New focus areas continue to represent a more significant part of total sales
Sales in Harsh Environment totaled MSEK 259 in the first quarter, an increase from MSEK 52 in the corresponding quarter last year. The growth is driven by the acquisitions of Rochester Cable and Fibron Cable, active in dynamic hybrid cables for applications mainly in energy and defense.

In Harsh Environment, not least with the current security situation in the world, there is a generally strong demand in defense and energy markets that we believe will remain for a long time to come. We are currently seeing a substantial expansion of existing sea-based infrastructure and great interest in renewable sea-based energy production. This is driving investments in, for example, Remotely Operating Vehicles (ROVs) that rely entirely on dynamic hybrid cables for their operation.

Sales in Data Center amounted to MSEK 256 in the first quarter, an increase from MSEK 182 in the corresponding period last year. The majority of the growth is organic, and the remaining part is attributable to the acquisition of the data center company USNet in the US.

During the quarter, growth was strong in the product and service business in both of our main geographical markets, the US and Europe. The accelerating implementation of artificial intelligence (AI), which requires significant processing power, is driving the expansion of data centers globally.

North America
North America showed a negative sales development of 8 percent in the quarter. The acquisitions of Rochester Cable and USNet contributed positively but were offset by lower sales for Blue Diamond Industries.

Sales of FTTH systems in the US and Canada were slightly weaker than in the corresponding quarter last year, mainly due to project delays.

The construction of the new duct factory in Ogden, Utah, is proceeding according to plan and is expected to be ready for production in the third quarter of 2024. The plant expands our addressable market for duct to include the western United States, which is a significant market.

Europe
In the quarter, sales in Rest of Europe decreased by 21 percent compared to the corresponding period last year. The decrease is explained by the weaker development in Fiber Solutions, particularly in Germany and the UK, combined with the fact that the corresponding quarter last year was very strong. The acquisition of Fibron Cable contributed positively and in line with our expectations.

Sales in Sweden decreased by 8 percent, where we saw slightly lower activity in the FTTH market.

APAC
In APAC, sales decreased by 25 percent compared to the corresponding period last year, mainly due to a submarine cable project delivered to South Korea last year. Although, sales during the quarter were in line with the previous quarter.

Continued financial flexibility
We continue to have good financial flexibility for the creation of long-term value. Interest-bearing net debt (i.e. excluding IFRS 16) was largely in line with the previous quarter and amounted to MSEK 2,102 at the end of the quarter.

The interest-bearing net debt in relation to proforma EBITDA on 12-months basis, key ratio that reflects our existing bank covenant, increased from 1.4x to 1.7x during the quarter. The increase is due to lower profitability in the first quarter compared to a very strong first quarter last year.

Outlook for 2024 and beyond
In Harsh Environment and Data Center we expect market demand to remain strong during the rest of the year and beyond, mainly driven by investments in defense, energy and AI.

In Fiber Solutions we expect the market to remain weak in the coming quarters and then a gradual increase in demand in the latter part of the year. However, we see strong underlying structural trends, supporting global build-out in the long term.

The Group’s order book at the end of the first quarter corresponded to just over two months of sales, which is unchanged compared to the end of 2023.

Welcome to join us on our growth journey.

Henrik Larsson Lyon
President and CEO Hexatronic Group AB (publ)

Please direct any questions to:
Henrik Larsson Lyon, CEO Hexatronic Group, +46 706 50 34 00
Pernilla Lindén, CFO Hexatronic Group, +46 708 77 58 32

This is information that Hexatronic Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication under responsibility of the contact persons set out above, at 07:00 CEST on April 26, 2024.
This is a translation of the Swedish version of the year end report. When in doubt, the Swedish wording prevails.

Hexatronic creates sustainable networks all over the world. We partner with customers on four continents – from telecom operators to network owners – and offer leading, high-quality fiber technology for every conceivable application. Hexatronic Group (publ.) was founded in Sweden in 1993 and the Group is listed on Nasdaq OMX Stockholm. Our global brands include Viper, Stingray, Raptor, InOne, and Wistom?.

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• Hexatronic Group AB (publ) - Interim report Q1 2024