Earnings call transcript: AQ Group Q2 2025 sees record profit after tax

AQ Group AB recently reported its financial results for the second quarter of 2025, showcasing a robust performance with net sales reaching 2.3 billion SEK, marking a 4% year-over-year increase. The company achieved its highest-ever profit after tax at 189 million SEK, despite a slight decline in operating profit. The company maintains impressive gross profit margins of 50.49% and has earned a "GREAT" financial health score according to InvestingPro’s comprehensive analysis. The stock responded positively to the news, with a 3.88% increase, reflecting investor confidence in the company’s ongoing strategies and market performance.

Key Takeaways

• AQ Group achieved record profit after tax of 189 million SEK.
• Net sales increased by 4% year-over-year to 2.3 billion SEK.
• Stock price rose by 3.88% following the earnings announcement.
• The company continues to focus on organic growth and strategic acquisitions.
• New customer projects include collaborations with Volvo and Siemens.

Company Performance

AQ Group has demonstrated consistent growth, with net sales for the first half of the year totaling 4.6 billion SEK, a 3% increase compared to the previous year. The company has maintained profitability for 10 consecutive quarters, surpassing its 8% earnings before tax target. This performance is bolstered by strategic acquisitions and a focus on high-growth segments like electrification and railway systems.

Financial Highlights

• Revenue: 2.3 billion SEK, up 4% YoY
• Operating profit (EBIT): 218 million SEK, down 2% YoY
• Profit after tax: 189 million SEK, highest on record
• Earnings per share: 2,060 SEK, highest ever

Earnings vs. Forecast

While specific EPS forecasts were not provided, AQ Group’s results were robust, as evidenced by the record profit after tax and highest-ever earnings per share. The company’s performance aligns with its historical trend of consistent profitability and growth.

Market Reaction

Following the earnings release, AQ Group’s stock price increased by 3.88%, closing at 192.7 SEK. This rise positions the stock closer to its 52-week high of 196 SEK, indicating strong market confidence. The stock has demonstrated remarkable momentum with a 33.95% year-to-date return. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value. The positive stock movement reflects investor optimism about the company’s strategic initiatives and financial health, supported by a strong current ratio of 2.68 and healthy cash flows.

Outlook & Guidance

AQ Group aims to double its earnings per share every five years, continuing its strategy of growth through both organic means and acquisitions. With an impressive five-year revenue CAGR of 11% and a market capitalization of $1.84 billion, the company demonstrates strong execution capability. The company expects improvements in margins for its recent acquisitions and remains focused on cost control and operational efficiency. InvestingPro subscribers have access to 12 additional key insights about AQ Group’s financial health and growth prospects, along with detailed analysis in the comprehensive Pro Research Report.

Executive Commentary

• "We fight for every single penny," emphasized an AQ Group executive, highlighting the company’s commitment to financial discipline.
• "We have plenty of work to do in our factories," another executive noted, underscoring the company’s robust project pipeline.
• "We will continue to grow, both organically and through acquisitions," an executive stated, reinforcing AQ Group’s growth strategy.

Risks and Challenges

• Supply chain disruptions could impact production timelines and costs.
• Market saturation in key segments like MedTech equipment and vending machines.
• Economic uncertainties may affect demand in challenged segments like buses in North America.
• Regulatory changes in global markets could pose compliance challenges.
• Currency fluctuations could impact financial results given AQ Group’s international operations.

Q&A

During the earnings call, analysts inquired about AQ Group’s acquisition strategy and its potential impact on margins. Executives addressed market uncertainty and detailed plans for margin improvements in recent acquisitions. Growth expectations in the trucks segment were also discussed, highlighting the company’s focus on expanding its footprint in high-potential markets.

Full transcript - AQ Group AB (AQ) Q2 2025:

Company Executive/Presenter, AQ Group: Okay. It’s 09:00, and we are going to have EQ Group’s presentation for the second quarter We start with a beautiful picture from Czech Republic. It is outside of our factory in Trutnov, where which is our latest acquisition. It’s a beautiful little village church.

And then you can see the billboard on the right with AQ nice logo and AQ branded. This is typically a typical example of AQ cost efficiency. We haven’t changed the billboard. We just put a sticker with AQ logo on top of the old brand and made it in a very cheap way, a very effective marketing board. Also beautiful picture with nice weather.

