Hexicon Q1’25 preview: Our focus remains on the financing needs

Hexicon will publish its Q1 results on Wednesday, May 28, at 8:00 am CEST. We expect Hexicon’s revenue to remain modest in Q1, primarily driven by consulting fees. Looking at the bigger picture, we believe project divestments will be the company’s main growth driver in the coming years. Accordingly, we look forward to further updates on potential divestments, particularly the strategically important MunmuBaram project. We will also pay close attention to the company’s comments regarding its financing needs.

Operational progress and divestments remain key

We forecast Q1 revenue to increase to 1.2 MSEK (Q1’24: 0.5 MSEK). However, since we do not expect any divestments to be recognized as revenue in this quarter, revenue will likely remain at low levels and continue to consist mainly of consulting fees from development projects. That said, Hexicon’s long-term investment case is based on achieving commercial scale, so we do not place much weight on quarterly fluctuations in consulting revenue. Instead, our focus remains on operational progress across the project portfolio and further divestments, which are crucial for achieving broader scale and positive cash flow. In this context, Hexicon made notable progress during the quarter, completing the divestment of two Italian floating offshore wind projects: Sicily South (1,150 MW) and Sardinia Northwest (1,300 MW). We expect the 2.5 MEUR (~27 MSEK) upfront payment to be recognized as revenue in Q2’25.

Profitability and cash flow remain in the red

We expect the company’s operating loss (EBIT) to increase to -22.5 MSEK (Q1’24: -19.9 MSEK), reflecting low revenue and continued high operating costs. Free cash flow is also expected to remain negative, driven by operating losses and ongoing investments in project development and technology. As of the end of Q4’24, the company had a cash balance and available credit facilities of approximately 23 MSEK, which we estimate was later boosted by around 27 MSEK thanks to the recent divestments.

However, with a quarterly cash burn of roughly 20 MSEK and a 75 MSEK credit facility maturing in June 2025, it is evident that new financing will be needed soon. Although future divestments could be part of the solution, they would have to be substantial because such deals usually include smaller initial payments followed by larger milestone-based payments. Given its already elevated debt levels, we cannot rule out the possibility that Hexicon may seek additional capital through an equity issue.

We expect substantial revenues in 2025, but uncertainty is high

Hexicon does not provide financial guidance. However, we estimate that revenue for 2025 will reach 301 MSEK, with positive bottom-line results, primarily driven by a partial divestment of the MunmuBaram project. As such, our estimates are highly dependent on a successful divestment of the project. Furthermore, our forecast carries significant risks, as the revenue from the sale is contingent on several uncertain factors, including the size of the divestment (MW), the sale price, and the deal structure. In the upcoming Q1 report, we will closely monitor any developments regarding the long-term ownership structure of the project, as well as the company’s views on its financing needs.