Morning, everybody, and welcome to this Q3 2026 revenue session that we'll do together with Stéphanie Laval, our VP Strategic Planning and Investor Relations. Before jumping into the figures that I think you have been able to go through in our CP this morning, I'd like to come back on what is the current automotive market environment, which obviously has a strong impact on our Q3 top-line result and the overall market condition that we are today facing. If we go to this page two, quick reminder of where the market stands. The global automotive production, as you know, has declined by 1.9% in this third quarter to approximately 22 million vehicles.
With contrasted trends among the different region, but all in all, I would say some decrease overall through the market globally. In Europe, the automotive production declined by 0.2%, with a difference in between Western and Eastern Europe. Western Europe, where some leading manufacturer are still adjusting some of their production in the current production plan and ongoing weeks. In North America, production decreased by 5%, with a clear difference in between the U.S. and Mexico. All in all, the region continued to be affected by a softer demand. Still some inventories that are still high in the U.S., and as you know, still this uncertainty around the tariff situation and the impact on the medium to long-term in the region.
Asia, but China in particular, remains pretty challenging. In China, the automotive production declined by 5.6%. That's when it comes to production. The biggest impact was the domestic vehicle sales that were down by -24%, and which obviously highlights the quite critical and tense market condition locally and the pressure it has on the market. The rest of Asia remains the most supportive region when it comes to production, with an increase by 5.3%, thanks to India notably, but I would say all of Southeast Asia that continues to perform quite well. At the same time, that's about production trends, but at the same time, our sector continues to face the impact of inflation on price of raw materials and components.
Also, again, we do see a further impact in terms of supply chain volatility and potential sourcing hiccups that could happen in the weeks to come. The market remains demanding, with pretty low visibility and again, strong differences from one region to another. That's when it comes to the market. If we see what is the performance of OPmobility on this Q3 2026 revenues, we have a good momentum when it comes to sales. We did 2.8%+ growth when it comes to consolidated sales on a like-for-like basis. If you consider the consolidated sales, it means that we did 4.7% better than the market, and 1.6% when it comes to economic sales. The gap in between is our mainly our joint venture in Asia. I'll come back to that.
Importantly, all of the three segments of OPmobility contributed positively to the revenue growth. Exterior & Lighting, Modules and Powertrain, in different magnitude, but all with positive impact. When it comes to region and localization of growth was mainly driven by the U.S., by Eastern Europe, South Korea and India, which could enable us to offset those market condition in China that I described just earlier. The quarter was also marked, you know it, by two other important developments, strategic ones. The first one, which is the signature of the agreement to acquire 100% of the Hyundai Mobis lighting activity. I will come back to this major milestone, which will be detrimental for us in terms of forecasted growth of our lighting business, but also executing this diversification strategy.
Secondly, just back from Morocco last night, where we inaugurated our fourth plant in the country. It was an extension for the exterior activity, supporting one major European OEM that you know is well settled in this area of Morocco, close to Kenitra. Overall, this quarter, solid growth, organic growth, and major step again in executing this long-term strategy that we believe is key for the years to come in this challenging market. If we take a closer look to what happened in the different region of the world, as you know, if you look at the big three blocks, which are North America, Europe, and China, the automotive production was down, but again, with quite different trends within each of those region.
If we look at Europe, which today represent half of our sales in the quarter, some good performance supported by more launches in Q3 2026, if you compare to Q3 of 2025. So a revenue increase like-for-like by 8.6%. Pretty solid performance when you compare that to the automotive production. It was mainly driven by our activity in Eastern Europe, and notably on the module assembly side and exterior system side. As I said, in Western Europe, however, we still do see a weaker demand with some additional shutdowns that have been communicated over the last weeks to the market. So where we continue to adapt our footprint and our operation to what is happening in terms of market production.
If we now look at North America, which is almost 30% of our revenues, all in all, you can see that our sales decreased by almost 6%. But again, here with a very strong contrast, because when you look closer, our activity in the U.S. grew by almost 5% in a market that was down 3.8%. Again, still a strong performance, which is good, and it is fully, I would say, part of our roadmap to double the sales in this region in the five years to come. This performance was supported by higher volumes on the module side for this major U.S. OEM localized close to Austin.
