Stockholm — Hexpol AB has seen third quarter sales and earnings grow year-over-year, but continued shortage of raw materials and disruptions in automotive production has impacted the results of the Swedish polymer compounder.
Adjusted earnings for the three months ending Sept. 30 rose 13 percent to $112 million, on 23 percent higher sales of $475 million, announced the Swedish compounder on Oct. 22.
Operating profit for the quarter nearly doubled to $127 million, as it included a $49.7 million insurance settlement for a fire at Hexpol's production unit in Jonesborough, Tennessee.
Adjusted earnings margin, however, fell by 8 percentage points to 16.9 percent during the three-month period due to "severe disruptions" in terms of customer demand and delivery problems.
"The vehicle manufacturers' frequent stop and start of production due to component shortages had a clear negative impact on those of our customers who deliver to the automotive industry," said Georg Brunstam, Hexpol president and CEO.
The issue, Brunstam said, became particularly severe at the end of the quarter with demand rapidly declining as several vehicle manufacturers stopped production.
Furthermore, the company official said, Hexpol experienced substantial disruptions in its own supply chain, with problems in the procurement of raw materials and transport.
In addition to those challenges, Brunstam said that Hexpol had also seen continuously higher prices for raw materials and, more recently, sharply increased energy costs.
The constant adaptation of production due to "constantly changing demand" from customers, non-optimized recipes due to raw material shortages as well as the increasing raw materials and energy costs had a negative effect gross margin, he said.
Hexpol is a compounder of thermoplastics and rubber.