Hello, ladies and gentlemen, welcome to the Stabilus Financial Results in second quarter of fiscal year 2023. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Dr. Michael Büchsner.
Thank you very much. Ladies and gentlemen, hello and welcome also from side of the Stabilus management to our Q2 call today. There you have the Vice President for Investor Relations, Andreas Schröder, on the call. Here on the call, Stefan Bauerreis, our CFO, and for sure, myself, Dr. Michael Büchsner, being the CEO of the Stabilus Group. Yeah, we have some exciting numbers to discuss today. We are happy that you're all on the call. We had a successful quarter in still challenging environments, and that's what I wanna go through with you today. It's a shared presentation as always. I'll start with an overview. Stefan will jump in for some details. To wrap the session up, I'll talk a bit about industry challenges and topics and success in, as I said, challenging environments.
I will talk about the guidance for sure towards the end of the presentation. We're jumping on page five, which gives you the operational update. There were a very good mix between automotive and industry again, and our organic growth this time around is 8% year-over-year, comparing the two quarters, financial year 2022 and 2023. It's a very good growth despite the challenging environment. Particularly the POWERISE growth was good in the European region, which led to good organic growth. It's a good eco-economic rebound of the European business in general terms. We also had a very strong business in the Americas regions. Our business did grew 19% year-over-year. We enjoy good automation effects, and germanization is something we'll talk about later when we talk about the industrial business shares.
You'll see on the pie chart towards the end of the presentation, what are our priorities and in which areas of our business we're particularly strong. Despite of some still in place pandemic-related effects in Asia Pacific, particularly China, for sure, we could increase our EBIT margin 4% and our profit even 63%. We'll go for sure in detail of this result. Something I would also like to highlight this time around is our Innovation Race initiative. What is Innovation Race? Every other year, we gather all the ideas of our colleagues in the company in terms of innovation. As you all know, in our strategic pyramid, innovation plays a major role. For each and every successful company, innovation is the fuel for success.
This is kind of paving the road for future products, paving the road for good and profitable ideas. This is what we do every other year along with our colleagues from the complete and global Stabilus team. We ask them for their best ideas with the given portfolio of products and also to expand the product into other business areas. We thereby get, yeah, in the range of hundreds of ideas which result in good business opportunity to us. This is really the fuel for our business channel and product channel. It's a part of our long-term strategy, and actually this guarantees the continuous above-market growth and good profits in the company.
It's a process which we have in place for some years now, and it has been proven to be the number one area for creating ideas with the focus of business growth and good profits. It will last until the end of this financial year. Typically, it's kind of a sprint, which is towards the end of the Innovation Race, resulting into a celebration in September, where the best ideas are celebrated and get an award. In the coming 12-18 months, we execute up on these ideas to generate further business for us. Particularly successful for both automotive and the industrial side. We would flip over to the financial results, and I'll start on page seven with some basic numbers, key numbers to describe our business quarter two, financial year 2023.
Our revenue was up versus the quarter of the comparing quarter 2022 by 10.5% and amounted up to EUR 310.6 million this time around. Actually, almost all was organic growth, 7.7%. Indeed, organic growth, some translation effects of 2.8%. In general terms, successful growth, particularly industrial side and some growth also for sure in the other region of automotive. In terms of adjusted EBIT margin, EUR 40.8 million Q2, which is an up of 3.8% versus the prior quarter, means the Q2 2022 as a comparison quarter.
The adjusted EBIT margin is at 10.1%. In terms of profitability, exciting results as well, EUR 42.6 million, which is a growth of 62% year-over-year and ends in a profit margin of 13.7%. We're still in the phase of recovering some inflation costs of our customers. In parallel, we also started intensive discussions with our supply base for inflation reduction. This is something which will for sure drive us through the rest of the year. This is also what we'll talk about later on. In terms of adjusted cash flow, free cash flow is basically on a level of EUR 12.1 million, so also 18.6% up year-over-year. Net leverage ratio remained in the area of 0.5 times with the financial debt of EUR 122 million.
The outlook remains unchanged. The full year forecast is still at EUR 1.1 billion-EUR 1.2 billion in terms of sales, and the EBIT margin is expected to be in the range of 13%-14%. With that general overview, I hand over to our CFO, Stefan Bauer.
Thank you very much, Michael, and I directly would like to continue on page eight, going a little bit more in detail about the key financial figures and the development of the Q2 of this fiscal year for Stabilus. Coming back for a second once again to the revenue development. We can say with an increase of 10.5% in such a volatile environment, I think it's a very good story, and we have to say that our good mix between automotive industry with a strong POWERISE business in Europe, mainly also with a very good development of our industry business, which helps us in Americas and EMEA.
Mainly, we were able also to compensate in that perspective, the current weaker situation that we see due to all the corona pandemic based effects in APAC. The region EMEA is with EUR 137.2 million sales the or clearly the biggest region where we get our revenues, which corresponds to 44% of the total revenues of Stabilus Group, directly followed by Americas with EUR 113.9 million. Currently it's still in brackets, the smallest region with EUR 59.5 million, the region APAC. First time that we suffered a slight reduction in terms of our sales, but that is all corona pandemic impacted.
All our world's global footprint and the diversification between all the industry really contributes to a good Q2 results. Having a look on the right side regarding the EBIT, the adjusted EBIT development, we increased about 3.8% compared to last year. There, we have to know that obviously still a significant material price increases compared to the Q2 last year is still to be discussed about.
The recovery is ongoing, that we try getting from our customer, including all the further optimization projects in production to recover at least a good portion of our increasing personal expenses, which obviously also in this year are really much higher due to inflation that we have to suffer all over the world. The good and the very, I think, very positive development is the region EMEA. We'll come back to that also later on, where we had to once again last year, Q2 to this Q2 , a very good development and even a better development with an 11.5% EBIT margin, which is a great opportunity and a great achievement. APAC a little bit lower than last year.
As I told already on the revenue side, this is also valid for those then missing volume and fixed cost absorption impacts that we get with a slight reduction in the profitability that we see over there in that region. Once again, all in all, we have to say or wanna say that Q2 is back on track. After let's say an seasonality-based lower Q3 , I would say with a 13.1% margin in the Q2 , we are back on track. In terms of profitability, here you can see the biggest jump with 62.6%.
Obviously everybody will ask the question, how this is possible when we just have an EBIT increase of 3.8%, what happened then on the profit line? The major topic here is, that is something really positive with almost a slight increase on the EBIT numbers. We were able to achieve a significant positive tax impact, which is a tax refund we got from a tax ruling because there was in past, you know that, in past, in the year 2009, 2010, there were change in the ownership of Stabilus Group, which was done to restructure the whole company and to bring them to the future.
Normally, with such a change in own-ownership of a company, all losses that are suffered until that moment, including the loss carryforward, normally disappear and they cannot be used. German law and German tax law defines one concrete example. It's called in German, That corresponds to an EUR 18.9 million tax income, if you wanna say it like that, which is more or less 50% directly reduction of taxes of prior years. It's a direct tax income that we will get also the money during the next couple of weeks and months. The other portion are regarding interest tax loans carryforward, that we now can use once again, and these are now deferred tax assets, which are absolutely valid based on that ruling.
Therefore, we were able to put an asset position of EUR 18.9 million, which at the end goes directly via the P&L. In addition to that, you know that on in German tax authorities, whenever you get a tax refund, then also interest has to be calculated on. Until 2018, at least the tax relevant interest rate was about 6%, which sounds very, at least quite positive in that perspective. Therefore, we got, in addition to that, a EUR 3.3 million tax interest income from our tax authorities.
Overall, all in all, the total amount is about EUR 21-22 million, positive result that we were able, after long discussions with tax authorities, to really bring that home and to increase our asset side for the company, where we are absolutely happy on that. Talking about the free cash flow, there we have to say that the free cash flow increased by 18.6%, from EUR 10.2 million to EUR 12.1 million. There obviously you have to know that all this positive impact on the tax ruling did not have any influence because first money inflow will happen after the end of the quarter.
Therefore, the only impact of that tax ruling is when we're talking about the profit, but not about when we're talking about the free cash flow. In that quarter, it did not have any positive impact, but obviously over the next weeks to come, a EUR 10 million positive direct free cash flow impact is to be expected to come in the next quarter or in the next two quarters until end of the fiscal year. That is a little bit the situation about the Q2 . We have to say after the Q1 , we are quite back on track. We are in our margin development.
Obviously, there is still some way to go to really get in in our to reach for the full year our guidance. You know already from past years that the seasonality in that perspective also will help us to make that happen, and that we are convinced that we can maintain our existing guidance. If we then jump to page nine, then I would like to give you also some insights about the first half year, so not only the Q2 , but first and Q2 . Here the situation on the revenue side is slightly different, where we have a 14.6% increase of our revenue from EUR 524.9 million to EUR 601.3 million.
Still on the first half of the year, despite the negative effect due to coronavirus pandemic in the Q2 , still in the first half of the year, also the APAC region had a positive growth with an 8.6% growth compared to last year. That is still remarkable and I think a very good sign going forward that with once we overcome all those specific, individual China, related risk. That we will come back on track also on that, in that region. Americas with a very high growth, so that is this year after last year's where APAC was number one in growing this year is the region of Americas, both on industry side as well as on automotive side with a 29.3%.
Therefore, really a big and a very positive achievement in the region of Americas in all the different business units that we have. Finally, EMEA. You still remember that that was quite a little bit our most critical situation in the past quarters, we have to say, even in the prior year, due to all these energy crisis, Ukraine war, et cetera, et cetera. Here we are able to announce that we're still growing at 6.9% first half of last year to first half of this year. Also, that taking into consideration that, in our Q1 last year, that was still the last one before the Ukraine war. Therefore, a lot of things geopolitically perspective changed.
Therefore, we have to say, there we are quite proud that EMEA also is back on track in that activity. EBIT, 7.0% increase from last year to this year. Obviously, it's a 13.1 to the 12.2%. We are expecting the same seasonality as last year, where we also were below the total year-end result that we achieved the 14% last year. We were also in the half year on the 13.1%, there is no reason not to think about that this will be the same development also in this year.
Also here we are quite fine with the development that we see after those specific action in the Q1 , that we have an improved Q2 available now that I just presented you five minutes ago. In terms of the regions, APAC is with a EUR 23.8 million last year, now increasing to EUR 24.3 million result, major impact, obviously, following the development on the sales side with the region Americas, where we have the biggest increase from EUR 19.2 million to EUR 27 million adjusted EBIT for the region Americas. Last but not least, EMEA with now with the EUR 25.7 million, therefore, having a good development also in that perspective.
Once again, the profit of the year increasing there significantly due to that specific impact that I already explained with the Q2 numbers mainly related to the tax refund that we got, so therefore not necessary to repeat all those activities once again. On the adjusted cash flow side, also there we see a very, very positive development. Therefore, despite the good operational development of our EBIT margin and EBIT numbers in absolute numbers, we have to say that now we are not anymore in the time in this year of increasing our net working capital due to supply chain issue. This is already what we have seen in the past.
Now it's up to us coming in the next quarters, not only one, but multiple several quarters also to continue this path of reducing the working capital for the group and generating the cash flow out of that. We then go a little bit even more in detail and continuing the page 11, we come to the region EMEA. Here you can see also the share of our three business units, Industrial, POWERISE, and Automotive Gas Spring. Once again, we saw a significant good development on the Industrial area, jumping from 70 million EUR to 75.1 million EUR. But obviously the biggest development is the development in the revenues of the Automotive POWERISE coming up from 23.9 million EUR to 29.8 million EUR.
This having said, having a look at the light vehicle production in Europe, Middle East and Africa, which was at about 5.1 million units and an increase of 13.6%. Having a clear understanding that our POWERISE business increased significantly higher than this light vehicle production. Therefore, we still can say, POWERISE is really much on track and the success story with that production area with an increase of 24% is really ongoing. Which was supported by higher production of POWERISE units for BMW 1 Series, 4 Series, and 5 Series. All the different areas, including also the electric vehicle, the iX series, the MINI, but also for Focus, Geely, Hyundai, Kia, Tesla model, Volkswagen.
You can see that it's not just one customer that we increased, and therefore it's a one-timer. It's really on all those platforms that we are in that the success of the POWERISE continues here in Europe, which is a very, very positive sign. Also Industrial revenue grew up with EUR 5 million or 7.1%. Taking in mind the development of the GDP in Europe, also there, this is a significant outperformance that we can see here with major growth on our areas of mobility and energy, construction, industrial machinery and automation.
All over that, the adjusted EBIT margin improved by 50 basis points to 12.3% in the Q2 of the financial year 2023, due to, as I already said, a strong growth in the automotive power lines and the industrial business units, and therefore contributing with a bit of better fixed cost absorption and also slightly reduced purchase price for some of our raw materials and components. Going down to the next slide on page 12, we continue with the region Americas in the Q2 . Also here, with 19.7% increase of our revenues start coming from EUR 95.2 billion up to EUR 114.0 billion, sorry.
Also here we have to say a very strong development in all the three business units, but obviously the biggest one is the industrial, jumping from 31.7 to 39.3, which is nothing else than an increase of 23.9%. Also the automotive business units increased 16.2, with POWER LINE or gas springs with 19% in a nutshell. Having this said, we compare that also once again with the light vehicle production in Americas, which increased by 10.5% in the Q2 .
Therefore also here, we have to say that, or we can say we are proud of that, and also here our outperformance, because it's in the market, for the market, on that perspective, is significantly higher and therefore also here a very good development. Automotive Gas Spring revenue increased 9.3% organic. 1.3% organically. I think to compare them with light vehicle production, we have to take the numbers based on the real values and not only the organic topics because it's in the region, for the region.
Main customers within reach was Ford, Expedition, Rivian, Tesla, Model 3, Model X, Model Y, also the Volkswagen Group with also their new models that we are now in and having a good development. Nevertheless, the shooting star of that region was the industrial revenue increase, which is 24.7%, which still is an organic growth by 18.5%. Also here, the major segments, which is also valid for the group and also here for Americas, is energy, construction, industrial machinery and automation. These are the major ones that we are increasing significantly. Last but not least, to go to our region APAC, that you can see on page 13. Here I would like to start first of all with the light vehicle production.
