Q3 from Hexatronic Group - Strong development in profitability. "The strong trend witnessed during the first half of the year continued during the third quarter. We achieved sales growth of 91 percent compared with the same quarter last year, of which 53 percent was organic growth. Profitability (EBITA) increased 200 percent, with a margin of 18.3 percent, which far exceeds our target of at least 12 percent. The improved profitability is primarily a result of continued strong development in the US and UK, as well as scale effects with most of our factories operating at high capacity", says Henrik Larsson Lyon, CEO Hexatronic Group.
Hexatronic signs a 3-year strategic partner agreement with Open Fiber USA, to a value of more than MUSD 40.
Hexatronic signs an agreement to acquire the data center specialist Impact Data Solutions Ltd., that offers consultation, design, and installation of fiber, copper, and containment solutions to support data center and colocation projects.
Hexatronic acquires the German multimedia home network provider homeway GmbH.
Events since the end of the period
Hexatronic completed the acquisition of Impact Data Solutions Ltd.
Hexatronic has signed a binding asset purchase agreement to acquire all business activities of Rochester Cable from TE Connectivity, one of the main designers and manufacturers of harsh environment electro-optical cables in the USA.
Hexatronic CEO Henrik Larsson Lyon in an interview about Q3, 2022
Comments from CEO
Strong development in profitability. The strong trend witnessed during the first half of the year continued during the third quarter. We achieved sales growth of 91 percent compared with the same quarter last year, of which 53 percent was organic growth. Profitability (EBITA) increased 200 percent, with a margin of 18.3 percent, which far exceeds our target of at least 12 percent. The improved profitability is primarily a result of continued strong development in the US and UK, as well as scale effects with most of our factories operating at high capacity.
We can see that most raw material prices and transport costs have stabilized during the quarter, while energy prices have risen. Some uncertainty regarding how raw material prices will develop remains, with increasing inflation and a general uncertainty.
Sales in our largest market, North America, developed very well, with a growth rate of 159 percent. The growth is led by sales in the US, with strong sales for our ducts, as well as sales of Fiber To The Home (FTTH) systems. Sales in Canada also developed strongly. Our new duct factory in Clinton, South Carolina, will begin production during the fourth quarter of this year. Production lines will be installed progressively. Full production will be reached towards the end of Q2 2023. The factory will represent a major contribution to an even stronger position in North America.
Sales in Europe excluding Sweden also continued to develop strongly, primarily thanks to the UK and Germany. Sales in the region increased by 83 percent compared with the corresponding quarter last year.
Sales in Sweden remained strong and increased by 45 percent compared with the corresponding quarter last year. The increase is mainly due to a weak comparison quarter in 2021.
Sales in the rest of the world grew by 22 percent, primarily as a result of our two acquisitions in Australia in 2021.
We made two acquisitions during the quarter. homeway GmbH strengthens our offering in buildings, primarily in Germany. The acquisition of IDS Ltd gives us a European platform for growing our business in data centres, alongside DCS in the US. Rochester Cable, for which we signed an agreement after the end of the quarter, strengthens our offering in fiber optic solutions for harsh environments.
Incoming orders continued to develop strongly. We ended the quarter with an order book that was 168 percent higher organically than at the same point in the previous year. We see no signs of incoming orders slowing down, or of the level of activity decreasing on the markets where we operate. In the event of a recession, we expect that we would see some negative impact. Welcome to join us on our growth journey.
Henrik Larsson Lyon President and CEO Hexatronic Group AB (publ)
Publication The information was submitted for publication, through the agency of the contact person set out above, at 07:00 CET on October 28, 2022. This is a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails.