Good morning, ladies and gentlemen, and welcome to the Stabilus SE Web Conference regarding the results in the third quarter of fiscal 2024. 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. Welcome to our quarterly call today. We have Stefan Bauerreis, our CFO, Andreas Schröder, Investor Relations, and myself, Michael Büchsner, CEO of the Stabilus Group, on the call. We have some good news for you today. The market is stabilizing for us in the fourth quarter, and the first-time consolidation of Destaco contributes positively to our financials. Let's go into the details. As expected, we saw some softer call-offs in the third quarter, which we forecasted, and this is mainly driven by our bigger OEMs and also by the electric car segments. However, our customer demand is stabilizing in the fourth quarter, and thereby in the third quarter, the organic revenue growth in Asia-Pacific was positive 3.2%. Organic development in EMEA, a little softer as expected, -5.1%, and in Americas, -3%.
Also here, softer, impacted by lower quantities, automotive and commercial vehicle sector. However, the consolidation of Destaco really drove our sales, and we overall, quarter to quarter, have a positive 14.4% sales increase, and Destaco generated EUR 48.8 million in revenues and 19.9% EBIT margin, which is absolutely outstanding given the market circumstances and fully in line with what we forecasted. So Destaco integration is well on track. The refinancing of the bridge facility is in preparation, and we see a solid pipeline in our business of Destaco going forward. On the next page, I'd like to talk a bit about the market environment in the second half for our business. The volume reductions we saw in the second half of the year are for sure impacting our fixed cost leverage, which actually was reflected in our latest guidance release as of June 11th, 2024.
This fixed cost flexibilization action, which we're now taking into account and now executing all over the world, we started them already months ago, showing first impacts, and things are stabilizing. We'll for sure overcome these headwinds and then actually carry these advantages in our cost structures in the year to come. Overall, we absolutely confirm our STAR 2030 goals in spite of these challenging market environments. So what did we do in detail? That's what you see on the next page to counterbalance these challenges. The countermeasures which are in place are rolled out over the course of the past months and will progress also in the future, is flexibilization of our production in all impacted plants. We see this overall softness in sales of 2.5% on a global scale.
We've been considering all these effects in the plants, cutting costs down and adjusting our labor for sure. We expanded our efficiency programs, which we started in all the plants to cut down on costs and make a sustainable business model for us and consider and push our path for success. And we expanded these efficiency programs into the functions. So also on the functions, we're now adjusting the cost structure in order to improve our operations. The continued automation is also extremely important in terms of counterbalancing our labor cost inflation position. Yeah, these inflation recovery measures, which we've been talking about over the course of the past months and years, are carrying first fruits as well in this year as expected. So we are in negotiations with our customers. All these negotiations are coming to an end and materializing in the second half of this year.
We'll see that also in the fourth quarter. So we will for sure overcome the external headwinds in the coming quarters. On the next page, we'll talk a bit more about the good results we see on Destaco side. The revenue growth was good. Overall revenue is EUR 48.8 million. EBIT margin EUR 9.7 million, which equals to 19.9%, which pretty much is in line with last year and also which is in line with our expectation for the year. And the free cash flow amounts to EUR 7.6 million, 15.6% as a percentage of revenue. It was a very good quarter for us in terms of integration work. Actually, we go to our customers and our customers welcome us with, "Yep, we know your products from ACE. We know your products from Hahn.
Now you have a way bigger portfolio as a Stabilus Group, and we are actually touching the same customers than before, but with a nice and good portfolio on the automation side in addition. This is really appreciated by the customer base and is driving good sales for us on the DESTACO side. As a matter of fact, we have four cross-sales orders received and actually joint customer visits, which we do along with our new colleagues from DESTACO, and this is really welcomed by our customers, as I said. We also see first savings on the procurement side as we streamline our volumes, streamline the supplier base, and actually having joint supplier negotiations as we speak. Important to us is for sure the IT landscape.
So we are pursuing the path of migration of IT services and actually are setting up and decoupling the stack from their previous ownership and attaching them to our systems along the line. We rolled out the code of conduct to the entities and actually are working on cutting the costs down where we can, also when it comes to the transition service agreements, which we are actually ahead of time in terms of executing. And we achieved a very successful initial consolidation of the business itself. The numbers are coming together, and they are developing in the way we wanted them to develop. A particular highlight we'll see on the next page, a particular highlight actually is the conveyor belt business. You know, the conveyor belt business is extremely important.