The lighting also continued to benefit from the several launch that we anticipated at the beginning of the year according to plan, which again, supports the overall recovery roadmap of our lighting activity. In Mexico, production was down by 6.3% in Q3. Notably for us, still, again, a lot of uncertainty and when it comes to what will be the lasting consequences of the tariff situation. But very short-term, we have had the end of production of some European OEM models that has impacted our module and exterior activities in the country.
In Asia, more launch also globally in this region when it comes to Q3 2026 versus 2025. China, as I said, remains an area of quite some strong pressure. You can see that our revenue are decreasing by 33.2%, like-for-like. Here it is important to look a bit in more details at what is happening in this country. The automotive production is down by 5.6% and the domestic sales are down by a very sharp 24%. When you look at YFPO, which is our biggest activity in this country, broadly speaking, we can say that our sales were in line with the automotive production, so - 5.6%. We have had the impact of some development revenues that were affected.
As you know, it really depends on the production planning and the timing of the launch of the manufacturer. When it comes to sales, we behave like the market, and not in this dimension in terms of the 33% drop that is really specific in Q3. When it comes to the fuel system activity, we continue to operate in a market where the sales of internal combustion, as you know, are declining. That is not a surprise, but we continue our consolidation strategy, and we should benefit in the medium-term of the strong order intake and different portfolio of customers that we have been taking for the last months that should develop positively in the medium-term.
We continue, in parallel of that, to strengthen our exposure to the leading OEMs. As you know, there is a very fast and strong shift in terms of customer portfolio that is happening, and we are part of this strategic repositioning. When it comes to the rest of Asia, revenue grew quite strongly by 12.3% like-for-like. Still like in the other communication that we have made, supported by South Korea and the strong activity we have there in Modules and Fuel Tank System. We are preparing also for further growth to come in India. We will be, next week, inaugurating a new fuel tank production plant in Karkala in India.
In summary, all in all, good performance of the top line, in particular in Europe, Eastern Europe, sorry, United States, and the rest of Asia. This balance of footprint that enables us to offset the decline in China, and which again confirms the importance of being well-balanced throughout the market. I will now let Stéphanie get into more details when it comes to the revenue Q3.
Thank you, Félicie, and good morning, everyone. Let me start with our Q3 revenue performance, with a focus on our different segments. OPmobility posted a solid performance in a declining market with consolidated revenue amounting to EUR 2.4 billion. This represents a reported growth of 3.2% and organic growth, if we so exclude the impact of FX and the scope perimeter, of +2.8%. After a negative FX impact on H1 2026, Q3 2026 benefited from a positive currency effect of EUR +19 million, mainly linked to the evolution of the U.S. dollar. The scope effect continues to remain limited. I remind you that since June 1 of this year, the scope of our JV, YFPO in China, has been extended to include Modules activity from the two partners, OPmobility and Yanfeng.
The impact is not material in Q3 and amounted to EUR -11 million. Looking at the contribution by segment, all three segments generated consolidated revenue growth compared with last year. First, Exterior & Lighting contributed at a EUR +42 million to organic growth, driven by the continued improvement in lighting, which has benefited from several launches in Mexico and in Czech Republic since the beginning of this year. Exterior has also posted some growth in Q3 this year compared to last year, mainly driven by strong activity in Europe and notably in Eastern Europe. Moving to module, which has also contributed positively at plus EUR 22 million, driven by stronger volumes in North America linked to a program for a major U.S.
EV player, as well as continued growth in South Korea through our joint venture, SHB, which maintained significant volumes throughout the period. Third, Powertrain contributed at a EUR +3 million. Within this segment, the C-Power continued to consolidate its leadership in fuel system production, supported by solid momentum in Asia, notably in South Korea, in India, as well as in Japan, while continuing to deliver robust activity in Europe. The difference between consolidated and economic revenue reflects the performance of our joint ventures, mainly YFPO in China and SHB in South Korea. As mentioned earlier by Félicie in the presentation, YFPO was impacted by lower automotive production and weaker domestic sales in China, partially offset by continued growth from our module JV, SHB, in South Korea.