What is, and we have to say just a 0.8% increase in the Q2 . Taking in mind the growth rate that we learned or that we experienced over the last years, this is significantly reduced. There with an overall revenue of -2.5%, obviously we were not exactly in line with the light vehicle production, but this is also due to some mixed impact on the current on the current sales area. The organic change in Automotive Gas Spring, -5.3% year-over-year and POWER LINEs +4.8%, was driven yields by higher production, mainly ahead with Hyundai IONIQ, Niro, Tesla Model Y, and some of these other Chinese car manufacturer.
At the end, the EBIT margin is at 15% in Q2 after 17.7% in the Q2 of last year, which is obviously a reduction of our profitability. On the other side, we have to say that in some weeks, not only at Stabilus but at all the different industries in Asia, in China, we had sickness rates of about 40%-50% after the release of the corona pandemic related activities in China. Coming out of that with still a good margin is already a good sign.
Finally, before I go, hand over back to Michael, I would jump shortly to the slide 14, which shows us the revenue on for the whole Stabilus Group for the Q2 , not here in that case divided by region, but shown by the business units, industrial, POWER LINES and Automotive Gas Springs. Still here we have growth rates in all the different areas. Obviously, historically, the growth rate is due to the high market share that we already have with Automotive Gas Springs, lower than with POWER LINES. POWER LINES, we have to say that the growth story and the good development is a truck industry on a very good development.
Therefore, as we already said at the beginning, the good mix between auto industry is really much paying back and helps us overall to also in these difficult times to maintain a very good performance in the Q2 . With having said, I hand over back to Michael for more insight about the industrial sectors.
Thank you very much, Stefan. Industrial revenue by market segment we are talking in the next couple of minutes. Again, here also on the industrial revenue side, very good growth year-over-year, 11.9% comparing Q2 2023 to Q2 2022. Overall, we are at a sales point of EUR 120.2 million for the past quarter. Where is this coming from? Particularly on the energy construction and industrial machinery area, as well as on the automation side and mobility side, we've been growing very strong. A part is reshoring activity, we'll get to that later. Let's talk about the mobility sector first. The truck business is recovering in certain areas.
This is contributing to this growth of having a share of 27% up to 30% for the automation, for the auto sector here or for the mobility sector in general term. The aerospace business is also enjoying good growth because now after the pandemics, the producers of airplanes, they continue to produce planes. The maintenance activities need to kick in, and this is supporting us big time on the mobility sector. I'd like to talk about the automation sector means reshoring a bit in particular. As said earlier, the reshoring supports our values a lot also in the coming years. That's our assessment. Considering the geopolitical risks of certain countries, certain countries decided then to kind of reshore production back home. This actually leaves them with an increased labor impact on their products.
Means, for example, if products are reshoried back to the US or to Europe because the belief is that in China, there might be some unrest and some critical situation in the future. Many companies do so. They reshore, therefore, production back to the home countries like the US and Europe. This leaves them with higher costs, right? Because the labor costs in the US, typically also in Europe, are higher than in other countries like China. They need to compensate or make up for this disadvantage. They do that with automation. Our products are top-notch in terms of automation. I've been also stating earlier today in the call that we are working on our innovation rates. Our method out of the strategic pyramid to deliver top-notch products in the area of industrialization and automation.
This helps a lot in these particular segments, because whenever companies are bringing back their home business, they need automated equipment. In many, many cases, you find the gas springs, POWERISE systems, electromechanical devices, dampening systems in these assembly lines. This is what particularly these days and also in the future, is generating good growth opportunities for us. I tell you, it's really profitable growth we're talking about here. With that, I would jump over to the final page of our presentation, which is page 17, talking a bit about the guidance. I also said early in the call that our guidance is unchanged. Bottom line is we had a strong quarter. Did improve our profitability.
Over the course of the year, we continue to do so because there are certain activities in terms of repricing, inflation recovery, and also managing our supply base to further continue that path of success, along with productivity increase in all of our plants. That's why you see some margin increase towards the end of the year. I've said it before. Basis of our guidance is still light vehicle production growth of 4%, so 84.8 million produced vehicles in the year 2023 versus to 81.6 produced in 2022. We follow IHS as a market tool. Then for sure, we also still consider some post-COVID effects out of China in our doings, in our guidance.
Our guidance at the end of the day amounts to EUR 1.1 billion-EUR 1.2 billion in terms of sales and the EBIT margin to be expected in the range of 13%-14%. In the long run, also here again, we are committed to our strategic pyramid. As I said, we are fueling our company in terms of innovations. Also extremely important to us is focusing on profitability and sustainable growth, customer and employee satisfaction. With that strategy in the pocket, basically, and the strong backwind of automation in the industrial areas, we are progressing in the year. With that, I would open the session for questions, if there are any.
