Ependion AB

Thank you very much and welcome everybody to Appendion's Q4 report presentation. So as usual it's Joakim and myself. We are down here in Malmö today and the agenda looks the same as usual. So I will start with giving an overall business update. Then Joakim will move into the financial performance more in detail and then I will take the concluding notes and outlook and after that we will open up for questions and answers. So, looking at this quarter, well, first of all, we see that the market environment is largely unchanged compared to previous quarters in 2025. The geopolitical uncertainty remains, so that we can conclude. Nevertheless, order intake increased in the quarter by 12% and adjusted for the Velotech acquisition and negative currency effects, the increase was 4%. Vestimo had a good quarter. If you remember, we had a weak quarter in the quarter three, driven by weak order intake from the train segment. a little bit similar to last year that order intake bounced back now in this quarter so that was good to see and as we have pointed out many times order intake especially from the train segment can vary a lot from quarter to quarter Bayer Electronics showed growth adjusted for currency with three percent and the positive sign there is that the core offering which is of course part of the new strategy to be focusing on on the HMI product family that increased by 7% in currency adjusted numbers. Sales increased a little bit by 1% adjusted for acquisitions and currency. We saw a decrease by 2%. The Vestamo growth was in this quarter thanks to Velotech who had a good development. Whereas Bayer Electronics was impacted quite a lot by the phased out products that we have been talking about before compared to last year. That effect was actually some 20 million in the quarter and we didn't manage to compensate for that in this market environment. Due to the relatively weak volumes earnings came in lower at 58.3 million Swedish kronor or 10% for the group in the quarter. As we state in the headline for the report we don't normally talk so much about currency effects but in this particular quarter the effects on the pension are quite brutal and that is also why we highlight that we had a total negative currency effect of 16 million Swedish kronor in the quarter and on top of that the result in Vestimo is impacted by the amortization of excess values connected to the Velotech acquisition and that corresponds to 4.9 million Swedish krona in a negative effect investimo. We had a good free cash flow in the quarter 68 million Swedish kronor and the board proposes an increased dividend of 0.25 krona to 1.50 krona per share. I can also mention, it's not written here as a bullet, but I can also mention that we do see our gross margins strengthening and they have strengthened throughout the year actually in both business entities. So with increased volumes and without adding fixed costs, we have quite a strong operating leverage in the group now. All right, moving a little bit more into the details in the two business entities. Vestimo orders came in at plus 22%. If we adjust that for the Velotech acquisition and currency, we came in at plus 3%. As I mentioned, we do see a pretty significant sequential improvement, especially for the train and trackside segments. So that's good to see. The Velotech integration progresses very, very well. We are very pleased with the performance of Velotech as part of Estimo, and it has already generated a concrete new business with a combined offering. So that's very positive. Sales increased 6% but that was actually thanks to the acquisition of Yellowtech organically and currency adjusted at minus 6. The sales gap that we see is mainly related to less of project deliveries this quarter compared to last year. We had expected to ship a little bit more in the quarter but there were some delays as well. Again, significant currency headwind and the Velotech amortization led to a decreased profitability. So overall, we came in at 14.3% for the quarter. However, if we look beyond these two significant impacts, we do see a healthy profitability in Vestimo and as I mentioned, improved gross margins as well. We mentioned the defense industry last quarter and this quarter the board of directors actually decided to add the defense industry as a focus segment within Vestamo and we also mentioned in the report that our current business within defense represents some 30 million Swedish kronor in 2025. And we do have a couple of very good customer references in this area to actually to build upon. So we are targeting to significantly increase this business in the coming years. For Bayer Electronics, order intake at minus 5% and currency adjusted at plus 3%. We see a stable development in the marine sector and also a good growth for the rugged segment, while the manufacturing industry still remains weak. I mentioned before the HMI range increased with 7% in the quarter compared to the same quarter last year. On the sales side, we did see a decline, minus 8%, but currency adjusted basically flat. And I mentioned that last year included the 20 million Swedish kronor of phased out sales volume, which we did not manage to compensate. Profitability at the low side in the quarter 8.6%, impacted significantly by negative currency effects corresponding to 2.7 percentage points. And also, as we talked about last quarter, we see a sequential addition of amortization on the X3 development, which also negatively impacts the EBIT. But of course, despite the fact that we have decreased costs and so on, we are not satisfied with the result for the quarter. So we continue to work on that. On the positive side, very good customer response to the new X3 family. There are some 120 customers that have actually placed an order on the new X3. series as of now for evaluation mainly. And what I find really, really good is that some 20 of these are actually new customers. So this fact is very promising for the future because we are of course targeting to acquire a lot of new customers with this product family. So if we look at the volumes more in a graphical format, you can see on the left hand side the order intake ticking up quite nicely. Sales came in at 582 million Swedish kronor or 1% last year and minus 2 adjusted for currency and acquisitions. On the volume side, orders and sales volumes, the currency effects represent some six percentage points negative. Positive is that we have a book to bill at 1.10 for quarter four. So that's a significant increase in book to bill ratio. So that's good. And the backlog now stands at 1.1 billion Swedish krona.

So with that, I'll hand over to you Joakim.

