AQ Group AB (publ), interim report January - June, 2019
Second quarter, April-June 2019
in brief
- Strongly improved profit, good growth and acquisition of Trafotek
- Net sales increased by 7.3% to SEK 1 313 million (1 224)
- Operating profit (EBIT) increased by 61.6 % to SEK 93 million (58)
- Profit after financial items (EBT) increased by 59.7 % to SEK 88 million (55)
- Profit margin before tax (EBT %) was 6.7 % (4.5)
- Cash flow from operating activities increased by 39.8 % to SEK 50 million (35)
- Earnings per share after tax increased by 50.0 % to SEK 3.81 (2.54)
- Equity ratio 49 % (54), 2019 affected by new IFRS 16 rules
Six months, January-June 2019
in brief
- Net sales increased by 10.9% to SEK 2 566 million (2 314)
- Operating profit (EBIT) increased by 46.2 % to SEK 189 million (129)
- Profit after financial items (EBT) increased by 46.5 % to SEK 181 million (124)
- Profit margin before tax (EBT %) was 7.1 % (5.4)
- Cash flow from operating activities increased by 206.8 % to SEK 215 million (70)
- Earnings per share after tax increased by 40.0 % to SEK 7.95 (5.68)
A word form the CEO
Quarter
The second quarter is the 99th consecutive quarter that AQ Group shows profit. Profit after financial items (EBT) was 59.7% better than last year and turnover was 7.3% higher. The profit improvement comes from higher sales and that we no longer have losses from the three units we restructured in 2018.
Cash flow from operating activities was positively affected by our projects to increase inventory turnover, but other parts of working capital did not develop as strongly during the quarter. Here, we will continue our efforts to optimize our inventory and to reduce our overdue accounts receivable. On the other hand, cash flow from operating activities was good for the first half of the year.
Acquisitions
During the quarter, we completed the acquisition of Trafotek. This company is a leading supplier in the design and manufacturing of inductive components for power electronics, such as reactors, transformers and filters. Trafotek's customers are mainly active in industrial automation, renewable energy and marine electrification. The fit between AQ and Trafotek is very good and we have no overlaps in terms of customers and geographical presence. We look forward to working with our new colleagues to develop the business with inductive components around the world.
Just at the beginning of the third quarter, we also announced that one of our companies in Sweden, AQ Wiring Systems AB, has made a complementary acquisition of a company called MiniCon AB. This acquisition will strengthen our presence and expertise in wiring systems for demanding industrial customers in the Nordic region. Acquisitions like these will continue to be an important part of AQ's strategy.
Market
The organic growth for the quarter adjusted for currency, acquisitions and the larger unit we phased out last year was 8.9%. Our business with electrical cabinets for automation, inductive components for trains, wiring systems for commercial vehicles and assembly of complete machines for medical technology continue to be the strongest contributors of growth even in this quarter. In our role as a supplier, AQ is always ready for changes in demand. We need to be quick to change both in growth and when demand for our customers' products decreases.
Delivery capability
We want to continue to develop into an even better supplier for our customers. We note that our delivery reliability has improved during the quarter, but we are not yet satisfied. In the last interim report, we mentioned that one third of our manufacturing units have unsatisfactory delivery precision. Approximately half of these have improved during the quarter and this work continues. We want to continuously develop our processes and standards to become even more robust and flexible during this and coming years.
Organization
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.
Outlook
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 continued good integration of Trafotek, B3CG, Mecanova and Minicon.
An 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
CEO
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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 July 18, 2019.
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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.
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