Lower North America demand impacts Hexpol results

Malmo, Sweden – Hexpol AB has seen a sharp decline in its second-quarter results, due mainly to lower demand in North America, driven by the uncertainty linked to the threat of potential tariffs.

For the three months to end of June, the group posted a 17% year-on-year decline in earnings (EBIT) to SEK756 million (€67.3 million), on 8.3% lower sales of just under SEK5 billion.

For the first half, sales fell 3.6% to SEK10.3 billion, while earnings declined 12% to SEK1.6 billion, Hexpol reported 18 July.

While operations in Europe were ‘resilient’ and the Engineered Products business area reported growth, the main challenge in demand was visible in North America, explained Klas Dahlberg, president and CEO.

Breaking down second-quarter performance by segments, the Swedish group said the Hexpol Compounding business area posted a 9% year-on-year decline in sales to SEK4.6 billion, hit by a SEK340 million negative effect of exchange rates.

Sales were, however, positively affected by a 4% contribution from the acquisitions of Piedmont and Kabkom, Dahlberg noted.

During the second quarter, the business unit saw “continued weak demand from automotive-related customers compared to the corresponding quarter of 2024.”

The decline was partly offset by increased demand from customers within building and construction, and "the growing segment, cable compound."

Sales and raw material prices remained stable both year-on-year and sequentially.

The Hexpol Engineered Products sales increased 3% year-on-year during the quarter to SEK402 million, despite a SEK27 million negative effect of exchange rates.

Here, the group said, the operations in Europe and Asia developed positively during the quarter.

From a geographical perspective, the group’s sales in the Americas decreased by 15% and in Asia by 4% year-on-year, while in Europe, sales remained flat compared to last year. 

On the near-term outlook, the Hexpol CEO said that despite ongoing global geopolitical unrest, the group has “a strong local presence in both North America and Europe.”

“With 53 sites, [we are] close to our customers with very limited exports between the regions,” he added.