HEXPOL

Quarterly Report • Apr 28, 2023

Published on April 28, 2023

JANUARY – MARCH 2023

• o Sales increased by 16 percent and amounted to 5,990 MSEK (5,173).
• o EBIT increased by 22 percent and amounted to 946 MSEK (775).
• o EBIT-margin amounted to 15.8 percent (15.0).
• o Profit after tax amounted to 668 MSEK (600).
• o Earnings per share amounted to 1.94 SEK (1.74).
• o Operating cash flow increased to 593 MSEK (103).

Group Summary

Key figures	Jan-Mar	Jan-Mar	Full Year	Apr 22-
MSEK	2023	2022	2022	Mar 23
Sales	5 990	5 173	22 243	23 060
EBITA, adjusted	975	797	3 358	3 536
EBITA-margin, adjusted, %	16,3	15,4	15,1	15,3
EBITA	975	797	3 388	3 566
EBITA-margin, %	16,3	15,4	15,2	15,5
EBIT, adjusted	946	775	3 260	3 431
EBIT-margin, adjusted, %	15,8	15,0	14,7	14,9
EBIT	946	775	3 290	3 461
EBIT-margin, %	15,8	15,0	14,8	15,0
Profit before tax	876	781	3 244	3 339
Profit after tax	668	600	2 483	2 551
Earnings per share, adjusted, SEK	1,94	1,74	7,14	7,34
Earnings per share after dilution, SEK	1,94	1,74	7,21	7,41
Equity/assets ratio, %	60	62	58
Return on capital employed, % R12	19,0	22,4	19,2
Operating cash flow	593	103	2 813	3 303

"Continued growth and strong margin - our best quarter to date"

Georg Brunstam, President and CEO

ABOUT HEXPOL

HEXPOL is a world-leading polymers group with strong global positions in advanced polymer compounds (Compounding), gaskets for plate heat exchangers (Gaskets and Seals), and wheels made of polymer materials for truck and castor wheel applications (Wheels). Customers are primarily system suppliers to the global automotive and engineering industry, building and construction industry and within sectors as transportation, energy, consumer and cable industry and manufacturers of medical equipment, plate heat exchangers and forklifts. The Group is organized in two business areas, HEXPOL Compounding and HEXPOL Engineered Products. The HEXPOL Group's sales in 2022 amounted to 22,243 MSEK and the Group has approximately 5,100 employees in fourteen countries.

Continued growth and strong margin - our best quarter to date

Once again, we delivered a very strong quarter. EBIT amounted to 946 MSEK (775), which in terms of results is our best quarter to date and represents an increase of 22 percent compared with the corresponding quarter previous year. The sales growth for the quarter as a total was strong with an increase of 16 percent compared with the corresponding quarter last year, with good sales in all markets and product areas. Above all, America showed a continued strong development. Included in the sales growth for HEXPOL Group are positive effects from acquisitions and positive currency effects.

Sales to automotive-related customers show an improvement but still varies from market to market. We see great uncertainty in Europe, mainly in the building and construction industry. The challenges within supply chains continue, but with lower intensity and then mainly for certain raw materials. With the exception of recently acquired McCann, the acquired companies of recent years are integrated into HEXPOL Group both geographically and organizationally and their plans have been delivered.

Strong execution of our solid business model with high customer focus combined with our ability to offer fast and stable deliveries, as well as rapid implementation of price adjustments are the key to the strong result. This together with our large geographical coverage with manufacturing close to our customers increases our delivery capacity.

The acquisition strategy is set and we work focused according to it. We recently acquired McCann Plastics LLC, an American specialist in thermoplastic compounds which has a significant proportion of recycled products. Our strong financial position and low debt ratios support our continued acquisition agenda.

The work on sustainability continues, not least with reducing our carbon footprint in order to achieve our goal of a reduction by 75 percent to 2025. Since the establishment of the target we have reduced our carbon footprint by 51 percent so we are well on our way to achieving our goal. The sustainability strategy includes a significant shift towards increased share of recycled materials, including acquisition of companies with a high portion of recycled material. Today constitutes the recycled material approximately 18 percent of the polymeric raw materials.

We recently held a well-attended capital market day in Åmål, Sweden. The strategy and business model were presented during the day, as well as specifically the business in America, the work with sustainability, and our product offering in health and medical technology. Furthermore, the factory in Åmål was presented, including the latest investment to increase the capacity within medical technology.

The uncertainty going forward remains high with high inflation and high interest rates, disturbances in supply chain and Russia's invasion of Ukraine. However, we believe that our strong customer focus in combination with our geographical closeness to our customers gives us continued opportunities to deal with the disruptions and further strengthen our market position. We are flexible and ready to meet the expected increase in vehicle production. The strong business model in combination with a clear acquisition strategy and strong financial position give us good conditions for continued growth and acquisitions.

