Hexagon reports strong first quarter, but is hit by raw materials costs

Nacka Strand, Sweden - European engineering group Hexagon AB reported strong growth in the first quarter. The company said overall sales increased 43 percent to SEK 3335 million (€357 million). The company said this improvement was helped by exchange rates and acquisitions. On a like-for-like basis, the company increased sales 14 percent.

The group's Polymers unit is active in three markets: Gaskets for plate heat exchangers

(PHE), plastic and rubber wheels for truck and track drive applications and rubber compounds as

semi-finished goods. The unit recorded sales of SEK 636 million (€68 million) in the three months, up from SEK 530 million a year earlier. Profits in the Polymers unit reduced, however, to SEK 64m (€6.8 million) from SEK 70 million in the first quarter of 2005.

In a statement, the company said, "The volume growth of the business area was strong also during the first quarter. The exceptional increase in raw material prices has had a substantial negative impact on the operating margin that came down to a bottom level of 9 per cent during the fourth quarter 2005. The raw material prices have continued to increase during 2006. Despite this, part of the drop in operating margin has been recovered during the first quarter by continued internal rationalisations and increased prices on our products."

Hexagon Polymers has started the construction of the plant in Qingdao, China, for production of rubber compounds and wheels. According to plan, the plant will start operations during the first quarter 2007. The planning of establishing production facilities for rubber compounds in Mexico has begun.

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Website of Hexagon AB