Good afternoon. Could we start? We start. Good afternoon, and thank you very much for being here with us. Today, the board of directors has approved the nine-month results. All the material, press release and presentation, is available on the SIT corporate website. We are recording this conference call, and we have with us this afternoon Federico de' Stefani, Chairman of the group, and Paul Fogolin, CFO. I give the floor immediately to Paul Fogolin for the presentation of the results, and then for the closing remarks to Federico de' Stefani. Please, Paul, go on.
Thank you, Mara. Just a second to share the presentation in full screen. Good afternoon, and thank you, everybody, for joining us. We shall present the nine-month results of the group. Starting on the top line, before going into details, just to highlight that the comparison is quite challenging because the nine months of 2025 were going fine, so we have to consider that some comparisons are not easy to challenge, not easy to overperform. Having said that, we were a bit disappointed, especially on the top line, because you see, to nine months, we are at 5% less, EUR 226 million. Heating & Ventilation is - 3.9% versus last year, meaning EUR 159 million. Let's say that we know that the European market for Heating & Ventilation business is historically core, and we had some tough performance in the previous years.
To state that we have positive performance in this perimeter is quite, anyway, a positive information looking forward. As far as the Metering, we have overall - 6.8%, that's EUR 63.6 million. Again, we have to repeat, one of the drivers of the quarter that we already discussed, we already presented in H1, has repeated, and that means that a very high concentrated market in Italy, decisions regarding procurement of the single player has very much significant impact on our revenue recognition. We have to underline this because it's one focus point that does impact our numbers, and also at group level. Said this on the top line, looking at the EBITDA, it's at EUR 25.7 million, that's 11.4%, slightly lower in terms of margin versus last year, and EUR 28.6 million compared to last year.
As I said, it was a challenging comparison, and the difference is due to volumes and also an unfavorable mix, let me say, in both divisions. This impacts our margins, operating margin. To this, we have to add the external factors that year-on-year are impacting production, either costs that are increasing, and we only were able to offset it only partially. This explains the 11.4%. Anyway, net income is EUR 1.8 million. It was EUR 1.6 million last year, so this is a positive. Looking at debt, we closed the quarter at EUR 137.6 million. It's an improvement versus both comparisons that here we report. At the end of last year, it was EUR 139 million, and the end of September 2025 was EUR 142 million.
As we discussed in our previous meeting, we did report EUR 125.8 million at the end of June, but we disclosed that that performance, which was particularly positive, was mainly timing effect on net trade working capital. As we expected, we are now on the trend that we were, as I said, expecting at that time. This is the highlight. If we look at the numbers altogether, looking at this recap of margins, we see some differences, as we discussed. Just to add on the additional, to comment the additional information of this table, I would highlight that we are accounting a reduction in depreciation.
This I highlight to point that we are investing in different kind of production footprint, different kind of product development, and one of the key strategies on this point of view is less capital, less capital-intensive production, and we are seeing the effect of this, as you see, in the difference between the number of depreciation and amortization. This helps EBIT, which is at EUR 8.3 million, meaning 3.7%. Last year it was 3.8%, so basically in line. Financial charges have increased versus last year. Let me point out that we do have a one-off item here, because you might recall that in August, we closed a financial transaction and accounting, let's say, convention, accounting standards made us write an extra, let's say, one-off item, an item that is around nearly EUR 1 million. So basically, part of that difference is due to this.
This brings us, let me say, to before tax at 1.6% and net income of 1%, as I said before. The other items were already commented. We will go into the net trade working capital when we go into the dedicated slide or when we discuss cash flow. Going ahead, let's look at the bridge of our sales. As I said, the last quarter, especially obviously the two last months of the quarter, the last month of the quarter were not so positive, and they impacted in volumes for EUR 11.8 million. Here we have the breakdown at a consolidated level by divisions and by geography. I think that the discussion of detail by country makes more sense in the two divisional slides, so let me go forward. Here you see overall the quarter accounted exactly the amount in terms of volume.
