Highlights of the second quarter

• Net sales decreased by 6 percent to SEK 1,906 million (2,024). Sales decreased organically by 1 percent, growth from acquisitions amounted to 1 percent, and exchange rate effects had a negative impact of 6 percent.
• EBITA decreased by 24 percent to SEK 169 million (222), corresponding to an EBITA margin of 8.9 percent (11.0).
• Operating profit (EBIT) decreased by 26 percent to SEK 142 million (192), corresponding to an operating margin of 7.4 percent (9.5).
• Profit for the period decreased by 13 percent to SEK 77 million (89).
• Earnings per share after dilution amounted to SEK 0.38 (0.44).
• Net sales in Data Center increased by 38 percent.
• The leverage amounted to 1,9x, which is unchanged from December 31, 2024.
• Cash flow from operating activities amounted to SEK 131 million (221).
• Hexatronic has refinanced its senior loans and revolving credit facility.
• Hexatronic's climate targets for 2030 have been validated and approved by the Science Based Targets initiative (SBTi).
• Fiber Solutions signs 7-year contract with Chorus in New Zealand.

Events after the end of the quarter

• Hexatronic reports preliminary figures for the second quarter due to weaker than expected profitability in Fiber Solutions.
• Initiating a Performance Improvement program in Fiber Solutions. Details of the program will be presented on September 11, 2025, in connection with a digital Investor Update. Financial targets per business area will also be introduced at that time.

Comments from the CEO

Weak development in Fiber Solutions and currency effects impacted the quarter

In line with the preliminary figures for the second quarter reported on July 6, Group sales decreased by 6 percent to SEK 1,906 million, mainly due to currency effects that impacted sales by -6 percent during the quarter. The Fiber Solutions business area performed weakly, with declining demand and margins. At the same time, Data Center and Harsh Environment continued to perform strongly and delivered record results for the quarter, accounting for 59 percent of the Group’s EBITA before eliminations during the quarter.

The Group's EBITA decreased to 8.9 percent (11.0) as a result of the weaker performance in Fiber Solutions.

Weak demand in Fiber Solutions

Sales and EBITA in the Fiber Solutions business area performed significantly weaker than expected during the quarter due to lower demand for FTTH equipment and price pressure, which has been accentuated by overcapacity in the industry. Weak demand was noted in both North America and Europe, which saw negative growth of 23 and 12 percent, respectively, during the quarter. In North America, the decline is primarily related to Canada and a few customers in the US who had lower activity during the quarter. The APAC region has seen stable development. Sales declined by 8 percent during the quarter but increased in local currency. In June, we signed a new 7-year contract with New Zealand's leading broadband operator, Chorus, with whom we have had a close partnership for many years.

Overall, Fiber Solutions' sales decreased by 16 percent. EBITA declined to SEK 78 million (169), corresponding to a margin of 6.4 percent, due to lower sales and price pressure, primarily attributable to North America, which has traditionally had higher profitability.

Continued growth for Harsh Environment

Sales in Harsh Environment rose 4 percent during the quarter, and EBITA improved to SEK 40 million (38), thanks to several major project deliveries during the quarter. We continue to see good demand in the defense and energy sectors. Work to streamline manufacturing at the subsidiary Rochester Cable is ongoing and will continue throughout the year. Some positive effects of this work were noted during the second quarter.

Another record quarter for Data Center

The strong performance of Data Center continued in the second quarter. Sales rose 38 percent compared with the previous year, with strong growth mainly in the service business in both North America and Europe. In terms of profitability, the outcome was 2 to 3 percentage points higher than expected thanks to a couple of major projects with strong margins. During the quarter, we significantly strengthened our organization within the installation of security systems, audiovisual solutions, and wireless networks for indoor environments in the US market, in line with the growth strategy presented at the Investor Update in March earlier this year.

Stable cash flow and reduced net debt

We continue to have good financial flexibility for long-term value creation. During the second quarter, our interest-bearing net debt (excluding IFRS 16) decreased to SEK 1,802 million compared with SEK 1,923 million at the end of the first quarter, which means that the debt ratio is unchanged at 1.9 times pro forma EBITDA. We report a positive operating cash flow of SEK 131 million, corresponding to cash generation of 74 percent.

Initiating a performance improvement program in Fiber Solutions

We have initiated a program to improve earnings in Fiber Solutions. This program aims to strengthen our competitiveness through increased cost efficiency and creating conditions for growth by allocating resources to adjacent, attractive growth areas. We will present the details of this program and introduce financial targets per business area as part of an Investor Update in September.

Outlook

For Fiber Solutions, the market situation in Europe is expected to remain unchanged in the coming quarters, with intense competition and low price levels. In the US, the market is more robust, and we are working hard to increase sales again. Overall, we expect an EBITA margin for Fiber Solutions in the third quarter to be in line with the second quarter.

As part of the performance improvement program we initiated in Fiber Solutions, we are now taking decisive steps to reduce our costs, increase productivity, and expand our operations into new growth areas.

In Data Center, the focus is on strong organic and acquisition-driven growth. We expect the seasonal pattern with a weaker second half to continue, but with good growth compared with the previous year. We are working actively to broaden our customer base, both with more data center operators and in more related segments such as schools, hospitals, and commercial premises. In the Harsh Environment business area, work is underway to improve operational efficiency and profitability, primarily in the subsidiary Rochester Cable. We expect sales to be in line with the previous year during the third quarter.

Our ambition remains to complete one or two acquisitions during the year in Harsh Environment and Data Center. The order book at the end of the second quarter corresponds to 2.5 months of sales.

Rikard Fröberg
President and CEO

Presentation

Hexatronic will present the interim report at a webcast conference call today, Monday, July 14, 2025, at 10.00 CEST. CEO Rikard Fröberg, CFO Pernilla Lindén, and Deputy CEO Martin Åberg will participate.

Link to the webcast:

https://hexatronic-group.events.inderes.com/q2-report-2025

For registration and participation via the teleconference:

https://conference.inderes.com/teleconference/?id=5006798

Webcast and presentation materials will be available on the Hexatronic website.