Good morning, everyone, and welcome to our conference call on our Q1 2026 results. Turning to the financial highlights for the first quarter in this year on page three, please. Here you can see that group sales reached around EUR 452 million, representing an organic growth of 5.6% year-over-year and benefited from the recovery trend in EMEA as well as in APAC. The Americas region continued its weak momentum in both truck and trailer segments. This caused a negative regional mix effect in the first quarter, and overall profitability was nearly on par with the previous year, and the quarter closed with a solid adjusted EBIT margin of 9.4%, and the adjusted EBITDA margin was 13%.
The operating free cash flow came in strongly with around EUR 45 million, reflecting strict working capital management and, as said before, a solid organic growth. Leverage further improved to 2.2x , mainly due to the strong cash performance. In a nutshell, Q1 2026 represents a solid start of the year and gives us confidence for the months ahead. On page four, you can see the development of group sales and adjusted EBIT development. During the first quarter, SAF-Holland benefited from the ongoing recovery in the European OE market, while APAC markets also recorded a clear sequential improvement. Against this backdrop, the group delivered solid organic revenue growth of 5.6%, demonstrating the strength of its regional and business mix. The aftermarket business was continued to perform at a high-end resilient level, providing stable support to overall revenues.
While the foreign exchange effects created a headwind of around 5%, group sales reached EUR 451.7 million in the first three months of the year, slightly exceeding the prior year level. Now turning to profitability, SAF-Holland achieved a solid adjusted EBIT margin of 9.4%, this performance reflects continued strict cost discipline, mainly within SG&A, as a result of the first positive contributions from the efficiency program in indirect functions. Overall, the group's resilient margin development once again highlights the robustness and scalability of SAF-Holland's operating model, even in a mixed market environment. Moving on to the sales split by region and customer category on the next page, please.
Here you can see that in the first quarter of 2026, EMEA further strengthened its position with the region increasing to around 52% of group sales now. This development was driven by the ongoing recovery in European trailer and truck OE demand. In North America, commercial vehicle production levels remain subdued. However, the market is providing early signs of stabilization. By contrast, APAC delivered a strong performance, supported by solid demand growth in India and Australia. As a result, revenues in the region grew by almost 9%, with APAC contributing 13% to group sales now. Looking at the performance by customer segment, the recovery momentum in Europe and APAC translated into meaningful increase in trailer OE sales, which grew by around 6% and accounted for now 52% of group sales.
Truck OE sales now representing 11% of the group's top line, reflecting the still cautious market environment in North America and mainly in the U.S. Once again, the aftermarket business demonstrated its resilience and strategic importance, contributing a solid 37% of total group sales. Let's speak about EMEA on the next page, please. With OE demand improving across the trailer and truck segments, EMEA delivered strong organic sales growth of 8% in the first quarter of 2026. This performance was further supported by a stable and resilient aftermarket business, providing an additional pillar of strength. Geopolitical developments, including the conflict in the Middle East, have so far not had any material impact on the group's order book, which gives us confidence for the upcoming month.
Despite a slightly adverse mix effect resulting from the higher share of the growing OE business, adjusted EBIT increased by around 16% compared to the prior year. This improvement was primarily driven by the positive scale effects and continued strict cost management, reflecting the benefits of the efficiency program implemented in the indirect area, which we started already last year. Overall, EMEA delivered a solid performance in the first quarter of this year. Speaking of Americas, on the next slide, please. Here you can see that in the first quarter of 2026, demand in the OE business remained subdued across our truck and trailer segments, reflecting an ongoing uncertainty around the U.S. tariff policy, as well as the potential industry discussions related to EPA 2027.
At the same time, our aftermarket business once again demonstrated also its resilience and was able to partially offset the softer OE environment, supporting the overall sales development. Against a still comparatively strong prior year with still solid truck demand, organic sales were moderately lower by 2.5%. FX developments remained a headwinds, with a negative impact of 8.5% on reported sales. Following the successful implementation of retroactive price adjustments in the fourth quarter of 2025 to fully offset additional tariff related costs, the first quarter of 2026 showed a stable overall pricing and cost position. The year-over-year development in adjusted EBIT mainly reflects lower fixed cost absorption in a softer volume environment. This effect was substantially mitigated by continued strict cost discipline, mainly also here within SG&A.
