Good evening. We welcome you to the Gestamp nine months 2026 result presentation. During the presentation, all participants will be on a listen-only mode. There will be an opportunity to ask questions after the presentation. If you wish to ask a question during the Q and A session, you may do so by pressing the star followed by five on your telephone keypad. I will now hand the conference over to the Gestamp team. Please go ahead.
Hi, good evening, and thank you all for joining our nine months result presentation. This call will be led as usual by our Executive Chairman, Mr. Francisco Riberas, and myself, Group CFO. Together with us, Gonzalo de Borja, our new Financial Planning and Investor Relations Director. As usual, please let me refer you to the disclaimer on slide two of this presentation, and as the introduction has said, reminding you that at the end of the call, we will open up the floor for a Q and A session. Now, let me hand over the call to our Executive Chairman.
Good morning, and thanks all for attending our nine months results call. First of all, I say that our third quarter results and year-to-date remain solid despite a challenging scenario, with our revenues up to September reaching EUR 8.4 billion, which represents a flat organic growth and a slight outperformance versus the market in the period. In the first nine months of the year, our EBITDA has reached EUR 954 million, which means an 11.3% EBITDA margin, which is 27 basis points better year-on-year. And also with a good performance in terms of free cash flow, which has helped us to control our debt and to achieve a leverage of 1.4 x debt-to-EBITDA already in the third quarter. During the first nine months of the year, light vehicle production has reduced by 0.7% in Gestamp footprint, reaching 62.2 million units in the period.
Even if global manufacturing has been rather flat, there are mixed regional dynamics, with a severe drop in China of 5.5%, some slight decrease in Western Europe and North America, and a good performance in countries such as India or Brazil. Moving to slide six. Up to September, Gestamp revenues have outperformed the market by 0.8% in our footprint, with a clear outperformance in Europe, both in our West and East operations, and also in Mercosur, and an underperformance in North America, mainly in Mexico, and in Asia, mainly driven by the drop in China, and even if in the rest of Asia, we have outperformed the market by 16%.
Our nine months reported revenues have decreased by 0.6% in the period, reaching EUR 4.8 billion, with flat organic growth, supported by an increase of our scrap revenue, and partially offset by negative forex evolution linked to some currencies in India, Turkey, or in the U.S. dollar. Moving to slide eight. Even if there is some decrease on reported revenues, we have been able to increase our profitability in our auto business. In fact, our year-to-date auto revenues have decreased by 1.5% or EUR 119 million, but our year-to-date automotive EBITDA has increased by 1.1% or EUR 10 million, which means 30 basis points improvement of our EBITDA margin from 11.2% to 11.5% up to September.
We have been able to achieve this thanks to the correct right-sizing of our operations and working in adapting our capacities, and a continuous effort in different cost reduction programs, efficiency, and productivity measures, some constructive customer negotiations, and also delivering, of course, in our Phoenix turnaround in North America. Following September results, we are on track for the execution of the full-year guidance of 11.9% for our auto business. In terms of Phoenix, even if production volumes in North America are far away from the expected volumes when we announced the Phoenix Plan, 1.5 million units less, Gestamp is fully committed to reach our target of 10% EBITDA margin for this year. Up to September, we have included already 80% of the extraordinary impact expected for 2026.
In the third quarter 2026, we have already achieved a 10.5% EBITDA margin, an increase from the 8.8% margin in Q2. With the traditional seasonal strength of the fourth quarter, we are on track to reach 10% full-year EBITDA margin this year. For Gestamp, the scrap prices have increased substantially compared to 2025 level everywhere in the world. Due to the improving market conditions, Gestamp has been able to increase revenues up to September by 17%, reaching EUR 416 million. In terms of profitability, EBIT margin has increased from 5.8% to 6.2% in the year, reaching already EUR 28.5 million. Positive results year-to-date, supporting our full-year guidance for Gestamp of more than 7.4% EBITDA margin in the year. Now I hand it over to Ana.
Well, thank you, Francisco. On slide number 12, we show the reported nine-month figures on the left and the figures adjusted by Phoenix on the right. As our Executive Chairman explained in the first part of this presentation, our nine-month performance continues to be negatively impacted by adverse forex movements. We have achieved revenues of EUR 8,432,000,000 , and the combination of flattish organic growth in the auto business, together with the positive results from the efficiency and flexibility measures implemented since the beginning of the year, plus the higher performance in our scrap business, have resulted in an EBITDA of EUR 936 million, or EUR 954 million when adjusted by Phoenix cost. This entitles an EBITDA margin of 11.3%, a 30 basis point improvement compared to the same period of last year. This provides a strong visibility for the achievement of the full year 2026 guidance.
