HEXPOL's Q2: When the Middle East Disruption Becomes a Market-Share Weapon

Quarter in brief

HEXPOL closed Q2 2026 with sales of SEK 5.3 billion, up 6% reported and 9% in fixed currency, and adjusted EBIT of SEK 772 million — a 14.6% margin, down 50bps on higher OpEx. The headline, high organic growth of 8%, is almost entirely volume-driven, and it comes against a broader market that management still describes as marked by “fairly high levels of uncertainty and a wait-and-see mentality” — Peter Rosén, Deputy CEO and CFO · 2026-07-20. That tension — a company accelerating while its markets hesitate — is the thread running through this call.

The Middle East as a share-gain catalyst

What is genuinely new this quarter is the Middle East situation surfacing as a first-class driver for HEXPOL — absent from every prior call in the company's keyword history. The conflict has “created imbalances in the supply chain and also volatile raw material prices” — Peter Rosén, Deputy CEO and CFO · 2026-07-20, forcing HEXPOL to secure Raw material supply, deliberately build inventory, and push through price increases described as low-mid single digit. The inventory build is a temporary working-capital hit — net debt-to-EBITDA still improved to 1.17 — but it reflects a deliberate choice to prioritize supply continuity over cash-flow optics.

We also know that in some cases, we've had - some of this volume is because also some competitors have difficulty in managing raw materials and deliveries and supplies.

That is the crux: where peers frame the Middle East purely as a headwind, HEXPOL frames it as a market-share opportunity. The operational edge — sourcing materials and delivering when rivals cannot — is exactly what converts a macro shock into structural gains. Asked whether those gains would evaporate if prices normalize, management was clear: “I don't see a direct correlation with the prices and market shares” — Peter Rosén, Deputy CEO and CFO · 2026-07-20. The volumes are treated as earned, not rented.

Thermoplastic Compounding is firing

The standout business is Thermoplastic Compounding, with 12% organic growth, EBIT up 40% to SEK 155 million, and margin expanding 280bps to 11.9%. Growth is project-driven — new car programs and recycled-content mandates ramping to volume. Managing expectations carefully, the CFO said: “the current profitability level where we are now is - makes sense. That's where we can be in the short term” — Peter Rosén, Deputy CEO and CFO · 2026-07-20, adding that climbing further up the "product pyramid" will require M&A. This is the company's clear growth area, and it is behaving like one. Meanwhile Engineered Products slipped on two specific Swedish customers, but margins held above 18%.

Captive volumes: from hope to action

The other notable shift is on captive volumes — the compounding capacity customers have in-sourced over the past two years. Prior commentary was cautiously hopeful that the in-sourcing wave had peaked: “our view is that we've probably hit the -- let's call it, maximum in-sourcing at this point” — Peter Rosén, CFO · 2025-10-24. This quarter the tone is operational, not aspirational — HEXPOL is winning volumes back partly because competitors cannot manage raw-material logistics, and management notes “we've also been able to win some captive volumes that has contributed to this growth” — Peter Rosén, Deputy CEO and CFO · 2026-07-20. If this is a durable reversal, it is a structural tailwind layered on top of the cyclical recovery.

Costs, M&A, and what changed

The OpEx story continues from prior quarters — IT and staffing — but management now draws a line under it: “we do have the increase, which is, as I mentioned, is primarily IT and staffing. But yes, I don't expect that we will increase from here” — Peter Rosén, Deputy CEO and CFO · 2026-07-20. That is a subtle but real shift from the prior quarter's “it's not going to change the OpEx picture of the company. It's targeted and staffing” — Peter Rosén, Chief Financial Officer · 2026-01-29 — the investment has now been made.

On M&A, the message is the most pointed new element of the call: despite the CEO transition, “there will be no pause or let up in our - in us doing M&A because of this” — Peter Rosén, Deputy CEO and CFO · 2026-07-20, with discussions “ongoing that we are intensifying” — Peter Rosén, Deputy CEO and CFO · 2026-07-20. Appetite is not just maintained but accelerating.

Why it matters

Zooming out, the Middle East conflict and the related "Iran War" theme dominate the global editorial trajectory this period, with most reporting companies describing headwinds. HEXPOL's take is the differentiated one: the disruption is a competitive accelerant for a company with the supply-chain muscle to win share — and it compounds with the captive-volume peak view and a Thermoplastic engine running at double-digit growth. For a roughly $26B chemicals name, that combination of company-unique upside and fresh catalysts (M&A, captive reversal) is what separates this quarter from the prior four.