Quarterly Report • Oct 27, 2022
Quarterly Report
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| MEUR | Q3 2022 | Q3 2021 | Δ% | 9M 2022 | 9M 2021 | Δ% |
|---|---|---|---|---|---|---|
| Operating net sales2) | 1,320.2 | 1,077.2 | 7 1) |
3,772.3 | 3,130.7 | 8 1) |
| Revenue adjustment3) | -3.6 | - | n.a. | -13.7 | - | n.a. |
| Net sales | 1,316.6 | 1,077.2 | 7 1) |
3,758.6 | 3,130.7 | 8 1) |
| Adjusted gross earnings2) | 860.7 | 692.9 | 24 | 2,455.8 | 2,015.3 | 22 |
| Adjusted gross margin, %2) | 65.2 | 64.3 | 0.9 | 65.1 | 64.4 | 0.7 |
| Adjusted operating earnings (EBITDA)2) | 473.7 | 413.4 | 15 | 1,355.8 | 1,182.9 | 15 |
| Adjusted EBITDA margin, %2) | 35.9 | 38.4 | -2.5 | 35.9 | 37.8 | -1.9 |
| Adjusted operating earnings (EBIT1)2) | 386.2 | 310.6 | 24 | 1,099.8 | 896.5 | 23 |
| Adjusted operating margin, % | 29.3 | 28.8 | 0.5 | 29.2 | 28.6 | 0.6 |
| Earnings before taxes, excluding | ||||||
| adjustments | 377.3 | 304.3 | 24 | 1,079.5 | 875.8 | 23 |
| Adjustments (before taxes)3) | -43.8 | -23.2 | n.a. | -186.9 | -59.8 | n.a. |
| Earnings before taxes | 333.5 | 281.1 | 19 | 892.6 | 816.0 | 9 |
| Net earnings | 273.5 | 230.6 | 19 | 727.7 | 669.2 | 9 |
| Net earnings, excl. adjustments | 309.4 | 249.6 | 24 | 885.2 | 718.3 | 23 |
| Earnings per share, Euro cent | 10.0 | 8.9 | 12 | 26.7 | 25.9 | 3 |
| Earnings per share, excl. | ||||||
| adjustments, Euro cent | 11.4 | 9.6 | 19 | 32.5 | 27.8 | 17 |
1)Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
2)For definition, see page 20.
3)See more information on page 2.
"Organic sales in the third quarter accelerated to 7 per cent, which drove the operating margin to 29.3 per cent, a year-over-year increase of 0.5 percentage points. Looking across the divisions, the gradual slowdown in Geosystems was more than offset by the acceleration in all others, as well as in China. These results underscore our resilience in a market hampered by inflationary pressure and continued constraint of components, which adversely impacted organic growth by -3 per cent in the quarter. As expected, we see improvements in the supply of components and can reaffirm that the situation should be resolved close to year-end.
Looking ahead, we are well prepared operationally for a global economic slowdown. The investments we have made in R&D and acquisitions continue to strengthen our margins and the resiliency of our business.
In closing, after 23 years and 91 interim reports, I want to end this commentary by expressing my gratitude to our employees, board members, shareholders, and other stakeholders that have believed in Hexagon over the years. With your support we have made industrial history - Hexagon would never have become what it is today without you and I look forward to continuing our journey together as Chairman! Thank you for your trust!"
Ola Rollén, President and CEO, Hexagon AB
ORGANIC
7
%
%
%
GROWTH
ADJUSTED
29
OPERATING MARGIN
CASH CONVERSION
78
Operating net sales increased by 23 per cent to 1,320.2 MEUR (1,077.2). Using fixed exchange rates and a comparable group structure (organic growth), net sales increased by 7 per cent. Regionally, organic growth was 8 per cent in the Americas, 8 per cent in Asia and 4 per cent in EMEA. In the Americas, North America recorded 8 per cent organic growth, driven by strong demand across most industries, and in particular surveying and automotive. South America recorded double-digit organic growth driven by strength in mining, and power and energy. In Asia, China recorded 5 per cent organic growth, driven by solid growth in general manufacturing, automotive and power and energy, which offset a slower development in the infrastructure and construction markets. The rest of Asia recorded doubledigit organic growth, driven by strong demand in India and Japan. In EMEA, Western Europe recorded 6 per cent organic growth, driven by growth in general manufacturing, automotive, surveying and power and energy. Russia declined significantly, reflecting the impact of the sanctions imposed by the European Union, U.S. and other countries, and the actions taken to freeze all business operations in Russia. EMEA excluding Russia and Western Europe recorded strong double-digit organic growth
Adjusted operating earnings (EBIT1) increased by 24 per cent to 386.2 MEUR (310.6), which corresponds to an adjusted operating margin of 29.3 per cent (28.8). The adjusted operating margin (EBIT1) was positively impacted by product mix and currency movements. Adjusted operating earnings (EBIT1) were positively impacted by currency translation effects of 32.6 MEUR and positively impacted by currency transaction effects of 9.7 MEUR. Earnings before taxes, excluding adjustments, amounted to 377.3 MEUR (304.3) and were positively impacted by currency translation effects of 28.5 MEUR.
The adjustments for the quarter consist of share-based program expenses (LTIP) of 13.2 MEUR (9.4), amortisation of surplus values (PPA) of 27.0 MEUR (13.8) and acquired deferred revenues of 3.6 MEUR (-).
| Net sales | Earnings | ||||||
|---|---|---|---|---|---|---|---|
| MEUR | Q3 2022 | Q3 2021 | Δ% 1) | Q3 2022 | Q3 2021 | Δ% | |
| Geospatial Enterprise Solutions | 641.9 | 551.9 | 5 | 197.0 | 172.6 | 14 | |
| Industrial Enterprise Solutions | 678.3 | 525.3 | 9 | 198.1 | 142.6 | 39 | |
| Operating net sales | 1,320.2 | 1,077.2 | 7 | ||||
| Revenue adjustment | -3.6 | - | n.a. | ||||
| Net sales | 1,316.6 | 1,077.2 | 7 | ||||
| Group cost | -8.9 | -4.6 | -93 | ||||
| Adjusted operating earnings (EBIT1) | 386.2 | 310.6 | 24 | ||||
| Adjusted operating margin, % | 29.3 | 28.8 | 0.5 | ||||
| Interest income and expenses, net | -8.9 | -6.3 | -41 | ||||
| Earnings before adjustments | 377.3 | 304.3 | 24 | ||||
| Adjustments | -43.8 | -23.2 | n.a. | ||||
| Earnings before taxes | 333.5 | 281.1 | 19 | ||||
| Taxes | -60.0 | -50.5 | -19 | ||||
| Net earnings | 273.5 | 230.6 | 19 |
1)Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
| Movement 1) | Income less cost | Earnings impact | ||
|---|---|---|---|---|
| CHF | Strengthened | 11% | Negative | Negative |
| USD | Strengthened | 17% | Positive | Positive |
| CNY | Strengthened | 11% | Positive | Positive |
| EBIT1, MEUR | 32.6 |
1)Compared to Q3 2021
| Operating net sales1) | Region | Q3 2022 | |
|---|---|---|---|
| 2021, MEUR | 1,077.2 | Asia excl. China (13% of sales) | ↗ |
| Structure, % | 7 | South America (4% of sales) | ↗ |
| Currency, % | 9 | 2 North America (36% of sales) | → |
| Organic growth, % | 7 | Western Europe (25% of sales) | → |
| Total, % | 23 | China (15% of sales) | → |
| 2022, MEUR | 1,320.2 | EMEA excl. Western Europe (7% of sales) | ↘ |
1)Net sales from acquisitions and divestments during the last twelve months are reported as "Structure" in the table above. Percentages are rounded to the nearest whole per cent.
| Operating net sales1) | Region | Q3 2022 | ||
|---|---|---|---|---|
| 2021, MEUR | 1,077.2 | Asia excl. China (13% of sales) | ↗ | |
| Structure, % | 7 | South America (4% of sales) | ↗ | |
| Currency, % | 9 | 2 North America (36% of sales) | → | |
| Organic growth, % | 7 | Western Europe (25% of sales) | → | >8% ↗ |
| Total, % | 23 | China (15% of sales) | → | 0-8% → |
| 2022, MEUR | 1,320.2 | EMEA excl. Western Europe (7% of sales) | ↘ | Negative ↘ |
| 1)Net sales from acquisitions and divestments during the last twelve | Total | → |
Geospatial Enterprise Solutions includes a world-leading portfolio of sensors for capturing data from land and air as well as sensors for positioning via satellites. The sensors are complemented by software (GIS) for the creation of 3D maps and models which are used for decision-making in a range of software applications, covering areas such as surveying, construction, public safety and agriculture. Divisions reported in this segment include: (1) Geosystems, (2) Safety, Infrastructure & Geospatial and (3) Autonomy & Positioning.
Geospatial Enterprise Solutions (GES) operating net sales amounted to 641.9 MEUR (551.9). Using fixed exchange rates and a comparable group structure (organic growth), net sales increased by 5 per cent. Regionally, organic growth was 8 per cent in the Americas, 7 per cent in Asia and 0 per cent in EMEA. In the Americas, North America recorded 9 per cent organic growth, driven by strong growth across most industries. South America recorded single-digit organic growth, driven by strong demand for mining, surveying and agriculture solutions. In Asia, China recorded -5 per cent organic growth due to weakness in the infrastructure and construction markets. The rest of Asia continued to record double-digit organic growth, driven by strong demand for surveying solutions in Japan, South Korea and India, and mining solutions in Australia. In EMEA, Western Europe recorded 1 per cent organic growth, positively impacted by solid demand for surveying and positioning solutions but adversely impacted by a weakness in public safety and construction. Russia continued to decline significantly, reflecting the impact of the sanctions imposed by the European Union, the U.S. and other countries, and the actions taken to freeze all business operations in Russia. Excluding Russia and Western Europe, EMEA recorded high double-digit organic growth.
Geosystems recorded 4 per cent organic growth, driven by solid demand for surveying and mining solutions but hampered by tough comparison numbers. The Safety, Infrastructure & Geospatial division recorded 5 per cent organic growth, driven by growth in defence. The Autonomy & Positioning division recorded 9 per cent organic growth, fuelled by strong demand for defence solutions and growth in autonomous driving solutions.
Adjusted operating earnings (EBIT1) increased by 14 per cent to 197.0 MEUR (172.6), which corresponds to an adjusted operating margin of 30.7 per cent (31.3). The adjusted operating margin (EBIT1) was positively impacted by currency movements but adversely impacted by continued investments in new product launches and marketing costs.
| MEUR | Q3 2022 | Q3 2021 | Δ% | 9M 2022 | 9M 2021 | Δ% |
|---|---|---|---|---|---|---|
| Operating net sales | 641.9 | 551.9 | 5 1) | 1,875.0 | 1,614.9 | 7 1) |
| Adjusted operating earnings (EBIT1) | 197.0 | 172.6 | 14 | 578.2 | 502.7 | 15 |
| Adjusted operating margin, % | 30.7 | 31.3 | -0.6 | 30.8 | 31.1 | -0.3 |
| Avg. number of employees | 10,036 | 9,303 | 8 |
1)Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
Industrial Enterprise Solutions includes metrology systems that incorporate the latest in sensor technology for fast and accurate measurements, as well as CAD (computer-aided design), CAM (computer-aided manufacturing) and CAE (computer-aided engineering) software. These solutions optimise design, processes and throughput in manufacturing facilities and create and leverage asset management information critical to the planning, construction and operation of plants and process facilities in a number of industries, such as automotive, aerospace and oil and gas. Divisions reported in this segment include: (1) Manufacturing Intelligence and (2) Asset Lifecycle Intelligence.
Industrial Enterprise Solutions (IES) operating net sales amounted to 678.3 MEUR (525.3). Using fixed exchange rates and a comparable group structure (organic growth), net sales increased by 9 per cent. Regionally, organic growth was 10 per cent in EMEA, 9 per cent in Asia and 8 per cent in the Americas. In EMEA, Western Europe recorded 13 per cent organic growth, driven by broad-based strength across manufacturing industries and power and energy. The rest of EMEA recorded a single-digit organic decline, with the Middle East growing high double-digits and Russia declining substantially due to sanctions imposed by the European Union, the U.S. and other countries, and the actions taken to freeze all business operations in Russia. In Asia, China recorded 8 per cent organic growth, fuelled by strong growth in general manufacturing and automotive – with a favorable impact from the electrification trend, and a recovery in power and energy after COVID-19 related lockdown issues. The rest of Asia recorded double-digit organic growth due to strong demand for solutions within power and energy and automotive. In the Americas, North America recorded 6 per cent organic growth, driven by strong growth in aerospace and automotive. South America recorded double-digit organic growth, driven by strong demand in the power and energy segment.
Manufacturing Intelligence recorded 8 per cent organic growth, driven by solid broad-based strength across geographies, industries and the software portfolio. The Asset Lifecycle Intelligence division recorded 12 per cent organic growth, fuelled by growth in both design and asset information management software.
Adjusted operating earnings (EBIT1) increased by 39 per cent to 198.1 MEUR (142.6), which corresponds to an adjusted operating margin of 29.2 per cent (27.1). The adjusted operating margin (EBIT1) was positively impacted by product mix and currency movements.
| MEUR | Q3 2022 | Q3 2021 | Δ% | 9M 2022 | 9M 2021 | Δ% |
|---|---|---|---|---|---|---|
| Operating net sales | 678.3 | 525.3 | 9 1) | 1,897.3 | 1,515.8 | 9 1) |
| Adjusted operating earnings (EBIT1) | 198.1 | 142.6 | 39 | 541.7 | 408.2 | 33 |
| Adjusted operating margin, % | 29.2 | 27.1 | 2.1 | 28.6 | 26.9 | 1.7 |
| Avg. number of employees | 12,866 | 11,709 | 10 |
1)Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
Operating net sales amounted to 3,772.3 MEUR (3,130.7) for the first nine months of the year. Using fixed exchange rates and a comparable group structure (organic growth), net sales increased by 8 per cent.
Adjusted operating earnings (EBIT1) amounted to 1,099.8 MEUR (896.5), which corresponds to an adjusted operating margin of 29.2 per cent (28.6). Adjusted operating earnings (EBIT1) were positively affected by currency translation effects of 74.1 MEUR and positively affected by currency transaction effects of 16.4 MEUR.
The financial net amounted to -20.3 MEUR (-20.7) for the first nine months of the year.
Earnings before taxes, excluding adjustments, amounted to 1,079.5 MEUR (875.8). Earnings before taxes, including these items, amounted to 892.6 MEUR (816.0) and were positively impacted by currency translation effects of 65.8 MEUR.
Net earnings, excluding adjustments, amounted to 885.2 MEUR (718.3) or 32.5 Euro cent (27.8) per share. Net earnings, including these items, amounted to 727.7 MEUR (669.2) or 26.7 Euro cent (25.9) per share.
| Net sales | Earnings | |||||
|---|---|---|---|---|---|---|
| MEUR | 9M 2022 | 9M 2021 | Δ% 1) | 9M 2022 | 9M 2021 | Δ% |
| Geospatial Enterprise Solutions | 1,875.0 | 1,614.9 | 7 | 578.2 | 502.7 | 15 |
| Industrial Enterprise Solutions | 1,897.3 | 1,515.8 | 9 | 541.7 | 408.2 | 33 |
| Operating net sales | 3,772.3 | 3,130.7 | 8 | |||
| Revenue adjustment2) | -13.7 | - | n.a. | |||
| Net sales | 3,758.6 | 3,130.7 | 8 | |||
| Group cost | -20.1 | -14.4 | -40 | |||
| Adjusted operating earnings (EBIT1) | 1,099.8 | 896.5 | 23 | |||
| Adjusted operating margin, % | 29.2 | 28.6 | 0.6 | |||
| Interest income and expenses, net | -20.3 | -20.7 | 2 | |||
| Earnings before adjustments | 1,079.5 | 875.8 | 23 | |||
| Adjustments3 | -186.9 | -59.8 | n.a. | |||
| Earnings before taxes | 892.6 | 816.0 | 9 | |||
| Taxes | -164.9 | -146.8 | -12 | |||
| Net earnings | 727.7 | 669.2 | 9 | |||
1)Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
2)Reduction of acquired deferred revenue (haircut) related to acquisitions
3)Adjustments in 2022 relates to share programmes (LTIP), amortisation of surplus values and non-recurring items.
| Movement 1) | Income less cost | Earnings impact | ||
|---|---|---|---|---|
| CHF | Strengthened | 8% | Negative | Negative |
| USD | Strengthened | 13% | Positive | Positive |
| CNY | Strengthened | 10% | Positive | Positive |
| EBIT1, MEUR | 74.1 |
1)Compared to 9M 2021.
