Good morning, ladies and gentlemen, and welcome to the Analysts and Investors Web Conference regarding the Stabilus results on fiscal 2024 and outlook for fiscal 2025. 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 Büchner.
Yeah, hello and welcome from our side here to our full-year 2024 results call. You have, as always, Stefan Bauerreis, our CFO, and myself, Michael Büchner, being the CEO of the Stabilus Group in the call. There will be two main sections in this call today. First of all, for sure, we'll talk about the financial results and later on about the guidance and basically the data behind the guidance.
We're as well, for sure, very happy about your questions thereafter. So we start with a very solid performance. The solid performance actually was confirmed. We had our first release on 11th of November, and we could confirm the data also in our annual report. You can look at them at any time. So despite a challenging market environment, we did show a very stable and solid performance in the year 2024.
We will pay a dividend of 1.15, which is 40% of our net income. As you know, our policy is between 20% and 40% of net income in terms of dividend. This underlines also the solid performance of our company, right? Because we are giving back the money to our shareholders in the way of a dividend of 1.15 for the year. This 1.15, for sure, for this at this point in time, also a suggestion to the AGM, and it will be voted by the AGM on 5th of February in that regard. We did do and execute a lot of initiatives in order to further improve the robustness of our business and the resilience of our business. They are still ongoing.
You all know that in a bigger scope, we've been taking on the stake in this year, which was a great success and is a great success and will continue to be a great success. It stabilizes the company further. It also brings us to the next level in terms of industry business in our portfolio to, at the end of the day, reach a healthy mix between automotive and industry going forward. And we see very good results with that. And the side of that, we've been driving initiatives in terms of labor cost control, material cost control, spending control in order to further solidify our business and make it resilient in these difficult days.
Talking about the guidance, the fiscal year 2025 guidance forecast is EUR 5 billion with an adjusted EBIT margin of 11%-13% and a free cash flow of EUR 90 million up to EUR 120 million. We'll talk about some housekeeping points later on, which also should give you some more flavor about this guidance on hand. Before we do so, I would hand over to Stefan to look into the regional data and then some segment information for the past year.
Thank you very much, Michael, and also very welcome from my side. As you know, we are able to announce now the final year-end closing numbers without any change compared to the preliminary results. Therefore, we are focusing in that call just in giving a summary on the total Stabilus Group without then going in all the nitty-gritty details of the different regions as it was already done in the preliminary result presentation. Talking about revenues, we are from EUR 1.2 billion. We were able to increase our revenues to the level of EUR 1.305 billion Euro sales. That is for sure an increase of 7.5%, but this 7.5% obviously also includes all our M&A activity. Therefore, in a like-for-like comparison, we were able to achieve a 0.8% revenue increase from the year 2023 to 2024.
We were negatively impacted as well by the FX impacts, but obviously the major activity which drove our growth in inorganically the M&A activities of the DESTACO and still the last month, which was still in the prior missing with Cultraro in that full consolidation of that perspective. Main driver for all that organic growth once again was the region APAC, which was able to compensate the organic small downturn in revenues in the regions, EMEA and Americas. So that is the mixed picture that we have seen on the revenue side. What does it mean for the Adjusted EBIT numbers? So here, as Michael already explained and we announced in the preliminary result, we were able now to meet our revised guidance for the fiscal year 2024 and achieved an EBIT margin of 12%.
We believe that in that mainly very difficult second half of the year with a lot of big reduction, which would have been unforeseeable from our customer side in call-offs, to realize still an EBIT margin with 12% was a good achievement. Obviously, also the DESTACO contributed to that EBIT margin with a good development, with stable sales in a declining market environment in the second half of the year. So the DESTACO was really much stable in sales. So that was a very good message and also with a good and high profitability of 20.4%. The result also was impacted by around EUR 4 million integration costs for the DESTACO to separate the company completely from Dover, the seller of the DESTACO.
