- Organic Growth & Margin Impact Delivered 3% organic growth, with operating margin at 29.4% impacted by 150 bps currency headwinds.
- Cash Conversion Strength Achieved 121% cash conversion, driven by robust working capital release of EUR 121 million in Q4.
- Restructuring Savings Implemented a restructuring program yielding EUR 11 million savings in Q4, with annualized EUR 65 million run rate expected by 2026.
- Business Area Performance Autonomous Solutions grew 23% organically, while Geosystems declined 1% due to China destocking.
- Octave EBIT Margin Octave reported 32% EBIT margin, influenced by higher perpetual revenue mix in the prior year and FX headwinds.
Segment Performance
The company's business areas performed variably, with Manufacturing Intelligence growing 1%, Geosystems declining by 1% due to proactive destocking in China, and Autonomous Solutions delivering a strong 23% organic growth. Octave, which is being considered for a potential spin-off, reported 2% organic growth, with 3% recurring revenue growth and double-digit SaaS growth.
Financial Highlights
The company's operating earnings decreased by 7% to EUR 420 million, corresponding to a margin of 29.4%. The net working capital release was EUR 121 million in Q4, and the cash conversion was strong at 121%. As Anders Svensson mentioned, "We are targeting growth with profitable markets and areas for us that continue to grow very rapidly." The company's restructuring program is expected to yield EUR 65 million in annualized savings.
Valuation and Outlook
With a P/E Ratio of 41.9 and an EV/EBITDA of 16.24, the market appears to be pricing in a certain level of growth. Analysts estimate next year's revenue growth at 5.8%. The company's guidance for Q1 2026 suggests a continued headwind from currencies and seasonality. However, with a strong order book and a positive growth outlook, Hexagon is well-positioned to drive efficiency and innovation across the group.
Cash Conversion and Margin Evolution
Hexagon's cash conversion is expected to be around 80% to 90% going forward, according to Norbert Hanke. The company's margin evolution in 2026 is expected to be driven by growth in profitable markets and areas, as well as the contribution from new products. With a strong operating model and leadership position in its markets, Hexagon is confident in its ability to deliver strong results in the year ahead.