(Reuters) -Swedish industrial technology group Hexagon said on Wednesday the uncertainty caused by tariffs had impacted demand in key countries, hitting its volumes and operating margins in mid-March.
Hexagon Reports Tariff Impact on March Volumes and Margins
(Reuters) -Swedish industrial technology group Hexagon said on Wednesday the uncertainty caused by tariffs had impacted demand in key countries, hitting its volumes and operating margins in mid-March.
Interim CEO Norbert Hanke told a conference call with analysts that the company saw significant organic growth declines in March in Canada and Mexico -- the first countries to be subject to increased U.S. tariffs -- as well as impacts in China and Western Europe. He said there was an overall organic growth decline of 6% in March.
Hanke said that at current tariff rates, it is expected the direct impact on the company's earnings to be up to 15 million euros, before mitigation, in the current quarter.
To mitigate the tariff impact, he said the company was evaluating actions including the re-routing of shipping, alternative sourcing of critical materials, strategic inventory management and price increases.
"We expect the direct impact of tariffs to be more manageable than customer uncertainty," Hanke said, adding that Hexagon has experienced delayed responses from customers, who decided to wait and see how the tariff situation develops.
The company had said earlier this month that its adjusted operating profit fell around 8% in the January-March first quarter, due to weakening growth in North America and China.
Hexagon said in a statement that demand for sensors, robotic solutions and perpetual licences was now weak following a good start to the year.
It said customer orders and shipments were delayed due to geopolitical uncertainty.
"We have seen a stabilisation of demand early in the second quarter, but the overall outlook remains uncertain," Hanke said in a statement.
Shares in Hexagon were up around 2% at 1103 GMT.
J.P.Morgan said in a note to clients that the drivers of Hexagon's underperformance were broad-based, with softer growth and profitability across all divisions including software-heavy businesses like Asset Lifecycle Intelligence. This, according to the broker, may limit investor confidence in the short term.
(Reporting by Marta Frąckowiak in Gdansk; Editing by Savio D'Souza and Ed Osmond)
