AQ Group AB (publ), interim report January - June, 2021

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Second quarter, April-June 2021 in brief

  • Strong demand and high capacity utilization in combination with continued cost control
  • Net sales increased by 21.9% to SEK 1,361 million (1,116)
  • Operating profit (EBIT) increased by 46.0% to SEK 118 million (81)
  • Profit after financial items (EBT) increased by 45.9% to SEK 114 million (78)
  • Profit margin before tax (EBT %) was 8.4% (7.0)
  • Cash flow from operating activities decreased by 32.0% to SEK 84 million (166)
  • Earnings per share after tax increased by 37.4% to SEK 5.22 (3.80)

Six months, January-June 2021 in brief

  • Net sales increased by 8.5% to SEK 2,668 million (2,458)
  • Operating profit (EBIT) increased by 33.8% to SEK 239 million (179)
  • Profit after financial items (EBT) increased by 45.4% to SEK 240 million (165)
  • Profit margin before tax (EBT %) was 9.0% (6.7)
  • Cash flow from operating activities decreased by 20.5% to SEK 244 million (307)
  • Earnings per share after tax increased by 40.5% to SEK 11.11 (7.91)
  • Equity ratio was 57% (56)

A word from the CEO

Full speed ahead. There is high demand in all markets and in our factories. It is a struggle every day to get hold of components, to find new employees, machines and production surface. Now we have the opportunity to show our customers that we are different. We focus our energy on acting quickly and without bureaucracy to make our demanding customers happy despite difficult conditions. I am incredibly proud of all our employees who struggle every day to do the little extra to make our customers' everyday lives better.

Second quarter
A challenging quarter in many ways. Our factories are working at full speed. Net sales are at a high level, which could, however, be higher if we were not limited by the supply of materials and components. We have a high organic growth in the quarter of 26.7% due to comparison with the lower sales during the pandemic in 2020. We are now continuing with major efforts to increase our organic growth. The focus is still on helping our customers to solve their challenges to deliver to their customers. All in all, this gives a stable profit in the period where the EBT margin is 8.4%.

During the quarter, many of our factories experienced disruptions in the supply chain of incoming material. Some of our units have had a negative effect on our customers and our delivery precision is 93% in the quarter, compared with the target of 98%. However, we have a close dialogue with the customers and my understanding is that in most cases they show great understanding of the market situation and are grateful for the efforts we make to deliver as much as possible. Prices of raw materials, such as copper and steel continued to rise sharply during the quarter. During the quarter, we have worked hard to obtain compensation for this from our customers. Our work to improve our wiring systems unit in Mexico continues. During the quarter, we strengthened our management to reverse the development there.

It is a unique situation in the market right now where customers want to buy everything we can produce and more, at the same time as we have great challenges in the supply of material and components.

Investments in renewable energy continue to increase. We supply inductive components, sheet metal details and electrical cabinets to customers who operate in wind and solar power. Renewable energy also drives the need for energy storage. Here we work with new solutions for several customers.

AQ is a leader in the development and production of transformers and inductors in electromobility for trains and heavy vehicles. The acquisition of Schaffner's Power Magnetics division further strengthens our position in this area while gaining more customers in Germany and the United States. We know filter technology, electrification and automation at the same time as we are a supplier of wiring systems, sheet metal and inductive components for commercial vehicles. We participate in about twenty different development projects for electric vehicles.

The only of our customer segments that have not yet recovered from the pandemic are trains, buses and ships.

Our M&A team works continuously to identify potential acquisitions that fit into AQ. At the beginning of the second quarter, we agreed with the Schaffner Group to take over their Power Magnetics Division. The acquired units complement AQ's business area Inductive Components in a very good way, both in terms of technology and geographical coverage. We get a technically strong sales organization in Germany and the USA, as well as fine manufacturing units in Hungary, China and the USA. We believe that this acquisition will contribute to AQ's long-term ambition to be a global leader in the design and production of inductive components in our niches such as rail vehicles and electrification. The acquisition contributes approximately with 8% growth in our net sales on an annual basis. The closing took place according to plan on July 1 this year.

The pandemic had little effect on AQ during the quarter. But demand for products for trains, buses and ships has not yet recovered. We will continue with the measures we have introduced and are prepared to do so for a longer period. All our production units are up and running and we work closely with our customers to minimize the effects of the pandemic.

Environment and work environment
AQ has management systems for the environment at all our manufacturing units. These contain concrete goals, metrics and activities to reduce our environmental impact. One requirement is that there must be local targets for reducing CO2 emissions at each unit. We also try to encourage our customers to buy locally from our factories in each geographic market to reduce long-distance transports. For example, our units in China supply to our customers’ factories in China, our units in India supply most of their products to our customers' Indian factories, and so on.

Cash flow and balance sheet
Our balance sheet is very strong. This is sustainable. Even after the acquisition of Schaffner's Power Magnetics division, we have a low net debt. Our cash flows are affected by growth and inventory build-up during the quarter. Our strong balance sheet allows us to focus on our customers and continue to invest and grow with them. During the quarter, we also refinanced our bank loans on better terms. This means that we have freedom of action to act when our M&A team finds attractive acquisition opportunities.

Employees and core values
What makes AQ successful is that we have fantastic employees who work in accordance with our core values. We are simple people who like to get things done. Sometimes we get criticism from the capital market that we are bad at marketing ourselves. We think that our results should speak for themselves. Our ambition is for us to continue to grow our sales and our profits.
Quite simply: We will continue to grow, make money, and have fun.


James Ahrgren


For further information, please contact:
James Ahrgren, CEO, +46 76 052 58 88  or CFO, Christina Hegg, telephone +46 70-318 92 48

AQ Group is required to make the information in this press release public in accordance with the EU Market Abuse Regulation and the Securities Markets Act. The information was released by CEO James Ahrgren for publication at 08:00 hours CEST on July 15, 2021.


AQ in brief

AQ is a leading supplier to demanding industrial customers and is listed on Nasdaq Stockholm’s main market.

The Group consists mainly of operating companies each of which develop their special skills and in cooperation with other companies, provides cost effective solutions in close cooperation with the customer.

The Group headquarter is in Västerås, Sweden. AQ has, on December 31, 2020, in total about 5,900 employees in Sweden, Bulgaria, China, Estonia, Hungary, India, Italy, Lithuania, Mexico, Poland, Serbia, Finland, Canada, USA, Brazil and Germany.

In 2020 AQ had net sales of SEK 4.8 billion and the group has since its start in 1994 shown profit every quarter.