Sweden's Hexagon misses Q3 profit view, mulls business separation
Rewrites throughout, adds share move in paragraph 1, details on markets, CEO and analyst quotes
Oct 25 (Reuters) -Hexagon HEXAb.ST said on Friday it was considering separating its business that provides software for constructing and operating industrial facilities and listing it in both Sweden and the U.S., sending its shares up 8% in early trade.
The Swedish industrial technology group said in a release it was evaluating a potential spin-off of its Asset Lifecycle Intelligence (ALI) business that caters to oil and gas and chemicals sectors, among others.
Hexagon addresses two communities of users, how they are served digitally is very different, and they tend to appreciate different business models, CEO Paolo Guglielmini told Reuters in an interview.
"These two companies (Hexagon and the spun-off unit) would have fantastic financial profiles, both of those in different markets, both at scale, both with cash generation, recurring revenues that allow you to plan and invest into the future."
The new company would be led by Mattias Stenberg, who is currently the president of the ALI division.
"This announcement will come as a surprise to many investors, given that ALI is one of Hexagon's higher growth and higher margin divisions, with its software-centric mix particularly aligned to its strategy of growing recurring revenues," JPMorgan analysts said in a note.
The company said it would provide additional information on the ALI business separation, as well as other details regarding the matter "at an appropriate time", adding the process is expected to take 12-18 months.
Separately, the company reported adjusted earnings before interest and tax of 376.6 million euros ($407.41 million) in the July-September quarter, down about 4% from 393.0 million euros a year earlier. That missed the 388 million euros expected by analysts in a company-provided consensus.
It said a slowdown in construction and automotive markets would continue to weigh in the third quarter.
($1 = 0.9244 euros)
Reporting by Marta Frąckowiak; Editing by Rashmi Aich
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