You basically are progressing and push the materials, the workpieces from one to the other place in a fully automated assembly line with such a conveyor belt. It enjoys really good growth rates. One of these contracts can be in the hundreds of thousands of EUR, and it's a prime product which we sell to pharmaceutical and medical areas and actually enjoys good growth rates also on the consumer goods side and personal care. So it's used for packaging, life science, mobility, whatnot. And actually, it's a product which is good for the Stabilus because it's demanding high precision. It's leading edge amongst the competitors, and it's actually integrated in assembly equipment in all industries and driving therefore also our growth of the future. This is just one example of the wonderful product portfolio of the Stabilus Group.
On the next page, we talk a bit about the financial position, and I will basically give you a general overview before I hand over to Stefan to talk a little bit about the regions. For sure, these numbers are in an overarching scheme of the Destaco integration. So the revenues did rise by 14.4% from EUR 306.5 - EUR 350.7 million. Organically, yes, it has been a soft quarter for us, mainly driven by some of these bigger OEMs, as stated. M&A effects, however, are 17.4% up in terms of sales, and there was also an FX impact which we consider in these numbers. The M&A effect, which was the Destaco mainly, is EUR 48.8 million, and the currency effect, EUR 4.6 million. Predominantly still growing in Asia-Pacific, offset by a little less volume in EMEA and Americas.
Also, when it comes to the adjusted EBIT margin, we ended the last quarter last year, so the third quarter in financial year 2023, was EUR 41.9 million, and now we are at EUR 43.1 million. So a growth of 2.9% year-over-year, quarter-over-quarter. And the adjusted EBIT margin was for sure to a certain impact impacted by these lower sales of the automotive side and commercial vehicle side, but in an absolute term offset for sure by the positive development of the Stabilus Group role. High profitability of the Stabilus was for sure a major point of our consolidation. Please also consider that there was kind of an integration cost effect of EUR 2 million for the past quarter to do this integration predominantly on the IT side.
When it comes to profits in EUR millions, EUR 21.7 million was the number for the third quarter in the year 2023, and now we are up to EUR 24.3 million, so an increase of 12% year-over-year in terms of the project profitability and profit margin. We are extremely healthy still on the cash flow side. However, you see here one effect, which actually is effect carrying forward from last year. Last year, we had an extraordinary payment of a EUR 6.2 million tax payment, which actually did not occur this year. If you net it out by this number, we're well on track with our EUR 37.9 million and actually are on a good ratio in terms of our free cash flow in our business. So these are some detailed numbers, and on the next page, you see them in an overview.
For sure, these numbers are also in the light of our DESTACO integration because here you see on the upper line, the revenues are up in Americas 21.8%, EMEA 8.5%, Asia-Pacific 13.8%, and this is largely driven for sure by the DESTACO integration, predominantly in Americas and in EMEA, somewhat counterbalanced a bit by the softer sales of the automotive sector and the commercial areas. EBIT margin is in the same way driven then to the extent we've been discussing by the DESTACO. Here we go into the details of the different regions on the next couple of pages, and I would hand over to Stefan, please.
Thank you very much. Now we'll guide you through over the next couple of minutes over our main segments, the regions, as we are reporting them, starting like normally also with the region Americas. So here on the revenue side, our revenues increased from EUR 109.9 million by about 21.8% to EUR 133.9 million. Always that includes the DESTACO sales which here leads to an increase of 24.5% included in that number. And as Michael already indicated, we have here a decline in our organic growth.
That will mean Stabilus excluding all the M&A activities which in here in that region is almost the DESTACO acquisition. So we have there a reduction by 3% in the organic growth. That is one of the major topics we are faced with. And you know, with our last, let's say, actualization of our guidance, we also indicated that it's mainly driven by the automotive OEMs and commercial vehicle side. And that is also what we can see here in Americas.
Overall, we reacted, I think, very, very good in that quarter already because it's not only declining from an organic perspective, 3% in sales, but we also started significantly in adjusting and flexing and make cost flexibilization wherever we can. So for example, here in the region, North America, we were able to reduce the number of wages people by 155 people, which is a reduction of 7% just in that quarter. And even the temporary workers we reduced because that is the easiest and the fastest way to reduce it and to make a contribution of the cost flexibilization of 67 people, so around 55%. So that shows you that we really take really much care of the flexibilization of our costs. Nevertheless, there is, and that is what you can see here in our adjusted EBIT figures.
On the one side, a very good increase on the one side from EUR 11.6 million to EUR 15 million. But also here, we have to say the major portion of the increase here is coming out of the first-time consolidation of DESTACO. And organically, we have here, despite all those measures that we took over the last weeks in terms of flexibilization of our costs and organic reduction on the EBIT side of 14.6%. Where does that come from? And I just want to give you also some information about our major market segment here in the region. For sure, there is a reduction in our major customers also on the e-mobility side and the bigger cars, which always, obviously in a lot of cases, have the power system also here in place. So that is also something that we see an overall reduction.
