Hexagon Purus: Navigating Turbulence with Strategic Resilience

In the second quarter of 2025, Hexagon Purus ASA faced a stark reality: a 63% year-over-year revenue decline to NOK 193 million, driven by a 69% slump in its Hydrogen Mobility & Infrastructure (HMI) segment and a 95% drop in hydrogen infrastructure revenue. Yet, amid this turbulence, the company's strategic response has positioned it as a case study in resilience. With a bold cost-cutting program, a reevaluation of its business portfolio, and a pivot toward battery electric mobility, Hexagon Purus is recalibrating its trajectory in a volatile market. For investors, the question is no longer whether the company can survive, but how it might capitalize on its upcoming transformation.

A Volatile Landscape and the Cost of Resilience

The Q2 2025 results underscore the fragility of Hexagon's hydrogen-centric model. The HMI segment, once a cornerstone of growth, reported an EBITDA loss of NOK -76 million, while the Battery Systems & Vehicle Integration (BVI) segment, though unprofitable, showed modest revenue growth (NOK 25 million). The company's EBITDA swung to NOK -161 million, a 66% deterioration compared to the prior year, and cash outflows of NOK 262 million for the quarter further strained liquidity.

However, the company's response has been swift and decisive. Hexagon expanded its cost reduction target to NOK 350 million annually (up from NOK 200 million), including a 30% workforce reduction in Germany. These measures aim to lower the breakeven point and enable profitability at lower volumes, a critical step given the current revenue environment. The CEO, Morten Holum, emphasized that these cuts are not merely defensive but foundational for long-term sustainability.

Strategic Pivots: Diversification and Margin Recovery

Hexagon's strategic review of its BVI segment and joint ventures in hydrogen infrastructure reflects a shift toward portfolio optimization. The company is now prioritizing battery electric mobility, evidenced by its expanded partnership with Hino Trucks in North America to deliver Class 6 & 7 battery electric trucks. This move taps into a sector with more immediate demand, particularly in urban logistics, where battery technology outperforms hydrogen in cost and efficiency.

The order backlog of NOK 1.1 billion—diversified across hydrogen mobility (35%), infrastructure (29%), and other applications (32%)—provides a critical runway for recovery. Notably, 69% of this backlog is scheduled for delivery beyond 2027, offering long-term visibility. The company's focus on aerospace applications, which saw 18% growth in Q2, further diversifies its revenue base and mitigates overreliance on hydrogen projects, which face regulatory delays and supply chain bottlenecks.

Investment Potential: Risks and Rewards

Hexagon's path to EBITDA breakeven by 2026 is ambitious but plausible. The cost reductions, combined with lower capital expenditures and a more efficient working capital structure, should meaningfully reduce cash outflows in the second half of 2025. However, risks remain:
1. Hydrogen Infrastructure Delays: The EU's delayed green hydrogen regulations and U.S. trade policy shifts could prolong project timelines.
2. BVI Segment Viability: While the BVI segment's EBITDA improved to NOK -31 million in Q2 2025, it remains a drag on profitability unless scaled effectively.
3. Market Competition: Larger players in hydrogen storage and battery EVs could erode Hexagon's market share.

For investors, the key is to assess whether the company's restructuring efforts can outpace these risks. The expanded partnership with Hino and the Tern RC8's production readiness are positive signals. Additionally, the company's cash balance of NOK 527 million at quarter-end, while down from NOK 543 million in Q1, remains sufficient to fund operations until 2026, assuming the order backlog converts as projected.

Conclusion: A Calculated Bet on the Energy Transition

Hexagon Purus is at a crossroads. Its Q2 2025 performance highlights the fragility of its hydrogen-centric model, but its strategic pivot toward battery electric mobility and disciplined cost management offers a viable path forward. For investors with a medium-term horizon, the company's upcoming business separation and margin recovery efforts present an opportunity to invest in a firm that is adapting to the realities of the energy transition.

The risks are real, but so are the rewards. If Hexagon can execute its cost-cutting program, scale its battery electric initiatives, and navigate regulatory headwinds, it could emerge as a resilient player in the clean energy sector. For now, the market will be watching closely as the company's second-half performance unfolds.