Of course. Ladies and gentlemen, if you would like to ask a question, please press nine star on your telephone keypad. If you would like to withdraw your question, press nine star again. Please press nine star to raise your question. Meanwhile, we have already received few questions, and the first one comes from Mr. Akshat Kacker of JP Morgan. Please go ahead.
Morning, Michael. Morning, Stefan. Akshat from JP Morgan. Three questions from my side, please. The first one on the margin recovery in the second half of the year. Obviously, this is the key question with this set of results, and we're getting a lot of incoming on this. If I summarize my question, you're basically guiding for a 150 to 350 basis point improvement in margins in the second half versus the first half of the year on a similar top line. This is mainly based on inflation recoveries from your customers and inflation reduction from your suppliers as well. In terms of your discussions currently, how many of these negotiations have you already completed or signed YTD? Probably in other words, what is the risk of customers or suppliers pushing back on inflation compensation, especially across labor and energy?
That's the first question, please. The second one on China and Asia Pacific, obviously a weaker quarter in terms of seasonality, and it was hit by pandemic-related shutdowns this time around. How do you think about the recovery in margins, going into 2023, please? Do you think we go back to the 19%-20% levels as the market stabilizes, or are there more cost or pricing pressures in the region going ahead? The last question on the Americas region, and again, on the margin development in that region specifically. As you mentioned, revenues are up 15% organically in the first half, and margins are still at 12%, which is relatively low versus your own track record in the region. You have mentioned inflation and product mix effects.
Could you please elaborate on both these impacts and if it is possible to quantify the impact on the bottom line from both these effects, please? Thank you.
Thank you very much, Akshat, for your questions. We split in the following way. I'll talk a bit about the margins for the rest of the year, then Stefan will talk about China and the Americas, so the regions. In general terms, if you talk about the margins, yes, you have to be right in mathematics terms. It needs 150 to 350 basis points for the rest of the year in terms of margin improvement, coming out of the activities we've been stating. Actually, there are three main areas of activities. One is, we mentioned two of them, inflation recovery from the customer side, managing inflation with the suppliers. Also the third one, which is extremely important to us, is the improvement in our operations.
The improvement of our operations, I will start with that because it's the point which is actually also developing over a year. We have a increase in terms of labor around the globe. The labor inflation was significant this year. You also know that. It hit particularly North America and Europe, not so much in the Chinese regions, but in the Asian regions. In North America and Europe, it was anywhere in the range between 5%-8%, depending on the plants, whether it be Mexico or U.S. or in Romania or in Germany for us. This area, we typically start early the year to kick in with improvement actions on our shop floor. That means we typically do cycle timing and improve the cycle times of our machines.
We have initiatives for automation in our production shop floor, which gradually improves the efficiency of our line. This is something which for sure cannot be turned and switched on by the 1st of October. That's why we kicked in October, November, December with the first actions executed January, February, March, the first effects you see in our business. This kind of rolls up to an improvement of our actions to set up or compensate 2%-3% of labor increases over the year. Typically, this time around, we're faced with an average of 4.5%-5%, and this is also something which we negotiate with the customers along the line.
Let's say this improvement, they are also linearly growing from October towards the Q3 of the year, which is one element of making up this margin improvement. The other point is inflation on the customers and supply side. I would say in terms of negotiations with the customers, we are at 75%. And on the supply side, I would say we are in the range of 50%. Why is that? See, on the customer side, we did kick in very early for sure with kind of crawling back money and increasing our prices to the customers already in October. Because we knew that we are in a difficult situation in terms of getting back customers' money in terms of inflation recovery.
We started very, very early in the game in October. Also here, it's kind of a linear way of getting the money back. Why is that the case? We started the negotiation October till December. January, February, March, we closed majority of the contracts. The money kicks in either retrospective but in general term, growing over the course of the year. This is kind of where we are in the middle of the game, getting this money back from the customer. It's I would say 75% closed. Just as a point to remember, our inflation in that range was kind of a 3.5%-4.5% of inflation of the material side. The other point is on the supplier side.
On the supplier side, for sure, we are only at 50% negotiation, even a bit less, I would say. Why is that? You know, we typically start to push out the negotiations with the suppliers as long as we can, right? You want to make deals with the customer in the early stage, because the longer you wait, the more people and suppliers knock on the door at the customers. Unlike the suppliers, you want to push that out in order to gain from the momentum, because we knew already in the early days of the winter that eventually the energy costs will be not quite as high as we all thought. Then we saw already the material costs coming down.