That causes also the fact that we are lower in terms of our own growth in revenues compared to the IHS numbers because here we clearly have to say that currently we are really much impacted by the mix of cars produced that is hurting us. But I think we got the right answers in flexibilization of our cost basis. If we then go to the next slide, please, we see an overview about EMEA. So in EMEA, obviously the picture is quite similar. Here we have even a reduction in our organic growth, which is higher than in Americas. It's by -5.1%, which goes in line also with the reduction of the IHS production figures, which produce cars, which is about 5%. So that goes hand in hand with that development that we can also see here.
Also in Europe, knowing that it is due to existing labor laws, often a little bit more difficult to adapt also your own cost structure. We already started to get in cost flexibilization and also were able to reduce the people in our product, mainly talking here also about temporary workers, but also wage earners. Wage earners at least were able to reduce 1%. The temps, we reduced 26 people also to react on that reduced number. Overall, the adjusted EBIT reduced here by about 5.2%. That is also a very deep organic reduction due to this negative organic growth that we see. And here in Europe, that is not only the car, the automotive OEMs, also here, quite frankly, significantly impacted by commercial vehicles, which have a downturn of 11.6%. So here that is not only the automotive business, but also industrial business impacted.
Exactly in those market segments, as we announced that in our last message about this reduction of sales that we see on the auto and on the commercial vehicle side. But I think we found good solutions and good first steps. We are not yet at the end of all that, but the measures are starting to show first positive results. And also here, when we see the development within the quarter, so there is obviously a positive trend also within the different months of the quarter in terms of the profitability. Nevertheless, the downturn has to be managed with cost flexibilization. That is what we are doing. If we then continue to the region APAC on the next slide here, that is the region where we obviously also from an organic perspective are growing. So here we have an organic growth of 3.2%.
Now you would probably say, "Okay, we are used to get higher organic growth rates than just 3.2%." That is correct. And we suffered here from this perspective significantly with high inventories compared to the last quarter to this quarter that our customer had on hand. Now we see that after this quarter a very much, let's say, normalization also in that perspective. And also here, the sales numbers within the quarter starting for the auto OEM business to recover step by step. So here we see even within the quarter a certain trend of improvement. And as Michael said, of at least a good stabilization of those reduced sales that we saw. And from that lower perspective, step by step, we come back to grow again. So at the end, despite of an organic growth, we nevertheless had the biggest reduction in the adjusted EBIT margin.
We just were able to realize a 13.2% compared to the 16.8% of last quarter. Where does that come from? That has come from, as we already indicated, mainly about a significant reduction in sales on Powerise. I already explained the high level of inventory that we had. And in addition to that, or our customer had on hand, not our, not on our side. And in addition to that, we are preparing our future growth also there by the start of new production lines, which are on the way being implemented and being set up in APAC and mainly in China.
Just talking about also about the PAL lines that we have and other smaller locations we're doing where we have to train people significantly and created some extra costs, but that will contribute and will pay back over the next quarters with coming back to a quite good growth. So within the quarter, we already see quite positive development from month to month going forward. So obviously here in that quarter, April and May were the worst month in terms of the sales. In June, then now starts slightly to recover. And that is also what we see for the next quarter to come. And that are the reasons for this development in our adjusted EBIT line. If we then continue, then we come to the development of the different market segments. And with those market segments, Michael, I now will back to you.
Yeah. Thank you very much, Stefan. EUR 350 million is the number. EUR 350 million is an outstanding quarter for us in terms of our sales for quarter three 2024. Sure, it was, as we said, somewhat impacted by the automotive business and the commercial vehicle business share, which you see here all to the right. However, whenever the automotive business is a little soft, the independent aftermarket shows positive trends with 4% here. That's what you see. For sure, overarching is the development driven by the STAR. So our shift to a balanced portfolio between auto and industry.
This is something you see here on this pie chart onto the left because our automation sector did increase up to 17%. And it's coming from a couple of percentage points only. Just to remind you, we had always 3%-5% of automation in our portfolio with our products from ACE and Hahn predominantly. Now we are expanding in a great way up to being a company driven by two major businesses, automotive and industry. This drives our portfolio in terms of a stable business going forward.
On the next page, we talk about our net debt ratio. For sure, with the payment of Destaco, buying Destaco, we lifted up to 2.8 x. We now have a net debt of EUR 703 million, which we already could reduce over the course of the past quarter. However, our goal for the future is to stay below 3.0 as of September 2024. As we already stated in that conjunction, we are in discussions with our bank to actually prolong our loans and actually working on our bridge facility to basically turn it into a more solid financing going forward. That's in the midst of the discussions.
