
You have the Internet of Things, machine talking to other machines. Everything is connected. Our customer, they collect big data in real time in order to be able to serve their customer with better products, more reliable products. All of this creates more jobs for us. We also see a clear trend going towards shorter time to customer and shorter time to market. Of course, not as short when it comes to consumer electronics, but still we have products that have been living there for 15-20 years. It is not consumer electronics, not at all, but still. With the setup of Inission, we will benefit from this. Over to some word about the acquisition. As said there already, we have been doing about an acquisition per year since we started. We look upon acquisitions almost like a sales process.
We call it, we have a pipeline of cases. We call it our stove, where we have cold, lukewarm, warm, and hot cases. Our ambition is to move these cases either forward or out. We have a well-established process for this. After the year, we think we have become quite good at it. Also, when we judge these possible target companies, the possible cases, the customer portfolio, that is the most important thing. Of course, we also try to evaluate the management culture so that you get as much overlap together with Inission as possible, financial history, financial potential. Next, what we look into is the geography, as mentioned earlier, proximity. We are a believer in proximity, meaning that we want to be close to our customers. We would not mind having something more up northern part of Finland.
Now I'm talking about the Inission EMS side of our company. Denmark is still a white spot for us, so we would like to be in Denmark, absolutely. After that, we have the idea of migrating further down in northern part of Europe. By now, we are actively scouting in northern Germany. That is the geography where we look into the most intense. When it comes to Enedo, we have been doing no further acquisitions there by purpose. We have made a turnaround on Enedo, but still we want Enedo to stabilize profit level, cash flow level, and to have a stable ground. It is really our ambition to do acquisitions also with Enedo because power supply industry, likewise to EMS industry, are very fragmented. There is a lot of room for consolidation there. Doing acquisitions, as said, we have a well-proven process.
During our DD process, we use that time not only to scrutinize the company so that we really know what we are getting and know what we are paid for, but also to create a list, an improvement list. When we take over, when we have handover of the target company, we already day one have a list there of what we want to achieve. The synergies there are quite obvious in many cases, not the least sourcing. All industry, all our industry is buying the components from the same worldwide component distributors. There we immediately can get our rebates, our payment terms, and our service level to the new company. AXXE in Halden, our latest acquisition, is a clear example of how that works really good. Some of these changes we implement directly. That could be reporting, financial reporting, KPI reporting, sourcing, as I said.
There are other items that take longer time. Being in the EMS industry, it's not easy. It's very competitive. You have to be good at what you're doing. You have to be disciplined. I often compare it to having 12 fine-tuning wheels. You have to take control of all of these 12 parameters and adjust them and adjust them and adjust them. When you do that really good, you are able to earn decent money. We have companies within the group that are doing double-digit EBTs. We know that. Correctly done, this could be reasonably profitable. Normally, it takes a few years to get there, though, typically three to five years. With that said, I would like to hand over to our CFO, John Granlund, to talk about financial performance and financial targets.
Thanks, Fredrik. Hello, everyone. My name is John Granlund, and I've had the pleasure to change positions over time. I'm happy that I moved to Karlstad with my family and joined Inission as the new Group CFO in September 2023. Prior to this, I held the position as CFO at Segula Technologies in Gothenburg with a Swedish footprint also in Stockholm, providing consultancy services mainly within the automotive industry. Before this, I have worked as Finance Director at Tranter International, a company owned by Alfa Laval, manufacturing heat exchangers. Before this, I worked as CFO at Infra Capital when they acquired FEAB, a DSO business energy company in the municipality of Falköping. Before that, working within Linde Engineering as a Finance Manager and a Gothenburg-based company building and engineering LNG terminals and any kind of infrastructure for energy businesses.
