Stabilus Stock

Good morning, and welcome to our quarter 3 results call. I would like to start this time around with the key takeaways for you. So first of all, yes, we completed the sale of fabric and track products. As you all know, starting 1st of May, we had the signing and the closing -- signing on 7th of May and the closing was on the 23rd of June in 2026. Also very important to our business is, for sure, our personnel-related measures we are taking as a very important pillar to improve our business and to do a business transformation.

This transformation program is basically completed, right? All personal measures have been taken and we are enjoying the fruits of this success. Important to know is also that we increased our covenant headroom. So our covenant now is also 3.9 throughout the year 2027. This is just to have some more safety and also to consider the request of some of the shareholders and analysts who say we are getting too narrow in terms of the headroom we are having. And now we have a sufficient headroom also for the next 12 months in rough waters.

This was a great achievement of our team negotiating with our banks. And you've probably read it over the course of the past week, we have an intensive work along with Synapticon and are working on robot technology. This is something I will elaborate on at a later stage. Pointing out the 2 most important numbers EUR 299 million, so close to EUR 300 million. That's the revenue number for the past quarter with 10.8% EBIT margin. And yes, the revenues are under pressure.

Will talk a bit throughout the conference, why that's the case. It's -- and this is something I right away, tell you at this page, it's rather driven by China and some China weakness in the market that we are at the end of the day, 4% or 4.5% below prior year's sales number for the third quarter. However, we managed even with these lower sales having a better EBIT margin, and this is something we're particularly proud of.

A big cheer is driven by also all these efficiency programs we are doing along the line. Last year, we have been at 10.5%. And this year is 10.8% increase on EBIT margin despite of some lower revenues on the third quarter this year compared to prior year's third quarter. Technical stuff.

On the next page, you see some more details in terms of the transaction overview for the sale of Tech and Fabreeka. teck products in Fabreeka have been a good asset for us. We, at the end of the day, acquired them with a big acquisition in 2016. However, they are basically not in the core of our business, and we put them held for sale 1st of May, at the signing 7th of May. It was a flawless process to selling it to the VMC Group. They, at the end of the day, have a broad portfolio in that term already, and it's very complementary to their portfolio. So they've been from the beginning, very interested. It was at the beginning kind of a process where we had more interest in people or companies in the scope.

But at the end of the day, we did narrow it down to the best option we had in both thinking about the portfolio fit and also in financial terms for us. The enterprise value was EUR 92 million at that stage. And it was a successful business for us. We did grow it a lot, and the margin was exceptionally good, was in the range of 30%. So revenue and EBIT margin 2025 were also remarkable. And the closing did happen on the 23rd of June.

What did we sell? Just a reminder for everybody, this is basically, yes, something in relation to management of vibration and velocity control however, not really fitting in a perfect way to our portfolio. And you know that we are concentrating now and expanding on the automation side, the robotics side, and these elements, they have been the vast majority components for mechanical movements, rubber and plastic mounts. And this is, at the end of the day, what we sold. We have now a stronger focus on our core business with the electromechanical intelligent motion control and automation business.

And that's something to concentrate on because we'll hear something on this playground later on with a great collaboration we've been starting along the line. So what did we do in terms of this transaction. At the end of the day, as I said already, it's is [indiscernible] move to basically concentrate on the core portfolio, which we do with that. We had limited synergies way forward, and we used the monies we got for deleveraging our balance sheet and it's perfect fit to VMC Group, and they took on the complete business from us. This was a strategic decision value creating for both sides.

Yes, I've been touching that point already. We are progressing in a big way with our move towards industrial business. Not only that a couple of years ago, we bought [indiscernible], which is a great success in terms of beefing up our margin, which is a great success in terms of sales opportunities we have. But also we're investing now in the smart rotary actuator business for [indiscernible], and this is just another pillar for us to strengthen our business. So why is that? And you see that over the course of the past years, it's wise for us to invest into the industrial space.

I've been mentioning that our sales have been with EUR 300 million, a little less than last year, around about 4.5%. However, our industry business, and you'll see that at a later stage, is actually improving. And it is year-over-year, 8% plus on the industrial space. So it was exactly the right decision we took to invest more and to foster our business on the industrial side because also, we are generating -- a side of higher sales, we are generating nowadays, majority of our profits in this playground because the margins we are tackling with the businesses are exceptionally good.

If you see, as an example, the [indiscernible] business and also other business opportunities like the rotary actors [indiscernible]. And you fly think about that. It's 30 rotary actuators per robot per human with robot, you find them in all joints, and we have basically a USP. So what's our USP? We started along with a well-known partner, which is Synapticon where we hold more than 10% of their shares, a collaboration where we invested a low single-digit million number to make sure that they develop along with us this robot joints. And they are basically experts in motion control when it comes to software and safety, and you need a safety layer for these kinds of robots. The human read robots, they need a safety layer. In case power is down or other things happen, this thing, they're pretty heavy, can't fall apart or can't fall on to people.

And this is why there is a safety mode Synapticon is working on the software. We are working on the mass production. As you all know, we are experts in mass production. And this is why we've been expanding our business in there and are now exclusive working with Synapticon and are jointly selling these applications into the virtual robotics -- robotic supplier, robotics manufacturing and the important thing to know is we did talk about that last week. We're talking now about it because we wanted to gather some facts before we get to our shareholders. because we are known for executing what we talk about, and this is what I also can tell you here, it's not like on this PowerPoint chart. But we already sent first samples to our customers not only the hardware but also including the software.

So this was a great success, is a great success, and there is great growth coming up in that playground, as you know. There is, for sure, headwinds we are currently dealing with also would like to give you an update on the headwinds, the light vehicle production, on the year-to-year comparison, is now for the third quarter on EUR 22.9 million. So if you add that up, will not reach even the EUR 19 million of produced vehicles this year. This is some headwind we for sure see because the automotive business is a volume business, and we're just shy of EUR 90 million. So we're behind the expectation of the market here. The market, actually, the original thought was that we would be above EUR 90 million, now it's below EUR 90 million for the year. And this is, for sure, adding some pressure, along with competitive pressure in China.

So Asia Pacific is and remains an area of highest competitive business predominantly in China. We see here some pricing pressure, and this will continue. We know how to deal with it, right? We have wonderful actions in place. To deal with this pressure and to come down with our costs, we're working on the purchasing side, on the operations side, dealing with our customers. However, this is just something which we and this is the same for everybody else in the market have to deal with.

So -- and then customer sentiment, I mentioned customer sentiment, and we'll talk a bit about that on the next slide that we talk about the split of the business, but this is a concern as well that the consumer sentiment is low. As I said, the industrial business is improving now. We see light at the end of the tunnel. But on the automotive space, it's still fragile. And then for sure, with all the geopolitical stuff around, there is a high attention of everybody on supply chain and supply chain disruption.

Talking a bit about our business setting. And one thing you will see here, and this is different from last time we talked. The industrial business is gaining ground. We are now seeing an organic growth year-over-year of 8%. You see that on the top left in this box, 8% revenue growth versus the third quarter last year. Unlike automotive, which, at the end of the day, in organic way, was suffering minus 15% over last year. And this also confirms the great initiatives we did to fasten strengthen our industrial business.

Strengthening our industrial business is and remains the main focus point. Automotive is extremely important for us because the nucleus of our success is automotive because with economies of scale, highest level of quality expectations, this market of automotive drove us at Stabilus where we are, being a leader in many, many different segments, leading by a very nice cost setting and also extremely good performance and quality level. This is why we are known in the industry for very robust product, and this is why we also have no issues at all expanding into the robot market.

It's also a market which is highly competitive and ask for a lot of quality and quality aspects, and at the end of the day, quality guidelines, but we are able to deal with it. So what did happen in the market over the course of the past quarter, and this is an important chart for you. Automotive, yes, if you see the year-over-year change, it's even beyond the 13%. It's a rather 15% organic side, driven by market weakness and pricing pressure. And then we see the automation and industrial machinery sector, stabilizing. Distribution independent aftermarket is growing.

Commercial Vehicle segment is growing. Energy & Construction is growing. Aerospace, marine, rail and defense is growing to an extent of 35% even. So all the initiatives, which we've been doing over the course of the years, particularly also now with defense, are carrying fruits. We are growing. We are growing on the industrial side, 8% organically, and we are growing in the sector where it really matters. The sectors which are highly profitable for us and where the customers really value our quality. And this is something which was extremely important in the past quarter that we saw and see now the light at the end of the tunnel in that term.

Now let's talk a bit about the numbers. On the next page, you will find the 1st or the quarter 3 numbers, the revenue at the end of the day, in organic way was minus 5% almost, 4.4% to 5.2%. However, you see that the organic area was minus 4.4% and some areas of FX were slightly positive even, but the soft market, particularly in the Asia Pacific knocks us down in terms of revenues. And as I said, the important thing is that the industrial business is holding up and getting stronger.

EBIT margin, likewise, and we have had 10.8%, which is remarkable considering this weakness on the revenue side. And this is driven because of our high share of industry business and also driven by the good initiatives we did to strengthen our portfolio in the industrial side. On the profit, you for sure see the effect now of our divestiture. You see the sale of Tech and Fabreeka, tech products and Fabreeka in this number, which was very good in terms of our profit -- on the cash flow, you don't see this effect because, for sure, we adjusted all these effects and are currently a little lower than last year, same time around. And in terms of percentage is 9.5%. This is basically driven by the lower sales and thereby less EBIT within EBITDA we generated driven by sales. But however, the profitability is holding up very strong. And it is and will remain stable because of the good and healthy mix we have now between automotive and industry.

