Ladies and gentlemen, welcome to Mersen 2026 Q3 sales. The webcast will be structured in two parts. First, a presentation by the Mersen management team, represented by Salvador Lamas, Group CEO, and Thomas Baumgartner, Group CFO. Afterwards, there will be a Q&A session, during which you may ask questions in two ways: by submitting a written question in the box below the player, or by clicking the green hand button on the player to ask your questions orally.
I will now hand over to Salvador Lamas. Please go ahead.
Thank you. Good afternoon, everyone, and thank you for joining us. I am pleased today to share that quarterly sales came in at a record level of EUR 329 million, an organic growth of 14.2%. What is encouraging is that this performance reflects positive momentum across both of our segments and all three of our main regions. Electrical Power continued to accelerate, delivering organic growth of 22.8%. We are seeing very strong demand in several of our key markets, particularly data centers and power electronics, where our solutions play an important role in supporting the growing need for electrification and electrical infrastructure. At the same time, Advanced Materials returned to organic growth of 6.4%. This is an encouraging development, supported notably by demand in the silicon semiconductors and aeronautics as well.
This combination is important. It is a clear demonstration of the strength and diversity of our growth drivers and confirms the relevance of our positioning at the heart of electrification and the major energy and industrial transitions. It is worth noting that our strong performance was partly driven by price increases, which contributed approximately 4 percentage points to organic growth in the third quarter. Overall, this strong performance gives us the confidence to raise our organic sales growth guidance, and I will come back to this later in the presentation.
First, let me hand over to Thomas, who will take you through the third quarter performance in more detail.
Thank you, Salvador. Good afternoon, everyone. As Salvador mentioned, the 14.2% organic growth in sales was driven by all geographies. First, by strong growth in North America with 17.2%. We continue to see in the region a very dynamic activity for data centers. This is not the only growing market as aeronautics, wind, or rail are also on strong momentum. The second region, Asia Pacific, is also very dynamic with organic growth of 18.6%. This growth is driven by all countries in the region. China, with growth in wind and semicon offsetting the low level in solar. India with wind, rail, and data centers, and Korea, driven by the silicon semiconductor market. Eventually, Europe also delivered a strong performance with organic growth of 9.5%, marking a clear improvement compared with the first half of the year.
Growth was supported by aeronautics and several electrical infrastructure project. If we look now by segment, starting with Electrical Power. Electrical Power segment had posted a very strong growth, almost 23%. This was driven by strong growth for protection of data centers and by several projects in power electronics, where we supply different passive components for OEMs. EV and wind were also solid, and as Salvador said, the good performance includes also price increases to compensate largely for the inflation of components and raw material. The Advanced Materials segment also benefited from growth in several markets, leading to an organic growth of 6.4%. First of all, silicon semiconductors and aeronautics delivered very strong growth. As far as solar is concerned, we have not seen yet any sign of recovery.
Finally, SiC semiconductor sales increased, but have remained as expected at a low level. On the other hand, the activity in chemicals suffered from the difficult situation of this market, as we mentioned it already in the first half. I would also like to briefly comment on the few highlights on the third quarter. First, we continue to meet the strong demand for fuses to protect data center installation in different region, in the U.S., but also in Asia. As far as silicon semiconductor is concerned, we have a solid market position, especially on the ion implantation phase. The growth is mainly fueled by AI and data center demand.
In September, a further highlight, we have been selected by GE Vernova to contribute to a major project to strengthen the Saudi Arabian power grid as it integrates a growing share of renewable energy. Eventually, during this quarter, we have seen a strong growth in aerospace, both in the military and the civil segments. It's important to remind that both segments, material and electrical, are contributing to this market. So this achievement illustrates very clearly our positioning on key markets with long-term growth trends, particularly electrification, data centers, energy transition, and sustainable mobility.
I now hand over to Salvador for more details on the nine-month sales figures and the guidance for the full year.
Thank you, Thomas. Looking to the first nine months of the year, the group sales reached EUR 941 million, including a negative exchange rate impact of EUR 18 million. We grew organically by 7.3%, compared with 3.9% in the first half of the year. During the period, and especially during the third quarter, the price increase impact was significantly higher than the first half of the year, as expected. It is important to mention that we continue to see a high level of inflation. Price increases contribute approximately 3% to the total growth for the first nine months. Let's talk now on our full-year guidance. First, for the fourth quarter, Mersen anticipates the following market trends. We continue to see a strong momentums in data centers as well as silicon semiconductor market.
The deliveries of silicon carbide semiconductor, as explained by Thomas, will remain at low level. We see further positive momentum in the wind power market, while the solar market will remain low. We see as well ongoing favorable trends in transportation, powered by particularly rail and aeronautics, but also as well continuing the ramp-up of deliveries with electrical cars, battery components for ACC. We see a low level of deliveries to the chemical market I mentioned with Thomas, as we expected and communicated during the year. Last, the group should be in position to continue raising these prices to largely offset inflationary pressures on components and raw material. Overall, for the full year, we have upgraded for the second time this year and narrowed our guidance for organic sales growth.
We now expect organic growth between 6.5% and 7.5%. This is above the previous guidance from July, which was between 4% and 6%, and of course, above our original guidance at beginning of the year, which was between 2% and 6%. That means that we are forecasting a good fourth quarter after an exceptional third quarter. As far as margins are concerned, we confirm our previous guidance, which was released and upgraded at the end of July. EBITDA margin before non-recurring items between 16% and 16.5%, expected around the midpoint of the range.
Operating margin before non-recurring items will be between 9% and 9.5%, expected on the upper range of the guidance. Industrial CapEx between EUR 80 million and EUR 90 million remain unchanged compared to the previous guidance in July. To conclude, this raised guidance is fully in line with our midterm plan for 2029.
With this, let's be open to question. Let's move to questions.
Ladies and gentlemen, if you wish to ask a question, you may do so in one of the two ways: by submitting a written question in the box below the player, or by clicking the green hand button on the player to ask your question orally. Once we activate your line, you will see a message to unmute your microphone. Please make sure to do so. The first question comes from the line of Giovanni Selvetti from Berenberg. Your line is open.
Hello, can you hear me?
Yes. Really well.
Okay. Hi, and thank you for taking my question and congratulations about the result. The question is more about if you can kind of give a sense of outcome if you are telling us that pricing is quite good and you can rebate the inflationary environment that you see. The higher volumes and the higher growth is not translating to higher margins. In the press release you mentioned a less favorable product mix. If you can elaborate a bit more about that. Thank you.
I can start with pricing. In fact, the pricing, when we launch pricing, we are where we thought we would be. So good pricing power. However, we have a little bit more inflation than what we expected in July. We are going to adapt our pricing policy. But, of course, it is not immediate, I would say.
Yes. To explain with the mix impact, with the increased need of electrification and acceleration of these main markets we are present, we see more and more project business in front of us with higher volumes being requested by OEMs. Which is different compared to the distribution traditional business. But it is positive for the future as well because this OEM market will generate, as part of our business model, the spare part business that goes with in the following years.
Okay. Thank you very much.
You are welcome.
The next question comes from the line of Thomas Renaud from Kepler Cheuvreux. Your line is open.
Yes. Good afternoon. Can you hear me?
Yes.
One question on my side on the updated guidance. It implies in Q4, let's say 4%-8% organic, so clear slowdown compared to Q3. What explains the slowdown? Is it mainly cautiousness on your side? Because the wording of your Q4 outlook is very positive, in my view. In Electrical Power, your main competitor, Littelfuse, expect further acceleration in Q4 after 22% in Q3. So, are you seeing the different trends?