Thank you very much, Jenny. So I will talk somewhat more about the numbers. so we start with the pendium we had then an order intake of 639 million in the quarter and that is actually the first time we are above 600 million for quite some long time um sales at 582 as jenny said and an ebit of 58 and an ebit percentage of 10 percent as stated by any earlier there are relatively high or high FX impact compared to last year and the amount is 16 million. Main part of that is transactional variances. The translation part is 2.9 million. So the main part then transactional and that then corresponds to 2.8 percentage points on the EBIT side. And as Jenny said, in the quarter Q4, we did the PPA for Velotech, as we informed about in the last report. And now the effects of the amortizations of the access values impacts then in Q4 that we haven't seen earlier in the year, and that is the amount is 4.9 million. Free cash flow, quite positive. 68 million, still somewhat lower than the record quarter that we actually had last year. 68 million impacted positively that we have been able to lower the working capital somewhat. So that is then a good thing. For you that look lower than the EBIT, you can notice that the tax cost is relatively low in the quarter. And the reason for that is that we have changed the legal structure in Germany now. After that we have done the Velotech acquisition and that has then provided us to get full deductibility of the interests. That meant that the net income is actually increasing compared to last year to 44 million and also the EPS, the earnings per share, increased compared to last year with 1.37. That was Vendion. Let's look at Vestamo. Here we have then the good order intake, 432 million in the quarter and sales of 368 and then EBIT of 52.7 or 14.3%. Jenny has talked about the effects of FX, so we conclude that if we adjust for the acquisition and FX, the number is 3%. Book-to-bill for Vestamu 1.17, which is then a good thing going forward. Then the profitability, as Jenny pointed out, heavily impacted by the FX, 2.7 percentage points. And also then note that the Velotech amortization is then impacting also in this quarter that we haven't seen earlier in the year. impacting them with 4.9 million. So the underlying, you could say, activities in Vestimo is still on a healthy basis compared to where we were last year. And then some final words on Velotech. Continued very well, added to the growth and also a positive profitability contribution to Estimo in the quarter. Then we have Bayer Electronics, an order intake of 208 million, sales of 215 and an EBIT of 18 or 8.6%. Also here we have an impact of the FX and adjusted for FX at plus 3%. And then you should note that last year we had some volume of orders also in the fourth quarter of the phased out products that we have talked quite a lot about, 30 million of that. And as Jenny stated earlier, the HMI business actually grew with 7% in the quarter. Book to build below 1.97 for Bayer Electronics. sales at minus eight but if we compare to fx adjust for fx sorry then we are slightly above one percent and then you should note also that in last year we had about 20 million of phased out products in in the sales volume in q4 last year so you should have that with you We are not happy with the profitability, despite that we have a solid cost control in Bayer Electronics, still on the 8.6 compared to the 8.3 last year. Also here, the negative impact of FX is hitting, it's 2.7%. And as we informed about last quarter also, now when the X3 family is fully implemented, we got additional amortizations of the capitalized R&D on the X3 that impacts about 4 million in this quarter. um when it comes to r d spend we have talked about that we will lower the r d spend over the year and and the r d spend is definitely lower now compared to last year for you who watches or look at the numbers very carefully you might know that sequentially we're somewhat higher in q4 compared to q3 but that is seasonal effect so It is coming down in line with what we have said. With that, I've finalized the financials. So over to you, Jenny.

To conclude this, when we sat here a year ago looking on 2025, we were hoping for a more stable global business environment. That did not happen. We still see that 2025 was a year that was affected by geopolitical tensions and tariffs and continued cautious markets. We are focusing on what we can actually affect and we mitigate these effects as much as we can and day by day by maintaining focus on our business and on building a stronger group. And we have strengthened the pension a lot during the year through investments in new technology, new acquisitions, but also geographical expansion, like for example, Vestamo India, and also the addition of a Vestamo office in Benelux and in Denmark. So as we have stated before, medium and long term, we are confident about our ability to continue our profitable growth journey because the global trends that our business is related to are still very much there in terms of digitalization, electrification, sustainable transportation and so on and so forth. So therefore, we remain committed to creating value regardless of market conditions. And we are, of course, focused every day on improving our businesses. And looking at our financial targets, just a reminder of that, the 10% organic growth in revenues still remain. We are not quite there yet, so we continue to have that in focus. Profitability-wise, 15% operating margin level, very much achievable, as I mentioned before. The leverage is very high in our business, and with some volume, we will be able to improve EBIT quite significantly. And then the dividend we just mentioned, the board proposes an increase there to 1.5 Swedish krona per share. And looking at the outlook then for 2026, as I mentioned, we believe that we are well positioned in attractive markets that has an underlying growth. So We believe that medium term we should be able to achieve both our growth and profitability targets. In the short term, however, we do see that the uncertainty persists, but still with the investments that we have done in product development, in new geographies with India and so on, we actually are cautiously positive regarding 2026 at this point. So with that, that concludes our presentation. So we would like to open up for Q&A.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Marcus Almarid from DNB Carnegie. Please go ahead.

Yeah, hi Jenny, hi Joakim. A couple of questions for me. Maybe starting with the order intake, you talk about recovery in Vesamo in particular, and if you can give a little bit more colour on that, I'll start there.

Yeah, that was your first question, right?

Yeah, exactly. I'll start there then.

Yeah, good. As we mentioned in Q3, we saw an exceptionally low order intake from the train segment in that quarter, and again, That is a natural variation, so to say, and it can have different reasons. But what we saw in Q4 was that the order intake from our key customers in the train segment were coming back and they were coming back strongly. So it was a little bit similar pattern as we saw last year, actually. So I'm not sure if that's something we're going to see going forward. But nothing has changed, so to say, when it comes to our position in the train segment, our strong position in the train segment. So it was good to see that order intake level came back.