On the next page, you see the 9 months you saw year-to-date. Actually, you see here that in terms of sales, there is a minus almost 6% in organic way. Here, the FX rate is even more and having a bigger impact, the FX rate impact on the quarter 3 was only 0.6%. On the year-to-date, it's 2.2%, so that means the organic side is kind of flat over the course of the year. And the FX impact earlier this year was higher than it's now. And we also think that for the rest of the year, it will be rather reflecting the quarter 3 FX rates than the yearly average. However, on the performance for the complete year, we are at 10.7%.

There is versus last year, for sure, this divestment effect of M&A. So that means the divestiture of 1.1% negative for us. And then you also see here that there was good cost synergies with this take over the course of the year, EUR 1.7 million overall profitability also here in this view impacted massively by the sale of Tech Products and Fabreeka and the adjusted cash flow in the same range than last year, a little softer driven by less revenues. However, on a strong position, nevertheless, because of the healthy business setting we have.

Good. So we would need to switch to the next page, the next 3 pages. You basically see on next 4 pages is by region, starting with an overall view on the Stabilus as a group. You see here over the course of the past 5 quarters, how sales were doing and how profitability we're doing is that -- we're doing. So over the course of the quarter, a pretty stable picture, right, in terms of the EBIT margin, the adjusted EBIT margin in the range of 10.5% to 11.2% with a very good upside and 10.8% even in the quarter 3 with a positive 0.3 basis points movement. In terms of sales, over the quarters, pretty stable. However, as I said, the third quarter was less than the third quarter prior year. However, the business mix for us was positive, and this is why we've been generating good EBIT margins.

So we would move on now to the different regions, starting with Americas. You know that early in the year, we told you this was that we are suffering some performance issues on the side of America. You see here the EBIT margins gradually improving over the past 2 quarters. We've been at 8.8% in quarter 2 and now at 9.5%. This is a good indicator that not only the business gets a little stronger now in terms of also the Industrial business, but also here some of these effects of our performance-related issues in our plant of Mexico, we have been already settling, and we are on a good way to also complete this journey in order to improve our business substantially and sustainably and this is what we are working on.

So on the next page, you see the EMEA picture. Here also similar picture, kind of stable this time around, right? You see the upswing towards the end of last year, but then in the range of almost 12% margin quarter 3 and the organic growth was also similar 0.1%, so pretty stable compared to last quarter. Also not too spectacular here. However, we go on the next page and see the APAC region. And this basically comes down to China. And here, you see a big swing, right? We see 20% over the course of the past year. And this is something which is an issue which we saw coming.

That's why we've been talking over the course of the last quarters about it, the economy in China is particularly soft. We saw this effect right in the Chinese New Year. And if you remember back, it's our quarter 2, we saw it being [indiscernible] with February and March after the Chinese New Year, where many people thought it would go upwards in terms of consumer sentiment, but actually it did not. It is and remains soft. This is driven by the automotive market for us hitting predominantly on the side of powerise. And likewise and similar is the margin.

When we've been talking about the margin in various meetings, I always said that I expect that the Asia Pacific margin on the long run is stronger than the company margin, but in the same range than the company margin. And this is something which we see as important for us. So we are actually year-to-date will be in a similar range as a target for the quarters to come. However, the organic growth we see also for the next quarter as an issue, particularly in China when it comes to discussion on the Asia Pacific region.

Good. So we continue our charts here, we see the adjusted EBIT margin improved by 30 basis points in the past quarter. This is also the quarter 3 call -- quarter 3 view [ becoming ] from 10.5% to 10.8%. I've been highlighting that already, similar absolute range of around about EUR 32.2 million. You see here on the right-hand side, this swing of the divestiture gains and then for sure, the adjustments because whatever we've been making in a net way from our sale of brick and tech products for sure adjusted. And this is the upside. The net effect was EUR 44.4 million. We adjusted almost everything side of some costs, which we had -- and other than that, there are some impacts in terms of lower sales.

So revenues. You see that on the left-hand side, and there's an effect out of that we see that the EBIT margin in the third quarter came down a little bit, but it's in a similar range. And the EBIT margin in percentage improved to 10.8%. So on the next page, we see also here, for sure, in that view, the basically the cash view in terms of Fabreeka and Tech products impact. On the left-hand side, I will start with that. However, you see the starting point of EUR 66 million for the last year and then basically some ups and downs in terms of M&A process, the divestment initiatives, which did also some sales related impact. So for sure, we also here adjusted the effect of the sale of Fabreeka and Tech products.

You see this big EUR 79 million green bar on the right-hand side and then the adjustment of EUR 73.2 million, which at the end of the day, brings us to a like-for-like cash flow EUR 28.5 million free cash flow, third quarter year-to-date for 2026. So there is still a lot to do. However, we all know that this last quarter of the year is the strongest quarter for us in terms of cash generation. So we are confident that also here, we achieve our guidance. And also, as we did narrow down our guidance will anyway later on talk about the latest view on that.

So I will switch to the next point. And this is extremely important chart for us, right? Deleveraging the -- without a doubt, selling Fabreeka and Tech products was driven as a strategic element. We want to concentrate on automation technologies. We want to concentrate on human read robots, and we want to grow in the industrial space. And this is working coming back to that point. You saw that quarter through last year to quarter 3 this year, the areas of industry are growing in almost all areas, predominantly in the area of independent aftermarket commercial vehicles, but also the areas of rail, air and defense.

And this is something which is very positive for us. However, we've been selling Fabreeka and Tech products because it doesn't fit to this core strategy and we want to concentrate on the -- really on the technical things which matter to us. We took the money and did pay back debt. And that's what you see here on this chart that debt came down from EUR 631 million to EUR 554 million. So basically a delta of EUR 80 million most. And this is something which we're extremely proud of, and it brought down our net leverage ratio to 2.77.

You would for sure ask now why do you then go into the range of 3.9% with your net leverage ratio at the covenant. We did that just to be on the safe side. And because we got the hint also from investors and analysts and shareholders that we basically are better off if we increase the headroom, which we did with our banks and this is the result. And this is what you see here on this chart. So just a reminder how -- what do we owe to the bank, right? There is EUR 100 million and EUR 150 million in terms of term loan facilities. One of them will basically run out next year. So we are on a refinancing for next year. And then there is EUR 350 million in terms of a revolving credit facility. And with a net leverage ratio of 2.77, we are actually in the safe side because now our maximum leverage ratio -- net leverage ratio is 3.5. It will be 4.0 throughout the financial year 2026 and then 3.9 throughout the complete year in 2027.

You would ask why is such an odd number, right, 3.9 and not 4. This is something where we wanted to balance the risk factors that the banks we are discussing with and wanted to get it for a minimum premium, and this is why we have been staying below the 4. So we are very stable with that. We achieved to delever and to pay back debt. Now our debt is EUR 554 million, which is along with 2.77 net leverage ratio, absolutely moving into the right direction, and we'll continue keeping that as a main priority to delever and to reduce our debt for sure.

Net working capital is at 20.5%. There is also things to do. We have certain initiatives which we are executing as we speak, with some financial initiatives, which we're still doing, but also we have biweekly calls now with all entities to bring our inventories down because here, we're also facing some headwinds, right? Our inventories there basically coming down a bit and the accounts receivable per payable as well. So you see on the bottom right, a business mix, which, at the end of the day, is typical for a movement to more industry, right?

Payment terms are a little longer. And for sure, inventories are a little higher, but we are fighting this effect. You see us being successful already on the inventory side to a certain share, and we'll continue that part because the more we get into the industrial space, the longer payment terms and average get and also the more inventory we need because in many cases, you kind of sell products only if you have them on the shelf, right? And this is something which we need to acknowledge. It's a little more capital intensive than the automotive industry. And this is something which we are balancing and fighting against, and we are pretty successful on that, and you will see that in the coming months.

So on the next page, cost savings projects, right? I can't repeat it often enough because we are progressing very well. This slide is pretty similar from the slide we've been showing over the course of the past quarters. And the restructuring expense have been executed to EUR 7.6 million. So that's the utilization as we speak. The cash outflow in the first 9 months was EUR 7.3 million. So there's quite some cash sitting there. And along on these accruals sitting there because the accrual was way higher, it was in double-digit million. The cost savings in the 9 months was EUR 15.4 million. And you see the ratio right? The cash outflow was EUR 7.3 million. And now the cost savings of EUR 15.4 million. It's a highly effective and good program for us.

The expected savings will even further increase. So the full year '27 effect will be EUR 19 million cost savings because we have been starting in the first quarter and step by step, we are coming up with these savings, and the EUR 32 million reoccurring cost savings in 2028. So you see that in all angles, we do what we promise. We've been growing the industrial business. We invest where it matters. We know what the content create on with this divestment. And at the end of the day, we are executing our cost savings initiatives.

