Hexagon 'best ever' third quarter tops forecasts helped by China demand

STOCKHOLM (Reuters) - Industrial technology group Hexagon HEXAb.ST on Wednesday reported quarterly core earnings well ahead of market expectations as a broad-based recovery in China and cost savings boosted results.

The company said it was seeing a “two-speed world”, with growth for its newer automation products in construction, mining, public safety and agriculture, but uncertain demand in sectors such as traditional automotive, aerospace and oil and gas.

The maker of measurement and positioning systems and software said third-quarter adjusted operating earnings rose to 250 million euros ($295 million) from 236 million in the year-earlier quarter, and ahead of the 230 million mean analyst forecast in a Refinitiv poll.

“We are pleased with the results, having delivered our best third-quarter earnings and profitability ever despite the significant currency headwind,” CEO Ola Rollen said in a statement.

Hexagon, which partly competes with companies such as Trimble TRMB.O and Autodesk ADSK.O, said organic sales growth was flat in the quarter compared to the year-ago period, with Asia up 5%, and regions EMEA (Europe, Middle East and Africa) and the Americas down 1% and 2% respectively.

“We saw a robust sequential improvement in sales growth, supported by a broad-based recovery in China and a solid development in our geospatial segments,” Rollen said.

China was the big driver in the quarter with organic growth of 18%, mainly driven by infrastructure and construction and a recovery in the electronics segment.

Hexagon’s sensors and software are used for measurement and quality inspection in manufacturing processes and engineering plant design, and also in areas such as infrastructure planning, construction, mining, agriculture and energy.

The Swedish company late on Tuesday proposed to reinstate its original dividend for 2019, which was withdrawn early in the year because of uncertainty around the pandemic.

Reporting by Johannes Hellstrom; Editing by Simon Johnson and Barbara Lewis