Welcome everybody here in the studio and those joining the webcast. It's my pleasure to take you through Hexagon Composites' Quarter 1 2018 earnings broadcast. I will start with the, as usual, group highlights, the financials, and segment overview. We'll also have an update on the hydrogen-related investments. These are a key strategic area for Hexagon at the moment. Jon Erik will join us for the outlook, and we'll both take any Q&A. In summary, a strong quarter. Quarter 1 2018, 20% year-over-year growth in revenues, solid cash generation. Two factors here, really. Strong mobile pipelines, in fact, the strongest quarterly revenues in three years. In combination with the continuously strong LPG volumes, that's combined to give us the best group quarterly EBITDA since Quarter 4 2014. In addition, very solid hydrogen and light-duty vehicles volumes. Relatively weak quarter for Agility Fuel Solutions.
The good news is that revenues and profitability have picked up substantially since Quarter 4 2017. We also joined the prestigious Hydrogen Council, Jon Erik will cover that later. In addition, we proposed and subsequently paid a modest dividend of NOK 0.3 per share. When we go into the financials, we recorded the revenues to the left of NOK 416 million. That's a growth of NOK 70 million or, as I said, 20% growth. The year-over-year growth really driven by mobile pipelines allowed us to record EBITDA of NOK 66.5 million or 16% EBITDA margin, that's versus NOK 35.1 million same quarter last year 10% margin. So those six margin percentage points very much driven by having high volumes both in our mobile pipeline business and also the Hexagon Ragasco LPG business. The NOK 66.5 is also stated after dilution effect of the hydrogen business unit.
This is in its early growth phase, we plan to invest a lot of resources in this. The dilution is planned, that factor you should put in for NOK 6 million in the quarter. When we look at net profit, we recorded NOK 23 million in net profit. That's a growth of NOK 16 million year-over-year versus the NOK 7 million in Quarter 1 2017. The NOK 23 million, sorry, is recorded after NOK 6 million negative headwinds from currency effects. The underlying effect is even higher. Looking at our group income statement, I've touched the operating income, EBITDA, and profit after tax, I'll concentrate on the lines in between. We can see just under EBITDA, our depreciation pretty much stable year-over-year. Amortization and impairment has increased slightly, this is due to the good development work we've done in 2017.
Higher development attracts a higher amortization cost this year. Below EBIT, we have share of profit from associates. This is a line of where we record the Agility investment. A slight improvement year-over-year by NOK 0.4, but again, negative figures of NOK 0.9, we'll touch that later. The amortization connected to Agility intangibles fairly stable, NOK 3.2 versus NOK 3.5, just foreign currency effects impacting those. Our other financial items, we recorded NOK 11.9 million in charges in Quarter 1 2018 versus NOK 5.7 million same quarter last year. That increase of NOK 6.3, that's really primarily foreign currency movements negative. We recorded an operating margin or EBIT percentage of 11.4% for the quarter. That compares very favorably with the 4.8% margin for Quarter 1 2017. When we look to the full year 2017, we had an average operating margin of 6.9%.
Comparing very favorably, a very good start to 2018. Looking at our share of revenues between the Light-Duty Vehicles and Hydrogen, Mobile Pipeline and Other, and Hexagon Ragasco business segments. Two things we can draw from 2018 versus 2017. One is that all business segments have shown growth year-over-year. It's very good. The balance of the segments has improved in 2018. It was much more heavily dependent on Ragasco LPG in 2017. Let's have a look at those segments. On the left-hand side, we will begin with Hexagon Hydrogen and Light-Duty Vehicles. You can see 26% revenue growth, top-line growth from NOK 67 million to NOK 84 million in the quarter. Very much by CNG Light-Duty Vehicles driving that growth. There was actually lower Hydrogen product revenues. Instead, we have three fuel cell electric vehicle development contracts, and we are recognizing the revenues based on progress to contract milestones.