Overall, the Americas segment demonstrated its resilience, delivering a solid double-digit margin despite ongoing market weaknesses, mainly in the U.S. Last but not least, on the next slide, we speak about our APAC region. Here in APAC, the overall demand continued to improve during the first quarter, and the region benefited from the ongoing recovery in the Indian trailer market, as well as a solid demand in Australia and New Zealand. While exports from India to Asian markets remained subdued due to tariff frameworks, this had only a limited impact on the overall regional development. FX effects continued to represent a heavy headwind, with a negative impact of 13.4% on reported sales. The adjusted EBIT increased by around 8% in line with sales growth, resulting in a stable profitability level year-over-year.
At the same time, the SAF-Holland operation in China showed a strong operational recovery driven by improved capacity utilization as well as a targeted efficiency program. Overall, APAC delivered a solid and increasingly balanced performance with improving end markets and continued progress on the operational side. Having said this, I hand over to Frank for the key financials for the first quarter.
Yeah. Thank you, Alex, hello to everybody on the line. Let me start with a short overview on the EBIT to adjusted EBIT reconciliation for the group on page 10. During the first three months of 2026, reported EBIT increased slightly by 2.8% year-over-year to EUR 36.9 million, supported by our overall strict cost management. Moreover, depreciation and amortization from purchase price allocations were adjusted as usual and declined by EUR 1.2 million compared to the prior year, mainly due to expiring amortization related to the IMS acquisition. Our adjustments remained at low level of only EUR 0.9 million and were largely coming from legal and transaction-related expenses. As a result, SAF-Holland achieved an almost stable adjusted EBIT and a solid adjusted EBIT margin of 9.4% in the first quarter 2026.
The adjusted EBITDA margin remained broadly stable at robust 13%, underlining the continued resilience of the group's earnings profile. Moving on to page 11, where you see the bridge from EBIT to basic earnings per share. As mentioned earlier, reported EBIT for the first quarter amounted EUR 36.9 million. At the same time, we made further progress in actively managing below-the-line items. The financial result improved by EUR 10.1 million to a level of EUR -5.2 million. This improvement was mainly driven by lower unrealized FX effects. Following the adjustments to our intercompany financing structure, we were able to further reduce our overall FX exposure. The remaining exposure was positively influenced by favorable currency movements, particularly to the US dollar.
As a result, while the prior year period was still burdened by negative FX effects of EUR 5.8 million, the first quarter of this year benefited from a positive FX contribution. In addition, and even more important, we further optimized our external financing structure, interest expenses declined by EUR 1.1 million or almost 9% year-over-year. Income taxes remained broadly stable compared to the previous year, with an effective tax rate of 35.3%. Tax rate continues to be mainly influenced by non-capitalized deferred assets related to interest and loss carryforwards. For the full year 2026, we continue to expect a tax rate of around 35%. Overall, the improved finance result, together with an improved EBIT, translated into a strong earnings performance. Reported EPS increased by 57% year-over-year to EUR 0.45.
Also the adjusted EPS increased by almost 38% to EUR 0.61. Adjusting all the unrealized FX effects according to our dividend definition, the EPS improved by 4.2% versus previous year, which is highlighting the resilience and profitability of the group despite the still challenging market environment. Moving to page 12, where you see the development of the equity ratio. Compared with the year-end 2025, equity rose by 4.9% or EUR 24.2 million to EUR 516.2 million, mainly driven by the positive result for the period. At the same time, the balance sheet total grew by 5.8% compared to year end 2025, primarily reflecting the seasonal build-up of working capital in the first quarter.
As a result, the equity ratio stood at a solid 29.3% at the end of March 26, Therefore almost reached the year-end 2025 level. Turning to page 13, I would like to speak about net working capital development. Net working capital at March 2026 was influenced by several factors. First, it reflects the usual seasonal build-up at the beginning of the year, which was further supported by continued top-line growth. At the same time, trade payables developed very favorably, benefiting from extended payment terms versus our suppliers and providing significant positive contribution to working capital. In addition, development was further supported by strict inventory management, which remains a key focus area for the remainder of the year. In contrast, trade receivables increased mainly due to a structurally different customer mix that was partly compensated by higher factoring volumes of EUR +8 million.
Overall, these developments resulted in an improvement in net working capital of 4.2% to 17.1% of sales, and therefore comfortably in our target corridor of 16%-18%. Now let me address the cash flow development on page 14. Net cash flow from operating activities developed very strongly in the first quarter, reaching EUR 44.8 million. This performance reflects not only the solid operating result, but also a favorable development in working capital. As mentioned earlier, net working capital benefited from targeted measures, including improved payment terms and a general strict inventory management. In addition, tax payments decreased slightly in line with the underlying business development of previous years. The other line amounting to EUR 5 million primarily relates to changes in deferred tax assets.
