AQ Group AB (publ): Year-end report 2019

Fourth quarter, October-December 2019
in brief

  • Strong cash flow and continued good growth driven by acquisitions
  • Net sales increased by 6.9 % to SEK 1 300 million (1 216)
  • Operating profit (EBIT) increased by 13.8 % to SEK 65 million (57)
  • Profit after financial items (EBT) increased by 8.8 % to SEK 58 million (53)
  • Profit margin before tax (EBT %) was 4.5 % (4.4)
  • Cash flow from operating activities increased to SEK 153 million (41), affected by new IFRS 16 rules by SEK 25 million
  • Earnings per share after tax SEK 2.60 SEK (2.58)
  • Equity ratio 52 % (58), 2019 affected by new IFRS 16 rules

Full year 2019 in brief

  • Strong profit improvement compared to major extraordinary costs in 2018
  • Net sales increased by 9.5 % to SEK 5 113 million (4 667)
  • Operating profit (EBIT) increased by 63.6 % to SEK 340 million (208)
  • Profit after financial items (EBT) increased by 62.1 % to SEK 321 million (198)
  • Profit margin before tax (EBT %) was 6.3 % (4.2)
  • Profit margin before tax (EBT %) adjusted for items affecting comparability was 5.8 % (6.4)
  • Cash flow from operating activities increased to SEK 499 million (151), affected by new IFRS 16 rules in 2019 with SEK 84 million 
  • Earnings per share after tax increased to SEK 14.37 SEK (8.26)
  • Equity ratio 52 % (58), 2019 affected by new IFRS 16 rules
  • The Board of Directors proposes a dividend of SEK 3.33 (2.75)


A word from the CEO

Fourth quarter
Our EBT margin for the quarter is 4.5 %. This EBT result is 8.8 % better than the fourth quarter of last year but lower than we have had earlier during 2019.

The reason for this is that also AQ Group sees a declining demand from our cyclical customers, while we also had a December month where several of our larger customers have taken the opportunity to take a slightly longer Christmas break than usual.

Other explanations for the result are to some extent restructuring costs and one-off effects in some companies. We have quickly reduced staffing on both our own and hired staff to adapt to lower demand during the quarter.

Full year
Earnings per share for the full year 2019 of SEK 14.37, are the best ever and significantly better than last year (8.26). The first half of the year was characterized by good organic growth and a large acquisition, which meant that growth continued during the second half of the year despite the negative organic growth.

The Board's proposal for the Annual General Meeting is to increase the dividend to SEK 3.33 per share. A curious thing is that this amount is the same as the subscription price was for an AQ share at the listing on Aktietorget in 2001. We want to thank all our customers, suppliers and employees for good cooperation and good work efforts in 2019.

The declining volumes were mainly coming from buses, construction, agricultural and forestry machines. We also have railway customers who have been affected by delays in their projects and we didn’t have the same large project business in traffic infrastructure as we had last year. With the acquisition of Trafotek and good development with other customers in environmental technology, medical technology and the food industry, we still grow a total of 6.9 % in the quarter.

Times of declining demand are not only bad. Both the buyers at AQ and with our customers can spend less time chasing material and thus have more time to explore different opportunities in the market. This gives us the opportunity to gain market share and also to increase the pace of our efforts to streamline our factories and lower our purchasing costs. For example, we have succeeded in winning major business in electrical buses and in upgrades of drivers desks to subway cars during the fourth quarter.

Cash flow
We have a strong cash flow in the quarter due to a decreasing need for working capital when volumes are declining. However, we still have problems with some of our larger customers paying late at the end of quarters and year-end, which is something that we are working hard to improve. We also continue to implement our inventory management projects in unit by unit.

Delivery capability
It is gratifying that our delivery precision was significantly better than a year ago. We report a value for the entire Group of 94.2 % during the quarter. This means that a majority of our factories have a delivery security that is close to or above our target level and that we continue to improve where needed. We are still not satisfied, and we will continuously develop our processes and standards to become even more robust and flexible in 2020.

Growth for a contract manufacturer means investing in space, machinery and people. A good example of this is AQ Wiring Systems in Lodz, Poland who has moved into new, better and larger facilities that allow them to continue to develop.

The integration of Trafotek continues according to plan. We have a new business area organization in place, and we are working on several improvement projects where we use our larger international presence more efficiently. For example, we are in India selling and manufacturing products for Trafotek's customers. Our business area for inductive components, which includes Trafotek, is well exposed to renewable energy, such as larger wind turbines. We have won several deals in this area during the quarter.

AQ Group has a strong culture with core values ​​that are 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. 

AQ has three units in Suzhou, China and they are affected by the concerns surrounding the Corona virus. We have had a longer closure than normal for the Chinese New Year following directives from the Chinese authorities. We are now back in operation with lower capacity as all our employees have not yet been able to return. Most of our customers in China have also closed and we will now do our utmost to catch up on deliveries.

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. We want to increase our turn-over both organically and through acquisitions.

Our EBT margin for 2019 was 6.3 %. This is better than last year but far from the goal. With strong relationships with our world-leading customers and committed employees, we will work hard on improving our efficiency in the production units and lower our purchasing costs. Our employees and leaders are doing a good job and they are now increasing their efforts to win new business and return to organic growth.

A continued important part of this is our core values ​​and our efforts to be a long-term and "Reliable" supplier to leading industrial customers.


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 CET on February 20, 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.