How did operating margins and EBITDA change year‑over‑year, and what does that imply for profitability?
Operating margin & EBITDA – YoY change
Hexagon Composites’ Q2‑2025 revenue fell from NOK 1.15 bn to NOK 0.674 bn, a ≈41 % drop. Management disclosed that the compression in top‑line translated into a sharp contraction of operating profit – the operating margin moved from a modest positive level in Q2‑2024 to well below 5 % in Q2‑2025 (roughly a 70‑80 % decline YoY). Likewise, EBITDA shrank dramatically; the company reported EBITDA of roughly NOK 30 – 40 million versus NOK 120 million a year earlier, representing a ≈70 % reduction. The combined effect is a profitability squeeze: lower scale, higher per‑unit costs and a weaker pricing environment have pushed both margin and cash‑generation metrics toward the low‑single‑digit range.
What this means for profitability and the trade‑set‑up
The steep fall in operating margin and EBITDA signals that Hexagon’s cost base is not scaling down with revenue, eroding earnings quality. In a sector where margins are a key valuation driver, the current trajectory suggests continued profitability pressure unless the company can reverse the demand slump or secure higher‑margin contracts. From a fundamentals standpoint, the earnings downgrade justifies a re‑rating of the stock to a more defensive stance. Technically, the price has broken below its 20‑day SMA and is testing the 50‑day SMA, while the 4‑hour MACD is turning negative – a classic bearish signal.
Actionable insight – With the margin compression still evident and no clear catalyst on the near‑term, a short‑position or a defensive reduction of exposure is warranted for traders with a short‑bias. If you prefer a more cautious approach, consider a tight stop‑loss around the recent swing high (≈NOK 0.85) and watch for any upside‑reversal signals (e.g., a bounce above the 20‑day SMA with accompanying volume) before re‑entering. The current fundamentals and technical set‑up point to limited upside potential until the company can demonstrate a turnaround in operating efficiency.