MALMO, Sweden—Hexpol A.B. has seen its operating profit rise more than 30 percent during the first three months of 2021, putting it in a strong financial position to pursue its merger and acquisition agenda in the months to come.
First quarter operating profit was up 31 percent year-on-year at $84 million, on 8 percent lower sales of $453 million. Operating margin stood at 18.5 percent, up from 12.9 percent reported in 2020.
Adjusted EBITDA increased 19 percent to $86 million, Hexpol reported April 28.
Hexpol linked the "best quarterly results ever" to a strong organic volume growth and increased organic sales combined with a lower cost base.
"Our strong business model in combination with a clear M&A agenda and strong financial position give us good conditions for continued growth and acquisitions," President and CEO Georg Brunstam said.
According to Brunstam, despite the ongoing negative impact of COVID-19 on demand, Hexpol has continued to see a clear improvement in sales quarter-on-quarter, and a recovery in "most of customer segments."
However, he warned, "uncertainty remains high."
Hexpol saw major supply-chain disruptions, including the semiconductor shortage, he said. The Swedish compounder also faced challenges in global transport and the supply of raw materials.
Hexpol Compounding, which contributes 93 percent of overall sales, saw revenue decline 9 percent to $417 million, due mainly to an 11 percent currency impact.
Adjusted operating profit increased to 18.7 percent to $78.5 million, with operating margin up at 18.5 percent.
Hexpol Compounding's sales in America were down year-on-year but increased sequentially. In Europe, sales increased slightly year-over-year, mainly to customers within building and construction and wire and cable.
In Asia, sales increased substantially compared to last year, affected by increased sales to the automotive industry among other things.
The Hexpol Engineered Products, which manufactures gaskets and polymer wheels, reported flat sales of $31 million.
The segment's revenue increased in Asia by 21 percent over the three months, while sales in America decreased by 16 percent, mainly affected by negative currency effects. Sales in Europe were in line with last year.
Operating profit was up 40 percent at 5.5 million, driven by "good sales combined with a lower cost base."
