Hexpol announces structural changes amid lower first quarter earnings

Malmo, Sweden – Hexpol AB has disclosed a number of structural changes across its operations in a move to create a “focused organisation with better utilisation of synergies.”

As part of a strategic overview, work is underway to assess conditions for organic growth in Hexpol's various markets, said president and CEO Klas Dahlberg in a first quarter of statement.

During the quarter, the Hexpol Compounding division has seen the creation of a product area focused on growth areas of thermoplastics and thermoplastic elastomers.

Another change has involved integrating the group’s “high performance compounds” unit with “closely related advanced rubber compounding,” explained Dahlberg.

These moves will increase synergies and improve efficiency across group operations, according to the Hexpol leader.

The Swedish group intends to hold a capital markets day in Stockholm in early November to explain its plans and goals in more detail.

Over the three months to 31 March, Hexpol’s adjusted earnings (adjusted EBITA) declined 7% year-on-year to SEK873 million (€79 million), on 1% higher sales of SEK5.3 billion.

Adjusted earnings margin fell to 16.2% compared to 17.7% reported for the same period last year.

“We delivered a stable first quarter... despite a great deal of uncertainty in the world around us,” said Dahlberg.

“As expected,” he said, “during the quarter, we saw increased demand after the seasonally weak fourth quarter of 2024.”

From an end customer perspective, the automotive industry showed "continued weak demand."

This was offset by increased demand from customers within building & construction, general industry and the growing segment of cable compounds, said the Hexpol leader.

The Swedish compounder linked the lower margin to product-mix.

By segment, the Hexpol Compounding business area’s sales were in line with last year at SEK4.95 billion, with exchange rate changes contributing SEK59 million to revenue.

Hexpol Engineered Products increased sales 15% year-on-year to SEK429 million, with operations in Europe and Asia ‘developing positively’ during the quarter.

From a geographical perspective, group sales were flat in Europe, while Americas and Asia saw increases of 1% and 15% respectively. 

Hexpol added that it is continuing work on sustainability and was ‘well on its way’ to achieving a goal of cutting CO2 emissions by 75% by the end of 2025.

The group’s sustainability strategy also includes “a significant shift towards an increased share of recycled materials.”

On the business environment, Dahlberg noted that “great uncertainty" continues with geopolitical unrest and US tariffs.

However, Hexpol did not see a direct impact from tariffs in the first quarter, due mainly to having a strong local presence in both the US and Europe with "very little exports between the regions.” 

“There are, however, activities ongoing to handle the tariffs going forward and we expect the impact on margins to be limited,” said Dahlberg, noting a possible indirect impact of tariffs on market demand.

Relying on its “strong market position” and geographical proximity to customers, Hexpol expects to be in a “good condition” to deal with uncertainties.