Hexagon Composites ASA
OSE:HEX
US |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
|
US |
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Mastercard Inc
NYSE:MA
|
Technology
|
|
US |
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
|
US |
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
|
US |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
|
US |
Visa Inc
NYSE:V
|
Technology
|
|
CN |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
|
US |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
|
US |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
|
US |
Coca-Cola Co
NYSE:KO
|
Beverages
|
|
US |
Walmart Inc
NYSE:WMT
|
Retail
|
|
US |
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
16.56
48.55
|
Price Target |
|
We'll email you a reminder when the closing price reaches NOK.
Choose the stock you wish to monitor with a price alert.
Johnson & Johnson
NYSE:JNJ
|
US | |
Berkshire Hathaway Inc
NYSE:BRK.A
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Mastercard Inc
NYSE:MA
|
US | |
UnitedHealth Group Inc
NYSE:UNH
|
US | |
Exxon Mobil Corp
NYSE:XOM
|
US | |
Pfizer Inc
NYSE:PFE
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
Nike Inc
NYSE:NKE
|
US | |
Visa Inc
NYSE:V
|
US | |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN | |
3M Co
NYSE:MMM
|
US | |
JPMorgan Chase & Co
NYSE:JPM
|
US | |
Coca-Cola Co
NYSE:KO
|
US | |
Walmart Inc
NYSE:WMT
|
US | |
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Good morning, and welcome to Hexagon Composites Q2 2021 presentation. I hope you've had a good summer. My name is Karen Romer, and I'm the SVP Communications at Hexagon Group. I'll moderate today's broadcast from the studio here in Oslo. Joining me here in studio today is Jon Erik Engeset, President and CEO of Hexagon Composites; and David Bandele, CFO.The agenda for the broadcast includes Q2 CEO update by Jon Erik and a summary of group highlights from financials and outlook by David. This will be followed by a Q&A. You can see the Q&A field in the right hand below the streaming window of your screen. It will be open throughout the broadcast, so feel free to use it and make note of your questions there. If you have trouble accessing the Q&A field, you can also send your question to ir@hexagongroup.com.I now invite our CEO, Jon Erik Engeset, to take the floor.
Thank you, Karen, and good morning, everyone. Q2 was a quarter with a lot of action. Overall, very good market activity and order intake, in particular, so in our Hexagon Agility business, which had the near time -- all-time high order intake for the CNG Fuel Systems business and also a very strong rebound for the Mobile Pipeline business after a couple of challenging years.The Hexagon Ragasco business was also very strong. That business has actually enjoyed some tailwinds from the COVID pandemic with more people in the home markets in Europe spending money domestically. But also, the quarter showed some good penetration in new geographies. Hexagon Digital Wave is delivering on their strategic plan to digitalize the cylinders and systems. And in the quarter, we took a very important contract with Linde for UE testing equipment.And the Hexagon Purus business is doing very well, very high market activity, a lot of strong orders in the quarter, most notably maybe the Nikola and the Air Liquide long-term agreements. And in the quarter, we also announced that we will separate our maritime business into a new entity that in the initial phase will focus primarily on the Norwegian markets.Hexagon is about reducing emissions and pollution. And so far in this year, we have contributed to enabling 428,000 tons of CO2 removed from the atmosphere, which corresponds to 93,000 vehicles on the roads or 524,000 acres of new forest.Financially, we had a top line revenue in the business, excluding Purus, of NOK 726 million in the quarter, which, if you correct for the FX effects, translates into 17% year-over-year growth. Frankly, going into the quarter, we had expected an even higher growth, but a 7-week strike with one of our major OEM customers in the U.S., in addition to some supply chain issues regarding chassis, pushed some of the orders into Q3. Nevertheless, that translated into a NOK 71 million EBITDA, ex Purus, and the Purus business did very well, more than doubling its revenue and