Hexagon (HEXA) Q3 2025 earnings summary

Executive summary

• Organic growth reached 4% year-over-year in Q3 2025, with strong demand in autonomous solutions, aerospace, defense, electronics, and mining, and solid cash conversion at 77%, despite currency headwinds and a seasonally weak quarter.

• Operating margins improved sequentially but remain below targets, with adjusted operating earnings (EBIT1) down 7% to EUR 349 million and a margin of 26.8%.

• A EUR 110 million cost efficiency program is underway, with a total restructuring charge of EUR 299 million in Q3, including EUR 186 million in impairments.

• Strategic actions included the announced sale of the Design & Engineering business for EUR 2.7 billion, expected to yield a EUR 1.4 billion gain and close in Q1 2026, and leadership changes in anticipation of the Octave spin-off.

• The Octave spin-off remains on track for H1 2026, with preparations for public company readiness and a capital markets day planned.

Financial highlights

• Group revenue was EUR 1.3 billion, with reported growth flat year-over-year and 4% organic growth, offset by a 4% negative currency impact.

• Adjusted gross margin was 66.9%, and operating earnings (EBIT1) fell 7% to EUR 349 million, with a margin of 26.8%.

• Earnings per share declined by 5% to EUR 0.096; interest expenses and financial costs decreased from EUR 44 million to EUR 32 million.

• Cash conversion improved to 77% from 70% in Q3 2024; operating cash flow before non-recurring items was EUR 177.8 million, up 7%.

• Net working capital as a proportion of sales improved to 5.3% from 8.3% last year.

Outlook and guidance

• Cost savings of EUR 110 million are expected to flow fully to the bottom line by end of 2026, with gradual benefits starting in Q4 2025.

• The market environment is expected to remain unchanged in the near term, with delayed customer decisions and no near-term improvement expected.

• New product launches and an updated operating model position the group for growth as markets recover.

• The Octave spin-off and D&E sale are on track for completion in the first half of 2026, with a capital markets day planned for Q1 2026.