I was there a couple of weeks ago. It’s a very nice factory, I can tell you. Let’s go on with the report. Normally, we we say why we think you should invest in EQ Group. We have an earnings per share CAGR of 14% over the past ten years.

We made profit every quarter since the foundation in 1994, where we’re exposed to industrial market segments with underlying growth, meaning electrification, railway, defense, medtech. We also have a long history of acquisitions. We buy two to four factories per year, and the latest one being Amdex factory in Czech Republic, where we’ve just been and an engineering company in Germany also make a little trough about in Ilsofen in Germany, were acquired in quarter one. We have an extremely strong balance sheet with a net cash position. And on the right, you can see the development of sales and profits over the thirty years we have been existing.

Some quick facts about the year. We’re 8,000 employees, about SEK 8,500,000,000.0 in turnover. We have seven different product areas in and we work in 15 more than 15 market segments with production in 17 countries. We have more than 4,000 customers globally, we made profit every quarter for thirty years, as I said. And then we are part of Jung Global Compact since 2012, which is our sustainability initiative.

So to the numbers. Second quarter was okay. We increased our net sales with 4% to SEK 2,300,000,000.0. It is below our target of 15% growth. We’ll come to that later.

We made an operating profit EBIT. It decreased with 2% to SEK $218,000,000. We had a very strong Q2 last year. And then profit after financial items, EBIT increased with 5% to SEK $228,000,000. And our profit margin before tax, EBIT was 9.7%.

And profit after tax was 189,000,000, which is our best quarter ever in terms of profit after tax. And cash flow from operating activities was $232,000,000, a little bit lower than last year, and earnings per share increased to SEK 2,060,000.00, also that the highest that we have ever had in AQ. For the first six months, our net sales has increased with 3% to 4,600,000,000.0 with an operating profit that decreased with 3% to $433,000,000. Profit after financial items decreased with 1% to $432,000,000 and profit margin before tax was 9.3%. And profit after tax was $335,000,000 for the first six months.

And cash flow from operating activities was SEK $476,000,000, and earnings per share before dilution was SEK 3,870,000.00, a little bit lower than first six months of twenty twenty four. Our CAGR is still 14% considering the rolling twelve months of 2025. I expect it to be I hope it will be better when we summarize the full year. And our target is to double the earnings per share every five years, meaning an increase of 15% per year. Net sales development after a little bit of a bleak trend, we’re starting to increase again, and the growth was 4%.

And there, organic was plus 0.3%, so slight organic growth. Currency was minus 48% positive was M and A growth in the quarter compared to last quarter same quarter last year, sorry. So organic growth, we’re seeing it coming back now, but we are still far away from our target. We still we have had a very low demand from buses in North America in our factory in New York and Mexico. But a new customer called New Flyer is starting with we’re starting ramp up there in quarter three, which is nice.

So it is new flyer. What is that if you’re a Nordic investor? But it’s one of the biggest bus manufacturers in North America. So we’re happy that they are starting to work with us. And then we’re growing in trucks in Europe.

We have won some new business for the electrical trucks. And then we are growing in construction equipment. We won a lot of new business, both sheet metal and wire harnesses for the new electrical construction equipment machines. And then electrification with Hitachi ABB are still growing. And then railway and defense are also great markets to be in at the moment in especially in Europe, I would say.

Some recent new customer project wins. So on the top left, we have an inverter cabinet that we are now in full swing in serial production. But we have won also the serial production for the next version of this product that we will start with. We have started to deliver already in q two, but in q three, it would be more volume, and we believe that we can get more market share with this customer. So that is great.

We have done a really good job with delivering great quality products from our factory in Bulgaria. Then we have won some special transformers for offshore cranes that are you can see on the middle picture there. It is a not very well known company that do these huge offshore cranes, but, they’re they’re the the one that have built the biggest one in the world, and we are very happy that they are buying our kind of special transformers that we build. We we have taken one transformer, one inductor, put it together into one cabinet to make the footprint smaller. So we we save cost for our customers and can make their product more more efficient.

So it’s been designed in in Finland and produced in China for this customer. And then we have this electrical vehicle from Volvo Construction Equipment. They have launched their their new dumpers and and excavators and they’re launching products almost every month, and we are a big part of that. I think our team has done a great job with all the prototyping and now small serial volumes are coming. We hope it will continue to increase and that they will sell more electrified vehicles because that is good for Volvo, but good for the world and also good for AQ.