On the next page, we see our net working capital. Our net working capital ratio is now at 20%, which is a good number after all, considering that we did integrate also DESTACO in these numbers. You know, by definition, DESTACO has some higher net working capital driven by their business model. Key is for this business model that they have parts on shelf because whenever customers need their products, they are embedded into fully automated processes. They require and request DESTACO to carry some of these materials in their inventories, which is basically driving these numbers. It's just an indicator of a very good relationship to the customers because whenever the customers need our parts, they are there. And this for sure drives on a short midterm somewhat our net working capital for this business-related components of automation equipment.
On the next page, we see our development of our, at the end of the day, investments, our CapEx rate. We are in the range of 5%-6% historically. This is something which we now, over the course of the last two quarters, increased a bit because we actually invested in our new technology, DA90. Door actuation systems, one of the bright future businesses we have on hand. Now, as you know, we got good business on hand. We sold more than 200,000 sets of our door actuation systems in the current year, year to date. We continue to invest in that area for radar systems and also for the development of door actuation system. This is, however, a short-term basis investment. We expect our investment ratio, so the CapEx rate ratio, be in the range between 5%-6%.
This 6.16% or 2% are driven by these upfront investments for these new technologies. However, we expect that to ease over the course of the coming quarters. With that, I would like to talk a bit about the outlook. Our outlook and the guidance of June is between EUR 1.3 billion up to EUR 1.35 billion in terms of revenue and 11.7%-12.3% in terms of adjusted EBIT margin. We confirm this latest forecast considering a current revenue of three quarters of EUR 969.6 million in terms of revenue and an adjusted EBIT margin of close to 12% with the 11.9%. We feel comfortable and will achieve our guidance, which we published on the 11th of June this year. With that, I would like to highlight the key takeaways of this presentation before we open up for the Q&A session.
We took all the right measures to increase the robustness and resilience of our business model. That's for sure. We are sticking to our STAR 2030 initiatives. We are offsetting the current headwinds with the activities we have on hand, be it automation, cost cutting, flexing activities. That's what contributing in the short and midterm to our success. However, we also are fully in line with our STAR 2030 initiatives and long-term strategy. Considering the STAR initiatives, it's fully on track in terms of integration.
First success is for sure a successful quarter with EUR 48.8 million in terms of sales and an EBIT margin of 19.9% as expected and fully in line with our expectations for the year. With the current revenue of EUR 969.6 million and adjusted EBIT margin of 11.9%, we feel absolutely confident to reach the guidance for the full year 2024. And with that, we will open up for questions.
Thank you. Dear ladies and gentlemen, if you are dialed in the conference call and have a question for the speakers, please press nine followed by the star key on your telephone keypad. Now turned to the queue. Once your name has been announced, you can ask a question. If you wish to cancel your question again, please press nine star the second time. So one moment for the first question, please. The first question comes from Akshath Kacker of J.P. Morgan. Please go ahead.
Good morning, Michael. Good morning, Stefan. Akshath from JP Morgan. Three questions from my side, please. The first one on Powerise. When I look at the business in North America, the slowdown looks to be quite pronounced sequentially. Could you just give us more details of what's happening in this region? Is this OEM specific where you have been hit by a negative customer mix on inventory reductions or lower volume expectations, or are you seeing lower take rates across the board from all of your customers in North America?
That's the first question. The second one is on inflation and cost recoveries. If you could just help us by giving more details on what have you already achieved this year in terms of your negotiations with customers as well as suppliers, and how should we think about the pickup in margins in Q4 versus Q3? That would be helpful. The last one is on the industrial business. Could you just give us some more flavor on end market demand across different business segments? How's the order intake looking like? Are we looking at sentiment that is stopping out across different end markets, and what does that mean for organic growth going forward? Thank you.
Thank you very much, Akshath, for your questions. I'll start with the Powerise question, talk a bit about inflation and then industrial business before I also hand over for sure to Stefan for his comments. But talking a bit about Powerise in North America, absolutely right. And the business in North America in terms of Powerise was a little softer in the past. So this was caused by higher inventory of this particularly car fleets in the industry, right? If you see the big producer for electric cars, right? The big factories, there have been some of them which have been shut down for a number of weeks because of high inventories of these top-notch upper segment electric vehicles, right?
Due to the fact that we are the major supplier for electromechanical devices, we were impacted by that. By no means it was a reduction in take rate. The take rates are up to the levels they've been in the past, and they continue to be on that levels. We see that on all electromechanical devices, not only on the Powerise side, but also on the door actuation side because comfort features are a way to differentiate from others. That's why customers continue to put electromechanical devices for comfort in their vehicles, be it tailgate opening systems in an automatic way or door actuation systems. Actually, it was driven by higher inventories to a certain share driven by the Detroit 3 and by the big producer for electric vehicles.