Overall, the third quarter shows solid contributing organic growth, supporting by all segments in a declining automotive market. Just a few words in our nine months performance. If we look at the performance for the first nine months 2026, OPmobility posted a solid growth of + 1.1% on a like-for-like basis, a performance that is still above the automotive market, which is at - 0.9%. Let me now deep dive more on the performance and on the operational performance for each of the three segments. First, starting with our exterior solutions, covering both Exterior & Lighting and Modules. Starting with Exterior & Lighting, the production of exterior systems in the third quarter posted a solid performance with several launches.
For exterior, the activity was supported by key launches in the United States and in Eastern Europe, notably in the Czech Republic. As you can see on the left-hand side of the slide, among the main launches during the quarter were the bumpers produced for the BMW X5 and the Volkswagen Atlas, both in the U.S. In Eastern Europe, activity was also supported by the launch of the Škoda Kamiq in Poland. Regarding lighting, where activity continued to improve during the quarter, which confirms the recovery trend as expected. Revenue growth was supported by the ramp-up of several launches since the beginning of the year, both in the North American region as well as in Europe, and notably Eastern Europe.
To illustrate, lighting has started to produce headlamps and rear lamps for the Škoda Kamiq, as well as rear lamps for the Renault Mégane, both in Eastern Europe. These developments highlight the conversion of the lighting order book into revenue, and that the recovery of this activity is on track. Moving to module, the solid performance of this business group in the U.S. continues to be driven by higher volumes for a major American EV player. Activity of Modules also increased in Eastern Europe, supported by some key launches, notably for Škoda for front-end Modules. Asia remained also a key growth driver for this activity, in particular in South Korea, with continued strong momentum supported by our joint venture, SHB, and to a lesser extent in Malaysia, with the launch of front-end Modules for Jaecoo, a Chery brand.
Overall, exterior solutions maintain solid momentum supported by positive development across Exterior & L ighting, and Modules. Looking at our Powertrain segment, our fuel systems and battery packs activities continue to demonstrate solid momentum supported by robust commercial developments and new program launches across key markets. Starting with fuel system, the business continued to benefit from our last man standing strategy. New significant contracts were secured for the Jeep Grand Cherokee and Volvo, as you can see on the slide.
In Mexico, the launch of fuel tank production for Polaris marks another milestone in our partnership, recently recognized with a Supplier Excellence Award for our performance, quality, and reliability. In Asia, C-Power continued to expand across key Asian markets, supported by new awards and several launches, including the Suzuki Ertiga in India, the production of fuel tanks for an hybrid vehicle for a major Chinese OEM in China, as well as the Kia Sorento in Thailand. Last but not least, moving to Europe, fuel systems activity remained solid, notably with the launch of the Toyota Hilux in Poland.
All in all, the fuel systems activity continues to demonstrate strong resilience and the relevance of our technology across key markets. A few words now on our battery packs activity. The group accelerate its cell-agnostic strategy with a clear focus on hybrid mobility solution. It has strengthened its position in collective mobility through partnerships with customers, including Allison, HESS, Alstom, and Siemens. OPmobility has recently expanded its presence in the passenger car segment. As you can see on the slide, we have secured an additional major contract with an OEM for future hybrid vehicles for Suzuki in Japan. I will now hand over to Félicie, who will comment on our key strategic highlights for Q3.
Thank you, Stéphanie. As you can see, solid momentum on the revenues, despite a decrease in market. Now let's take a closer look to what are our medium to long-term strategy and the important milestones that we have reached recently. Just quickly summarizing again, our four-pillar strategy, very important to us; fortify our technological leadership, diversification of our customer portfolio, rebalancing the geographical split of our sales and localization, and expand beyond the automotive segment. When it comes to the latest development, as I mentioned, we just inaugurated the latest plant in Morocco. We have a long-standing presence in Morocco.
