Hexagon Composites ASA: Navigating Short-Term Headwinds for Long-Term Clean Energy Dominance

In the volatile world of clean energy investing, few companies embody the tension between near-term struggles and long-term dominance like Hexagon Composites ASA. While its Q1 2025 results revealed margin pressures and flat revenue growth, the company’s strategic moves in renewable natural gas (RNG) adoption for heavy-duty trucking signal a $10 billion opportunity by 2030—one that’s being discounted by a market fixated on short-term macroeconomic noise. Here’s why the stock’s 51% year-to-date (YTD) price drop presents a rare buy signal for investors willing to look past the horizon.

The Near-Term Storm: Margins Under Pressure, but Recurring Revenue Shines

Hexagon’s Q1 2025 results were a mixed bag. Revenue held steady at €1.32 billion, but EBIT margins contracted to 26.1%, down from 29.0% in 2024. The pain points were clear:
- Weak demand in NAFTA and China, particularly in March (the quarter’s largest revenue month), slowed sensor sales and deliveries.
- Currency fluctuations cost the company €6 million in EBIT drag.

Yet, the story isn’t all gloom. Recurring revenues grew strongly, a testament to Hexagon’s shift toward subscription-based service contracts and long-term partnerships. This resilience suggests the company is building a predictable cash flow engine even as it navigates cyclical headwinds.

The market’s reaction—51% YTD price decline—has ignored this nuance, pricing in worst-case scenarios. But the real prize lies in Hexagon’s pole position in the energy transition.

The Long-Term Prize: RNG Adoption in Heavy-Duty Trucking

Hexagon’s core advantage is its role as a gatekeeper to the RNG revolution in trucking. Its composite cylinders and fuel systems are enabling a shift from diesel to RNG, a fuel that cuts greenhouse gas emissions by up to 90% while matching diesel’s range and power. Here’s why this market is primed to explode:

1. Market Expansion: From 100,000 to 300,000 Trucks Annually

The Cummins X15N engine has been a game-changer. Previously, only 100,000 out of 300,000 annual North American heavy-duty truck sales were suitable for natural gas. Now, with the X15N’s 500 hp power and 1,200-mile range, all 300,000 trucks can run on RNG. This has added 200,000 new annual addressable units—a 200% market expansion.

2. OEM Partnerships: The Trifecta of Trucking

All three leading Class 8 truck OEMs—Daimler Truck North America (Freightliner Cascadia), Kenworth, and Peterbilt—now offer X15N-powered trucks. Daimler’s April 2025 launch of Freightliner models marked a critical milestone, opening the door to long-haul fleets that once relied solely on diesel.

3. Infrastructure Support: 1,600 Stations and Growing

North America’s RNG fueling network now boasts over 1,600 public and private stations, with Hexagon’s Mobile Pipeline systems ensuring safe, efficient transport of RNG. This infrastructure is the backbone of a $10 billion market by 2030, driven by stricter emissions regulations and RNG’s 30-50% cost advantage over diesel.

Why Now? The Case for an Opportunistic Buy

The stock’s 51% YTD drop has created a mispriced entry point for three reasons:
1. Undervalued Against Long-Term Potential: At current prices, Hexagon trades at a discount to its recurring revenue growth and balance sheet strength (50% equity ratio, €1.2 billion liquidity).
2. Near-Term Risks Are Temporary:
- Delayed truck ramp-up: Freightliner’s X15N trucks are set to scale in Q3 2025, unlocking demand for Hexagon’s systems.
- Currency headwinds: Hedging strategies and operational efficiency can mitigate transactional risks.
3. Structural Tailwinds: The freight market’s 10x growth by 2030—driven by decarbonization mandates—will fuel recurring demand for Hexagon’s RNG infrastructure.

Catalysts to Watch

• May 15, 2025 Earnings Release: The official Q1 report will clarify execution against targets, including breakeven EBITDA by 2025.
• Freightliner X15N Ramp-Up: Q3 2025 production levels will signal demand for Hexagon’s fuel systems.

Conclusion: A Rare Buy Signal in the Clean Energy Transition

Hexagon Composites ASA isn’t just surviving—it’s dominating a sector at the heart of global decarbonization. While short-term macro risks and currency fluctuations weigh on near-term results, the company’s strategic moves in RNG adoption and $10 billion market roadmap make its 51% YTD price drop a compelling contrarian opportunity.

Investors should act now: The RNG revolution is here, and Hexagon is the engine powering it.

Disclosure: This analysis is for informational purposes only. Always conduct your own research before making investment decisions.