Release Date: July 29, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hexagon AB HXGBF achieved its highest organic growth in the last five years, with a 12% increase across all business areas.
- The company demonstrated strong operational leverage, improving EBIT AC to 24% in the quarter.
- Cash conversion was impressive at 149%, indicating strong cash flow management.
- Hexagon AB (HXGBF) completed the separation of Octave, simplifying its business focus on precision measurement and positioning technologies.
- The company was recognized by Time as one of the world's most sustainable companies, highlighting its commitment to sustainability.
Negative Points
- Currency headwinds negatively impacted the gross margin, despite strong hardware sales.
- The automotive market, particularly in China, remained weak, affecting overall performance.
- Agriculture in the Americas and construction in both China and Europe faced challenging market conditions.
- The recurring revenue numbers were down due to strong hardware sales, which could impact future revenue stability.
- The robotics business incurred costs of EUR 10 million, with expectations of further cost increases before commercialization benefits are realized.
Q & A Highlights
Q: Can you quantify the impact of the U.S. tariff refund on your margins or EBITAC?
A: The tariff refund amounted to a net positive of EUR2.4 million compared to the previous year. However, this was offset by increased costs from Iran due to higher freight costs, resulting in a net zero impact.
Q: Can you provide more details on the book-to-bill levels in your divisions?
A: We don't typically disclose book-to-bill ratios as many of our businesses don't build a backlog. However, we had good order intake across all businesses, with the most significant contribution from Manufacturing Intelligence (MI) due to its size and backlog operations.
Q: What are the expectations for EBITAC margin trajectory in H2, considering the restructuring program and changes in software and hardware mix?
A: We reported a 330 basis points improvement in EBITAC, with 100 bps from currency, 130 bps from the restructuring program, and the remaining 100 bps from operational leverage and other improvements.
Q: Regarding robotics partnerships, will there be a significant increase in costs due to commercialization plans?
A: We are exploring potential business partnerships to share ownership. Costs will increase as we move into sales and commercialization, but we have not yet reached the highest cost level.
Q: Can you elaborate on the defense programs or customer applications driving growth in aerospace and defense?
A: We provide positioning solutions for challenged environments used in various applications, including defense. We benefit from the buildup in Europe and the U.S. replenishing inventories due to geopolitical situations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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