As you can hear, I have mainly worked with companies within the energy business and automotive. My study background is as an engineer and then a Master of Science in Accounting. Finally, also with an executive MBA at the University of Gothenburg. First, we will take a look at the group financials showing the yearly revenue and the EBITDA development. Our company's revenue has grown significantly from 2015 - 2024 with a CAGR of above 25%, which highlights an impressive long-term growth. Despite a slight dip in 2024, the overall trend remains very positive. The EBITDA has shown a strong recovery, especially the years after the dip in 2021 when Enedo was fully consolidated. Increased profitability with organic growth gaining from economies of scale and by cost control. Let's continue and have a look into the development of our EMS business.
It has shown an impressive profitable growth with a CAGR of about 22% from 2015 - 2024, driven by a strong, diversified customer base and strategic acquisitions, as said, on a regular basis almost every year. Our last acquisition, AXXE, was made in January 2024. They are located in Halden, Norway, and both by their presence geographically and also with a customer portfolio complements our business perfect. Inission EMS has significantly strengthened its position over the years with stable revenues and EBITDA margins, which we will expect to continue to improve over time. Over to our next business area, Enedo OEM. Enedo was acquired, as heard, in 2021 in order to broaden the offer and execute on substantial synergies. Enedo is a turnaround case, as you can see in the graphs, and we expect Enedo to become a solid contributor at group level going forward.
In 2024, EBIT landed at 2.8% and EBITDA at 9.3%, generating good cash flows. Soon, during Q2, we will finalize the reorganization of the Tunis entity to Inission EMS. The nature of this entity is a regular EMS plant, and this will streamline the business in both business areas, and the optimization will help us reach higher margins in both business areas. Net working capital and CapEx. Over the years, the group has had steady net working capital versus net sales at about 30%. In 2024, the net working capital increased more due to the transition from factoring to regular invoicing during Q2 and Q3, increasing accounts receivables with SEK 80 million, and in combination with the acquisition of AXXE, an additional impact of SEK 70 million. Excluding this, the corresponding rate would be at 28%. The work to optimize net working capital continues, and excluding AXXE, the inventories decreased significantly in 2024.
Hence, we will be back at lower levels going forward. Our CapEx comes with high utilization, and in general, Inission is a CapEx light group at 2% expenditure versus net sales. We are well positioned and with possibilities to increase utilization of existing capacity, not least since we are working mainly two shifts in most entities and to increase to third shifts or 24/7. You understand that this is a great opportunity. Also, with our Tunis EMS factory providing a modern alternative close to the European market. We have now invested recently for the future and increased our capacity in the south and the west of Sweden. Always taking into account sustainability, investing in modern technical solutions with minimum pollution, waste, and whenever possible, using renewables. Net debt and cash conversion. Inission maintains a strong cash conversion rate around 80%, reflecting efficient operations and solid financial discipline.
The cash conversion put us in a good situation for the procurement of bank services last year during Q2, which now will have full impact in 2025. This high conversion rate indicates that a large portion of our earnings are consistently turning into actual cash flows. It provides us to be flexible and reinvest, reduce debt, or to pursue growth opportunities. The net debt through stable earnings and positive cash flows amortization to net debt through EBITDA remains at healthy levels. Even last year through the acquisition of AXXE, SEK 27 million loans, transition from factoring SEK 80 million, and the amortization of the pandemic COVID loans at SEK 132 million. This is a very good development. Over to the financial targets. The board of directors have decided the targets for 2025.
We expect the revenues to be about SEK 2.2 billion, slightly above 2024, and the EBITDA margin to be at 6% versus 2024 at 5.8%. The net interest-bearing debt through EBITDA to be less than 2.5 times compared to our agreements with the banks regarding the covenants that allows us to be up to three times. The equity ratio should be above 30%. As seen from last year, we landed at 39%. Last, the dividend should be, when the financial situation allows for it, up to 30% earnings after tax. As you know, the board has proposed for the AGM next month that we will have a dividend of SEK 1 per share corresponding to 30%. The midterm financial targets are as follows. Increase revenues by 15% annual growth, of which 10% organic and 5% to acquisitions.
