This is Johannes Lind-Widestam, CEO of NOTE. Welcome to this call. I trust that there is someone that will speak English, I will take this in English. Yeah, welcome to this call. We have published our Q3 report today. We believe it's a quite strong report. We are happy with what we are presenting. The purpose of the call is to give you a brief overview of some details of the report and also what gives some more flavor to how we have seen the quarter. I thought that I should give you just a short introduction of the global EMS industry and how we are set up to tackle this. We are in a very favorable market.
We see a market growth year-over-year that is in the range of 4% or 5%. It's some swings, depending on what kind of technologies that are launched in, in, in the industry. We see the digitalization, the 5G, Internet of Things, electric vehicles, higher electric content in cars, and things like that are driving our industry forward. We also see some trade restrictions that have changed the marketplace a little bit. We have seen that some customers are quickly to get away from the tariffs between China and U.S. That has affected the market in some way, and we have seen some customer change, change behavior internally as well. We have had a very difficult component market for some years. We have seen that it has eased up a little bit this year.
This means that lead times on components are getting a little bit shorter. There are more availability on critical components today compared to one year ago, so we, we see this as favorable. If we go over to NOTE, we have set a quite ambitious growth agenda. Our target is to increase our market share and achieve a stable growth exceeding 10%. The way we do it is that we, we work a lot with our existing customers. We try to increase our share of wallet. We also focus a lot on winning new customers.
When we, when we address new customers, we look at what industries and what technologies are we successful with, then we try to, to address customers with similar products or, or similar technologies where we know that we, that we have a strong position, and we can contribute to our customers' success. On top of that, we try to spice it up with some selected acquisitions, when we say selected acquisitions, we are, we are always looking at acquiring businesses that are, are, what I would say, healthy as standalones, and we try to add them into the group and, and by that, add more value to their business. We are not targeting like restructuring cases.
We, we want to acquire businesses that are healthy on their own, but where we see good potential for us to either increase their profit or, or, or benefit on their customer base or, or, or find some kind of synergies in, in the acquisitions. We do not see ourselves as a, as a company that will acquire a lot of businesses. We see us where we add some selected acquisitions where we see a good fit. Speedboard, that we acquired about one year ago, was a very good fit, and it has, during this year, gradually been integrated into the NOTE group, and today it's a, it's a, it's a good NOTE factory, and, and we have, we are seeing good synergies from the acquisition. If you look at the year so far, we have seen, seen sales increase of 30%.
We, we, we know that the Speedboard is adding about 14%, and we have a positive effect from currency with about 3%, so our organic growth is 13%. When we talk organic growth, it's everything besides acquired growth. We are very happy with this speed. We, we are expecting this speed to continue going forward, based on what we have announced and how we see the market. Our operating profit went up with 59% as reported 41% if we exclude the one-offs that we had in the Q3 last year. Still a very positive development. Our operating profit margin ended up at 7% year to date, up with 0.6 percentage unit from 6.4 last year.
Here I often get the question: What is the end game of margin? How much money can you make in an EMS industry? This is a very good question. We see that some sites are making more than 7%. We see some are making less. What I would say is that 7% is a very strong level. Of course, we expect this to continue to increase while we grow with the existing footprint. How far can we grow it? That is hard to say, but 7% is not the roof, as I see it. Profit after tax, 65% up. We're up to SEK 2.29 billion.
Swedish per share of the tax. If we, our 12-month rolling level is SEK 3.11, I think that is probably the strongest 12-month period that NOTE, the NOTE group has ever had. We expect that the growth, we expect that to continue to increase going forward. Cash flow. This is our, the one KPI that we are unhappy with the development this year. We have a negative cash flow. We have had an inventory problem, as I see it. We had bought a lot of components and material for some large accounts that we have just recently started up. We have started to bleed down the inventory.
Still, we are, we are not exactly where we want to be, but the, the, the inventory issue that we saw in Q2 has started to decline, and today, our inventory terms are actually higher than they were one year ago. We are, we are getting in, in much better into shape here. The cash flow takes, it has some lagging effect, so we expect that the, the, the strong cash flow will come in the fourth quarter. If you look at the Q3, I think that many reporting companies are, are, are seeing that lately the, the order intake and the sales has been a little weaker. We see the opposite.
