Hexatronic Group (HTRO) Investor Update summary

Business area structure and strategy

• The company is organized into three business areas: Fiber Solutions, Data Center, and Harsh Environment, each with distinct market dynamics and strategies, and segment reporting now aligns with this operational structure for greater transparency and comparability.

• Fiber Solutions covers FTTH, wireless, security, and submarine cables, accounting for over 70% of group sales, with a focus on local manufacturing and innovation.

• Data Center is asset-light, has the highest margin (up to 17.7% EBITDA), and targets growth via organic initiatives and M&A, with a strong presence in Europe and North America.

• Harsh Environment targets margin improvement and growth, especially in dynamic cables and connector solutions for defense and energy markets.

• Acquisition strategy prioritizes Harsh Environment and Data Center, with opportunistic investments in Fiber Solutions.

Financial performance and outlook

• 2024 net sales were SEK 7.6 billion, with EBITDA margin ranging from 10.6% to 14.5% and EBITA margin at 10.6%.

• Fiber Solutions contributed SEK 5.4 billion in sales, with EBITDA margin up to 15.2%, but sales declined 17.6% in 2024 due to market slowdown and customer reclassification.

• Harsh Environment grew 61.6% in 2024, with SEK 1.2 billion in sales and EBITDA margin up to 13.5%, driven by acquisitions but impacted by operational challenges.

• Data Center grew 18.7% in 2024, with SEK 1.0 billion in sales and EBITDA margin up to 17.7%, maintaining strong margins and capital-light operations.

• The group maintains solid liquidity (SEK 1.9 billion), with CapEx expected to normalize at 3-5% of sales and total 2024 investments at SEK 325 million.

Market trends and growth drivers

• Key trends include digital transformation, AI, energy transition, sustainability, security, and protectionism.

• The U.S. market is a major growth opportunity, especially for Fiber Solutions and Data Center, with local production as a strategic advantage amid rising trade barriers.

• BEAD program and similar government initiatives in the U.S. and Europe are expected to support demand.

• Data Center and Harsh Environment benefit from long-term trends in renewables, defense, and digital infrastructure.

• Strong market outlook across all segments, with annual growth rates of 15-17% in hyperscale/colocation and 7-9% in enterprise.