On the bottom left, we see one of our customers that are producing satellites. So we are doing the wire harnesses, you can see on which are marked in red for the solar panels. It’s very complicated flat wire harnesses that we have made in our factory in The UK. And we have won a big contract to supply these cables to European satellites that will or many European satellites that will be launched. So that is fun, we think, with the EK parts going into space.

And then we have the data center UPS cabinets in the middle. We have secured now volumes so that we will have full production in three sites already from quarter three, quarter four, quarter one next year. It will be full swing in that. And it is it’s very exciting for us. Our customer believes a lot in this product, and I hope we hope that we will be successful with that together.

And then we have received the first orders for ABBA from Siemens for big train projects, but also we have one additional train business that will be delivered to Norway in quarter two. So railway is also going strong, as I said before. In terms of acquired growth, we have Amdex, which we bought in January, and we have a couple of other companies that we also bought last year that impacts the growth and the M and A growth. And we have several targets that we are negotiating with, but it’s very hard to close at the price that AQ is satisfied with. So negotiations are ongoing, and we will see if we manage to close any more acquisitions this year.

But we will we are working hard on it, but let’s see if we will manage to do any deals this year. A little bit update on Amdex and Riedel. So we had the the turnover was affected, especially in Riddell by a hailstorm in Ileshofen that made holes in the roof. It made us lose, like, two weeks of production there. And the roof is repaired now, and most of the cost will be taken by our insurance company.

But it impacted the invoicing in in the negatively in the quarter. Carvana Vital system is done. Monitor ER implementation will be done in 01/01/2026. Refinancing and factoring and external loan, we have started this work, and we will complete some of it in Q3 and some of it in Q4, and it will impact the margin positively. And we will merge Amdex, Veja, and Paderborn.

Hopefully, we believe it will be completed by 2025. It doesn’t mean that we will move all the people and so on. It will more more or less, we will reduce the cost of administration and also make it simple to run this company. I mean, it’s two companies doing the same thing really, and we can we have the same manager today, so it makes sense to to merge it together. And then we have implemented new purchase prices according to AQ agreements with copper wire, aluminum wire and also grain oriented electrical steel suppliers.

And of course, Amdex had inventory when we bought it, so it takes some time before that really shows in the P and L when the new price when we start to buy the components on the new prices. It doesn’t mean we have changed the suppliers. It just means that we have changed the agreement with the current supplier. So they have same supplier as AQ had before, but we have managed to get them into the AQ agreements. It is good also and will also improve the profit in Amdex.

And then we’re working with productivity improvements in Amdex, especially in Amdex in Trutnov and in Veyia. There is things to do in the workshops and there are things to do in the office where we can get more efficient and get more out of our people. That can mean also that they do more work for other AQ companies and so on, but also it could mean that we reduce some people as well. The margin development, we look at the EBT margin, and now we have 10 consecutive quarters above our EBT target of 8%. We think it’s great work from all people involved.

We must, however, say that the sale of one of our real estate buildings, we only have one, we only had one. Ingemble improved the EBITDA margin with about 1% in the quarter. We made a really good profit. I think it was like 6,000,000 in the books, and we sold it for EUR 26,000,000. So we got like I think we get EUR 22,000,000 positive effect in the quarter, which is great.

I think it is a good deal. I think this property is centrally in Javela, which is quite expensive place. And we think that a professional real estate company can do more with this property than we could. They will need to do a lot of things with this property, and we did not want to spend our money on that. But we are renting it now for and we have signed a rental agreement for, I think, three plus years.

Let’s see how that goes. In the quarter, we have had cost control in focus, but we need to continue with that. There is plenty of opportunities to save every day. And it is really important if we are going to remain on this high margin, we need to continue to reduce our costs. That is a message to everyone really in EQ.

We really need to work on our cost. There is an opportunity to improve operationally in a few of our production sites, where we can get more productive, improve efficiency, as I said, both in the office and in the manufacturing. And then as we mentioned in the report, Amdex dilutes also the margin with about 1% in the quarter, it will improve sequentially. We wrote that also in quarter one, for those of you who are into the details with AQ, and then we say then it was 0.5%. So Hailstorm had a big impact and also a little bit other things that we have done in order to improve the productivity have cost a little bit.

So but we believe it will be it will only get better from here. And year to date, this in Amdex and Italy is still 0.5%. So it’s a little bit high cost in this quarter. Inventory value and turnover and inventory turnover development. So our inventory turnover rate is 3.5.