Q3 was the strongest quarter in year to date, actually we saw even stronger sales in the later months of the quarter. We ended the quarter at a very, very high speed and 34% up with an organic growth, excluding Speedboard and currency, ended up around 15%. We also see that our order backlog is continuing to build up. We didn't report it in the Q2 , so we don't have that comparison, but in the Q1 , we reported around 26% up, and now we are up 30%. We are still seeing that our order backlog is increasing rather than declining. Operating profit ended up at SEK 32 million, and that equals to 7.3%, also the highest quarter so far.
I think it's the highest quarter that we have reported, at least in modern time, after the financial crisis. We also see that profit after tax went up with 100%, and we, we saw a slight improvement in the cash flow with, with $1 million. Very weak, but we, we at least see a trend shift here. Okay. I also wanted to highlight this, and, how our split between Western Europe and rest of the world. How we see it, rest of the world is China and Estonia, and Western Europe is, of course, Sweden, Finland, and, and U.K. We see very strong growth in the Western Europe region. What is even more pleasing is that we see that our operating profit is continuing to increase in this region. This has a lot to do with, with, with benefits of scale.
When we grow with existing footprint, we get some benefits out of it. We also did a few efficiency programs in the Swedish sites a few years ago, and those have paid off very, very well. If we look at rest of the world, we see that our growth is 11%, but here we have the strongest effect of the currency, so the actual organic growth in local currency is just over 6%. We see that the rest of the world is not working in the same speed as the rest of the group. We should also know that some of the slowdown has to do with the China effect. We have lost two customers that have went to other low-cost areas in the Asia region.
The loss was not that big in, in sales for us, we have also seen that we have transferred 2 accounts back to Western Europe from China due to the tariffs. Despite that, we managed to grow both our Estonia factory and our Chinese factory in local currency, and that, I think, is very pleasing. What we also have done is that we have initiated similar efficiency programs in both China and Estonia. What we are targeting here is to, is to increase the level of efficiency, increase the level of automation. We want to leverage more on our blue-collar work base. What we expect is that we, we, going forward, we will see good improvements also in, in these 2 factories from a profitability standpoint. We are very happy with the customer base we have in those factories.
We have announced a few new customers for both the factories during this year and last year. We have a few large accounts that are just starting up, where we are in the start-up phases with the sales. Even though we see that China has some issues with the trade tariffs, we still expect that factory to increase their growth rate going forward. All in all, we see that Western Europe is behaving strong, but we believe that our two sites in the rest of the world will also start to perform better going forward. What we can say is that in the Q3 , and also year to date, all our factories has positive growth in local currency.
I think also that is the first time ever in the group that we see that all the sites are performing in the right direction. Our sales per our customer segments. Here is also, I get a lot of questions: Is it a problem for us that we are so industrial dependent? I would say, yes, if you look at this, it would be better to balance it off. What we need to know is that in our industrial segment, we have a lot of different products and different customers, and the industrial segment is so enormous, so it's very hard to say that it's not one or two customer dependencies. Take, for example, we have Atlas Copco. They presented a very strong report yesterday.
We have customers like DeLaval, also a very strong customer, but those two customers are completely different in their market position. Even if Atlas Copco would decline, I would not say that that would affect DeLaval, for example, because those industries are not going in sync. Even within the industrial segment, we have a lot of different customers, a lot of different segments within the industrial segment. We're not that unhappy with this relation. What we can see is that the two areas that are growing strongest are MedTech. We see a growth that are about 50%. We also see defense, where we grow even more, maybe 75% growth in that segment. This trend we expect to continue.
We have announced several new MedTech customers, and we see that that segment has a lot of potential for us to continue to grow in a high speed. We have also just recently started up some large orders and progress for the, for the defense industry, so we expect that segment to continue to increase as well. I, I can also say that when we look into the different segments, how we see the margin, everyone expects that MedTech has stronger margin than industrial. I would say that it's not that obvious for us. We see that we have customers within industrial segment with good margins, and we have customers within MedTech with, with lower margins. What we can say is that defense segment normally has higher margins than the other four. That is the only trend we can say internally.
