Second quarter, April-June 2024 in brief
- Acquisitions in Robertsfors, Örnsköldsvik and England
- Net sales decreased by 4% to SEK 2,254 m (2,345)
- Operating profit (EBIT) increased by 9% to SEK 222 m (203)
- Profit before tax (EBT) increased by 11% to SEK 218 m (195)
- Profit margin before tax (EBT %) was 9.7% (8.3)
- Profit after tax amounted to SEK 181 m (172)
- Cash flow from operating activities amounted to SEK 301 m (177)
- Earnings per share before dilution amounted to SEK 1.97 (1.86)
Six months, January-June 2024 in brief
- Net sales decreased by 3% to SEK 4,479 m (4,598)
- Operating profit (EBIT) increased by 12% to SEK 445 m (398)
- Profit before tax (EBT) increased by 16% to SEK 439 m (380)
- Profit margin before tax (EBT %) was 9.8% (8.3)
- Profit after tax amounted to SEK 366 m (330)
- Cash flow from operating activities amounted to SEK 545 m (403)
- Earnings per share before dilution amounted to SEK 3.98 (3.58)
- Equity ratio was 64% (58)
A word from the CEO
AQ in Robertsfors, Örnsköldsvik and England!
The second quarter has continued as the first. We focus on helping our customers. We are quick to adjust our capacity and cost base, which, together with productivity improvements, creates a good result in the second quarter.
Acquisition
In March, we agreed with the owners of JIT Mech to acquire their two production units in Robertsfors and Örnsköldsvik. This gives AQ unique expertise in welding and machining of large complex components for electrification, the defense industry and forest mechanization. Closing was at the beginning of May and although the integration has just begun, the company is developing better than expected and has now a yearly turnover of SEK 200 m. Therefore, we have decided to carry out major investments of SEK 30 m in additional processing capacity with a large floor type milling machine and a large multi-operation machine to meet the needs of our customers in electrification and for the defense industry.
On July 10, we acquired and took over Rockford Components Ltd., which manufactures cabling and electromechanical systems for customers in the aerospace, defense and general industries. The company had sales of approximately SEK 95 m in 2023 and an operating margin below the AQ average. Rockford has 112 employees in Worksop, Rendlesham and Salisbury, England. We have had a dialogue with Rockford for many years and now was the right time to join forces. We value Rockford's high level of technical know-how, fine customer base and see synergies with AQ's highly productive manufacturing units around the world.
These two acquisitions will mean more profit, growth and fun. But we are not satisfied. We continue to work and hope to be able to complete one or more acquisitions before the end of the year. But acquisition processes are something we like to speed up slowly. It is of the utmost importance that we do not rush and make costly mistakes.
Market
In the quarter, we had a negative organic growth of 6% compared to the same quarter last year. This is partly due to the fact that we delivered several large energy storage projects in the corresponding quarter last year, but just as in the first quarter, we see an increasing slowdown in components for construction equipment and trucks.
On a positive note, during the quarter, we won major projects of liquid-cooled inductors for market-leading wind power manufacturers in North America, won our first major order for enclosures for a leading inverter manufacturer in Europe, won several projects in electrical automation for Ro-Ro vessels in China, won several projects for inductors for trains in Europe and also received two major orders for advanced components for defense vehicles.
During the second quarter, our new management in one of our Indian companies continued the improvement work. This has resulted in a write-down of the inventory, by approximately SEK 10 m, which was an important step against enhanced inventory control and increased on-time delivery to our customers.
Cash flow and balance sheet
Our cash flow from operating activities is in line with our results. Our net debt is low, SEK 128 m. During the quarter, we have chosen to sign a new agreement with our bank in which we extended the term by three years on our loans with favorable terms. This means that we continue to have plenty of capital to use to grow with our customers and to carry out further acquisitions.
AQ 30 years of growth, profit and fun
In 2024, AQ as a company celebrates 30 years. We want to do this by once again showing that we are hard-working entrepreneurs who, with our core values as a guiding star, can grow, show good results and have fun together along the way. Finally, I would like to thank our employees who do a fantastic job of satisfying our demanding customers.
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 12-07-2024 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
