Hexatronic Group AB (publ) Interim report January – March 2024 - Seite 2

Profitability in line with the previous quarter
Profitability has continued to be affected by lower capacity utilization and price pressure in several markets. The EBITA margin in the quarter was 9.4 percent, compared with 17.2 percent in the corresponding period last year and 9.1 percent compared with the previous quarter.

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.