Hexcel is aiming for double-digit growth in its operations by 2026

During an “Investor Day” held on February 20, 2024, Hexcel presented ambitious development objectives. The company is aiming for an annual revenue growth of 10% to 12% until 2026. This strong progression will be driven by the commercial aerospace sector (+12% to 16%), the Space & Defense activities (+5% to 10%), and the industry sector (+3% to 6%). Financially, Hexcel aims for an adjusted EBITDA of €1,39 billion ($1.5 billion) and a free cash flow of over €740 million ($800 million).

Organic growth and acquisitions are on the horizon

“Hexcel is benefitting from both cyclical growth as aircraft production rates increase to support strong demand, and from secular growth reflecting our advanced composite technology value proposition as lightweighting supports fuel efficiency and emissions reduction. We are forecasting strong sales growth over the next three years. We expect robust earnings expansion as we leverage our global manufacturing footprint. We are entering a period of strong cash generation, which will support continued investment in operational excellence and organic growth, the potential for strategic acquisitions, and returning cash to stockholders”, explains Nick Stanage, CEO of Hexcel. He emphasises that the company will continue its share buyback policy, with €60,12 million ($65 million) to date, and an additional €277,47 million ($300 million) through a new buyback programme.

The projected growth of the aerospace sector: an aim to capitalise

“We have the right team in place, our innovation is a powerful competitive advantage, our long-term customer relationships are broad and deep, and our markets are growing. All of these support continued and compelling value creation for our shareholders”, continues Nick Stanage. In 2023, Hexcel achieved a revenue of €1.66 billion ($1.8 billion), distributed as follows: 60% in aerospace (wings, fuselage, secondary and interior structures, engines, and nacelles); 30% for Space & Defense (rotors, fixed wings, satellites and launchers); 10% in industry (automotive, marine, leisure, energy, and electronics). According to forecasts from Airbus and Boeing, demand for commercial aviation will be very strong over the next 2 decades, driven by fleet renewal (46%) and market growth (54%). Combining the data from both giants, there is a projection of 33,430 single-aisle aircraft, 7,370 wide-body aircraft and 923 cargo aircraft, in the next 20 years. Additionally, the business aviation segment is also expected to grow. “For example, the Dassault Falcon 10X will be the first business aircraft to have a composite wing. We are their exclusive carbon fibre supplier”, rejoices a spokesman for Hexcel.

An alignment of planets for the demand

Moreover, in the Aerospace & Defense sectors, Hexcel’s management identifies significant growth potential as numerous programmes are set to expand. This includes platforms such as the Sikorsky CH-53K, Dassault Rafale or Embraer KC-90. Military and civilian helicopters constitute a dynamic perimeter, as do military drones or new aircraft like the Bell V-280. Not to mention the booming space sector, with continued strong demand for satellites and launchers. Finally, in the industry domain, Hexcel relies on its high-value-added solutions to seize opportunities in a technological stage, where the competitive landscape is tightening. This requires a segmented approach and targeting niche markets, such as luxury cars, for example. A Lamborghini illustrates this slide presented to investors, while the group highlights the promises of the Marine sector, which is under pressure to drastically reduce emissions.

In conclusion, Hexcel remains ambitious in detailing its guidance for the 2024 fiscal year. The focus is on overall growth: revenue, EPS, and free cash flow.

Featured image: During an Investor Day, Hexcel presented its strategy and growth milestones for the period 2024-2026.

Visit Hexcel at JEC World 2024, from March 5^th to 7^th, 2024, Hall 5, booth J41.