So on the next page, I would like to lead you through the transformation program. It's well on track. Organizational transformation, the adjustments is in the execution phase -- we've been a stronger customer focus with what we do here. We are reacting faster to the market, and this is something which we further want to strengthen and work on. Then there are location-related measures. These measures are the ones which take the longest because you need to be very sensitive on which locations you do what? Because they are, at the end of the day, the front runners in terms of your customer interface and they are sometimes more difficult to move than other initiatives you're doing in this consolidation of offices, production facilities is also here well on track, and there is more to come. That's definitely something which we concentrate on in the coming months. And all related measures. We've been talking about that, it's executed, and that's what we're proud of.

Investment. Also here, I gave the strong commitment that we will be below 6% in this year. So year-to-date, we've been below 6%, 5.8%. We know it's a tricky time. Some of the investments have a long introduction phase, particularly the ones which are important to work on the cost position. And we will continue to invest in the new technologies and to get more cost effective. But you know with the current business setting, we also acknowledge and see that there is less investment needed for capacities for sure. The business is flat on the automotive side, and you'll see that or see this effect, and this is something which will also continue.

I would like to highlight, we're coming to the last couple of slides here, the priorities which we're working on. So the swift execution of the personal-related measures, right? The footprint optimization, organizational streamlining and then the cost management itself, that's something which is on the cost side, right-hand side of this chart here, very important. However, we continue to delever with that. We're ramping up the factoring, right? And we are also investing nevertheless in our future with good investments in terms of Human read robots working partnerships in order to make it happen.

So on one hand side, we were managing the costs in the short, mid and long term, that's what we can be sure of. And on the other hand side, we don't miss out on jumping onto the trains of success for the future, which is equally important for us. Always having in mind that, yes, automotive is our core business where we came from, but we want to strengthen our industrial business.

So this basically leads me to the summary of 9 months. For sure we are impacted by the market environment, our local-for-local initiatives help us a lot. To make us resilient with 10.8% EBIT margin in difficult waters and have been able to delever massively. We did pay back EUR 80 million in terms of debt. And for sure, with all I told you, we are very stringently executing the Start 2030 strategies we have on hand.

So with that, we go for the page where we talk about the market and economics, right? There is a moderate outlook for the quarters to come. We see some softer growth in Europe and stronger momentum in U.S. and China going forward, and as I said, particularly in the area of industrial business, things are holding up. Geopolitical tension, we always keep in mind also in terms of securing our supply base. And then the basic broader light vehicle production is in the range of EUR 90 million. Here is EUR 92 million. Let's see where finally the number comes up. This is something which has in the past quarter being with 22.9 million vehicle produced in a little shy of this number if you extrapolate it to 4 quarters, but it should be in the range of EUR 90 million to conclude the year for us.

So talking about conclusion, I'd like to also point out our guidance, which we did narrow down but within the original guidance we gave. So we will end up being at EUR 1.15 billion round about. We will be in the range of 10%, maybe a notch higher, but in the range of 10% in the EBIT margin adjusted and the free cash flow at EUR 90 million round about for the year. There's only 2 more months, as you know, right? For us, the year ends on the end of September. So there is August and September to go. And we're confident -- very confident that we reach these numbers.

Good. So with that, I would hand over back to our host, and we will start the Q&A session.

Absolutely. I'm happy to do that. First of all, we talk about these growth angles, right? You mentioned the door actuation. The do actuation is going very well. We've been launching it with Xiaomi in China. We are now filling the pipeline of parts, and they start the Cami production in August, similar in Europe with we are the supply for direction for -- starting with the X5 series and they are also here now in filling the pipeline for -- in terms of sales.

So both activities happen over the summer period, which actually is August and September. So it's too early to say yet how this progresses then for the next year coming back to your question also in the future. But for the time being, it's absolutely in accordance slightly a notch higher than our expectation. That's in terms of store actuation. When it comes to the defense area, we are in the execution. You mentioned the propulsion system. There is a rocket propulsion system, a nuclear propulsion system where we deliver the remote handling equipment. This is running on track. -- it's exactly in terms of our forecast running on our forecast level and also making good progress.

The human leads is currently on a stage where we see first sales for next year. This will be on the low single-digit million sales for next year, but kicking in as well next year. However, this year, only by sample parts. This is important to know. The thing which goes positive is, in general terms, all these industrial businesses. However, and that's the point. And you are referencing also to the information we gave to the capital market 2 weeks ago. The industry of automotive in general terms is lagging behind. And this is something which we -- and I mentioned that as headwinds, we took into consideration narrowing down the guidance.

Why is that? Because we know that -- and we had exchange with our OEMs before hand, for sure, we always know this information from their EDIs a little beforehand. And nowadays, you probably heard over the course of the past last days that the majority of the bigger scale automotive suppliers, automotive customers have been dampening their outlook for the next quarter a bit. This is something which we saw coming already a couple of weeks ago. This is why we said, okay, let's consider that in our doings. Hopefully, it turns out a little better than this expectation is from the OEMs.

Our current guidance on one hand side includes this cautiousness of these automotive suppliers because we got this heads up a little earlier for sure with our EDIs. On the other hand side, we see very positive development on the direct to it as the defense area and in general, tons industry. And this is something which we see also going forward because I mentioned that our automotive business in an organic way is down 15% quarter-over-quarter, quarter 3 last year to quarter 3 this year. However, the way more positive and profitable industry business is up 8% year-over-year.

And this is something which we think will be also strong in the quarter. However, it will leave some marks on the sales side in terms of this automotive space. But we are making up some of it with more profitable industry business. So this shift from automotive industry, which is volatile to the industry business with a good margin profile is working very well. We've been putting basically the money into the right basket with this initiative to strengthen industry business. I hope that answers your question.

The incremental savings will be the EUR 4 million. So as we stand year-to-date at EUR 15.4 million. We will add another almost EUR 4 million for the rest of the year because there's only 2 more months to go now. And we had this steep ramp up. We wanted to execute all the savings early in the year. So there is EUR 1 million to come. And then we have the run rate for '27, which is the EUR 19 million. And then out in '28, it will be up to EUR 32 million even because then there are some operational savings coming.

Absolutely. Thank you very much for your question. Are there further questions?

Okay. So that's good. Let's start step-by-step, Yasmin. The first question is, in Asia Pacific, we've been down 18% year-over-year. As you know, that is what we have in the numbers and you're absolutely right, the light vehicle production. In general terms, was basically flat. However, if you look into the details of the light vehicle production, the light vehicle production was predominantly strong in the small segment cars and those OEMs also where there is low technical shipment of products. We are strong there with Gas Springs, right? This is also why we see there on the Gas Spring side, a positive sign.

However, if you go to the typical vehicles where you would have a powerise like the cherries like the Western OEMs, unfortunately, and we hear in the press that the western OEMs are just losing their [indiscernible], also to certain shares still [indiscernible] there, but also the known bigger Asia Pacific suppliers for bigger cars or producers for bigger cars like Chile, there are having had the difficulties in the last quarter, particularly in the last quarter, and this is basically what we saw. Our biggest customer is, as you know, on global scale VW. And this is also something where we are strong in China.

Unfortunately, for example, VW, and you hear it in all the media is basically suffering as well this weak market and particularly a competitiveness issue and with this lower sales on that end. For sure, we have a good stake in the Western World customers on the OEM side, and they're a little softer than we would have seen last year. So this is the reason overall light vehicle production, yes, they produce the cars. But if you go into the segment analysis and then you divide it between Western World and local Chinese OEMs, then you see some shifts. And there are some vehicles out there.

I mean, BYD is also losing some shares, but they are still doing good in their volumes. But as you know, they produce the Powerise on their own. And this is something in conjunction with the Western world OEMs being a little softer, which hurts us there. So the second part of your first question was the 10% EBIT margin. The 10% EBIT margin, we will defend and will be even a little higher than that. Why is that there are 2 elements to that. In Asia Pacific, one hand thing is we still have some cost levels we do. The Chinese now as they are under pressure, they are rapidly working on technical changes. So our technical changes to come down with costs there on the run their progress, and we'll execute upon to them. And this will help us to get to maintain this margin position. That's one point.

And then we also will further strengthen our industrial business, not only in the region Europe and North America, but also China. And this is why I'm confident that we stabilize the margin in China, even if the competitive pressure is -- will continue. I hope that's answering your first question.

I would say we see a softening of the price erosion. There is still year-over-year 5% price erosion in almost 6%, yes. But -- and this is kind of the pressure on the pricing side they will maintain in China. This is a given, right? Because everybody in this industry is under pressure in terms of pricing. The important thing to know is that we have this technical levers to counterbalance this deterioration of the pricing. And then the other part is, as you well said, is the market softness predominantly Western world and higher ranked vehicle segment classes. So these 2 elements are important and 6% is around -- about 5% to 6% is price erosion in this basket.

The content for the time being, and this is basically -- we are talking now still at premature levels, and we are basically producing on sample purposes, but you can calculate that depending on the size of the of the joint. It's anywhere between -- in the final stage in 2, 3 years at EUR 100 to EUR 250 per joint. The value creation in that term between Stabilus and Synapticon is probably rather 40% to on -- 30% to 40% is on Synopticon and in the range of 70 -- 60% to 70% on Stabilus. The hardware is still the more expensive part because it requires a lot of precision parts and the software is pretty much scalable.