It has had a little bit of a declining trend. It’s positive to see that it is now turning upwards. The addition of the acquired companies, of course, have an impact with I think it’s like 0.1, 0.2. It has a negative impact because we don’t calculate it. We calculate the COGS rolling twelve months back.

So the longer an acquisition is part of AQ, the better the inventory turnover will be. Despite this, we have done a lot of things now to improve our inventory turnover in several of our sites. I’d like to mention a few. AQ Magnet in Bulgaria has improved their inventory turnover from, I think, point two to three over the past twelve months. We have Aky Transformer Solutions, which I think in 2023 had an inventory turnover of 1.6 and now we’re above five.

And we have AQ Trofotec in Finland, who had a large inventory turnover, who are now one of the better in the group. So our improvement project is working, but we still have several companies where we can get better. We have electric in Bulgaria. We have wiring systems in Canada and U. S.

We have our UK newly acquired company, AQ Rockford. We have AQ India AQ in India and Mexico. And we want to get them all above three. It will release more cash, but also improve or lower the risk in inventory and also improve our productivity. Because if you have less material in the warehouse, it’s easy.

You don’t need to count them as many times when you do audits and so on. So it is super important this in order to keep our costs down. Net cash from operating activities, of course, are impacted by the inventory turnover, but also profit. And the profit levels are quite good, and the inventory turnover is quite good. So then we get good cash flow into the business.

And our net debt is still low. And then in the quarter, we had paid for a real estate acquisition in The U. S, where we bought a factory there. We have paid dividends. Of course, it’s not part of the net cash flow from operations, but of course, it will impact the net debt.

So I think we are in a really good position. We will see a little bit negative effects on the working capital or it will be increased working capital when we stop the factoring in Amdex, but it will have a great impact on our margins. So it’s still worth it. Regarding quality and delivery position, which we always report, I’m really happy to see that on an average in quarter two, we are on, I think, 4.68, meaning we are, if you round it up, really 95% in the quarter, which is much better than one year ago. And the quality level is still stable and the inventory turnover is still good, meaning we are really improving towards our customers, which is great.

And despite that, we still have several companies that can be better. We have Rockford in The UK. We have just implemented monitor there to get the better overview and to be able to improve our inventory turnover and on time delivery there. It will have a big effect on on that company, I can say, because now everybody can see what the problems are. We still need to improve in Ytmec, and we’ve done some changes there, in the in one of the sites.

I think we will see it getting even better despite I’m very happy with that acquisition because they’re really one of the best companies in Sweden when it comes to machining extremely difficult parts and and and welding those, both for for the power grid, but also for defense. Transformer solutions in US inductors Hungary can also improve. We need to improve the capacity there. So Hungary, I think it’s sold now when we have bought Truthno transformer solutions in The US there. We are constantly doing investments there and in order to get more products out of the workshop because it’s a great demand for transformers and inductors, especially bigger ones and for defense in The U.

S. And we still have challenges to deliver on time in India even though it has gotten much better over the past year and quality is on a good level. And I think that is that. So I let’s do some questions. We have Colin Norian was the first one who raised his hand.

Can you unmute and ask your question, please?

Colin Norian, Analyst: Yes. Can you hear me?

Company Executive/Presenter, AQ Group: Yes.

Colin Norian, Analyst: Great. Good morning, and congrats to really solid numbers here.

Company Executive/Presenter, AQ Group: Thank you.

Colin Norian, Analyst: First question here is if it’s possible to give some more flavor on which segments where you did not see any growth in the quarter. Because, I mean, in the report, I think you mentioned the trucks and the construction equipment is now back to growth and electrification and defense continues. So what other than buses is it where you’re not seeing good growth? Is trains and processing, food or yeah. What we Yeah.

Company Executive/Presenter, AQ Group: So so so so, buses in North America, we mentioned in the report. It it is, I mean, Nova Nova Bus closed their factory in New York, couple of year ago, one year ago or something like that. And now we are getting new bus business in there. We have decreased sales a lot in Mexico to buses as well. So that’s really poor in the quarter.

I would say food industry as well, really poor for us in the quarter and the full year this year, equipment for that. You can also say that we have a decrease in big equipment for MedTech, but instead, have sold a lot of our own products and single use items. So the net effect on the turnover is just a little bit lower in the quarter, but it’s not growing anyway. I would say defense is growing, as I’ve said before, and then trucks is growing a little bit and construction equipment is growing a little bit. What we are happy with is that we have managed to take a lot of newly won projects, both we won a lot in quarter four and quarter one, which are now starting to deliver out.

