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Investing.com -- Hexatronic Group AB (ST:HTRO) shares plunged more than 27% on Monday after the company reported a sharp decline in second-quarter earnings, driven by a steep drop in profitability in its Fiber Solutions division.
The Sweden-based fiber technology company said preliminary net sales for the quarter ended June 30 fell to SEK 1.91 billion from SEK 2.02 billion a year earlier. EBITA dropped to SEK 169 million from SEK 222 million, a 24% decrease.
Sales in Fiber Solutions, Hexatronic’s largest business area, declined 16% to SEK 1,230 million. EBITA for the segment dropped 54% to SEK 78 million.
The company cited weaker demand for FTTH equipment and increased price pressure due to industry overcapacity.
Hexatronic said a performance improvement program has been initiated in Fiber Solutions, focusing on cost savings and targeted investments. Details of the program will be presented during an investor update in September, the company said.
Other business areas reported stronger results. Sales in the Data Center segment rose 38% to SEK 344 million, while EBITA increased 73% to SEK 72 million.
The Harsh Environment division recorded a 4% sales increase to SEK 331 million and a 3% EBITA rise to SEK 40 million. Combined, these two divisions accounted for 59% of EBITA before group eliminations.
Net debt, excluding IFRS 16, was 1.9 times EBITDA at the end of the second quarter, unchanged from the previous quarter.