Investments in property, plant, and equipment and intangible assets totaled EUR 5.1 million, corresponding to 1.1% of group sales. As typical for the first quarter, investment activity remained at a comparatively moderate level, fully in line with our full year guidance of up to 3% of sales. Overall, investments were focused on further automation and modernization of production processes alongside targeted equipment additions in line with our Drive 2030 ambition to grow our business to more than EUR 3 billion until 2030. Moving on to an overview of the leverage development on page 15. Net debt to EBITDA ratio stood at 2.2x at the end of March 26th, slightly below the level at year-end 2025, and benefited in particular from an improved net debt.
Gross debt increased moderately and was influenced by the issuance of a EUR 100 million promissory note loan. This transaction further strengthened the maturity profile and was mainly used to refinance around EUR 93 million of outstanding maturities, mainly due in March 2027. At the same time, our cash and cash equivalents increased by approximately EUR 34 million. This improvement was achieved despite the ongoing share buyback program, under which EUR 6.2 million were deployed during the quarter. In addition, we further strengthened our financing profile by extending our revolving credit facility by EUR 75 million to EUR 325 million, which was undrawn by the end of March 26th. Altogether, we see solid headroom to target on mid-size M&A projects without additional financing.
Excluding the IFRS 16 effect, our leverage would have amounted to a significantly lower level of 1.9x at the end of March 2026. Now I hand back to Alex.
Yeah. Thank you, Frank. I'm on page 17, showing the 2026 forecasts for the trailer and truck markets. As mentioned earlier, European and Asia Pacific markets showed encouraging signs of recovery at the start of the year. In contrast, North America continues to be shaped by a more cautious demand environment, primarily driven by ongoing uncertainties surrounding the upcoming EPA 2027 regulations, but also due to the USMCA discussions going on. Looking ahead, we expect the trailer and truck markets in North America in 2026 to benefit from improving freight rates and increasing regulatory clarity over the course of the year, supporting a gradual normalization of demand.
We continue to expect a largely stable development in North American trailer market and at the same time, we have upgraded our outlook for the Class 8 truck market and now expect growth in range of 0%-10% plus. In the Brazilian CV market, which remained below expectations and against the backdrop of a persistently high interest rate environment, we currently see a market decline in the range of 5%-10% for 2026. For EMEA, we continue to see a steady to moderately positive development in trailer markets, while the heavy truck market is expected to show a somewhat stronger growth profile with increases of up to 10%. Our market expectations for the APAC region were moderately updated post the strong development in Q1.
Having said that, let me briefly come to our guidance for 2026 on page 18. Here we confirm our guidance unchanged across all key performance indicators. At the same time, the current geopolitical environment, particularly developments related to the conflict in the Middle East and the potential implications for the broader economic situation of our end markets remain difficult to assess with a high degree of uncertainty. That said, based on what we see today, we feel confident in the resilience of our business model, which positions us well to respond flexibly to potential demand and cost dynamics. From today's perspective, we do not see any material impact on SAF-Holland and therefore remain comfortably with our current outlook. Last but not least, let me briefly summarize the key takeaways for the first quarter on the next slide.
First of all, we have seen a solid start into the year, with demand normalization in Europe and Asia Pacific clearly gaining traction and translating into an improved top-line performance. This underlines that our regional diversification is paying off. At the same time, we continue to demonstrate the resilience of our earnings profile with an adjusted EBIT margin of 9.4%. We are essentially on par with last year's level, supported by disciplined cost management and a solid contribution across our three regions. Cash generation was very strong in the first quarter, with an operating free cash flow of nearly EUR 45 million, reflecting our continued focus on efficient net working capital management across the organization. Overall, Q1 was an encouraging start into 2026 and gives us confidence that we are well-positioned to navigate a volatile macro and geopolitical environment. Ladies and gentlemen, this concludes the presentation.
Thank you for listening. We now can start with our questions. Operator, the first question, please.
We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking the question. Anyone who has a question may press star and one at this time. The first question comes from the line of Holger Schmidt from DZ Bank AG. Please go ahead.
Yeah. Good morning, everyone. I have a question on the aftermarket business. We haven't seen growth for a longer period. The revenues are down by about 14% as compared to the second quarter in 2024. What is driving that? Is it purely the volume? Have you not been able to push price increases? When do we expect the business to come back to positive growth again?