It comes to EBITDA, we see an improvement in EBITDA year-over-year. But again, remember the Hydrogen business unit is dilutive and the year-over-year impact then is actually NOK 7 million on EBITDA year-over-year you should also calculate in. When we look to the right, we take our Hexagon Mobile Pipeline and Other business segment. Here we had 51% growth from NOK 109 million in revenue to NOK 164 million in revenue. Really when we go north of NOK 100 million per quarter, you really see the release of scale efficiencies. So here we are getting the decent volumes through our plants, and that's helping to generate a double-digit EBITDA margin. You see NOK 20.2 million in EBITDA or 12% margin for the quarter this year. Going over to Hexagon Ragasco LPG on the left-hand side. Interestingly enough, Q1 2017 was a record at the time. It still remains our third highest quarterly revenue.
Q1 2018, NOK 185 million is actually our second highest now. LPG continues to be very strong and also still demonstrating growth year-over-year, 7%. Revenues primarily from the European core markets. That happens to be Q1, Q2 as they prepare for the summer season. But also we did have the benefit of a remainder of a contract to Iraq, so deliveries in Q1. Most of those deliveries were in 2017. So again, higher volumes have allowed a higher EBITDA, so we increased by two percentage points to 25% for Q1 2018. To the right-hand side, when we look at the Hexagon Group total, again, very good growth. The margin upswing to 16%, again, a factor of LPG and Mobile Pipeline being strong in the same quarter.
You look at 2017 as a whole, I think Hexagon Composites is much better to record the year-over-year full year progress, as we do tend to fluctuate in the quarters. You can see in 2017, margins fluctuated between 10% and 15%. So within the year there will be fluctuations, but very pleased with the underlying healthiness and strength of profitability in the business. Let's look at Agility Fuel Solutions, our equity accounted investment. These are the actual business operating results of Agility we are looking at. Far right-hand side, Agility recorded $36 million in revenues, and that generated $2.5 million in adjusted EBITDA or a 7% margin. The adjusted EBITDA is the closest to cash. That was a distinct pickup from the weak quarter 4 you see there with $32 million of revenues and $0.7 million.
That's very encouraging and that's been driven mainly by very strong transit bus revenue performance. Still year-over-year lighter than same Q1 2017 last year and that's mainly due to heavy-duty truck. The ordering patterns have been slightly disrupted due to a delayed launch in a new near zero emission 12 liter engine and good to say that engine will be on the market from Q2. Other pleasing thing is very solid refuse truck sales. First half of 2017 was fairly weak. We saw momentum picking up fairly strongly in back end of 2017. That momentum has only increased and continues then in 2018. Agility have a very strong position within refuse truck. The fledgling business powertrain systems, mainly medium-duty propane at this stage is on track to the business plan. It's under one year old and revenues will pick up as we go through the year.
Agility continues to be fully funded and very good liquidity. If we go over to the next page, this is how the equity accounting works for the Agility investment. Remember, it's not consolidated so it's no longer in our numbers and we go from an adjusted EBITDA of $2.5 million after we take off share-based compensation. Again, non-cash charges, depreciation and amortization of the intangibles within Agility. That takes Agility down to a -$1.4 million profit before tax. When we take it over to the right-hand side into the group accounts, we have to change and correct for IFRS amongst other things. There we record in NOK millions now negative NOK 0.9 million and then we attach the intangible amortization for those intangibles recognized on our balance sheet and that's negative NOK 3.2 million for a total loss of minus NOK 4.1 million. The balance sheet remains very strong. Couple of comments.
Net interest bearing debt was NOK 215 million the last quarter has gone down to NOK 175 million. Equity ratio at 60%, so remains very strong with lots of capacity. If we go on to the group cash movements, we see a very strong cash generation, NOK 80 million from all other underlying operations. I split out operating working capital changes. That's been negative NOK 17 million, of course as we're expanding the business in Q1 2017. All to all net NOK 63 million more than covers our CapEx and development costs which were NOK 22 million for the quarter. That will be split around about NOK 17 million on normal CapEx and NOK 5 million on development expenses. Net movements in financing and FX movements have been fairly modest and we closed at NOK 204 million for that quarter. It is very important to give an update on the hydrogen related investments.
