Sweden’s Hexagon has blamed “geopolitical uncertainty driven by tariffs” for a dip in trading conditions that negatively impacted its March quarter sales and profits.
CEO Norbert Hanke said delays in customer orders and shipments in March, which typically accounted for 50% of first-quarter revenues but saw an overall 6% decrease, caused a “late decline in volumes on a cost base” primed for expansion, resulting in 0% organic sales growth and an 8% fall in EBIT to €344.7 million. “[The] timing of impacts left us unable to address the cost base proactively,” Hanke said.
The Stockholm-listed software, sensor and robotics company saw recurring revenue rise by 10% in the quarter to €570.7m while net sales increased 2% to €1.32 billion.
Hanke said geopolitical uncertainty affected growth in North America and China.
“The late decline in volumes … resulted in a decline in the EBIT margin to 26%, despite further progress in our gross margin level,” he said.
“We have seen a stabilisation of demand early in the second quarter but the overall outlook remains uncertain.”
Chief financial officer David Mills told analysts said Hexagon was expecting a €15 million tariff hit on earnings “before mitigation”. He said while April had seen some “normalisation” of trading conditions, “we need to see the overall direction of travel of where the volume is going and then we can take appropriate [phased] action” on costs.
Hanke said continued weakness in the company’s Manufacturing Intelligence (MI) and Geosystems businesses offset gains in Asset Lifecycle Intelligence (ALI), Autonomous Solutions (AS) and Safety, Infrastructure & Geospatial (SIG).
AS net sales rose 2% to €151.1m, Geosystems declined by 3% to €375.7m on “weakness seen across the majority of construction markets … exacerbated late in the quarter by the impact of geopolitical uncertainty in some segments”, and ALI was up 5% at €204.4m.
Mining sales across these three core divisions totalled €120m, or about US$135 million, led by AS.
“In mining we saw slight growth in the quarter with good performance in mine planning and operations software offset by a slowdown in overall sensor shipments towards the end of the quarter, especially in North America. We also saw continued growth in the autonomous road project in Australia,” Hexagon chief strategy officer Ben Maslen said.