The profitability of 9% EBITDA through improved capacity utilization, operational excellence, and unification of the businesses. The net interest-bearing debt through EBITDA less than 2.5 times and equity ratio above 30%. By continuing to improve the KPIs through good cash flows and decrease of debts. This will help us continue with dividends up to 30% earnings after tax. Thanks. Now over to Henric Hintze at ABG for the Q&A session.
All right. Thank you all very much for that presentation. Now we're heading into a Q&A session. Anyone in the audience who wishes to ask a question, please type it up in the Q&A chat, and I will read it out. While you do that, I'll start us off with some questions of my own. First out, the question I expect everyone is typing in chat right now.
Tariffs have been a bit of a topic in the past few weeks, so I was wondering if you could maybe comment on how Inission is exposed to that and how we should think about that.
Yeah, of course, it's a really turbulent world out there. I think the most severe damage of this will be slowed down on the world economy. It will be an indirect hit on us. Of course, since a lot of our components are coming from Asia, we do assembly here, we send it out to the rest of the world, as described by Kalle and Mathias. If there will be tariffs there, various tariffs going from various countries, various tariffs, and someone sitting and judging where the most value add is, it will be a horror situation, really. Maybe we should ask Kalle having a big portion of this too big.
Failed in the U.S. Maybe you can say something about the U.S. situation.
Yes, thank you, Fredrik. It's very true what you said about the component flows and how that will be a big player in this. If I look at the value-added part of Enedo, our sales, out of our sales, approximately 30% go into the U.S. If you look at our value-added supply base, it's very much European-based, where there are the tariffs of 20% that have been suggested. Specifically for Tunisia, which is a big supply site for us as well, the suggested tariff was 28%. If you look at our footprint, I would say that we are not probably in the first place that we could be, but obviously there are topics really to address with the tariff.
What we are doing is we are in constant discussions with our customers, and we have a common target there to find as good a solution to our customers' competitiveness as possible. As of today, we do not have any specific indication from our customers of anything that would be in any meaningful way changing the way how we do business today with our U.S. customers.
Thank you. Yes. On that topic, we also got the question here in the chat. Do you have any idea of how your clients' customers are affected by this, the indirect effect on your business, basically?
No, what we do, exactly as Kalle said, both Kalle and Mathias and our organization, we try to get in contact, and we even use this as a reason to get the strategic high-level contacts with our customers.
So far, there is nothing like no stops and nothing like that. The indirect effect, I mean, they could be immense. There are some doomsday prophecies out there. Of course, if the world economy slows down and ends up in a recession, yeah, that would be very, very harmful for us, and that would be very harmful for everyone. Yeah, not so easy to have a clear answer there, but it's anything as good coming out from this anyhow, you know, it's really terrible. Yeah.
All right. Looking at the inventory situation, both for you and your customers, that's been a topic over the past couple of years. Could you just give us an update on how you view both your own inventory situation and your customers' inventory situations at the moment?
Yeah, I think we have had 2024 was the breaking year, and part of that comes from that we produced a lot 2022 and especially 2023. Some of that was overproduction, if you put it like that. Those things ended up, both for Inission EMS and for Enedo, they ended up at our customers' warehouses. Now they keep on eating down that stock. We are also keeping eating down our stock. I think that sort of reflects the situation because destocking is not just a thing to say when you have bad sales. No, but we can see our own stock is going down. What we are doing is exactly the same as what our customer is doing.
Our stock has come down quite a bit, and we think in a little bit smoother, easier world, we should be able to decrease from where we came from originally. We should be able to decrease at least 5%, even 10% stock measured over turnover then. Yeah.
All right. Looking at the medium-term targets here, the profitability target, could you give us a few more details on what needs to be done within the group to get to this level?