So we do have here the quarter was particularly negative, and that explains our, let's say, disappointment versus what we were planning at the beginning when we last met. So we have here the data related to the quarter that was not yet commented. So we have 8.3% the Heating & Ventilation, 16% the Metering, and again, the geographies that we'll go into more detail. Here we are at the Heating & Ventilation. So let's say Forex effect overall was not material. So we are saying the Q3 was -8.3% and -3.2%. Italy is going well, finally. We had a few quarters where the Italian market, which is still weak, we were able anyway to perform well in Direct Heating applications and ventilation product family. So it's a +3.8% . The nine months goes to -5.7%, so we did improve the year-to-date performance.
Even in a weak environment, the performance was positive thanks to the innovation that we are bringing along in non-combustion markets. That is positive news. Europe, as I said, is still positive at the quarter and at the year -to -date, slightly less better, less over-performing versus H1, but still positive. We are going very strong in Turkey, both for local production and for international groups located there. This quarter, Central Europe was flat, but still positive in the nine month. The U.K., let me say, here we are not going well because of one specific issue, one customer, which has a slowdown in one product line. So it is a very much concentrated focus point that we are managing, so we are not actually surprised of that trend.
Looking at one of the markets that impacted our mix is the American market. As I said, the comparison is challenging, and also because last year we were doing +30% versus 2024 in the American market. This year we are down, between 9% and 7%, looking at the same rates. The environment is a bit difficult. Inflation is impacting the markets that are more sensible to inflation. That is the Direct Heating where we account the fireplaces. So there, that is, it is still in single-digit growth, but we were probably expecting more. As far as the other markets are concerned, Central Heating, I would say these are stable markets, not much related to context, and they are basically very stable.
We are going a bit lower, less than last year, because of some issues that our customers have had, not related to other products and other components that are slowing down our sales. So, this explains part of our performance in terms of also margin, because you all know that America is our key cornerstone of our growth strategy, and this quarter was not impacted on our P&L. As far as Asia, we are reporting the same story for some time now. That is, as you see, over 30% more or less in the quarter, in the nine months, nearly 30%. China is weak. Australia is penalized by regulatory changes. Let me say other countries that are reported, these Middle East countries are impacted by political and geopolitical issues.
It is an area that is not performing well, cannot perform well in this period. Going ahead on our Metering business, on the left side, as I said, decision makers on single customers and single markets impact heavily, and you see it in the residential. We are trying to compensate with other product families, and actually we do have portfolio, we do have orders in the commercial and industrial. They are going well. You might recall that our product line is very rich. We were the first to have the smart meters in the commercial and industrial part of the range, and that is being rewarded as it. Now, so we do have the portfolio. Let's say it is capacity, it is a production capacity which is limiting this, but it is performing well, +40%, 50%, sorry.
Overall, unfortunately, we are still in the range of -15% more or less in the Smart Gas Metering. I have been very much determined to report the international breakdown of the Smart Gas Metering, even when the business, the international business was very, let's say, marginal. Let me say now that we are accounting some foreign sales, 7% in Greece and 4% in U.K. So now it is not only symbolic, this number in the U.K., and we know that we have a big contract signed and that we are finally delivering because we have finally put in place all the certification, technical, and now we are producing for the U.K. So this will be a number that will certainly remain for the next. Let us go in the Water Metering. We are disappointed with that -2%, very much.
I think that since we acquired the company, this is the first quarter with a negative sign. I have to say that the difference is EUR 200,000, but it is a disappointment in any case. And this brings the year -to -date to 7%. We were used to see it in the double-digit range, but let me say that probably the end of the year, we will not be able to confirm this performance in the water metering business. We are facing a short order cycle in the market. Utilities are, how you say, issuing orders on ever shorter timing, and this puts pressure on the supply chain in this period. So managing, let me say, with some attention our stock in this business and taking into account lead time from components from the Far East and so on, probably will not permit us to make the performance, confirm the double-digit performance.
