AQ Group

Third quarter, July-September 2024 in brief

• Lower sales and maintained profit margin
• Net sales decreased by 9% to SEK 1,949 m (2,149) 
• Operating profit (EBIT) decreased by 6% to SEK 188 m (201) 
• Profit before tax (EBT) decreased by 9% to SEK 177 m (195) 
• Profit margin before tax (EBT %) was 9.1% (9.1) 
• Profit after tax amounted to SEK 146 m (172)
• Cash flow from operating activities amounted to SEK 363 m (339)
• Earnings per share before dilution amounted to SEK 1.60 (1.87)

Nine months, January-September 2024 in brief

• Net sales decreased by 5% to SEK 6,428 m (6,747) 
• Operating profit (EBIT) increased by 6% to SEK 633 m (599) 
• Profit before tax (EBT) increased by 7% to SEK 616 m (575) 
• Profit margin before tax (EBT %) was 9.6% (8.5) 
• Profit after tax amounted to SEK 511 m (502)
• Cash flow from operating activities amounted to SEK 908 m (742)
• Earnings per share before dilution amounted to SEK 5.58 (5.45)
• Equity ratio was 65% (61)

A word from the CEO      
Lower sales but AQ stands strong
In the third quarter, our sales decreased by 9% compared to the same period last year. Our profit before tax decreased in line with net sales. As always, we focus on helping our customers. Our actionable management teams are quick to adjust our capacity and cost base, which gives an okay result in this quarter. We continue to work towards increasing our added value by selling more complex components and systems with an increased proportion of technology content.

Acquisitions
In 2024, we acquired five factories and one engineering office. AQ has a history of making more acquisitions when the markets in which we operate are weak. We have a good pipeline of companies we want to buy. We took over Rockford Components Ltd at the beginning of the third quarter, which manufactures wiring systems and electromechanical systems for customers primarily in the aerospace and defense industries. AQ Rockford has delivered more and better than expected in the third quarter and we see great potential to continue to grow with our new customers in the UK.

At the end of September, we signed an agreement to acquire TechROi Engineering and TechROi Scandinavia, which develop components and systems for demanding customers in the automotive, aerospace and gas turbine industries. With this acquisition, we strengthen AQ's competence in customer-oriented product development and prototype manufacturing. This, combined with AQ's factory network, gives us a stronger offering to our customers. If the authorities approve the acquisition, the company will be included in AQ from the fourth quarter. When we combine the TechROi companies with our own company AQ Engineering, we have more than 100 engineers in Sweden who work directly together with demanding industrial customers.

Market and investments
In the quarter, we had a negative organic growth of 11% compared to the same quarter last year. We are not satisfied with that. We can do better. We continue to see a slowdown in demand from our customers in trucks and construction equipment. There is also a general decline in demand from German customers in agricultural machinery, forklifts, and engines.   

We have won several new contracts that will increase in volume going forward. But this will not completely compensate for the volume losses that we see. Our view is that we continue to gain market share, but my most important task is to get new orders in, and I am not satisfied with my own performance. We will work harder!

During the quarter, we installed our first machine for magnetic pulse crimping of high-voltage wiring systems for the automotive industry in our factory in Lithuania. This is to meet demand and raise the level of quality for several of our major vehicle customers. We are pleased that we are one of the first companies in the world with this type of equipment. We expect to grow in this area, although sales of electric vehicles are slower than expected right now. During the third quarter, we also put into use our new Solar Power Plant at our plant AQ Magnit in Godech, Bulgaria. This will decrease our carbon footprint by 160 tons per year  

Cash flow and balance sheet
As expected, our cash flow from operating activities is strong as sales volume declines. We have a net cash position of SEK 117 m. This means that we have plenty of capital to use for continued growth with our customers and to carry out acquisitions.  

AQ stands strong
In 2024, AQ as a company celebrates 30 years. We have increased our turnover from SEK 18 million to almost SEK 9 billion (R12). We have proven that our business model and culture with decentralized leadership close to the customer works. AQ stands stronger than ever now that volumes are declining in some of our market segments. We have a very strong balance sheet, efficient production units globally, world-class machinery and fantastic employees. We know that the economy is not always booming. That is why we are now rolling up our sleeves to work smarter and even more goal-oriented to please our customers so that we together can reach our high targets.

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 released for publication by James Ahrgren on 17-10-2024 08:00 CEST.

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

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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 8,000 employees in Bulgaria, Poland, Lithuania, Sweden, China, Estonia, Hungary, Mexico, Finland, India, Canada, USA, Germany, Italy, Brazil and England. In 2023 AQ had net sales of SEK 9 billion, and the Group has since its start in 1994 shown profit every quarter.

www.aqgroup.com