This having in mind, we can say that we managed a very big part of the way in the fiscal year 2024 in a very short period of time, but still some activities also to come now in the first month of 2025. Profit. Therefore, we saw a significant or we see a significant downturn by 30.3%. That obviously needs some further explanation because that is not foreseeable with the adjusted EBIT. Here the major reason is obviously, as we already announced months and months ago in the half-year result when we published them with the first consolidation of DESTACO, we always said that all the impact on the purchase price allocation of DESTACO will be worked out until the end of the fiscal year.
Now we were able then in the numbers of the full year also to have the purchase price impact ready in terms of what does that mean in allocation of hidden reserves and also what does that mean in additional depreciation. This is the major impact why overall the profit on that perspective is reducing because you know all these impacts on the PPA are not part of the adjusted EBIT. Coming last but not least to the adjusted free cash flow, here the situation is completely different. We achieved a very positive development of our free cash flow. We increased it from EUR 107 million to EUR 132 million in the fiscal year 2024.
That shows us that not only Stabilus is a strong cash flow generating entity, but also DESTACO contributed as of day one significantly in creating additional cash flow. And also with some optimization of net working capital, we were able to achieve this very high level and this very good expectation on the free cash flow for the year 2024, which obviously also having a look on our net debt is very important what we were able to reduce in the last six months by around EUR 50 million.
So what is a very good achievement. If we then go to the next slide, then you can see here once again the business development by the market segment. So despite a very challenging automotive business in the second half of the year, nevertheless, we were able to finalize the full year with a small increase on the automotive side. But everybody knows that this increase is 100% driven by a good first half of our fiscal year and obviously not by the second half of the fiscal year.
Industrial machinery and automation, here you see the biggest impact obviously with a plus of 217%, so unfortunately, this is not operational performance only, this is obviously due to a significant impact of the first consolidation of the DESTACO, and you see here also having a look on the left side that the industrial automation business is growing in the proportion of our market segments, so that is where we believe that the future mega trends we can support are really much in favor for us, commercial vehicle with a downturn mainly driven by poor development on the truck and agriculture side, which is really much driven by the macroeconomic development, and on the other side, we were able to increase and to grow against the market on health, recreation, furniture slightly with 2%, energy down with minus 32%.
This is mainly driven by a reduction on the solar business where everybody waited in America for the new laws with the Biden government and getting the products not anymore from Mexico or Brazil, but they want to get it from the U.S., and therefore, we saw for a certain period of time a downturn in the solar business to be recovered then in 2025.
Last but not least, unfortunately, a small business market segment, but a very nice one, very growing. It's aerospace, marine, and rail. We were able to achieve very good growth. So you can see our strategy to really much being diversified and to offer a solution for all the different industries is paying back, and we were able also with the acquisition of the DESTACO to reduce our share on the automotive side. This having said, Michael, back to you.
Thank you very much, Stefan. Bottom line of Stefan's part of the presentation is that we have a stable business on hand, which performs well, very well in difficult times. And one sign for that is actually our proposal to the AGM paying EUR 1.15 dividend per share, which is on the upper end of our dividend guidance of 20%-40% of net income. So a very good sign, difficult times to our shareholders. But now we talk in the next couple of pages about the guidelines for our forecast for next year for the year 2025. Actual EUR 1.3 billion, 12% EBIT margin and EUR 132 million free cash flow, as you know, in terms of million. And the guidance for 2025 is EUR 1.3 billion-EUR 1.45 billion in terms of sales, 11%-13% EBIT margin, EUR 90-140 million in.
You see why the range is wider than we typically give. Why is that? Because, and Stefan talked about it, particularly in the second half of the year, we saw how rapidly some of the businesses in this economic time frame we are in can be a stretch. This is why we took a decision to have a wider range in terms of the guidance this time around. The market environment is challenging, you all know that. There is some uncertainty out there in the market, which we reflect with this wider range. One comment as well, also in the financial year 2025, we expect that the business year will be somewhat back-loaded because several of these activities we for sure start early in the year and they gain ground as we continue in the year.
On the next page, you also see some further KPIs, which are basically our assumptions for the guidance. So GDP growth is 3% positive. Light vehicle production stays just shy of 90 million, so in the range of 89 million. So moving sideways to the vehicle production of last year will be more or less in terms of vehicle production kind of flat, probably a little up in North America and Asia, but flat or a little downward trend in Europe. I'm sure we'll talk about that in detail in our Q&A session later. Cost inflation, material cost, we expect to have a slight decrease there. You know the material indexes in these days are going down. So we also starting here or did start early this year negotiations with our supply chain to further reduce our material costs.
And then for sure labor costs, also important point to talk about. Labor inflation will be somewhere in the range of 5% for the year 2025. Major FX rates, 1.12 to the US dollar in terms of euro and then in terms of China, 7.84 to the euro for the year to come. So on the next page, we also thought to give some flavor about the regions this time around in terms of our operating segments, Americas, Europe, and Asia-Pacific. I just gave you a general impression.
The numbers are on hand here and you see them in the presentation as well in our financial reporting here. Our growth in Americas is deemed to be 2% for the year, Europe 1% and 5% in China. This basically reflects the economic situation, also the forecast of IHS GDP out there for the year to come.
There will be a slight higher light vehicle production in Asia-Pacific, 2% lower in Americas by 1% and for sure a very soft development in Europe, -5% here in that term. Yeah, the labor inflation did challenge us over the course of the past years, as you know, Mexico and Romania here still the main focus point for us. Price pressure in China also leads to some challenges, particularly in the China business. This is why the growth in China, if you look onto this growth numbers in this forecast bandwidth, the growth is here as a maximum of 9%. One reason is that in China, and we talked about that in some of the conferences, we expect the pricing pressure be aside of the other regions, the highest probably in China with local competition.
We are winning business against our local competition and we are basically on par, but this could have some impact on the pricing. This is what we've reflected also here in these sales numbers. That's why the upper end is 9%. Other than that, I think all clear on this chart. We can go to the next one.
The next chart, just some housekeeping items. You know we were asked by our investors back and forth about some of the elements you need to do the math to feed it to your Excel charts, if at all. Non-Recurring items, PPA, EUR 35 million in 2025. EUR 20 million of that is the DESTACO PPA in NA. In terms of CapEx, we plan to be in the range of 6%. Also our target is always to be in between 5% and 6%. This is what we want to do in 2025.
Investments, we want to do particularly continuing in automotive. Sorry, not in automotive. On the automotive side, only in the Door Actuation System, not in general terms. In general terms, rather on automation. So automation of facilities to bring our costs further down to areas, product development, automotive Door Actuation, and the area of automation technologies in our plants for improving the operations. Yeah, in terms of the DESTACO integration, integration costs, we expect EUR 2million - EUR 3 million. Some are internal, some are external costs of that. Net Working Capital between 17%-20%. I think that's very helpful also for your models as well as the tax rates, 25%-30%. Yeah, also the dividend policy remains unchanged.
You've for sure witnessed and saw that over the course of the past couple of years, we've been on the upper end of our guidelines in terms of dividend policy, which is rather in the area of 40%. So our range continues to be between 20% and 40% of net income. As I said, EUR 1.15 represents 40% of our net profits, which we return happily to our shareholders after approval of the AGM on 5th of February. So this was it in a very crisp and fast way because we know that you for sure have a lot of questions, which we are happy to answer now. So I would open the floor for questions, please.
Ladies and gentlemen, if you would like to ask a question, please press 9 and the star key on your telephone keypad. If you would like to cancel your question, please press 9 and the star key again. Please press now 9 and the star key to ask a question. And the first question comes from Akshat Kacker. The floor is yours.
Good morning, Michael and Stefan. Akshat from J.P. Morgan. I have three questions, please. The first one on current trading. Given the uncertainties and market volatility that you have flagged, could you please provide some color on Q1 trading? I think it would generally be helpful considering the wide range that we have on the fiscal year 2025 outlook. Could you just talk about expectations around total growth or organic growth in Q1 and how has the quarter started in terms of margins? The second question is on the margin guidance. And thank you for all the details by region. I think it's really helpful.
So when I look at your guidance in Europe and North America, I think it tells us that ongoing cost initiatives just offset the incremental cost inflation that we're going to see in fiscal year 2025 without recovering the margin headwinds as such over the last few years. So could you just talk about all the actions that you're taking and if you could also accelerate some of these measures to reclaim a portion of those earnings? And the last question is on APAC and China. You've clearly mentioned that pricing pressure in the region is higher than expected. And generally, when I think about China, it hasn't been an easy market for Western players specifically over the last two years.
So how do you think about sustainable margins in the region and what makes you confident that the ongoing margin performance of the region is around that 15%-17% level and not the 10%-12% range? Thank you so much.
Thank you, Akshat, for these questions. I'll give you the starting point, starting with volatility in the market and what does this mean for the first quarter of our business, where do we stand? You know we just finished the second month of our quarter, so we are just somewhere half through the quarter due to the fact that we are still in the consolidation phase of November numbers. October and early part of November did kind of continue like we saw second half of last year. So that means sidewards to the last quarter somewhat in terms of sales development. For sure, slightly lower than the first quarter last year, right? I would say in the range of 7%-10% for the first six, seven months. For sure, there's preliminary numbers and they're basically only a flavor of how we started the year.
Basically, we're moving sideways to the last quarter, the quarter four in 2024 for us, which is slightly lower than the last year, as I said, between 7%-10% depending on the business. However, this is all in the guidance on hand already. The €1.3 billion-€1.45 billion guidance and the 11%-13% EBIT margin reflect that already. That's not a big surprise in terms of the numbers we have on hand. It's basically somewhat sideways to the fourth quarter in terms of sales, which we just ended, which was July, August, September last or this year. In terms of margin development, Europe and North America, cost inflation, how are we doing in terms of margin development in that region? You know there have been a couple of impacting factors.
There has been for sure material prices and inflation over the course of the last two years. There is this big area of labor inflation, particularly in Mexico. Then for sure also pricing pressure in North America, not quite to the extent and to China. We'll talk about that later on. But also there is for sure pressure, as always in the automotive area. So how are we doing in that term? You know that the inflation was beyond 5% the last two years, rather in the range of 8%-10%. We've been investing in all this automation equipment, so we could recover more than half of it. There is some stuff left over. You know all these activities they're getting into the plants in terms of our fully automated equipment.
We expect thereby labor inflation, particularly when it comes to low-cost countries of another 4.5% for the year. We are still recovering some of that from last year. So overall, we're working on a range of 7%-8% to last year with some carryovers. We have been setting up the activities to bring our costs down on the labor side. So we're confident that we can deal with it in the quarters to come, and that's why also we continue to invest in fully automated equipment. On the material side, we know that the prices are going down, right? The indices for steel, plastic, resins, and other materials are going down over the course of the past months and quarters. And this is something which we currently see. We started an initiative with the complete supply base, right?
We were locking our departments along with our suppliers in some rooms and discussed what we can do in terms of bringing the prices down, first of all, in terms of material index, and then for sure with technical changes, so VAVE activities. Both areas will lead to improvements in terms of bill of material, which should offset to a vast majority pricing pressure in the market and also some carryover pricing pressure, which we saw from last year.
And here we are confident that we are gaining a couple of percentage points on our bill of material in the range of 2%-3%, which, as I said, will basically be used to offset pricing to our customers. You touched a very important point in terms of China performance. China always did perform in the range, depending on the quarter, somewhere between 16% and 18%. This year around, we see pricing pressure in China, particularly.
This pricing pressure will lead kind of to a price deterioration of, in the range of 5-6%, 6% roundabout. And this is something where we typically can deal with in the range of 3%, I would say, with normal actions. These normal actions typically are technical changes or negotiations with the supply base. This time around, the pricing pressure is a little higher than that, and that's why we have been taking particular actions with our supply base, so we've been having good success over the course of the last six weeks, so, as I said, we locked our departments along with all the suppliers around the globe into some rooms and were working on improvement activities on the technical side, but you know this is the critical thing about that.
This is something you need to execute now over the course of the next 12 months because all these technical changes, they need to be announced to the customers. They need to be approved by the customers, and this is why I'm saying that the financials are probably back-loaded again this year because all these technical changes to flow in now and they will improve the business over the course of the year. Stefan, anything to add from your side? Well, I think mainly when we're talking about how this starts this new fiscal year, we always have to have in mind that the year 2024 was really much separated into different parts, the first half and the second half.
And what we now see, and that is not something unexpected, but we now see that the fiscal year 2025 is not starting like the first half of 2024, but it's starting like the second half of 2024 in terms of revenues. So we saw there was a significant downturn and we're still in the space of downturn. On the other side, we were able to also create with some one-time price increases with our customers in the fourth quarter of last fiscal year.
So therefore, margin was good. So that is normalizing now in the first quarter. Sales are on the lower side, and that is what we have to handle. And to be clear with that reduction on sales is that currently the fixed cost absorption, what you get, let's call it for free with higher sales, normally with a sales increase, is currently not our biggest threat.
Nevertheless, we are focused on our optimization projects as we started them, and we really see that they start to pay back. And that is what makes us, despite the very challenging environment, nevertheless, to a certain extent, optimistic for the year 2025. Yeah. And these optimization actions, again, they will be moving the needle because these optimization activities, they will lead to the point that these technical changes are ramping in. For sure, they take some time to kind of bring them to life along with our technical approvals at the customers. But now is the time to pound on technical changes because the OEMs also have the need to improve things and will not give away any pricing without these technical changes, which offset those price erosions to a vast majority. Hope that answers your question, Akshat.
Thank you both. Yes, it does. Thank you.
Thank you.
Thank you, and the next question comes from Marc-René Tonn . The floor is yours.
Yes, good morning. Thank you for taking my questions as well. First, coming a bit back on growth, when we look at your guidance, I think at midpoint and considering, let's say, the around EUR 100 million, you probably still expect as a tailwind from the DESTACO acquisition, you're probably guiding more towards, let's say, organically a slight decrease in revenues rather than an increase. But if you could give us some indication, let's say, which sectors or, let's say, target industries you're seeing, let's say, performing a bit better and which are a bit more difficult. Perhaps you can also give us some reassurance that, let's say, when we look at the order intake, that you are still currently gaining more orders when compared to your current market share, whether this, let's say, statement still holds.
The second question would be on the Free Cash Flow targets for the current year. I think very promising, particularly when considering that you had, let's say, alluded that you expect some, let's say, rewinding of some temporary positive effects which supported last year for the Free Cash Flow. Has that changed or is it, let's say, really just an underlying very strong expectation we also should expect for the current year? Then perhaps coming to your long-term 15% Adjusted EBIT margin target. Given that, let's say, probably things like price pressure, inflationary cost pressure is something which will probably stay there also in the future.
What would you see as, let's say, the major ingredients to improve the margins from the, let's say, 12% last year, 12% at midpoint of the guidance for this year to regain this, let's say, three percentage points which you have lost? Where is it, let's say, the main driver to get that back? Is it the technical improvements of the products longer term that should support? Is it business mix? Any information would be helpful there. Thank you.
Thank you very much for your questions, Martin. In terms of growth, giving some flavor on that, you said in terms of growth that from this year, basically, there will be another effect of half a year DESTACO in the game. That's something to add on. So how will this look like in terms of flat developments of the areas versus growth? And here, one thing is important to us, right?
If you look at the numbers for the guidance, it suggests that there is a flat development on the automotive side in the range of just shy of EUR 90 million. So automotive, we expect to be kind of flat. Industrial business, flat, but maybe a slight movement here. And if I look at the different regions, we see that with the elections in the U.S., basically that the elections are done, we see somewhat more stability.
Our regions, if you look on them as a guiding factor for us, America, we see after the election is now done, stabilizing with a slightly upwards trend. The European region, we expect to see some more pressure because at the end of the day, that will probably take another half a year, year to get here in the range of stability. We see in Asia Pacific, particularly in China, also here a slight positive trend. What does this mean for the different sectors? Automotive, as I said, 90 million slightly below will lead to kind of a soft sales development. There is for sure this upswing side on the industrial side for this takeover. However, we need to get into a safe area when it comes to renewable energy, for example.
There is the commercial vehicle sector, which is still a tough environment to be in where we see lower sales for the year to come. And only if the economy starts going up, the commercial vehicles will start getting up in terms of performance. We see a very positive trend still in rail, marine, and aircraft. So our aerospace business is performing very well. This is what we see continuously. We see a moving sideways also in terms of home furniture markets. We see in terms of automation and industrial equipment, slight improvement, but basically it's moving sideways with a slight tendency upwards in the next six to 12 months. And this is basically our main sectors. So slight improvement or flat moving sideways, this is basically what it comes down to.
If you look onto our numbers, yep, there is a wider range of guidance in terms of sales as well. This does not mean that we lose any market share. If we look at the business wins over the past year, we are winning in accordance or slightly ahead of our market share. What does this mean? If you look onto the POWERISE systems, including the door actuation, we are actually winning business in the magnitude of one-third of the market or slightly above.
Our competitor landscape is unchanged. So there is Brose, Magna, Edscha, and for sure now is the new kid around the block in China, Anjun as main competitor. We are successfully winning against all of these customers, all of these basically tier ones. We're winning business to a magnitude of one-third of the market. Same thing on the gas spring side. We're defending and even in some areas increasing our market share there.
Averaging of the world is basically 70%-75%, and we are winning business in that term. Also when it comes to the industrial side. So that means, yes, this pipeline filling is very successful in terms of the different businesses we win on the automotive side and the industrial side. It's just that currently, and we've been explaining that before, customers are buying nine instead of 10 parts, right? And this leads to a deterioration, a softer market by in the range of 7%-10% compared to last year around this time in our first and second quarter. This unfortunately changed a bit. You mentioned also the Free Cash Flow. Free Cash Flow guidance is EUR 90 million-EUR 140 million. And you were also pointing out that this is a very positive cash flow.
We're convinced that we perform in that area. Why is that? Because we just started a net working capital project spanning over the complete Stabilus Group. You know, this is something, yes, you would say maybe you started such an activity as well as our cost managing activities also in the past. That's absolutely right. But due to the fact that the business is changing so fast, that we've been growing massively in Asia-Pacific over the course of the last years, and that we could take this on, there are plenty of opportunities where we just reshaped the organization a bit to optimize here and there net working capital and to give it another boost to further optimize.
And with this project, we will definitely be in terms of free cash flow between €90 million and €140 million. We see very good and positive signs there. So you also mentioned a long-term guidance, right? Our vision of 2030, which is still on. Yes, you know, it's business currently is moving sidewards. We are, by the way, way better performing than many, many others out there in terms of many other competitors, customers.
We are on an EBIT margin of three times or four times better than them. However, our long-term target is even higher, 15%, and it's still on as a vision. Where is it coming from? You know, door actuation. We are currently winning big shares of the door actuation. We are still market leader in the door actuation. This kicks in starting 2026, 2027 with good volumes around the globe or regions. Yeah. Front runner still Asia Pacific, followed by Europe and then last but not least, North America in terms of door actuation with good margin.
There is for sure our business acquisition of this takeover, which we want to further expand, including cross-sales activities. And then for sure there is industry business, particularly also on the industry POWERISE side where we are very successful in selling all kinds of automotive-like POWERISE systems into the industrial market. And as you know, our automotive products, they enjoy a very good cost position on a very high quality position, which leads to good margins and really happy customers. And these are the three main areas: door actuation, DESTACO areas, and indirect industry purchasing along with other industry applications, which are leading to the healthy mix which goes along with it. Is there anything else from your side, Stefan, you would add?
I think it's mainly focusing this time on the Free Cash Flow generation, so everybody knows that that is with the acquisition we made with DESTACO and the net leverage we currently have on the balance sheet, that this is our key initiative, one of our key initiatives, we have to say, and therefore I'm working very, very hard on the perspective with all the different projects. Michael said that this is also mainly driven by further optimization of working capital, but you know, it shows us as well that historically, Stabilus always was very strong in cash generating, and DESTACO is doing the same way, so therefore we have two companies which now are coming together, which are quite strong in cash generating capability.
