Hexpol notes year-end slowdown in sales amid inventory reductions

Malmo, Sweden – Hexpol Group has posted a rise in annual sales and earnings for 2022, but noted a market slowdown towards the yearend, due in part to inventory reductions by customers.

For last year, the Swedish compounding group reported a 19% year-on-year increase in adjusted EBITDA (earnings) to SEK3.3 billion (€295 million), on 39% higher sales of SEK16 billion.

During the final three months of the year, adjusted earnings jumped 28% to SEK837 million, while sales lifted 35% to come in at SEK5.5 billion.

“We delivered a very strong quarter… which in terms of results is our best fourth quarter so far,” commented Hexpol Group president and CEO Georg Brunstam.

Results were buoyed by “good sales in all markets and all product areas,” Brunstam added in a 27 Jan financial release.

However, he noted that sales had dipped by late December, reflecting “inventory reductions at customers and the effects of the extreme winter weather in the US.”

Despite the slowdown, the Americas showed a “continued strong development” overall, said Brunstam.

The trend was particularly visible within the Hexpol Engineered Products division, which manufactures, among other products, gaskets for plate heat exchangers, as well as wheels for forklifts and material handling.

Sales to automotive-related customers showed a slight improvement, continued the Hexpol boss, adding that the sector “still varies globally”.

In Europe, meanwhile, the group is seeing “continued great uncertainty” particularly in the building & construction industry.

“In addition to the challenges of uneven demand and supply issues, we have seen continued price increases for certain raw materials, and increased energy costs.” Brunstam added.

Profitability was also impacted by acquired companies, which continue to have lower margins than Hexpol Group.

On the short-term outlook, Brunstam said uncertainty “remains high” with sharply rising inflation and interest rates, disturbances in supply-chains and Russia’s invasion of Ukraine.

However, concluded the Hexpol leader, with “strong customer focus” and “geographical closeness”, the group remained positive that it could overcome disruptions and strengthen market position.