I think the most helpful, the most helpful thing is organic growth. That is extremely helpful for improving the profitability. Also, as John partly talked about, it's about utilization. Of course, if we have organic growth, we will have higher utilization, and we are equipped to run on a higher level. Then again, everyone is. What is different here then?
What we have to do until these higher volumes show up, we have to shrink in cost. Here we have some difficulties actually coming down at the speed we want. There are decisions all the way from the board via me, my business area managers and dripping down. It is not like the company managers are running up there and saying, "Hey, I want to cut like this or cut like that." You know, it has to be organized, structured, and we are shrinking. We are, as we speak, shrinking quite a bit. We have ongoing discussions with the unions in Tunis, as I have talked about earlier, as well as in Italy. We have reduction plans. We will, sooner or later, adapt our cost level to the income level. Unfortunately, it takes a little bit longer time than my ambition level. Yeah.
Yeah, okay. On organic growth, your target there is also a bit higher than maybe it's been historically. Could you tell us what are you changing to get to a higher organic growth level?
I think partly that our quite fast acquisition rate has been that has not helped our organic growth because acquiring company, and I talked earlier about customer portfolio being the most important, and we really tried to scrutinize that. It so happens that we get on board customers that are perhaps not super duper initial customers. After a few years, they tend to leave us, and that has been on the minor side. Now focusing on doing acquisition in a little bit slower rate and really trying to put back energy, investing in sales and marketing. That is what we think will help.
But also, of course, having a really efficient, high-standard production units so that we have top-level performance that we can offer our customers. Yeah. I have also earlier talked about that we are going towards bigger business units, and I think that will also be helpful. You will see that over time. Now we have a breaking situation. Profits are coming down, but then I think later, maybe later HQ this year, or we will see. Now it's a really turbulent world, but we will see. Later when volumes are coming back, this bigger business unit of ours will be, it should be possible to produce higher margins.
All right, all right. Speaking of M&A and such, maybe before we get into that a bit more, could you just tell us a bit more about how the group is structured? What parts are more centralized, what parts are more decentralized, and what incentive structures are in place to ensure performance in the decentralized parts, things like that?
All in all, one could say that Inission is extremely decentralized. Our daughter companies, our company managers, they are kings and queens in their areas. They are really responsible for their operation, for the customer, full profit and loss and balance sheet responsibility. They are measured and incentivized by that. This company manager in Inission Group, they are incentivized on profit and on cash flow, half coming from their own company and half coming from the group. That is how our incentive system looks like. All right. Also, sorry, which part is centralized? I mean, all companies are fully equipped with all the functions needed: sales, sourcing, HR, finance, and everything. They are really standalone units.
What we try to do is help out with central sourcing to do contracts on a high level with these component distributors that I talked about that we do. We also have central sales working on a high level without having any connection with the factories, being able to do sales, marketing, and sales. When they get the lead and the possible business, they are independent. They are factory independent. They will be able to put the job or the quotation at the factory that has the highest probability to get the job.
All right, all right. On the Tunis factory move that you're currently carrying out, moving it from the Enedo segment to the Inission segment, I think you said that will be concluded in Q2. Is that?
That is our ambition.
Yes.
That is absolutely our ambition.
Yes. Could you just tell us a bit about what you have done with the Tunis factory since you acquired Enedo and what makes you feel that now is the right time to move it to the Initial segment?
Yeah, I think we should ask Mathias here. He's actually an import, he's the receiver of the factory, and he's been very important in running this project. That took a little bit longer time and took a little bit more effort than we anticipated because the factory there was underinvested, undermanaged. Just changing the ERP system took us almost a year. We are getting closer.
Yes, yes, yes. You are mentioning quite a bit of it. Tunis factory being an OEM factory for Enedo, it was maybe not really suitable to bring customers to.
What we have done is that we have made it more suitable for customer visits, customer audits, bringing in quality systems that are suitable for external customers. We have invested quite a lot also in equipment and machinery. We are having an investment plan to take it even further, but we've taken part one of it. We do believe that we are ready now to sell the capability. We are actually, we have one or a few external contracts that will end up there eventually. You have already started looking for external customers for the Tunis? Yeah, yeah. We have had external visits there, and that's going on.
