W5 Solutions interim report January-September 2024
The third quarter was characterised by operational successes as in form of significantly increased order book and several important strategic initiatives. Updated financial targets for the next three years 2025 to 2027 have been establised, along with a strategy outlining how these goals will be achieved. The new financial targets includes one billion SEK with a EBIT-margin of 10 percent by 2027 at latest.
Significant events during third quarter 2024
- In July, a 5-year framework agreement was received in the business area Power worth SEK 500 million, an initial order of SEK 94 million was received 2 September.
Other important during the third period
- On 1 September, a new organisational structure was implemented, based on three new business areas: Training, Power and Integration
Significant events after the end of the period
- No significant events after the period
| SEK m | 2024 July-sept | 2023 July-Sept | 2024 Jan-Sept | 2023 Jan-Sept | Oct 23 - Sept 24 LTM | 2023 Jan-Dec |
| Income | 72.0 | 78.4 | 268.8 | 264.4 | 399.7 | 395.3 |
| EBITDA | –2.8 | 8.0 | 1.5 | 44.5 | 12.9 | 56.0 |
| EBITDA-margin, % | –3.8 | 10.3 | 0.5 | 16.8 | 3.2 | 14.2 |
| EBITA | –5.3 | 6.4 | –5.9 | 38.6 | 2.6 | 47.1 |
| EBITA-margin, % | –7.3 | 8.2 | –2.2 | 14.6 | 0.7 | 11.9 |
| Net profit for the period | –14.7 | –4.6 | –37.2 | 6.9 | –45.1 | –1.0 |
| Earnings per share, SEK | –0.97 | –0.33 | –2.46 | 0.51 | –3.02 | –0.08 |
| Cash flow from operating activities | –1.0 | 6.8 | –35.9 | 28.3 | 25.3 | 89.4 |
| Orders received | 138 | 38 | 328 | 166 | 410 | 248 |
| Order book | 304 | 229 | 304 | 229 | 304 | 199 |
July – September 2024
- Operating income for the quarter amounted to SEK 72.0 (78.4) million, a decrease with 8 percent.
- EBITA, for the quarter amounted to SEK –5.3 (6.4) million a decrease of SEK 11.7 million
- Cash flow from operating activities amounted to SEK –1.0 (6.8) million.
- Orders received during the period amounted to SEK 138 (38) million with an order book at the end of the period of SEK 304 (229) million.
January – September 2024
- Operating income for the period amounted to SEK 268.8 (264.4) million, an increase with 4 percent.
- EBITA, for the period, amounted to SEK –5.9 (41.4) million a decrease of SEK 47.3 million.
- Cash flow from operating activities amounted to SEK –35.9 (28.3) million.
- Orders received during the period amounted to SEK 328 (166) million with an order book at the end of the period of SEK 304 (229) million.
Comments by CEO Evelina Hedskog
The past quarter has been a period of both progress and challenges. We have continued to deliver according to our strategy, and we see clear signs that our efforts are yielding results for the future.
Strategic initiatives for future growth
The third quarter was characterised by operational successes as in form of significantly increased order book and several important strategic initiatives. Updated financial targets for the next three years 2025 to 2027 have been establised, along with a strategy outlining how these goals will be achieved. This, in turn, has led to a clearer positioning towards total defence as our main customer base. A new vision and mission are in place, and the path towards becoming a billion-SEK company has been mapped out. The new financial targets include one billion SEK with an EBIT margin of 10 percent by 2027, at latest.
A prerequisite for succeeding in this is a robust organisation, and the business area structure we established in the third quarter is an important factor. We are now organising our subsidiaries into three business areas: Power, Integration and Training. These business areas, which together comprise seven product areas, create a more efficient way of working in the Group and provide a sustainable platform for future growth. A new Group Management Team has been appointed with the aim of being able to clearly and effectively manage the business, as well as to control and coordinate Group-wide functions. In addition to solid knowledge and experience, we are now also strengthening W5 with tools and processes that will help us maintain efficiency while continuing to grow. In addition to aligning ourselves organisationally to achieve synergies, this is also happening geographically. In Älmhult, a move to shared premises has begun and soon, the entire Power business area will be housed in new, modern facilities. Our decision to co-locate is a clear success factor for both economies of scale and optimising expertise.
Significant increase in order backlog and a clear message from the delivery organisation
However, the most significant progress during the period is the order book, which has increased by 50 percent compared to the previous quarter. Furthermore, we have also secured a five-year framework agreement with a maximum volume of SEK 500 million. All in all, this means that the occupancy rate for our personnel is now back at a significantly healthier level than in the first half of 2024. We are also continuing to close several large contracts that are essential for continued profitable growth.
It is clear that our product portfolio is relevant in the export market, and our increased focus on exports is reflected in the business opportunities we are working on. A number of important delivery milestones related to our development work were successfully reached during the third quarter, and all in all, we have a development and production organisation that delivers consistently with quality. This is an important message to the market for future series deliveries. Inventory has been built up during the past quarter, which makes the cash situation tougher, but also enables important deliveries in the last months of the year.
Continued focus on revenue growth
Overall, the figures we see in the near future remain challenging, with weak turnover leading to profitability issues. However, this should be seen in the context of a stable gross margin, a personnel cost in balance with the current order backlog and other external costs that are in line with the previous year despite ongoing implementation of strategically important initiatives such as transition to IFRS, preparations for CSRD accounting, establishment of HR, CRM and finance systems, and much more. The situation indicates that the single most important focus in near future is to build our order book and thereby increase our sales in the long term; this is something we are working hard for and have high hopes of succeeding in. The fact that we have used this period of lower activity to restructure and streamline operations will serve us well in the future, and I look forward to leading W5 towards the goals we have now set for the next three years.
The Interim report is available for download at: https://w5solutions.com/investor-relations/