I'm a little cautious with this number, and I'll tell you why because this pretty much depends on the volume, right? Because software, you do buy a license and then the software depends just up to by EUR 1 million, EUR 2 million or EUR 3 million or EUR 10 million parts. And then the software cost per part come down significantly, whereas a lot in terms of the mechanical part is driven by the bill of material. But as a as estimation in years from now, EUR 100 to EUR 250 would be the cost of such a joint.

That's too early to, in detail, talk about it. For sure, we do goodwill analyzes every month and every quarter. For the time being, we are confident, and that's why also we passed the third quarter with the goodwill which we have in place. But for sure, the reduced sales is something to consider in this equation. And these considerations are ongoing. And it pretty much depends on how also the business will develop in the fourth quarter, particularly when it also comes to the humanoids and the effect of the Humanoids. We are currently in discussions with various customers and are in the preparation of our outlook and the outlook for next year will be, and this is where we're just in the midst of the budgeting planning basically go hand-in-hand to the fourth quarter and the full year result.

And this is basically something which we will review over the course of the next 2 months and then come up with eventually change. [indiscernible] It pretty much depends on the budgeting and it's too early to say how the effect over the year will be because there are a lot of moving elements in there. But for the quarter 3, we have been confident and had the goodwill on a level which was still good and acceptable.

Thank you very much, Yasmin. Further questions.

Good. If there are no further questions, it's also understandable because we are in the midst of vacation time, right, early August. If there are no further questions, we would close the call, and I would wish you a still good summer time. And if you haven't [indiscernible] good vacation.

Ladies and gentlemen, and welcome to the analyst and investor web conference regarding the Stabilus results in the second quarter of fiscal 2026 [Operator Instructions]

Let me now turn the floor over to your host, Dr. Mr. Pickle.

Hello, and welcome together to our earnings call today. My name is Michel Pilsen, I'm the CEO of the Stabilus Group. And for sure, you also have our CFO, Andreas Sieger, with us in the call today. Actually, in terms of the presentation, we'll see it slightly different today because we wanted to put also a main focus on where we stand in terms of our strategic priorities and also as we are in a transformation, giving you some updates on the transformation along the sideline. So what's the current status and what do we plan in the close future to proceed and to further improve. Our bottom line is a key takeaway, I would say we're progressing very well on our transformation. And despite of rough waters, we delivered stable results.

In the past weeks, we did streamline further our industrial footprint in Asia this time around with our Suzu plant. We'll talk about that in a bit. Then for sure, we also had a lot of new business wins, in both automotive and on industrial side, I would also like to highlight 1 good win, which is actually in terms of the aftermarket, a big win in North America again for electromechanical devices. We are further working on our defense applications. That's important to us. It's steadily growing. We'll have an own section about this business or part of the business in a couple of slides.

And then for sure, we continue in general to start 2030 platforms. This time around, we also talk a bit about the robotics market. establish for automation, that's our slogan and we invest in the automation sector, predominantly also in the robotics area in the close future to make sure that we follow the megatrends which we are faced with. Yes. There is also a good progress in terms of our personnel-related measures, which we did introduce half a year ago. We've been fully executing them. And this actually helps and we'll see that on the financial deck to improve our margins along the line because even with lower sales this year around, we could maintain our EBIT margin.

Yes, this resilience point is extremely important for us in difficult times. predominantly also with the slogan, and this is really what we live local for local. So in the region, for the region to be close to the customer. Switching to the next slide, actually point it out. Spot on, we had in the second quarter, EUR 304.9 million in terms of sales. which is better than the first quarter this year where we have been in the range of EUR 291 million. However, it's 10% less than prior year. And the remarkable thing is that despite of lower sales, we achieved same EBIT margins than last year, which was 11.2%. which underlines again our execution in terms of our cost measurements and cost measurement savings, which we initiated over the course of the past months.

Yes. I've been talking about the defense sector in the beginning of the slide. And actually, we had significant order wins over the course of the past quarters. And it's significant for us because we already sold EUR 3.2 million, and this will be triple soon. We'll be tripling soon where we are selling all kinds of features, be it dampening systems, opening systems, gas springs, gastros for all kinds of applications in the military sector starting from standard weapons up to drones.

So we are basically becoming bigger and bigger in this sector of our business. And this is only a starting point because when it comes to the next and even bigger areas like Human retorts, we are also now in the progress to develop the right features to be also present in that market. So you see that with whatever we do, also in strategic terms, we invest a lot in that point. Yet to be closer to the customers, we decided to combine our industrial brands under 1 roof.

So we had the inauguration of our new plant in Suzhou 2 weeks ago. It was a great success. 65 valued customers have been participating in the same way than representatives from the government, for sure, the management was there of the Stabilus Group. And we could open in brand new facility to actually capture our industrial brands under 1 roof. and to be closer to the customers, this is really appreciated by our customers, and we see very nice order intake since that because now we have all the export brands under 1 roof. which adds to basically efficiency, and it brings us very close to our customers, which is absolutely appreciated and needed this time around.

So it's in the region for the region by Excellence. Talking a bit about the market environment. And I told you already that the presentation this time around is a little different than the times before because we also would like to talk about the market environment, right? So there is still a lot of competitive pressure in the market. You all know that particularly in the automotive industry, Asia Pacific for front, right? The global lightweight production is below prior year's plan or below prior year's execution by 3%, yes.

We see some unfavorable currency translation effects, driven mainly by the U.S. dollar and the renminbi. And at the end of the day, the industrial segments, they are also impacted by the current situation out there in the market. There is a consumer sentiment, which is basically cautious in all kinds of investments for goods. And then for sure, along with that, we are basically working on protecting us in terms of supply chain disruptions, right, driven by all these geopolitical unrest in the world basically protect ourselves and make sure that our supply chain is independent and robust and stable.

So this is currently the market environment we are faced with, like many or almost all other companies in the world as well. And as I said, we are fighting through that because our EBIT margin basically stood at the same level than last year with even lower sales, which underlines the execution and the effect of our activities at the Stabilus group. So on the next page, we jump directly into our deep dive and different market segments we have on hand. And actually, now at 50-50 between automotive and industrial businesses.

Our Industrial business actually did grow organically 2%. However, the FX rate was an issue in the first half of the year, particularly also in the second quarter. And the automotive industry, as I said before, minus 16% is impacted by the currently weak automotive market, yes, around the group, right? You see that on top of the slide on the red-hand side, 16% down year-over-year. Also, the industry machinery and automation market is impacted by that people are consuming less. And this also brings to the point that the companies are investing less in automation.

They're investing less industrial machinery. And this is certainly something we feel. However, distribution and first from the commercial vehicle and also the aerospace, marine and rail sector, they are performing well. And this is basically, for us, particularly the commercial vehicle sector an indicator for growth in the future because typically the economies start to grow with commercial vehicles and commercial vehicle growth. This basically drives the economy on global scale despite of the current headwind we are seeing in the global economy.

So with that, on the next page, I would hand over to Andreas Gage, leading us through the financials for the last quarter and the first half of the year.

Thank you, Michael, and also from my side, a very warm welcome to this conference. If you look at the first -- the second quarter, where I will start, that's January to March, and then I will go into the half year result. So in the first -- in the second quarter, we lost compared to prior year, 9.8% in the revenue, and you see about 2/3 is really coming from the volume where 1/3 is impacted by foreign currency translation, so we had headwind from that side.

If you then look where this volume drop is coming from, it's mainly Asia Pacific. and also Americas isolated Q2 had a softer revenue result than in the prior year. What we also did realize also in the second quarter again are some synergies from the taco combination of EUR 2.4 million. If you then look at the EBIT margin with minus 9.8% in revenue, we could maintain the EBIT margin at prior year level. So that shows we really could flex our cost basis. From the revenue side, you see it then later on in the bridge.

We lost more than EUR 9 million in EBIT but where we really strong was in the compensation with overhead cost of EUR 7.6 million. And just bear in mind, we reduced them by EUR 7.6 million compared to prior year despite the headwind we have from all the inflationary price increases. If we then move around to the profit for the second quarter, you see it went down by 17%. However, it's important to notice that the deviation basically comes from the EBIT, so below the EBIT, there was not a lot of movement as compared to the prior year. The adjusted free cash flow in the quarter, and it's important in the quarter stand-alone was clearly below the prior year level.

The main driver behind there was a strong March. We had in March, very strong sales, clearly above the normal run rate that we have, and these sales were then reflected in higher accounts receivable. If I then move on to the half year results, you see the revenue in the half year was 1.2%, down. We also half of 2/3 volume, half FX impact. And what we see then in the -- if you look at the whole half year 2026, it was predominantly from Asia Pacific and in Asia Pacific, a big portion from Powerise.

If you look at the whole half year 2026, we realized more than EUR 4 million of sales synergies in with the taco. In the EBIT, a similar picture, you see the gap to prior year and was closed a little bit in the second quarter. That's also why we see a bigger deviation in the first half year, the margin still 10.6% in the quarter stand-alone. The major impact when you also compare it in absolute numbers compared to prior year also comes from the volume effect.