Okay, very good. Thank you. You mentioned you've invested quite a bit in the Tunis factory. I think you've also expanded the Malmö factory recently. Do you think that the investment level going forward from here will be a bit lower than it's been in the past couple of years?
Yeah, definitely. It was, I clearly remember myself and all the company managers being in Tallinn, Spring 2023, you know, and the big question was, how should we get machines enough? How should we get square meters enough? How should we get employees enough? You know, and that was Spring or May, May 2023, and now we are here, April 2025, and the situation is very different. I think we have made some moves. We have equipped our sheet metal factory in Tallinn to the highest standard. We have taken away bottlenecks, and we can do a lot there. We have improved both, as you said, the Malmö factory has increased square meters.
We are also investing in Borås now, moving not to more square meters, but more efficient square meters. The ratio between office and production is very much better in the new site. Since we are moving to a new site, we are also setting it up as a really good flow situation there. Yeah, I think it will be definitely slower. Yes, until speed picks up again, and we will need that. As John said here, most of our factories are running two shifts only. We have also well-loaded factories. I was in Munkfors last week, and they are running four shifts, seven days a week. They only shut down between two o'clock in the night and six in the morning, seven days a week. They are running high speed there. It is not all loomy. There are lights there also, yes.
Okay. We have some follow-up questions on tariffs from the audience here. One question is, initial sales directly to the U.S. are not very high. Do you have any idea how big your customer sales into the U.S. are?
I don't have a figure out of that. Of course, some of our customer products will eventually end up in the U.S., but that will not be the majority. Most of what we are selling to our customer, that goes to Europe. Yes, there are important sales also and further sales. Still, even if our, as I talked about earlier there, if the world economy slows down, then our European customer, they wouldn't need this industrial electronics because, and then step after step. It's difficult. It's really difficult. My thinking of it on a high level is that we sell mining equipment.
Most of that will not end up in the U.S. We sell systems for marine applications to Kongsberg. Most of that will not end up in the U.S. There are, and the customer Mathias talked about here, Falcom, they have actually, they have sold to the U.S. Army, but now they further say they are looking into the European market.
Do you see any scenario where Enedo, who does sell directly to the U.S., might have to look for production options within the U.S.?
If this becomes extremely complicated, yes. However, what we think now is that this will be relative competition. Us being in Africa, selling via Europe to the U.S., we bringing in components, sheet metal, other stuff here at zero tariffs.
If these things have to be brought into the U.S. with 100+ tariffs from Asia or China, they will not have a competitive edge actually putting our value add in the U.S. That would be far down the line. That would be my expectation, yes. You will never know which tariffs hit which types of components or products. It is extremely difficult.
Another question from the audience here. Do you think there is a risk of oversupply in Europe due to the rapid increase in supply in Europe in the last decade?
If you mean as a consequence of the tariffs?
I do not think this was specifically related to tariffs. Feel free to clarify the question, the audience member who asked it. I think they are talking about that the supply of your kind of services has increased in Europe in the last decade. They're wondering if there's a risk of oversupply in the meantime.
No, I think really that the oversupply was 2021 partly, but then 2022 and 2023. Now we see a supply that is actually, I think, even lower than the actual demand. That would be my idea about this. Our customers, as we said earlier, they are eating stock now still. Especially on the Enedo side, we are for sure that they are eating stock. Meaning that we are actually supplying less than the underlying need at the moment. The market's idea here, my colleague's idea about this is that somewhere H2, everything else alike, somewhere H2, this will pick up again and normalize and follow this 6%-7% trend that I talked about. There is one analyst in Germany that is following Dieter Weiss.