That's when we started negotiation with the suppliers, making sure that we reach them in the perfect point in time also to confront our supply base with reduced prices on materials and reduced prices on energy. This is how else we say, 50% of the supplier negotiations are closed and 75% of the customer negotiations are closed. Please keep in mind that they are going up in a linear way towards the end of the year, as they are kind of negotiated now, but they're kicking in over the course of the year. I hope that answers your question. I would hand over to Stephan for the regional topics.
Okay, thank you very much, Michael. The second question was about where we believe that we come back for the margin in China and in the region APAC. As you correctly said, APAC is really much influenced by China. There we have to say that we really much suffered of the Chinese New Year, a significant sickness rate. This was not a Stabilus specific issue. That was in all the different industry, up to 50% of sickness rate, which really makes it very difficult to maintain not only the production, but to maintain it also on an efficiency level, which is quite good. Therefore, what is when we are expecting going forward?
First of all, we are on that perspective, not, let's say, as enthusiastic as what we've seen in the last year after the lockdowns happened in, in China, then there was a tremendous increase in our sales. This time we do not believe, because now it's the market needs a little bit more time to recover and to feel that new normal that they get in, in China. Nevertheless, we also see there a slight recovery over the next months to come. Therefore also, by doing that, we should get additional positive impact by slightly increasing volumes on the one side.
Second also, by the continuous optimization of our operational level, including purchasing, as Michael said, but not only purchasing, also our production activities to recover and to get all the productivity wins. The good thing is there, and that is a little bit different to other regions, that China was not too much impacted by very let's call it extraordinary high increases of personal expenses that we've seen in other regions, like in part of Europe with Romania or with Mexico. That is a good sign. Therefore, the clear objective has to be, yes, of course, coming back to the 19% in terms of profitability. The timing exactly that will also the volume will show us when this will be doable.
That is clearly the clear target to come back to those margins that we already had in past. Talking about the region Americas, there, you're also right that, from a margin perspective, we are a little bit lower than what we already achieved also in past. There we have different impacts. First, we suffered there, not too much in U.S., but mainly in Mexico, which is also for the region, our biggest production entity, a significant increase of our personal expenses, which was an increase, a labor cost increase of 7%-8%. I think that it's normal to understand that the normal procedure is that you get compensate those personal expenses by productivity earnings in operation. With the 7%-8%, this is not doable on short term.
That needs a little bit more time, and we're working on that. Second point, we suffered quite a bit about the higher freight costs compared to mainly to last year. The good thing is that we already see a tendency that at least in some areas the freights tariffs go down a little bit, and therefore also that is helping us. The third point also, which will help us despite all the productivity earnings that also Michael explained, is that we've seen until now still quite high accruals for healthcare costs because they were significantly still impacted by the corona of last year. Also here the clear expectation is, and also we start seeing that over the last weeks already, that those costs should reduce now step by step also for the second half of the year. Therefore.
There are very good arguments to believe that, based on a continuous work that we're doing in productivity, we will compensate more and more those personal cost inflation increases that we have. We will be supported by reduced challenges on the freight cost side. We will also see some cost improvements on the material side. Once again, also a little bit the healthcare topics will help us to get back to those margins that we know from past. I hope this explains a little bit the question you had.
Thank you so much. That's very helpful. Just one quick follow-up in terms of Americas region. Can you please elaborate the product mix effect that you have spoken about in the presentation? Apologies if I missed explanation there.
Yeah. The product mix impact, that is now that we see that it's significantly one business unit good, other units bad. It's always also a little bit within the different business units, and it goes via all the different aspects that we had compared to the last quarter, some topics where we also had customer-specific inquiries where the margin is a little bit lower than what is the normal mix that we get. This was in that last quarter a little bit coming in. That is not that I can say, this is one or two customers, and these are one or two product lines that we have. That is the total mix of a lot of different issues.
Within the industry, there are some activities where we started, where we're still margin to come up, so some costs are increasing. This is impacting all the different business units coming there across. Not one or two specific topics that we say we can take out of that as specific trends. We do not believe that this is a trend. This is just, let's say, summing up this quarter.
Understood. Thank you for the details.
Thank you. Thank you.
Yes. Thank you. At the moment, there are no further questions in the queue, therefore I will repeat. Ladies and gentlemen, if you still have a question to stage, please press nine star. Okay. We received a couple of more questions. The next one is Yasmin Steilen of Berenberg Bank. Please go ahead.
Yeah. Thanks, for taking my question. Actually, only one left. With regards to POWERISE, we have seen underperformance of the light vehicle production in the Q2 , so obviously it's a very volatile development. Maybe can you shed some more light on the reasons for the underperformance in the Q2 and what we should expect for H two? Is there anything or which you can share already in terms of the development there? In this context, should we also expect an improvement of the product mix from Automotive in the second half? That would be very helpful. Thanks.
