AQ Group AB (publ), interim report January - September, 2019

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Third quarter, July-September 2019 in brief

  • 100 consecutive quarters with profit
  • More than SEK 5 billion in turnover the last 12 months
  • Very strong profit improvement due to comparison with large extraordinary costs
  • Strong cash flow and continued good growth driven by acquisitions
  • Net sales increased by 9.6% to SEK 1 247 million (1 137)
  • Operating profit (EBIT) increased to SEK 87 million (22)
  • Profit after financial items (EBT) increased to SEK 82 million (21)
  • Profit margin before tax (EBT %) was 6.6 % (1.9)
  • Cash flow from operating activities increased to SEK 132 million (39)
  • Earnings per share after tax increased to SEK 3.77 (0.01)
  • Equity ratio 51 % (56), 2019 affected by new IFRS 16 rules

Nine months, January-September 2019 in brief

  • Net sales increased by 10.5% to SEK 3 813 million (3 451)
  • Operating profit (EBIT) increased by 82.3 % to SEK 276 million (151)
  • Profit after financial items (EBT) increased by 81.6 % to SEK 263 million (145)
  • Profit margin before tax (EBT %) was 6.9 % (4.2)
  • Cash flow from operating activities increased to SEK 346 million (109)
  • Earnings per share after tax increased to SEK 11.77 (5.68)

A word from the CEO

The third quarter is the 100th consecutive quarter where AQ Group reports positive earnings per share after tax. We are very proud of this but even more pleased that we have simultaneously managed to increase our net sales every year during the same time. We are passing an important milestone this quarter, as we have more than MSEK 5 000 in net sales over the past 12 months. To highlight our 25-year celebration, we have written an article that can be read later in the report.

We had large extraordinary costs in the third quarter last year, so our comparative figures on profit after financial items (EBT) are very strong. It's good to be back to more normal levels when it comes to earnings per share. It is worth noting that our EBT margin of 6.6% is somewhat affected by the vacation period.

AQ Group is growing 9.6% in the quarter, mainly due to the acquisition of Trafotek, which we completed in June. However, the picture of our business volumes is mixed, and we don’t have organic growth during the quarter. Like many other companies, we feel a slowdown in the investment-heavy segments, such as construction and agricultural machines. On the other hand, the development for our less cyclical customers in rail, bus, medical technology, environmental technology and electrification is still good.

As a contract manufacturer, we must be able to adjust operations both when demand increases and when it decreases. We currently have many examples where our talented subsidiary managers and their management teams work with this. We increase capacity where needed and adapt the costume to customer forecasts where it goes down. At the same time, we are intensifying our sales work and we work even more diligently to win new business. The contract manufacturer market is fragmented, and we have small market shares, so there are many opportunities to compensate a decline in some markets with new business. Good examples of this are, for example, plastic and sheet metal parts for car safety equipment in China, stainless steel products for healthcare and plastic components for new customers who manufacture hand tools.

Lower organic growth means that working capital is more stable and we generate good cash flow from operating activities during the quarter. This reduces our net debt and gives us better opportunities to make acquisitions and invest in the business. We continue our efforts to recover overdue accounts receivable and optimize our inventory management.

Delivery capability
Our delivery precision is improving and is now at much better levels for the whole group than it was a year ago. However, we are still not satisfied and want to continuously develop our processes and standards to become even more robust and flexible during this and the coming years.

AQ Group has a strong company culture with core values that are for real in customer focus, entrepreneurship, simplicity, cost efficiency, courage and respect. We run our business in decentralized companies with talented leaders and employees who work close to their customers and have a mandate to run the business. In this way, we can be quick and utilize all the opportunities available in the market. This is a strategy we will continue with. In addition, we are now also working to strengthen our business areas with common expertise in purchasing, processes and sales. Our ambition is to increase the intensity of our sales work and to identify more opportunities for cost savings in both purchasing and manufacturing.

When it comes to purchasing, we now see that more opportunities open up after a few years of strong boom. It is important to work hard to realize these improvements. AQ also works extensively with productivity in all factories, not least in Eastern Europe where there are opportunities in e.g. automation and robotization.

Our goal is to be a long-term stable, growing and profitable group with an operating margin (EBT) of 8% and a strong financial position. We like to do business with the customer in focus. Our employees and managers are doing a good job and it will be reflected in new business also in the future.

With strong relationships with world-leading customers and committed employees, we will work hard to achieve a stable profit level, accomplish new acquisitions, continue organic growth and generate good cash flow. In the coming year, we will also focus on a continued good integration of our acquisitions Trafotek, B3CG, Mecanova and Minicon.

We are proud and excited to reach the milestone SEK 5 billion in turnover and to present the 100th quarter with profit. With the help of our values and our aim to be a long-term and "Reliable" supplier to leading industrial customers, we now look forward to the coming 100 quarters of profitable growth.

Anders Carlsson


For further information, please contact:
Anders Carlsson, CEO, +46 70 513 42 99 or CFO, Mia Tomczak, telephone +46 70-833 00 80

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 Anders Carlsson for publication at 08:00 hours CEST on October 24, 2019.


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, 2018, in total about 6,100 employees in Sweden, Bulgaria, China, Estonia, Hungary, India, Italy, Lithuania, Mexico, Poland, Serbia, Finland, Canada and USA.

In 2018 AQ had net sales of SEK 4.7 billion and the group has since its start in 1994 shown profit every quarter.