We can say also maybe vending machines has been quite poor as well this year, parking meters and this kind of equipment has not been great, to name a few.

Colin Norian, Analyst: Yes. No, that’s very clear. And just a follow-up on trucks, I guess, which we have discussed a bit. But I mean, we have seen some warnings or slower demand and some profit warnings from the big truck OEMs. I mean, are you still seeing that growth can continue here in the second half?

Or are you taking a more conservative view?

Company Executive/Presenter, AQ Group: I would say trucks. I don’t know. We don’t like to give forward looking statement. Let’s see how it will how this will play out because it’s quarter especially quarter three is the trickiest quarter to forecast because customers are buying a little bit before the summer, then factories are closing during the summer, then people come back late and then the orders have come during the summer. So it might be that they need to they need a lot of parts or they don’t need so many parts.

So it’s hard to predict quarter three for us always, and it’s always our worst quarter. But in general, I don’t believe it will be a big growth. I think we have been good at winning new business for trucks, and we hope to continue to win more business. And then let’s see how the market develops. We cannot influence that anyway.

Fair.

Colin Norian, Analyst: Fair. And on the acquisitions you made late last year in Germany or Amdex and Riedel, I mean, a little bit more negative margin impact here, as you mentioned, somewhat driven by the hailstorm. But would you say also that it’s slightly more challenging to improve this company than you previously thought? Or do you still believe that you can reach better margin here quite soon? Or how should we think?

Company Executive/Presenter, AQ Group: I mean, we we have very high ambitions when it comes to the turnaround. Then if we are as fast as we want to be or a little bit slower, doesn’t really matter. I mean, we are here. We we we buy this for the long term. And I as I said, I was there a couple of weeks ago.

I mean, this is in in I was in Amdex a couple of weeks ago. I mean, it’s a great team there. It’s super experienced, the the Czech team. Super impressed by the factory, how they have planned it. We need definitely more volume there.

We will get some volume with these UPSs, but we, for sure, need more volume as well. But on the other hand, we are AQ and we are very how to put it? We fight for every single penny and we need to get that culture into these companies as well to start to fight for every single, single krone or dollar or whatever Czech currency you want to talk about. In terms of Riedel, it’s super nicely run company. We see also that there we can they have actually it’s like 75% transformer and inductor sales and then it’s 25% electrical cabinet sales.

So we see a good opportunity to also grow the electrical cabinet business from in Germany from that perspective. And we have done that quite successfully in Sweden over the years where we have had three sites in Sweden doing electrical cabinets, working closely with project managers from our big OEMs for electrical automation and then for bigger projects using AQ Electric in Bulgaria. Now we have an opportunity to do the same in Germany, which is, of course, a bigger market where we can work with big OEMs. And when they have small things, we do it in Lidl. When they have bigger things bigger orders, we can do it now both in Trutnov in Czech Republic and in Elektik in Bulgaria.

And I think it will be a very cost efficient and good offering for our customers that can grow our business in the German market with machine builders and other, I mean, automation companies. So we think that looks good.

Colin Norian, Analyst: Yes. Sounds good. And it sounds like you have lot to do here going forward. So, that’s also good. Just the final one.

Company Executive/Presenter, AQ Group: That’s cool.

Colin Norian, Analyst: Yeah. On the acquisition side, I mean, you still hold a very strong balance sheet with net cash. I know you’re out there scouting for for new new growth opportunities, But can you say anything about what’s in the pipeline and how you’re thinking on M and A?

Company Executive/Presenter, AQ Group: Yes. It’s amazing how many companies it is that is for sale, really. So that is fascinating, I think. That what we can say is that we do not want to overpay because that will be it’s so hard to fix it. So so we we are negotiating and negotiating and negotiating.

And it can take time sometimes, and sometimes it goes faster. I believe that we will continue to buy companies when it will happen, I don’t know. But I think we have a couple of nice ones that we are looking at, at the moment. But all the pieces in the puzzle have to come together before we make a deal and move forward. So I mean, we are active in this market, and we believe that we will find factories that we buy.

And do

Colin Norian, Analyst: you do you still see good prices or that you can get good okay ish prices for the companies that you look to acquire?