Hexagon AB announced the acquisition of iConstruct Pty Ltd, a provider of award-winning Building Information Modelling (BIM) software used in commercial, infrastructure and industrial construction. Its flagship solution iConstruct Pro enables integration, accessibility and control of the wealth of design and construction information held within different BIM models, combining all data into a single 3D model.
Capital employed increased to 14,442.0 MEUR (9,470.0). Return on average capital employed for the last twelve months was 11.9 per cent (13.5). Return on average shareholders' equity over the previous twelve months was 9.3 per cent (13.8). The capital turnover rate was 0.4 times (0.5).
Total shareholders' equity increased to 10,441.9 MEUR (6,710.3). The equity ratio was 60.5 per cent (57.8). Hexagon's total assets increased to 17,256.4 MEUR (11,614.6). The increase in total assets is driven primarily by acquisitions and currency movements.
Following a refinancing in 2021, Hexagon's main sources of financing consist of:
1) A multicurrency revolving credit facility (RCF) established in 2021. The RCF amounts to 1,500 MEUR with a tenor of 5+1+1 years.
2) A Swedish Medium Term Note Programme (MTN) established in 2014. The MTN programme amounts to 20,000 MSEK with tenor up to 6 years
3) A Swedish Commercial Paper Programme (CP) established in 2012. The CP programme amounts to 15,000 MSEK with tenor up to 12 months.
On 30 September 2022, cash and unutilised credit limits totalled 1,400.8 MEUR (1,847.8). Hexagon's net debt was 3,519.0 MEUR (2,052.5). The net indebtedness was 0.31 times (0.28). Interest coverage ratio was 31.0 times (37.0).
During the third quarter, cash flow from operations before changes in working capital amounted to 407.2 MEUR (347.6), corresponding to 15.1 Euro cent (13.5) per share. Cash flow from operations in the third quarter amounted to 385.3 MEUR (283.2), corresponding to 14.3 Euro cent (11.0) per share. Operating cash flow in the third quarter, including nonrecurring items, amounted to 232.6 MEUR (179.6).
For the first nine months of the year, cash flow from operations amounted to 1,035.6 MEUR (981.2) corresponding to 38.4 Euro cent (38.2) per share. The operating cash flow, including non-recurring items, amounted to 625.0 MEUR (666.9).
Hexagon's net investments, excluding acquisitions and divestitures, amounted to -141.8 MEUR (-98.9) in the third quarter and -388.2 MEUR (-296.3) in the first nine months of the year. Depreciation, amortisation and impairment amounted to -114.5 MEUR (-116.6) in the third quarter and -334.1 MEUR (-327.1) during the first nine months of the year, whereof impairment charges amounted to 0.0 MEUR (-12.7) in the third quarter and 0.0 MEUR (-23.5) during the first nine months of the year.
The tax expense for the first nine months of the year amounted to -164.9 MEUR (-146.8). The reported tax rate was 18.0 per cent (18.0) for the quarter and 18.5 per cent (18.0) for the first nine months of the year. The tax rate, excluding non-recurring items, was 18.0 per cent (18.0) for the quarter and 18.0 per cent (18.0) for the first nine months of the year.
The average number of employees during the third quarter was 23,024 (21,109). The number of employees at the end of the quarter was 23,696 (21,427).
Earnings per share, including adjustments, for the third quarter amounted to 10.0 Euro cent (8.9). Earnings per share, excluding adjustments, for the third quarter amounted to 11.4 Euro cent (9.6).
Earnings per share, including adjustments, for the first nine months of the year amounted to 26.7 Euro cent (25.9). Earnings per share, excluding adjustments, for first nine months of the year amounted to 32.5 Euro cent (27.8).
On 30 September 2022, equity per share was 3.87 EUR (2.60) and the share price was 104.70 SEK (135.95).
Hexagon's share capital amounts to 85,761,450 EUR, represented by 2,705,477,888 shares, of which 110,250,000 are of series A with ten votes each and 2,595,227,888 are of series B with one vote each. Hexagon holds 14,550,000 treasury shares.
The parent company's earnings before taxes in the third quarter amounted to -3.9 MEUR (-2.9) and 273.3 MEUR (-7.4) for the first nine months of the year. The equity was 6,552.6 MEUR (4,928.9). The equity ratio of the parent company was 47 per cent (44). Liquid funds including unutilised credit limits were 881.1 MEUR (1,460.9).
Hexagon announced R-ventures, a new venture capital arm of R-evolution. The R-ventures programme aims to help the greentech startup ecosystem accelerate its next breakthroughs through seed funding or in-kind technology from Hexagon's portfolio.
Hexagon applies International Financial Reporting Standards (IFRS) as adopted by the European Union. Hexagon's report for the Group is prepared in accordance with IAS 34, Interim Financial Reporting and the Annual Accounts Act. Parent company accounts are prepared in accordance with the Annual Accounts Act. Accounting principles and calculation methods are unchanged from those applied in the Annual Report for 2021, see note 1 for further information.
As an international group, Hexagon is exposed to a number of business and financial risks. The business risks can be divided into strategic, operational and legal risks. The financial risks are related to such factors as exchange rates, interest rates, liquidity and the ability to raise funds. Risk management in Hexagon aims to identify, control and reduce risks. This work begins with an assessment of the probability of risks occurring and their potential effect on the Group. There has been no change in the risks facing the Group compared to what was reported in the Annual Report 2021.
Hexagon's share programme is accounted for according to IFRS 2 and is classified as an equity-settled share-based payment transaction, which means the programme is reported within equity. Social fees are reported as a liability in the balance sheet. The total cost of the share-based incentive programme is estimated at 60 MEUR per programme and is recognised as a personnel expense in profit or loss during the vesting period. The purpose of the share programme is to strengthen Hexagon's ability to retain and recruit competent employees, provide competitive remuneration and to align the interests of the shareholders with the interests of the employees concerned. Through a share-based incentive programme, the employees' remuneration is tied to the
company's earnings and value growth and creates long-term incentives for the programme participants.
Currently, Hexagon has three ongoing programmes, 2020/2023, 2021/2024 and 2022/2025.
No significant related party transactions have been incurred during the quarter.
The AGM will be held on 2 May 2023 at 16:00 CET at IVA Konferenscenter, Grev Turegatan 16. The composition of the Hexagon Nomination Committee for the Annual General Meeting 2023 is: Mikael Ekdahl (Chairman), Melker Schörling AB, Jan Dworsky, Swedbank Robur fonder, Anders Oscarsson, AMF and AMF Fonder and Liselott Ledin, Alecta.
On 7 October, Hexagon announced that David Mills will succeed Robert Belkic as Chief Financial Officer (CFO) for Hexagon AB, effective 1 July 2023.
The Board of Directors and the President and CEO declare that this Interim Report provides a true and fair overview of the Company´s and the Group´s operations, its financial position and performance, and describes material risks and uncertainties facing the Company and companies within the Group.