You see in the full half year 2026, we even reduced overhead cost by EUR 14.3 million. So here, you see the effort from all the measures we took, we really see in the results. Moving on to profit, similar pictures for the second quarter. The major deviation in the profit as compared to EBIT comes from the lower EBIT in absolute terms. And then if you move directly on to the cash flow, you see if we compare the full second half year with prior year, we even generated slightly more cash flow. The reason being in the prior year, the Q1 was weak. and now this year, Q2 was rather weak.

But if we compare to the full 6 months to prior year, we could even slightly increase it. What you also see, if you just go for 1 second back, you also see that on 1 hand, it's the operating cash flow, but we clearly adjusted also current level of the business activity was the cash flow from investing activities. If we then move on and look more the sequential view, that's also new slide that we prepared and also a new kind of presenting the results, you now see the quarter's trailing for the last 12 months.

And you see we improved our revenue as well as our EBIT from the first quarter to the second quarter. On 1 hand, that's driven by the higher revenues that we could achieve and also by the good March revenue that we could book. And you also see that our cost measures on cost of goods sold, but also on the overhead cost showed its positive impact even more in Q2 than we saw it in Q1 2026. If I then go into the region and give you a little bit more flavor about the region, the 3 region developed quite differently. In the U.S., the top line went down quarter-to-quarter by 11.5%. That's really driven by the automotive business, but you also must note that the automotive business was only in the second quarter, particularly weak in the U.S. where we achieved good or I would even say, very good results is industrial components, and particularly in the form of taco where we could increase in Americas, the revenue by 6%.

If you then look at the development of the EBIT, we said it already in Q1 presentation that we are not satisfied with the EBIT that we delivered in Q1 with the EUR 5 million. In Q2, it is a little bit better with 9.9% and 8.8% margin still not there where we want, and it has basically 2 reasons in there. Reason number 1 is the challenges we had in the production of Gas Spring in Mexico. We already discussed that in the last call for Q1. And what we also see so in the second quarter and when we produce in Mexico, we ship a big part of our products to the U.S., and we invoice that in U.S. dollar.

And when the currency moves and the dollar gets weaker, we then get less Mexican peso when we converted to Mexican peso in order to cover our cost. When we then look at EMEA, we see a different picture. If you look at quarter-to-quarter, we could basically maintain our revenue level organically even slightly increased it mainly also coming from Automotive Gas Spring. Interesting to see is that industrial components, even in Europe, where we really can say, have not an easy economic environment, it could increase the revenue by 4.3%. And in Europe, different to the other region, we could maintain or even slightly increase the automotive Powerise business. When we then look at the EBIT margin, also here, a clear improvement quarter-to-quarter from 10.8% to 11.2%.

Also here, we see on 1 hand, the volume impact that we could realize with a better EBIT and what we also see that the cost saving measures are really booked now into the results. Asia Pacific, also again, a different picture than EMEA and Americas. In Asia Pacific, we clearly see the lower revenue. The top line was down 28% or 26.6% if you compare it quarter-to-quarter, mainly -- is mainly coming from automotive and within automotive, especially from the Powerise business. What I would stress here and highlight is the EBIT and the EBIT margin, I mean, we lowered the revenue significantly driven by the economic mainly in China. but we still deliver EBIT margin of 18%, 16.7%, what I would consider as a strong result.

When we then move on to the bridge, that's also a new slide that we now share with you. And here we compare the EBIT from Q2 '25 to the EBIT Q2 '26 to give you a better flavor what is the driver of the result. And you see clearly on the negative side is the impact from the revenue with EUR 9.3 million. On the margin, I could say with minus 0.4%, it's almost flat. So we adjusted our cost of goods sold to the new volumes that we have in Q2 2026. And then you see the savings we realized totaling EUR 7.6 million, a little bit in R&D, but mainly in selling, and that is even more important in admin expense that it could reduce by 7.4% in an inflationary environment.

The adjustments also were a little different than in prior year, and that brings us to the EUR 34.1 million in Q2 2026. We also prepared for you a similar bridge for the cash flow, I mean the cash flow, we compare the cash conversion, and you see we started the EBIT, and then we had the depreciation and amortization so that we are at the level of the EBITDA. Then you see the change in net working capital with the strongest negative impact, the change in net working capital is mainly explained from the higher accounts receivable from the good revenues we had in March 2026.

To a lower extent, it's also driven by the fact that in prior year, we reduced the inventory in the second quarter notably. And this reduction, we obviously cannot repeat year-over-year and year. So in comparison than the prior year, this has also a slightly negative impact as well as tax and others. That brings us to the operating cash flow of the EUR 15.7 million. If you then make the bridge to the adjusted free cash flow, we invested EUR 15.4 million in our facilities and also new production equipment. significant less than last year to adjust also and to preserve the cash and then you see with the adjustment, it gives us a free cash flow of EUR 4.1 million in the quarter, which is clearly below prior quarter stand-alone but as I showed at the beginning, if you look at the first half year, we were even slightly above.

With that, I would also show you how the net leverage ratio developed and it went slightly up because the debt increased slightly as compared to 2025, However, we continue our deleveraging our reduction of net financial debt over the years, and we will also continue that path in the second half of 2026. And we also initiated actions and plans in order to particularly work on the inventory level in order to bring that further down.

The last slide is then from my side on the net working capital. Here, you see the increase on trade accounts receivable. You see it also on the right-hand bottom side, the major increase the 27.7% comes from accounts receivable by the strong month March 2026. That's what we prepared for you in respect of a deep dive into the numbers, and I would hand back to Michael for the remaining presentation.

Thank you, Andreas. Thank you for leading us through the financial sector. And as you see, considering the lower sales we saw over the course of the first half of the year, we are protecting our margins. And we're also on the same level of cash flow than last year, which is a good indicator for us that we are spot on with our strategic initiative, in particular when it costs and maintaining good cash conversion. And this is very, very important for us. So how do we do that? And how do we continue this development. .

So you see the strategic pillars, which we have on hand and basically, it's all about the strategic pillars to us. And I wanted to give you an update on what we achieved over the course of the first half year and also where our impact will be and next milestones will be to further progress on this improvement path. So when you talk, for example, about the motion control innovation, right? Innovation is key for success for us. We did invent the industrial Powerise solutions for us, the door actuation system and also, for sure, automation-related products like Powerise for automation. And this is something which drives our performance.

It drives also the shift from automotive to industry, and it guarantees a healthy and good margin profile. So what's the focus in terms of the next milestones, the industrial automation will also bring that to the defense applications now, right? And we are working on human-robot systems. What are we doing there? Yes, we have, for example, the hinges, right? There is more than 20 hinches in a humane robot and you need a reliable motor with a gear system and the right software.

And due to the fact that we work together with our partners like Synapticon, where we acquired a certain stake, as you know, we have the right software and the right hardware and execution to be successful in that market and this is something which we are now driving. It's under the umbrella of Stabilus for automation, which also captures the doings in terms of our test business. Talking about that, this is basically, for us, the motion ecosystem, right? Stabilus for automation and for sure, also along with that, our dealings with AI, AI holds the world. It's for us on the product side, which Stabilus for automation, but also it's in terms of, for example, sales channel management, so will be faster to the customer with the right product and the right product quality.

This is how we use AI and big data amongst them throughout our company. For sure, we also did good progress in terms of sustainable and profitable company, right? We've been installing several solar systems are progressing in terms of renewable energy and will even put a stronger focus based on that also going forward on our growth levels, including the margin improvement measures to basically progress on this path of a stable, profitable and sustainable company.

Asia center of gravity, Andreas has been talking about that a bit. There is a big shift in Asia, as you all know, there is on 1 hand side, the big pressure from the competition. On the other hand side, it's very, very important to deliver not only steady and stable results there, which we do with our financial performance of around about 17% in average percent, EBIT margin over the course of the first half year. Also, on the other hand side, it will be very, very important to be in the region for the region, and this is what we do with our additional footprint with further empowerment of people, local decision-making, and that's something which we also execute along with our transformation program. And for sure, in terms of operations agility, we're driving efficiency in the plants, right?

We've been investing a lot in automation, particularly when it comes into the production of Powerise systems it's fully automated now, and we improve our labor productivity with that along the line. That's what we did. And here, we also want to focus on further cost savings and cost initiatives to bring the prices down -- the cost of our products down and to invest more in operational excellence. So that's basically an update on the strategic execution. You see in terms of the product, it goes more into innovative products with human reads, but also defense areas, then the cost management is extremely important to us. and for sure, the flawless execution.

This is what it brings down to. So in terms of cost measurements, and we talked about that also at the beginning of the slide, and Andreas highlighted that our cost savings, they're coming through, right? The cost savings in the first half of the year were EUR 14.3 million. The expected savings for 12 months effect is EUR 19 million. And even in 2028, we will see EUR 32 million out of this complete reorganization and transformation program, including the restructuring, which we've been doing over the course of the past months. And that's not over yet. I mean these first initiatives are done. We are executing them. We are flawlessly executing them along the line. But for sure, we continue this path of success and cost management in our company because that's vital these days.

And this is also why we achieved similar EBIT margins in the first half year, even with lower sales by 10% compared to the prior year. Talking a bit on the next slide about our programs, our transformation program, right? The transformation is key. We drive it in each and every region. we do the organizational transformation. We've been reducing heraical levels in all the areas just our new plant in Suzhou is 1 example, right? We're taking out different layers, bringing the businesses together in order to be close to the customer and take out costs because this is what it's all about. in these days, making us lighter, making us fast and agile in a difficult environment with a lot of headwinds.