We've been present in the country since 2013. We started by launching our fuel tank activity close to Tangier, and then developed also the exterior business line close to Kenitra. We will now bring this additional extension to support this exterior system activity in Kenitra. Not only are we involved in developing the production in Morocco, we are also using Morocco as a strong base to develop further back office, mainly in HR, finance, and digital. We really want to grow the teams there and to leverage the very competitive and knowledgeable teams that we have in this field in the country.
Morocco also is, as you know, recognized as a major automotive hub with an automotive progression that is increasing by a bit less than 10% in the first nine months of the year, supporting, again, the good dynamics of our business development. Other important milestone was the signature of the Hyundai Mobis Lighting business acquisition. We've been discussing that topic for some months now as the MOU took place at the beginning of the year. Now we have entered this important step of signing this transaction. It represents an enterprise value of approximately EUR 390 million.
Very importantly, this enables to reach a new scale when it comes to our lighting activity, because this business is a sustainable business representing EUR 1.6 billion in sales for 2025 with a positive operating margin. Clearly the combination will bring our lighting activity to a new scale and also strengthening the actual global footprint that we do have. It will strengthen our presence in Asia, North America, and Europe, and obviously diversify our customer portfolio, and deepening our partnership with Hyundai and Kia, which today represents a bit less than 5% of our customer portfolio.
That clearly will become one of the top customer of the group once we have closed this acquisition. We expect second part of 2027, hopefully more at the beginning of the semester two of 2027. The transaction is not expected to have a material impact to our deleveraging strategy. We are fully committed now in between signing and closing to facilitate what is necessary to make this integration a success, knowing that it's a complex carve-out, but we are already working closely with the seller to make sure everything goes smoothly in the months to come. Just quickly reminding you what are the key highlights of, again, this transaction. Today our lighting activity is more concentrated on the rear lamps technology, and clearly here, the Mobis Lighting activity is more focused on the headlamps.
All in all, when it comes to our market share and our positioning on the headlamps, this transaction should enable us to triple our market share on the headlamp, while doubling our market share on the rear lamp. A good step up, I would say, in terms of technology and product offer to our future customer. When it comes to the geography, we will have, again, a more balanced footprint, consolidating our position in Europe and clearly develop it in Asia and also North America. Diversification of the customer portfolio, I've already mentioned it. I think all in all, at the end of the day, the footprint that we will have of all of our 14 plants will put us in a good position when it comes to capturing the future growth of the market. Next slide. I will now conclude before taking your question.
Obviously, I will come back quickly on the announcements that we've made a few weeks ago, which was made to really explain and show how we are addressing the transformation of the automotive market. Yes, we have discussed at length that very short-term visibility is low and growth or decrease in most of the region is putting some pressure overall on the market. Still, if we look at and consider the medium to long-term development, we are fully engaged and committed to adapt and do what we need to do to make sure that we sustain the development of our financial KPIs and develop the order book and the future sales answering to what the market is requiring, which is competitiveness. To do so, we have announced, as you know, adjustment both on the industrial footprint but also our R&D organization in France.
All in all, leading to this envelope of restructuring costs that we anticipate for the year in between $120 million and $130 million for the full year 2026. This is really, again, to create value over the medium-term. You have seen there is a lot of debate still in Europe when it comes to local content, CO2 emission reduction trajectory. All those framework are indeed important, but yet alone not sufficient to sustain a competitive positioning over the long run, hence, again, the recent adjustment that we have made.
Back to very short-term, what we are expecting by the end of the year, we also made some adjustment to our operating margin. As you know, this is linked really mainly to the short-term impact of the persistent volatility in terms of prices. Strong inflation, as you know, on raw material, notably for us, mainly resins, but also certain components like PCBs and memories that still trigger some hiccup in the supply chain throughout the world. China still remain short-term a strong impact for us, and I'm sure you will comment that afterwards maybe in your questions.
Also, again, end of the year, that can be also impacted by some quick stop and goes at some customers, mainly in Europe. All in all, we do confirm the guidance that we've announced to you two weeks ago. Operating margin in between EUR 430 million and EUR 450 million, net result group share significant, free cash flow above EUR 220 million, and still focusing on a deleveraging trajectory to reduce our net debt versus last year. Thank you for your attention, and we will now take your questions.