Let's just reiterate our position on hydrogen. The energy transition to low carbon fuels is happening now. Very strong push certainly from the public bodies, whether they're national countries, whether they're states, whether they're cities, but also coalitions such as the Hydrogen Council and Jon Erik will touch on that. Also helping to focus, you can say, the private investment as well in this area. We're seeing this. We have contracts already, substantial contracts, and we see really game-changing opportunities for Hexagon already. That said, of course, we are then focusing on investments in this area. The next three years, we will focus on attractive returns in the future within the hydrogen business. Just to illustrate the growth path as we see, and what hydrogen will do for Hexagon Composites.
If we look back to 2016, this was basically a 3% of our revenues type of a business unit. In 2017, it's 10%. 2025 and beyond, we're looking at probably higher than 50% of a much bigger pie. All business units growing, but the growth rate will be dwarfed by the opportunities that we're seeing in hydrogen. Very significant. I should mention actually hydrogen and biogas. What we did is last quarter, we had some CapEx guiding. I'm just bringing up the slide from quarter four 2017. We'd like to be a little bit more precise on this CapEx guiding and allow us to actually iterate another view. Back to quarter four 2017. To the right-hand side, you'll see the CapEx guiding. That basically totals NOK 664 million. About 45% of this is actually connected to contracts that we have in hand.
The other 55% is if opportunities develop further within this period, then also that CapEx will be attached to those opportunities, but they are not based on contracts in hand. I will just further specify over the page. Allow us the updated view. Firstly, in the, you can say, the peach colored area in the middle. This is the 2018-2020 CapEx spend. This is the area of CapEx spend that is connected to the two, actually we have three fuel cell electric vehicle contracts, but specifically two that will garner most of the CapEx here. On the right-hand side then is the rest of the NOK 664 million, which is NOK 368 million. We are confident now that given our footprint of manufacturing, we have two sites in the U.S. and we have one site in Germany.
We feel in the 2018-2020 timeframe, we'll have enough capacity already in hand to deal with any opportunities that arise, including the fuel cell electric vehicle contracts that we have today. That means that any future developments that arise through 2018-2020, they'll probably materialize CapEx post 2020. We'll take those as they come. Let's focus on the NOK 296 million then. It comes in, I would say, generally 2 stages. To the left, NOK 122 million. These are basic customer requirements for two fuel cell electric vehicle contracts that we have today. The majority of that is backstopped by the customer as well. The majority of that is not at any risk.
At some point, we think that will be around about mid-2019, we will face a decision gate with the customer on volume prognosis, and then we would expect an additional requirement, increased volume, you can say, after that decision gate. With that additional volume requirement, at that stage, we will then be able to commit the rest of the CapEx, the NOK 174 million that you see there. That's basically ensuring that we have higher volumes, higher capacities, more comprehensive plant that's capable of doing that. Hopefully that clarifies on the CapEx. Around about NOK 300 million tied to fuel cell electric vehicle contracts. That CapEx will only be deployed as the customer wishes it or gives us that commitment. The rest of the CapEx, NOK 368 million, that is really dependent on future opportunities as they arise.
Before I finish and hand over to Jon Erik, I will just say that also just to say that the NOK 300 million of CapEx, this will be fully funded with the cash inflows from the rest of the business areas. I hope that clarifies the CapEx guidance. Jon Erik, if you can join us for the outlook. Thank you very much.
Thank you, David. Good morning, everyone. We have really moved into a phase of very favorable macro conditions. Of course, the oil price increase is serving parts of our business very well. A healthy spread between diesel and natural gas prices in North America in particular. As David has touched on, a rapidly growing momentum for our alternative energy exposed business. It's clear that natural gas and biogas are key to achieving emission goals. The left-hand charts there indicate the growing spread. Interestingly, in North America, natural gas prices are trending down while oil prices are trending up. First and foremost, we emphasize the increased oil prices. The right-hand chart shows the spread at the pump between natural gas and diesel on the diesel equivalent. It's important to note that many of the operators have more attractive gas prices and consequently, a larger spread.
