Quickie: Hexagon’s Q3 dragged down by electronics woes
Hexagon just reported results for the third quarter — and they’re not awesome: Total revenue was up 1% as reported to €956 million but down 3% in constant currencies/on an organic basis (cco). That’s about 1% slower growth than expected, though cost controls helped Hexagon slightly beat operating profitability forecasts.
In prepared remarks, CEO Ola Rollén focused on execution, saying that “Hexagon reported strong profitability and strong cash flow … despite continued headwinds in China affecting sales growth. This demonstrates … the effect of the restructuring actions we took in the second quarter. [Growth] was hampered by the significant decline in the electronics industry in China and by tough comparative figures from last year’s product launches. The best performing division was PPM, recording 8% organic growth … strong demand for design and construction software … The decline in the electronics business combined with the uncertain trading environment resulted in recorded organic sales growth of -9% in the Manufacturing Intelligence division [even as] the performance in the software portfolios remained stable.”
A very mixed bag. A few of the details, before the earnings call that could provide more info:
- Geospatial Solutions revenue was up 4% (but down 2% cco) to €474 million, on a tough comparable due to last year’s big product launches in Q3. Within Geospatial Solutions,, Geosystems revenue was down 3% cco, Safety &Infrastructure was up 1% and Positioning was flat
- Industrial Solutions revenue was €483 million, down 5% cco. Within that division, Manufacturing Intelligence revenue was down 9% on the decline in the electronics business in China, not helped by what the company says was weak demand in automotive. PPM revenue was up 8%, due to strong demand in the design and construction software, especially in North America. Regionally, cco growth was +5% in the Americas, but -4% in EMEA and 13% in Asia.
Mr. Rollén, in the press release, said that ” while near-term market uncertainties remain, we are confident in our ability to deliver on … our 2021 financial objectives.” For those of you who have lost track, that was revenue of €4.6 billion to €5.1 billion — quite a stretch from the €3.95 billion or so that seems to be the consensus for 2019.
More after the call, if there’s anything new — and definitely more after the company’s Capital Markets Day 2019 on 11 December.