Hexpol reports strong sales growth despite automotive headwinds

Stockholm – Hexpol AB has seen third quarter sales and earnings grow year-on-year but continued shortage of raw materials and disruptions in automotive production has impacted the results of the Swedish polymer compounder.

Adjusted earnings (EBITDA) for the three months to end of September rose 13% to SEK695 million (€96.5 million), on 23% higher sales of SEK4.1 billion, announced the Swedish compounder 22 Oct.

Operating profit for the quarter nearly doubled to SEK1.1 billion, as it included a SEK428 million insurance settlement for a fire at Hexpol’s production unit in Jonesborough, Tennessee.

Adjusted earnings margin, however, fell by eight percentage points to 16.9% during the three-month period, due to “severe disruptions” in terms of customer demand and delivery problems. 

“The vehicle manufacturers’ frequent stop and start of production due to component shortages had a clear negative impact on those of our customers who deliver to the automotive industry,” said Georg Brunstam president and CEO. 

The issue, said Brunstam, became particularly severe at the end of the quarter with demand rapidly declining as several vehicle manufacturers stopped production. 

Furthermore, the company official said Hexpol also experienced substantial disruptions in its own supply chain, with problems in the procurement of raw materials and transport.

In addition to those challenges, Brunstam said that Hexpol had also seen continuously higher prices for raw materials and, more recently, sharply increased energy costs.

The constant adaptation of production due to "constantly changing demand" from customers, non-optimised recipes due to raw material shortages as well as the increasing raw materials and energy costs had a negative effect gross margin, he explained.