If I understand your question correctly, Mr. Schmidt, you were asking about a decline of aftermarket sales.
That's right.
Which I cannot confirm. First of all, we are not displaying our aftermarket sales. I can report that the aftermarket is very stable in both major regions, which is Europe or EMEA and also North America. Specifically North America, that was the driver that we could keep our profitability. There is no decline of aftermarket business.
I mean, looking at the figures, I mean, if I'm right, you published EUR 167 million in aftermarket revenues in the first quarter.
You are referring to the 37% share of our aftermarket business in total group sales.
That's right.
Is what you are re-
Yeah.
Yeah.
This is down as compared to the second quarter in 2024, so about two years ago, by around 14%, which means we haven't seen growth in the aftermarket business, effectively, a decline in the aftermarket business over a longer period of time. I'm asking, what are the drivers behind it? Is it purely the volume? Have you not been able to push price increases? What drives the decline in the aftermarket business since the second quarter of 2024?
Maybe I take this. To ask again, you are jumping back two years going to 2024.
That's right. Yeah.
Yeah. It's a good question. There might be a slight reduction, but aftermarket business, as you know, is really depending on driven miles. We have seen, especially in the big market in Europe, a reduction in industry transportation due to the decline in the automotive industry. Reduced driven miles are a little bit impacting our volumes in aftermarket, what will recover as soon as we come back to normal industry levels in this region. It's not a big topic. If you add then the big portion of the U.S. of our Americas business, we are strong in aftermarket. You have to add again another 10%-15% reduction from FX because we are reporting in EUR and the sales is coming in in USD.
Overall, if we take the volume in aftermarket, we do have a little bit a reduction in EMEA, it's partially even offset by our higher population we have generated the last five years. We also have a huge FX impact from the depreciation of the U.S. dollar in the top line. There is no issue in margin. Even on the price side, as we mentioned already in last year's calls, even the tariff topics we could offset in the U.S. in aftermarket, as we do usually in our market. From the business performance, we don't see any negative impact in aftermarket. Its key topic is FX, taking 2024 U.S. dollar rate to EUR rate.
The second is a little bit in Europe, the lower driven miles from reduced industry transportation that we even partially offset with higher population. Performance-wise, no doubt in our aftermarket.
Okay, that's very helpful. Thank you very much. My second question is on your M&A ambitions. I mean, back at your Capital Markets Day last year, you highlighted the M&A ambitions. I think you mentioned an M&A capacity of up to EUR 1.5 billion with a focus on entering into adjacent markets. We haven't seen any major activity so far. Can you give us an update where you stand here?
I take this question again. First of all, the EUR 1.5 billion, I can confirm we do see firepower to do really reasonable M&As. Second is topic, the strategy is Drive 2030. This does not mean that only six or 12 months after publishing it, we go and buy something. We are really selective. We are investigating a lot of companies, visiting companies, but our target is to create value for the company. This is leading us into the topic that we have to really do a good analysis and look for a really perfect fit target. I have to admit, this takes some time. We have a good shortlist where we are discussing, and as well in our communication on the share buyback program.
As we see that the activity, we take us the time to really find a good target. We put some money on the share buyback program to invest it for the time being, until we find the right target.
Yeah.
As soon as we have it, you will get to know.
We don't wanna over, let's say, overpay, of course, for targets. This is why we are really selective, and we take our time to get good targets, and as Frank said, once we are ready, we will let you know it.
Yeah. Yeah, that's helpful as well. Take your time. Makes sense. The third question is on the APAC business. I was a bit surprised about the 9% top line growth. It was quite remarkable after an extended period of declining revenues. I mean, it was driven by India and Australia. Do you think this is the start of a new cycle? What is the potential for APAC in 2026 as a whole and for the next 3 years?
Well, our biggest portion of the whole, let's say, Asia business for us is our Indian market, having more than 50% market share in trailer axles and trailer suspensions. We would like to grow that. We also have the capacity to further increase our output. That's a good, a good sign. As a reminder, we just moved like two, three years ago into a totally new facility with upgraded robots and authorization. That's a good thing. India had a decline of markets the last two years. I can, I can confirm that. This year, we had really good start. We don't see huge impacts with the shortage of gas and electricity in India at the moment due to the Middle East conflict. The export specifically to the U.S. is still subdued due to the tariff situation.