He's following this really, really closely, and he's calculating about the underlying trend, the demand, the capacity, and everything. His idea is Q3, Q4 that we have catched up because the need is still there or has been. What will happen with the turbulence the last weeks, that I don't know.
Yeah, another question from the audience on that. Do you think tariffs can speed up the movement from China to Europe and that that might even be a positive effect of this situation?
Yes. If so happens that China starts to, because Chinese EMS industry is selling a lot to the U.S. Of course, in one scenario, when they have to do, they have to get rid of their capacity, they would start to dump prices in Europe.
If Europe does the U.S. trick and starts with tariffs, that could get to that scenario. That will push regionalization even further. That will be positive for us in one way because comparatively we will be better off. From a world economy perspective, I am a strong believer in free trade, world economy. At the end of the day, I still do not think an escalating tariff war, trade war is beneficial for anyone, really.
All right. You mentioned your M&A strategy earlier in the presentation. You said you are looking a bit farther down in Europe, northern Germany and such. With the balance sheet where it is right now, what potential timeline do you see for your next acquisition?
I got that question the other day.
I met an investor and I said, "Do you think there will be anything this year?" I said, "Normally we are doing one acquisition per year." I am quite confident that we will do something this year, absolutely. That is our target and we have a pipeline that is supporting that idea. We have inbounds also filling up that pipeline. We are scouting actively. Absolutely, there are possible cases, absolutely. Of course, we have a loan capacity now being on 2.4 and a covenant at 3.0. There will be room for acquisitions in our balance sheet now. Of course, if it breaks even harder and EBITDA falls for various reasons, yeah, it will be a different story, of course. At the moment now, we really have the possibility to do medium-sized acquisitions.
That is what we target for, 50-300 turnover cases. That is our sort of sweet spot. All right. Another question here from the audience, likely related to tariffs.
If manufacturing moves to the U.S., what do you think the risk of long-term oversupply in Europe is because of that?
I think maybe it's a boring answer, you know, but it will take so much time to build these factories in the U.S. to produce all these goods. It will take a lot of employees to produce all that stuff. Now we are not only talking about electronics. We're talking about everything that is coming from around the world. According to my knowledge, it's only a few % unemployment rate in the U.S. I think this will sort of just stop by itself.
Already a few days now after these extreme levels were announced, iPhones are exception, that are exception. I think it will come down to a more normal. I think this will normalize and the damage from unpredictability is caused already, of course. Massive production movements from the U.S., I do not think of. Four years is after all a short period. It will take these four years. A lot of people will realize that it was not a good idea that Americans would sit there and manufacture their own T-shirts. It is simply a bad idea. I think it will correct itself. That is my belief. I think unfortunately we will not get there. That is my prediction. All right. One other hot topic recently has been the big moves in the defense industry.
Could you maybe comment a bit more on your defense exposure, what you're seeing there, and what opportunities for growth you think you have there?
Yeah, we have a few % into the defense industry. We have interesting leads. We have interesting quotations. So far, we have nothing that says pang. We also have those quotations now. We have good hopes that we will be able to support the defense industry in a new level. What we are doing now is communication. We have shielded computers. Mathias talked about Falcom, communication system. We have really advanced positioning system that we are doing for Kongsberg. Those can be used for positioning commercial ships, but also for military ships, of course. That will be a gray zone there, really, how that type of equipment is used. We have a set of customers.
We have some leads also into we have worked on to get into Saab for a long, long time. We have some small business going in there. We are constantly onto this issue because we realize, as everyone, that the defense industry will boom for a long time. For a while, it was not sustainable. I think most people now these days realize that it is sustainable to defend yourself. We do not have that sort of issues. We would gladly help Saab or Kongsberg or Rheinmetall or anyone, you know, building electronics for them. Absolutely.
All right. Very good. I think those were all the questions. If you have any final remarks, please go ahead. Yes. Thank you for everyone that has been listening into this and taking your time.
Thank you all from us here at Inission.
Thank you.