HEXPOL (HPOL) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales were 5,454 MSEK (SEK 5.5 billion), down 5% year-over-year, with EBIT at 911 MSEK and an EBIT margin of 16.7%, supported by favorable product and price mix despite lower demand and sales prices.

• H1 2024 sales reached 10,766 MSEK, down 8% year-over-year, with EBIT at 1,816 MSEK and EBIT margin at 16.9%.

• Strong operative cash flow in Q2 was 926 MSEK, with robust cash conversion and net debt/EBITDA at 0.72 after dividend payouts.

• Sustainability initiatives advanced, including investment in a de-vulcanization line in Europe and high project activity in recycled products, especially for automotive.

• M&A pipeline remains active, with improved alignment between buyers and sellers and a focus on companies with high recycled material content.

Financial highlights

• Q2 2024 sales: 5,454 MSEK (down 5%); EBIT: 911 MSEK (down 4%); EBIT margin: 16.7% (up from 16.5%).

• Profit after tax: 654 MSEK (Q2 2023: 679 MSEK); EPS: 1.90 SEK (1.97 SEK).

• Equity/assets ratio: 61%; return on capital employed: 18.9%.

• Operating cash flow in Q2: 926 MSEK; net debt/EBITDA: 0.72.

• Working capital stable year-over-year; Star Thermoplastics acquisition added 18 MSEK to working capital.

Outlook and guidance

• Demand and sales prices expected to remain stable sequentially, but uncertainty remains high due to inflation, interest rates, and global unrest.

• High focus on M&A supported by strong financial position.

• Sustainability remains a priority, with a target to reduce carbon footprint by 75% by 2025; 57% reduction achieved so far.

• No early customer shutdowns detected ahead of summer, particularly in automotive.

• Ongoing investment in recycling and sustainability initiatives.