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Hexatronic Group - Year-end report 2020

Hexatronic Group - Year-end report 2020

Year-end report January – December 2020

Strong profitability growth and several acquisitions in year-end report from Hexatronic. With a profitability (EBITA) of 9.8%, Hexatronic exceeds the target for 2020. With no less than four acquisitions and increased sales in several focus markets, the company sums up 2020 as a really good year.

Read the full report here.

Events during the quarter 

  • Hexatronic acquired the fiber optic companies Baltronic Group OÜ, based in Estonia and the Canadian company Toronics Inc. (name changed to Hexatronic Canada Inc).
  • Hexatronic acquired 90 percent of the shares in Qubix S.pA., an Italian supplier of structured cabling.
  • Hexatronic won new submarine cable orders totalling approximately MSEK 115.
  • Lennart Sparud announced that he is leaving his role as CFO in Hexatronic Group. The recruitment process for a replacement is in the final phase.

Events since the end of the period

  • Hexatronic Hexatronic won new submarine cable orders totalling approximately MSEK 60.
  • Hexatronic signed a strategic supply agreement with Vocus in Australia.
  • The Board of Directors will propose a dividend of SEK 0.50 (0) per share for the financial year 2020 to the Annual General Meeting.
  • Hexatronic adjusted the profitability target to 10 percent EBITA on rolling 12 months basis (from 9 percent).

Hexatronic CEO Henrik Larsson Lyon in interview about Year-end Report 2020

 


Comments from the CEO

Strong profitability growth and high acquisition activity
2020 was a year of strong growth in profitability for Hexatronic. The EBITA margin increased from 7.4 percent last year to 9.8 percent, well above the target of at least 9 percent. Compared to last year, EBITA rose by 51 percent and earnings per share by 87 percent.  

The quarterly EBITA margin of 11 percent was very strong and resulted in an increase in EBITA of 139 percent compared to the corresponding period last year. The strong development in profitability during the year is primarily attributable to scale effects: our production plants have seen higher capacity utilisation, and we have reduced costs of materials by using new materials, and thanks to reduced material prices.

Sales continue to develop well, even though we did not achieve our growth target of at least 20 percent. Sales growth totalled 13 percent, of which organic growth 11 percent. Our assessment is that we lost 5 to 10 percent of sales during the year due to the COVID-19 pandemic.

Sales growth in Europe excluding Sweden was 24 percent, primarily driven by continued strong development in the UK, as well as Germany and Norway. There has been high activity on the British market during the year, with many operators now building or planning FTTH networks. The German market, which lags behind the British one in terms of investment activity, showed clear signs of gathering momentum.

Sales in North America grew by 16 percent, mainly driven by a strong underlying market for duct. We have also increased our capacity with the new factory in Texas. Growth in our system sales was also strong, albeit from low levels.

Sales in Sweden increased by 12 percent, which was above expectation going into the year. Good demand for our solutions in FTTH systems, along with several transport network projects, explains the positive development. Our submarine cable business has seen great success during the year, winning several major contracts.

The Cash flow was also strong during the year, with cash flow from operating activities of MSEK 250 (174 in 2019). The strong cash flow, combined with higher profitability, gives us a strong financial position for future acquisitions.

We made four acquisitions during the year. These have added the Baltics and Italy to our market base and made us the largest player in telecom training in the USA. We believe that all four acquisitions will strengthen our competitiveness and contribute to continued good development in profitability.

Looking into 2021, we see continued increasing demand in all our growth markets. Our judgement is that the Swedish market will remain at much the same level as in 2020.  

We will continue to invest in strengthening our organisations in primarily North America, Germany, and the UK, in order to support continued growth. We also intend to strengthen our position in our growth markets through further acquisitions.

We have raised our profitability target to EBITA of at least 10 percent on a rolling 12-month basis (from 9 percent), given the opportunities we can now see moving forward.

The order book has continued to develop positively. We entered 2021 with an order book that was 93 percent higher organically than at the same point last year. Excluding marine cable projects, the order book was 47 percent higher than at the same point last year.

The development of the COVID-19 pandemic and its impact on us does entail some ongoing uncertainty, even though we handled the situation well in 2020. In the longer term, we believe that experiences from COVID-19 will have a positive impact on investments in communication networks.

Thank you for joining us on this journey.

Henrik Larsson Lyon
President and CEO Hexatronic Group AB (publ)

Topic

Regulatory
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