If you wish to ask a question, please dial the pound key followed by five on your telephone keypad to enter the queue. Please state your question as clearly as possible. The next question comes from Michael Foundoukidis from ODDO BHF. Please go ahead.
Yes. Hello. Few questions on my side. First question, maybe I ask them one by one, it would be easier. First question—
Yes.
You mentioned this briefly during the presentation, but China seems to have been impacted by some one-off around tooling and development effect in Q3. How should we think about Q4 in this respect? More importantly, maybe by 2027, including on a profitability level in what could probably remain a challenging market? That's the first question.
On China, you're right. Your reading is good. Indeed, we have had the impact of some tooling. If you put that aside, the top line behavior of YFPO was in line with the market. For Q4, this strong decline that you can see will somehow reduce and behave like a market.
Regarding 2027, same, I would say?
2027, there's still I think some question as to how the Chinese market will recover. 2027 should be better than 2026. We are still questioning the magnitude of recovery of the market, although it should be better than this year.
Okay. Thank you. Second question, maybe, again, the backdrop of the rapid acceleration of electrification in Europe. What can you tell us about the ShootTech business in the region? More broadly, how do you see it evolving globally?
The ShootTech activity is pretty resilient and pretty solid. We still have this strategy of consolidation of the market, and that is the case, and that should continue to be the case.
Okay, thanks. Maybe a wider question on Made in Europe. France and Germany made an agreement recently. How do you see the framework? Is it ambitious enough in our view, concrete enough? What could it change for you specifically in the coming years?
All in all, the French/German position is, I would say, slightly below what we have pushed as suppliers when it comes to local content. The position, it is a progressive one from 65% to potentially 70% when it comes to local content. Not too far away from what we were asking. At the end of the day, I think what is important is that now we take a decision, that this decision is implemented because the more we wait, the more difficult it will be to implement it and to somehow mitigate some of the decisions that have been already taken. It is a good first step. Now let us implement it. But again, that yet alone, I do not think will be the solution. There was also those potential new tariff or at least export containment that was agreed at European level.
This also should somehow reduce the pressure on Europe. But restraining the export or adding new tariff, that protects the market for the OEMs, but it is still not the answer when it comes to suppliers because those parts can still be exported from China to Europe. That is why we keep on working on what is our competitiveness level and to make sure that we can provide the best products that we have at competitive cost to whoever wants to produce in Europe. That is really our ambition.
Okay, thanks. Very comprehensive. Maybe a quick last one. You mentioned stop and goes in Q4, so we saw obviously some in October. Do you feel that others are likely in November, early December, or too early to tell?
We do see some further reduction in November, not yet known for December.
And that is mainly Europe or not necessarily?
Mainly Europe, yes.
Okay. Thank you very much.
The next question comes from Jos é Asumendi from J.P. Morgan. Please go ahead.
Good morning, Félicie. Congratulations on the Morocco opening.
Thanks.
That will be very interesting to see how it develops. Three questions, I will ask them at once. One, can you comment on raw mats and the impact on P&L and whether this is an exercise where you can pass on price increases in 2026 or is this more of a also maybe spill over into first half 2027? Second, with regards to the shift into BEV in Europe, which is definitely going much quicker than expected, the potential reorganization or consolidation of some of the plants, is that embedded in the restructuring actions you have announced in the last announcement and the ones you have announced also on the slides today? The third one, the final one, when I look at the lighting business, very interesting to see the developments. Are you open for further M&A on the lighting front to continue to grow the business in the next two years?
Thank you.
Thank you, Jose. If I take the first question on impact on raw material cost inflation. Again, as you know, we have some mechanism in place, not for all of our contracts, but when it is in place, it is a matter of passing through. Here, the question again is the time difference in between the time lag of application, so three to six months. That will happen, but in the months to come. It has already started, but we will see that developing through the months to come. For what is not covered by the mechanism, which is an important part also, it is really about negotiation with the customer, and that is where we are fully engaged to do so.