It was driven, as I said, by high inventories because some of these OEMs have been working beyond 100 days in terms of vehicle inventory on the upper segment fleet. This is something which they wanted actually to ease towards the summer period. That's why some of the call-offs were softer in the past quarter. This is something which we reflected in the second half of this year. So it's all in our numbers as we speak. In terms of inflation and cost recovery from customers, we saw in terms of inflation, predominantly for sure labor inflation over the course of the past two years. We also saw inflation on the side of the material side. But however, this is coming down as the economy gets softer.
The predominant work we do currently is in terms of labor inflation recoveries in our plants and also still some cost recoveries, inflation recoveries from customers and suppliers. Just to give you there some flavor, in terms of inflation on the labor side, we've been seeing globally in the last 2 years, yeah, 5%-11% inflation per year on the labor side, depending on the region, right? In the low-cost countries, it was a little higher in terms of percentages. If you take, for example, Germany, it was in the range of 4%-5% or the U.S. in the range of 6%-8%, depending on the location. And this is something which we've been counterbalancing with automation equipment, putting automation equipment in place. Stefan mentioned the PAL line . So it's a Powerise automated line. That's what it means with PAL line .
The PAL line is now up and running in all regions. We built it up throughout this year to make us more independent from labor because these lines are producing the last generation, the final generation, the current generation of our Powerise fully automated. Then, for sure, in terms of inflation and cost recovery from customers, some of the customers owe us money from the past years, past two years. And this is why we are in discussions with these customers because typically, you know, these negotiations, they take a long period of time. We've been greatly increasing our sales prices, as you know, in the magnitude of 4%-7%, depending on the business, whether it be automotive and industrial business in the last year already. And some of this stuff is carryover, was also carryover in the discussions.
So we've been managing also here positive trend in terms of customer negotiation, which we'll see in the fourth quarter this year materializing. In the same way on the supplier side, because due to the fact that some of these materials are now not in inflation, but in the deflation mode, we are still in discussions with the suppliers and also see here the one or other percentage points pending on the commodity coming up. So what does this mean for the rest of the year? And this is what I meant with confirming our guidance, which we did hand out on the 11th of June this year with the current EBIT margins we have on hand, plus also with the EBIT margin development with these initiatives.
We feel comfortable to reach our revised guidance for the year, which is in between 11.7%-12.3% in terms of EBIT margin. So before I hand over to Stefan, also in terms of industrial business and end markets, I would say it's all in the scheme of early this year when I say construction equipment and agricultural equipment, still in a stressful environment. This is coming to an end. It's more stable than beginning of the year. However, we see here still an impact of the overall economy in these two areas. And then there is for sure some dependency on how the elections in the U.S. will go when it comes to the solar business because this pretty much depends on how the solar business will be tackled going forward. We see still very good opportunities in South America.
However, also with the initiative America First, we are the only ones now with a newly set up line which we transferred from Mexico to the U.S. We are the only supplier who's able to produce solar systems and damping system for solar equipment in the U.S., which actually supports the initiative of America First. So we are wherever the customer is and needs us in the future with these solar systems. However, at this point in time, and this is also something which we see for the coming months, pending on the election, this business is basically stable, but on lower levels than we all would love to see. When it then comes to the automotive industry in terms of sectors, the automotive sector is for us stabilized. It's a little softer than we expected as announced in the second half of this year.
It's, however, stabilized, and we see here a stable business development for the months to come compared to our last forecast we gave in June. In the same way, commercial vehicles impacted by lower demands on the globe early this year, we see now basically flattening out and a stable foundation for the months to come. From our perspective, it will not go further down. It will stabilize on these numbers. And also here we see good progress. A topic which I would like to highlight is for sure DESTACO because DESTACO generated EUR 48.8 million in terms of revenue with an EBIT margin of close to 20%. This is exactly what we've been planning for. And they are by far better than their industrial peers with their strong portfolio. They have a wide portfolio of clamping, gripping, conveyor belts, as I highlighted as one of the sales highlights.
Then they have also in their portfolio remote handling equipment. And this for market segments they have in their subsegment of automation stabilizes the business pretty much. And this is something which helps them to get through a softer market environment, which certainly many others in the market experience, which they are able to soften up and which they are able to maneuver through in an excellent way. Stefan, from your side, anything to add?
I think perhaps to give a kind of flavor on the last question, Akshath, what you said about the industrial business. And here, nothing to add what Michael said on the industrial business. In all our former calls of the last quarters, we said that there are some topics where we see a recovery on the industrial business. And there are different ones.
