Hexagon Composites ASA Q1 2025 Results: Navigating Short-Term Challenges Amid Long-Term Growth

Hexagon Composites ASA, a global leader in advanced composite technology, recently outlined its first-quarter 2025 performance, revealing a mix of near-term headwinds and strategic optimism. As the company prepares to officially release its Q1 results on May 15, 2025, investors are evaluating its ability to weather current market pressures while capitalizing on its long-term position in clean energy infrastructure.

Key Financial Highlights

Preliminary data indicates that Hexagon Composites reported Q1 2025 revenue of €1.32 billion, a marginal increase from €1.30 billion in the same period of 2024. However, organic growth stagnated at 0%, down from 3% in Q1 2024, reflecting a challenging macroeconomic environment. EBIT1 (operating earnings excluding adjustments) fell to €345 million, a 9% drop from €376.5 million in 2024, with the adjusted operating margin contracting to 26.1% from 29.0%.

The underperformance stems primarily from:
- A sharp decline in sensor sales, exacerbated by weak demand in March—the quarter’s most critical revenue month.
- Economic uncertainty in NAFTA and China, which slowed deliveries and delayed customer capital expenditure.
- A €6 million adverse impact from currency fluctuations, adding short-term pressure.

Strategic Positioning and Long-Term Outlook

Despite Q1 headwinds, management remains confident in Hexagon’s pole position in the clean energy transition. Key growth drivers include:
1. Natural Gas Trucking Expansion:
- North America’s freight market is projected to grow 10x by 2030, driven by emissions regulations and the economic viability of natural gas (e.g., renewable natural gas). Hexagon’s Mobile Pipeline systems and composite cylinders are critical to this shift.
- Freightliner X15N natural gas truck platforms, expected to ramp up in Q3 2025, will boost demand for Hexagon’s fuel storage solutions.

1. Market Resilience:

2. Recurring revenues grew strongly during the quarter, offsetting sensor sales weakness. This segment, which includes service contracts and subscriptions, underscores the company’s shift toward predictable cash flows.

3. Operational Strength:

4. A robust balance sheet with a 50% equity ratio and €1.2 billion in liquidity provides flexibility to invest in growth initiatives or weather short-term volatility.
5. New production facilities in Lincoln, Nebraska, and Rialto, California, enhance capacity to meet rising demand.

Risks and Mitigation Strategies

• First-Half Softness: Management acknowledges limited visibility in the first half of 2025, with delayed truck platform availability and freight market uncertainty.
• Cost Discipline: The company will monitor expenses closely and may implement reductions if demand remains constrained.
• Currency Risks: Hedging strategies and operational efficiency will aim to offset transactional currency impacts.

Conclusion: A Volatile Quarter, but a Strong Foundation for Growth

Hexagon Composites’ Q1 2025 results reflect the challenges of an uneven recovery in global markets, particularly in its key NAFTA and China regions. However, the company’s strategic focus on clean energy infrastructure—backed by a robust balance sheet and technological leadership—positions it to capitalize on the $10 billion natural gas trucking opportunity by 2030.

With €1.32 billion in revenue and a 26.1% margin in Q1, Hexagon remains on track to achieve its long-term targets, including breakeven EBITDA by 2025. While near-term volatility may persist, the company’s dominance in lightweight composites and its alignment with global emissions reduction goals suggest that investors who look past short-term noise could be rewarded.

As CEO Philipp Schramm emphasized, Hexagon’s “pole position” in the energy transition is no accident. With innovation and execution as its cornerstones, the company is poised to emerge stronger from the current downturn.

Hexagon Composites ASA’s official Q1 2025 report will be published on May 15, 2025, at 07:00 CET, with a live presentation at 08:30 CET.