And if you would have any thoughts about underlying demand and kind of where the train segment is, is it kind of steady compared to Q3? Or is it like, do you see any uptick in terms of conversations or how your customers are thinking about things? I mean, in the train segment in particular.

Yeah, I don't think that you can say that between quarters that varies. We know that there are strong drivers for investment in rail infrastructure and trains and train upgrades and so on. And that is driven by in the EU by new legislation, as well as the aim in Europe to actually have interoperability between the different countries, which requires a lot of investment in different types of system infrastructure to make that happen. So that we still see that that is happening. And then, of course, we have the Indian market with the booming investment cycle in especially, I would say, metro systems in all the key cities in India, but also high speed rail and regional rail and so on. So it hasn't changed between the Q4 and Q3, but we still see a positive development over time in that segment.

And our pipeline, we should say that that still looks very healthy. I mean, no big changes, but it's still a very healthy pipeline.

Yeah. Yeah. Okay. And then in energy, two sub-questions, I guess. First, the same question, how the energy segment is developing. And then second to that, maybe a couple of words on Belotech. And if you look, Belotech isolated how that has developed.

Mm-hmm. Yeah, well, I think that the energy segment is, I mean, we are working to win new customers and so on. And I think that we are gaining ground and we have more and more customer conversations and so on. And the Veolotech acquisition, you can look at it separately, of course, but more importantly, you need to look at it in combination with Vestamo as it looked like before, because there are a lot of customer conversations going on jointly, so to say, with customers that Velotech used to have, but not Vestamo and the other way around where we now can offer a much broader portfolio. So I see that as a catalyst really for the energy segment going forward that we now have strong customer relationships, but also a much broader portfolio to offer to these customers. So very good start of Velotech in the Vestamo family.

But in the numbers, it's relatively flat compared to Q3 if we look sequentially.

Yeah.

Okay.

So I think last quarter we spoke about you had been maybe not surprised, but there had been good start of all Velotech and then previous just Vestimo seeing customers together and presenting the offering together. And that is still in discussion phases. We haven't really seen that materialize. yet is still in that kind of presenting phase.

Yeah, I think that we have moved forward because we do see we actually do have a couple of concrete orders that have been won from this from this joint conversation. So it's starting to materialize, I would say.

Okay, okay. That's good to know. And then moving on to extreme, maybe there's still I mean, very good with 120 customers who've placed orders, but I assume it's still on evaluation purposes, no really big orders yet. When should we expect for these evaluations to kind of start turning into bigger volumes? What is the kind of normal time looking back into history?

I would expect that to happen gradually now during 2026. It's hard to say exactly when, so to say, but gradually, definitely, we should start to see that. And a lot of the customers that are using X2 today have, of course, ordered X3 now for evaluation and testing, and we expect these customers to actually gradually move over to the new product line. And in addition to that, as I mentioned, of course, the aim is to also win new customers with this very new and modern platform. But I think we will see a very gradual shift here during 2026.

And then finally maybe just a housekeeping question, the four million in depreciation increase in R&D that you see in Bay Electronics, is that kind of level where we should expect it being forward?

uh i mean in coming quarters and and maybe the next couple of years and also with the ppa the same question basically the five million yeah when it comes to the x3 amortizations of the capitalized r d yes what you see in q4 is what you can expect in the electronics going forward for 2026. When it comes to the amortizations in Vestamo, that is then hit by the excess value, that level that you saw in Q4, you can also expect to continue in the rest of 2026 and going forward.

Okay, okay. Okay, perfect. Thank you very much. That's my question for now.

Thank you, Markus.

Thank you, Markus.

The next question comes from Henrik Alveskog from Red Eye Ab. Please go ahead.

Okay, hello. Do you hear me?

Hi, Henrik.

Hi, hi. Yeah, so first off, the new, well, defense area within Västermiljö shared a few comments on that and I'm just curious regarding these products and customers is there anything you can would like to tell us about this to give us a more color on the on the activity and the business.

Yeah, we have the same question written here actually from another participant. It's still early days but of course what we are selling into the defense sector today which then represents these 30 million that we mentioned before that is actually existing you know normal products so to say that are not adopted specifically for the defense industry but but but of course westermost products as they are with the rugged um and and rugged and high quality products are of course per se suited towards this uh this segment. So and again, we have a couple of very good customer references that are already using our products for different applications. So of course, the aim now is to use that as a basis and start developing and meeting new customers in the segment and then understanding, of course, if there are product variances or product requirements that we need to take into consideration to grow this business going forward. But really starting from where we are now and building on that.

And would you like to say something about the customers here? Are they predominantly European or?

Yes, predominantly European customers. And we will also be focusing predominantly on Europe in the first step here.

And the application is communication.

Yeah.

Okay, great. Thanks. And then I noticed an announcement from Velotech on their homepage where they explained that there is a shortage in the market regarding memory components and certain chips, I guess, which will probably or definitely lead to price increases. I guess this was to explain to their customers why they need to raise prices. Could you talk a little bit about this? Is this a big issue right now? Yeah.

Yeah, you're absolutely right. There is a situation coming up in the memory chip space driven by the increased demand from the AI boom, so to say, which has caused prices of different types of memory chips to increase. significantly, four or five times actually in the last six to nine months. And of course, there is question about capacity and delivery situation going forward and so on. We are, of course, closely monitoring the situation. We are not the only ones, of course. It's something that will affect all players using memories, different kind of memory chips. And there are only a few global suppliers of these chips. So, yeah. We are increasing prices to compensate for the price increases and we are closely monitoring the development and taking different mitigating actions also in this area.

You're not foreseeing any urgent sourcing issues here?

Not in the near term, but of course, we have lived through another electronic component crisis not very long ago. So we have learned a lot from that and we are trying to mitigate and take mitigating actions as early as possible. So in the near term, no, but again, we are monitoring the situation very closely.

Yeah.

And then, well, back to the 20 new customers that you talked about for Bayer Electronics. Is there like one common denominator here or are there many reasons that why they turn to you?

I don't think that there is maybe one common denominator, but we mentioned the rugged segment, applications where the products are sitting more or less outside, like, for example, this carbon capturing facility in Denmark, where they are one of the customers that have ordered our new products. So I think that's one thing. But other than that, it's pretty much the same rationale or logic that we have you know, in general, when it comes to the HMIs and why they choose Bayer Electronics, which has to do with, you know, quality and customer support and, you know, being close to the customer and reliability and so on.

Yeah. Okay.

Well, and then just finally, I think you also touched upon the European Commission and I guess new, they talk about, I think it was in November, last November, they issued some report regarding the procurement of rail services and products. And well, one thing that I just noticed was that they are shifting beyond the lowest cost, so to speak, in the procurement. I'm just wondering if this, I mean, that sounds very good, but is it really, is it any different to what it has been? Or is there anything else in this report that you are excited about?

Yeah, I also read that. And of course, we welcome that statement, so to say, because that is what we have been claiming all along that you have to look at the lifecycle cost of a component or an application or even a train, rather than just looking at the initial purchasing costs. So Yeah, I think it's a good thing. I don't think that it will significantly change the way customers are buying products in the near term, but it's good that they are lifting this aspect of lifecycle cost and looking at the lowest lifetime cost of a system rather than single components. Yeah.

All right, then. Thank you very much. That's all for me.

Thank you, Henrik. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Daniel Lindqvist from Danske Bank. Please go ahead.

Hi, so I guess most of my questions have been answered. Just one quick one. On the contingent claim with the Velotech acquisition, could you just run through, is that in your net debt definition? It ended up at 150 instead of 161, is that correct?

Now you have to take that once more, Daniel. What is the question?

The question is on the continued claim for the valid acquisition.

The continued claim? What do you mean with claim?

Yes, so the possible earn-out.

Aha, the earn-out. Okay, yeah, sorry.

Yeah, the earn-out. So is that earn-out in your definition of the net debt? That's the first question. And then it ended up at 150 million instead of 161, as we estimated from the Q3. Just those two questions.

Yeah, you should read the note in the report carefully, because what it says in that one is that the earn-out nominal value is still 14.8 million euros. But when you calculated it in the PPA, you need to do a... What is it called in Swedish? Discontera. Yeah, you discount the value to now, and then the value is 150. So that is explained in the report. So there's no new view on the earn out. That is not the case. But the full earn out is used as an assumption and also included in the goodwill amount.

Okay, but we calculate your net debt. It's not included in your net debt.

no I need to double check that but my belief is not that it's included in the net debt okay cool

Perfect. And then I have no further questions. It may be on the cost side. I mean, I was quite thumb above on my cost expectations. I guess that could be some from currency, but is it also so that you've kept a tight control on your costs?

In general, we have a tight cost controls in both Bayer Electronics and Vestino. So there is no increase of spending that we are not seeing. Then in terms of sequential development, Q3 normally is always somewhat lower due to the summer time. So activity level goes up somewhat in Q4. But if you compare Q4 this year to last year, we are on the lower side.

Yeah, and I found myself too high on the costs in Q4, so that's a positive and extrapolating forward instead, I guess. So it's great. Let's hope for scalability then on the cost side and on the strong gross margin and the fair order intake in this quarter. Thank you, guys.

Thank you. Thank you, Daniel.

There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Yeah, so we have two written questions. I think the first one was related to the defense vertical. I think we have already answered that one. The second one is related to the supply of memory chips that we were just talking about. The question is, for how long have you secured supply of RAM and do you see customers front running a shortage or behaving more hesitantly? Well, we are not publicly disclosing for how long we have secured the supply, and it depends, of course, on different components and so on. For the time being, we are not seeing any change in customer behavior in terms of ordering more or less and so on and so forth. So again, it remains to be seen, but we are following the development, as I mentioned, very closely.

And I think it should be said that the position that we have when it comes to the deliveries of these memory RAMs, we evaluated our position and we decided there is no reason to actually write explicitly about this issue in the report. So that is an evaluation that we have done and that's the judgment we have taken. The situation that we are facing right now is not as critical that we believe that it should be mentioned in the report. But now has come to surface in the call here as it's been communicated on the Velotech homepage. But it is something that we are looking at. We are mitigating this. We are doing lots of activities to secure both the supply and also when it comes to the design in our products so that we will be less vulnerable.

so i think that concludes the written questions as well so with that we will conclude this presentation thank you very much for attending and have a great day thank you thank you

Welcome to Appendian Q4 Report 2025 presentation. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO Jenny Shaddoll and CFO Joachim Lorien. Please go ahead.