No, in fact, the Q3 was a combination of many markets going very well first, and there is a reference effect if you look at the Q3 last year. The difference between the Q3 and the Q4. Last year, we posted -6% in Q3 and almost flat in Q4. It's a lot about reference effect, I would say. That explain what you call the deceleration, but it's not a deceleration of business.
No, but it's a clear deceleration compared to[crosstalk].
Yes, but the reference effect is not the same. Again, the Q4 was very low last year, and if you compare with H1, there is a deceleration compared to H1 with the implied figure you give for the Q4.
Okay.
There's no deceleration.
Just on my comment on Littelfuse, which expects further acceleration.
Again, we have not the same exact portfolio than Littelfuse, so you cannot compare directly and get the same conclusions. What I can say is that we do not see a deceleration in our markets where we deliver, specifically data centers, I think is the question behind. So I confirm today the trend is there, and we continue to grow in this market as our customers.
Okay. Thank you.
You are welcome.
As a reminder, if you wish to ask a question, you may do so in one of the two ways: by submitting a written question in the box below the player, or by clicking the green hand button on the player to ask your question orally. The next question comes from the line of Julien Onillon from Marex. Your line is open.
Yes. Do you hear me?
Yes.
Thank you. So, three small questions. We have seen the strong numbers overall, but just like come back on very specific markets where you have some weaker revenue or results. Let's say first on silicon carbide, you mentioned it is quite stable, so no strong recovery. From what you are today, do you see that, it will be not in Q4, but do you expect early 2027, some improvement in this market? Be the same question about solar. Are you seeing solar to eventually to start to recover, or you see the recovery of potential in solar to come later on? So what are the view on those two markets?
Second question will come on traditional [audio distortion] SiC. Semiconductors, more traditional. Here you have a strong growth. What type of growth do you have? Is it for the full year, you expect something like 10% growth, 20% growth? Just to have the idea of magnitude, in the semiconductor growth you could see over the year. Thank you very much.
You mentioned three questions.
Yes. Well, there is two and three.
Yeah. Two and three.
Silicon carbide and solar is two questions, and the third one i s traditional semicons.
It's for me.
Okay. You start.
I can start with the first one regarding the markets are not so strong today. Yes, silicon carbide market. I confirm today as well. We don't see a significant recovery before end of 2027. It was the case in July. I confirm this is still the case today. Regarding solar, we do not see a recovery in China on this market. As I mentioned, the situation in China with this overcapacity and overstock is still there.
Nevertheless, with solar, in a medium-term situation, different countries, some countries are looking to produce their own solar resources, such as the case of India and United States. And with these customers, we are already working on the pre-phase or pre-project on this project. We expect midterm recovery, not in 2027.
Okay, as far as silicon are concerned, we are closer to 30% growth.
Oh, 30%.
Since the beginning of the year.
When we have had in mind around EUR 55 million of revenue last year. 30% is quite significant, I guess.
Yeah.
Okay. Very good. Thank you.
There are no further oral questions at this time, so I will now return the conference to the speakers for the written questions.
Yes. Let's start with a question on data center. A question from Jérémy Sallée. Could you give us an indication of the revenue contribution from data center and the growth rate of the business? Could you also provide the same figure for ACC?
Yes, I will take that one. From data centers, we expect to meet above EUR 40 million by the end of the year, which represents 2x compared to the previous year. This is confirmed. Regarding ACC, we have not communicated the figures particularly. What I can say is that we also see the ramp-up of the output of ACC that you can find as well in other media. What I can tell is that Q3 was the highest ever number we have delivered to ACC. We continue to see this ramp-up in the future in some forecast for ACC that is able to share with us for starting next year.
Okay, one question for the fourth quarter. Could you elaborate on what trend you expect by division? Should we think about new growth in AM?
Sorry, but we don't give guidance by segment. You will have to wait.
One question related to Wolfspeed. Wolfspeed recently received significant funding from U.S. government. The question is whether Mersen will become a preferred beneficiary of any turnaround at Wolfspeed. It will be shorter than the question.