But fundamentals are good, and I would highlight that these numbers include a significant portion of a new product that you recall we launched in 2025, basically, which is a smart water meter, which strategically was the reason we bought that company in the first place. Okay, set this on the top line. I would like to go to the net trade working capital. Here, as I said, last time we presented our numbers, we highlighted that we had an exceptional good end of Q2, and that, of course, in this matter, it was a timing effect, and that happened. And so we are increasing, we did increase the working capital in both absolute terms. As you see, it is EUR 6 million year-on-year, and it is 3% higher than last year.
This is very difficult to optimize in a supply chain environment which is putting a lot of pressure on cost, delivery, and availability. So, I would say that looking forward, we will do our best on the working capital, but we have to take into account also these constraints regarding the procurement markets that, of course, you are aware of. So, looking at the nine months, on our nine-month cash flow, let me say that our current cash flow, of course, impacted by the reduction in EBITDA, the impact of working capital. Trade burned EUR 5 million, and the other working capital also EUR 5 million. These are basically in line. What here is important to highlight is that the CapEx was kind of accelerated versus the EUR 5 million that we reported in H1, the end of June. This is due, first of all, we do have a seasonality here.
The pipeline of product development is more concentrated at year-end. It is part of the seasonality of this item. We did have also the impact of the acquisition of Conthidra that basically happened the last day of the reporting period. It happened on September 30th, meaning that we did account the impact of this in terms of, let's say, CapEx. We do not have the impact yet coming from P&L, but that is what we have here in the CapEx side. We have cash flow of EUR 6.6 million positive, and then we have the lines under the operation. The net debt is positive. This is reduced by EUR 1.7 million in the nine-month period. Here we have the composition of the financial position. I think at this point, I can leave the floor to Federico. Thank you.
Thank you, Paul. Before we move to your questions, let me share a few thoughts on the group's performance and on our outlook. 2026 is proving to be a challenging year, with demand below expectations. In the third quarter in particular, we were impacted also by a slowdown in order intake and by delivery postponements requested by some few customers. This is all compounded by supply chain pressures, including, as we know, cost increases and shortages of critical components. We know how difficult these days is, in particular, to get supplies of electronics. In this context, we have focused our efforts on protecting profitability and group financial sustainability. The efficiency and cost reduction measures already implemented, we have discussed this also in previous calls.
All these measures contributed to an improvement in net income compared to last year, while we continued to generate cash and keep net debt under control, which has always been our priority. Supply constraints forced us to manage our supplier relationships in a more flexible way, including advance payments needed to ensure production continuity, again, electronics in particular, and this temporary weighed on working capital. Looking at the final part of the year, we expect a slight pickup in activity in the fourth quarter compared to both the third quarter this year and the fourth quarter last year, with the full-year EBITDA margin broadly in line with the 11.4% reported in the first nine months this year.
We also confirm our target of achieving a positive net result for the full year while maintaining disciplined management of our financial structure, which should bring our net financial position to a number between EUR 130 million and EUR 135 million. Beyond the current cyclical headwinds, we continue to work on growth, opportunities for growth, and at the same time, strengthening our competitive positioning. In Heating & Ventilation, despite a market that, as we said, remains weak, we are gaining market share in Europe in particular, thanks to contracts signed with major customers and thanks to the introduction of new products. In particular, let me mention the opportunity offered by data center cooling solutions, a market, we all know how attractive, how much, and how attractive the growth is, and the prospective growth is in this segment.
From this point of view, we have already communicated in July a partnership with Sonexos to develop low-noise cooling solutions for data center cooling and energy storage systems. We all know how critical noise is in these applications in data center. More recently, on top of that, in October, together with Panasonic, we presented a new advanced ventilation solution for commercial Heating & Ventilation, air conditioning, and refrigeration applications at a very important trade show in Germany called Chillventa. These are very concrete initiatives that aim at broadening our product portfolio and that enable us to position ourselves in segments with attractive market dynamics, including through partnerships with leading technology players, as we know. We are still in the process of developing the commercial opportunities, but we believe that these applications could become and will become an additional growth driver for SIT in the coming years.