Thank you very much and welcome everybody to Appendion's Q4 report presentation. So as usual, it's Joakim and myself. We are down here in Malmö today and the agenda looks the same as usual. So I will start with giving an overall business update. Then Joakim will move into the financial performance more in detail and then I will take the concluding notes and outlook and after that we will open up for questions and answers. So looking at this quarter, well, first of all, we see that the market environment is largely unchanged compared to previous quarters in 2025. The geopolitical uncertainty remains so that we can conclude. Nevertheless, order intake increased in the quarter by 12% and adjusted for the Velotech acquisition and negative currency effects, the increase was 4%. Vestimo had a good quarter. If you remember, we had a weak quarter in the quarter three, driven by weak order intake from the train segment. a little bit similar to last year that order intake bounced back now in this quarter so that was good to see and as we have pointed out many times order intake especially from the train segment can vary a lot from quarter to quarter Bayer Electronics showed growth adjusted for currency with three percent and the positive sign there is that the core offering which is of course part of the new strategy to be focusing on on the HMI product family that increased by 7% in currency adjusted numbers. Sales increased a little bit by 1% adjusted for acquisitions and currency. We saw a decrease by 2%. The Vestamo growth was in this quarter thanks to Velotech who had a good development. Whereas Bayer Electronics was impacted quite a lot by the phased out products that we have been talking about before compared to last year. That effect was actually some 20 million in the quarter and we didn't manage to compensate for that in this market environment. Due to the relatively weak volumes, earnings came in lower at 58.3 million Swedish kronor or 10% for the group in the quarter. As we state in the headline for the report, we don't normally talk so much about currency effects, but in this particular quarter, the effects on the Pendion are quite brutal and that is also why we highlight that we had a total negative currency effect of 16 million Swedish kronor in the quarter and on top of that the result in Vestimo is impacted by the amortization of excess values connected to the Velotech acquisition and that corresponds to 4.9 million Swedish krona in a negative effect in Vestmo. We had a good free cash flow in the quarter 68 million Swedish kronor and the board proposes an increased dividend of 0.25 krona to 1.50 krona per share. I can also mention, it's not written here as a bullet, but I can also mention that we do see our gross margins strengthening and they have strengthened throughout the year actually in both business entities. So with increased volumes and without adding fixed costs, we have quite a strong operating leverage in the group now. All right, moving a little bit more into the details in the two business entities. Vestamo orders came in at plus 22%. If we adjust that for the Velotech acquisition and currency, we came in at plus 3%. As I mentioned, we do see a pretty significant sequential improvement, especially for the train and trackside segments. So that's good to see. The Velotech integration progresses very, very well. We are very pleased with the performance of Velotech as part of Estimo and it has already generated a concrete new business with a combined offering. So that's very positive. Sales increased 6% but that was actually thanks to the acquisition of Yellowtech organically and currency adjusted at minus 6. The sales gap that we see is mainly related to less of project deliveries this quarter compared to last year. We had expected to ship a little bit more in the quarter but there were some delays as well. Again, significant currency headwind and the Velotech amortization led to a decreased profitability. So overall, we came in at 14.3% for the quarter. However, if we look beyond these two significant impacts, we do see a healthy profitability in Vestimo and as I mentioned, improved gross margins as well. We mentioned the defense industry last quarter and this quarter the board of directors actually decided to add the defense industry as a focus segment within Vestimo and we also mentioned in the report that our current business within defense represents some 30 million Swedish Kronor in 2025. And we do have a couple of very good customer references in this area to actually to build upon. So we are targeting to significantly increase this business in the coming years. For Bayer Electronics, order intake at minus 5% and currency adjusted at plus 3%. We see a stable development in the marine sector and also a good growth for the rugged segment, while the manufacturing industry still remains weak. I mentioned before the HMI range increased with seven percent in the quarter compared to the same quarter last year. On the sales side we did see a decline minus eight percent but currency adjusted basically flat and I mentioned that last year included that the 20 million Swedish kronor of phased out sales volume which we did not manage to compensate. Profitability at the low side in the quarter 8.6%, impacted significantly by negative currency effects corresponding to 2.7 percentage points. And also, as we talked about last quarter, we see a sequential addition of amortization on the X3 development, which also negatively impacts the EBIT. But of course, despite the fact that we have decreased costs and so on, we are not satisfied with the result for the quarter. So we continue to work on that. On the positive side, very good customer response to the new X3 family. There are some 120 customers that have actually placed an order on the new X3. series as of now for evaluation mainly. And what I find really, really good is that some 20 of these are actually new customers. So this fact is very promising for the future because we are of course targeting to acquire a lot of new customers with this product family. So if we look at the volumes more in a graphical format, you can see on the left hand side, the order intake ticking up quite nicely. Sales came in at 582 million Swedish kronor or 1% last year and minus two adjusted for currency and acquisitions. On the volume side, orders and sales volumes, the currency effects represent some six percentage points negative. Positive is that we have book-to-bill at 1.10 for Q4. So that's a significant increase in book-to-bill ratio, so that's good. And the backlog now stands at 1.1 billion Swedish krona. So with that, I'll hand over to you Joakim.