What we know is that MedTech customers is very good to have because they, they have their registrations or, or, or their regulatory registrations, meaning that they are very, it's very, very tricky for them to transfer production. Anything we have in MedTech is fairly likely to stay until the product is end of life. That is the biggest advantage with MedTech. That also go to other customers. It's expensive to move production, as long as we behave good, keep our operational efficiency, I don't expect us to lose any customers in the other segments either. Okay? Our operational highlights. I would like to say that it's a busy slide, we have been very busy in the quarter, so, so I think the slide reflects our, our, our internal agenda.
I, I, I try to stress every time I, I speak in front of people that what is, what is the real strength with NOTE? I would say that our internal efficiency, our delivery performance, our quality performance, those are the things that our customers value most. We are, we are reporting an delivery performance that is exceeding 96% on time. That is very rare in our industry. Normally, you're, you're much lower than that. Our quality performance is also increasing year by year, and, and we work with the customers to understand how to become much better with, with our quality performance. Both of these two KPIs are what we refer to as best in class in our industry.
What, what we have talked about, the second bullet, continuous strong organic growth, we expect that to continue with where we stand today. We are not reporting how much we win, we are reporting customers where, that are of large substance to the market. Underneath that, we are winning several smaller accounts. We are winning startups, we are winning, how shall I say, prototype and industrialization projects that we expect to transform into volume production. We are winning much more than we report, and we have said that we are reporting anything about SEK 25 million in sales, and we're winning a lot of business underneath that as well. That is what you see in our organic growth, more than the larger accounts.
We have announced several new customers this year. We have highlighted some of them, DeLaval, of course, Maven Wireless, a company that have high expectations on their market penetration, Micropower, Unipower, Laerdal Medical, Human Care. It's a good balance between the different segments here, where we see good in medical customers combining the industrial segment there. As I said, we have several products in the ramp-up phase. What we mean there is that we have made industrialization, the products are ready to be introduced into volume production, or that we have just started volume production, but we have not reached the full potential with these customers. We have stronger orders than we are performing, we expect that those accounts will also contribute to our growth going forward. We have talked a little bit about our margin strengthening in Western Europe.
We have talked about our efficiency progress in China and Estonia. I will come back to that in, in later presentations going forward, to give you an update where we stand on a quarterly basis. We talked about the cash flow. We have done a lot of activities in this area. Everyone that are growing knows that, that this has a, a limiting effect on your cash flow. We can say that our, our receivables were on the record level, I would say, in, in, in, in, in the end of Q3, and that puts, put some pressure now on our, on our cash flow. This is an effect of growing. The more you sell, the higher your, your receivables will be.
For those of you that have been following us, knows that we had a share buyback program initiated around Christmas last year, where we acquired 1 million shares. Our proposal is to cancel those shares, that is an AGM meeting approval, and we will put this up at the coming AGM in April. We talked about our strong order backlog. With this order backlog is we expect that we will continue on this level that we have seen so far. What we also see is that we're reporting 30%+, but organic growth is only 18%. The backlog is, of course, transformed into so it also has some currency effect in it.
With the strong order backlog and the strong order intake and the status where we are with, with the new accounts, we expect that the coming quarters will continue at the same speed as we have been reporting this year. As a last slide, this is the performance that NOTE has been doing over the last couple of years. If we look at the left chart, we see the sales. The sales trend is extremely positive, what we can see is that from 2013, our annual growth rate has been exceeding 10%. We had some years. If we look at the last three years, the growth rate is even higher.
This year, of course, we are a little helped by Speedboard, but in the earlier years, we were selling off some units, so we also have some negative effects in this chart. We, we expect the growth to continue. We, we expect it to decline a little bit. October is the last month where we have an acquisition effect of Speedboard. After that, we will, we will only report organic growth. If we look at the margin, I often get the question: Have we reached the ceiling at 7%?