Company Executive/Presenter, AQ Group: I I think that the the yes. The the the there is, of course, companies that we can acquire to a good price. Yes. Like, there are shares in the stock market that you can acquire to a good price. So so I think there’s there’s always opportunities where where where the sellers and we think both think they’re doing a good deal.

I mean, that is where you have to, in a way, come to. So so so, I mean, we we continue to work and, yeah, I’m I’m positive.

Colin Norian, Analyst: Yeah. No. That’s great. And that’s all my questions. Good to see you back in organic growth again, and, yeah, keep up the good job.

Company Executive/Presenter, AQ Group: Thank you, Carl. Who is next? And I can actually not see you. Joakoppebe, can you unmute?

Joakoppebe, Analyst: Yes. Do you hear me?

Company Executive/Presenter, AQ Group: Yes, I do.

Joakoppebe, Analyst: Yes. Good morning, and thanks for taking my question, and thanks for pleasant reading this morning. Yesterday, when we last talked in the Q1 presentation, we were talking a bit about the sequential development across the first quarter. Can you talk somewhat of what you’ve seen starting from April, kind of a special month perhaps, and how that has then progressed during going into May and going into June? Do you hear something different?

Do you feel that customers are more confident, less confident? Or what’s your view on that, if you have some type of aggregated view?

Company Executive/Presenter, AQ Group: Oh, so hard to I have to just use my stomach feeling, and maybe that’s not always right. I think that we I think, in general, our customers are quite positive. Then then again, there there are always things that, maybe not going their way. But we can say like this also. I mean, our customers are world leading in their markets and markets with with fantastic products, and I believe they will be successful then if it will be if they will start to if all of them will start to grow next quarter.

Actually, I have no idea. I think we have plenty of work to do in our factories. Of course, we always want to have more to do. And we are it’s also up to us to have a cost competitive offering to so that they choose us every time. So, yeah, I think It’s a

Joakoppebe, Analyst: tricky one.

Company Executive/Presenter, AQ Group: Yeah. It’s a tricky one. And, of course, people are getting people are affected by the media. And and, I mean, people are writing about these Trump tariffs. I mean, it’s crazy about and it makes, of course, business leaders a bit unsecured.

But, I mean, we have this bomb since we then which is like a tax on all the all the all the people. It’s a tariff on all the people, and and nobody talks about that. And EU is putting on regulations, like, every month to to increase the burden for big companies. Now we’re talking about a new tax for big companies. And the media is not writing at all about that, and it it’s frustrating.

But then again, maybe it’s better that the media don’t write anything because then people will continue to invest and believe in the future, and then it will be better for everyone. So I think, yeah, it it’s it’s really quite tricky to say, really what what what’s ahead of us. But I think our customers are so good at what they do. So they will continue to grow, and there will be bumps here and there, but they will continue to grow. And we in AQ are really good at what we do, so we will also continue to grow going forward, both organically and through acquisitions.

Joakoppebe, Analyst: Yeah. That makes sense. It’s a difficult one, but good explanation

Company Executive/Presenter, AQ Group: for Yes. Your sorry for that little bit strange, maybe.

Joakoppebe, Analyst: No, no. Complicated question gets complicated answers But just the final one for me, then back to the MDAX and how that profitability will continue on from here. You’re talking about a bit of sequential developments. Are we supposed to interpret this as more of a linear movement? Are there certain points in time where there’ll be a larger uptick?

Or what’s your view on that considering all these implementations that you will go through with from here?

Company Executive/Presenter, AQ Group: It’s quite difficult to say really exactly when it will be. It’s like what I said in my presentation about we are implementing our AQ agreements. Then we need to consume the copper that they had in stock before those new prices come into play. So it’s quite hard to say exactly when everything is implemented. So I would say it will go a little bit by little bit and eventually it will all be implemented.

So it will not be any any huge step. Then I then again, of course, when we pay off some of the loans that they had with local banks, of course, then you get an immediate effect on that loan. I think like we have written in the presentation and so on, it will be a couple of percent here and there, and we will march forward towards our targets. So I think in the end, it will be a good margin in this business. But we have to do a lot of work in order to get there.

I mean we need to improve the productivity a lot in the offices, both in Truttow and in Germany. We need to improve the productivity also in the workshop. And we have done a lot of work already in the workshop. Maybe now we need to do more work in the offices.

Joakoppebe, Analyst: Perfect. Thank you for that. Yes, perhaps a final bit stupid question. But can you just remind me about the food processing business that you have? How much of the sales would you say that is on a normalized level?

