Hexpol reports strong results in first nine months

ERJ staff report (DS)

Malmö, Sweden -- Hexpol AB, the rubber and compounding arm of Hexagon AB, has reported healthy results for the period ending 30 Sept, 2008.

In the nine-month period, Hexpol said sales and pre-tax profit (EBIT) both grew, while margins slipped slightly. In the three months, sales grew strongly on higher prices, but profit (EBIT) was static while margins slipped more sharply. .

In the three months to September, sales in business area Hexpol Compounding increased by 23 percent to 609 MSEK (Euro 61 million) (from 495), while operating profit rose 15 percent to 63 MSEK ( from 55). In the US, volumes remained weak during the third quarter and in Europe, a distinct slowdown was experienced in the automotive industry toward the end of the quarter. Within NAFTA, volumes in the unit in Mexico increased for each month.

Over the nine month period, Hexpol said it s compounding business saw sales increase by 35 percent to 1,905 MSEK (from 1,406) and operating profit by 23 percent to 181 MSEK (148). "Growth in this business area was strong during the first nine months of the year." said the company.

The company said, "In Europe, overall demand was lower during the quarter, and particularly toward the end of the quarter, a clear weakening of demand was noted from the automotive industry. However, volumes in Eastern Europe remained at a relatively high level."

Georg Brunstam, President and CEO said, “Our growth with favourable margins continued despite a deterioration in market conditions. During the third quarter, sales increased by 17 percent and by a full 23 percent within business area Hexpol Compounding, despite reduced activity, primarily within the automotive industry. Our operating profit amounted to 85 MSEK, corresponding to an operating margin of 10.7 percent. During the quarter, the automotive industry in both the US and Europe announced sharp reductions in production and, particularly toward the end of the quarter, we had lower volumes to automotive-related customers.

Separately, in early October, Maths O. Sundqvist resigned from his position as non-executive director at Hexpol's Board of Directors.

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Press release from Hexpol