Q2 from Hexatronic - Very strong growth and increased profitability
“The strong development from the first quarter of the year was reinforced during the second, with excellent growth of 54% compared to the corresponding quarter last year, 38% of which was organic. The increase in profitability for the quarter was even stronger. EBITA increased by 90% and earnings per share rose by 102%. EBITA in the second quarter was positively affected with approximately MSEK 8 as a result of the US authorities’ decision to forgive loans related to covid-19 raised through Blue Diamond Industries, Inc.,” says Henrik Larsson Lyon, CEO Hexatronic Group
Hexatronic signed three agreements in Germany to a total value of MSEK 70.
Hexatronic establish 5G training through the acquisition of Mpirical Ltd. in UK
Hexatronic has issued a redundancy notice for the fiber optics assembly operation in Örebro, with the aim of relocating all production to Baltronic in Estonia and coordinating our warehouses in Sweden to Hudiksvall. The relocation is part of efforts to strengthen the company’s competitiveness on a growing international market, while the Swedish market is expected to decrease in the coming years.
Events since the end of the period
Hexatronic has signed a binding asset purchase agreement to acquire all the telecom activities of REHAU Group – one of the main players in the German microduct market.
Hexatronic has acquired 100% of the shares in two Australian companies. Optical Solutions Australia Group is a national value-creating distributor of telecom solutions and The Fiber Optic Shop Pty Ltd designs and manufactures fiber optic products.
Hexatronic acquires 100% of the shares of H. Weterings Galgeweg BV in the Netherlands. Weterings produces ducts and tubes for the telecommunication and agriculture market.
Pernilla Lindén took office as CFO and member of the Group Management Team at Hexatronic Group as of August 9, 2021.
Hexatronic CEO Henrik Larsson Lyon in interview about Q2, 2021
Comments from CEO
Very strong growth and increased profitability The strong development from the first quarter of the year was reinforced during the second, with excellent growth of 54% compared to the corresponding quarter last year, 38% of which was organic. The increase in profitability for the quarter was even stronger. EBITA increased by 90% and earnings per share rose by 102%. EBITA in the second quarter was positively affected with approximately MSEK 8 as a result of the US authorities’ decision to forgive loans related to covid-19 raised through Blue Diamond Industries, Inc.
For the current rolling 12-month period, with 35% sales growth and 11,5% EBITA, we are exceeding our goals of at least 20% growth and an EBITA margin of at least 10%. We note continued high costs for transport and raw materials for the second quarter as a result of the ongoing pandemic. Effects that we assess will persist for the rest of the year.
Our internationalization journey continues at a high pace, exemplified by the fact that the USA passed Sweden during the quarter as Hexatronic's single largest market in terms of sales over the past twelve months. Sales in North America grew by 79 % during the quarter, primarily driven by a strong underlying infrastructure market for duct. Our system sales continue to develop strongly, and we see good opportunities for further dramatic expansion.
Sales in Europe excluding Sweden remained very strong, with growth of 100%. Most markets developed well, and particularly the UK. We are seeing continued strong growth particularly in the UK and Germany.
Sales in Sweden fell by 4%, which was roughly as expected. Our judgement is still that the Swedish market will remain at the same level as in 2020.
The order book has continued to develop very positively. We entered the third quarter with an order book that was 182% higher organically than at the same point last year. Excluding marine cable projects, the order book was 147% higher. With the strong development we are seeing in most of our markets, we will continue to invest in more capacity for continued growth.
During the quarter, we acquired training company Mpirical. Mpirical focuses on online training in 5G and wireless communication. We can see excellent potential in their business within 5G, and in using their technique for our training companies in fiber optic networks.
Since the end of the quarter, we have made four strategic acquisitions: the telecom business of REHAU Group, primarily microducts, in Germany and Austria, duct and pipe manufacturer Weterings in the Netherlands, and the Australian telecom companies Optical Solutions Australia Group and The Fibre Optic Shop. These acquisitions have been high on the agenda for several years and will consolidate our position in Central Europe with regard to production capacity and market position, and afford us a strong national foothold on the Australian telecom market.
The acquisitions further bolster our offering, while rendering our business even more international. In addition to a strong strategic match with Hexatronic, the new companies add a combined total of MSEK 750 in sales and MSEK 130 in EBITA.
If the newly acquired companies had been part of Hexatronic for the past 12 months, sales and EBITA would have been in the region of MSEK 3,400 and MSEK 440 respectively. The international share would have been just over 80%.
Following completed acquisitions, we have continued a sound capital structure with a Net Debt / EBITDA that is expected to amount to approximately 2.4x, including the acquisition of REHAU Telecom which is expected to be completed during the fourth quarter of 2021. We will continue to be active with acquisitions going forward.
We look forward to travelling with you on our ongoing journey towards further growth.
Henrik Larsson Lyon President and CEO Hexatronic Group AB (publ)
Publication This information comprises disclosures that Hexatronic Group AB (publ) must publish according to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, under responsibility of the contact persons named below, on 12 August 2021 at 07:00 CET.