For them, the attractiveness of natural gas is even better. We are back to a situation where certain fleets driving long ranges have a very healthy payback. We hear this, or mentioned examples of less than two years for the long-range vehicles. This chart you've seen last year and the year before. What is interesting about it, this is BP's update, is that every time it is updated, the curves get a little bit steeper for renewables and natural gas. The trend is moving closer in time. I think there is a strong consensus that natural gas and renewables will take relative share, while in particular oil and coal will lose relative share of the total energy mix globally. That's good news for Hexagon. We recently joined the Hydrogen Council. A lot of highly esteemed companies set that organization up at the beginning of 2017.
We get a lot of useful insights from that partnership. Their predictions for hydrogen's importance for the fuel supply in the world going forward is indeed very encouraging. They predict 18% by 2050 of the world's energy demands, avoiding six gigatons of CO2, and fueling 10 to 15 million cars and 500 trucks by 2030. That is significantly more ambitious, if you like, than what we have in our forecasts and numbers that have gone into the chart that David had on his update. We may be on the conservative side, even though we see significant opportunities for our businesses. Another interesting news flow recently from SINTEF and NTNU in Norway, really putting carbon capture and storage back, but now for the production of hydrogen.
Predicting by, again, 2050, NOK 220 billion worth of hydrogen, separating then natural gas, storing the carbon in the North Sea, and then facilitating the hydrogen to the market. An estimate of 25,000-35,000 jobs related to this development. In April, the International Maritime Organization, as expected, made their commitment to reducing CO2 emissions in the maritime sector globally by 50% by 2050. It will be very interesting to see in the coming years what solutions will be developed. We feel confident that hydrogen will be one part of it, LNG another, and also we see opportunities for CNG for certain types of vessels. In the quarter, we had our first delivery of Mobile Pipelines for the capture and compression and storage of boil-off gas from an LNG tank on a vessel. If we move on then to the business areas and the respective outlooks.
We have discussed in previous quarters Volkswagen's very strong commitment to CNG for passenger cars, and that is only getting reinforced every quarter. Some press releases recently shown here. They also report very strong growth both in Germany and in Italy. Still, Italy is the largest market in Europe, but they have reported triple-digit growth in Germany for its CNG model sales. They are constantly launching new CNG engines. I'm afraid there is a typo here. This launch is actually for 2018, but we expect more models to be launched in the next few years. SEAT in Spain, part of the Volkswagen Group, also have declared strong ambitions, 1 million LEVs sold by 2030. In a consortium, they are promoting the development of the gas station network in Spain. We have a very large optimism for this sector.
It's interesting because previously Volkswagen has talked about CNG as a transition to a clean fuel environment, while the sale president now has stated that CNG is not just a bridge technology, but a real long-term alternative. To us, that makes perfect sense because if you especially mix biogas with CNG, with natural gas, and make renewable natural gas, that will have a very significant CO2 impact. We strongly believe that we will see continued development of this mix of different technologies, of which CNG and renewable natural gas will be a very important component. On the hydrogen side, as David mentioned, we are now very much focused on delivering the engineering and the development for the large OEM contracts programs that we have.
We expect that we will start serial production for one of the programs in the second half of 2018, while the two others will come in 2019 and 2020. We see that in that part of the hydrogen business, we have a somewhat reduced income level in the quarter, but that will fluctuate and it will certainly pick up as we go forward. In the quarter, we had a somewhat slow market on the distribution side of the business, so Mobile Pipelines for hydrogen, if you like. We see one application for that on this picture. That also is expected to resume strongly in the second half of the year. On the Mobile Pipeline side, we have had the first delivery to a biogas plant in North America, where the trucks are transporting renewable natural gas from farms to pipeline.
