AQ Group AB (publ), interim report January - September, 2022

Report this content

Third quarter, July-September 2022 in brief


  • Strong growth within electrification
  • Net sales increased by 31.0% to SEK 1,711 million (1,306)
  • Operating profit (EBIT) increased by 30.8% to SEK 123 million (94)
  • Profit after financial items (EBT) increased by 33.7% to SEK 121 million (91)
  • Profit margin before tax (EBT %) was 7.1% (6.9)
  • Cash flow from operating activities amounted to SEK 3 million (99)
  • Earnings per share after dilution increased by 31.4% to SEK 5.41 (4.12)


Nine months, January-September 2022 in brief


  • Net sales increased by 27.8% to SEK 5,078 million (3,974)
  • Operating profit (EBIT) increased by 2.9% to SEK 343 million (333)
  • Profit after financial items (EBT) increased by 4.6% to SEK 346 million (331)
  • Profit margin before tax (EBT %) was 6.8% (8.3)
  • Cash flow from operating activities amounted to SEK 69 million (343)
  • Earnings per share after dilution decreased by 0.4% to SEK 15.16 (15.23)
  • Equity ratio was 56% (55)


A word from the CEO  


Growth within electrification

We continue our trend with strong organic growth. In the quarter we grew by 31%. More electricity to the people is the message around the world. To work with electrification has become a buzzword. At AQ we have worked with electrification since we were founded in 1994. Our customers within all segments use our knowledge within design and production of mechanics, wiring systems, inductive components, and electric cabinets to be able to deliver new electrified solutions. We are proud that we can contribute to make the world better. During the quarter we have continued to expand our capacity, for example we have delivered our first battery systems from Bulgaria, and we have 500 new employees in our factory in Lithuania, which delivers wiring systems to electrified heavy vehicles such as trucks, buses and construction equipment. Many people talk about a future recession within the industry. AQ is a small company with a small market share relative to the total market for contract manufacturing. We intend to continue to grow and take market share even though the demand within any of our market segments suddenly would drop.


The profit margin for the quarter was 7%. We cannot be satisfied with that. If we are to be able to afford our strong organic growth, a margin of 8% is required. We are still in tough negotiations with our vehicle customers to receive compensation for cost increases for raw materials, energy, and transport. These negotiations have come far, and I am convinced that we will reach our goal during the fourth quarter.


We have been making improvements at our company in Mexico for a long time. We now see a big improvement in terms of quality and delivery precision to our customers. It also improves profitability. But we are still not quite there. During the fourth quarter, we will strengthen the management team in Mexico with two experienced leaders to further improve operations.


As I wrote in the report for second quarter, we still have profitability problems in two of our companies in China. During third quarter we have started to sell directly to end customers instead of using distributors. This has a positive impact on our profitability. During the fourth quarter we shall improve productivity in these companies in order to reach our goals regarding profitability.


Two of our companies in North America have had to stop deliveries during the quarter as a customer has closed his factory due to a strike. This affects the profit negatively during the quarter by SEK 4 million. The strike is now over, and deliveries have been made as usual since August 20.


As far as material shortages are concerned, the situation has improved within our wiring companies. However, we still have difficulties buying processors for our business areas Electric Cabinets and System Products. The lead times on these components are long and affect our ability to deliver everything our customers want. We have a continued backlog within these two business areas.



During the third quarter, our factory in Bulgaria delivered battery storage systems for EUR 6 million to a customer who provides energy storage for the electric grid. Our company in Lithuania has started serial deliveries of a new contract for wiring harnesses that we received during the second quarter. This contract is worth approximately EUR 9 million per year.


The demand from our existing customers is strong. We see good growth mainly in electrification. During the third quarter, our deliveries for electrification are 55% of our total turnover. We focus our continued organic growth within this area. 20% of our total turnover in the quarter is to the automotive industry, which is still mostly diesel powered. These customers are making a major transition to electrified vehicles. The turnover for our wiring products increases by an estimated 20% for electric vehicles compared to the same type of diesel vehicle. We help our customers through this transition with our strong offer in wiring systems, electrical cabinets, and inductive components.


Investments in continued growth and acquisitions

Today we have good organic growth. We are therefore focusing our resources on managing this historically high organic expansion rate. During the first nine months of 2022, we have grown by SEK 1 billion in absolute numbers. We expect increased sales of new products at the same extent also for 2023. Therefore, we currently do not consider making potential acquisitions.


We have started with great speed the renovation of the property we acquired in Pernik Bulgaria during the second quarter. We expect the first battery systems to be delivered from this new factory in the fourth quarter and then to reach full production rate in the first quarter of 2023. Our team is doing a fantastic job on this project. Sometimes the most important thing for our customers is that we can execute quickly, which we certainly do. We have great opportunities to sell battery systems for EUR 40 million from this factory in 2023.


Our factory in Lithuania is now preparing for serial production of wiring harnesses to a world-leading truck manufacturer starting in the first quarter, 2023. We have already recruited 500 employees and will recruit 300 more before the end of the fourth quarter. It is natural that productivity will be lower for a while when we recruit so many new employees at once. We have a very experienced management team in Lithuania that will handle this ramp-up well. We expect that this factory will double its turnover in 2023, which means an increase of EUR 40 million.


Cash flow and balance sheet

We have continued high organic growth. This means that our inventory and our accounts receivable are increasing. We have many large customer projects with several new customers which initially affect cash flow negatively. The units that had the greatest impact on working capital during the quarter are our Wiring System unit in Lithuania, our Electrical Cabinet company in Bulgaria and our transformer factory in the USA. In the quarter, the cash flow is weak, but we continue to have a low debt ratio, which means that we can focus on our customers and continue to invest and grow together with them.


Employees and core values

I have had the privilege of leading AQ for six quarters. We are a group of around 50 leaders with a strong inner drive who always want to get better. It is these leaders who, together with our 7 000 employees, make AQ such a strong force. We move forward together, upwards and towards new records every year. This year, I can already say with certainty that we will break our records in terms of turnover and earnings once again. That's what makes this job, the best one can have. Leading this group and together becoming better and better while we, by producing solutions for our customers for an electrified society, at the same time make the world a little better every day.


As a long-term shareholder in AQ, I expect that we will grow turnover and earnings every year while contributing positively to a better society. I think that's fun. As I usually say to my employees, "Let's Grow, Make Profit and have Fun!"


James Ahrgren


This disclosure contains information that AQ Group is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through James Ahrgren, on 20-10-2022 08:00 CEST.


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


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, provides cost effective solutions in close cooperation with the customer.

The Group headquarter is in Västerås, Sweden. AQ has, on December 31, 2021, in total about 6,500 employees in Sweden, Bulgaria, China, Estonia, Hungary, India, Italy, Lithuania, Mexico, Poland, Serbia, Finland, Canada, USA, Brazil and Germany.

In 2021 AQ had net sales of SEK 5.5 billion and the group has since its start in 1994 shown profit every quarter.