And what type of business areas are involved in that? So it’s a broad AQ exposure towards it.

Company Executive/Presenter, AQ Group: The biggest one is machines for food packaging equipment, where we build a complete machine to put a straw on juice packet, for instance, for one of our customers. That is the biggest part of that business. And we also do electrical cabinets for filling machines of beverages and so on. And we do things for ovens and so on. But this business has been declining for several years.

And last year was quite a good year because we got some big orders for wrapping machines. And this year is a little bit not not not as good, I would say, in this area. Or it’s the it has declined, so can so you can say. It’s not the huge part of our business that you cannot say.

Joakoppebe, Analyst: No, perfect. That was all from me. Once again, you a lot for taking my questions.

Company Executive/Presenter, AQ Group: Thank you so much. Forbes, maybe? Hi, Hi. Good Good morning.

Forbes, Analyst: Yes. Just a couple of questions here from me as well. First one, could you maybe talk a little bit about price and mix I mean, volumes versus price here in the quarter? You’re back to organic growth. Do you have any how does that look like from a volume point of view?

Company Executive/Presenter, AQ Group: So I would say that the organic growth in the quarter in volume is it is mainly volume, I would say. It is not pricing at all in the quarter. And then we have, of course, the negative effect of the currencies that influence it. But the organic growth is volume driven. But yes, But I would I would not say that it’s it is not price increases.

Forbes, Analyst: And, could could you maybe just recap what you have been doing in terms of price increases the last couple of years and if you have any plans to to use that going forward.

Company Executive/Presenter, AQ Group: I mean, we we are constantly we have our price development plans, and we constantly look on our assortment the or the parts that we sell and the customers that we have. And if we need to do price adjustments, we do them. But if we if you look, for instance, ’22, ’23, it was a much bigger, I mean, you can say a broad inflation that pushed us to increase the prices. And now I would say that it is a bit mixed, that in some cases, we are increasing prices for sure. And in some cases, even costs are going down a little bit because we have been good at finding efficient way of doing things, and we are sharing that with our customers.

So I think it’s a mix. Maybe this year, complete year, I could maybe it is I don’t know. Maybe let’s say like that. I’m not sure because it it would be, like maximum 1%, but not on the full assortment. No.

So maybe it’s better to say that price increases this year have been quite flat for us. Mean, meaning some parts have increased, some parts have not increased, some parts have decreased. So it becomes total and flat picture.

Forbes, Analyst: Great. Right. And a final one for me, it would be on the margins. And, I mean, even considering the m and a dilution, they look really strong and stronger compared to what they have been historically as well. So anything we should be thinking about here in terms of, for instance, mix that is supporting margins here or anything in the sales mix that can have a material impact here going forward.

I’m thinking maybe of it appears like trucks and construction equipment will maybe see some more growth now in the second half compared to the rest of the assortment. Will that maybe have an impact on the margins? Or that’s counterbalanced, of course, by defense and maybe health care. But any comments regarding the margin and mix implications here would be quite interesting.

Company Executive/Presenter, AQ Group: Yes, I think we are growing in the defense business should have a great margin, I think. And but but also our inductive components because we have a lot more engineering input into that. So that should also have a good margin better than our target, if I may say so, our goal. And it has grown substantially over the years as well. So that is, of course, good.

But then on the other hand, where we have I mean, four trucks and yellow machines, you can also have good margins if you have really high productivity and good control of your costs, which I believe we have in several of our sites. So it’s I would say that I’m happy that we are growing all of I mean, we want to grow all our market segments, and we don’t really see that we have any bad market segments because then we will not be in those market segments. So of course, it is a mixed thing. Some products are better profit than others, but it is also in the transformer segment. You can find better products there and worse, same as you can find in the market segments versus trucks and yellow machines and so on.

So of course, try to sell more of the most profitable things. That’s not short, but but I I wouldn’t say that it’s negative for us with the growth in it will not impact the margin negatively that we grow in those segments, I would say.

Forbes, Analyst: Okay. Good to hear and great work. Have a nice holiday and talk to

Company Executive/Presenter, AQ Group: you soon. Thank you. You. Any more questions? Seems like we all the questions have been asked, then then it’s Vamos Alla Playa and maybe some vacation for some of us.

And we will continue to work, looking forward to see you again in quarter three. Thank you so much.

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