Hexpol says sales were up in 2008, but slowdown continues

ERJ staff report (TB)

Malmö, Sweden -- Hexpol has announced strong sales growth for the year ended December 2008. The company, which spun off from Hexagon Group last year, has two main activities: custom compounding and the manufacture of heat exchange gaskets and systems.

The custom compounding activity -- which brings together Gislaved Gummi, Thona Group and GFD Elastomer -- saw sales up by about a quarter in the 12-month period, but down in the final quarter. Similarly margins declined steadily through the year.

The company reported sales of SEK 2425 million (euro 231 million) in the 12 months up from SEK 1955 million in 2007. In the final quarter, however, sales declined to SEK 520 million from SEK 549 million a year previously. The company said of the last quarter, "Although operating profit was negatively affected by significantly lower volumes in both Europe and the US, substantial cost adjustments were implemented, primarily through personnel reductions, which offset some of the impact of the low volumes."

The company continued, "In Europe, the volume trend continued to be weaker than in previous quarters, particularly in December when demand from the automotive industry was very low. Many automotive manufacturers stopped production from early December until early January 2009. Significantly lower demand was also noted in Eastern Europe, where demand had previously been higher than in the rest of Europe."

The company said the volume decline in the NAFTA region was less dramatic than in Europe, while Asian sales continued to rise, but at a lower pace than expected.

In the engineered products sector, which generates most of its sales from heat-exchanger gasketing systems, the company generated sales of SEK 765 million in the 12 months, slightly lower than in 2007.

The company said, "During the fourth quarter, termination notices were served to a total of 68 employees at Gislaved Gummi AB, and staffing at the unit in Sri Lanka was also adapted to the lower demand. During the first half of 2009, we expect to start up production at our new plant in China for the production of gaskets for plate heat exchangers.

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Press release from Hexpol