In Metering, the technological evolution of our offering continues with new products and contracts that provide an important foundation for future growth, although with different dynamics across individual markets. We know how different Italy, for example, is from other European markets in particular. At this point in this call, we do not intend to provide quantitative targets for 2027, as this will be defined along the completion of the budget process. However, we do see concrete opportunities supported by innovation, new commercial programs, and potential gain for additional market share. In summary, I would like to again emphasize what is our priority, which is to combine the operational and financial rigid discipline with the current environment, let's say, in the current environment, with the ability to invest in the future, and in particular, in future growth opportunities.
We are working hard to find this balance between operational and financial discipline and important growth opportunities for the future, with determination, with pragmatism. We have a new organization that has proven to be very pragmatic and very determined. This is with the aim to strengthen SIT competitiveness and to create value over the medium and long term. Now we are here to, and happy to take your questions.
Thank you, Federico. We open the floor to the Q&A section. Please raise your hand to make the question. Giada Cabrino. Giada?
Hello. Good afternoon, everybody. Thank you for taking my questions. The first one is related to the market, the tough market environment in the Heating & Ventilation. If you could give us some more color, particularly in the U.S., for example, in Storage Water Heaters and Central Heating. I know it's related to real estate and the inflation dynamics, et cetera, but do you see this weakness as a temporary or persistent, for example, next year, based on your sentiment? The second, or even your orders. The second is related to your orders. You talk about postponements. When do you expect to recover the orders postponed, and how much, for example, in the first quarter of 2027? The third one is if you have taken any specific action to encourage customers to release their orders. Okay, that's it. Thank you.
Thank you, Giada. With regard to your first question on the U.S. market, you know that that is a very, very. Historically, it has been a very, very stable market. Despite that, we have seen in 2026 a reduction at a significantly higher rate compared to historical data. I think, I believe that this is, and back to your question, this is a temporary evolution, temporary trend of that market. We expect that market to recover, but not only that. We know that by end of 2028, there are important technological change, regulatory changes becoming mandatory, the so-called NAECA 4 requirements that will imply significant technological change in the application, so in the Storage Water Heaters. We're working hard on that. We have technological solutions for that, and therefore, we expect to increase our market share over time in that market.
Not only the market share, but also the share of wallet and therefore the value that SIT can provide to residential Storage Water Heaters. Again, we have been working and we continue to work to find a technological solution to that. With regard to your second question, postponement of deliveries, still difficult to say, to predict, but we are confident that these postponements will be recovered not by the end of this year, but probably in the first part of 2027. This is related mainly to a very selected number of customers, especially in the Smart Gas Metering business. I did not really get the third question. If you can just please reply that.
If you have taken any specific action to encourage customers to release their orders, I don't know, some help on payments or delays or, I don't know, your
That's a more general question, Giada, about not in particular to postponement of specific
Yes
customers, right?
Yes, general question, especially in the Heating & Ventilation, I think.
Well, we all know how much attention in this time of high and increasing interest rates, everybody is very, very There is a lot of attention to end of the year, to working capital in general, and end of year stock level. To answer your question, we are not seeing any particular advantage or any particular advancement in deliveries by our customers. We do not expect customers to give us any, let's say, anticipation, any order anticipation by the end of the year, of this year. There is a lot of attention, and if we do get orders, then probably deliveries of those products will not be required by the end of the year, and therefore we expect from this point of view, a fourth quarter, as I said before, is expected to be above, slightly above both third quarter this year and fourth quarter last year.
Let's say, based on very operational and very traditional assumptions without taking into consideration what you asked.
Thank you.
I don't know if there are additional questions. Please raise your hand. No, I don't see any.
Right.
Okay. Thank you very much indeed for participating to this call, and if you have any additional question, my assistant and myself are available to, of course, answer to any of that. Thank you very much indeed for being with us.
Thank you. Thank you all.
Bye-bye.
Bye-bye.