Invest in Hexatronic

There is a structural need for fibre optic infrastructure in the coming years with low penetration rates in Hexatronic’s strategic growth markets. According to FTTH Council Europe and RVA forecasts, it is expected that 120 million homes will be passed with fiber optic cables in Germany, UK, and the US by 2028.

Furthermore, the penetration rates in Germany (10 percent), the UK (17 percent), and the US (24 percent) indicates a continued market potential ahead. At the same time, the number of households in these markets is significantly higher than in Sweden which is considered a more mature market with a penetration rate of approximately 70 percent, with Germany having more than 9 times as many households as in Sweden, the UK having 6 times as many, and the US having 27 times as many households.

Furthermore, there are several government initiatives in Hexatronic’s strategic growth markets that are expected to support continued expansion of fibre optic infrastructure in the coming years.

Hexatronic has successfully generated organic growth over time, primarily driven by strategic investments in production capacity, a unique system offering, and through successful partnerships with customers and providing additional services as field support and training. Through acquisitions, the company has entered new and growing geographies, acquired local production and offerings, and important platforms in new growth areas.

As a testament to the company’s growth profile and prudent capital allocation strategy, Hexatronic has, in the last five years:

• Increased its revenue in average an annual 39 percent.
• Grown EBITA in average by an annual 61 percent and reached an EBITA-margin of 15.1 percent for the full year 2023.
• Increased its earnings per share after dilution by an annual 68 percent.

Hexatronic offers a unique system offering to customers. This offering ensures significant competitive advantages for Hexatronic, as the company provides the entire product range needed by customers, creating efficiency in installation but also support throughout the entire process – from the design phase to installation.

Through in-house product development and production, Hexatronic gains even greater product knowledge and ensures quality as well as compatibility. Hexatronic also provides training, certification, and field support. For customers, this translates to the lowest possible total cost of ownership (“TCO”), and for Hexatronic, it results in competitive advantages that enables pricing power.

This has established a strong position for Hexatronic in the company’s strategic markets spanning across Europe, North America, and APAC.

In line with a growing use of fiber for different applications, Hexatronic has expanded its operations into new strategic focus areas; Harsh Environment, Data Center and Wireless.

Through expansion into new business areas, Hexatronic can meet the demand of new target groups and segments, enter new market drivers, creating additional growth potential while diversifying the company’s revenue base and enhancing resilience.

Furthermore, this provides an increasingly differentiated revenue split, where Fiber Solutions accounted for roughly two thirds of sales in the fourth quarter of 2023 and the other growth areas accounted for one third.

Hexatronic consists of 37 operating units with a total of approximately 2,000 employees. Operational units are incorporated under the Hexatronic brand as a starting point, but local brands may be retained where strategically relevant.

This creates an efficient, decentralized model and with a strong go-to-market strategy. At the same time, the company drives operational excellence by coordinating sourcing and production to achieve economies of scale and the best possible products. Furthermore, processes and workflows are streamlined through a common view and digitalization platform.

Hexatronic also has an extensive sustainability agenda and is part of the Science Based Targets initiative (“SBTi”), meaning that all the company’s operating units operate according to the same agenda to support sustainable and profitable growth for the Group.

Hexatronic has demonstrated a successful acquisition strategy aimed at expanding its geographical footprint, entering new business areas, enhancing the product offering, and adding local production capacity.

In the last five years, the company has completed 20 acquisitions, generating:

• Expansion into 9 new geographical markets.
• Additional revenue in new business areas accounted for almost a third of Group sales in the fourth quarter.

Through these acquisitions, the company has also significantly strengthened its production capacity, creating economies of scale demonstrated by margin development from 7.4 percent EBITA margin in 2019 to 15.1 percent in 2023.

Furthermore, new acquisitions have added to the Group’s product offering, thereby fostering long-term competitiveness.