Hexagon (HEXA) Q4 2024 earnings summary

Executive summary

• Q4 2024 delivered 1% organic growth, driven by strong software, recurring revenue, and new product launches, offsetting market weakness in automotive and construction.

• Gross margin remained robust at 66.7% in Q4, with operating margin at 31.1% and cash conversion at 116%.

• Board proposes an 8% dividend increase to EUR 0.14 per share; leadership changes include Anders Svensson as incoming CEO and Björn Rosengren as Deputy Chair.

• Several acquisitions completed (indurad, Geomagic, Septentrio, CAD Service) to strengthen market leadership.

• Investigation into the proposed separation of the ALI division is ongoing, with an update expected in Q1 2025.

Financial highlights

• Q4 sales reached EUR 1,448 million, up 0.9% reported and 1.1% organic growth; full-year sales were EUR 5,401.1 million (flat organic growth).

• Q4 gross margin improved to 66.7% (up 80 bps YoY); full-year gross margin at 66.9%.

• Q4 operating earnings rose 3% YoY to EUR 450.3 million; operating margin at 31.1%.

• Q4 EPS grew to EUR 12.4 cents; full-year EPS at EUR 43.3 cents.

• Q4 cash conversion at 116%; full-year at 91%, above the 80-90% target range.

Outlook and guidance

• Market environment expected to remain stable in Q1 2025, with potential improvement in the U.S. and softer growth in China.

• Board maintains conviction in 2022-2026 targets: 5-7% average annual organic growth, 3-5% M&A growth, EBIT1 margin above 30% by 2026, and 80-90% annual cash conversion.

• ALI and SIG expected to maintain good growth in 2025, driven by recurring revenues.

• Autonomous Solutions anticipated to reaccelerate growth in 2025 with new product launches, especially in mining.

• ESG targets include 95% reduction in Scope 1 and 2 emissions by 2030 and net zero by 2050.