That is the independent aftermarket, where we obviously see that this will improve. We also, as Michael said, we have this issue about uncertainty about the election in America. Nevertheless, also here, the sale of, let's say, solar damper will now increase out of U.S. production in our fourth quarter. But it would be too early to put out there a really big trend for the next years to come because we have to see what the election will bring and how everything on that will continue. Nevertheless, those small detailed optimization improvements that we anticipated when we explained the Q2 numbers, they're really starting taking first fruits. And this is coming back to normal. Also, when we're talking about the distributor business, here also the high inventories, what they build up, let's say, as an own production against inflation, that is also now starting getting more and more normalized.
This, in addition, with a very great development in the aerospace business, which, in that perspective, unfortunately, is not the biggest market segment in industrial. But there are some topics where there is more than just hope that we have a good development. At the end, and this is what hurts us and what is very unfortunate, is with end of May, starting getting, let's say, cancellation, short-term cancellation of commercial vehicle producers of car manufacturers on the OEMs that they would use the call-offs in a quite significant way. And this is what hurt us. But I think, as I've explained in my words about the regions, we not only talking about, we really started implementing all those measures to flexibilization of our costs. All of us know that this cannot be always on the same day, but takes a little bit of time.
I think we are on a good way, and we will continue not just the activities of automation, what we already started last year, also that in terms of CapEx needs some time until this will happen. But the cost flexibilization is one major topic we really take serious. I explained the numbers overall that we had by reducing 204 people of wage earners and 155 people on temporary workers. That's just in the last quarter. That shows that we take that really much serious. Powerise North America, and that is, from my perspective, also valid for other regions, is here we are talking really much currently on a mix. We have some customers, or especially one customer where we are 100% supplier on e-mobility cars. That is obviously currently was not the best quarter over there in terms of own production.
But also here, as I already said, the numbers starting to stabilize. And therefore, we will not get now on short-term basis back to very, very high growth, but it's a good stabilization. And the excess inventories on cars, at least for a good portion, should now be reduced in the last quarter, perhaps beginning this quarter, but the next months to come in the fourth quarter should be almost eliminating this overproportionate inventory they had on hand.
Thank you very much. That's very clear. Thank you.
Thank you.
Thanks for your question, Akshath. We would be ready for the next one, please.
Thank you also from my side. The next question comes from Yasmin Steilen of Berenberg. Please go ahead.
Thanks very much for taking my questions. I have also three if I may. So first on automotive, coming back to Powerise, just looking at the global production volume still up and your Powerise business down 5%. You mentioned already the lower call-offs on inventory build-up among your customer base. I know you're not talking about a single customer, but is it right to assume that a large Chinese OEM is not incorporating Powerise systems to the same extent as the Western OEMs? And on the other hand, you're a sole supplier to a large Western European or, sorry, to an American EV OEM. So or put it the other way around, can you confirm that you have not lost any market share in the Powerise segment? That would be my first question. The second one on DESTACO, the EUR 48 million or EUR 49 million revenues are encouraging.
Could you shed more color onto what extent this reflects the delayed conveyor order from the second quarter? And based on your customer discussions with first cross-sale orders received, do you see a similar revenue level or slightly acceleration in the last quarter? And finally, a housekeeping question. After the EUR 2 million integration cost in Q3, should we expect an increase in Q4 to get you closer to the high single-digit EUR million amount you have targeted for the fiscal year? Thanks very much.
Yep. Thank you very much, Yasmin, for these questions. I will start as usual, and then I also ask Stefan for his additions. When we talk about the OEMs per region, the one OEM you're referencing to who builds all the features themselves is for sure BYD. We talked about it several times.
BYD is a customer which actually has a very high degree of vertical integration. We are a supplier to them, one of the few, because they do not rely too much on supply basis as they are growing predominantly in China. But we are a supplier to them for gas springs in a big scale. However, Powerise, they build internally. That's absolutely right. This is offset by several other local OEMs: Guangzhou Auto, Li Auto, Geely. They are all our customers. We supply to all of them. And I definitely can confirm that we did not lose any market share there. Also, this is for sure in each and every quarter as we track our win rates, an important point for us to be checked, right? Because on a quarterly basis, we check our win rates versus our competition. And here, we definitely confirm our current market position.
We are winning Powerise systems with a win rate of 35%-37%, which is beyond our current market share of 33%. So definitely, we are not losing any market share here. It was a volume impact. You were also in a second question asking about the delay in orders when it comes to conveyor belts. Early in the year, we talked about that, or early in the stage of integrating DESTACO, we talked about a delay in some shipments of a conveyor belt to the big electric vehicle producer in the world, the biggest one. And this actually, and that's the outstanding work the team did of DESTACO. Due to the fact that they have such a wide portfolio of products, they could offset that effect.
This is what we meant with outstanding development, that they still were able to generate EUR 48.8 million because they have such a wide portfolio that they could offset that over the course of the past months and drive a very positive momentum in terms of their sales development. We see that similar for the last quarter this year. We expect a stable quarter of the Distaco group. When it comes to the EUR 2 million of integration costs, which were predominantly driven by IT service charges in the last quarter, we expect this to go slightly up for the rest of the year to prepare a complete integration of the IT system. And this will cost some more money for sure, which will be also in the millions.
But here, maybe Stefan, you can give some flavor when it comes to this integration costs and what we do as a next step.
Sure. So that's directly chopping those integration costs activities. So what we clearly decided, despite all those operational topics with what we already explained, that we will not, that we want to be as fast as possible with all the integration activities despite everything what goes here around because that is, let's say, shaping our future and then is the starting point and the prerequisite also to create all those synergies that we want to get for the next season. Even after, as all of you know, that the closing took place 1 month later than original plan. So the original planning was February and then in March. We nevertheless were able to compensate quite good this 1-month delay of our activity by really fast enough.
That will mean we are now in the process of, after preparing all those activities, starting changing some of those TSA already, but now starting in the, we're now getting into, I call it hot phase of the IT integration and to change and to separate everything completely over the course of the next couple of weeks. In here August and September will be a very much important month to do that. And that also will mean that the total integration costs in our fourth quarter obviously will be higher than in the third quarter. So we believe in about EUR 4-5 million. That is the range which is also included in our forecast for the fourth quarter. So also that is included in our range of our announced profitability targets. So nothing really much new.
We try to do it as low as possible, but we have to see that here a lot of external costs, external activity is to be done to really hasten up here all activity. So that's why, Yasmin, I can confirm we will not stick with another EUR 2 million. It will be at a higher level in the fourth quarter to come. And that is, but this is included in our forecast. It probably will be around EUR 4 -EUR 5 million, depending if we really can make all the speed that we want to do. But I'm very optimistic in that perspective. I hope this answers your question on that perspective.
Thank you.
Yep. Thanks very much. Thanks very much. That was helpful. I'll step back.
Thank you.
Thank you. The next question comes from Marc René Tonn of Warburg Research. Please go ahead.
Good morning. Thank you for taking my questions as well. Looking a bit into the fourth quarter, and I think when I understood you right, you are alluding to, let's say, in general, a stabilization, if not, let's say, an improvement at least sequentially when it comes to the market conditions to the third quarter. Nevertheless, when we look at your guidance, at least at midpoint, profitability is pretty much on the same level. I think what you are, let's say, implicitly expecting for Q4. Despite the integration costs, which you, let's say, elaborated on answering Yasmin's question, is there anything else we should, let's say, be aware of, or let's say, more as a burden perhaps in Q4, what may, let's say, weigh a bit on results in that quarter, particularly keeping in mind that the fourth quarters in the past years were always very strong?
Is there anything which is, let's say, different this time? And pretty much, let's say, in connection with that, looking into next year perhaps already, we've seen, let's say, in the past years, let's say, always a rather soft start and then things improving over the course of the year. Unfortunately, this year, not as much as previously expected. But how would you look into the future? Would you also, let's say, expect, let's say, back-end loaded years ahead when it comes to the development of profitability, or should we see, let's say, a more evenly distributed profitability in these years? And it would also, let's say, be pretty much in connection with my last question.
From what you're doing in terms of automation, reducing labor directly and indirectly in the regions, could you give us some indication on how far you are with, let's say, adjusting your structures and how much more there is to go to get back to, let's say, your historic levels of profitability? So when it comes to the sell-side measures, is there some kind of a very completion ratio which you could give us in this regard? Thank you.
Thank you very much, Marc, for these questions. When we see these effects of sales, right? We talked early in the presentation about a soft development in the third quarter, which then leads to a rather soft development in the complete second half of the year. This is purely what we reflected into our latest guidance and also for the last quarter in our financial year.
So we expect in the fourth quarter that we see some stabilization in terms of sales. However, it's a little lower than we originally had foreseen in the budget for this year. So this is basically the reason why we, at that time, on June 11th, adjusted our guidance for the rest of the year. However, there is no additional effect because you asked for additional effects. There is no additional effect aside from these softer volumes which did hit us in the third quarter and which actually we will see over the course of the last months of our year. So that means in July, August, and September. Other than that, there is no impact which we currently see to our business or P&L. You mentioned also that the integration costs of DESTACO are a point there. That's absolutely right.
