Teqnion Shifts Its Turnaround Focus From Margins to Growth and Working Capital as Management Says Pruning Is "Mostly Done"
Q3 2026 Q&A session, October 19, 2026, on the eve of the company's 20th anniversary
Priorities are changing after a margin-led turnaround
The main message from the Q3 session with CEO Johan Steene and Deputy CEO Daniel Zhang is a change in sequencing. Management acknowledged openly that Teqnion has spent the past few years in a turnaround, and that it deliberately started with margins and pruning because that was where the most damage could be repaired fastest. Zhang said the group has now "moved a little bit of prioritization to getting top line growth as well" and has also raised the priority of freeing up working capital. Both had been "secondary" to protecting profitability in the core.
Management gave no timeline or investment figure for organic growth. Asked about the J-curve of spending on salespeople and capacity ahead of revenue, Steene said he would "be very surprised if we couldn't see a positive turn on that KPI," but stressed that growth is "not the key" and that the priority remains building cash flow to feed the acquisition engine. Zhang said subsidiaries are sorted internally into three groups: those that still need to reach a normal state, a majority of cash-cow or normal businesses, and a small set with identified upside where Teqnion plans to invest more, primarily in sales staff. He conceded the company "might not be right" on that potential.
Management also said the effects of operating changes lag. Actions typically show in financials a quarter later at best and sometimes four to five quarters later, which is a reasonable caveat for investors waiting for growth to appear.
Pruning largely done, and organic growth figures are distorted by acquisitions
On the weak spots, Zhang said that in Teqnion Nord, "the key companies when it comes to pruning, I feel that we're mostly done," while adding that pruning is never finished. Steene was blunt that patience with underperformers has run out "on a couple of occasions" in recent years, and that some niche businesses may have "better harbors" than Teqnion as the group buys higher-quality companies.
Nord's EBITA fell 5.9% in Q3 on flat sales. Management attributed this to mix. Several high-margin companies completed large projects in Q3 2025 and boosted both sales and profit, while this year's quarter was more normal and some larger projects slipped into October and will be booked in Q4. Underlying EBT of SEK 57 million, against SEK 61 million a year earlier, was explained mainly by higher financial expenses.
Teqnion Väst was down slightly in local currencies. Zhang pointed to a company that had an exceptional 2025 and has returned to a still-healthy baseline, and to a company that was folded. He also described a technical issue in the organic growth metric. A company acquired 13 months ago contributes only one month to the calculation, and it takes 25 months to get a full contribution. Because Väst grew mostly through acquisitions in recent years, the metric will become more representative only gradually.
Financial expense jump is an accounting effect
Investors have asked why financial expenses rose sharply in 2026, particularly in Q3. Zhang said more than 90% of the increase comes from IFRS revaluations. Earn-out liabilities and the minority shares in the U.K. companies are denominated in pounds, so sterling strength against the krona creates a net interest cost. "It's not anything that changes the tax. It's not anything that changes the cash flow. It's just an accounting effect," he said, adding that a weaker pound would produce an equally unreal financial income. A smaller portion reflects larger loans from acquisitions, while the average interest rate is actually lower after the refinancing earlier this year. Management declined to say which companies drove the latest earn-out revaluations.
Acquisitions are cheap relative to earnings, but the bottleneck keeps moving
Zhang pointed to page 24 of the report. The companies acquired this year would have contributed SEK 45 million of EBITDA over nine months had they been owned from January 1, which implies roughly SEK 60 million annualized, before financing costs. Excluding acquired cash, Teqnion paid "SEK 200-odd million" for them. That implies a multiple below 4x, which fits a question from a participant who noted that Q3 deals were priced below 4x net EBITDA and carried 9% contingent consideration against 25% in the first half. Zhang said this is not a trend. Deal structure varies with how much risk sellers will share, and with only two or three deals in a quarter the mix is lumpy.
On what limits the pace of M&A, management declined to name a single constraint. Steene said Teqnion would slow acquisitions if it lacked the capacity to absorb them, and that it could "run out of acquisition cash if we want to," though operating cash flow growth should support borrowing capacity. Zhang described the bottleneck as a moving target: first the pipeline, then management capacity to integrate, and historically capital. The company has recently added Martin Lagerberg, Dave Barton and business unit leads, plus an in-house recruiter for about six months. Zhang said recent targets typically already have succession in place, which matters as the targets get larger.
Teqnion is also looking for a third geographic leg beyond Sweden and the U.K., which now have roughly equal earnings. Zhang said the U.K. was chosen after screening about 15 companies and weighing legal robustness, culture, language, travel distance and competition. He said the company will eventually consider Asia-Pacific, drawing on its China sourcing office and his background there, but "it's not going to happen in the short term."
Sourcing office savings are rising
Annualized savings from the supply chain office were previously cited at SEK 10 million to SEK 15 million and are now "a little bit north of SEK 15 million," according to Zhang. The company will not report the figure quarterly and expects the benefit to show up in gross margin and working capital. Zhang also noted that the office works in both directions, as closer ties to Chinese and Southeast Asian suppliers could bring more products into European markets, which would add revenue.
Backlog, working capital and cyclicality
Backlog is growing faster than revenue, which management attributed partly to acquired backlog entering the balance sheet and partly to solid order intake in the existing portfolio. Steene said there is no change in execution time. Zhang cautioned that backlog is less useful at group level. Abercromby, with revenue approaching SEK 100 million, has no backlog because customers pay by card, and Norband's volumes materialize close to delivery.
Zhang also explained why the balance sheet and income statement can diverge after acquisitions. A newly acquired company brings its full working capital onto the balance sheet at once but contributes only a fraction of its earnings, and because Teqnion keeps acquiring, "you would see this effect basically forever." The group's EBITDA margin is around 15%, which Zhang said means roughly half of revenue sits below that level. Management would not say how many companies that covers.
On energy prices and interest rates, Steene said the company has few energy-intensive plants and is exposed mainly through logistics. Zhang argued that some holdings benefit, citing U.K. energy-efficiency business Merridale, where higher prices raise demand for its services, and defense-related companies. Norband, which supplies high-profile events, was described as cyclical but currently not at a cyclical high. Zhang said its summer-weighted seasonality is a welcome offset to the more traditional industrial companies in the group.
Reporting changes and the scale question
Management said lease payments have been stable quarter to quarter, and that there will probably be "some smaller changes" to the quarterly report format from Q1 next year, partly in response to requests for more line items and KPIs. Acquisition disclosures will continue to use three-year average revenue, which Zhang defended as more conservative and less volatile, and consistent with a policy of avoiding pro forma figures that raise expectations for the acquired companies.
Asked whether Teqnion could produce an outsized winner like Lifco or Berkshire's GEICO, Steene said there are "a couple of potential gems." Zhang was more restrained, saying the company will not make bets of that scale and does not pretend to be Buffett or Munger. He did point to Elrond, one of the first acquisitions, which now pays more in annual free cash flow than Teqnion paid for it.