That is what we are looking for, what we are continuing in that way, supported by further optimization, as Michael indicated also on the net working capital side. These are the ingredients to manage that. We want to show that the reduction of our Net Debt of EUR 50 million in six months was not just a unique exercise, but there will continue continuously to reduce, not each quarter in the same way, obviously, but that we continuously reduce in a further reduction of our Net Debt position.
Good. Thank you very much.
Good. I think there was a slight hiccup at the end of what you said, Stefan, but no issue at all. I think the message came across in terms of the free cash flow. By the way, I would like to invite you to our Capital Markets Day 2025. First time in the history of Stabilus, we will do a Capital Markets Day in June next year, and we'll have a particular focus on the industrial business. For sure, we'll give an overview of everything, but there will be a focus on the industrial business. Please speak up and tell also then Andreas Schröder from Investor Relations about some details on the Capital Markets Day. We'll announce it soon.
We will shape a nice agenda for you to get some more flavor in terms of the industrial business for sure, as well as for sure a global overview of the Stabilus Group and where we stand with our success story. Further questions?
So if you would like to ask a question, please press nine and the star key on your telephone keypad. And we have one more. Oh, it's deleted. So maybe we wait a short minute. So please press nine and star key. Okay. There, she's back. So the next question comes from Yasmin Steilen. The floor is yours.
Yeah. Good morning. Thanks also for taking my questions. I have also three if I may. So first, coming back to the sales guidance, you mentioned automotive should be flattish in terms of sales. However, the lower end of your guidance points to a sales decline in the ballpark of 8%, stripping out DESTACO. So could you elaborate what the volume price assumptions are reflecting in this range? And does this lower end also reflect potential impacts from the strike actions, for example, at Volkswagen Group? Then the second question, coming back to the margin development, profitability in automotive seems not below 10% adjusted EBIT margin the last year, and your guidance implies further deterioration.
Could you provide us a more precise update on your own automation projects, in particular for POWERISE, and how should we think about a sustainable automotive margin midterm? Finally, on cost synergies, the integration costs seem to come in not below the initial guidance range at around EUR 6 million. Could you provide us an update on the expected sales and cost synergies and what is baked into your fiscal year guidance for the current year? Thanks very much.
Yep. Thank you very much, Yasmin, for your questions. First of all, you know, if you talk about our range of the guidance, this year around, it's a wider range. We want to have a very realistic guidance on hand, and this is why we had this wider range, because the last year told us that it can happen easily over the course of the year that there is a deterioration in market and the situation currently is in a geopolitical situation and in an economic situation. You mentioned, for example, VW, but it's basically a structural point of the industry at all in all areas, all regions, which can impact a business in any terms, right, and this is why we did open up the bandwidth of sales and profit to 1.3-1.45 and 11%-13%.
You were pointing out the lower end of the guidance and building your rationale. And if you just talk about the lower end of the guidance, what did we do in terms of volume currently? There is a volume impact of the automotive industry, which is a slight sideways move or a slight decrease planned currently in the current numbers. And for sure, there is also some strike action of OEMs embedded, particularly VW. Nobody knows how long this strike will go. And this is something which is reflected in this guidance. However, if you pointed out to the exactly -8% you were mentioning, this is rather seeing the volatility coming from the last year. As Stefan pointed out, first half of the year, we all were confident that it was an okay year.
Then second half of the year, we saw an eight% reduction in terms of sales volumes driven mainly by light vehicle production, but also commercial vehicles. We said for the year to come, there is a mid-range of a guidance, but also there is a volatility if something happens. We always have our downturn scenarios mentioned in our budgeting, right? That is something we look constantly into. What happens if volumes deteriorate in the way it did in the past? That is something we constantly look into. This is why we opened up the range in a bigger scale. Main point is automotive flat or slightly decrease in the European region, some strike activities in there, and then on the industrial side, impacted by commercial vehicle for sure.
And this is something which at the end of the day was considered rather on the low side of our sales guidance. And then, as I said, this market volatility and the experience, which personally did hurt me very well in November, because typically we achieve what we say to the community. This did lead us to kind of open up the guidance a bit in order to foresee just this volatility in the market. And the same thing is in terms of profitability. The business model of Stabilus is absolutely intact. We see good margins with our products. We see good margins in the automotive sector and on the industrial sector and in the regions. We did foresee a price deterioration of additional 6% in China, which we are dealing with in technical terms. Yeah.
And we see also some pricing challenges in North America on the power rise side. This is what we did bake into the numbers. And then equivalent, you've been looking like on the sales side, rather on the low end of the guidance in terms of profitability. What does this 11% mean? Yeah, it means that we build up a budget and then we had a bandwidth towards the both sides up and down.
So to achieve this or to get to this 11%-13%, well knowing that in the here and now, and I did basically answer the question with Akshat, that the current numbers suggest that we're moving sidewards to the last year coming from a soft quarter already, August, September, July, August, September. And this is basically something which we continue to see kind of move sidewards, move for the time being.
There is for sure light at the end of the tunnel. As I said, the election is done. We see performance in Asia very well performing and developing in a good way on the one hand. In terms of integration, the integration is well on track in terms of DESTACO. We generated in the first weeks of the business good cross-sales synergies and good cost-cutting synergies. We will also talk about that after the first quarter because we are in the middle of consolidating these numbers. But so far, I can tell you our target for the year is EUR 10 million cross-sales synergies and EUR 1 to 1.5 million in terms of cost synergies with DESTACO. And to achieve that, we are well on track currently. Maybe Stefan, you have some more flavor to that point.
I think mainly we're talking about, let's say, the sales, the sales development and how we, and as we explained it already in the first question, the current development, so it continues like we ended the fiscal year 2024, so with a quite soft automotive part, and that is also one of the reasons why we are expecting also a back-end loaded. Not the only reason, but one of the reasons is because the new fiscal year starts with quite soft sales, probably in terms of what we are expecting, and also here, our total numbers are reflecting at least a slight recovery also in the second half of the year, and therefore, you see that is also a kind of risk that nobody knows exactly how the second half of the year will develop.
Therefore, as Michael already explained it very much in detail, is the range quite big or bigger than what we've done over the last years. But that is due to the uncertainty in the market, which is also significantly higher than in prior years.
Yeah. The important thing is to know from my perspective, and thank you, Stefan. We developed a budget, a good understanding of our business where we stand as a midpoint, and then we've been basically reflecting this volatility to both sides.
Yeah.
Okay. I hope that answers your question, Yasmin.
Yes. Very clear. Thank you.
Thank you. Further questions?
So at the moment, there are no further questions. You can press star nine if you want to ask a question.
I think we wait a couple of seconds for another question if there is one, but as I said, it's pretty straightforward. It was a stable year for us. We have been performing very well in terms of our agenda to further build a robust business model. We are now migrating towards 50/50 automotive industry business, and moreover, very positive news in terms of the dividend payment, right? Because many people out there ask, well, are you guys now up for a capital increase? That's definitely not the case. It's not on our agenda for next year, and one sign should also be that we pay a dividend because if things will be tight, then we couldn't pay a dividend.
We do that even on the upper end of our policy, which should give you also good information and with our free cash flow, a good data point in terms of stability of our business. So that's very good news from my perspective. And also in terms of how the business develops for the years to come because we are very stringent in terms of execution of our long-term plan in terms of achieving our €2 billion by 15% EBIT margin vision. And this vision is on and we are moving towards that. Other further questions? If not, then.
There are no further questions.
Once more, I would like to invite you to participate on the Capital Markets Day. It will be for sure an interesting show. You know, we have such a wide portfolio of products in Stabilus and the Stabilus Group with all its expert brands. They will be all there. You have the opportunity to particularly deep dive into the industrial business during that day. And we are really counting on you that you're there in June. Andreas has the details, Andreas Schröder, and you have the product day. So thank you very much to everybody.
If there are no further questions, we would close the call. I don't want to miss the opportunity to thank you for all the meetings we had, for the feedback we got, and for your trust. And I would wish you all the best for the rest of the year. Happy holidays and all the best. Also luck and health for the year 2025. Thank you very much, everybody.
Thank you. All the best.