So that's what we do. So location relationship measures, this is 1 example. Such plant, but also we've been working on our facilities in Germany, U.S., Singapore and Thailand. to bring things together and combine them to take out costs. And this is something which we will progress over the course of the next quarters as well. because there is 1 thing which is extremely important to us being close to the customer, managing our costs well and also drive our top line with innovations. And the personnel-related measures we executed them already according to the plan, which we did set up last year in September October, taking out 450 employees, predominantly on the overhead side, which is actually 6% of the global workforce.

And it's predominantly in Europe and Americas. for sold in Asia Pacific, driving a little bit of different spin because there, we need to invest in local for local and also feed our engine for growth for the future. So bottom line, you see the programs are on track. So we are investing in these programs, but nevertheless, maintain our healthy EBIT margin in an environment of lower sales. And also, we are maintaining our cash flows. And I think that's remarkable. So on the next page, we've been talking a bit about the sustainability areas. This slide shows you some results, right? We're investing in renewable energy.

We've been basically despite of lower volumes, increasing our renewable energy share, you see that top left, but also there is CO2 reduction of our emissions in the facilities, a big point. We could do that by another 20% and then also, we are harvesting our own energy with solar power systems in place, which basically adds 1/3 more than before in terms of being sustainable. And this also gets recognized by the sustainability ratings we recently got, and you see it on the bottom right.

So they are all in a very good level with good ratings and also progressing well to further steps in executing on that long-term plan for us. Because it's important to be sustainable and profitable for us as a company. Over the course of the past quarters, I did tell you that we will reduce our investments which is vital for us because we want to tailor our investments to the needs we have and also to the current market situation.

So we basically have been going down in terms of investments to a range of 5%, 5.5%. As I always promised, right? We talked about the last year that the investment in the range of 6% to 7% is not a level which we'll pursue a long run. So now we are at 5.6% and at the end of the year, we will also be in the same magnitude. So we are investing where it matters in terms of new technologies, but we are very cautious in terms of capacities and for sure, safe wherever we can to underline our vital financial performance in difficult times.

On the next page, this basically leads to the key priorities for the year. Deleveraging is the most important thing for us. We need good financials for that, stable transformation in terms of creating and generating cash. That's what we do. We need a swift execution of our personal related measures for that. The footprint organization optimization goes on, the stringent cost management. And then for sure, despite of all this cost management, we still need to invest in the development of the latest technologies like human read because we don't want to miss that share because it's a fast-growing market and also in the terms of defense. as traditional markets are basically suffering or running flat like the automotive industry, we see a slight decline. we are investing and getting business in terms of new technologies like Establish for automation, automation, technology and human read and also the defense area.

And this is the main drivers we have to continue our success. And then for sure, we have also operational measurements like ramping up factoring and other points to in difficult times, stabilize and continue stable progress of our business. Yes. I'll lead to a summary now. The next 2 pages are basically giving you a summary and outlook we conclude the meeting with our guidance for the year, which, by the way, remains unchanged due to the fact that in the first half year, we could deliver stable results. And then for sure, we'll have later Q&A session.

But let me summarize before that so the first half of the year was impacted by a drop on the -- in terms of sales, however, driven by a market which is unfavorable. However, we could maintain our margin position with 11.2% particularly also in the second quarter, we've been having a good financial result overall. Also, our cash generation is similar than last year even with lower sales. local-for-local approach is extremely important for us, not only because we want to be close to the customer. It's also a natural hedging for us, right? In difficult times, we never know how the margins -- how the FX rates go up and down. You need to have kind of a natural hedging.

And this fosters basically a resilience in this currently geopolitical unrest situation and this is extremely important for us. We continue to do that. And then for sure, the transformation program is on track, as I said, with the savings at hedged and also taking out hierarchical levels. And fourth front, it's important for us to invest also in the future an innovation to be spot on with tables for automation and also our investments we do in the defense areas. On the next page, basically, also giving you a bit of an outlook how markets in the economy from our perspective will continue.

We see moderate growth. We see some light at the end of the tunnel in terms of how the economy is developing, as I said, also at the beginning of the slide, commercial vehicle for us is a little up in terms of sales. And this is an indicator for us that at the end of the day, we went through that valley and see also some positive signs here. And we see also a stronger momentum in the U.S. and China to start with, and this is basically a good sign for us. Yes, we are -- in the next quarter, there has been particularly important strengthen our supply chain, protect from supply chain disruptions because we also see that in a market environment where the economy is suffering, also our supply chain needs to be secured not only within the region for the region, but also with certain measures to stabilize our supply base.

And then at the end of the day, we see that the light vehicle production stays flat now at 92 million units produced slightly less than last year. But let's see at the end of the day, we see in the second half of the year, a slight improvement as well. So that's what I mean with light at the end of the tunnel, we see in the commercial areas -- commercial vehicle areas, some improvements. But also we see slight improvements in the vehicle market in the second half of the year, which should lead to a better environment in the second half of the year. And that's what we are basically having as an outlook and prognosis for the next half year.

Yes, towards the end of the meeting, confirming the guidance for the year 2026, as I said, we see slightly lower sales than last year. This is something which we had from the beginning in our ballpark of our prognosis and guidance for the year. That's why in the first place, we've been shaping the guidance with a revenue of EUR 1.1 billion to EUR 1.3 billion, and we are within this corridor, well to the midpoint. And in the same way, and you see that with the performance of 11.2% in the first half of the year, we see that we are within the guidance in terms of the EBIT margin, which was at 10% to 12%. And then cash flow. We all know that Stabilus typically due to slit generates more cash in the second half than in the first half of the year.

We've been on a similar level than last year. So we will also confirm here that we are within the guidance in terms of the cash flow and the guidance here is between EUR 80 million and EUR 110 million. Yes, this is basically an overview of the Stabilus group where we stand as a company. As I said, cost management, deleveraging, nevertheless investing in the latest technologies to grow in the human read market as Stabilus for automation and also on the area of defense. That are the priorities for us. And now we are happy to receive your questions. We will start the Q&A session with that.

[Operator Instructions], The first question is from Yasmin Thilan from Berenberg.

I have 3, if I may. So the first 1 on your confirmed free cash flow guidance. So could you shed more color on the free cash flow development in H1? You said already that in general, it's kind of half where you generate higher cash flow. However, how should we think about inventory impact from a potential supply chain disruptions there? So inventory to be built up. And is there anything we should keep in mind in context with the actuation ramp-up second half. And just to clarify, you adjust for the entire cash out related to the restructuring program. That's my first question.

And the second, on the deleveraging. So in Q2, we have seen a sequential increase on higher debt levels. How should we think about the EBITDA leverage by year-end? And the last question on the door actuation system. So China announced the ban of the fully hidden poorelectric door handles starting as of next year. So do you expect to push towards semi-hedesigns? And how will this impact the demand for our dotation system, if at all, many things.

Because I had some click in the line. Just I mean the third question was in terms of the penetration of traction, you mean? .

So basically, kind of the development and with the kind of upcoming ban in China for the fully hidden pop-up electric door handles. So how this will impact the demand for our dotation systems? And kind of if you have anything in particular from your Asian OEMs as a feedback so far in terms of the expected ramp-up or the kind of overall penetration...

Thank you for the clarification in terms of the question. Thank you for your question, Yasmin. I will start answering them, and then I for sure I hand over to Andreas. In terms of free cash flow guidance. Last year, we had EUR 119 million free cash flow. And this year, the guidance is between EUR 80 million to EUR 110 million. So that means 1 of your points was did you reflect or what's the impact of the accrual we did and the cash out of our restructuring program. This is considered in that. It was EUR 18 million, and we considered in our free cash flow guidance that this EUR 18 million is an outflow because when you then this deduct from last year's plan, the reduced sales and thereby the reduced EBIT and then also the cash out of the EUR 18 million.

This basically is leading us to the mid point of the guidance corridor. So from that point of view, there is, for sure, in the second half of the year, a lot of things to work on, you mentioned them, like there's the ramp-up of the door systems, which has not a big impact on our inventories because typically, in the automotive industry, you just like have just in time and sequence production and delivery of these parts, and that's why it will be average in terms of our inventory needs. On the other hand side, if you look into our financial set, for sure, there is higher inventories. These tardy in our plan. due to the fact that we see some headwinds coming when it comes to supply chain securities or safe to stability.

Bottom line is in our current forecast, there is included the current softer sales, but also the ramp-ups, and we did deduct the cash out of our restructuring program of EUR 18 million. if you count that all up, it basically we are still in the guidance corridor, and this is why we can confirm it. But to this point, for sure, or maybe Andreas has further things to add. In terms of debt level, our target is for the year-end to be below 3%. So you saw now 3.2%. We have some strategic measures, but also some measures which we pull in the here and now like factoring or also reducing inventory numbers to basically bring our profits up and also to delever further, bringing our profit up is also main priority towards the second half of the year.

Here we concentrate with our programs to reduce costs on bringing up the margins further in order to generate good cash to delever. And then as I said, there are also strategic levels in place, which we plan to execute in the second half of the year, which basically will lead us to a net leverage ratio of below 3. So the third question is in terms of the door handle, there is fully electric doors in China coming up to the market.