Yes, but Chapter 11, because it referred to that, it did not change anything for Mersen. In fact, we continued business. I remind you that we renegotiated contract, and it did not change anything regarding our relationship with Wolfspeed.
One question on price increase. 4% was the price increase in Q3, and 3% for the nine months. Do you think you can keep this trend and keep this level of price increase for the year?
No. For the year, I would not be very impressed. In fact, the price are not going to increase again a lot by the end of the year. I would not give a percentage compared to last year, because last year we increased the price also. It is a difference. But globally, I can say that we have a good pricing, I would say.
Okay. Then a question on visibility. Can we say that with the current trend, you have more visibility than in the past? What is your visibility in terms of months versus the past?
If you take the figures in terms of orders, well, more or less, it's five months of sales. The visibility doesn't come really from our order book. It's more a question of visibility per market where we have some good assumptions and some good talks with our clients. Typically, on data center, yes, we know that it's going to grow in 2027. Not necessarily through our order, which is order book, five months of sales, more or less.
Then we go on space. Could you precise and quantify your activity for space? Do you see significant growth in this market with constellation of satellites?
So yeah. We are present in this space market with different solutions. There's potential in this market, and as we speak, we talk to different customers for different projects. I cannot say more this time, so more will come when some concrete trends, some projects we'll be able to communicate.
Now we go back to pricing impact. Could you break down the Q3 pricing impact between Advanced Materials and Electrical Power? Should we expect a stronger pricing contribution in Q4? You already answered to the last part of the question. Maybe one comment on the first part.
I won't quantify, but what I can say that it's much more on Electrical Power. But inflation is also much more on Electrical Power because it uses more silver and copper than in Advanced Materials. That's it.
I think now we have one more question on the webcast.
Yes. The next question on the webcast comes from Thomas Renaud from Kepler Cheuvreux. Your line is open.
Yes. Thank you. Just a quick follow-up on data center. You just confirmed sales of over EUR 40 million this year, but
More. More than EUR 40 million .
Yeah, more than EUR 40 million . So had you already reached that level by the end of September, or were you close to that level of EUR 40 million by the end of September?
No, but we will give you the final figure in January. It will be above.
Could be above. At the end of September?
We will give you the figures at the end of the month, yeah.
Okay. Thank you.
Maybe one more question. It is related, I guess, on SiC silicon. The question is, "We are quite surprised by your comment during the earning calls regarding a recovery only in late 2027, given that your listed client capacity utilization rate had bounced back above 80%, faster than expected. Could you explain why your outlook on the recovery timeline remains unchanged?
Okay. It is simple. The capacity we have for these type of products, what we deliver to customers in the semcon industry, are not specifically dedicated to SiC. They go through also silicon semiconductors, for example, other applications such as aeronautics. The capacity is independent of the market in this case.
I would say that when I see the client capacity utilization rate, we have a lot of clients, so I do not know to what client you are referring to, but what I can say as well is compared to our competitors, we have invested a lot. That is now our strength, meaning that we are able to increase the sales far higher than them because we have capacities, in fact.
We have no further question on the chat. We have more time if you have more questions.
As a reminder, if you wish to ask a question, sorry, you may do so in one of the two ways: by submitting a written question in the box below the player or by clicking the green hand button on the player to ask your question orally.
No question?
We have no more question.
One more question, sorry, just now on the chat. Do you have any news regarding M&A?
As I mentioned, and I will repeat myself, unfortunately, we continue to work on our pipeline acquisitions. When the time will come, we will let you know more. But definitely, bolt-on acquisition is what we are looking for, and we are working on with a good pipeline of our projects.
If there is no question, thank you very much, and we look forward to updating you on our progress on January 27 for the full year sales figures. Have a nice evening. Thank you very much.
Thank you very much.
Thank you.