Stockholm, Sweden, 27 October 2022 Hexagon AB (publ)
Gun Nilsson Chair of the Board
Ola Rollén President and CEO Board Member
Henrik Henriksson Board Member
John Brandon Board Member
Erik Huggers Board Member Märta Schörling Andreen Board Member
Ulrika Francke Board Member
Sofia Schörling Högberg Board Member
Patrick Söderlund Board Member
Brett Watson Board Member
We have reviewed the condensed interim report for Hexagon AB as at September 30, 2022 and for the nine months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.
Stockholm, 27 October 2022
PricewaterhouseCoopers AB
Bo Karlsson Authorised Public Accountant
Helena Kaiser de Carolis Authorised Public Accountant
| MEUR | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | 2021 |
|---|---|---|---|---|---|
| Net sales | 1,316.6 | 1,077.2 | 3,758.6 | 3,130.7 | 4,341.1 |
| Cost of goods sold | -460.6 | -385.1 | -1,324.1 | -1,116.6 | -1,544.0 |
| Gross earnings | 856.0 | 692.1 | 2,434.5 | 2,014.1 | 2,797.1 |
| Sales expenses | -262.6 | -192.4 | -739.5 | -564.1 | -797.4 |
| Administration expenses | -107.5 | -85.3 | -308.0 | -251.1 | -357.4 |
| Research and development expenses | -155.4 | -130.8 | -450.1 | -374.5 | -510.8 |
| Capital gain (+) / loss (-) from sale of shares in Group companies | - | - | - | 0.3 | 0.3 |
| Other income and expenses, net | 11.9 | 3.8 | -24.0 | 12.0 | -122.0 |
| Operating earnings 1) | 342.4 | 287.4 | 912.9 | 836.7 | 1,009.8 |
| Financial income | 2.2 | 1.5 | 6.2 | 3.7 | 5.1 |
| Financial expenses | -11.1 | -7.8 | -26.5 | -24.4 | -31.3 |
| Earnings before taxes | 333.5 | 281.1 | 892.6 | 816.0 | 983.6 |
| Taxes | -60.0 | -50.5 | -164.9 | -146.8 | -173.6 |
| Net earnings | 273.5 | 230.6 | 727.7 | 669.2 | 810.0 |
| Attributable to: | |||||
| Parent company shareholders | 270.2 | 228.4 | 718.7 | 663.3 | 801.6 |
| Non-controlling interest | 3.3 | 2.2 | 9.0 | 5.9 | 8.4 |
| 1) of which adjustments | -43.8 | -23.2 | -186.9 | -59.8 | -259.8 |
| Earnings include depreciation, amortisation and impairments of | -114.5 | -116.6 | -334.1 | -327.1 | -578.9 |
| - of which amortisation of surplus values (included in adjustments) | -27.0 | -13.8 | -78.1 | -40.7 | -62.2 |
| Basic earnings per share, Euro cent | 10.0 | 8.9 | 26.7 | 25.9 | 30.8 |
| Earnings per share after dilution, Euro cent | 10.0 | 8.9 | 26.6 | 25.9 | 30.8 |
| Total shareholder's equity per share, EUR | 3.87 | 2.60 | 3.87 | 2.60 | 3.24 |
| Closing number of shares, thousands | 2,690,928 | 2,565,506 | 2,690,928 | 2,565,506 | 2,696,128 |
| Average number of shares, thousands | 2,691,928 | 2,566,556 | 2,694,065 | 2,567,053 | 2,599,293 |
| Average number of shares after dilution, thousands | 2,706,478 | 2,573,906 | 2,706,498 | 2,573,267 | 2,606,291 |
| MEUR | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | 2021 |
|---|---|---|---|---|---|
| Net earnings | 273.5 | 230.6 | 727.7 | 669.2 | 810.0 |
| Other comprehensive income | |||||
| Items that will not be reclassified to income statement | |||||
| Remeasurement of pensions | -0.2 | 0.9 | -0.6 | 45.5 | 43.7 |
| Taxes on items that will not be reclassified to income statement | 0.0 | -0.1 | 0.1 | -4.6 | -5.3 |
| Total items that will not be reclassified to income statement, net | |||||
| of taxes | -0.2 | 0.8 | -0.5 | 40.9 | 38.4 |
| Items that may be reclassified subsequently to income statement | |||||
| Exchange rate differences | 566.9 | 106.0 | 1,338.2 | 314.3 | 503.5 |
| Taxes on items that may be reclassified subsequently to income | |||||
| statement | -19.4 | -4.8 | -56.0 | -10.4 | -14.1 |
| Total items that may be reclassified subsequently to income | |||||
| statement, net of taxes | 547.5 | 101.2 | 1,282.2 | 303.9 | 489.4 |
| Other comprehensive income, net of taxes | 547.3 | 102.0 | 1,281.7 | 344.8 | 527.8 |
| Total comprehensive income for the period | 820.8 | 332.6 | 2,009.4 | 1,014.0 | 1,337.8 |
| Attributable to: | |||||
| Parent company shareholders | 817.4 | 329.7 | 1,999.3 | 1,006.8 | 1,326.8 |
| Non-controlling interest | 3.4 | 2.9 | 10.1 | 7.2 | 11.0 |
| MEUR | 30/9 2022 | 30/9 2021 | 31/12 2021 |
|---|---|---|---|
| Intangible fixed assets | 13,641.9 | 8,359.8 | 10,909.4 |
| Tangible fixed assets | 599.2 | 511.0 | 536.7 |
| Right-of-use assets | 217.3 | 201.4 | 201.7 |
| Financial fixed assets | 74.9 | 68.1 | 69.6 |
| Deferred tax assets | 121.7 | 97.9 | 105.9 |
| Total fixed assets | 14,655.0 | 9,238.2 | 11,823.3 |
| Inventories | 582.7 | 425.3 | 443.5 |
| Accounts receivables | 1,215.1 | 900.6 | 1,090.8 |
| Other receivables | 113.3 | 172.8 | 114.8 |
| Prepaid expenses and accrued income | 209.2 | 170.5 | 150.5 |
| Total current receivables | 1,537.6 | 1,243.9 | 1,356.1 |
| Cash and cash equivalents | 481.1 | 707.2 | 472.1 |
| Total current assets | 2,601.4 | 2,376.4 | 2,271.7 |
| Total assets | 17,256.4 | 11,614.6 | 14,095.0 |
| Equity attributable to parent company shareholders | 10,406.7 | 6,679.9 | 8,732.1 |
| Equity attributable to non-controlling interest | 35.2 | 30.4 | 32.6 |
| Total shareholders' equity | 10,441.9 | 6,710.3 | 8,764.7 |
| Interest bearing liabilities | 3,046.9 | 1,111.5 | 2,143.0 |
| Lease liabilities | 163.6 | 150.3 | 149.9 |
| Other liabilities | 122.8 | 91.7 | 116.0 |
| Pension liabilities | 76.3 | 72.4 | 75.0 |
| Deferred tax liabilities | 637.8 | 485.7 | 478.0 |
| Other provisions | 17.1 | 12.2 | 13.9 |
| Total long-term liabilities | 4,064.5 | 1,923.8 | 2,975.8 |
| Interest bearing liabilities | 646.6 | 1,363.9 | 582.3 |
| Lease liabilities | 66.7 | 61.6 | 62.7 |
| Accounts payable | 320.3 | 230.2 | 263.2 |
| Other liabilities | 365.2 | 363.6 | 307.1 |
| Other provisions | 93.7 | 30.6 | 54.8 |
| Deferred income | 763.7 | 541.6 | 655.1 |
| Accrued expenses | 493.8 | 389.0 | 429.3 |
| Total short-term liabilities | 2,750.0 | 2,980.5 | 2,354.5 |
| Total equity and liabilities | 17,256.4 | 11,614.6 | 14,095.0 |
In Hexagon's balance sheet derivatives and other long-term securities holdings are carried at fair value. Derivatives are measured at fair value based on valuation techniques with observable market data as input (level 2 according to definition in IFRS 13). Other longterm securities holdings amount to insignificant numbers. Liabilities for contingent considerations are measured at fair value and based on management's best estimation of the most probable outcome (level 3 according to definition in IFRS 13). Other assets and liabilities are carried at accrued cost.