Sales 5,990 MSEK (5,173) +16%

EBIT 946 MSEK (775)

+22%

Georg Brunstam President and CEO

Group development January - March 2023

Sales

Our sales once again increased during the first quarter 2023 compared to the corresponding quarter previous year. The HEXPOL Group's sales increased by 16 percent and amounted to 5,990 MSEK (5,173) during the quarter, including positive currency effects of 463 MSEK. In addition to the positive currency effects, the sales were positively affected by acquisitions (almaak and McCann) with 7 percent.

The HEXPOL Compounding business area's sales increased by 16 percent during the quarter, compared to the corresponding quarter 2022. The sales amounted to 5,617 MSEK (4,841) including positive currency effects of 439 MSEK. Adjusted for these, the sales amounted to 5,178 MSEK. In addition to the positive currency effects, the sales were positively affected by acquisitions with 7 percent. All markets and product areas showed good sales. Above all America showed a continued strong development.

Sales to automotive-related customers show an improvement but still varies from market to market. We see continued great uncertainty in Europe, mainly in the building and construction industry.

We have seen slightly lower raw material prices during the quarter.

The HEXPOL Engineered Products sales also increased during the quarter, and amounted to 373 MSEK (332), an increase by 12 percent. The operations in Asia developed positively during the quarter.

From a geographical perspective the sales increased in Europe by 14 percent compared to the corresponding quarter previous year. In America, the sales increased by 17 percent and in Asia by 18 percent, both compared with the corresponding quarter previous year.

Earnings

EBITA increased to 975 MSEK (797), which meant a corresponding EBITA margin of 16.3 percent (15.4).

EBIT increased by 22 percent to 946 MSEK (775). Positive currency effects of 81 MSEK are included. The corresponding operating margin amounted to 15,8 percent (15.0). The higher EBIT margin is driven by better product- and price mix.

The Group's net financial items amounted to an expense of 70 MSEK (6). Profit before tax amounted to 876 MSEK (781), profit after tax amounted to 668 MSEK (600) and earnings per share 1.94 SEK (1.74).

Sales 5,990 MSEK

+16%

EBIT 946 MSEK

+22%

EBIT-margin 15.8%

Financial overview

Equity/assets ratio

The equity/assets ratio remains strong at 60 percent (62). The Group's total assets amounted to 24,075 MSEK (19,941). Net debt amounted to 2,469 MSEK (865) whereof 420 MSEK (384) relates to financial leasing liabilities according to IFRS 16, which gives a net debt/EBITDA of 0.62 (0.24). The increase in net debt/EBITDA is mainly affected by the acquisition of almaak international GmbH during the second quarter and McCann Plastics LLC during the fourth quarter, but also by the extra dividend during 2022.

The Group had the following major credit agreements with Nordic banks as per March 31:

• A credit agreement with a limit of 2,000 MSEK due in July 2023
• A credit agreement with a limit of 1,500 MSEK due in September 2023
• A credit agreement with a limit of 1,500 MSEK due in June 2025
• A credit agreement with a limit of 1,100 MSEK due in February 2026

The Group use commercial papers as part of the company's financing and as of March 31 they amounted to 2,295 MSEK. In accordance with IAS1, outstanding volumes are reported in the balance sheet as current liabilities, but since HEXPOL's bilateral credit agreements also function as back-up facilities for outstanding commercial papers, they are of a non-current nature.

Cash flow

The operating cash flow for the Group amounted to 593 MSEK (103) in the quarter. Cash flow from operating activities amounted to 460 MSEK (122).

Investments, depreciation and amortisation

The Group's investments amounted to 129 MSEK (92) for the quarter. At the same time, depreciation, amortization and impairment amounted to 130 MSEK (106) whereof 20 MSEK (21) refers to leased assets according to IFRS 16.

Tax expenses

The Group's tax expenses amounted to 208 MSEK (181) for the first quarter 2023, which corresponds to a tax rate of 23.7 percent (23,2).

Profitability

The return on average capital employed, R12, amounted to 19.0 percent (22.4). The return on shareholders' equity, R12, amounted to 18.9 percent (21.6).

Parent Company

The Parent Company's profit after tax for the first quarter amounted to an expense of 28 MSEK (expense 9). Shareholders' equity amounted to 5,582 MSEK (6,237).

Net debt/EBITDA 0.62

HEXPOL Compounding

January - March 2023

The sales increased during the first quarter 2023, compared to the corresponding quarter previous year. The sales amounted to 5,617 MSEK (4,841) including positive currency effects of 439 MSEK. Adjusted for these, the sales amounted to 5,178 MSEK. In addition to positive currency effects, the sales were positively affected by acquisitions with 7 percent. All regions and product areas showed sales increases compared to the corresponding quarter previous year.

