Malmo, Sweden — Hexpol A.B. has seen a significant rebound in fourth quarter operating profit and a strong cash flow, which could support the rubber group's "acquisition agenda."
During the final three months of 2020, operating profit rose 47 percent year-on-year to $74 million, on 10 percent lower sales of $404 million, Hexpol announced Jan. 29.
In addition to its rubber compounding, Hexpol also is a supplier of thermoplastic elastomers and thermoplastics.
For the full year, the Swedish compounder posted sales down 13.4 percent year-on-year to $1.6 billion, with operating profit coming in 5.2 percent lower at $226 million.
Hexpol linked its "best quarterly result ever" to increased sales volumes over the final three months of last year, and a reduced cost-base.
The decline in sales, meanwhile, reflected a 7 percent negative currency impact and lower sales prices, according to the group's report.
Volumes "clearly increased" to automotive customers and construction industry during the quarter, President and CEO Georg Brunstam said.
Hexpol's "large geographical coverage" and proximity to customers were "a clear competitive advantage," he said.
Meanwhile, measures to reduce direct and indirect costs bolstered operating margin, which reached 18.3 percent in the final three months of the year.
Brunstam said a "very good cashflow" left Hexpol in a strong position for "continued growth and intensified acquisition agenda."
Hexpol has been on the acquisition trail for the past two years, as seen with its full takeover of Italian rubber compounder Mesgo Group last year.
In North America, Hexpol's recent moves have included the 2019 acquisition of Preferred Compounding with six production facilities across the U.S. and Mexico.