Hexpol targets automation, M&As amid weak yearly results

Malmo, Sweden – Hexpol AB has reaffirmed its strategic focus on automation investments as well as mergers and acquisitions following a decline in annual sales and earnings in 2025.

The Swedish group reported sales of SEK19.3 billion (€1.8 billion) for the full year, down 5% compared to 2024, Hexpol announced 30 Jan.

Adjusted earnings (EBIT) came in 14% lower than the year before at SEK2.8 billion, with earnings margins down from 15.9% to 14.4%.

Lower sales were mainly driven by currency effects that negatively affected revenue by 5%, said the group, noting that adjusted for currency effects, sales amounted to SEK20.3 billion, in line with the previous year.

Elsewhere, revenue was positively affected by acquisitions (Piedmont and Kabkom) by 4%, while organic sales fell by 4%.

From a geographical perspective, group sales in Asia increased by 1% compared to the year before, while Europe remained flat and Americas reported a 10% year-on-year decrease.

Hexpol Compounding sales came in at SEK17.8 billion, down 6% compared to the year before, primarily due to currency headwinds.

Sales to automotive-related customers decreased compared to 2024, affected by lower production rates within the industry in the markets where the group is active.

At the same time, Hexpol increased sales to other customer segments such as building and construction, and the growing wire and cable segment.

Revenue at Hexpol Engineered Products grew marginally to SEK1.52 billion, despite a 5% negative currency impact.

Operations in Asia and Europe developed positively during the period.

In terms of earnings, Hexpol said negative currency effects of SEK160 million, as well as product mix and cost effects, impacted earnings.

Over the final quarter of the year, the group reported adjusted earnings of SEK508 million, down nearly 20% year-on-year, on 9% lower sales of SEK4.2 billion.

Sales were mainly affected by negative currency effects of 9%, while earnings were down due to currency and mix effects.

Commenting on the fourth-quarter and full-year results, president and CEO Klas Dahlberg said Hexpol increased volumes in both Europe and North America in the final quarter of the year.

“We have thus succeeded in defending our strong market position, especially in rubber compounding,” he said.

Fourth-quarter volumes increased especially within the wire and cable, building and construction, and medical customer segments.

Automotive, meanwhile, was in line with the final quarter of last year, affected by the Christmas holidays.

Despite current market conditions, Dahlberg said Hexpol was “actively working on our strategic agenda, which is our plan until 2030.”

The group, he said, is on track with its strategic initiatives announced in November last year (ERJ report) and is seeing “some progress.”

“For example, our new management in North America has already won assignments in so called captive conversion, where the dialogue of taking over customers internal compounding operations continues in a positive direction,” Dahlberg added.

Furthermore, the Hexpol leader said many of the group’s potential acquisition targets had prioritised cost savings, divestments of non-core and nonperforming assets over the sale of the company in 2025.

“We are now starting to see an increase in acquisition activities, albeit from a low level,” he added.

Another key initiative, according to Dahlberg, is the group’s move towards implementing its automated production technology.

“Mixing 5.0 is an ongoing project where we made further investment decisions during the quarter,” he explained.

The aim is to automate the production of rubber compounds in the first production unit in about a year, according to Dahlberg, noting that the new process “clearly increases efficiency and minimises the need for manual work.”