delivering on plan with respect to the ramp up of the organization.Going into the second half, we have a very solid order book, I would say, full order book. However, some challenges in the supply chain. I already mentioned the chassis. Also the semiconductor shortage continues to cause challenges, in particular, for our CNG Light-Duty business. And that also translates into some increased costs and freight costs as well as some material cost increases in some of our businesses.In the last quarter, I talked at some length about the EU taxonomy. And since then, in July, the EU came out with the Fit for 55 program, the overall ambition to bring the CO2 emissions in the EU down by 55% by 2030 compared with 1990 levels. In that program, there is also a specific target for the passenger vehicle -- the passenger vehicle segment with a target to reduce the CO2 footprint of new vehicles by 55% by 2030.No corresponding targets have yet been set for the commercial vehicle segments, but we expect that to be communicated in 2022 and passed into law in 2023. And we expect a similar level, probably around 50% reduction of CO2 from new vehicles by 2030. However, that will not go a long way in reaching the overall 55% target. That will actually only bring the commercial vehicle sector down to the 1990 level. So in order to address the -- excuse me, in order to address the gap illustrated in yellow here, other measures are required. And in short, that's where RNG, renewable natural gas, comes into the picture because that is the only readily available fuel which can impact the emissions short and medium term.And this article from CNN is fresh from the press. It was on their web page this morning, responding to the recent UN report on climate change. The code red for humanity, which is, in particular, addressing the methane emissions and the necessity to capture those emissions and avoid them leaking to the atmosphere because that is a significantly more potent climate gas than CO2.And not only is this a very compelling environmental proposition, but it's also economically beneficial for the fleet owners. This chart illustrates the different alternatives the fleet must calculate on. And with today's incentives, CNG, RNG is the most attractive solution much more so than, for example, battery, electric or diesel. And not only is it less expensive than this, it also offers a good visibility. The prices for CNG over the last 10, 15 years have been remarkably stable, offering the fleet owners visibility and predictability when they calculate their alternative TCOs for their fleets.So looking at the RNG market opportunity for us, we have developed 3 different scenarios. In fact, there is enough bio resources in the EU and in the U.S. to more than cover the total demand for fuels for the commercial vehicle segments. And these 3 alternatives don't assume that full potential taken out. The yellow curve here is showing the commercially viable resources being utilized in a 10 years' perspective, in which case we see a 40x increase in adoption.The middle curve here is maybe the most realistic one where we see additional support from the regulators, which could translate into 10x increase of the adoption of RNG in the fleets. And the lower curve is forecast assuming today's regulation, which will result in a 5x increase. And we see the prominent fleets responding to this. The last brand to join the club is DHL, who recently announced that they will adopt LNG, liquid natural gas, in the European fleet using bio LNG.In order to respond to this increased market demand and also step up to the challenges provided by the authorities, we have decided to commission another expansion. We will invest NOK 250 million in expanding our facility in Salisbury. That comes in addition to the already ongoing expansion projects in Lincoln, Nebraska and in Kassel, Germany. And together, we will increase capacities by 80% compared with 2021 levels by 2023.And in addition to the very comprehensive ramp-up program of our Hexagon Purus business, our group will then do our part in order to serve the demands and deliver to more or less the full range of fleet segments for land transportation as well as rail and maritime as well as distribution and logistics products.And with that, I will hand over to you, David. Thank you so far.