For financial assets and liabilities that are carried at accrued cost, the fair value is deemed to be coincident with the carrying amount except for long-term liabilities to credit institutions. The difference between the fair value and the carrying amount for these long-term liabilities is deemed to be insignificant relative to the total balance sheet since the interest rate duration is short.
| MEUR | Q3 2022 | Q3 2021 | 2021 |
|---|---|---|---|
| Opening shareholders' equity | 8,764.7 | 5,949.2 | 5,949.2 |
| Total comprehensive income for the period1) Issue in kind |
2,009.4 - |
1,014.0 - |
1,337.8 1,751.4 |
| Acquisition of treasury shares | -57.6 | -35.2 | -62.2 |
| Dividend | -303.4 | -243.9 | -244.2 |
| Acquisition of non-controlling interest | 0.4 | 12.7 | 12.7 |
| Share based programme (LTIP) | 28.4 | 13.5 | 20.0 |
| Closing shareholders' equity2) | 10,441.9 | 6,710.3 | 8,764.7 |
| 1) Of which: Parent company shareholders | 1,999.3 | 1,006.8 | 1,326.8 |
| Non-controlling interest | 10.1 | 7.2 | 11.0 |
| 2) Of which: Parent company shareholders | 10,406.7 | 6,679.9 | 8,732.1 |
| Non-controlling interest | 35.2 | 30.4 | 32.6 |
| series A | series B | Total | |
|---|---|---|---|
| 2014-12-31 Total issued and outstanding | 15,750,000 | 341,639,213 | 357,389,213 |
| New issue, warrants exercised | - | 2,947,929 | 2,947,929 |
| 2015-12-31 Total issued and outstanding | 15,750,000 | 344,587,142 | 360,337,142 |
| New issue, warrants exercised | - | 106,000 | 106,000 |
| 2016-12-31 Total issued and outstanding | 15,750,000 | 344,693,142 | 360,443,142 |
| New issue, warrants exercised | - | - | - |
| 2017-12-31 Total issued and outstanding | 15,750,000 | 344,693,142 | 360,443,142 |
| New issue, warrants exercised | - | 2,481,550 | 2,481,550 |
| 2018-12-31 Total issued and outstanding | 15,750,000 | 347,174,692 | 362,924,692 |
| New issue, warrants exercised | - | 4,614,610 | 4,614,610 |
| 2019-12-31 Total issued and outstanding | 15,750,000 | 351,789,302 | 367,539,302 |
| New issue, warrants exercised | - | 11,500 | 11,500 |
| Repurchase of treasury shares | - | -646,000 | -646,000 |
| 2020-12-31 Total outstanding | 15,750,000 | 351,154,802 | 366,904,802 |
| Repurchase of treasury shares | - | -204,000 | -204,000 |
| 2021-03-31 Total outstanding | 15,750,000 | 350,950,802 | 366,700,802 |
| Split 7:1 outstanding shares | 94,500,000 | 2,105,704,812 | 2,200,204,812 |
| 2021-06-30 Total outstanding | 110,250,000 | 2,456,655,614 | 2,566,905,614 |
| Repurchase of treasury shares | - | -1,400,000 | -1,400,000 |
| 2021-09-30 Total outstanding | 110,250,000 | 2,455,255,614 | 2,565,505,614 |
| Issue in kind | 132,622,274 | 132,622,274 | |
| Repurchase of treasury shares | -2,000,000 | -2,000,000 | |
| 2021-12-31 Total outstanding | 110,250,000 | 2,585,877,888 | 2,696,127,888 |
| Repurchase of treasury shares | - | -850,000 | -850,000 |
| 2022-03-31 Total outstanding | 110,250,000 | 2,585,027,888 | 2,695,277,888 |
| Repurchase of treasury shares | - | -2,350,000 | -2,350,000 |
| 2022-06-30 Total outstanding | 110,250,000 | 2,582,677,888 | 2,692,927,888 |
| Repurchase of treasury shares | -2,000,000 | -2,000,000 | |
| 2022-09-30 Total outstanding | 110,250,000 | 2,580,677,888 | 2,690,927,888 |
| Total amount of treasury shares | - | 14,550,000 | 14,550,000 |
| 2022-09-30 Total issued | 110,250,000 | 2,595,227,888 | 2,705,477,888 |
Each share of series A carries entitlement to ten votes and each share of series B carries entitlement to one vote.
| MEUR | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | 2021 |
|---|---|---|---|---|---|
| Cash flow from operations before change in working capital | |||||
| excluding taxes and interest | 463.1 | 399.0 | 1,322.8 | 1,152.6 | 1,590.9 |
| Taxes paid | -47.3 | -45.2 | -169.8 | -148.1 | -189.4 |
| Interest received and paid, net | -8.6 | -6.2 | -19.7 | -19.3 | -28.7 |
| Cash flow from operations before change in working capital | 407.2 | 347.6 | 1,133.3 | 985.2 | 1,372.8 |
| Cash flow from change in working capital | -21.9 | -64.4 | -97.7 | -4.0 | -21.4 |
| Cash flow from operations | 385.3 | 283.2 | 1,035.6 | 981.2 | 1,351.4 |
| Investments tangible assets, net | -33.8 | -22.5 | -94.1 | -70.9 | -107.2 |
| Investments intangible assets | -108.0 | -76.4 | -294.1 | -225.4 | -312.2 |
| Operating cash flow before non-recurring items | 243.5 | 184.3 | 647.4 | 684.9 | 932.0 |
| Non-recurring cash flow 1) | -10.9 | -4.7 | -22.4 | -18.0 | -27.8 |
| Operating cash flow | 232.6 | 179.6 | 625.0 | 666.9 | 904.2 |
| Cash flow from acquisitions and divestments | -20.2 | -44.1 | -1,172.8 | -78.3 | -748.1 |
| Cash flow from other investing activities | -7.4 | -1.9 | -5.4 | 2.7 | 1.4 |
| Cash flow after other investing activities | 205.0 | 133.6 | -553.2 | 591.3 | 157.5 |
| Dividends paid | -7.6 | -0.6 | -303.4 | -243.9 | -244.2 |
| Repurchase of Treasury shares | -21.7 | -20.4 | -57.6 | -35.2 | -62.2 |
| Cash flow from other financing activities | -174.6 | 183.5 | 907.8 | -15.6 | 219.9 |
| Cash flow for the period | 1.1 | 296.1 | -6.4 | 296.6 | 71.0 |
| Cash and cash equivalents, beginning of period | 472.8 | 412.7 | 472.1 | 397.4 | 397.4 |
| Effect of translation differences on cash and cash equivalents | 7.2 | -1.6 | 15.4 | 13.2 | 3.7 |
| Cash flow for the period | 1.1 | 296.1 | -6.4 | 296.6 | 71.0 |
| Cash and cash equivalents, end of period | 481.1 | 707.2 | 481.1 | 707.2 | 472.1 |
1) Non-recurring cash flow consists of restructuring costs.
| MEUR | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | 2021 |
|---|---|---|---|---|---|
| Adjusted operating margin, %2) | 29.3 | 28.8 | 29.2 | 28.6 | 29.2 |
| Profit margin before taxes, % | 25.3 | 26.1 | 23.7 | 26.1 | 22.7 |
| Return on shareholders' equity, 12-month average, % | 9.3 | 13.8 | 9.3 | 13.8 | 11.6 |
| Return on capital employed ,12-month average, %2) | 11.9 | 13.5 | 11.9 | 13.5 | 13.5 |
| Equity ratio, % | 60.5 | 57.8 | 60.5 | 57.8 | 62.2 |
| Net indebtedness | 0.31 | 0.28 | 0.31 | 0.28 | 0.27 |
| Interest coverage ratio | 31.0 | 37.0 | 34.7 | 34.4 | 32.4 |
| Average number of shares, thousands1) | 2,691,928 | 2,566,556 | 2,694,065 | 2,567,053 | 2,599,293 |
| Basic earnings per share excl. adjustments, Euro cent1) 2) | 11.4 | 9.6 | 32.5 | 27.8 | 38.8 |
| Basic earnings per share, Euro cent1) | 10.0 | 8.9 | 26.7 | 25.9 | 30.8 |
| Cash flow per share, Euro cent1) | 14.3 | 11.0 | 38.4 | 38.2 | 52.0 |
| Cash flow per share before change in working cap, Euro cent1) | 15.1 | 13.5 | 42.1 | 38.4 | 52.8 |
| Share price, SEK | 104.70 | 135.95 | 104.70 | 135.95 | 143.65 |
| Share price, translated to EUR | 9.61 | 12.76 | 9.61 | 12.76 | 14.02 |
1)All comparatives to per share data have been adjusted to reflect the split 7:1 during Q2 2021.