This, however, doesn't impact the door actuation because the door actuation is basically the electromechanical device to open and close the doors itself. However, that door is actuated. You can do that still by tipping on the car, slightly manually open it or with gestures. However, this is basically embedded into the vehicle. It has nothing to do with the pure electromechanical device to open and close the doors in conjunction with the radar systems because however you activate the door, you need a radar system, the software, the ECU and the electromechanical parts to then open and close the doors mechanically. So that means there is a limited impact there.

And also, we get very good customer feedback. You know that there was the betting auto show. And we are particularly in the mid and upper segment of the cars, there is no brand anymore without the door actuation India. We've been recently and we monitor that, as you know, every quarter, have been winning with a great wall additional door actuation systems. So for us now in China, there is not a single OEM who is not jumping on the door actuation, There is the -- in Europe, the big car manufacturers who are in the mid and premium sector, they are all avoiding the systems now for their SOPs. And you know that with BMW, we are about to have the launch in a couple of weeks for the first biggest volume in the Western world. And we see the same thing in North America.

So from today's perspective, this product and this technology is very well accepted by all OEMs and end customers who are desperate to use them. So that's in terms of the 3 questions. Andreas, from your perspective, anything to add when it comes to the free cash flow guidance and the debt levels.

I think on the free cash flow, I could probably help with the rough calculation. So we made in the first half year, about EUR 30 million, that would bring us to EUR 60 million for the full year. And on the EUR 60 million, you should add then certain aspects and FX that will come in. So first of all, on the net working capital side, we launched the inventory reduction program. And as I said, we had at the end of Q2, this extraordinary impact from the high accounts receivable over the time, over the next couple of weeks, our customers will pay us and then this levels out. And then more on the financing side. We also have 2 initiatives we'll be working on.

On 1 hand, we're rolling out the ABS program, so an asset-backed security program for our accounts receivable and we also roll out the reverse factory program or the bankers among us, better known as the Seafox program and these 2 initiatives will then more on the financing side also support in order to reach the guidance. On the rest, I have nothing to add unless you would have a specific question.

Maybe a follow-up on the actuation system. So could you remind us who are the main competitors on the dotation market. So is it mainly in Gino have you seen also other Chinese competitors entering the field.

I would divide it in 2 regional aspects, right? If you look into the Western world, it's still the main competitors we know, right? It's pause, it's agent Magna. And if you go for China, it's -- yes, the main competitor is still engine. And then there are 2 or 3 smaller ones who are basically working with minor local brands, but the biggest 1 remains engine. And the biggest 1 actually is also not only a competitor of ours in terms of direction, as you know, but also take opening systems in general terms. So these are the biggest competitors we have. .

[Operator Instructions] At the moment, we have no more questions in the queue. [Operator Instructions] But there's been no more questions to be incurring. So with that, I hand over the floor back to Buschner.

Yes. Thank you very much. Thank you for joining today. I think that saves us a couple of minutes. We all need desperately in our day-to-day business anyways, particularly on Mondays. So thanks for joining today. And again, the main priorities are for us deleveraging, execute and improve further our cost position. And then for sure, nevertheless, in difficult times, invest in the latest technologies needed in the market. Thank you very much. And I wish you a good and successful day and week. Thank you. Goodbye, everybody.

Thank you. Goodbye.

Good morning, and a warm welcome, dear ladies and gentlemen, to the analyst and investor web conference regarding the Stabilus results in the first quarter of fiscal 2026. [Operator Instructions]

Let me now turn the floor over to your host, Dr. Michael Buchsner.

Hello, and welcome to our quarter 1 results call of the Stabilus Group. As always, you have our CFO, Andreas Jaeger; and myself, Michael Buchsner, being the CEO of the Stabilus Group in the call. And I'm happy to lead you through our results for the first quarter. And then for sure, we'll also have a Q&A session at a later stage.

Yes, in a nutshell, I would say we hold our course in a very difficult market environment, as you can imagine, in the Automotive and also in the Industrial space. However, we had a very strong cash generation. If you compare that to the prior year, we've been doing particularly well and we've been doing particularly well in terms of our operational management of the cash flow. Our cash flow came out with EUR 23.9 million. And yes, like-for-like, last year comparison, we've been at EUR 8.9 million. So very positive development in that [ term ].

Our EBIT margin stayed strong with 10.1 percentage points. And as you all know, it's pretty much back-end loaded this year around because towards the second half of the year, our efficiency program and the new launches kick in. That's why the year will be for us back-end loaded in terms of the margin development and loaded on the second half of the year.

Also, a good highlight was the EBIT margin we had in China. As you can imagine, and we always talked about it, the environment in China is getting tough, tougher in terms of competition. And this is why we also took the decision not to hunt for each and every business, but to concentrate also in these difficult times on the EBIT margin development, and we had an outstanding result. If you compare that also to the prior quarters and even the prior years, we had in the first quarter, a record EBIT margin in China of 18%.

However, I said at the beginning already, we, for sure, are in a challenging market environment. And you see that forefront in our revenue for sure because the revenue was on EUR 291 million, which at the end of the day is 7% change versus the quarter 1 prior year, and it's becoming softer. So the first quarter is particularly kind of an impact we saw in predominantly China due to the fact that this consumer sentiment was particularly low. Then on the other hand, we also are -- as we are represented predominantly in the upper segment cars in the electromobility like Tesla, we also feel the market environment.

On the other hand, there is a big FX impact of negative 3.7% year-over-year which at the end of the day is unfavorable for us. However, as I said before, the margin generation in China was particularly good and also the cash flow generation was on a very good level for us overall. And the EMEA and Americas region stay very strong in terms of organic development. The region we currently focus on is Asia Pacific, as you know.

Our overhead reduction program is well on track. We started, as you know, this transformation program in the first quarter. So starting with October, we've been concentrating on cutting down costs on a second step in the overhead structure. You know that over the course of the past 2 years, we always have already concentrating on the reduction of our costs predominantly on the operations side. We've been doing automation projects in Koblenz, which materialize throughout this year and the years to come.

And now as you already have been informed about quarter 1, means starting October last year, we started also to cut down on overhead costs. And this transformation program is basically a boost for us for the second half of the year and the years to come. And we're basically taking out already in 2027, EUR 19 million in terms of fixed costs on our P&L. And this is something which gradually kicks in, in the next quarters ahead of us.

Net leverage ratio, it's important for us to stay around 3x. We have 4.5x as a covenant, but we want to stay well below that with our net leverage ratio. And we've been in the range of 3x, so 3.04x this time around as of December. And I would say, as I said at the beginning, we at the end of the day, start in a market environment, which is soft and challenging with a strong and good position predominantly on the cash flow.

So with that, we will go into the next page, and I would like to draw your attention a bit more on the technical stuff, the growth drivers for here and now, the months, quarters to come and also the next years. We invested in the past years, as you know, on the Industrial Powerise. Why is that particularly important for us? We started the same thing with Gas Springs, right? We are a leading company for Gas Springs. We brought the Gas Spring on a very good position, nice quality, excellent cost into the market also for all kinds of industrial applications. So you find them everywhere.

So now we are doing the same with Industrial Powerise, right? We started in the Automotive side, are producing on highest quality and best cost position, the Powerise now for the industrial space. We've been having revenues beyond EUR 5 million in the first 12 months of our doing last year. So it grows double digit. And this basically receives a lot of interest of our customers. It receives a lot of technical support by our customers, and they love this project -- product because it's very robust. It's built on automotive lines to a very nice cost position. And as I said, we already started after the market introduction, which happened early last year with EUR 5 million we've been generating in terms of revenue on a very exceptionally high margin. As you can imagine, Industrial Powerise, part of the industrial space and industrial business enjoys good margin at this point in time.

Second position is here as a growth driver for us, the door actuation. Door actuation, a wonderful product to be a next generation of vehicle comfort, right? It opens and closes doors automatically. It's a must-have for all kinds of cars with autonomous driving, self-parking, but also it enjoys exceptionally good growth rates in China these days. So we are in Geely, in Korea, we are in Hyundai. Actually, we start Li Auto this year. And there is not a single customer who's not interested in this next-generation vehicle comfort.

And this takes off in the second half of the year as our customers, predominantly BMW, but also Tesla once more and also Li Auto to Xiaomi will fill their pipeline for the upcoming launches, and we enjoy also good business wins there. And as I said before, yes, currently in China, the consumer sentiment is on a decline. We saw that October, November, December, but this technology enjoys very nice growth rates, and it basically goes off in the second half of this year and will greatly help us in terms of sales.

Last not least, also the third growth driver for us is our automation and the automation synergies. As you can imagine, over the course of the last years, we've been working a lot on synergy generation in terms of sales and technology with our Destaco portfolio. And now here, I would like to highlight first time that we are working already also on humanoid robots and industrial robotics systems. We have not only gripping systems, which we tailored now to humanoids and to industrial robots, but also we are with one of our OEMs where we're already in a strong business relationship in the automotive side, who decides to produce or decided to produce humanoid robots big scale, U.S. company, U.S.-based company.

We are working on electromechanical solutions for the hinges of humanoid robots. And this is a development project which we recently entered. And this project, along with industrial robotics, gripping systems, the opportunities we see also for us in the automation space materializes as we speak and helps us a lot also throughout the year to generate additional highly profitable margins business.

