Malmo, Sweden – Hexpol AB has seen its operating profit rise over 30% during the first three months of 2021, putting it in a strong financial position to pursue its merger & acquisition agenda in the months to come.
First quarter operating profit was up 31% year-on-year at SEK704 million (€70 million), on 8% lower sales of SEK3.8 billion. Operating margin stood at 18.5%, up from 12.9% reported in 2020.
Adjusted EBITDA increased 19% to SEK721 million, Hexpol reported 28 April.
Hexpol linked the “best quarterly results ever” to a strong organic volume growth and increased organic sales combined with a lower cost base.
“Our strong business model in combination with a clear M&A agenda and strong financial position give us good conditions for continued growth and acquisitions," said Georg Brunstam, president and CEO.
According to Brunstam, despite the ongoing negative impact of Covid on demand, Hexpol has continued to see a clear improvement in sales quarter-on-quarter, and a recovery in “most of customer segments”.
However, he warned, "uncertainty remains high."
Hexpol saw 'major supply-chain disruptions' with regards to, for instance, the shortage of semiconductors, he said.
Similarly, the Swedish compounder also faced challenges in global transport and the supply of raw materials, Brunstam added.
Breaking down the performance, Hexpol Compounding, which contributes 93% of overall sales, saw revenue decline 9% to SEK3.5 billion, due mainly to an 11% currency impact.
Adjusted operating profit, increased to 18.7% to SEK658 million, with operating margin up at 18.5%.
Hexpol Compounding's sales in America were down year-on-year but increased sequentially. In Europe, sales increased slightly year-over-year, mainly to customers within building and construction and “wire and cable”.
In Asia, sales increased “substantially” compared to last year, affected by, among other things, increased sales to the automotive industry.
The Hexpol Engineered Products, which manufactures gaskets and polymer wheels, reported flat sales of SEK262 million.
The segment’s revenue increased in Asia by 21% over the three months, while sales in America decreased by 16%, mainly affected by negative currency effects. Sales in Europe were in line with last year.
Operating profit was up 40% at SEK46 million, driven by “good sales combined with a lower cost base.”