EBIT adjusted by Phoenix has reached EUR 400 million with an EBIT margin of 4.7% or 4.9% when we exclude the EUR 15 million impairment costs accounted in Q1 this year. This implies a 10 basis points improvement compared to last year, reflecting measures to become a less capital-intensive business model. Net income during the year from January to September has reached EUR 141 million. Lastly, despite the typical business seasonality in Q3, free cash flow generation has been positive at EUR 17 million when adjusted by Phoenix cost. As a result, net debt remains below EUR 2 billion, standing slightly above EUR 1 billion and EUR 900 million. Overall, a very strong performance during the first nine-month period.
Turning to slide number 15, I will not stop much in this slide as this is just a quick remember of the two extraordinary impacts at accounting level we've been having reported since the beginning of the year. The remaining EUR 15 million of write-downs that I just mentioned related to the EV realignment strategy started in Q4 2025, and the EUR 20 million coming from IFRS 9 accounting related to the extension of the EUR 1.7 billion syndicated facility agreed in January. This has a net impact of EUR 4 million at net profit level, and excluding it is a net profit of EUR 137 million, implying a more than a 30% increase year on year, and similar to the net profit reported in 2024, which despite the falling of the auto market, as we just explained at the beginning of this presentation.
Going into slide 14 that reflects our performance on a regional basis, it is clear that a balanced geographic revenue stream, a strong positioning, and a clear strategy by regions are the key levers to support Gestamp business performance. Like the trend seen during half one, the key contributors to the revenue performance has been for the auto business, Eastern Europe and Mercosur, and also Gescrap. EBITDA has been also supported by North America as well, reflecting the efforts from the Phoenix Plan. In Western Europe, despite the auto market continues to drop and there is a slight negative impact from the evolution of the British pound, revenue have remained flat year on year, but positive on a quarterly basis during Q3 and basically since Q2 this year.
EBITDA has also remained flat in the same period, with profitability standing broadly flat at 9.9%, thanks to the cost cutting, rightsizing, and efficiency measures implemented in this region. Eastern Europe, at constant currencies, remains a solid region for Gestamp, with a growth above 8%, and as our Chairman has commented in previous slides, while preserving best-in-class profitability with an EBITDA margin above 15%, which is the best in class in the group. Not much to add in North America to what has been previously explained by our Chairman a few slides ago. As you know, the delivery results on our Phoenix Plan is one of the key levers to achieve our full year guidance. The 10% EBITDA margin target has already been achieved this Q3 and will be reached by year-end, meeting with the growth commitment made back in 2024.
As for Mercosur, revenues have grown by 8%, with Brazil growing, but Argentina dropping a bit on local currency. Thanks to the restructuring done in the region last year and the improved operating leverage in Brazil, which last year was also affected by the floodings in the first half, profitability is back to a more normalized level in the region of 12.8%. Lastly, in the business in Asia, revenue performance was affected by a negative forex impact in the region and a weak China market. Markets like India are conversely growing above double digits, delivering on Gestamp's strategy to be a leading supplier in the market thanks to new products and technological edge. New plants in India are supporting a change in mix, which is helping the performance of the overall region.
Despite the lack of revenue growth in this area, and similar to what we are doing in other regions, we remain focused on being cost competitive. To this end, we have implemented efficiency and rightsizing measures to preserve profitability in Asia, which should be above those levels of 14%, which are second best in class in the group, as we have said in previous calls. Based on nine months performance, we have high visibility in the auto business to achieve the target of above 11.5% EBITDA margin by 11.9% of EBITDA margin by the end of the year. It is clear that by the end of this year, we will have all of our divisions with an EBITDA margin above 10%, which improves significantly the EBITDA balance of the group.
Lastly, on Gescrap, as we have previously seen, the integration of Industrias López Soriano plus sustained price increases across the year have led to double-digit growth at revenue and EBITDA. Overall, nine months have been a very strong result, demonstrating the company's ability to remain cost-competitive and preserve a strong financial position despite a challenging market environment. Moving on to slide number 15, let's review the free cash flow generation during the first nine months. It is worth recalling that due to Gestamp business seasonality, Q1 and Q3 are generally negative from a cash flow generation perspective. Excluding Phoenix costs of almost EUR 32 million, more or less 50% in CapEx and 50% OpEx, free cash flow stood at EUR 17 million. Given the limited top-line growth we are seeing, we are working on levers to improve cash flow conversion and hence improve our balance sheet.
This includes working capital management, CapEx discipline, and a control of all cash outflows. As a result of the above, the group cash flow conversion stood at 34% during the nine-month period, and this provides us with very good visibility to achieve the target by year-end. This free cash flow has led, as shown in slide number 16, to a net debt standing at EUR 1, 908,000,000 , the lowest net debt for a nine-month period. This reduction in terms of net debt and the slight EBITDA growth has driven us to report a leverage of 1.4x, a healthy balance sheet which gives us flexibility and optionality within a tough market context. This is all on my side. I will hand over the call to our Chairman.