Thank you, Jon Erik. It's really nice to be in the studio again together after such a while.Okay. Let's take the quarter 2 highlights -- financial highlights then. Starting with NOK 537 million, which is a very solid posting of revenues from g-mobility, and that's despite some of the currency headwinds, Jon Erik referred to, in fact, hitting g-mobility by a negative NOK 75 million. We still see the very strong demand in heavy-duty truck and indeed, European Transit Bus. However, that OEM strike that Jon Erik mentioned and certain other impacts that meant chassis availability wasn't there to actually mount and install our fuel systems that we were ready for that led to about NOK 45 million impact on the automotive side.Continued to reduce volumes in light-duty vehicles due to the impact of the global semiconductor shortage, particularly impacting our customer Volkswagen there. And of course, some other customer-related delays in Mobile Pipeline led to actually NOK 27 million also being delayed from Q2 into Q3.In Hexagon Ragasco, a very strong EBITDA of NOK 34 million, strong volumes and profitability. And that, again, despite some adverse mix and also temporarily high raw material price impacts. The Smart Cylinder program is on track and also when we go to Digital Wave, the pipeline extension or extension of pipeline digital services and products is on track.When it comes to Hexagon Purus, this is our publicly listed subsidiary, very, very pleased to see the significant increase in revenue in Q2, and that's on top of the strong order backlog. Our 75% ownership then is now currently valued by the market at around NOK 6 billion. Also, they have NOK 0.9 billion cash on the balance sheet.And if we go into the highlights, as we saw, NOK 726 million posted in revenues, underlying growth rate of 17% and the total currency effect that impacted us year-over-year at Hexagon level was NOK 80 million. Very strong backlog for quarter 3 onwards.And when we go over to EBITDA, you'll note that those currency headwinds are coming from the U.S. dollar businesses. When you go to EBITDA because the costs are matching the revenues, then the impact to EBITDA is much less than you see in the top line. And there, you see 87% growth year-over-year on EBITDA to NOK 71 million, so significant growth from the 2020 pandemic levels.And when we go over to earnings before interest and tax, EBIT, you see a NOK 39 million year-over-year increase to NOK 19 million for the quarter.Diving into g-mobility segment specifically. We have the same effect on revenues. You see NOK 538 million revenues posted for the quarter. Again, with the -- correcting for the currency effects, that would be a 24% year-over-year growth, so significant growth underlying in g-mobility. And when we dig into the sectors, I mentioned the strong U.S. truck demand and the European Transit Bus, that was around about 70% of the heavy and medium duty automotive revenues for the quarter. I'm very happy to see a pickup in the transit bus in Americas that has been softer in recent times. Medium-duty truck orders, we have a major customer there, UPS, which just pushed those out to Q3 and Q4 that's planned. And obviously, we started deliveries on Mobile Pipeline on our large Certarus order, and more of those deliveries to follow in Q3.And light duty, as we mentioned, impacted significantly in the quarter. It's not 0 volumes but very low volumes to Volkswagen. However, good thing is given the very strong activity in Hexagon Purus, particularly on the distribution modules, so there we can switch our production and capacity also to serve Purus as well as Mobile Pipeline.So when we look at the revenue shares on the right-hand side, we can see that if you add up all the heavy-duty, medium-duty businesses, this is the lion's share, around about 78% of all g-mobility revenues. And then you have the light-duty vehicles accounting for 11%, as is Mobile Pipeline.Moving on to Digital Wave. NOK 12 million revenues for the quarter, slightly down on last year. Nothing really to read on that. These are mainly machine sales, so they can be a little bit lumpy from quarter-to-quarter. So saying that within the NOK 12 million, very strong sales in Ultrasonic Examinations, the UE business, but also on Modal Acoustic Emission, MAE, technology that we typically use in the Type 4, Type 3 space. We'll go over to EBITDA. You see the minus 4 versus breakeven last year same quarter. And then again, that's the higher OpEx due to planned investment in ramping up the organization to further increase competitiveness there.On Hexagon Ragasco, they posted revenues of NOK 175 million, continued strong high demand from the European customers, but also supplemented by a large order to South Asia customer. And when we look over to the EBITDA to the right, that generated NOK 34 million, down year-over-year. Two effects, mainly just unfavorable mix year-over-year, but also an effect creeping in from higher raw material prices. It's really getting certain input materials over from China. So supply and availability is there. However, the price to land it in our ports are higher.And when we look at Hexagon, this is, again, excluding Purus. We closed the quarter with a net interest-bearing debt of NOK 0.8 billion. So we have the unsecured bond outstanding of NOK 1.1 billion and our cash reserves have grown to NOK 0.3 billion. That bond maturing in March 2023, but we also have a secured bank facility for NOK 0.6 billion, which is undrawn as we close