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Introduction & Market Context
Hexatronic Group AB (STO:HTRO) released its Q2 2025 half-year report on July 14, revealing a 6% decline in sales amid divergent performance across its business segments. The company’s stock closed at 22.08 SEK on July 11, down 2.73% ahead of the earnings release, and has been trading near its 52-week low of 20.57 SEK, reflecting ongoing investor concerns about the company’s growth trajectory.
The presentation highlighted Hexatronic’s global presence with diversified exposure across North America (36%), Europe (55%), and Asia-Pacific and Rest of World (9%). The company operates through three business segments: Fiber Solutions, Harsh Environment, and Data Center, with approximately 2,000 employees across 40 operating units and 18 production facilities in 9 countries.
Quarterly Performance Highlights
Hexatronic reported sales of 1,906 million SEK for Q2 2025, representing a 6% decline compared to the same period last year. This decline was primarily driven by currency headwinds, with organic sales declining by 1%, acquisition-driven growth contributing 1%, and exchange rate effects causing a 6% negative impact.
The company’s EBITA declined to 169 million SEK, corresponding to an EBITA margin of 8.9%, down from 11.0% in Q2 2024. Gross margin also decreased to 40.1% from 42.0% in the same quarter last year. Despite these challenges, Hexatronic maintained strong operating cash flow at 131 million SEK with 74% cash conversion.
As shown in the following financial summary:
Segment Analysis
The quarter revealed stark contrasts in performance across Hexatronic’s three business segments. Fiber Solutions, which represents 65% of Group sales and 41% of Group EBITA, experienced significant challenges. Data Center and Harsh Environment segments showed stronger results, collectively offsetting some of the weakness in the core Fiber Solutions business.
The relative contribution of each segment to sales and EBITA is illustrated in the following chart:
Fiber Solutions
The Fiber Solutions segment, Hexatronic’s largest business area, faced considerable headwinds in Q2 2025. Sales declined by 16% to 1,230 million SEK, with organic sales declining by 9%. The EBITA margin decreased significantly to 6.4% from 11.6% in Q2 2024, reflecting price pressure and an unfavorable business mix.
The company noted demand softness in both Europe and North America, with North American sales down 23%. Management highlighted ongoing work to broaden the customer base and announced a performance improvement program for this segment, with details to be presented on September 11.
The following chart illustrates the declining trend in Fiber Solutions performance:
Data Center
In stark contrast to Fiber Solutions, the Data Center segment achieved record results in Q2 2025. Sales grew by 38% to 344 million SEK, with organic growth of 35%. The EBITA margin increased significantly to 20.8% compared to 16.5% in the same period last year. This segment now represents 18% of Group sales but contributes a disproportionate 38% of Group EBITA.
Management expressed a strong market outlook for the Data Center business but noted that the seasonal pattern with stronger first half and weaker second half performance is expected to continue.
The Data Center segment’s impressive growth trajectory is shown below:
Harsh Environment
The Harsh Environment segment delivered solid results in Q2 2025, with sales growing 4% to 331 million SEK, representing a record quarter. Organic growth was 10%, with the EBITA margin improving to 12.0% from 9.4% in the same period last year. This segment now accounts for 17% of Group sales and 21% of Group EBITA.
Management expects underlying demand from the energy and defense sectors to remain strong, supporting continued growth in this segment.
The following chart shows the Harsh Environment segment’s performance:
Financial Position and Cash Flow
Despite operational challenges in its largest segment, Hexatronic maintained a solid financial position in Q2 2025. The company reported strong operating cash flow at 131 million SEK, with 74% cash conversion. Capital expenditures remained modest at 1.6% of net sales, primarily related to maintenance investments.
The net debt ratio was maintained at 1.9x EBITDA, with 518 million SEK in cash and 1,108 million SEK in unutilized back-up facilities, providing total liquidity of 1,626 million SEK. The company also completed a refinancing of senior loans during the quarter.
The following chart illustrates Hexatronic’s cash flow performance:
Outlook and Strategic Initiatives
Looking ahead, Hexatronic provided a cautious outlook for the remainder of 2025. For Fiber Solutions, the company expects the European market to remain challenging, while the US market is described as more robust. The Q3 EBITA margin for Fiber Solutions is expected to be in line with Q2.
The Data Center segment is expected to follow its typical seasonal pattern, while the company continues to work on improving efficiency in the Harsh Environment segment. Hexatronic also announced that its climate targets have been approved by the Science Based Targets initiative (SBTi).
A key upcoming event is the Investor Update scheduled for September 11, which will include virtual presentations, an updated strategy, details of the Performance Improvement Program for Fiber Solutions, and financial targets per Business Area.
The company’s outlook is summarized in the following slide:
This presentation marks a significant shift from Hexatronic’s Q1 2025 results, which showed 6% year-over-year growth in sales. The deterioration in performance, particularly in the Fiber Solutions segment, underscores the challenges the company faces in maintaining growth amid market headwinds. However, the strong performance in the Data Center segment and solid cash generation provide some counterbalance to these challenges as Hexatronic works to implement its improvement initiatives.
Full presentation:
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