Sweden’s Hexagon says weak North America, China growth hit Q1 earnings

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(Reuters) -Swedish industrial technology group Hexagon said its adjusted operating profit fell around 8% in the first quarter due to weakening growth in North America and China, sending its shares 10% lower on Friday.

“Growth in the key NAFTA and China markets declined in the last two weeks of March, with economic uncertainty impacting deliveries,” Hexagon said. The North American Free Trade Agreement, or NAFTA, concerns the U.S., Canada and Mexico.

The maker of measurement and positioning systems said it expected adjusted earnings before interest and taxes (EBIT) to fall to 345 million euros ($388.5 million) in the quarter, based on its preliminary estimates.

Analysts had forecast quarterly EBIT of 380.2 million euros on average, LSEG’s IBES data showed.

“Recent tariff-driven macro uncertainties, in our view, likely resulted in delays and postponements to spending decisions from customers,” Berenberg analysts said a note to clients.

Hexagon said organic sales growth was flat in the quarter, with adjusted operating margin falling to about 26.1% from 29% last year, mainly due to weakness in sensor sales.

“While the bar has come down for Hexagon … this is ultimately a significant miss vs. expectations,” J.P.Morgan analysts said, expecting the statement to weigh on consensus estimates.

Hexagon’s shares, which have fallen 20% so far this year, were at the bottom of Europe’s benchmark STOXX 600 index by 0830 GMT.

The company did not immediately respond to Reuters’ request for comment. It will report full quarterly results on April 30.

($1 = 0.8881 euros)

(Reporting by Marta Frackowiak in Gdansk, editing by Milla Nissi)