Thanks, Ana. Going to slide 18, even if the latest forecast shows some improvement, full-year light vehicle manufacturing in 2026 is expected to reach 91.6 million units, representing 1.5 million vehicles less than full year 2025. This year, the main impact is coming from China, with an expected 6.4% decrease on production despite the increase of exports. We see North America and Western Europe are also expected to slightly decrease manufacturing volumes, while in Mercosur, Rest of Asia, and East Europe, the production will grow substantially. For this year, in a kind of challenging market scenario, Gestamp is doing well. This challenging scenario means limited market growth, as we have seen. We have seen already, starting to see inflationary pressures, still remaining regulatory uncertainties, and a lot of geopolitical uncertainties.
Gestamp in this scenario is improving our positioning thanks to an improvement in our profitability due to different efficiency programs, due to delivering on the Phoenix Plan, and also thanks to the good evolution of our Gescrap business. Apart of that, we keep on strengthening our balance sheet with a very important focus in positive cash flow generation and reaching a low leverage ratio, providing us financial flexibility and optionality, and also with a good and diversified portfolio of assets, which is offering us, give us the possibility to have a flexible strategy across low and high-growth regions, and with new plants driving a more diversified footprint, like the ones we have opened this year in India and in Brazil.
We are well-positioned to navigate uncertainty and also to capture potential opportunities that could come from some regulatory developments, which could create opportunities for us, also to take benefit out of a structural industry trend, and also with a financial flexibility which could help us to take some kind of strategic opportunities. In terms of guidance, with solid results up to September, we confirm our guidance for full year 2026, meaning an EBITDA margin of more than 11.7%, with increasing profitability in our auto business and also improving the profitability in Gescrap, and with a group operating cash flow conversion in the range of 35%, preserving our net financial debt and also our financial health.
Just to conclude, we have been able to deliver a good set of results in a challenging environment, good set of results for the nine months of the year, which allow us to confirm the guidance for full year 2026, delivering as promised three years ago in the Phoenix Plan, and also focusing in strengthening more our balance sheet to have a strong balance sheet and a flexible balance sheet. We are well-positioned now to navigate all market scenarios and to capture all potential opportunities. With this now, we are open to your questions.
Ladies and gentlemen, we will now begin the Q and A session. If you would like to ask a question, please press star five on your telephone keypad. If you change your mind, please press star five again. Please ensure that your device is unmuted locally before proceeding with your question. Our first question comes from Enrique Yáguez from Bestinver Securities. Your line is now open. Please go ahead.
Good afternoon. I have three questions. The first one is on the EU regulation, and the question is, what is your view on how could affect Gestamp the potential delays on the Made in Europe EV battery rules? Also on the recent imports agreement between China and the EU. The second one is regarding your European industrial footprint. Other peers have recently announced some capacity closures in Europe. The question is, are you still happy with your industrial footprint in this region, or do you foresee the need to further accelerate the process of moving some capacity to other countries? Finally, the third question is about the customer negotiations. This year, the inflationary pressures have intensified. Should we expect a higher-than-usual impact from this in Q4? Thank you very much.
Okay, thank you for your questions. In terms of regulation, especially in Europe, it is still difficult to say what is going to happen. In fact, we are right now expecting the Europe regulation to really come across. As you know, there are different topics all around. There is a kind of discussion around CO2 limitations. In this sense, there have been some changes already, so that kind of changes is giving some flexibility to most of the OEMs. Regarding the imports and the Industrial Accelerator Act, everything is moving in the direction to have some kind of restrictions in order to limit the kind of vehicles which are imported into Europe, and also to be able to increase the rate of localization of the different components of the vehicle which are manufactured in Europe.
Altogether, both things are positive for Gestamp because we do have still a very extensive footprint in Europe, so anything which comes in the direction of increasing the production in Europe is going to be positive for us. In any case, and coming back to your second question, we have already done our homework. Little by little, we have been doing and adapting our capacities and adapting our flexibility in different markets. Of course, now that is why we are able to offer a very good profitability position in our European operations. Of course, we remain flexible and we remain ready to be able to take all kind of different actions, but I need to tell you that we have already done a very important part of our homework throughout in the last two, three years.
Regarding your third questions around customer negotiations, there is nothing going to be any substantial change in the fourth quarter. Of course, we have already been having quite constructive customer negotiations in the last two years. For next year, going to be cycle with negotiations with our customers. We still don't know what is going to be the impact of inflation. We have some rules in our negotiation for many years around the prices of steel and scrap, so these kind of things will remain in place. We don't think it's going to be any kind of big change in our traditional, normal, and constructive negotiation with our customers.
