HEXPOL (HPOL) investor relations material

Executive summary

• Q1 saw higher volumes across main segments, defending market share despite challenging market conditions, negative price/mix effects, and high competition.

• Three business areas now reported: Rubber Compounding, Thermoplastic Compounding, and Engineered Products, aligning with strategic growth focus.

• Growth in Building & Construction, Wire & Cable, Industrial, and Automotive segments across most geographies, with market share secured especially in North America.

• Supply chain imbalances from Middle East unrest and Strait of Hormuz closure managed effectively, with limited Q1 impact but expected to increase.

• Sustainability remains a priority, with a target to reduce CO2 emissions by an additional 10% between 2025 and 2026.

Financial highlights

• Q1 sales reached 4,768 MSEK, down 11% year-over-year, mainly due to negative FX effects and price/mix development.

• EBIT was 701 MSEK, down 16% year-over-year, with a margin of 14.7%; negative FX effects contributed significantly to the EBIT decline.

• Earnings per share for Q1 was 1.47 SEK, compared to 1.75 SEK in Q1 2025.

• Operating cash flow improved to 235 MSEK from 188 MSEK year-over-year.

• Net Debt/EBITDA increased to 0.88 from 0.63 year-over-year.

Outlook and guidance

• Price increases to offset higher raw material, energy, and transport costs will be implemented in Q2 and beyond.

• Short-term softness expected due to market conditions and geopolitical uncertainty; no general market improvement expected in the near term.

• Strategic focus on organic growth, customer acquisition, R&D, and increased M&A activity, especially in Thermoplastic Compounding.

• 2030 financial targets: >10% EPS CAGR, EBIT margin 14-16%, >10% revenue growth including M&A, Net Debt/EBITDA below 2.5.

• M&A activity is high, with several targets in the pipeline; Middle East conflict could impact future deals if prolonged.