Q2. And that leads us to a very satisfying leverage level of 2.1x and that is relevant when we take the next topic.So I'm going to talk about the g-mobility U.S. heavy-duty truck growth and the expansion plan specifically for the U.S. So why are we doing it? You've seen the very impressive market forecast. Whether you believe in the 5x or the 10x or even higher, there will be significant growth in the next 5 to 10 years. Why is that happening? Why is the U.S. so popular when it comes to adoption of CNG, RNG? Well, the infrastructure is available. So there's getting towards 2,000 public and private stations there. It's very well covered in the U.S.It's also a mature technology, meaning that everyone is familiar with it. It works. It does what it should. No need for extra investment in there. The emissions benefit is very well accepted in the U.S., both in terms of reducing greenhouse gas emissions, but also local air quality, especially over diesel. And then finally, in the U.S., the CNG and RNG is a very plentiful source, so perfect conditions.What are we doing? So it's a $28 million investment in CapEx, roughly NOK 250 million. And how we should view this is that we've had ongoing capacity expansion programs, as Jon Erik mentioned, also in Europe in Kassel and also in Lincoln in Nebraska. That has been part of our rolling CapEx, as you've seen through 2019, 2020 and you see in 2021. This you can consider as additional CapEx, and this alone will increase capacity by approximately 40%.The CapEx will -- at the start is slightly higher because it also involves a new building. That new building is actually on the -- or adjoined to the existing site in Salisbury, California -- Salisbury, North Carolina, apologies. And what that means is that you get synergies from also shortening the supply chain. And in addition, from a risk management perspective, enhanced business continuity from the dual site. And then as we -- as the market grows and proves itself, we can then have multiple discrete production lines just to address step-wise capacity increases.This will start happening already in Q3 2021, and we look to complete it by Q1 2023 and ramp up thereon. So once again, the new plant will complement, so add to existing capacity in Lincoln and Kassel. And this will be definitely a significant increase in our ability to supply this growing market.Let's just touch on the financials for the group. You see the balance sheet assets on the left-hand side, not a lot of difference. Cash has grown in Hexagon, up about NOK 130 million in the quarter. And principally, apart from good operational cash flow, we did also settle a swap -- a currency swap we did against the Norwegian bond, which was a swap in order to change the bond effectively to a U.S. dollar bond and hedge that position properly. It was in the money significantly to the tune of NOK 106 million, so we had the opportunity to settle that and that's used as then funding towards the capacity expansion. We obviously reintroduced a swap immediately as well to ensure that the hedging position continues.On the right-hand side, you see on the equity and liability side, very strong 58% equity ratio. And then again, it's very important to make the point that in the Hexagon Group, there's 2 significant entities, you can say. The Hexagon, excluding Purus, mature, profitable, cash-generating business, returning double-digit EBITDA margins on the left-hand side.In the middle, Hexagon Purus, the new chasing a very growing exponential market in e-mobility and revenues increasing significantly as we saw quarter-over-quarter, NOK 94 million, but still investing heavily into the future, so heavy EBITDA dilution. And of course, when you add both together, you get the results on the right.So when you screen at Hexagon Group level, you'll have NOK 788 million in revenues after eliminating some of the sales between Hexagon and Purus and a very low EBITDA margin. So that hides the fact of the, like I say, cash-generating business in Hexagon today. And obviously, the ultra exponential growth business in Purus.So in summary, a solid quarter 2. Despite the headwinds, we mentioned about delays in industry supply chains and the currency movements year-over-year. Demand for heavy-duty U.S. truck and transit bus remains very high. We have increasing demand for Mobile Pipeline, and that's driven by that strong rebound and also R&D adoption generating that as well. Strong EBITDA generation from Hexagon Ragasco and Smart Cylinder programs are ready and on track.So let's take a while to look at the 2021 full year guidance. As we mentioned before, our revenue target is expected for the year around about NOK 3.5 billion. So this is Hexagon, excluding Purus. And also Hexagon excluding Purus, we have an EBITDA target of around about NOK 400 million for the year.How are we doing? So Q3 and Q4 expected to be very strong. We have seen these pandemic-related impacts to the industry supply chains. And particularly, when it comes to Hexagon CNG LDV, we wouldn't expect at this stage to be able to fully mitigate that within the year. So that orange light has turned more into a permanent orange.So we do expect some recovery, already started, in Q4, but that won't be quick enough to not impact the expectation for that division in the year. However, we do see a lot of strength in the Hexagon Agility businesses, the automotive and the Mobile Pipeline business, so that can help mitigate that impact.On Ragasco, that's going according to plan. It's