Sales to automotive-related customers show an improvement but still varies from market to market. We see continued great uncertainty in Europe, mainly in the building and construction industry.

We have seen slightly lower raw material prices during the quarter.

EBIT increased to 873 MSEK (721) and the corresponding operating margin amounted to 15.5 percent (14.9). The higher EBIT margin is driven by better product- and price mix.

Share of the Group's sales January - March 2023

About HEXPOL Compounding

The business area is one of the world's leading suppliers in development and manufacturing of advanced, high-quality polymer compounds for demanding applications and demanding end users. Customers are manufacturers of polymer products and components who impose rigorous demands on performance and global delivery capacity. The market is global and the largest end-customer segments are the automotive and engineering industries, followed by the building and construction sector. Other key segments are transportation sector, energy sector, consumer sector, cable industries and manufacturers of medical equipment.

Soliditet xx%

Net debt/EBITDA

HEXPOL Compounding

			Jan-Mar Jan-Mar Full Year	Apr 22-
MSEK	2023	2022	2022	Mar 23
Sales	5 617	4 841	20 834	21 610
EBIT, adjusted	873	721	2 982	3 134
EBIT-margin, adjusted, %	15,5	14,9	14,3	14,5
EBIT	873	721	3 012	3 164

HEXPOL Engineered Products

January – March 2023

The sales increased by 12 percent compared to the same quarter previous year and amounted to 373 MSEK (332). The increase include positive currency effects of 24 MSEK. Adjusted for these, the sales amounted to 349 MSEK. EBIT amounted to 73 MSEK (54) which correspond to an operating margin of 19.6 percent (16.3).

All product areas increased their sales compared to the corresponding quarter previous year. The operations in Asia developed positively during the quarter.

Share of the Group's sales January - March 2023

About HEXPOL Engineered Products

The business area has operations in a number of niche areas with strong global positions in gaskets for plate heat exchangers (Gaskets and Seals) and wheels of polymer materials for forklifts and material handling (Wheels). The market for gaskets and wheels is global. Gaskets customers include manufacturers of plate heat exchangers and wheel customers are manufacturers of forklifts and castor wheels.

Net debt/EBITDA

HEXPOL Engineered Products

		Jan-Mar Jan-Mar Full Year		Apr 22-
MSEK	2023	2022	2022	Mar 23
Sales	373	332	1 409	1 450
EBIT	73	54	278	297
EBIT-margin, %	19,6	16,3	19,7	20,5

After the end of the period

Significant events

No significant events after the end of the period have been reported.

Other information

Risk factors

The Group's and Parent Company's business risks, risk management and management of financial risks are described in detail in the 2022 Annual Report. HEXPOL's global operation entails a risk that the company is affected by events in the global environment, beyond the company's direct control. Examples of this could be changed geopolitical situations or changes in the supply chain. It is high on the agenda of both the management and The Board to monitor events in the global environment in order to be able to act quickly in situations that can have a significant impact on HEXPOL.

Accounting policies

This interim report has been prepared in accordance with IAS 34, Interim Financial Reporting. The Parent Company's financial statements have been prepared in compliance with the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2, Reporting for Legal Entities. The accounting and measurement policies as well as the assessment bases, applied in the 2022 Annual Report have also been applied in this interim report. No new or revised IFRS that came into force 2022 have had any significant impact on the Group's financial reports.

Liabilities for put options are recognized as a financial liability measured at fair value with changes in value in profit or loss, and are valued in accordance with Level 3.

Alternative Performance Measures (APMs)

ESMA (European Securities and Markets Authority) guidelines on alternative performance measures are effective from 2016. HEXPOL presents financial definitions and reconciliations of alternative performance measures in this report. HEXPOL presents alternative performance measures as these provide valuable additional information to investors and the company's management as they allow evaluation of the company's performance.

Personnel

The number of employees at the end of the period was 5,087 (4,813). The increase, compared to the corresponding period previous year, is mainly explained by the acquisition of almaak which happened in April 2022 and McCann acquired in December 2022.

Ownership structure

HEXPOL AB (publ.) with Corporate Registration Number 556108-9631 is the Parent Company of the HEXPOL Group. HEXPOL's Class B shares are listed on Nasdaq Stockholm, Large Cap. HEXPOL AB had approximately 12,900 shareholders on March 31, 2023. The largest shareholder is Melker Schörling AB with 25 percent of the capital and 46 percent of the voting rights. The twenty largest shareholders own 69 percent of the capital and 78 percent of the voting rights.

Invitation to presentation of the report

A presentation of this report will be held through a webcasted conference call on April 28, 2023 at 01:00 p.m. CET. The presentation, as well as information concerning participations, is available at www.hexpol.com.

