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10th March 2017, Aalesund

Hexagon reports profits decline in 2016

Hexagon Composites' subsidiary Hexagon Ragasco received a new order for LPG cylinders from Woqod, Qatar, at a total value of EUR 8.9 million. © Hexagon Hexagon Composites, a Norway based supplier of composite pressure cylinders and systems for storage and transportation of various gases, has reported the company’s results for the fourth quarter 2016, as well as for the year 2016.

In 2016, Group operating income decreased to NOK 1,220.5 (1,443.9) million. Operating profit before depreciation (EBITDA) was NOK 374.9 (100.1) million. Operating profit (EBIT) was NOK 299.3 (37.5) million. Profit before tax for continuing operations was NOK 302.3 (0.3) million.

In the fourth quarter 2016 Hexagon Composites generated NOK 347.1 (371.4) million in operating income and made an operating profit before depreciation (EBITDA) of NOK 314.7 (40.9) million. Operating profit (EBIT) was NOK 288.7 (18.6) million and profit/loss before tax came to NOK 304.9 (14.7) million.

Financial statements

The financial statements for the fourth quarter 2016 include the impact of deconsolidating the previous Medium and Heavy-Duty CNG Automotive business unit results and instead accounting for Hexagon Composites' 50% share of Agility results under the equity method for the first time, the company reports.

In addition, the fully consolidated financial results of the acquired xperion Energy & Environment and related group subsidiaries for the whole quarter is included for the first time.

Impact to profit and loss

The main impact to profit and loss is lower underlying revenue, EBITDA and EBIT levels versus immediately before the transaction, whereas the one-off gain, as a result of the Agility transaction increases EBITDA and EBIT levels. The one-off gain is booked within EBITDA with a corresponding provision for deferred tax charges booked in the tax cost line.

Operating results in the fourth quarter were impacted positively by a 19% growth in revenues within the Low-Pressure segment versus the same period last year. Despite strong sales volumes of Mobile Pipeline in the quarter, profitability within the High-Pressure segment was hampered by one-off items, indirect impacts of M&A activities and movements in accruals totalling NOK 26 million, as well as the dilutive impacts of the Hydrogen business unit, which is now in an early growth phase.

Integration synergies from the acquisition of xperion have not yet been realized in the fourth quarter. However, the High-Pressure segment is expected to benefit from such synergies in 2017, according to the manufacturer.

Key developments

Apart from the acquisition of xperion Energy & Environment, as well as strong Mobile Pipeline sales driven by large order deliveries, a large order to North American oil and gas industry customer took place, for delivery mainly in first quarter 2017.

Hexagon Composites' subsidiary Hexagon Ragasco also entered into strategic partnership with customers in Bangladesh and Chile, and received a new order for LPG cylinders from Woqod, Qatar, at a total value of EUR 8.9 million. The order is scheduled for delivery during the second half of 2017.

The company also signed a letter of Intent with Nel ASA and PowerCell Sweden AB to establish a JV to pursue hydrogen opportunities.

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