Thank you very much Jenny. So I will talk somewhat more about the numbers. so we start with the pendium we had then an order intake of 639 million in the quarter and that is actually the first time we are above 600 million for quite some long time um sales at 582 as jenny said and an ebit of 58 and an ebit percentage of 10 percent as stated by any earlier there are relatively high or high FX impact compared to last year and the amount is 16 million. Main part of that is transactional variances. The translation part is 2.9 million. So the main part then transactional and that then corresponds to 2.8 percentage points on the EBIT side. And as Jenny said, in the quarter Q4, we did the PPA for Velotech, as we informed about in the last report. And now the effects of the amortizations of the access values impacts then in Q4 that we haven't seen earlier in the year, and that is the amount is 4.9 million. Free cash flow, quite positive. 68 million, still somewhat lower than the record quarter that we actually had last year. 68 million impacted positively that we have been able to lower the working capital somewhat. So that is then a good thing. For you that look lower than the EBIT, you can notice that the tax cost is relatively low in the quarter. And the reason for that is that we have changed the legal structure in Germany now. After that we have done the Velotech acquisition and that has then provided us to get full deductibility of the interests. That meant that the net income is actually increasing compared to last year to 44 million and also the EPS, the earnings per share, increased compared to last year with 1.37. That was the opinion. Let's look at Westermoe. Here we have then the good order intake, 432 million in the quarter and sales of 368 and then EBIT of 52.7 or 14.3%. Jenny has talked about the effects of FX, so we conclude that if we adjust for the acquisition and FX, the number is 3%. Book-to-bill for Vestamu 1.17, which is then a good thing going forward. Then the profitability, as Jenny pointed out, heavily impacted by the FX, 2.7 percentage points. And also then note that the Velotech amortization is then impacting also in this quarter that we haven't seen earlier in the year. impacting them with 4.9 million. So the underlying, you could say, activities in Vestimo is still on a healthy basis compared to where we were last year. And then some final words on Velotech. Continued very well, added to the growth and also a positive profitability contribution to Estimo in the quarter. Then we have Bayer Electronics, an order intake of 208 million, sales of 215 and an EBIT of 18 or 8.6%. Also here we have an impact of the FX and adjusted for FX at plus 3%. And then you should note that last year we had some volume of orders also in the fourth quarter of the phased out products that we have talked quite a lot about, 30 million of that. And as Jenny stated earlier, the HMI business actually grew with 7% in the quarter. Book to build below 1.97 for Bayer Electronics. sales at minus eight but if we compare to fx adjust for fx sorry then we are slightly above one percent and then you should note also that in last year we had about 20 million of phased out products in in the sales volume in q4 last year so you should have that with you We are not happy with the profitability, despite that we have a solid cost control in Bayer Electronics, still on the 8.6 compared to the 8.3 last year. Also here the negative impact of FX is hitting, it's 2.7%. And as we informed about last quarter also, now when the X3 family is fully implemented, we got additional amortizations of the capitalized R&D on the X3 that impacts about 4 million in this quarter. When it comes to R&D spend, we have talked about that we will lower the R&D spend over the year. And the R&D spend is definitely lower now compared to last year. For you who watches or look at the numbers very carefully, you might know that sequentially, we're somewhat higher in Q4 compared to Q3, but that is seasonal effect. So it is coming down in line with what we have set. With that, I've finalized the financials. So over to you, Jenny.

Yeah. So to conclude this, when we sat here a year ago looking on 2025, we were hoping for a more stable global business environment. That did not happen. We still see that 2025 was a year that was affected by geopolitical tensions and tariffs and continued cautious markets we are focusing on what we can actually affect and we mitigate these effects as much as we can and day by day by maintaining focus on our business and on building a stronger group and we have strengthened the pension a lot during the year through investments in new technology new acquisitions but also geographical expansion, like for example, Vestamo India, and also the addition of a Vestamo office in Benelux and in Denmark. So as we have stated before, medium and long term, we are confident about our ability to continue our profitable growth journey, because the global trends that our business is related to are still very much there in terms of digitalization, electrification, sustainable transportation and so on and so forth. So therefore, we remain committed to creating value regardless of market conditions. And we are, of course, focused every day on improving our businesses. And looking at our financial targets, just a reminder of that, the 10% organic growth in revenues still remain. We are not quite there yet, so we continue to have that in focus. Profitability-wise, 15% operating margin level, very much achievable, as I mentioned before. The leverage is very high in our business, and with some volume, we will be able to improve EBIT quite significantly. And then the dividend we just mentioned, the board proposes an increase there to 1.5 Swedish krona per share. And looking at the outlook then for 2026, as I mentioned, we believe that we are well positioned in attractive markets. that has an underlying growth, so we believe that medium term we should be able to achieve both our growth and profitability targets. In the short term, however, we do see that the uncertainty persists, but still with the investments that we have done in product development, in new geographies with India and so on, we actually are cautiously positive regarding 2026 at this point. So with that, that concludes our presentation. So we would like to open up for Q&A.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Marcus Almarid from DNB Carnegie. Please go ahead.

Yeah, hi, Jenny. Hi, Joachim. A couple of questions for me. Maybe starting with the order intake, you talk about recovery in Westmoreland in particular, and if you can give a little bit more colour on that, I'll start there.

yeah was that yeah that was your first question right so yeah exactly i'll start there then yeah yeah good yeah as we mentioned in q3 we we saw an exceptionally low order intake from the train segment in that quarter and again that is a natural variation so to say and it can have different reasons but what we saw in q4 was that the order intake from our key customers in the in the train segment were coming back and they were coming back strongly so it was a little bit similar pattern as we saw last year actually so i'm not sure if that's something we're going to see going forward but But nothing has changed, so to say, when it comes to our position in the train segment, our strong position in the train segment. So it was good to see that order intake level came back.