We have to see how that develops. Clearly, I have to say, with a share of 12%, 13% of the overall group sales, this is not sufficient. We reported that we at least would like to have 20%, 25% share in Asia until 2030 to more balance the different regions. If we had a 40% for Americas, 40% for EMEA, and 20% at least for the APAC region, that would be a target for the years to come. We are driving that. We also put together the management teams in China. We had two teams, one for Haldex, 1 for SAF. We put that together under one roof now. This is gaining traction.
We are increasing our sales, but also profitability is going up in China as one of the big markets or the biggest market in Asia. As you said, rightfully also in Oceania, speaking of Australia, but also New Zealand, we have high market shares with growth rates which are sufficient and good. Overall, to summarize what I just said, we would like to increase the overall portion of the business in Asia, not only in India, but also in China and the other regions like Indonesia, Malaysia, Thailand, Southeast Asia, in total, Japan, to be more in the ballpark of 20%-25% of group sales in the years to come.
Okay, sounds good. I go back into the line. Thank you very much.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Yasmin Steilen from Berenberg. Please go ahead.
Hello. Many thanks for taking my questions. I have three, if I may, and I will also take them one by one. The first one on U.S. truck and trailer market, you became more optimistic on U.S. truck market. Is it already visible in your current business? I.e., is it fair to assume or to expect a flattish development in Americas in Q2, and then the recovery in the second half? That's my first question.
Yeah, I can confirm that the order intake and also what we invoiced in the first quarter was some kind of, let's say, slightly promising, okay. It's not overall a super wow, I have to say. It's slightly improving. Order intake is also coming specifically for the, for the truck OE, which is one of the biggest portions of our overall U.S. business or North American business. The order intake for the second quarter is also okay, I have to say. It's increasing. We think that after we have more clarity on the EPA 2027 USMCA, it's still some more discussions going on. Now, new tariff regulations are coming in or talks are going, and we still have the Middle East conflict with which drives massively the gasoline prices.
A gallon now in Michigan is like $5.25. In California, $6-$7. This really hurts our industry, I have to say, because all the diesel prices jumped and that drives the inflation in our transportation. Everybody in the market expect that the second half of this year, it's going to be better than, much better than last year, but also better than the first quarter and the second quarter to be. We are positively optimistic here that the second half would be better.
Okay. Perfect. Following up on this, with regards to your EBIT margin seasonality, do you expect the usual quarterly EBIT margin development, or should we see a different pattern from the recovery of the U.S. truck and trailer market in the second half?
Basically, we do not guide EBIT by quarters. You have to refer to our guidance, 9%-10%. We had a good start in the year of 9.4%, almost in the middle of the guidance and there will be usual seasonality, but nothing special.
Okay. The last one, on working capital and the supply chain. With Middle East conflict, do you experience any tightness in your supply chain? How should we think about the net working capital ratio in this context for the remainder year and also assuming the recovery of the U.S. market in the second half?
Overall, we have a quite solid local-for-local supply chain and also dual sourcing or three sources as well. We don't see big impacts in terms of shortages on the supply chain. Energy cost is also not big issue for us. We have less than 1% energy cost in our P&L. We don't see a shortage in delivery and interruptions. Everybody has to monitor the energy supply in India. As Alex mentioned, also this is still working good and hopefully this conflict will be solved in the next weeks easily. We don't see a big issue in that. On the net working capital growth, as I have mentioned, we could manage especially in inventory, not a big jump in the first quarter as we have normally in the season.
What is good and is also one of the reasons for our good net working capital and cash performance in the first quarter. Also the improvement of accounts payable, improvement of payment terms. We placed a really solid program last year for sustainable improvement. This will remain. The remainder is the accounts receivable customer mix, but I don't see any big impacts on the net working capital ratio as well. The corridor 16%-18% is a solid corridor and this structure of business with 35%-38% aftermarket ratio. Also Q1 is a good implication for the remainder of the year.
Mainly also add on from my side, we just had a leadership update one hour ago with our EMEA team and APAC team. We had the same question coming here, and what I replied is, well done for the first quarter, but there is still room for improvement when you see the last couple of years. We are working very hard, mainly on inventory management, but also on getting our money from our customers in.
Perfect. All very clear. I'll step back into the line. Thank you.
Thank you.
We now have a question from the line of Nicolai Kempf from Deutsche Bank. Please go ahead.
