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Hexagon beats market expectations with record sales as manufacturing demand picks up

By Reuters

By Helena Soderpalm

STOCKHOLM -Swedish industrial technology group Hexagon reported record sales and profitability on Tuesday, beating market expectations, boosted by stronger manufacturing demand.

The measurement and positioning systems and software company said it had seen continued high activity in the global construction and infrastructure markets, recovering manufacturing in Europe and North America and strong demand in China.

Hexagon reported a like-for-like sales rise of 20% with China growing 25%, mainly driven by strong demand in manufacturing, and Europe, Middle East and Africa, the company’s biggest region by net sales, recording growth of 27%.

Hexagon’s sensors and software are used for measurement and quality inspection in manufacturing processes and engineering plant design, as well as in infrastructure planning, construction, mining, agriculture and energy.

Having risen 29% so far this year, shares in the firm, which partly competes with companies such as Trimble and Autodesk, were up 1.5% at 0936 GMT.

“While the company does not provide yearly guidance, the Q2 outperformance and continued strong recovery this year plus supplementary M&A looks likely to continue to drive up consensus earnings expectations,” investment bank JPMorgan said in a note.

Hexagon Chief Executive Ola Rollen said the second quarter was the firm’s “strongest ever”, with sales, operating earnings and margins at an all-time high.

The company’s PPM (Process, Power and Marine) business, the only division that showed negative growth, was however hampered by the challenging oil and gas market.

“But we do see signs of recovery and that’s why we are quite certain that PPM will return to growth, maybe already in the third quarter,” Rollen told analysts and journalists.

Hexagon said adjusted operating profit (EBIT) rose to 301.1 million euros ($355.2 million) from 226.5 million a year earlier, beating a mean analyst forecast of 283.5 million according to Refinitiv estimates.

The company said this month that it had acquired software company Infor’s enterprise asset management division in a cash and equity deal worth $2.7 billion.

($1 = 0.8476 euros)