So the point in terms of Distaco integration for sure is something which we considered in our latest forecast, as well as this slightly softer market development which is hitting us predominantly on the e-mobility side. Other than that, we don't see any other impacting factors for us. This basically is then leading to our first quarter next year. And I guess this was your second question. How is this going into the next year? Means how will October, November, December work out? We just can tell you in terms of the overall economy from the current numbers we're seeing. From the current numbers, we see a stabilization and a slight improvement when it comes to the sales line based on IHS numbers and based on GDP development. So it looks a little brighter than in last year's planning for the year to come.
However, we are in the midst of our budget planning, so it's way too early to talk about how, for us, the first quarter next year will play out. This is something which we currently are planning. You can imagine with all these activities we are doing to optimize our operations, to do efficiency programs on the project side, operation side, and function side. We consider that all in the budgeting process for next year because these effects are sustainable, predominantly also when it comes to automation and cutting out costs. And this is something which we will then for sure publish at a later stage. However, at this point in time, in terms of GDP and IHS, it seems that things are more stable October, November, December, and the year to come that we've been seeing it in the past.
When it comes to automation, your last question was also automation. How far are you progressing? In general terms, and this is something which we've been talking about earlier this year already, we are faced with labor inflation in the range of 5%-8%. In some of the low-cost countries, it did go even low double-digit. This is something which we've been working on the complete year. Our cobots systems are in place, automated material handling systems are in place. We have also in place our automated lines for the assembly of Powerise. And all these effects are basically effects which I would say are completed to 70%-75%. And they for sure are sustainable measures which we completely will roll out in the next quarter. We'll see this effect.
As you said, yeah, it's probably in the range of 70%-75% rolled out, these automation initiatives. But there's more to come for sure because we plan to constantly further develop our automation philosophy because that's also the reason why we were so interested in getting a hold of Distaco, because this mega trend of automation in the light of labor availability and labor inflation will not go away for the years to go and the years to come. And this is why we got a hold of Distaco, and we are exactly doing whatever else all the others are doing in the world. They try to automate things wherever they can. And this is why also Distaco is performing in a solid way in rough waters because all other companies are doing these automations as well. Stefan, is there anything from your side you would like to add?
Yeah, perhaps, Marc, what you said, the fourth quarter historically is the best quarter or is a very good quarter of Stabilus Group. And when you have a look at the last two, three years, then obviously it's right what you're saying. But there we have to know because from my perspective, this diversity now between the different quarters, the different development, now will change slightly. That will not mean that the fourth quarter will now be our worst. Don't understand me in that way. But why was the fourth quarter always the best quarter? Because mainly with the automotive customer, when we suffered, the high material expense increases.
You had to first suffer that, then you have to give evidence to the auto OEM, then you're negotiating that, and then you go further on, and then you get the compensation. That's why compensation always was very late in the fiscal year to get compensated also for the pain you suffered some quarters before. The same for energy costs, same for logistical costs. Now what we are in a circle. That obviously you can see that with other announcements of other companies. That is not a Stabilus's problem. That is a problem on the automotive supplier that the labor cost inflation, which is currently our major impact. We are, and we started early, we are on the way with good CapEx activities as we talked about the PAL line , as we talked about cobots, etc.
We started that already, and we are hopefully just filling these 25% to get really the fruits of all those activities to get compensation. But we are in negotiation with the customers. That will not mean that we even do not go there. And that does also not mean that we do not get anything on labor cost inflation. But you can be sure with everybody who has knowledge in the automotive sector, the compensation willingness, let's call it like that, of our friends from the auto OEM when it goes to labor cost inflation, at least is to be now friendly, is not higher than with material costs. It's more the other way around.
So that is, yes, there are some positive impacts to come, but I would not expect the same magnitude of all those impacts now in the fourth quarter because also here, step by step, we will get more normalization.
Thank you very much, Stefan, for summarizing. Thanks for your question, Marc.
Thank you also from my side. Yeah, there are no more questions stated. No more questions as of now. So I'm handing the floor back over to you.
Yeah, thank you very much. Thank you to all of you for joining the call today. I think it's very important to keep in mind we are offsetting the current headwinds we are faced with with our initiatives to improve our business further, which will be very sustainable. And then Distaco is well on track in terms of business outlook and financial performance.
For sure, we're pursuing all the actions we agreed upon in terms of our STAR 2030 strategy to be more balanced between automotive and industry business because that's just a healthy proposition. With that, we would close the call for today. Thank you very much for joining and have a wonderful week. Thank you. Bye, everybody.
Thank you. Bye-bye.