And if you would have any thoughts about underlying demand and kind of where the train segment is, is it kind of steady compared to Q3? Or is it like, do you see any uptick in terms of conversations or how your customers are thinking about things? I mean, in the train segment in particular.

I don't think that you can say that between quarters that varies. We know that there are strong drivers for investment in rail infrastructure and trains and train upgrades and so on. And that is driven by in the EU by new legislation, as well as the aim in Europe to actually have interoperability between the different countries, which requires a lot of investment in different types of system infrastructure to make that happen. So that we still see that that is happening. And then, of course, we have the Indian market with the booming investment cycle in especially, I would say, metro systems in all the key cities in India, but also high speed rail and regional rail and so on. So it hasn't changed between the Q4 and Q3, but we still see a positive development over time in that segment.

And our pipeline, we should say that that still looks very healthy. I mean, no big changes, but it's still a very healthy pipeline.

Yeah, yeah, okay. And then in energy, two sub-questions, I guess. First, the same question, how the energy segment is developing. And then second to that, maybe a couple of words on Belotec. And if you look, Belotec isolated, how that has developed.

Mm-hmm. Yeah, well, I think that the energy segment is, I mean, we are working to win new customers and so on. And I think that we are gaining ground and we have more and more customer conversations and so on. And the Veolotech acquisition, you can look at it separately, of course, but more importantly, you need to look at it in combination with Vestamo as it looked like before, because there are a lot of customer conversations going on jointly, so to say, with customers that Velotech used to have, but not Vestamo and the other way around, where we now can offer a much broader portfolio. So I see that as a catalyst really for the energy segment going forward, that we now have strong customer relationships, but also a much broader portfolio to offer to these customers. So very good start of Velotech in the Vestamo family.

but in the numbers it's relatively flat compared to a q3 if we look sequentially yeah okay so i think i think last quarter we spoke about you had been maybe not surprised but but there had been good start of all velotech and then previous just western seeing customers together and presenting the offering together and that is still in discussion faces we haven't really seen that materialized Yeah, it's still in that kind of presenting phase.

Yeah, I think that we have moved forward because we do see, we actually do have a couple of concrete orders that have been won from this joint conversation. So it's starting to materialize, I would say.

Okay, okay. That's good to know. And then moving on to X3 maybe, there is still, I mean, very good with 120 customers who've placed orders, but I assume it's still on evaluation purposes, no really big orders yet. When should we expect for these evaluations to kind of start turning into bigger volumes? What is the kind of normal time looking back into history?

I would expect that to happen gradually now during 2026. It's hard to say exactly when, so to say, but gradually, definitely, we should start to see that. And a lot of the customers that are using X2 today have, of course, ordered X3 now for evaluation and testing. And we expect these customers to actually gradually move over to the new product line. And in addition to that, as I mentioned, of course, the aim is to also win new customers with this very new and modern platform. But I think we will see a very gradual shift here during 2026.

And then finally maybe just a housekeeping question, the four million in depreciation increase in R&D that you see in Bay Electronics, is that kind of level where we should expect it being forward? I mean, in coming quarters and maybe the next couple of years and also with the PPA, the same question basically, the 5 million in PPA.

When it comes to the X3 amortizations of the capitalized R&D, yes, what you see in Q4 is what you can expect in Bayer Electronics going forward. for 2026. When it comes to the amortizations in Vestamo, that is then hit by the excess value, that level that you saw in Q4, you can also expect to continue in the rest of 2026 and going forward.

Okay, okay. Okay, perfect. Thank you very much. That's my question for now.

Thank you, Markus.

Thank you, Markus.

The next question comes from Henrik Alveskog from Red Eye Ab. Please go ahead.

Okay, hello. Do you hear me?

Hi, Henrik.

Hi, hi. Yeah, so first off, the new, well, defense area within Västermiljö shared a few comments on that and I'm just curious regarding these products and customers is there anything you can would like to tell us about this to give us a more color on the on the activity and the business.

Yeah, we have the same question written here actually from another participant. It's still early days, but of course what we are selling into the defense sector today, which then represents these 30 million that we mentioned before, that is actually existing uh you know normal products so to say that are not adopted specifically for the defense industry but but but of course vestamos products as they are with the rugged um and and rugged and high quality products are of course per se suited towards this uh this segment. So and again, we have a couple of very good customer references that are already using our products for for different applications. So of course, the aim now is to use that as a basis and start developing and meeting new customers in the segment and then understanding, of course, if there are product variances or product requirements that we need to take into consideration to to grow this business going forward so but really starting from where we are now so and and building on that and would you like to say something about the customers here are they predominantly

European or yes, predominantly European customers.

And we will also be focusing predominantly on on Europe in the first step here.

And the application is communication.

Yeah.

OK, great. Thanks. And then I noticed the. Well, an announcement from Velotech on their home page where they explained that there is a shortage in the market regarding memory components and certain chips, I guess, which will probably or definitely lead to price increases. I guess this was to explain to their customers why they need to raise prices. Could you talk a little bit about this? Is this a big issue right now? Yeah.