Okay. Thank you very much.
Ladies and gentlemen, please be reminded that if you'd like to ask a question, you should press star five on your telephone keypad. Our next question comes from Anthony Dick from Oddo BHF. Your line is now open. Please go ahead.
Yes, good evening. Thanks for taking the questions. There's two on my side. The first one is on a more kind of strategic aspect. During the Stellantis call, the CEO mentioned a couple of times that they were going to insource hot stamping at Stellantis. I was just wondering if, well, firstly, this actually has an impact on your business, do you think, in North America? More broadly, could you update us on the insourcing versus outsourcing trend, which has been more of a driver, I guess, over the last couple of years? My second question is a more financial one. It's on the below the EBIT items, which have fluctuated a bit this year quarter on quarter. I was just wondering if you could provide some guidance on tax rates, financial expenses, and minorities for the full year. Thank you.
First question, Ana will take the second one. Regarding the comment that you mentioned from Stellantis, it is true that it was some reference to hot stamping in North America. We do have some work with Stellantis and other customers of hot stamping in North America, but we have not seen any direct request from Stellantis about insourcing of our current work with them. In fact, if we go to this kind of discussion always around insourcing and outsourcing, I think today, all the OEMs everywhere in the world, I think they have a challenge in order to be able to preserve their financing. I think as far as there are suppliers with capacities in place and with competitive prices, it is difficult right now for investing capacities in-house. I think we are always facing this kind of discussions, whether in-house or outsourcing.
The reality is that the trend of outsourcing is clearly in place. In case of our hot stamping, our growth in hot stamping everywhere in the world, we are really growing not only in North America, but in rest of the countries, because it is a technology that is growing, because it is very, very supportive in order to be able to increase lightweighting with a quite affordable cost. Maybe Ana for the second question.
Yeah, for the third question related to what is the EBIT line. On financial expenses, as you know, the impact from those EUR 20 million accounted related to IFRS 9 was in first quarter, second quarter, and third quarter. I already show in a rather stable financial expense, and probably you should take those reference for the fourth quarter. Tax rate, as you know, our typical tax rate is normally in the range of 23%-25%. It has already been reported around 23% this year and should be in that range for the end of the year. Regarding minorities, as you know, the biggest impact we have this year was the case o f the Santander Real Estate as the deal we did last year.
That impact was already accounted in the last quarter last year, so pretty much you already have around EUR 75 million for the full year. Sorry, for the first nine months of the year, and probably assuming another EUR 25 million for the last part of the year should be a reasonable assumption. That should bring you to the net profit line or your own estimate on the net profit line for the year end, okay?
That is very clear. Thank you to you both.
There are no further questions on the conference call. I will now hand the line back to the Gestamp team. Please go ahead.
Thank you. Sorry.
Actually, we do have new questions on the conference call. Would you like me to put it through?
Yes, please.
Our next question comes from Alexandre Raverdy from Kepler Cheuvreux. Please go ahead.
Yes, good evening. Thanks for squeezing me in. I have two quick questions, please. The first one, could you please come back to the large top line decline we saw in NAFTA? I guess you were hit by production stoppages, but more color would be appreciated there. Secondly, could you please provide a quick Q4 update regarding the current trading? We know that S&P is expecting a larger decline. Any update on the current trading in terms of production stoppages that you might have faced in October would be helpful as well. Thank you.
Regarding your first question around North America, we have had some underperformance, but this is mainly related to some comparable basis from Q3 last year. Overall, the region remains negatively impacted by the trading situation between Mexico and the U.S. We have seen some slowdown in terms of market demand in that region. As you know also, there was also some optionality coming from growth in different EV projects, which obviously are not coming in. Most of them were canceled, so this is a bit of a regulatory uncertainty in North America. It's a little bit of what we are facing for this specific third quarter with that specific comparison basis versus last year in Q3. On your second question related to the trading environment so far, we have seen no changes in Q4 to the trends over the first nine months of the year.
Actually, we have been pretty much in line in most of the trends with the market that we have seen over the first nine months. Western Europe, we are obviously having some pickup in certain markets more related to the mix that Gestamp has rather than on the market side, but this is something that we have already anticipated you. We have already also the new plants in Brazil and India, which should be also contributing during the last part of the year. And we are not forecasting to see any significant changes in the region of Asia, particularly in China. So overall, we are pretty much in line with to what we have on the first part of the year, and pretty much in line to what was included in our guidance on budget for the year.
Thank you, Ana.
We are now done with the questions on the conference call. I will now hand the line back to the Gestamp team. Please go ahead.
Well, thank you for joining us today. As you know, the IR team remains at your disposal for any further questions, and we hope to see you soon after Christmas.