It looks a little bit like that, we, we know that Q3 , we were exceeding 7%, and we are, at the 12-month rolling, we are at 7%, and we, we have, we have higher ambitions than that, if I put it like that. All in all, we, we are expecting growth to continue at plus 10%. We expect Q4 to be, yeah, a little bit above that. How much is hard to say. We don't give you any, any guidance there. We also expect the margin to remain strong going forward. We expect cash flow to come in much stronger than it has been this year.
What, what I see is that, yes, we see some of our industrial accounts have reduced their, their demands, but all in all, we see our market as strong. We see our customer base as strong. We see our order intake to be at a record level. We have very high expectations going forward. We think we have done a, a very strong year so far, but we expect to, to continue our journey in, in a similar speed. This was what I intended to say. Do we have any questions or, or, or comments?
Yes, I would like to proceed with a question.
Yes.
Can you hear me, like?
Yes, I hear you.
All right, perfect. This is Philip from [Uncertain] .
Yes.
Thank you for including the order backlog once again. Congratulations on the high growth and the order intake. I'd like to ask, in Q2, the gross margin was lower than Q2 last year. The same goes for Q3 this year. Is this due to temporary changes in product mix, or is it the new normal for the gross margin?
We have, I would say that, we have had one big account in China that, that, that had, well, that we have lost volume in due to the tariffs, where we had free issue, meaning that they have supplied the material. For this customer, we have had 100% contribution one, due to that, we have only done value add. That account has, has been declining, and that has put. How should I say? That has reduced our, our overall gross margin for the group with up to 1%. We also know that Speedboard has a slightly lower contribution margin than the rest of the group, and that has also reduced the, the contribution one. We would say that the, that the, that the contribution one level today is, is about where we expect it to be.
If we exclude those two effects, we see that the contribution one level is 0.1% or 0.2% lower than last year, so it's fairly flat. The deviation between that is, as I see it, some customer mix that has affected it. What you see now is a level that we expect. If the tariffs are going away, we might see some increase in the account in China. That would, of course, help and support an increase of the margin.
Perfect. Thank you. I, I have another question.
Yes.
We're very happy with the focus on inventories and working capital. When we've been looking at your inventory compared to revenue, the levels have increased over the last couple of years. Should we expect inventory now to go down to the historical level of just below 20% of revenue?
I would not say how much it would go down, but our expectation is that we will continue to reduce the inventory in actual terms, and, and since we are growing, that will, of course, also been reduce it in, in a percentage. If we are reaching the 20%, I'm not sure, but we, we, we will, we will continue to reduce it.
All right. Perfect. Thank you very much.
Thank you. Any other questions or comments?
This is, Thomas Fang, also from [Uncertain] . I also have one question. You changed your dividend policy. The old dividend policy was very tangible, whereas the new one is more flexible. Could you add some flavor to the change and, and what the new policy, the dividend policy means?
Yes, what we changed here is. The reason for the change was that we saw that we, last year, for example, we had, we were buying back shares, and that was not included in the dividend policy. And we see it as some way of giving back to the market by reducing the number of shares. We wanted to have the possibility to include that in our policy. We also wanted to say that last year, we were giving out 30% dividend, or about that.
What we wanted to achieve with this is that this year has been a very strong growth, and when you grow a lot, you, you need the capital to grow, and we have had some, some constraints on the cash flow, and therefore, we, we, we wanted to be a little bit more free to, to not give the guidance in an, in, in a, in an interval between 30 and 50. This does not mean at all that we will not give dividend, it's more that if you have an, if you have stated 30%–50%, that's the expectation, and we wanted to have some more, how should I say, freedom in what we, what we, what we give, what we give as dividend.
Also to see that dividend can be used as, or the room for dividend can also be used for buying back shares, if, if we think that is, is a better option. That was the idea. It's, the board has decided that we, we, we are going in this direction.
That makes sense. Thank you very much, and congratulations on yet another excellent quarter.
Thank you very much. Any other questions or comments? Okay, if not, thank you very much for calling in and showing your interest in us. As I said, we're very happy with the quarter. We think we are doing a lot of good things, and we have high expectations going forward. Thank you, everyone, for listening, and have a nice day.