Yeah, you're absolutely right. There is a situation coming up in the memory chip space driven by the increased demand from the AI boom, so to say, which has caused prices of different types of memory chips to increase. significantly, four or five times actually in the last six to nine months. And of course, there is question about capacity and delivery situation going forward and so on. We are, of course, closely monitoring the situation. We are not the only ones, of course. It's something that will affect all players using memories, different kind of memory chips. And there are only a few global suppliers of these chips. So, yeah. We are increasing prices to compensate for the price increases and we are closely monitoring the development and taking different mitigating actions also in this area.

You're not foreseeing any urgent sourcing issues here?

Not in the near term, but of course, we have lived through another electronic component crisis not very long ago. So we have learned a lot from that and we are trying to mitigate and take mitigating actions as early as possible. So in the near term, no, but again, we are monitoring the situation very closely.

Yeah.

And then, well, back to the 20 new customers that you talked about for Bayer Electronics. Is there like one common denominator here or are there many reasons that why they turn to you?

I don't think that there is maybe one common denominator, but we mentioned the rugged segment applications where the products are sitting more or less outside, like, for example, this carbon capturing facility in Denmark, where they are one of the customers that have ordered our new products. So I think that's one thing. But other than that, it's pretty much the same rationale or logic that we have you know, in general, when it comes to the HMIs and why they choose Bayer Electronics, which has to do with, you know, quality and customer support and, you know, being close to the customer and reliability and so on.

Yeah. Okay.

Well, and then just finally, I think you also touched upon the european or the european commission and the i guess new uh they talk about i think it was in november last last november they issued some report regarding the procurement of of rail uh services uh products and um well one thing that i i just noticed was that they are shifting beyond the lowest cost so to speak uh in their in the procurement I'm just wondering, is this, I mean, that sounds very good, but is it really, is it any different to what it has been? Or is there anything else in this report that you are excited about?

Yeah, I also read that. And of course, we welcome that statement, so to say, because that is what we have been claiming all along that you have to look at the lifecycle cost of a component or an application or even a train, rather than just looking at the initial purchasing costs. So Yeah, I think it's a good thing. I don't think that it will significantly change the way customers are buying products in the near term, but it's good that they are lifting this aspect of lifecycle cost and looking at the lowest lifetime cost of a system rather than single components. Yeah.

All right, then. Thank you very much. That's all for me.

Thank you, Henrik. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Daniel Lindqvist from Danske Bank. Please go ahead.

Hi, so I guess most of my questions have been answered. Just one quick one. On the contingent claim with the Velotech acquisition, could you just run through, is that in your net debt definition? It ended up at 150 instead of 161, is that correct?

Now you have to take that once more, Daniel. What is the question?

The question is on the continued claim for the valid acquisition.

The continued claim? What do you mean with claim?

Yes, the possible earn-out. Aha, the earn-out.

Okay, yeah, sorry.

Yeah, the earn-out. So is that earn-out in your definition of the net debt? That's the first question. And then it ended up at 150 million instead of 161 that was estimated from the future. Those are the two questions.

Yeah, you should read the note in the report carefully, because what it says in that one is that the earn-out nominal value is still 14.8 million euros. But when you calculated it in the PPA, you need to do a... What is it called in Swedish? Discontera. Yeah, you discount the value to now, and then the value is 150. So that is explained in the report. So there's no new view on the earn out. That is not the case. But the full earn out is used as an assumption and also included in the goodwill amount.

Okay, but we calculate your net debt. It's not included in your net debt.

no I need to double check that but my belief is not that it's included in the net debt okay cool

Perfect. And then I have no further questions. It may be on the cost side. I mean, I was quite thumb above on my cost expectations. I guess that could be some from currency, but is it also so that you've kept a tight control on your costs?

in general we have a tight cost controls in in both bay electronics and and vestino so there is no increase of spending um that we are not seeing Then in terms of sequential development, Q3 normally is always somewhat lower due to its summer time. So activity level goes up somewhat in Q4. But if you compare Q4 this year to last year, we are on the lower side.

Yeah, and I found myself too high on the costs in Q4, so that's a positive and extrapolating forward instead, I guess. So it's great. Let's hope for scalability then on the cost side and on the strong gross margin and the fair order intake in this quarter. Thank you, guys.

Thank you. Thank you, Daniel.

There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Yeah, so we have two written questions. I think the first one was related to the defense vertical. I think we have already answered that one. The second one is related to the supply of memory chips that we were just talking about. The question is, for how long have you secured supply of RAM and do you see customers front running a shortage or behaving more hesitantly? Well, we are not publicly disclosing for how long we have secured the supply, and it depends, of course, on different components and so on. For the time being, we are not seeing any change in customer behavior in terms of ordering more or less and so on and so forth. So again, it remains to be seen, but we are following the development, as I mentioned, very closely.

And I think it should be said that the position that we have when it comes to the deliveries of these memory RAMs, we evaluated our position and we decided there is no reason to actually write explicitly about this issue in the report. So that is an evaluation that we have done and that's the judgment we have taken. The situation that we are facing right now is not as critical that we believe that it should be mentioned in the report. But now has come to surface in the call here as it's been communicated on the Velotech homepage. But it is something that we are looking at. We are mitigating this. We are doing lots of activities to secure both the supply and also when it comes to the design in our products so that we will be less vulnerable.

so i think that concludes the written questions as well so with that we will conclude this presentation thank you very much for attending and have a great day thank you thank you