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Hexagon Composites ASA: Thriving in the Clean Energy Transition

AInvestThursday, Nov 7, 2024 1:14 am ET
2min read
Hexagon Composites ASA, a world leader in composite cylinder technology, has reported strong financial results for the third quarter of 2024, highlighting the growing demand for clean energy solutions. The company's focus on compressed renewable natural gas (RNG) has driven its success, as evidenced by a nearly 40% increase in heavy-duty truck sales compared to Q2. This article delves into Hexagon's Q3 2024 performance, the role of RNG in its growth, and the outlook for the company's future.

Hexagon Composites ASA's third quarter of 2024 saw a revenue decline to NOK 1,250 million from NOK 1,148 million in Q3 2023. However, the company's EBITDA surged to NOK 184 million, up from NOK 120 million, yielding a 15% EBITDA margin. This improvement was driven by operational efficiency gains and increased heavy-duty truck activity in Hexagon Agility's fuel systems business. Despite overall industry overcapacity headwinds, heavy-duty truck sales nearly doubled compared to Q2 2024, with high activity from new RNG fuel adopters.

The shift towards renewable natural gas (RNG) and clean energy initiatives has significantly contributed to Hexagon Agility's growth in the heavy-duty truck sector. In Q3 2024, Hexagon Agility reported a nearly 40% increase in heavy-duty truck sales compared to Q2, driven by high activity from several new RNG fuel adopters coming online. This growth is attributed to the economic competitiveness and environmental benefits of RNG, which is expected to drive higher volumes for Hexagon Group's Mobile Pipeline and fuel systems businesses in the years ahead.


Hexagon Composites ASA's record-high EBITDA of NOK 184 million in Q3 2024 was driven by significant operational efficiency improvements in Hexagon Agility's fuel systems business. The company's CEO, Jon Erik Engeset, attributed this to increased heavy-duty truck activity and a nearly 40% increase in sales compared to Q2. This growth was supported by high activity from several new RNG fuel adopters coming online. To sustain these gains, Hexagon Agility has expanded its order book with customers new to RNG trucking, including over 30 leading Class 8 fleets, of which 40% are new adopters. This breadth of fleets piloting and placing new orders, along with continued high quoting activity, signifies a strong market embrace of RNG technology.


Hexagon Composites ASA's Q3 2024 results demonstrate the company's strong position in the clean energy sector. The global shift towards decarbonization and the economic competitiveness of compressed renewable natural gas (RNG) are expected to drive growth in Hexagon's Mobile Pipeline and fuel systems businesses. With a healthy backlog of orders, expectations for the upcoming quarters are positive, with improved margins and overall profitability.

As an investor, focusing on sectors that generate stable profits and cash flows, such as utilities, renewable energy, and the REIT sector, can be beneficial. Hexagon Composites ASA's commitment to sustainability and innovation positions it well for future success in the growing clean energy market. By capitalizing on undervaluations created by market perceptions and investing in funds like the Cohen & Steers Quality Income Realty Fund (RQI), investors can secure stable yields and potential capital gains. Diversification and adaptability of investment strategies, as seen in the author's interest in the XAI Octagon Floating Rate & Alternative Income Trust (XFLT) and REITs like AWP and GOOD, can further enhance investment portfolios. Reliable income-generating investments, such as Scotiabank, offer high dividends and are supported by strong institutional stability, making them attractive options for long-term, stable income-focused portfolios.
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