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Hexatronic Group - Interim report Q3 2020

Hexatronic Group AB Nov 5, 2020

Hexatronic Presents Interim Report January - September 2020

Q3 from Hexatronic – Strong profitability, increased sales and several strategic acquisitions.

We have laid a solid foundation for continued growth and intend to continue to consolidate our position with further acquisitions.

Read the full report here.

Events during the quarter

  • Hexatronic acquired the training company The Light Brigade Inc., a US-based fiber optic training provider for broadband communication, wireless, service providers etc.

Events since the end of the period

  • Hexatronic acquired the fiber optic companies Baltronic Group OÜ, based in Estonia and the Canadian company Toronics Inc.
  • Hexatronic acquired 90 percent of the shares in Qubix S.pA., an Italian supplier of structured cabling.

Comments from the CEO

Strong profitability and several strategic acquisitions
Profitability (EBITA) increased during the quarter to 11.8 percent, an increase of 34 percent on the same period last year. This strong rise in profitability means we are now less than half a percentage point from our goal of at least 9 percent on a rolling 12-month basis.

Earnings per share also improved considerably and is 54 percent higher than in the corresponding quarter of 2019. The strong profitability is primarily due to good gross margins and high capacity utilisation in several of our factories.

Sales continue to develop positively with growth of 13 percent during the quarter, despite an estimated adverse impact of 5 percent due to COVID-19, as well as negative currency effects of 4 percent. Virtually all the growth is organic.

North America continued to develop very positively with growth of 20 percent. This growth was primarily driven by duct sales, where our new factory in Texas was one contributing factor.  Growth in Europe excluding Sweden was 16 percent, primarily driven by strong sales in the UK and Germany. Sales in Sweden reported growth of 11 percent, driven by continued extension of FTTH as well as projects relating to bolstering core networks.

The acquisition of Light Brigade, North America’s leading training company in telecom, was completed during the quarter. Light Brigade makes us a better-known player in North America, with opportunities to offer training in our FTTH systems across the continent, something we believe will enhance our potential for higher system sales.

Since the end of the quarter, we have made several strategic acquisitions. Baltronic Group, headquartered in Estonia, is a long-standing partner of Hexatronic. Baltronic Group increases our production capacity in Europe, while also strengthening us in several geographic markets and in wireless networks. Toronics of Toronto gives us a local presence in Canada, and Qubix with headquarters in Italy establishes us on a new market and adds strength in indoor solutions.

The order book has continued to develop positively. We entered the fourth quarter with an order book that was 6 percent higher organically than at the same point last year.

We remain positive in our outlook on the market for fiber optic systems. Part of this lies in the fact that COVID-19 has made consumers and governments alike realise that fiber optic networks need to be extended to meet the needs that already exist and are set to increase with new services.

We have laid a solid foundation for continued strong growth and intend to continue to consolidate our position with further acquisitions.

Thank you for joining us on this journey.

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