Hexpol reports flat earnings on higher sales

Malmo – Hexpol AB’s operating profit for the first three months of the year remained flat at SEK587 million (€55 million), on 10% higher year-on-year sales of SEK4.1 billion, the Swedish group announced 28 April.

The polymer group also delivered a 49% higher operating cash flow of SEK527 million, driven by improved working capital.

Hexpol Compounding, which contributes 94% of total group sales, saw a 10% increase in revenue to SEK3.9 billion, due mainly to the acquisition of US-based Preferred Compounding. 

The acquisition contributed with 16% improvement in sales while currency fluctuation had a 4% positive impact. Organic sales, in the meantime, fell 10%, due partly to Covid-19 pandemic and lower automotive demand.

In addition the volumes for so-called ”tire and toll” were lower compared with the same period previous year.

Tire and toll refers to products that Hexpol temporarily produce as support when the customers have the needs.

Segment operating profit remained flat at SEK554 million, while operating margin fell by 1.4% to 14.2% due to lower organic volumes. 

Sales within Hexpol Engineered Products remained stable at SEK262 million, while operating profit was flat at SEK33 million.

Commenting on the market, Peter Rosén, acting CEO & CFO said the group saw limited impact from Covid-19 pandemic during the two first months in the quarter.

“However, during the month of March, the impact became more evident as, for example, the automotive industry largely shut down its production, not least in Europe and the US,” he added. 

Looking ahead, Rosén said he expected the pandemic to have “a major negative impact” on demand in the coming months, particularly during the second quarter of 2020.

According to the official, all Hexpol plants are currently open and it is experiencing “no significant problems” with either supplies of raw materials or deliveries of goods to customers. 

“However, we see considerably lower demand, not least when the production of several of our customers is standing still,” he added.

To address the issue, the Swedish group has introduced “short-term work” at many of its units in accordance with local guidelines.