Sure. The POWERISE performance is kind of different per region this time around, if you go through that. In terms of POWERISE, EMEA, as stated before, they've been certainly going up. It was kind of a good POWERISE quarter for EMEA, and the reason being that, against the general belief in the industry that the automotive industry would be going, kind of undergoing very soft times, this did not happen to the extent originally thought. That means, we had good launches and good performance, 24% POWERISE growth year-over-year, actually good growth with kind of BMWs frunk, but also with Ford, and also with local productions of Tesla, Volkswagen Group.
In general terms, on the European region, the originally, by the economists, expected slowdown in Europe did not happen to the extent forecasted. That's one element. In Americas, to a certain share, it's still. They also had a good performance. It's still kind of filling the pipeline after the electronic shortages, because particularly in Americas, the yards of dealerships are still on lower levels than average. Here we also saw good growth, by POWERISE in that term, in absolute terms. We have here good launches, also here combustion engine, but also electric engines like Rivian, Tesla, ID.4 with VW, which indicates that we are kind of with our product on the right product of our OEMs. Also the electromobility continues to be extremely important for our growth.
We've been growing, I would say, a majority also with the electric vehicles lately. Europe and North America on a very good level, as well as in Asia-Pacific, by the way. Asia-Pacific shows that we've been on the same level than before, 30.7 million versus 30.2 million. If you compare that in general terms with the economy, and with the cautiousness of people, then we did also in the POWERISE side well, particularly also here with electric vehicles. If you look onto the list, majority of these vehicles we've been launching, like Hyundai, and Kia and Tesla, there are with the auto several platforms which we launched. They've been also doing particularly well. The performance of POWERISE in Europe and Americas' bottom line is very good. It did grow substantially.
On the Asia Pacific area, it's flat. This is pretty much driven by the consumer behavior, and kind of thereby a softer car manufacturing in China. Hope that answers your question.
Not really. I mean, just looking at the numbers, in particular in Americas, the POWERISE development is disproportionately lower than the global production volumes. Is it a mix effect of the cars produced given the still some bottlenecks on the electronic side, the electronic shortages you just mentioned, and is it something we should see to reverse in the second half of the year?
Your question was particularly on the North American side. There, yes, we still get orders pushed out, particularly from the Detroit Three, based on shortages of electronic components.
Okay.
Talking about North America, region particularly. As I said, the POWERISE in general terms also in Americas enjoyed good growth from EUR 37 million up to EUR 43 million for the quarter comparing 2022 to 2023. Yes, you're absolutely right, and this is something which can be always underlined by the media around the globe. Still in America, particularly the Detroit Three, the electronic shortages is hindering and limiting once in a while the production at the OEM. It happens in a way that we get orders from the customers throughout the month. They get pushed out into the next month with the explanation that some electronic components and related electric components are missing at the OEMs. You're absolutely right.
Okay. Perfect. That's very clear.
Thank you for your question. Other questions?
Yes. The next questioner is Mr. Michael Schulz of JMS Invest. Please go ahead.
Hi, good morning. This is Michael Schulz from JMS Invest. Can you hear me?
Yes.
I have actually two kind of accounting questions. One is the cost of sales and R&D expenses. As I read in the report, they have for kind of restated. Just in order to confirm the effect going forward, in the Q2 , the restatement effect on R&D costs was around EUR 6 million. Is that now the effect for two quarters? Am I right? Because Q1 was not restated. Going forward, we have R&D costs of around in between the new level of EUR 6 million or the Q2 level of EUR 6 million and EUR 12 million as we had previously, so around EUR 9 million. Can you confirm that?
Okay. I will take that question. Dr. Michael Büchsner speaking. First of all, it's correct that there was a restatement, or a reclassification, we have to say, not a restatement. Stabilus at establishment traditionally made all our R&D, the capitalization of our R&D development costs, based on the IAS 38 that we made. Also, we were showing historically the depreciation on those running projects in the R&D line. Now, also to be going forward a little better, let's say in a mainstream place like all the other ones are more and more doing that accounting. Lots of company putting those depreciation not in the R&D line anymore because they are obviously sales related, because these are the sales of those new products.
That's why, lots of company already made in part the reclassification to show those depreciation on the cost of goods sold and not anymore under R&D. We made that already also this quarter end, to be there more in line with accounting practice of all, also of other peer companies. The six million, it is correct, but this is not a quarterly value. This is a half-year value because we made here the reclassification of those depreciation of the first six months. Therefore, you can say as the depreciation is quite stable of the year, the total impact on the depreciation of those projects is around EUR 12 million for full year, where we have now made the reclassification for first half. The quarter value would be around three.