Financial calender

HEXPOL AB publish financial information on the following dates:

-	Half-year report 2023	July 19, 2023
-	Interim report January-September 2023	October 27, 2023

Financial information is also available in Swedish and English on HEXPOL AB's website – www.hexpol.com.

This interim report January-March 2023 has not been audited by HEXPOL AB's auditors.

Malmö, Sweden April 28, 2023

HEXPOL AB (publ.)

Georg Brunstam

President and CEO

For more information, please contact:

• Peter Rosén, Vice President and CFO Tel: +46 (0)40 25 46 60

kl.12:00.

Address: Skeppsbron 3 SE-211 20 Malmö, Sweden

Corporate Registered Number: 556108–9631 Tel: +46 40-25 46 60 Website: www.hexpol.com

This report may contain forward-looking statements. When used in this report, words such as "anticipate", "believe", "estimate", "expect", "plan" and "project" are intended to identify forward-looking statements. Such statements could encompass risks and uncertainties pertaining to product demand, market acceptance, effects of economic conditions, impact of competitive products and pricing, foreign currency exchange rates and other risks. These forward-looking statements reflect the views of HEXPOL's management as of the date made with respect to future events but are subject to risks and uncertainties. While all of these forward-looking statements are based on estimates and assumptions made by HEXPOL's management and are believed to be reasonable, they are inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements. HEXPOL disclaims any intention or obligation to update these forward-looking statements.

This information is information that HEXPOL AB (publ.) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 12:00 a.m. CET on April 28, 2023. This report has been prepared both in Swedish and English. In case of any divergence in the content of the two versions, the Swedish version shall have precedence.

Informationen är sådan information som HEXPOL AB (publ) är skyldig att offentliggöra enligt EU:s marknadsmissbruksförordning. Informationen lämnades, genom ovanstående kontaktpersoners försorg, för offentliggörande den 23 oktober 2020

Summary financial information

Condensed consolidated income statement

		Jan-Mar Jan-Mar	Full Year Apr 22-
MSEK	2023	2022	2022	Mar 23
Sales	5 990	5 173	22 243	23 060
Cost of goods sold	-4 743	-4 168	-17 899	-18 474
Gross profit	1 247	1 005	4 344	4 586
Selling and administrative cost, etc.	-301	-230	-1 054	-1 125
Operating profit	946	775	3 290	3 461
Financial income and expenses	-70	6	-46	-122
Profit before tax	876	781	3 244	3 339
Tax	-208	-181	-761	-788
Profit after tax	668	600	2 483	2 551
- of which, attributable to Parent Company shareholders	668	600	2 483	2 551
Earnings per share before dilution, SEK	1,94	1,74	7,21	7,41
Earnings per share after dilution, SEK	1,94	1,74	7,21	7,41
Shareholders' equity per share, SEK	42,23	36,14	39,97
Average number of shares, 000s	344 437	344 437	344 437	344 437
Depreciation, amortisation and impairment	-130	-106	-492	-516

Condensed statement of comprehensive income

	Jan-Mar Jan-Mar		Full Year Apr 22-
MSEK	2023	2022	2022	Mar 23
Profit after tax	668	600	2 483	2 551
Items that will not be reclassified to the income statement
Remeasurements of defined benefit pension plans	-	-	5	5
Items that may be reclassified to the income statement
Translation differences	112	199	1 696	1 609
Comprehensive income	780	799	4 184	4 165
- of which, attributable to Parent Company's shareholders	780	799	4 184	4 165

Condensed consolidated balance sheet

	Mar 31	Mar 31	Dec 31
MSEK	2023	2022	2022
Intangible fixed assets	12 782	9 897	12 678
Tangible fixed assets	3 282	2 461	3 232
Financial fixed assets	7	3	7
Deferred tax asset	104	93	102
Total fixed assets	16 175	12 454	16 019
Inventories	2 466	2 061	2 454
Accounts receivable	3 539	3 329	3 078
Other receivables	345	233	384
Prepaid expenses and accrued income	101	67	77
Cash and cash equivalents	1 449	1 797	1 541
Total current assets	7 900	7 487	7 534
Total assets	24 075	19 941	23 553
Equity attributable to Parent Company's shareholders	14 547	12 449	13 767
Total shareholders' equity	14 547	12 449	13 767
Interest-bearing liabilities	579	777	1 822
Other liabilities	449	75	348
Provision for deferred tax	795	612	825
Provision for pensions	70	64	68
Total non-current liabilities	1 893	1 528	3 063
Interest-bearing liabilities	3 346	1 888	2 571
Accounts payable	3 316	3 073	3 111
Other liabilities	375	457	342
Accrued expenses, prepaid income, provisions	598	546	699
Total current liabilities	7 635	5 964	6 723
Total shareholders' equity and liabilities	24 075	19 941	23 553