2)Historical numbers have been restated with the new definition of adjustments.
| MEUR | Q3 2022 Q2 2022 Q1 2022* | 2022* | Q4 2021* | Q3 2021 | Q2 2021 | Q1 2021 | 2021* | ||
|---|---|---|---|---|---|---|---|---|---|
| Geospatial Enterprise Solutions | 641.9 | 650.4 | 582.7 | 1,875.0 | 586.5 | 551.9 | 560.4 | 502.6 | 2,201.4 |
| Industrial Enterprise Solutions | 678.3 | 638.3 | 580.7 | 1,897.3 | 630.2 | 525.3 | 515.2 | 475.3 | 2,146.0 |
| Group | 1,320.2 | 1,288.7 | 1,163.4 | 3,772.3 | 1,216.7 | 1,077.2 | 1,075.6 | 977.9 | 4,347.4 |
| MEUR | Q3 2022 | Q2 2022 | Q1 2022 | 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | 2021 |
|---|---|---|---|---|---|---|---|---|---|
| Geospatial Enterprise Solutions | 197.0 | 205.6 | 175.6 | 578.2 | 182.0 | 172.6 | 181.3 | 148.8 | 684.7 |
| Industrial Enterprise Solutions | 198.1 | 177.9 | 165.7 | 541.7 | 200.9 | 142.6 | 138.5 | 127.1 | 609.1 |
| Group costs | -8.9 | -5.0 | -6.2 | -20.1 | -9.8 | -4.6 | -5.2 | -4.6 | -24.2 |
| Group | 386.2 | 378.5 | 335.1 | 1,099.8 | 373.1 | 310.6 | 314.6 | 271.3 | 1,269.6 |
| Adjusted operating margin, % | 29.3 | 29.4 | 28.8 | 29.2 | 30.7 | 28.8 | 29.2 | 27.7 | 29.2 |
| MEUR | Q3 2022 | Q2 2022 | Q1 2022 | 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | 2021 |
|---|---|---|---|---|---|---|---|---|---|
| Geospatial Enterprise Solutions | -5.7 | -5.5 | -5.4 | -16.6 | -5.0 | -5.1 | -4.9 | -5.0 | -20.0 |
| Industrial Enterprise Solutions | -21.3 | -23.1 | -17.1 | -61.5 | -16.4 | -8.7 | -8.6 | -8.4 | -42.1 |
| Group costs | 0.0 | 0.0 | 0.0 | 0.0 | -0.1 | 0.0 | 0.0 | 0.0 | -0.1 |
| Group | -27.0 | -28.6 | -22.5 | -78.1 | -21.5 | -13.8 | -13.5 | -13.4 | -62.2 |
| MEUR | Q3 2022 Q2 2022 Q1 2022* | 2022* | Q4 2021* | Q3 2021 | Q2 2021 | Q1 2021 | 2021* | ||
|---|---|---|---|---|---|---|---|---|---|
| EMEA | 421.9 | 433.2 | 409.7 | 1,264.8 | 448.0 | 383.7 | 399.6 | 370.9 | 1,602.2 |
| Americas | 527.7 | 494.8 | 427.0 | 1,449.5 | 440.3 | 379.2 | 360.7 | 327.2 | 1,507.4 |
| Asia | 370.6 | 360.7 | 326.7 | 1,058.0 | 328.4 | 314.3 | 315.3 | 279.8 | 1,237.8 |
| Group | 1,320.2 | 1,288.7 | 1,163.4 | 3,772.3 | 1,216.7 | 1,077.2 | 1,075.6 | 977.9 | 4,347.4 |
| Average | Q3 2022 | Q2 2022 | Q1 2022 | 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | 2021 |
|---|---|---|---|---|---|---|---|---|---|
| SEK/EUR | 0.0941 | 0.0955 | 0.0954 | 0.0950 | 0.0988 | 0.0981 | 0.0986 | 0.0988 | 0.0986 |
| USD/EUR | 0.9929 | 0.9389 | 0.8914 | 0.9423 | 0.8744 | 0.8483 | 0.8293 | 0.8302 | 0.8459 |
| CNY/EUR | 0.1449 | 0.1421 | 0.1405 | 0.1425 | 0.1368 | 0.1311 | 0.1284 | 0.1281 | 0.1312 |
| CHF/EUR | 1.0271 | 0.9732 | 0.9648 | 0.9894 | 0.9481 | 0.9238 | 0.9109 | 0.9165 | 0.9250 |
| Closing | Q3 2022 | Q2 2022 | Q1 2022 | 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | 2021 |
| SEK/EUR | 0.0917 | 0.0932 | 0.0967 | 0.0917 | 0.0976 | 0.0983 | 0.0989 | 0.0977 | 0.0976 |
| USD/EUR | 1.0259 | 0.9627 | 0.9008 | 1.0259 | 0.8829 | 0.8636 | 0.8415 | 0.8529 | 0.8829 |
| CNY/EUR | 0.1442 | 0.1436 | 0.1420 | 0.1442 | 0.1390 | 0.1336 | 0.1303 | 0.1302 | 0.1390 |
| CHF/EUR | 0.9680 | 0.9234 | 0.9107 | 0.9680 |
*Operating net sales, i.e. excluding revenue adjustment (haircut)
| MEUR | ETQ | Other | 9M 2022 | 9M 2021 |
|---|---|---|---|---|
| Fair value of acquired assets and assumed liabilities | ||||
| Intangible fixed assets | 255.0 | 36.7 | 291.7 | 20.4 |
| Other fixed assets | 1.8 | 11.3 | 13.1 | 2.1 |
| Total fixed assets | 256.8 | 48.0 | 304.8 | 22.5 |
| Total current assets | 26.2 | 12.7 | 38.9 | 37.1 |
| Total assets | 283.0 | 60.7 | 343.7 | 59.6 |
| Total long-term liabilities | -58.3 | -11.8 | -70.1 | -6.7 |
| Total current liabilities | -32.9 | -19.6 | -52.5 | -5.3 |
| Total liabilities | -91.2 | -31.4 | -122.6 | -12.0 |
| Fair value of acquired assets and assumed liabilities, net | 191.8 | 29.3 | 221.1 | 47.6 |
| - Non-controlling interest in equity |
- | -0.4 | -0.4 | -12.7 |
| Goodwill | 887.4 | 146.9 | 1,034.3 | 92.4 |
| Total purchase consideration transferred | 1,079.2 | 175.8 | 1,255.0 | 127.3 |
| Less cash and cash equivalents in acquired companies | -16.1 | -6.5 | -22.6 | -5.3 |
| Adjustment for non-paid consideration and considerations | ||||
| paid for prior years' acquisitions | - | -59.6 | -59.6 | -43.4 |
| Cash flow from acquisition of companies/businesses | 1,063.1 | 109.7 | 1,172.8 | 78.6 |
During the first nine months of the year 2022, Hexagon acquired the following companies:
Aside from ETQ, the acquisitions are individually assessed as immaterial from a group perspective which is why only aggregated information is presented. The analysis of the acquired net assets is preliminary and the fair value might be subject to change. Contingent considerations are recognised to fair value (level 3 according to definition in IFRS 13) each reporting period and based on the latest relevant forecast for the acquired company. The valuation method is unchanged compared to the previous period. The estimated liability for contingent considerations amounted to 186.1 MEUR (153.0) as of 30 September, whereof the fair value adjustment in 2022 amounted to 0.6 MEUR (25.2). In connection with the valuation of contingent considerations the assets acquired and liabilities assumed in the purchase price allocation are reviewed. Any indication of impairment due to the revaluation of contingent considerations is considered and adjustments are made to off-set the impact from revaluation.
