Ependion earnings for the third quarter of 2026 showed sales rising 22% organically to SEK664 million and EBITA increasing 43% to a record SEK95 million. The October 23 results discussion highlighted stronger profitability across both businesses, but orders lagged shipments and management warned that electronic component supplies were becoming harder to secure.
Key Takeaways
- The group’s EBITA margin rose two percentage points to a record 14.3%.
- Westermo led growth, supported by energy-sector demand, while Beijer Electronics continued its margin recovery.
- Orders trailed sales, and management is prioritizing delivery capacity over reducing inventory as component supply tightens.
Table of Contents
- Ependion earnings grow faster than sales
- Energy demand supports Westermo’s expansion
- Order intake trails shipments, but rail demand remains stable
- Tighter component supply tests pricing and inventory
- Conclusion
Ependion earnings grow faster than sales
The increase in EBITA outpaced organic sales growth, showing that higher business volumes translated into stronger operating profitability. Demand improved across segments and geographies, although the pace differed between the group’s two businesses.
Westermo reported 30% organic sales growth and record EBITA of SEK81 million, with an EBITA margin of 18.7%. Beijer Electronics recorded 10% sales growth and 11% order intake growth, while its margin reached 13.3%, marking a third consecutive quarterly improvement.
Management described the manufacturing improvement as more likely a general recovery than evidence of market-share gains. CFO Joakim Laurén cautioned that one quarter was insufficient to establish a trend; the improvement was concentrated in North America and Asia.
| Item | Details |
|---|---|
| Group book-to-bill | 0.85 in Q3 2026. |
| Westermo book-to-bill | 0.79 in Q3 2026. |
| Free cash flow | SEK60 million, double the year-earlier level. |
| Net debt/EBITDA | Improved to just below 1 times. |
Energy demand supports Westermo’s expansion
CEO Jenny Sjödahl said Welotec’s position in substation automation and virtualization was the main driver of strong energy-sector ordering. She also described growing cooperation between Welotec and Westermo, with utility relationships creating opportunities to offer Westermo switches and routers.
The strategic rationale predates the quarter. Westermo’s April 2025 Welotec acquisition agreement announcement described plans to combine industrial edge computing with data communications and expand the joint substation-automation portfolio. That announcement provides context for the complementary product offering, rather than evidence of the latest quarterly performance.
Laurén acknowledged that Welotec’s gross margins were below Westermo’s average and therefore diluted the mix. Nevertheless, he said overall gross margins remained stable and Welotec contributed positively to Westermo’s profitability.
Order intake trails shipments, but rail demand remains stable
Group order intake grew more slowly than sales, leaving the book-to-bill ratio below one. This means new orders did not fully replace the value of business shipped during the quarter, a distinction from the strong reported sales growth.
Westermo’s order pattern was particularly uneven. Sjödahl cautioned against interpreting quarterly train orders as a direct measure of underlying demand, which she described as stable and slightly higher year over year. Train customers continued to hold multiyear backlogs, although some faced operational difficulties delivering their own products.
Defense opportunities remained less predictable. Management described active customer discussions and additional capabilities being built gradually, but said the timing of orders and sales was difficult to forecast.
Tighter component supply tests pricing and inventory
Sjödahl said longer lead times, price increases and allocation pressures were making component procurement more difficult. Ependion had not experienced shortages or production stoppages, but she could not rule out future disruption.
The company was prioritizing its ability to deliver rather than minimizing inventory. Free cash flow nevertheless doubled during the quarter, while leverage improved.
Management said most component cost increases had been passed through to customers, though long-term contracts prevented full recovery. Further memory-price increases could test customers’ willingness to absorb higher prices. The intention remained to pass on all cost increases, not a guarantee that this would be achieved.
Conclusion
Ependion’s record quarterly margin came alongside stronger cash generation, but order intake and component availability remain the key checks on that progress. The next quarterly results will show whether sales momentum can be sustained without sacrificing delivery reliability or cost recovery.
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