Condensed consolidated changes in shareholders' equity

	Mar 31, 2023			Mar 31, 2022		Dec 31, 2022
MSEK	Attributable to Parent Company shareholders	Total equity	Attributable to Parent Company shareholders	Total equity	Attributable to Parent Company shareholders	Total equity
Opening equity	13 767	13 767	11 650	11 650	11 650	11 650
Comprehensive income Dividend	780	780	799	799	4 184 -2 067	4 184 -2 067
Closing equity	- 14 547	- 14 547	- 12 449	- 12 449	13 767	13 767

Changes in number of shares

	Total number of Class A shares	Total number of Class B shares	Total number of shares
Number of shares at January 1	14 765 620	329 671 226	344 436 846
Number of shares at the end of the period		14 765 620 329 671 226 344 436 846

Condensed consolidated cash-flow statement

	Jan-Mar	Jan-Mar	Full Year	Apr 22-
MSEK	2023	2022	2022	Mar 23
Cash flow from operating activities before changes in working capital	814	808	2 903	2 909
Changes in working capital	-354	-686	-310	22
Cash flow from operating activities	460	122	2 593	2 931
Note 3 Acquisitions	5	-	-1 512	-1 507
Cash flow from other investing activities	-129	-92	-659	-696
Cash flow from investing activities	-124	-92	-2 171	-2 203
Dividend	-	-	-2 067	-2 067
Cash flow from other financing activities	-468	443	2 167	1 256
Cash flow from financing activities	-468	443	100	-811
Change in cash and cash equivalents	-132	473	522	-83
Cash and cash equivalents at January 1	1 541	1 320	1 320	1 797
Exchange-rate differences in cash and cash equivalents	40	4	-301	-265
Cash and cash equivalents at the end of the period	1 449	1 797	1 541	1 449

Operating cash flow, Group

	Jan-Mar	Jan-Mar	Full Year	Apr 22-
MSEK	2023	2022	2022	Mar 23
Operating profit	946	775	3 290	3 461
Depreciation/amortisation/impairment	130	106	492	516
Change in working capital	-354	-686	-310	22
Sale of fixed assets	0	0	0	0
Investments	-129	-92	-659	-696
Operating Cash flow	593	103	2 813	3 303

Other key figures, Group

	Jan-Mar	Jan-Mar	Full Year	Apr 22-
	2023	2022	2022	Mar 23
Profit margin before tax, %	14,6	15,1	14,6	14,5
Return on shareholders' equity, % R12	18,9	21,6	19,1
Interest-coverage ratio, multiple	18	88	34	25
Net debt, MSEK	-2 469	-865	-2 845
Sales growth adjusted for currency effects, %	7	26	25
Sales growth adjusted for currency effects and acquisitions, %	0	20	17
Cash flow per share, SEK	1,33	0,35	7,53	8,51
Cash flow per share before change in working capital, SEK	2,36	2,35	8,43	8,44

Condensed income statement, Parent Company

			Full
	Jan-Mar	Jan-Mar	Year	Apr 22-
MSEK	2023	2022	2022	Mar 23
Sales	22	16	68	74
Administrative costs, etc.	-30	-25	-109	-114
Operating loss	- 8	- 9	-41	-40
Financial income and expenses	-25	-1	1 488	1 464
Profit after financial items	-33	-10	1 447	1 424
Profit before tax	-33	-10	1 447	1 424
Tax	5	1	-17	-13
Profit after tax	-28	- 9	1 430	1 411

Condensed balance sheet, Parent company

	Mar 31	Mar 31	Dec 31
MSEK	2023	2022	2022
Fixed assets	13 601	10 023	13 767
Current assets	690	3 015	703
Total assets	14 291	13 038	14 470
Restricted shareholders' equity
Share capital	69	69	69
Total restricted shareholders' equity	69	69	69
Non-restricted shareholders' equity
Share premiun reserve	619	619	619
Accumulated earnings	4 922	5 558	3 492
Profit after tax	-28	-9	1 430
Total non-restricted shareholders' equity	5 513	6 168	5 541
Total shareholders' equity	5 582	6 237	5 610
Non-current liabilities	2 857	490	3 786
Current liabilities	5 852	6 311	5 074
Total shareholders' equity and liabilities	14 291	13 038	14 470