In April 2022, Hexagon acquired ETQ, a leading provider of SaaS-based QMS (quality management system), EHS (environment, health and safety) and compliance management software.
ETQ's SaaS QMS solution provides the data backbone for automating the collection and delivery of manufacturing quality control data, non-conformance reports, customer feedback and more. It provides an enterprise view of quality management across the entire product lifecycle. ETQ's broad portfolio of best-in-class applications comes with out-of-the-box functionality and no-code configurability, enabling customers to tailor the solution to their unique needs and optimise critical business processes to achieve their quality, safety and environmental goals. Given the strong fit across Hexagon's manufacturing and process industries and the significant scope for geographical expansion, the transaction is expected to generate sales synergies of over 40 MUSD, with very strong incremental margins, by 2026.
From the date of acquisition, ETQ has contributed 33.0 MEUR of net sales in 2022. If the acquisition had taken place at the beginning of the year, the contribution to net sales would have been 47.6 MEUR. The contribution to the group operating margin has been accretive.
| Restated | As | reported Restated | As | reported Restated | As | reported Restated | As reported |
|
|---|---|---|---|---|---|---|---|---|
| MEUR | Q3 2021 Q3 2021 Q2 2021 Q2 2021 Q1 2021 Q1 2021 9M 2021 9M 2021 | |||||||
| Net sales | 1,077.2 | 1,077.2 | 1,075.6 | 1,075.6 | 977.9 | 977.9 | 3,130.7 | 3,130.7 |
| Adjusted gross earnings | 692.9 | 692.9 | 692.8 | 692.8 | 629.6 | 629.6 | 2,015.3 | 2,015.3 |
| Adjusted gross margin, % | 64.3 | 64.3 | 64.4 | 64.4 | 64.4 | 64.4 | 64.4 | 64.4 |
| Adjusted operating earnings (EBITDA) |
413.4 | 413.4 | 402.8 | 402.8 | 366.7 | 366.7 | 1,182.9 | 1,182.9 |
| Adjusted EBITDA margin, % | 38.4 | 38.4 | 37.4 | 37.4 | 37.5 | 37.5 | 37.8 | 37.8 |
| Adjusted operating earnings (EBIT1) | 310.6 | 296.8 | 314.6 | 301.1 | 271.3 | 257.9 | 896.5 | 855.8 |
| Adjusted operating margin, % | 28.8 | 27.6 | 29.2 | 28.0 | 27.7 | 26.4 | 28.6 | 27.3 |
| Earnings before taxes, excluding | ||||||||
| adjustments | 304.3 | 290.5 | 307.8 | 294.3 | 263.7 | 250.3 | 875.8 | 835.1 |
| -Amortisation surplus values (PPA) | -13.8 | - | -13.5 | - | -13.4 | - | -40.7 | - |
| -Share programme (LTIP) | -9.4 | -9.4 | -4.9 | -4.9 | -4.8 | -4.8 | -19.1 | -19.1 |
| -Other non-recurring items | - | - | - | - | - | - | - | - |
| Total adjustments (before taxes) | -23.2 | -9.4 | -18.4 | -4.9 | -18.2 | -4.8 | -59.8 | -19.1 |
| Earnings before taxes | 281.1 | 281.1 | 289.4 | 289.4 | 245.5 | 245.5 | 816.0 | 816.0 |
| Net earnings | 230.6 | 230.6 | 237.3 | 237.3 | 201.3 | 201.3 | 669.2 | 669.2 |
| Net earnings, excl. adjustments | 249.6 | 238.3 | 252.5 | 241.4 | 216.2 | 205.2 | 718.3 | 684.9 |
| Earnings per share, Euro cent | 8.9 | 8.9 | 9.2 | 9.2 | 7.8 | 7.8 | 25.9 | 25.9 |
| Earnings per share, excl. | ||||||||
| adjustments, Euro cent | 9.6 | 9.2 | 9.8 | 9.3 | 8.4 | 7.9 | 27.8 | 26.4 |
| Restated | As | reported Restated | As | reported Restated | As | reported Restated | As | reported Restated | As reported |
|
|---|---|---|---|---|---|---|---|---|---|---|
| MEUR | Q4 2020 Q4 2020 Q3 2020 Q3 2020 Q2 2020 Q2 2020 Q1 2020 Q1 2020 | 2020 | 2020 | |||||||
| Operating net sales | 1,044.1 | 1,044.1 | 939.9 | 939.9 | 896.6 | 896.6 | 889.9 | 889.9 | 3,770.5 | 3,770.5 |
| Revenue adjustment | -6.1 | -6.1 | - | - | - | - | - | - | -6.1 | -6.1 |
| Net sales | 1,038.0 | 1,038.0 | 939.9 | 939.9 | 896.6 | 896.6 | 889.9 | 889.9 | 3,764.4 | 3,764.4 |
| Adjusted gross earnings | 652.3 | 652.3 | 599.7 | 599.7 | 550.7 | 550.7 | 571.6 | 571.6 | 2,374.3 | 2,374.3 |
| Adjusted gross margin, % | 62.5 | 62.5 | 63.8 | 63.8 | 61.4 | 61.4 | 64.2 | 64.2 | 63.0 | 63.0 |
| Adjusted operating earnings | ||||||||||
| (EBITDA) | 414.6 | 414.6 | 347.2 | 347.2 | 362.6 | 362.6 | 287.2 | 287.2 | 1,411.6 | 1,411.6 |
| Adjusted EBITDA margin, % | 39.7 | 39.7 | 36.9 | 36.9 | 40.4 | 40.4 | 32.3 | 32.3 | 37.4 | 37.4 |
| Adjusted operating earnings (EBIT1) | 299.7 | 287.2 | 263.2 | 250.1 | 240.0 | 226.5 | 206.6 | 192.4 | 1,009.5 | 956.2 |
| Adjusted operating margin, % | 28.7 | 27.5 | 28.0 | 26.6 | 26.8 | 25.3 | 23.2 | 21.6 | 26.8 | 25.4 |
| Earnings before taxes, excluding | ||||||||||
| adjustments | 292.4 | 279.9 | 255.3 | 242.2 | 233.6 | 220.1 | 200.8 | 186.6 | 982.1 | 928.8 |
| -Amortisation surplus values (PPA) | -12.5 | - | -13.1 | - | -13.5 | - | -14.2 | - | -53.3 | - |
| -Other non-recurring items | -34.2 | -34.2 | - | - | -135.0 | -135.0 | - | - | -169.2 | -169.2 |
| Total adjustments (before taxes) | -46.7 | -34.2 | -13.1 | - | -148.5 | -135.0 | -14.2 | - | -222.5 | -169.2 |
| Earnings before taxes | 245.7 | 245.7 | 242.2 | 242.2 | 85.1 | 85.1 | 186.6 | 186.6 | 759.6 | 759.6 |
| Net earnings | 202.5 | 202.5 | 198.6 | 198.6 | 70.6 | 70.6 | 153.0 | 153.0 | 624.7 | 624.7 |
| Net earnings, excl. adjustments | 239.8 | 229.5 | 209.3 | 198.6 | 191.6 | 180.5 | 164.6 | 153.0 | 805.3 | 761.6 |
| Earnings per share, Euro cent | 7.8 | 7.8 | 7.6 | 7.6 | 2.7 | 2.7 | 5.9 | 5.9 | 24.0 | 24.0 |
| Earnings per share, excl. | ||||||||||
| adjustments, Euro cent | 9.2 | 8.8 | 8.1 | 7.6 | 7.4 | 6.9 | 6.4 | 5.9 | 31.1 | 29.3 |
| MEUR | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | 2021 |
|---|---|---|---|---|---|
| Net sales | 4.2 | 3.8 | 12.7 | 11.4 | 15.4 |
| Administration expenses | -8.6 | -5.3 | -23.6 | -16.6 | -29.0 |
| Operating earnings | -4.4 | -1.5 | -10.9 | -5.2 | -13.6 |
| Earnings from shares in Group companies | - | - | 202.5 | 0.6 | 0.6 |
| Interest income and expenses, net | 0.5 | -1.4 | 81.7 | -2.8 | -8.7 |
| Appropriations | - | - | - | - | 7.3 |
| Earnings before taxes | -3.9 | -2.9 | 273.3 | -7.4 | -14.4 |
| Taxes | 0.7 | 0.6 | -15.0 | 1.6 | 2.9 |
| Net earnings | -3.2 | -2.3 | 258.3 | -5.8 | -11.5 |
| MEUR | 30/9 2022 | 30/9 2021 31/12 2021 | |
|---|---|---|---|
| Total fixed assets | 12,524.3 | 9,009.4 | 11,252.5 |
| Total current receivables | 1,306.8 | 1,803.5 | 1,738.7 |
| Cash and cash equivalents | 8.5 | 362.4 | 93.0 |
| Total current assets | 1,315.3 | 2,165.9 | 1,831.7 |
| Total assets | 13,839.6 | 11,175.3 | 13,084.2 |
| Total shareholders' equity | 6,552.6 | 4,928.9 | 6,647.6 |
| Untaxed reserves | - | 7.4 | - |
| Total long-term liabilities | 3,048.1 | 1,112.3 | 1,993.9 |
| Total short-term liabilities | 4,238.9 | 5,126.7 | 4,442.7 |
| Total equity and liabilities | 13,839.6 | 11,175.3 | 13,084.2 |
In addition to the financial measures as required by the financial reporting framework based on IFRS, this report also includes other measures and indicators that are used to follow-up, analyze and manage the business. These measures also provide Hexagon stakeholders with useful financial information on the Group's financial position, performance and development in a consistent way. Below is a list of definitions of measures and indicators used in this report.
