Hexatronic Group AB (publ)
Year-End Report 2019
(Full year 1 January – 31 December 2019)
The quarter (1 October – 31 December 2019)
- Net sales amounted to MSEK 463.2 (443.2), which represents 5% growth during the quarter.
- Reported operating result before interest, taxes and amortisation (EBITA) totalled MSEK 27.6 (24.4), which corresponds to an EBITA margin of 5.9% (5.5%). EBITA excluding patent dispute costs totalled MSEK 37.1 (28.0) which corresponds to an EBITA margin of 8.0% (6.3%).
- The operating result amounted to MSEK 20.6 (17.4).
- Net earnings totalled MSEK 14.5 (6.3).
- Earnings per share after dilution totalled SEK 0.39 (0.17).
- Cash flow from operating activities during the quarter amounted to MSEK 58.1 (51.6)
The full year (1 January – 31 December 2019)
- Net sales amounted to MSEK 1,842.3 (1,597.8), which represents 15% growth during the period.
- Reported operating result before interest, taxes and amortisation (EBITA) totalled MSEK 135.9 (114.9), which corresponds to an EBITA margin of 7.4% (7.2%). EBITA excluding patent dispute costs totalled MSEK 157.4 (122.7) which corresponds to an EBITA margin of 8.5% (7.7%).
- The operating result amounted to MSEK 106.4 (92.5).
- Net earnings totalled MSEK 67.1 (59.3).
- Earnings per share after dilution totalled SEK 1.80 (1.62).
- Cash flow from operating activities during the full year amounted to MSEK 173.9 (15.6)
- The board will propose a dividend of SEK 0.40 (0.40) per share for the financial year 2019 to the annual general meeting.
Comments from the CEO
Continued strong international growth
2019 was a year of continued strong international growth for Hexatronic. Sales excluding Sweden grew by just over 30%. The main growth was in Europe with the UK and Germany as the main drivers, along with North America. Including Sweden, sales increased by just over 15%, and 5% of this was organic. For the first time, Sweden now accounts for less than 30% of the company’s net sales. Growth during the fourth quarter was 5%, attributable in full to the acquisition of Opternus in Germany.
Profitability for the full year increased, with a boost in EBITA* (earnings after depreciation of tangible assets) of 28.2%. The EBITA margin* increased from 7.7% to 8.5% compared with 2018 as a whole. For the fourth quarter, the EBITA margin* increased from 6.3% to 8.0%. The reported EBITA margin also increased during the year and in the fourth quarter, despite considerably higher legal costs linked to the ongoing patent dispute in the UK. The improvements in margin during the periods are primarily a result of a higher gross margin.
Cash flow during the year was strong. Due to a decrease in interest-bearing debt combined with increased profitability, we reduced net debt in relation to EBITDA to 1.98, compared with 2.15 in the previous year. Thanks to our strong financial position, we can continue our growth journey through strategic acquisitions.
Looking ahead to 2020, we foresee continued strong growth internationally. During 2019 we have continued to invest in building our sales organisation, primarily in North America and the UK; we expect these investments to produce results as early as 2020. Also, during the year, we decided on a major investment in North America, with the establishment of a new duct factory in Texas, with production planned to begin in April 2020. Alongside our comprehensive organic growth investments, we are working actively to acquire strategic companies to continue growing on important emerging markets.
It was pleasing during the quarter to see a five-year extension of a contract with one of our biggest customers, Chorus, for passive fiber optic solutions.
We enter the first quarter of 2020 with an order book on a par with the same time last year.
We still have a highly positive view of the FTTH market, the opportunities 5G will bring in the shape of fiber expansion, and our potential for continued profitable growth. In the current situation, we see a minor risk of short-term adverse impact primarily on profitability should the spread of the coronavirus escalate.
Thank you for joining us on this journey.
Henrik Larsson Lyon
President and CEO of Hexatronic Group AB (publ)
* Excluding patent dispute costs related to the ongoing patent dispute in the UK.
Events during the quarter (1 October – 31 December 2019)
·Hexatronic NZ Ltd. extended its strategic partnership with Chorus Ltd. in signing a new 5-year supply agreement. The agreement covers the supply of end to end passive fibre optic solutions including fiber optic cables, micro duct etc. Chorus is one of the largest customers to the Hexatronic Group.
Events since the end of the period
No significant events since the end of the period.
Other information
Publication
This information comprises disclosures that Hexatronic Group AB (publ) must publish according to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, under responsibility of the contact persons named below, on 21 February 2020 at 08:00 CET.
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