Hexatronic Group AB (publ) (HTRO) Q2 2025 Earnings Call

Investor webinar replay

Replay transcript excerpt

Good morning, everyone, and welcome to Hexatronic second quarter presentation for 2025. As always, we start with a very brief reminder of who we are. Hexatronic is today a global business supporting customers around the world with products and solutions needed for fiber connectivity and the ever growing communications needs. We sell products and solutions under the Hexatronic brand and a few other brands as well. And we manufacture in 18 production facilities across nine different countries. Our turnover is about $7.5 billion SEC annually, and the business is organized in three business areas, fiber solutions, harsh environment, and data centers. Moving on to look at the quarter that just closed. We had a sales decline of 6%, which was entirely explained by currency headwinds. This is mainly the SEC strengthening against our key selling currencies like US dollar and euro. Overall profitability also saw a year on year decline with a beta margin landing at 8.9% in the quarter. And it was the fiber solutions business that caused this profit decline. We saw a weaker than expected quarter in both Europe and particularly in North America. On the other hand, our data center business overperformed again with another record quarter of very strong growth and profitability. And the harsh environment business area also had very solid results. In fact, all time high with double digit organic growth. Our cash flow, which you may recall, was negative in the first quarter, turned positive, as expected, with a 74% cash conversion. This contributed to keeping our net debt leverage constant at a rather comfortable 1.9 times. So all in all, we were, of course, disappointed by the underperformance in Fibre Solutions, but we also take away a number of positives elsewhere in the business. ...