AQ Group (AQ) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 decreased by 9% year-over-year to SEK 1,949 million, with operating profit (EBIT) down 6% to SEK 188 million and profit after tax at SEK 146 million.

• For the first nine months of 2024, net sales declined 5% to SEK 6,428 million, but EBIT rose 6% to SEK 633 million and EBT increased 7% to SEK 616 million.

• Earnings per share before dilution for Q3 was SEK 1.60 (down from 1.87); nine-month EPS was SEK 5.58 (up from 5.45).

• Cash flow from operating activities reached SEK 363 million in Q3 and SEK 908 million for the nine months, with the equity ratio at 65%.

• The company continues to pursue acquisitions, with five factories and one engineering/prototype office acquired year-to-date, including JIT Mech, Rockford Components, and an agreement to acquire TechROI Engineering.

Financial highlights

• Q3 net sales down 9% year-over-year, with -2% from currency, +3.5% from acquisitions, and organic growth at -11%.

• EBIT margin for Q3 was 9.6% (8.5% last year); EBT margin for Q3 was 9.1%, unchanged year-over-year.

• Inventory turnover remains below target at 3 turns/year; improvement actions ongoing.

• Net cash position at period end was SEK 117 million, compared to net debt of SEK 409 million last year.

• Profit after tax for nine months: SEK 511 million, higher than previous year; record operating cash flow of SEK 908 million.

Outlook and guidance

• Company targets >15% growth and >8% EBT margin; organic growth target is 10% per year, acquired growth target 5%.

• Power grid segment expected to grow ~20% per year; defense segment also growing rapidly.

• Marine growth expected to flatten, while railway remains strong but project-based and volatile.

• Loss of a major battery storage customer will improve comparison base in future quarters.

• Ongoing improvement initiatives in inventory management and operational efficiency.