| Americas | North, South and Central America |
|---|---|
| Asia | Asia, Australia and New Zealand |
| EMEA | Europe, Middle East and Africa |
| GES | Geospatial Enterprise Solutions |
| IES | Industrial Enterprise Solutions |
| Amortisation of surplus values | When a company is acquired, the purchase consideration is allocated to the identified assets and liabilities of the company. Intangible assets are most often allocated the substantial part of the purchase consideration. The amortisation of surplus values is defined as the difference between the amortisation of such identified intangible assets and what the amortisation would have been in the acquired company had the acquisition not taken place at all |
|---|---|
| Adjusted gross earnings | Operational net sales less cost of goods sold excluding adjustments related to cost of goods sold |
| Adjusted gross margin | Adjusted gross earnings divided by operating net sales |
| Adjusted operating earnings (EBIT1) |
Operating earnings excluding capital gains on shares in group companies and adjustments. Adjustments are excluded to facilitate the understanding of the Group´s operational development and to give comparable numbers between periods |
| Adjusted operating earnings (EBITDA) |
Adjusted operating earnings (EBIT 1) excluding amortisation, depreciation and impairment of fixed assets. The measure is presented to give depiction of the result generated by the operating activities |
| Adjusted EBITDA margin | Adjusted operating earnings (EBITDA) as a percentage of operating net sales |
| Adjusted operating margin | Adjusted operating earnings (EBIT1) as a percentage of operating net sales |
| Adjustments | Adjustments consists of expenses related to the share programme (LTIP), amortisation of surplus values (PPA) and non-recurring items which refers to income and expenses that are not expected to appear on a regular basis and impact comparability between periods |
| Capital employed | Total assets less non-interest-bearing liabilities |
| Capital turnover rate | Net sales divided by average capital employed |
| Cash conversion | Operating cash flow excluding interest, tax payments and non-recurring items divided by operating earnings (EBIT1) |
| Cash flow per share | Cash flow from operations, after change in working capital, excluding non-recurring items divided by average number of shares |
| Earnings per share | Net earnings excluding non-controlling interest divided by average number of shares |
| Equity ratio | Shareholders' equity including non-controlling interests as a percentage of total assets |
| Interest coverage ratio | Earnings before taxes plus financial expenses divided by financial expenses |
| Investments | Purchases less sales of tangible and intangible fixed assets, excluding those included in acquisitions and divestitures of subsidiaries |
| Net debt | Interest-bearing liabilities including pension liabilities and interest-bearing provisions less cash and cash equivalents |
| Net indebtedness | Interest-bearing liabilities less interest-bearing current receivables and liquid assets divided by shareholders' equity excluding non-controlling interests |
| Organic growth | Net sales compared to prior period excluding acquisitions and divestments and adjusted for currency exchange movements |
| Operating net sales | Net sales adjusted by the difference between fair value and book-value of deferred revenue regarding acquired businesses. |
| Profit margin before taxes | Earnings before taxes as a percentage of net sales |
| Return on capital employed (12-month average) |
Twelve months to end of period earnings after financial items, excluding adjustments, plus financial expenses as a percentage of twelve months to end of period average capital employed. The twelve months average capital employed is based on average quarterly capital employed |
| Return on shareholders' equity (12-month average) |
Twelve months to end of period net earnings excluding non-controlling interests as a percentage of twelve months to end of period average shareholders' equity excluding non controlling interests last twelve months. The twelve months average shareholders' equity is based on quarterly average shareholders' equity |
| Shareholders' equity per share | Shareholders' equity excluding non-controlling interests divided by the number of shares at year-end |
| Share price | Last settled transaction on Nasdaq Stockholm on the last business day for the period |
Hexagon is a global leader in digital reality solutions, combining sensor, software and autonomous technologies. We are putting data to work to boost efficiency, productivity, quality and safety across industrial, manufacturing, infrastructure, public sector, and mobility applications. Our technologies are shaping urban and production ecosystems to become increasingly connected and autonomous – ensuring a scalable, sustainable future. Hexagon (Nasdaq Stockholm: HEXA B) has approximately 22,000 employees in 50 countries and net sales of approximately 4.3bn EUR. Learn more at hexagon.com and follow us @HexagonAB.
Hexagon gives financial information at the following occasions:
| Year-End Report 2022 | 1 February 2023 |
|---|---|
| Interim Report Q1 2023 28 April 2023 | |
| Interim Report Q2 2023 26 July 2023 | |
| Interim Report Q3 2023 27 October 2023 |
Financial information is available in Swedish and English at the Hexagon website and can also be ordered via phone +46 8 601 26 20 or e-mail [email protected]
The Interim Report for the third quarter 2022 will be presented on 27 October at 10:00 CET at a telephone conference.
Please view instructions at Hexagon's website on how to participate.
Anton Heikenström, Investor Relations and Business Analyst, Hexagon AB +46 8 601 26 26, [email protected]
This is information that Hexagon AB 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 08:00 CET on 27 October 2022.
This communication may contain forward-looking statements. When used in this communication, words such as "anticipate", "believe", "estimate", "expect", "intend", "plan" and "project" are intended to identify forward-looking statements. They may involve risks and uncertainties, including technological advances in the measurement field, product demand and market acceptance, the effect of economic conditions, the impact of competitive products and pricing, foreign currency exchange rates and other risks. These forward-looking statements reflect the views of Hexagon's management as of the date made with respect to future events and are subject to risks and uncertainties. All of these forward-looking statements are based on estimates and assumptions made by Hexagon's management and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements. Hexagon disclaims any intention or obligation to update these forward-looking statements.
Hexagon AB [publ] P.O. Box 3692 SE- 103 59 Stockholm Fax: +46 8 601 26 21 Phone: +46 8 601 26 20 Registration number: 556190-4771 Registered Office: Stockholm Sweden hexagon.com
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