had a strong first half as is normal and seasonal. The second half, of course, will be seasonally lower. But again, we expect to also deliver on our growth forecast and guidance for the year. Digital Wave, this is on track. So overall, some pressure to the NOK 400 million EBITDA, mainly due to the impact of the Hexagon CNG LDV or, should I say, the impact of the global electronic shortage of components that impacts that division.Let's go into some detail then, business area and unit by unit. On the medium and heavy-duty vehicles, we can see that the decarbonization and sustainability focused demand continues. That is evident in our backlog, so we are covered for 2021. And through Q3 and Q4, we expect to continue to see very strong growth in truck, particularly in North America, and also with those delayed sales from Q2 to Q3. That positive development in European Transit Bus is expected to continue and a stable North American transit bus makes it a very good back end of the year for Hexagon Agility automotive business.Refuse segment. We actually had a very decent Q2. We expected that to come in second half, so probably now the second half will be slightly softer than the first half but again, rebounding in 2022. And all that, we have to say that obviously, if there are supply chain delays that impact chassis availability and our ability to recognize revenue, this will always be a risk going through to the end of the year.On Mobile Pipeline, the rebound continues. We see very solid volumes for the remainder of 2021, again, covered by order backlog. And those orders have come from the oil and gas sector, RNG, industrial gas and also fairly new sector to us, which has been the mobile refueling units when it comes to the North American geography. Also good to see orders coming through South America on energy-intensive projects and also an $8 million single order from XNG for delivery in the fourth quarter 2021.Should note that new customer, REV LNG, placed an $8 million order for distribution of RNG, and that's by far the largest single order for RNG to date. So a very significant data point now. Also, you see the picture there, our Mobile Pipelines containers. They are on chassis. Those chassis are made with steel, quite a lot of steel in there. And of course, the U.S. supply shortage of steel may cause -- or has some risk to cause some postponements during the year.CNG LDV. I think we've talked about this quite a bit. We're looking at full recovery now probably the end of 2021 and going into early 2022. Like I say, the good news is that we can utilize production capacity for hydrogen and also European CNG, RNG bus customers as well as European Mobile Pipeline customers, so very versatile manufacturing setup.On Digital Wave, we expect a stronger product mix to drive higher activity in the second half of 2021. That agreement with Linde is a very important agreement for Digital Wave, $2 million global agreement UE testing for Type 1 cylinders. That's all the -- so you can imagine the scope of the global Type 1 market there. So we look forward to added momentum in that area.And finally, on Hexagon Ragasco, as I mentioned, the second half of the year is always seasonally softer from the leisure customers. Saying that, the demand from European markets is on par. We see good demand in South Asia. The Smart Cylinders program is on track, and we always celebrate the new markets this time with a heavy West Indies focus on Trinidad and Tobago, Antigua and also the island of Barbuda, so good stuff there.And then finally, what are the 3 big things to look out for? I'll just repeat myself here. The RNG uptake that is happening now is in our numbers. And then from '22 onwards, look forward to our pilot programs and reporting back on that when it comes to LPG Smart Cylinders. And then hopefully, market penetration in 2023, and we really see this as a significant way to accelerate the adoption of Type 4 over steel in that area.And then when we move out to 2025, miniaturizing the Modal Acoustic Emissions technology so that we have the real-time monitoring of the Type-4 tanks and systems globally. That will be a game changer really for our industry. So those are the 3 things.And on that note, I will leave it to Clean Air Everywhere. And maybe Jon Erik, you can come and join me for Q&A. And back to Karen.
[Operator Instructions] And if you have any trouble accessing that, please just feel free to send us question to ir@hexagongroup.com. But we already have several questions that have come in. The first being about Ragasco. So there are actually 2 questions. One of the -- first one being the United States is one of the world's largest barbecue markets. Why haven't we succeeded there even though we've been in the market for almost a decade? I believe that's for you, Jon Erik.
Okay. Thank you. So that's correct. The U.S. is a market that we have not yet opened, but we're still working very actively on it. In those markets that we have succeeded, we have always partnered with big distribution companies. And in the U.S., still, there is a tradition of steel cylinders for barbecuing. But that's exactly why we are going to add value to our products by making them smart. And we see that as a big opportunity for the U.S. market, but also for several European markets, including Scandinavia, and also to open new markets in other parts of the world. So we remain quite confident that we will break the code in the U.S. and get a bigger market share than we currently enjoy.