We are now in the final stage of preparing the new TITAN 53, which we expect to launch in Q3. That is targeting the 65,000-80,000 pounds segment, where our other TITAN products have not been fully optimal. We are also addressing a segment which, in lack of a better word, we call pipeline integrity segment, so securing operation during downtime, maintenance, et cetera, for the pipelines. Also, we have projects aiming at connecting stranded communities, so communities that do not have access to the pipeline system, and provide them with gas. The North American shale sector is very active. On the international scene, there are a number of projects out there, some of which are quite large. Still, we have to report a relatively slow project flow. There are some deliveries, not as high as we would like.
We remain quite encouraged by the prospects. Strong overall outlook, do expect that there will be fluctuations between quarters. LPG, steady. A very robust European market, which is important now in the first half of the year. We have had a lot of success in the Middle East. We see a growing repeat order intake from the coastal customers, where the corrosion properties or lack of corrosion of the composite alternative is a very important customer value. We are also making now a new drive to open the U.S. market, and we have a pilot in Florida, and we are moving on to California in this quarter. Very positive momentum into Q2. We have promising prospects for second half of 2018, we hope to also deliver a strong second half 2018 in the low-pressure business.
The expansion program is on track and will be phased in the new lines in the beginning of next year. Agility. The market is picking up, and in particular, we have a positive outlook for the refuse and transit bus business. The Cummins Near-Zero NOx engine was made available now in Q2. That was somewhat delayed and only came on the market early this year. The truck builders are homologating the product. We didn't expect this to influence the market until Q3, we see that it is already starting to pick up now in Q2. There is a stronger outlook for Agility in the heavy-duty truck segment than we expected a quarter ago. There was a trade show in Long Beach two weeks ago. A lot of announcements were made. Agility exhibited its first hydrogen storage systems for trucks.
Also, Agility exhibited or made a press release that an alliance has been entered into with a company called Romeo Power for the supply of storage modules. We see an opportunity for hybrids between CNG and battery electric. That is something we will focus on going forward, and which may be an exciting growth opportunity for Agility. Also, for certain applications, it may be full electric trucks, because of the weight disadvantage, we think that will be a relatively small share of the market. While the hybrid segment has a lot of attraction to it. In summary, on the LPG side, full capacity utilization first half, and we will focus now the efforts on matching the record year of 2017 in the second half. Mobile Pipeline, strong outlook, nonlinear, we think we are on an upward trend.
On the hydrogen and light-duty vehicle side, it's strong outlook for LCV. We will have the dilutive effect from the hydrogen business. Also there we will see a nonlinear revenue development. On the Agility side, healthy outlook across all segments, especially driven then by the recovery of the spread between natural gas and diesel. With those closing remarks, I invite David back to the stage and welcome any questions. Please.
Thank you. My question is, unless you will not need any further to raise any further equity to cover the CapEx in the hydrogen business. How does that look if you include any expansion in other areas, like in low pressure or any transaction involving Agility? Will you still be funded fully, or will you then have to look at this again during the next, say, one to two years?
First of all, as David showed, the cash flow is strong. The hydrogen program that we have will be fully funded by the cash flow as we see it and expect. Any capital raise would have to be for other opportunities. I have to say that it is highly unlikely that we will raise capital anywhere near the current stock price. I think that answers the question. Of course, there are always opportunities out there, but we need to see attractive opportunities also on the capital side.
Any more questions from the audience?
Any questions on the webcast?
There are no questions from the web audience. Thank you.
Okay. Thank you very much.
I think there was another one from Ole.
The light-duty vehicle side in Europe looks like it's expanding quite good. Can you say anything about the competition there and what part of the market you are seeing for yourself?
Volkswagen is really the leader in the market. We have a strong position there. We are also supplying to certain other OEMs. What is exciting here is if these other
Yeah.
If these other OEMs will go after the same opportunity that Volkswagen is so strongly pursuing. At this stage, it is really quite low activity with the other OEMs. We would assume that they take inspiration from Volkswagen. Yeah, we are truly looking forward to the development in this sector. It looks very encouraging. Any further questions? If not, I wish everybody a good rest of the day, and talk to you soon. Thank you