AQ Group

Fourth quarter, October-December 2023 in brief

• Strong cash flow and the board proposes a doubled dividend
• Net sales increased by 12% to SEK 2,221 m (1,974)
• Operating profit (EBIT) increased by 30% to SEK 193 m (148)
• Profit before tax (EBT) increased by 33% to SEK 182 m (137)
• Profit margin before tax (EBT %) was 8.2% (6.9)
• Profit after tax amounted to SEK 134 m (134)
• Cash flow from operating activities amounted to SEK 239 m (140)
• Earnings per share before dilution amounted to SEK 7.32 (7.27)

Full year 2023 in brief

• Net sales increased by 27% to SEK 8,968 m (7,053)
• Operating profit (EBIT) increased by 61% to SEK 792 m (491)
• Profit before tax (EBT) increased by 57% to SEK 757 m (482)
• Profit margin before tax (EBT %) was 8.4% (6.8)
• Profit after tax increased by 54% to SEK 636 m (413)
• Cash flow from operating activities amounted to SEK 980 m (208)
• Earnings per share before dilution amounted to SEK 34.57 (22.43)
• Equity ratio was 63% (56)
• The Board of Directors proposes a dividend of SEK 6.66/share (SEK 3.33/share)

A word from the CEO     

Strong cash flow and high turnover despite production disruptions

This year we broke our records again in terms of turnover and profitability. This year was also the best in terms of operating cash flow. We've shown growth 28 out of 29 years and been profitable every quarter since we were founded in 1994. That's 117 quarters in a row. It is an achievement in our contract manufacturing world where we are constantly exposed to tough competition from talented competitors. Our most important competitive advantage is our employees who work with the customer in focus in accordance with our core values ​​where we let the individual take great responsibility and have great freedom to influence.

Production disruptions

During 2023, we have grown turnover by almost SEK 2 bn. The growth has taken place in all market segments, but above all in electrification, commercial vehicles and the defense industry. We love growth at AQ! Unfortunately, we have not managed to increase our capacity as quickly as our customers wanted, which has led to delivery delays. As a result of our rapid expansion, we have also had quality problems for some of our customers. This is not ok! We both can and must get better at scaling up our operations without delivery delays. We have several initiatives that will be implemented during the year to improve the quality and delivery precision to our customers.

For one of our customers in battery systems, we have had quality problems at the end of 2023. We have a close dialogue with the customer but right now we do not see any further projects in 2024. The projects we had were completed at the end of the fourth quarter with good quality. During 2023, the turnover related to this customer amounted to SEK 250 m. The capacity freed up in our factory in Bulgaria will be used for other customers who are growing in electrification.

These disruptions affect our profitability in the fourth quarter. Mainly caused by higher production costs but also quality costs. Therefore, the result in the quarter is disappointing even though we exceed our target with a profit before tax above 8%.

Market and acquisitions

We look positively on the development for our customers in 2024. We are a small part of the transition towards a more electrified society and there is good growth there. We also see strong growth in the defense industry, and we feel we are gaining market share in commercial vehicles. We also have a nice list of potential acquisitions that we want to complete. All in all, we remain positive about AQ's development in 2024.

Cash flow and balance sheet

During the year we improved the inventory turnover rate from 2.3 to 3.2 times/year. This results in a significantly better cash flow from operating activities, which was SEK 980 m during the year. We have low net debt (SEK 25 m), which enables continued investments in expanded production capacity and acquisitions. Our strong balance sheet also enables us to double the dividend from the previous year to SEK 6.66/share this year, if the AGM chooses to do so.

2023 was great, aiming for new records 2024

2023 was financially our best year ever. There is good basis for next year to be even better. We are still a relatively small company that, through entrepreneurship and determination, will continue to be able to grow our turnover and profit by 15% per year, as we have done for the past 10 years.

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 15-02-2024 08:00 CET.

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For further information, please contact:
James Ahrgren, CEO, +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 and Brazil.

In 2023 AQ had net sales of SEK 9 billion, and the Group has since its start in 1994 shown profit every quarter.