Okay. Thank you. That's helpful. The second question relates to selling expenses. They have increased by about 40% year-over-year. One of the explanations you give or a part of the explanation seems to be costs incurred in connection with the establishment of a warehouse for the independent aftermarket in the U.S. Can you say something about that? How much of that is sustainable costs, and how much is kind of a one-time maybe a step-up cost or so? What do we have to expect going forward, and how much is this in relation? I mean, the 40% seems quite steep, maybe you can explain a little.
First of all, the good message is that also this, when we talked about that issue, that is, that is mainly related also on a kind of reclassification that we established already in prior years, these independent aftermarket warehouse and all the related costs there, which at the beginning have been shown as cost of goods sold, and this has been changed to marketing and sales development. This is now as a fully finished product warehouse to deliver to the end customer.
Therefore, there's no additional cost that is coming up, but that is at the end about a good 3.2 million EUR reclassification from cost of goods sold in that perspective, which are not additional costs, but which are now nothing else than reclassification. If you wanna see the increase of those costs, then you have to deduct those values. By doing that, we are coming with a significant lower level in the increase of the marketing and sales costs. Nevertheless, we have to say, marketing and sales costs are increasing. Why?
First of all, you have to know that with all the fairs, which now take place once again, which the COVID pandemic related did not take place, also travel expenses are slightly increasing. Mainly also due to additional activity and additional sales on the industry side, we also have a little bit more outbound freight, not in terms of tariffs, but in terms of volume, and also some higher packaging costs. The point is now if you compare that, marketing and sales expenditures, these are not fully fixed costs. These are also related to the sales line for a quite significant perspective. The average increase of people that we had is quite minimum. It's just about six people increasing there, and this is also in low cost countries. The increase, if you want to say what is permanent increase of our cost, is quite small.
just as a clarification, the EUR 3.2 million, how do I? A reclassification from cost of sales? How do I have to look at this now?
Cost of sales.
Do I also have to take off of that as a quarterly increase to this line, basically, the selling expenses?
Yeah.
Of the EUR 3.2, so EUR 1.5 million.
These are not new costs. This is just a reclassification.
Yeah. I understand. Yeah. It's just in order to.
Yeah. Yeah, sure. Sure. Good. Thank you very much for your question. You know, quality and good performance starts with being in time. We exceeded already our meeting time today, which we really like because we value your strong interest in our successful company. We would close the call if there are no further question. If there is one, it should be a very short one, please. Otherwise, we would close the call for today.
Yes. There is one more follow-up question from Mr. Akshat Kacker. Please go ahead.
Thank you for taking my follow-up. One quick one on Automotive POWERISE, more a medium-term question. In terms of your discussions with customers and the recent RFQs that you are in, can you just talk about what applications are gaining traction in terms of Automotive POWERISE? Are you getting more incomings for door actuators, probably, or front trunks in electric SUVs or light trucks? If you could just talk around that, topic, that'd be great. Thank you so much.
Absolutely. Thank you much for the question. It's basically across the board. In general terms, we monitor on a quarterly basis our order intake. Typically, if we take in an order today, the development time of the cars are three years. It kind of is a good sign for how our business will be doing in three, four years from now. Actually, we are happy to say that currently our market share is 33% in the market, and with our order intake, we are surpassing that. Currently, we're taking in the range of 35%-40% of orders, which underlines that we see good growth. Where is this growth coming from? It's combustion machine vehicles as well as electric vehicles.
In general terms, the electromobility support us a lot in our business because those people who afford an electric car, they typically don't want to open things manually, they decide for electromechanical devices in general terms. That's also why we are a very strong player in all electromechanical and electric brands in the market on the OEM side. Door actuation, same thing. We are market leader with our technologies here and are currently awarded for cars mainly in the Asian side, in the Asian region. In the Asian region, forefront is Geely and HKMC. Those are the front runners for door actuation, and this is where the playground where we get our contracts with currently.
Here it seems that the Asians are the front runners and Europe and North America are kind of running after the crowd in terms of that introduction. Also here we see growth rates as expected, if that answers your question. In terms of frunk applications, it's a similar thing. Those OEMs, particularly producers of big SUVs and also pickup trucks, they decide for frunks, and our share of frunk applications in the industry is in the range of, yeah, 50%, which is a little bit above of our general market shares with electromechanical devices. Particularly here as well, as well as in the electromobility, we are extremely strong with our products because they have technical advantages, for example, in terms of noise behavior, right?
Those electric vehicles, they are on a lower noise level than combustion engine, and you want to have noise reduced parts, and here we are leading in terms of technology. Hope that answers your question, Aksha.
Great. Thank you.
Thank you.
There are no further questions in the queue.
That sounds good. As I said, it's a good sign that we outpaced our timing this time around. It underlines the strong interest in our strong company. Thank you very much for all your questions. Thank you much for the participation. We wish you a successful week. Thank you.
Thank you.
Bye, everybody.
The conference is now.