AQ Group AB (publ), interim report January - March, 2023
First quarter, January-March 2023 in brief
- Good start of the year results in growth, improved margin, and cash flow
- Net sales increased by 36.8% to SEK 2,253 million (1,646)
- Operating profit (EBIT) increased by 72.3% to SEK 194 million (113)
- Profit after financial items (EBT) increased by 58.3% to SEK 184 million (116)
- Profit margin before tax (EBT %) was 8.2% (7.1)
- Cash flow from operating activities amounted to SEK 225 million (44)
- Earnings per share after dilution increased by 70.2% to SEK 8.58 (5.04)
- Equity ratio was 55% (56)
- The Board of Directors proposes a dividend of SEK 3.33/share to the AGM (3.33)
A word from the CEO
We follow our plan
AQ´s ambition is to increase the net sales and profit each year. The first quarter has started well. We follow our plan, and it is pleasing that we are now back above our target of 8% in terms of EBT margin, which in the quarter was 8.2%. The main reason to our profit improvement in the quarter is that we have made improvements in our companies that previous have made a loss. I am proud of our leaders in Mexico, China, India, and North America, who have been able to turn their businesses to contribute positively. It has not been easy.
Our net sales increased by 14% compared to previous quarter. Above all, we increase within electrification, components to the defense industry, storage of renewable energy and within medical technology. However, we are not satisfied as several large orders could not be delivered in the quarter. Our delivery precision to our customers was 91% in the quarter, which is not good.
We still have a few units, where we do not reach our goals in terms of profitability. Our leaders and employees are working hard to improve the businesses and hence the profits.
Investments in continued growth and acquisitions
We are doing everything we can to work smarter, automate, increase the number of employees, and acquire additional production capacity. It's great to see that our fantastic customers are so strong in their markets. During the quarter, we entered into lease agreements for additional production space in Poland for wiring systems, we invested in additional punching capacity in Finland and Estonia and ordered winding machines for inductive components in Estonia. At the same time, we have started serial production in our new factories for wiring systems and battery systems in Lithuania and Bulgaria this quarter. During the quarter, we have also opened engineering offices in Västerås, Östersund and Trollhättan and recruited around 30 engineers to deliver more demanding engineering services to the automotive and defense industry. We see many opportunities to continue growing organically and through acquisitions.
Cash flow and balance sheet
During the quarter, we continued our work on increasing our inventory turnover rate. Several of our companies are showing major improvements, which results in a better cash flow from operating activities, which was SEK 225 million during the quarter. We continue to have a low net debt, which enables continued investments in expanded production capacity as well as acquisitions.
Sustainability and environment
During the quarter, we started installing solar panels on the roof of one of our factories in Poland. This, in combination with heat pumps, will make this factory completely independent of fossil fuels. Our goal to reduce our CO2 footprint continues. However, the components and systems that we deliver for the production, transmission and storage of renewable energy have the greatest impact. During the first quarter, we delivered battery systems that can store 42 MWh of renewable energy. It can save 30,000 tons of CO2 per year if it replaces a power plant that uses fossil fuels. All our operating companies at AQ are ISO 14001 certified. It is an environmental management system with targets for how we should improve our work.
The power of AQ
AQ's employees are doing a fantastic job of delivering critical components and systems to demanding industrial customers. Our customers deliver world-leading products that make our world better every day. I am proud of our fantastic employees who help our world-leading customers to succeed and that through entrepreneurship, networking and forward thinking we manage to create more value with each passing year. It makes me full of confidence that this year we will continue to grow, make a profit, and have fun!
James Ahrgren
CEO
This disclosure contains information that AQ Group is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014) and the Swedish Securities Markets Act (2007:528). The information was submitted for publication, through the agency of the contact person, on 20-04-2023 08:00 CEST.
For further information, please contact:
CEO and IR, James Ahrgren, telephone +46 76 052 58 88 or
CFO, Christina Hegg, telephone +46 70-318 92 48
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AQ in brief
AQ is a global manufacturer of components and systems 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, striving to provide cost effective solutions in close cooperation with the customer.
The Group headquarter is in Västerås, Sweden. AQ has, on December 31, 2022, in total 7,200 employees in Bulgaria, Poland, Lithuania, Sweden, China, Estonia, Hungary, Mexico, Finland, India, Canada, USA, Germany, Italy and Brazil.
In 2022 AQ had net sales of SEK 7 billion, and the Group has since its start in 1994 shown profit every quarter.