And I think you successfully answered the second question, which was, which markets are the target markets for the Smart Cylinder. So I think that's it.Next question. Could you elaborate a little on the performance of CNG LDV? How simple is the conversion of capacity from LDV to bus customers?
Yes. So that's the CNG LDV business is currently our sick child due to the shortage of semiconductors. Volkswagen has announced that they have had a 30% reduction of output this year, and that is also severely affecting our part of their business.The conversion to bus or other segments, I think we need to address them. Two parts of our resources. One is the engineering and program management, which is easily convertible. The lines as such, they are not easily convertible to bus but could be used for hydrogen light duty and including light commercial vehicle applications. So we see good use of those capacities short and long term. But meanwhile, we continue to struggle with the CNG Light-Duty segment.
Okay. I have a question for David. Could you clarify if you're maintaining the approximate NOK 400 million EBITDA guidance for 2021? Or are you saying that the target is at risk or can't be achieved because of semi availability -- semiconductor availability and supply chain problems?
Yes, we're definitely still targeting the NOK 400 million EBITDA guidance. We are recognizing that there is pressure on the number due to, as I said, those impacts on the CNG LDV. So it really depends on if we can make that up through Hexagon Agility primarily. So the heavy-duty and medium-duty automotive market, which is very strong, and also the Mobile Pipeline market, which we also predict a very strong second half. So still targeting the NOK 400 million, but we recognize some risk to that due to CNG LDV.
Excellent. Okay, Jon Erik, what are your thoughts on the close to 75% ownership in Purus? Would it be natural to invite more investors to own Purus?
So I must say we are extremely pleased with what we have accomplished. Purus is ahead of its plans that we communicated when we listed the company in December of last year. We have always said that we believe Hexagon can be a very, very good owner for Purus, enabling that company to industrialize and scale up. And by doing that, we also think we will create a lot of shareholder value. We have created shareholder value. We think that there is a significantly larger potential there that we would like to contribute to.That said, we are also very honored to attract so many very high-quality co-investors into that company. And if it serves the purpose of the business, and if it is accretive to shareholder value, then we will, of course, also consider allowing a bigger share of the company to other investors. But for now, we are focusing on the industrial development, and we think Hexagon is a very good partner and majority owner for that business.
David, what is the payback of the Salisbury capacity expansion?
Very good question. I think it's easier just to say that it's in the 1-year time frame, so it's a very strong payback.
And just continuing along the theme of the targets and the guiding, what gives you the confidence that the second half of the year will be strong enough to hit the Hexagon targets?
We see that quite simply in our order backlog. So it's more a question of -- we mentioned some of those delays impacting our ability to have chasses ready for us to mount our fuel systems on. That's really the only issue here. But in terms of backlog, we are very strong and covered for 2021.
Thank you. And Jon Erik, how long do you see the disruptions persisting?
That's the billion-dollar question, I suppose. We see them persisting at least through this year. We see some analysis talking about mid of next year. Sooner or later, of course, those issues will be solved. But I think there is also another change process going on. So with this experience, I think a lot of industry players will look at how to home source their components and production. So I think we will also look forward to a change in the global supply system. But we are confident that the markets will sort that out, but a few more quarters are probably fair to assume before we have it behind us.
And continuing with you, Jon Erik, what do you attribute the Mobile Pipeline rebound to?
That is something that we are really pleased about. Because unlike a few years ago when this was purely a function of the oil and gas prices and markets, we see now strong activity across a number of sectors, including renewable natural gas developments but also industrial use and -- or utilities in addition, of course, to the higher oil prices and the rebound of the oil and gas activities. But the very sound broad recovery of that segment, which is also then, to an increased extent, driven by environmental reasons.
Thank you. And then I think that I only have one more question here. Jon Erik, are you satisfied with the Hexagon Purus progress so far?
Very much so. Very much so. So I think they have overdelivered. And we've seen also that now starting to materialize into very significant growth, more than doubling of revenues from Q1 to Q2, and they are ready for continuing that growth. So a very exciting phase and development for Purus. We are very pleased.
And I think that wraps up the questions received from our audience so far. So with that, I'd like to thank everybody for spending time with us this morning, and we look forward to seeing you again soon. Thank you very much from Oslo.
Thank you.
Thank you.