AQ Group AB (publ), interim report January-March, 2017
First quarter, January-March 2017, in brief
- Continued growth in sales and profit
- Net sales increased by 25% to SEK 1 002 million (802)
- Operating profit (EBIT) increased by 13 % to SEK 87 million (77)
- Profit after financial items (EBT) increased by 21 % to SEK 92 million (76)
- Profit margin before tax (EBT %) 9.2% (9.5)
- Cash flow from operating activities decreased by 84 % to SEK 15 million (92)
- Equity ratio 60 % (60)
- Earnings per share after tax increased by 21 % to SEK 4.19 (3.46)
A word from the CEO
Market
The first quarter was our 90th consecutive quarter with profit.
The first quarter was our first quarter with a turnover over one billion SEK.
We have increased our turnover every year since the start October 1, 1994 i.e. for 22 years. We have shown profit during all 90 quarters. First quarter of 2017 shows the highest turnover and profit after financial items in the history of the group.
The organic growth for the quarter was 8.6% compared to 3.6% the first quarter of 2016. The high growth can partly be explained by more working days in March compared to 2016.
Our production units have had a high utilization rate at the end of the quarter, this in combination with many working days in March have given an increased margin. We see a need of investments in production capacity in several areas. Two of our production units in Sweden have profitability problems and action programs are ongoing, but it will take time to get them to satisfactory profitability.
The cash flow from operating activities is weak during the first quarter, a large part of the profit has been used for accounts receivables and inventory. There is still a pressure from our customer to extend credit terms.
Raw material prices, especially of steel, have increased during the first quarter. Therefore, it is important that we immediately adjust prices to our customers when prices of raw material are increasing. There is a risk going forward that we see declining margins if we don’t manage to increase customer prices at the same pace as raw material prices are increasing.
Acquisitions
Gerdins was acquired on October 3, 2016. It is our biggest acquisition so far when it comes to turnover. The subsidiaries of Gerdins have been integrated into AQ’s existing business areas. The margin during the fourth quarter last year was weak, but has during the first quarter turned to a level just below AQ’s goal.
We are always looking at new acquisition opportunities. We would like to strengthen our presence in the growth areas where we are already present, but also to follow some of our biggest customers to completely new geographic regions.
Organisation
Our focus has always been to adapt to customers’ requirements and real demands. It’s a strategy we will continue
to follow, to be fast movers and adaptable no matter of market conditions.
Our organisation is built on entrepreneurship and it is a foundation of our core values.
Outlook
My assessment is that we are gaining market shares in several areas and are also entering new markets. However, one shall be aware of the fact that AQ is acting in a global competition with subsequent price pressure.
With operations in 12 countries and more than 5 000 employees it is important for us to maintain our simplicity and speed in our decision making and to minimise bureaucracy, which can easily occur in a larger organisation.
With strong relations to world leading customers and engaged employees I am looking positively at the future with continued growth with stable profit level. An important part of this is our core values and our efforts to be a reliable supplier to leading industrial customers.
AQ is well positioned for new acquisitions from a financial as well as from a management view.
Claes Mellgren
CEO
_______________________________________________________________________________________
Further information can be given by AQ Group AB: CEO, Claes Mellgren, telephone +46 70-592 83 38 or CFO, Mia Tomczak, telephone +46 70-833 00 80 or IR, Glen Nilsson, telephone +46 70-654 40 03
AQ Group is required to make the information in this press release public in accordance with the EU Market Abuse Regulation. The information was released by CEO Claes Mellgren for publication at 08:00 hours CET on April 27, 2017.
_________________________________________________________________________________
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, striving to provide cost effective solutions in close cooperation with the customer.
The Group headquarter is in Västerås, Sweden. AQ has, on December 31, 2016, in total about 5,100 employees in Sweden, Bulgaria, China, Estonia, Hungary, India, Italy, Lithuania, Mexico, Poland, Serbia and Thailand.
In 2016 AQ had net sales of SEK 3.3 billion and the group has since its start in 1994 shown profit every quarter.
AQ has the highest credit rating AAA according to Bisnode.
Tags: