Yeah, hello and welcome to our call today. My name is Michael Büchsner. I am the CEO of the Stabilus Group, and we are happy to have you in the call discussing the preliminary results. Why do we do this call? As I said before, and you probably have heard and read the news yesterday evening or today in the morning, we have our preliminary numbers on hand. We wanted to lead through these preliminary numbers and give you some background details because, for sure, there are also some implications on our business by that. First of all, we had a very strong fourth quarter concerning our business, and basically was beyond what we have been expecting for the fourth quarter. We will talk a bit about that. This is a positive sign for us. It is predominantly on the industrial side, which underlines the validity of our strategy.
On the other hand, there is a goodwill impairment. You know that over the course of the past quarters and years, particularly the automotive industry, but also the equipment market, was underlying certain pressures in the different markets, particularly in North America, and this did lead to a goodwill impairment of EUR 67 million in the fourth quarter this year. We also updated our targets for 2030, EUR 1.5 billion revenue with an EBIT margin of 12%-15%. Why is that? You also know that with these ongoing challenges in the market, that we previously had around EUR 2 billion sales with an EBIT margin up to 15%.
At the end of the day, driven by the continuous pressures in the market, and also particularly automotive side, the unrest we see in the different regions, predominantly North America, but also in Asia, particularly China, we basically updated, as part of our budgeting process, our midterm targets to EUR 1.5 billion with an EBIT margin of 12%-15%. Now finally, when will we validate these numbers and finalize them? We will communicate on the 7th December 7:00 in the morning, 10:30 European time, in an analyst and investor web conference, the confirmed and latest numbers. So this, as I said at the beginning, are preliminary figures we talk today about, and on 7th December , we will present the confirmed ones, and also on December 7th, we will talk about the guidance for the year 2027.
Here with that, I would like to jump into some details. As I said at the beginning, we are at EUR 1.197 billion sales for this year. Last year, we had EUR 1.296 billion, so it is around about EUR 100 million less than last year, driven by economic circumstances on one hand side, but also consider there is a certain effect in there by our divestment of Fabreeka and Tech Products this year. On the other hand, our adjusted EBIT margin, we ended our year with 10.4%.
If you remember back a couple of weeks ago, we said there will be rather in the range of 10%. As I said at the beginning, we had a strong fourth quarter. This strong fourth quarter was mainly driven by industrial business, and this lead to 10.4% because we all know that our industrial business is superior in terms of the margin profile.
Also here, just a reminder, last year we had 11%, and please also here consider that we had this divestment of Fabreeka and Tech Products subsequently. That is in a nutshell the numbers, and let us go into some details. On this chart, you see the revenue, the EBIT margin adjusted way, the profitability, and then the free cash flow. First of all, the revenues with some details. As I said, we are at EUR 1.197 billion sales for the year 2026 in the preliminary numbers. The organic effect was - 5.7%. We had this divestment, M&A is written here with -0.3% , which is the divestment of Fabreeka and Tech Products, just as a reminder. In terms of the FX rates, the FX rates, particularly Mexico, North America, were not favorable last year for us. This was - 1.6% overall, 7.6% below the prior year.
Particularly the automotive sector is giving us a hard time, some headwinds last year, concentrating on Asia Pacific and the Americas. Then, for sure, the stake sales revenues were somewhat positive on one hand side. It did strengthen us particularly in the fourth quarter. However, the big impact we see with the automotive sales, which went down in Asia Pacific and Americas, basically across the board. You all know the challenges the OEMs face in the different regions, particularly in China, and this is something which we actually are affected with. When we talk about the EBIT margin, EBIT margin came down from EUR 142 million to EUR 124 million. Also here, there is this divestment for sure to a certain share reflected in these numbers, the divestment of Fabreeka and Tech Products.
On the other hand side, we had also cost synergies with this takeover, and for sure, the very stringent and good execution of our transformation program. You remember back then, a year ago, we said that we would materialize EUR 18 million in terms of savings for the year 2026. We invested equal amounts, so the payback was one year. As a matter of fact, in the adjusted EBIT numbers, we see then this positive effect of our transformation program, and there is more to come because the full year impact we will see for next year, but that is too early to tell because we will have, as I said, on 7th of December, our call with the guidance for the year 2027.
If we talk about the profit, the profit in absolute term ended up at EUR 26.2 million, which is in the similar range of last year, a little higher even, higher by 8.3%. However, there are two special effects in there. On one hand side, we did gain EUR 44.7 million from our divestment of Fabreeka and Tech Products. That is remarkable to tell because this was a very positive effect for us for selling this business. It was a highly profitable business, as you know, with an EBIT margin of almost 30%. However, against that, for sure, works our goodwill impairment, which we did in the range of EUR 66.7 million. So what does this mean in total? Bottom line, the net profit is EUR 26.2 million. On this EUR 26.2 million, we also want our shareholders to participate.
This is why we, and we will talk about that later, are defining or proposing a dividend of EUR 0.22, which is, yes, on the lower end of our policy and of our internal policy for dividend, which is 20%-40% of net profits. However, we move to the lower end, the 20%, to make sure that we have sufficient funds to also pay back debts in the year to come. That is extremely important. With this number on hand of the lower end of the guidance for, or guide rails for the dividend, we basically match that we still stick to our commitments for sure, which we always want to do, on one hand side, in terms of our targets for sharing the success of the company. On the other side, we want to still keep enough and sufficient funds to make sure that we pay back debt subsequently.
Yeah, in terms of the free cash flow, as you know also from the past, Stabilus generates good cash. We also ended the year this year with a good cash position of EUR 96 million. Yes, it is lower than the prior year, around about EUR 20 million. This is basically for sure driven by lower incomes because the revenue was lower. The cash generation and cash conversion, however, is on a very good level and basically fulfills and enables us also, and did enable us in the course of the last year, to pay back some debts to our banks. Here with that, we jump to the next page. Talking a bit about the impairment. The impairment basically was in the range of EUR 67 million, as I said at the beginning, and it is driven by the reduced automotive market circumstances and also automotive manufacturing equipment markets.
These two elements did drive, particularly in America's region, that the impairment on the goodwill had to be done. In Americas, because here we have a big customer scale when it comes to automotive and automotive equipment-related aspects. One thing is for sure, and you all know the issues in terms of investment, many companies, particularly the OEMs, be it automotive or non-automotive, are very cautious in terms of investing. This did also trigger on our end that we basically see softer investments there or saw softer investments over the course of the past quarters. We have been talking about numerous times, it is also by our sales, is lower than last year.
If we bake that into the numbers also with our latest budgeting and multi-year plan, we did a goodwill impairment test, and the topic is that we are in the range of an impairment of EUR 67 million for this year. That is embedded in the fourth quarter. Talking a bit on the next page about our midterm targets. A similar thing, right? We see a weakness in the automotive market, the lower automotive Powerise sales, particularly in China and North America. These are the two regions where we also subsequently, over the course of the past quarters, did talk about, because in China, we see not only the Western world OEMs, but also the local OEMs struggling. In North America also, the demand was softer in terms of automotive Powerise, driven by the platforms and platform production of our OEMs. What does this mean?
Yeah, we did not lose a single contract, by the way. We, at the end of the day, are winning disproportionally high compared to our current market share. Our market share is 33%-35%, and last year we did win 40% of the businesses out there, so even more than you see currently in our current business we have, in our current market shares we have. However, instead of 10 cars produced, we are currently seeing only eight cars produced. This is something for sure which leaves its marks on our numbers as well, because particularly in China and also in North America, the production numbers were just on a different, meaning lower level than before. What does this mean? We also embedded these numbers in our midterm numbers. We embedded these numbers in our budgeting and multi-year plan.
At the end of the day, as you remember from our discussions, we also had plans to have another M&A activity, probably in the year of 2028, 2029. This, at the end of the day, we took out of the equation for the time being, and thereby the revenues was defined up to EUR 2 billion. We see in our midterm plan that it will be rather in the range of EUR 1.5 billion. The EBIT margin with this effect of the lower volumes is anywhere in the range of 12%-15%. Based on the volatility we see currently in the market, we have bandwidth now in terms of the EBIT margin for the year 2030. The details, however, and that's all preliminary numbers, will basically shown in the December 7th meeting, and you will also for sure find all this information on the annual report.
By the way, also you find this presentation we are going through on our homepage to look into these numbers you like. On the last page, we, at the end of the day, talk a bit about the Q&A session. We, as I said, are in the fourth quarter finally to conclude the session. We delivered superior to what we've planned, and ended up with 10.4% EBIT margin, which was driven by the industrial business mainly. On the other hand, there are effects driven predominantly by the automotive and automotive-related business, which at the end of the day did lead, summarizing the session, to a goodwill impairment of EUR 67 million, and also did lead us to an adjustment of our midterm targets to EUR 1.5 billion and a bandwidth of 12%-15% EBIT margin.
This is what we wanted to share, or I wanted to share today with you. With that, we would open up for questions.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star, nine, and pound key on your telephone keypad. You can also use the dial-in function in the webcast and raise your hand if you would like to ask a question by phone. I repeat, to ask a question, please press star, nine, and pound key on your telephone keypad. The first question is from Yasmin Steilen from Berenberg. The floor is yours.
Hello. Good morning. Yasmin Steilen from Berenberg. Many thanks for taking my questions. I have three, if I may, and I will take them one by one. First, on your new 2030 sales targets, could you share more color on the underlying assumptions in terms of segment development by regions, the contributions from door actuation, and the price erosion in China, which is baked into your guidance? That's my first question, please.
Yeah. First of all, thank you, Yasmin, for your questions. By the way, it's Berenberg. Very important, Berenberg . Guidance for 2030. The underlying growth up to 2030 consists of a base we take with the GDP of the industrial business in the world, and what we, at the end of the day, superior to that, will deliver, and I'll get to that in a minute. That's on the industry side. The baseline is on the GDP, and then you see on Mobility Global, former S&P or IHS numbers, the number of produced vehicles. This is the two baselines. Then on top of that, we basically get into the additions on our business we are developing further and investing.
One element of this superior growth or growth up to EUR 1.5 billion is a development in the door actuation where we think that we will be in the range of EUR 75 million-EUR 100 million subsequently in the year 2030 as a share of our business. That's something which we think will grow substantially. It's a new technology. We won a lot of good contracts, not only with China, but also in the other regions. It's really picking up and gains ground also in Europe and North America. The sales of the door actuation system in 2030 will be in the range of EUR 75 million-EUR 100 million. Currently, we are delivering in the range or selling in the range of EUR 25 million-EUR 30 million per year. That's one driving aspect.
The other aspect in that is that following S&P or Mobility Global analysis on vehicle builds, the market of automotive will stay rather flat. That's also embedded in the numbers, as I said in the board, it's a baseline. The baseline is rather flat, probably 1%-2% increase in car production volume on the planet. Then superior to that, there is the door actuation system which we see. That's on the automotive side. The automotive side basically will continue to be a tough market in general terms, and we will grow superior to that with our door actuation system. That's the automotive side. On the industrial side, we see an average 3%-3.2% growth on GDP. We are in a superior way growing to that, driven by basically further automation growth.
You know that we have a strong growth plan in terms of automation equipment out there. We are, for good reason, also shifting more from automotive-related equipment to industrial-related. This basically is enabling us to grow 2%-3% better than the GDP numbers on the industrial sector. Then we have, as part of that, Industrial Powerise. This growth plan is still on. We are working currently on this robotics business. By the way, on the robotics, humanoid robotics, we won our first contract now. This is an element which we consider growing to a good extent, up to the range of EUR 20 million-EUR 30 million in the next two, three years.
Then, for sure, these elements, the equipment growth on automation side, the humanoid robots, and the Industrial Powerise lead us to an industrial growth 2%-3% superior to the GDP growth on the industrial side. Just as a reminder, on the automotive side, the baseline is the S&P numbers and also Mobility Global numbers. We see us outperforming a bit, driven by the door actuation system, up to a sales volume of EUR 75 million-EUR 100 million in the year 2030.
Perfect.
I hope that answers your first question.
Yeah, that's very clear. With regards to the asset impairment, does this write-down suggest that DESTACO is not yielding the expected synergies, or is it really mainly related to lowered sales assumptions in the U.S. business? Could you remind us about the automotive CapEx exposure of DESTACO? Has this changed since acquisition, or is it still in the ballpark of around 60% of sales? That's my second question.
Yeah. First of all, in terms of the synergies we are doing between DESTACO and our business, we are on track. The synergies are good. We started our Stabilus for automation track records. That's fine. There are three main OEMs in North America, as you know, and we have currently still a share between automotive-related and industry-related sales on the automation side of 40%-60%. So 40% of our complete automation equipment is related to automotive sales, be it in automotive factories to assemble stuff, be it in stamping companies related to it, on the supplier side, on the tier ones, or be it even battery manufacturing. So we are widely spread with our products. However, the Big Three in North America, they have been recently, for good reason, very cautious in terms of investing.