The overall situation of some of our OEM makes it not an easy discussion to have, and that's why we've been more cautious as to the timeframe within which we can work out those discussion. There is also the PCBs topic that was a sharp increase in the second semester that was not existing before the summer. That is clearly a doubling of the cost from a very unilateral way, and that is also part of the discussions that we have because we are not obviously the only one impacted on the supplier side, but also on the OEM side. So it's a matter of how do we organize collectively to address this topic, and that's taking a bit of time.
When it comes to the BEV penetration, what we have made as announcement is not really linked to that. When you consider what we have announced for France in terms of R&D, this R&D center that we are thinking about closing is historically dedicated to R&D activity for the fuel tank activity, which you know in Europe is having a deadline, 2035. Which is an activity where we do not have anymore a lot of R&D, given the timeframe we are talking about. Also in this center, we were having some development for the electric battery activity, but mainly linked to the EV mobility segment. Here again, there is a bit of slow down when it comes to penetration. So that's why it has been impacting.
Also as we have put close to that R&D center that we contemplate closing, another one for H2 activity, which also is suffering from market delay and development. We're going to put those two R&D center in one, and to have, I would say, R&D capacity dedicated to the Powertrain segment that is more adapted to the European requirement. Then the footprint reduction that we have announced in Germany is really linked to some of the OEM capacities in Germany that anyway is too high. We will transfer those projects to another plant. So it's really capacity adaptation, but generally speaking, not only specifically linked to BEV.
On the lighting topic, we will obviously focus first on integrating this new activity, which contains some important step to do so because it's quite a sizable business. Obviously, with an Asian customer that also works differently, so we will have to adapt to that, and it's a carve-out. So that will be clearly the focus, I guess, for the three years to come. As you know also, we like to be leaders on the activities that we have. So this transaction will put us in the top five, I would say. So once this is done, we will assess potentially what could be the next step, but that's too early to say.
Thank you very much. Thank you.
Thank you.
The next question comes from Christoph Laskawi from Deutsche Bank. Please go ahead.
Good morning. Two of my questions. I would like to come back to the short-term production adjustments, please, in Q4. You already pointed to there is a bit more in November, if I understood that correctly in Europe. In the call two weeks ago, I think you mentioned North America too in a smaller scale. I was just wondering if the situation there is stabilizing or you see the risk for the short-term cuts also in North America. Then, when it comes to like-for-like growth in Q4, obviously Q3 was quite decent but not impacted by that.
I guess it is fair to assume that like-for-like growth comes down. Any steer you could give us on that would be appreciated. Then on your comments with regards to the OEMs and challenging discussions to pass on the cost. I guess they are always challenging, but if you compare it to, say, one year ago, do you see more pushback of the OEMs or basically a stronger unwillingness to take on the cost? Have there been any changes in the way OEMs handle this? Thank you.
When it comes to Q4, what we do see, the latest developments are mainly in Europe. Yes, it was to a lesser extent in North America, but there we do not see any big changes. What I can say for Q4 is that we still expect Q4 2026 to be better than last year. That's what I can share at this point. When it comes to impact of inflation and negotiation, yes, it's more difficult to have the discussions. I guess because the overall situation is tense for everybody. OEMs are also suffering on their side, so the discussions are, by consequence, a bit more difficult to have. That's indeed the case.
Thank you. If I may, just one housekeeping follow-up. Did you already disclose or indicate what the cash out will be for Mobis in H2 2027 or not yet?
No, we just disclosed the enterprise value. That's it.
Understood. Thank you.
There are no more questions. I will now hand the conference back to Félicie Burelle for the closing comments.
Thank you everybody for attending this call. In a nutshell, short-term, good momentum on the top line despite a decreasing market and challenging one, and we remain fully engaged to obviously deliver short-term the recent new guidance we gave you two weeks ago. That is the priority, but also at the same time, fully engaged on executing our strategy and not losing sight of what are those priorities, because those will be key to put us in a position to grow in the years to come. Thank you very much, and talk to you soon.