Notes to the financial reports

Note 1 Financial instrument per category and measurement level

Mar 31, 2023	Financial assets/liabilities measured at:
MSEK	Amortized costs	Fair value through profit or loss	Measurem. level	Total
Assets in the balance sheet
Non-current financial assets	7	-		7
Accounts receivable	3 539	-		3 539
Cash and cash equivalents	1 449	-		1 449
Total	4 995	-		4 995
Liabilities in the balance sheet
Interest-bearing non-current liabilities	259	-		259
Interest-bearing non-current lease liabilities	320	-		320
Liabilities to minority shareholders*		412	3	412
Interest-bearing current liabilities	3 246	-		3 246
Interest-bearing current lease liabilities	100	-		100
Accounts payable	3 316	-		3 316
Other liabilities	375	-		375
Accrued expenses, prepaid income, provisions	598	-		598
Total	8 214	412		8 626

Mar 31, 2022	Financial assets/liabilities measured at:
MSEK	Fair value Amortized through profit or loss costs		Measurem. level	Total
Assets in the balance sheet
Non-current financial assets	3	-		3
Accounts receivable	3 329	-		3 329
Cash and cash equivalents	1 797	-		1 797
Total	5 129	-		5 129
Liabilities in the balance sheet
Interest-bearing non-current liabilities	491	-		491
Interest-bearing non-current lease liabilities	286	-		286
Interest-bearing current liabilities	1 790	-		1 790
Interest-bearing current lease liabilities	98	-		98
Accounts payable	3 073	-		3 073
Other liabilities	457	-		457
Accrued expenses, prepaid income, provisions	546	-		546
Total	6 741	-		6 741

*Liabilities to minority shareholders are recogniced as other non-current liabilities.

Note 2 Non-recurring items in the income statement

MSEK	Jan-Mar 2023	Jan-Mar 2022	Full Year 2022
Costs of goods sold	-	-	-
Other operating income	-	-	30
Other operating expense	-	-	-
Profit before tax	-	-	30
Tax	-	-	-6
Profit afer tax	-	-	24

The income during the full year 2022 is attributable to the dissolution of a cost accrual related to the fire in Jonesborough, TN, USA January 7, 2021.

Note 3 Acquisition

Acquisition within TP Compounding 2022

HEXPOL Group acquired 100% of the shares in McCann Plastics LLC from the McCann family in December. The company is specialized in niche thermoplastic compounds, with special focus on roto molding applications and is based in Ohio, USA. McCann has during the last 12 months delivered sales of some 72 MUSD with a profitability level just below that of the HEXPOL Group. McCann has operations in two locations in Ohio, USA with some 100 employees. The main end customer segments are general industry, agriculture and the fast growing segment of specialized cooling boxes. The acquisition price amounted to 120 MUSD on a cash and debt free basis and was funded by a combination of cash and existing bank facilities. During the quarter, 5 MUSD was paid out in relation to the acquisition.

Segment reporting and distribution of revenues

Quarterly data, Group

Sales per business area

	2023		2022			Full Apr 22-		2021				Full
MSEK	Q1	Q1	Q2	Q3	Q4		Year Mar 23	Q1	Q2	Q3	Q4	Year
HEXPOL Compounding	5 617	4 841	5 291	5 554	5 148	20 834	21 610	3 548	3 723	3 826	3 791	14 888
HEXPOL Engineered Products	373	332	363	367	347	1 409	1 450	262	279	282	294	1 117
Group total						5 990 5 173 5 654 5 921 5 495 22 243	23 060 3 810 4 002 4 108 4 085 16 005

Sales per geographic region

	2023	2022				Full	Apr 22-	2021				Full
MSEK	Q1	Q1	Q2	Q3	Q4	Year	Mar 23	Q1	Q2	Q3	Q4	Year
Europe	2 407	2 118	2 341	2 281	2 109	8 849	9 138	1 480	1 666	1 617	1 571	6 334
Americas	3 300	2 815	3 059	3 354	3 061	12 289	12 774	2 141	2 128	2 267	2 275	8 811
Asia	283	240	254	286	325	1 105	1 148	189	208	224	239	860
Group total						5 990 5 173 5 654 5 921 5 495 22 243						23 060 3 810 4 002 4 108 4 085 16 005

Sales per geographic region HEXPOL Compounding

	2023	2022				Full Apr 22-			2021		Full
MSEK	Q1	Q1	Q2	Q3	Q4	Year	Mar 23	Q1	Q2	Q3	Q4	Year
Europe	2 231	1 963	2 168	2 123	1 958	8 212	8 480	1 351	1 525	1 485	1 427	5 788
Americas	3 189	2 715	2 950	3 237	2 958	11 860	12 334	2 067	2 056	2 188	2 196	8 507
Asia	197	163	173	194	232	762	796	130	142	153	168	593
Group total						5 617 4 841 5 291 5 554 5 148 20 834						21 610 3 548 3 723 3 826 3 791 14 888

