AQ Group AB (publ), interim report January - September, 2023
Third quarter, July-September 2023 in brief
- High turnover and strong cash flow
- Net sales increased by 26% to SEK 2,149 million (1,711)
- Operating profit (EBIT) increased by 63% to SEK 201 million (123)
- Profit before tax (EBT) increased by 61% to SEK 195 million (121)
- Profit margin before tax (EBT %) was 9.1% (7.1)
- Profit after tax increased by 72% to SEK 172 million (100)
- Cash flow from operating activities amounted to SEK 339 million (3)
- Earnings per share before dilution amounted to SEK 9.34 (5.41)
Nine months, January-September 2023 in brief
- Net sales increased by 33% to SEK 6,747 million (5,078)
- Operating profit (EBIT) increased by 75% to SEK 599 million (343)
- Profit before tax (EBT) increased by 66% to SEK 575 million (346)
- Profit margin before tax (EBT %) was 8.5% (6.8)
- Profit after tax increased by 79% to SEK 502 million (280)
- Cash flow from operating activities amounted to SEK 742 million (69)
- Earnings per share before dilution amounted to SEK 27.25 (15.16)
- Equity ratio was 61% (56)
A word from the CEO
High turnover and strong cash flow
During the quarter, we have delivered on the great demand from our customers in electrification, commercial vehicles, the defense industry, trains and ships. We win new projects and products for new and existing demanding industrial customers. It is incredibly fun to see that our decentralized model with own customer responsibility continues to function.
Profitability
Our profitability improved compared to previous year and we are still slightly above our target of a profitability above 8% profit before tax. The improvement is strongly linked to productivity improvements in our companies in Mexico, Estonia, Poland, USA and Canada.
Implemented changes during the quarter
Our pace of change is high thanks to our decentralized leadership model. During the third quarter, we completed the expansion of our wiring systems factory in Lodz, Poland. It provides increased capacity. Our wiring systems factory in Lithuania has eliminated its backlog and now delivers on time. We have greatly increased our capacity in Bulgaria to cope with the large growth we see there.
Transformers and inductors for the future
Our business area Inductive Components is special. This is where we do the largest proportion of designs for our customers. Inductive components are needed everywhere where there is electricity, on everything from circuit boards to trains, boats, and for drives/charging/conversion of electricity. Over the past ten years, we have been involved in consolidating the market for advanced inductive components and can currently offer design and production in Europe, China, India, and USA. AQ has, within some niches inductive components, achieved a position of being one of five leading companies globally. We strongly believe in this business area for the future, that it can be a driving force in our continued growth. For example, during the quarter we developed and produced liquid-cooled inductors with higher frequency and lower weight for driving mining trucks for a well-known American manufacturer. It's fun with inductive components.
Cash flow and balance sheet
During the quarter, we continued our work on increasing our inventory turnover. At the end of the third quarter, we have an inventory turnover of 3 times/year. This is an improvement from 2.3 times/year at the beginning of the year. This results in a significantly better cash flow from operating activities, which was SEK 339 million during the quarter. We are now working further towards an inventory turnover of 3.5 times/year. We continue to have a low net debt, which enables continued investments in expanded production capacity and acquisitions.
Quality and delivery issues
We still have to struggle to deliver everything our customers want on time. Growing with new customers and products with new requirements is difficult. We have customers who are currently not satisfied with our quality and our delivery precision. We invest in and use our brightest employees to improve our quality and delivery capabilities.
For AQ – with the times
We are now starting to meet our own rapid growth from last year in the comparative figures. Our assessment is that, despite politically and economically uncertain times, we have good conditions to continue our growth journey. This is because many of our customers operates in electrification and energy efficiency. We are still a relatively small company that, through entrepreneurship and determination, will continue to be able to increase our turnover and profit by 15% per year. This of course also applies to 2024. AQ's fantastic employees are ready to help our customers deliver world-leading products that are critical to our transition towards a better society. We are proud that we can contribute with our excellence in how to manufacture these components and systems in the most resource-efficient way possible. It makes me full of confidence that we will continue to grow, make a profit and have fun!
James Ahrgren
CEO
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This disclosure contains information that AQ Group is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014) and the Swedish Securities Markets Act (2007:528). The information was submitted for publication, through the agency of the contact person, on 19-10-2023 08:00 CEST.
For further information, please contact:
CEO and IR, James Ahrgren, telephone +46 76 052 58 88 or
CFO, Christina Hegg, telephone +46 70-318 92 48
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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, striving to provide cost effective solutions in close cooperation with the customer.
The Group headquarter is in Västerås, Sweden. AQ has, on December 31, 2022, in total 7,200 employees in Bulgaria, Poland, Lithuania, Sweden, China, Estonia, Hungary, Mexico, Finland, India, Canada, USA, Germany, Italy and Brazil.
In 2022 AQ had net sales of SEK 7 billion, and the Group has since its start in 1994 shown profit every quarter.