Yeah. Hi, good morning. It's Nicolai from Deutsche Bank. Good start to Q1, well done. I'm a bit surprised about your comments on the U.S. market just because, and I'm just referring to trucks here. I know trailers may be a bit different, but I mean, the orders you see in Q1 are very strong and, I mean, yesterday the U.S. Class eight market leader reported Q1 numbers as well, and they pointed to a 50% unit set increase from Q2 versus Q1. My question is a bit, if you also like assume that Q2 ends on a bit stronger, I think first of all this could maybe make your top-line guidance appear rather cautious.
My second question is, would you expect any mix shift, and how would this impact profitability? Having more OE business and less aftermarket business. Thank you.
Starting first with your last comment about the mix shifts. I don't see that because typically this is not linked to each other. You have a running population in North America, mainly in the U.S., of trucks, and they need repair. I don't see a big drop of aftermarket or a shift from the aftermarket to OE. I can also confirm what you said, that the order intake specifically for the months of February and March was very good and very promising. You know, there is one thing. We have to stay cautious here because with the Middle East war going on, with the petrol, the gallon prices jumping to $ 6, $7 per liter, the fleets are very cautious. Then you have another discussions, new tariffs coming in.
The government, in my point of view, does everything to put uncertainty in the whole environment and the market, so our fleets are very cautious to really further invest. Let's hope that the order placed, being placed in February and March also will be delivered in the second quarter and the third quarter. We stay a little bit more cautious. Let's hope for the best, but we do our planning, and the planning is not over-optimistic in that regard.
Okay. Let me, yeah, clarify. Yeah. Sorry, go on.
I wanted to add regarding to your mix effect, higher OE is also coming in with higher economy of scale. This natural product mix effect, I can confirm with Alex that it's not coming, that we have better utilization of our equipment. On the order book, we also need to admit that Q2 last year was a quarter of still higher sales looking into a declining market. They have usually low order book. Now we look into lower delivered sales compared to last year, but looking into an improving margin. It's, for me, from the comparison, it's fully clear that we have this difference in order intake compared to previous quarter we see at Daimler Truck when they published. Yeah. As Alex mentioned, it delivered finally, yeah.
Yeah. Maybe just, yeah, I think you answered the question. My question was about the mix shift in profitability because the aftermarket is much more profitable than OE business. If you have a higher share of OE with aftermarket, could this impact your margins? You've answered that. Maybe just one quick one on Europe. Also here, rather positive signals from the truck manufacturers. I know Germany is slowly coming back, not as strong as hoped for. What do you see here in the market?
Well, we see the positive development. We were quite happy with our first quarter, not super happy like in 2022 or 2023. I have to admit, we are running two shifts in all the plants, so this is good output, which then also creates more population for the aftermarket for the years to come. Order intake is okay also for the second quarter. Also here we are positive looking into the future. As I said, it's not like it was in 2023 when the markets were booming and Germany is still, let's say, a question mark, I have to say. People are hesitant still and sitting on the money. There is money available. Interest is not too high in Germany or in Western Europe. They're willing to invest.
Now what happened just six weeks ago with a new, let's say, Middle East crisis, damped a little bit the overall positive signs in the first quarter we have seen. The second quarter is also the order intake. It's quite promising, I have to say.
Okay, understood. Thank you.
Once again, to ask a question, please press star and one on your telephone. The next question comes from the line of [Werner Friedman] from [Ace and Ice]. Please go ahead.
Yeah, well, good morning, gentlemen. It's only one question from my side. It's on the APAC region where you had shown a very, very strong organic growth of 22%. Usually with such kind of growth, the EBIT margin would react positively, too. This has not happened in that case. I've also seen that the number of employees in the APAC region was up very strongly. Maybe if you could elaborate on what is happening there.
That's an easy one. That's mainly coming from India. In India, unfortunately, the share of aftermarket and OE is not like 70/30, 70% OE and 30% aftermarket. It's mainly driven by OE business, so 90%+. The increase in sales was coming from the OE business. OE business, the margins are stable. This is why the margins did not jump heavily, I have to say.
Yeah, we have really good cost flexibility. You even could not see last year when sales declined and an impact on margins. We have really a flexible cost structure, and that's why margin goes basically stable along with sales up and down.
Okay, understood. Thanks a lot.
Thank you, Mr. Friedman.
Ladies and gentlemen, there are no more questions at this time. I would now like to turn the conference back over to Mr. Lorenz-Dietz for any closing remarks.
Yeah. Thank you everyone for your questions. Our investor relations team is available in case you have any follow-up questions. We will be, as usual, on the road attending conferences in the coming weeks and months and look forward seeing you there. Have a good day, and goodbye.
Thank you.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.