Sales per geographic region HEXPOL Engineered Products

	2023	2022				Full	Apr 22-		2021		Full
MSEK	Q1	Q1	Q2	Q3	Q4	Year	Mar 23	Q1	Q2	Q3	Q4	Year
Europe	176	155	173	158	151	637	658	129	141	132	144	546
Americas	111	100	109	117	103	429	440	74	72	79	79	304
Asia	86	77	81	92	93	343	352	59	66	71	71	267
Group total	373	332	363	367	347	1 409	1 450	262	279	282	294	1 117

EBIT per business area

	2023	2022				Full	Apr 22-		2021	Full
MSEK	Q1	Q1	Q2	Q3			Q4 Year * Mar 23	Q1	Q2	Q3*		Q4* Year *
HEXPOL Compounding	873	721	759	765	737	2 982	3 134	658	679	618	586	2 541
HEXPOL Engineered Products	73	54	77	73	74	278	297	46	49	59	42	196
Group total	946	775	836	838	811	3 260	3 431	704	728	677	628	2 737

EBIT-margin per business area

	2023		2022			Full	Apr 22-	2021			Full
%	Q1	Q1	Q2	Q3			Q4 Year * Mar 23	Q1	Q2	Q3*		Q4* Year *
HEXPOL Compounding	15,5	14,9	14,3	13,8	14,3	14,3	14,5	18,5	18,2	16,2	15,5	17,1
HEXPOL Engineered Products	19,6	16,3	21,2	19,9	21,3	19,7	20,5	17,6	17,6	20,9	14,3	17,5
Group total	15,8	15,0	14,8	14,2	14,8	14,7	14,9	18,5	18,2	16,5	15,4	17,1

*Adjusted EBIT for HEXPOL Compounding

Reconciliation alternative performance measures

Sales

	2023		2022			Full		2021			Full
MSEK	Q1	Q1	Q2	Q3	Q4	Year	Q1	Q2	Q3	Q4	Year
Sales	5 990	5 173	5 654	5 921	5 495	22 243	3 810	4 002	4 108	4 085	16 005
Currency effects	463	363	516	709	681	2 269	-412	-405	-55	58	-814
Sales excluding currency effects	5 527	4 810	5 138	5 212	4 814	19 974	4 222	4 407	4 163		4 027 16 819
Acquisitions	338	242	400	249	308	1 199	33	109	210	217	569
Sales excluding currency effects and acquisitions	5 189	4 568	4 738	4 963	4 506	18 775	4 189	4 298	3 953		3 810 16 250

Full Year

Sales growth

%	Jan-Mar 2023	Jan-Mar 2022	Full Year 2022
Sales growth excluding currency effects	7	26	25
Sales growth excluding currency effects and acquisitions	0	20	17

EBITA, adjusted, %

			Full
	Jan-Mar	Jan-Mar		Year Apr 22-
MSEK	2023	2022	2022	Mar 23
Sales	5 990	5 173	22 243	23 060
Operating profit	946	775	3 290	3 461
Non-recurring items	-	-	-30	-30
Amortisation and impairment of intangible assets	29	22	98	105
Total EBITA, adjusted	975	797	3 358	3 536
EBITA, adjusted, %	16,3	15,4	15,1	15,3

EBITA, %

			Full
	Jan-Mar	Jan-Mar		Year Apr 22-
MSEK	2023	2022	2022	Mar 23
Sales	5 990	5 173	22 243	23 060
Operating profit	946	775	3 290	3 461
Amortisation and impairment of intangible assets	29	22	98	105
Total EBITA	975	797	3 388	3 566
EBITA%	16,3	15,4	15,2	15,5

Capital employed

	2023	2022			2021
MSEK	Mar 31	Mar 31		Jun 30 Sep 30	Dec 31	Mar 31		Jun 30 Sep 30	31 Dec
Total assets	24 075	19 941	22 400	23 783	23 553	16 524	16 381	18 200	17 963
Provision for deferred tax	-795	-612	-665	-705	-825	-544	-531	-662	-602
Accounts payable	-3 316	-3 073	-3 479	-3 450	-3 111	-2 201	-2 320	-2 432	-2 431
Other liabilities	-375	-457	-335	-354	-342	-316	-293	-302	-334
Accrued expenses, prepaid income, provisions	-598	-546	-651	-777	-699	-494	-474	-570	-600
Total Group	18 991	15 253	17 270	18 497	18 576	12 969		12 763 14 234	13 996

Return on capital employed, R12

			Full
MSEK	Mar 31 2023	Mar 31 2022	Year 2022
Average capital employed	18 334	14 062	17 399
Profit before tax	3 339	3 110	3 244
Interest expense	140	41	98
Total	3 479	3 151	3 342
Return on capital employed, %	19,0	22,4	19,2