This is why it comes back to the point you mentioned. It's lower sales in the auto sector-related manufacturing equipment, a broader scale then in North America, which at the end of the day did lead to this goodwill impairment purely centered also about North America. We are moving also into the direction of investing and doing more on the industrial side, so that's for sure our target. This is the core of our complete 2030 strategy at the end of the day, to get a lower share on automotive side and a higher share on the industry side. This is perfect proof that this is the right strategy because currently, our automation equipment sales are, we reduced it, but still on 35% to 40% sales share on the automotive-related manufacturing equipment.
That leaves for sure some marks in North America if the big OEMs decide to be cautious in terms of investment.
Perfect. My last question is on your broader restructuring transformation program you initiated. Are the targeted annual cost savings of around, I think, if I remember correctly, EUR 30 million-EUR 32 million, starting with full effect in 2028, are they still on track? Are they baked in into your 2030 guidance?
Yes, they're baked into our-
Is there more to come? Mm-hmm.
They're baked into our 2030 guidance. Yes, we are on track with them. Just a reminder, we've been basically having savings in the year 2026, was EUR 18 million, EUR 17 million-EUR 18 million. We invested in the past year in restructuring activities on the overhead side, around about EUR 17 million-EUR 18 million with a payback of one year. That means this year's effect is EUR 18 million. That's in the P&L. For sure, these activities, they didn't ramp up over the course of the year. That means due to the fact that it's ramping up over the course of the year, we see in 2027 and 2028 then the full effect of these activities. This is then the numbers you've been mentioning in the range of EUR 30 million, EUR 32 million. This is baked into the numbers of our long-term or midterm targets.
Okay. Many thanks. It's all very clear. I'll step back into the line. Thank you.
Thank you very much, Yasmin.
Thank you very much. The next question is from Sebastian Ubert from Münchmeyer Petersen Capital Markets. The floor is yours.
Maybe you're muted still, Sebastian. We can't hear you yet.
Sebastian?
Or maybe the question was pulled back finally. Sebastian, you also have the chance to write it in the chat if something's not working technically. I'd suggest we go for the next question.
Sorry. I recommend that you call again, because your line was open, but we couldn't hear you. Maybe you just try again.
Yeah. Or you write a text. Good. Then we continue with other questions, if there are any.
I'm just going to repeat again. If anyone wants to ask a question, please press star, nine, and pound key on your telephone keypad, or just use the dial-in function in the webcast and raise your hand. I wait a moment to see if anyone raises their hand.
Just in case, and I just want to emphasize also in the case of Sebastian, if something is worthwhile discussing from your end, you also at any time can get in touch with Andreas Schröder, Investor Relations on our end. For sure, answering Q&As, answering your questions is not limited to this call. Whenever something technically doesn't work out, or you feel that something needs to be discussed in a later stage, Andreas is there. For sure, if you set up the meeting, I'll be there as well, and we have these discussions. Just as a remark, we're not limited to this call, because I sense that Sebastian didn't make it through with his question, or I'm not sure even if he did dial in again.
No, that's true. Maybe the question was already answered, and maybe that was the reason.
Okay. Good.
So far there isn't any more questions. I thank everyone for their participation, and with that, would like to hand over to your host, Mr. Büchsner, for closing remarks.
Yeah, thank you very much. Finally, as I said, three points to be discussed today, where we wanted to give some details. We ended the fourth quarter strong, which is a good sign also for the future. However, with the current market situation, we did an impairment on our end of EUR 67 million in North American region. Then finally, our midterm targets are revised to EUR 1.5 billion and 12%-15% EBIT margin. This is considering the currently weak situation out there in the market, predominantly in the automotive and automotive-related manufacturing equipment section. However, our strategy, our long-term strategy of growth is still on. Just as a reminder, in the past years, we have been growing 7.4% per year.
Yes, it is difficult times with headwinds, but for sure, our strategic levers are on to continue our growth path, and we have all new products we need in the portfolio, be it on the automotive side, but also in the industrial side, to continue that path of success. Yeah, we thank you for your participation in the call today, and I wish you all the best and good weekend. Thank you very much. Bye.