AQ Group AB (publ), interim report January - September, 2020
Third quarter, July-September 2020
- Good cost adjustment gives improved operating profit
- Net sales decreased by 11.4% to SEK 1,104 million (1,247)
- Operating profit (EBIT) increased by 12.4% to SEK 97 million (87)
- Profit after financial items (EBT) increased by 13.4% to SEK 93 million (82)
- Profit margin before tax (EBT %) was 8.4% (6.6)
- Cash flow from operating activities increased to SEK 139 million (132)
- Earnings per share after tax amounted to SEK 4.30 SEK (3.77)
Nine months, January-September 2020
- Net sales decreased by 6.6% to SEK 3,563 million (3,813)
- Operating profit (EBIT) increased by 0.1% to SEK 276 million (276)
- Profit after financial items (EBT) decreased by 2.0% to SEK 258 million (263)
- Profit margin before tax (EBT %) was 7.2% (6.9)
- Cash flow from operating activities increased by 28.6% to SEK 445 million (346)
- Earnings per share after tax increased by 3.7% to SEK 12.21 (11.77)
- Equity ratio was 56% (51)
A word from the CEO
AQ Group improves the EBT margin to 8.4% in the third quarter despite net sales declining by 11.4%.
The explanation for this is good work in reducing our costs over the past year at the same time as volumes recovered towards the end of the period.
We also have good growth in the quarter in medical technology, marine infrastructure, railway and machining of components for gas turbines.
The development in medical technology has been strong and we are involved in manufacturing components and systems to customers who supply equipment used for vaccine manufacturing. Marine infrastructure entails delivering enclosures and electrical cabinets for automation solutions, both on ships and in ports.
In the railway sector, we have doubled sales in India by selling to more customers and new projects. Deliveries of enclosures, inductors and master controllers to railway customers in Europe have also picked up after the summer. We also benefit from the consolidation that is taking place for machining of components for gas turbines where we are strong, especially in electrical discharge machining.
We have received subsidies to deal with the consequences of Covid-19, but to a lesser extent than during the second quarter. An adjusted EBT margin taking into account the grants received is 7.2% and the total amount of subsidies and support measures is SEK 13 million during the period.
The situation around Covid-19 has been stable. Our units have developed their working methods to deal with the virus. In the cases where we have had employees with Covid-19 infections, we have worked intensively with infection tracing, quarantine and other selective measures to prevent further spreading at our workplaces. We now see that the spread of the virus in the world is increasing again and we have full focus on continuing with our actions for the long time that the virus is likely to be around us.
During the quarter, we announced the closure of our unit in Smedjebacken and relocation of its operations to Estonia. We have also closed a smaller unit in Serbia and moved this production to Bulgaria. In Canada, we have moved the business to a new and much more adequate building located near the former facilities.
Cash flow and balance sheet
Our cash flow from operating activities is SEK 139 million. This in combination with more a cautious investment level reduces the net debt. Working capital is unchanged since the last quarter even though production increased in September from low levels. It has been challenging to work with inventory management during the year and our efforts have now led to inventory turnover rate returning to previous levels.
Acquisitions are an important part of AQ's strategy to strengthen its presence and ability in product areas and geographic markets where we see opportunities for growth and improved profitability. During Covid-19 the market for acquisitions has been slower of natural reasons, but in pace with a stabilized situation, we now return to working as usual according to our acquisition strategy.
Our guideline is to be a long-term, stable, growing and profitable group with a profit margin (EBT) of 8% and a strong financial position.
With strong relationships with world-leading customers and committed employees, we will work hard on improving our efficiency in the production units and lower our purchasing costs while increasing our efforts even more to win business with existing and new customers.
The basis for this is our strong core values that help us in everyday life. These are customer focus, simplicity, entrepreneurial business, cost efficiency and to show courage and respect in relation to our customers, suppliers and colleagues.
AQ Group is with its decentralized structure and strong balance sheet well positioned to be a “Reliable” supplier to demanding industrial customers.
For further information, please contact:
Anders Carlsson, CEO, +46 70 513 42 99 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 Anders Carlsson for publication at 08:00 hours CEST on October 22, 2020.
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, 2019, in total about 6,300 employees in Sweden, Bulgaria, China, Estonia, Hungary, India, Italy, Lithuania, Mexico, Poland, Serbia, Finland, Canada, USA, Brazil and Germany.
In 2019 AQ had net sales of SEK 5.1 billion and the group has since its start in 1994 shown profit every quarter.