Interest-coverage ratio, multiple

		Full
	Jan-Mar	Jan-Mar	Year	Apr 22-
MSEK	2023	2022	2022	Mar 23
Profit before tax	876	781	3 244	3 339
Interest expense	51	9	98	140
Total	927	790	3 342	3 479
Interest-coverage ratio, multiple	18	88	34	25

Shareholders' equity

	2023	2022			2021
MSEK	Mar 31	Mar 31	Jun 30	Sep 30	Dec 31	Mar 31	Jun 30 Sep 30		Dec 31
Shareholders' equity	14 547	12 449	12 069	13 684	13 767	10 230	9 782	10 905	11 650

Return on equity, R12

			Full
	Mar 31	Mar 31	Year
MSEK	2023	2022	2022
Average shareholders' equity	13 517	11 197	12 992
Profit after tax	2 551	2 424	2 483
Return on equity, %	18,9	21,6	19,1

Net debt

			Full
	Mar 31	Mar 31	Year
MSEK	2023	2022	2022
Financial assets	7	3	7
Cash and cash equivalents	1 449	1 797	1 541
Non-current interest-bearing liabilities	-579	-777	-1 822
Current interest-bearing liabilities	-3 346	-1 888	-2 571
Net debt	-2 469	-865	-2 845

Net debt/EBITDA

			Full
	Mar 31	Mar 31	Year
MSEK	2023	2022	2022
Net debt	-2 469	-865	-2 845
EBITDA, R12	3 977	3 558	3 782
Net debt/EBITDA, multiple	-0,62	-0,24	-0,75

Equity/assets ratio

			Full
MSEK	Mar 31 2023	Mar 31 2022	Year 2022
Shareholders' equity	14 547	12 449	13 767
Total assets	24 075	19 941	23 553
Equity/assets ratio, %	60	62	58

Financial definitions

Average capital employed	Average of the last four quarters capital employed.
Average shareholders' equity	Average of the last four quarters shareholders' equity.
Capital employed	Total assets less deferred tax liabilities, accounts payable, other liabilities and accrued expenses, prepaid income and provisions.
Cash flow	Cash flow from operating activities.
Cash flow per share	Cash flow from operating activities in relation to the average number of shares outstanding.
Cash flow per share before	Cash flow from operating activities before changes in working capital in relation to the average number of
changes in working capital	shares outstanding.
Earnings per share	Profit after tax, in relation to the average number of shares outstanding.
Earnings per share after dilution	Profit after tax, in relation to the average number of shares outstanding adjusted for the dilution effect of warrants.
Earnings per share excl. adjusted	Profit after tax excluding non-recurring items, in relation to the average number of shares outstanding.
EBIT	Operating profit.
EBITA	Operating profit, excluding amortisation and impairment of intangible assets.
EBITA margin, %	Operating profit, excluding amortisation and impairment of intangible assets in relation to sales.
EBITA, adjusted	Operating profit excluding non-recurring items and amortisation and impairment of intangible assets.
EBITA margin, adjusted, %	Operating profit excluding non-recurring items and amortisation and impairment of intangible assets in relation to sales.
EBITDA	Operating profit excluding depreciation, amortisation and impairment of tangible and intangible assets.
Equity/assets ratio	Shareholders' equity in relation to total assets.
Interest-coverage ratio	Profit before tax plus interest expenses in relation to interest expenses.
Net debt/EBITDA	Non-current and current interest-bearing liabilities less cash and cash equivalents in relation to operating profit excluding depreciation, amortisation and impairment of tangible and intangible assets.
Net debt, net cash	Non-current and current interest-bearing liabilities less cash and cash equivalents.
Non-recurring items	Refers to integration- and restructuring costs and other material non-recurring items.
Operating cash flow	Operating profit excluding depreciation, amortisation and impairment of tangible and intangible assets, less investments incl. new leasing agreements and plus sales of tangible and intangible assets, and after changes in working capital.
Operating margin, %	Operating profit in relation to the sales.
Operating margin, adjusted, %	Operating profit excluding non-recurring items, in relation to the sales.
Other investing activities	Investments and sales of intangible and tangible assets.
Operating profit, adjusted	Operating profit excluding non-recurring items.
Profit margin before tax	Profit before tax in relation to the sales.
Return on capital employed, R12	Twelve months profit before tax plus twelve months interest expenses in relation to average capital employed.
Return on equity, R12	Twelve months profit after tax in relation to average shareholders' equity.
R12	Rolling twelve months average.
Sales growth excluding currency effects	Sales excluding currency effects compared to the sales for the corresponding year-earlier period.
Sales growth excluding currency effects and acquisitions	Sales excluding currency effects and acquisitions compared to the sales for the corresponding year-earlier period.
Shareholders' equity per share	Shareholders' equity in relation to the number of shares outstanding at the end of the period.