So the 3 growth drivers, the growth sentiment remains unbroken and unchanged. The big growth drivers, Industrial Powerise, automation technologies, doors actuation, they are kicking in. And as you can imagine, along with the program we are driving to do a reorganization and restructuring on the overhead side, we take and use these days and times of softer business to actively shape our future. So that's the strategic points we've been achieving over the quarter, of the quarter 1, October, November, December. However, I would like to also go into the details of the financials with you before I hand over to Andreas for the details on the regional view.

Overall, revenues, as I said, EUR 291 million in terms of euros. Organic growth was soft, minus 7%. FX impact around, about 4%. And then we see here this China impact, predominantly Europe, North America growing well. In China, consumer sentiment, upper segment cars, when inflation hits the fan, people decide to go for lower segment cars in difficult days. We are with our products predominantly on the top segment cars, and this leaves its marks for sure. But we assume that being a short-term effect, which at the end of the day, will recover in the second half of the year from our perspective.

Destaco synergies well on track with EUR 1.7 million at this point in time. Our target this time around is EUR 10 million for a year. We will achieve that. Our forecast shows that. As I said, there is several elements in the pocket like the production of gripping systems for humanoid or other elements for autonomous and robotic systems.

In terms of EBIT margin, our EBIT margin came in with EUR 29.3 million, so it's 10.1%, predominantly supported by a very strong industrial business, but also by China because we decided in China to go for EBIT margins, not necessarily grabbing all the businesses around there, well knowing that the door actuation business at the end of the day has a higher margin to begin with, we said we rather focus on the high-margin products and the door actuation systems in order to generate good margins for us, and this strategy materializes. It's basically an 18% EBIT margin in China, overall 10.1%.

And this, at the end of the day, will also improve over the course of the year as our effects of our restructuring projects kicks in. For sure, Destaco cost synergies are still on track, and we monitor them on a quarterly basis, EUR 0.5 million. Here, the target is for the year, EUR 4 million, and this is absolutely what we will achieve.

Net profits are impacted for sure by FX, FX losses. But however, also here, FX and tax expenses, they are kicking in early in the year. This is something which you will see develop positively over the course of the year. And then last not least, our free cash flow, which is exceptionally good. The free cash flow is on EUR 23.9 million. We already got a question beforehand, whether this be driven by programs we did on the financial structure, but this is basically a good management of the operational side, a good cost control, good control on the forecast all levels on the operations side, which drives that and less financing programs.

So with that, I would hand over to Andreas for some details by region.

Good. Thank you very much, Michael, and a very warm welcome also from my side. I go directly into the region, and I would start with Americas. In Americas, we see in euro, a minus of 5.7% in the revenue. But if we consider the FX or the effect from foreign exchange rate translation in America, the organic growth was only minus 0.5%. The EBIT margin at 4.7%, we are not really satisfied, and Michael already mentioned it briefly, and I will come back to that on the next slide.

In EMEA, also in reporting currency, the revenue minus 1.4%. And if you also factor out here the FX impact, we are only 0.3% negative. The margin at a solid 10.8% and considering the slightly lower volume, we could even increase the EBIT margin by 1.9 percentage point that shows on one hand that we really took out fixed costs and that we also worked on flexing our cost basis.

In Asia Pacific, in the reporting currency, minus 30.6% year-on-year. Michael already mentioned it, predominantly in China with a challenging market environment in automotive. But the EBIT margin, clearly the highest with 18.1%, and considering all the challenges and the lower volume, we could almost maintain the EBIT margin and in percentage point, it went down only by 1.3 percentage points.

If I then go now more into the details for Americas, you see again on the revenue, the minus 0.5%. We grew organically in Automotive Gas Spring and in Powerise. And if we compare that slight growth in Automotive Gas Spring and Powerise with the latest S&P data from automotive, they were slightly negative. They told us minus 0.8%. So also, if we take the market as a benchmark, a solid development of the revenue.

On the EBIT side, we are not fully satisfied with what we achieved in there. On one hand, we saw the volume impact. We also saw and we informed you at the year-end presentation already that we changed the allocation and the recharges of the intellectual property right. So that had a negative impact on the EBIT. But then also the challenges we had in Mexico, in the U.S. Gas Spring operation, where we had a higher turnover in the workforce and that drove additional cost for training and also hampered the efficiency in the operation.

If we then move on to EMEA, we can show a different picture. In EMEA, we are almost at prior year level, if we look at the organic growth, we saw a slight decrease in Automotive Gas Spring and Industrial Automation. On the other hand, we grew in Automotive Powerise. Also, if we here, benchmark ourselves with the information that we received from the S&P automotive market with a minus 2.2%, we delivered better numbers than the S&P number told us. If you look at the EBIT, slightly lower volume, but it's clearly higher EBIT margin and even in absolute numbers, an increase of the EBIT that shows we really took out fixed cost in Europe, and we could also flex to the volume our production cost.

The last region then that I will cover is then APAC. In APAC, we already saw the decline that Michael at the beginning told us, the major impact we saw in this minus 24.9% comes from China. It's a challenging market, as Michael already said. If we then look at the development of the EBIT, yes, in absolute number, it went down, but we maintained a very solid margin of 18.1% in a very challenging environment.

If we then look at the development of the business segment by market segment on the next slide, you saw that we slightly could reduce our portion from automotive with 54%. In Q1, we were at 57%. And however, most of the segment showed a negative development.

If I then continue with the net leverage and the net financial debt on the next slide. You see since 2024, we could decrease the net financial debt by 7.5%. And if you compare that what we achieved in Q1 '26, we could reduce the net financial debt by EUR 13.3 million and reducing the debt and bringing down the leverage ratio is a clear priority. And we also said we will bring it to 2.0 within the next 2 years.

On the net working capital, Michael mentioned it at the beginning, and we talked about the cash generation. You see during the last 3 periods, the net working capital came clearly down, and we are now at EUR 218.6 million or if you compare it to the ratio and comparison to the revenue, it came down again to 17.3%.

The investments, you see them year-over-year and then the first quarter, the first quarter was with EUR 18.1 million, a little bit on the lower side, if you look at the investment. However, this has more to do with the seasonality. For us, it maintains a priority to invest in the future and develop new and interesting product technology, smart door actuation, electric grippers and also the automation of our production facility remains a priority.

And with that, I would give back to Michael for the outlook.

Thank you, Andreas. Yes, we -- as you know, and we know clearly and our main focus for the second quarter is to work on our restructuring project to continue to do the rollout, basically to manage our overhead costs, but also to further improve us on the operational side. And this is something which at the end of the day, will lead us into February and March, right? Over the first half of the year, we said we'll roll that program out. And then at the end of the day, we will harvest that fruit starting in the second half of the year. And this is something which at the end of the day helps us in terms of sales initiatives, right? Door actuation, continue to win business in terms of business on the Industrial side, it's Automation and the Industrial Powerise. That's what we're currently working on.

And as Andreas said, also in the second quarter, we'll continue to work on improving our North American plant in order to deal with the fluctuation we had on hand, which drove a negative performance there. Overall, with all these measures, our forecast is still on track, right? Our forecast, and we confirm it will be at EUR 1.1 billion sales, up to EUR 1.3 billion sales for the year in euro. The EBIT margin will be in the range between 10% and 12%. And also the adjusted cash flow is on track with EUR 80 million to EUR 110 million free cash flow after all. So that are basically the points we are currently working on.

And if we go on the next page, actually, here, a brief summary for you. The -- actually, we are impacted for sure by the market environment, no doubt about that. However, with the initiatives we have on hand, we clearly know what to concentrate on in the second quarter and thereby, the guidance is confirmed. For sure, with whatever we do, we work and continue to work with strong team efforts on our STAR 2030 initiatives, right? Andreas mentioned it as well.

Our main priorities remain there to invest in new technologies. We have had great achievements in the first quarter, we have been winning door actuation business, Industrial Powerise businesses and also even up on the Automation side, to contract development contracts for humanoid robots. That's what we're working on currently. And yes, in the second quarter, you will see development in the restructuring program. Next quarter, we will give an outlook about where we stand, what we achieved and which further points are necessary in terms of cost management, right? It's -- we've been managing the big and low-hanging fruit, which for us is now the restructuring program rollout. It has been starting very well. But also the cost management, it is very, very important to us in all the different regions.

And we will also put a strong focus on the improvement of the operations in North America and on top of the sales initiatives. Because there are 2 things which are important for us this year, it's the cost management and the sales initiatives in order to prepare for a continuous success in our industry.

Yes, with that, we would hand over to you for questions.

[Operator Instructions] So the first question is from Akshat Kacker of JPMorgan.

Akshat from JPMorgan. I have 3 questions, please. The first one starting on your China business. As you mentioned in the first quarter, the market environment wasn't supportive. We have seen organic growth declines of 20% to 30% across your business segments in the first quarter. Could you just give us more details in terms of a rough split between volumes and pricing? And in terms of how this year plays out, when do you expect volumes to start stabilizing in China, please? That's the first question.

The second question is on the North America margin. You did talk about some operational inefficiencies, higher personnel and training costs. Could you give us an idea on what kind of impact can we expect on the business for this fiscal year? And how quickly can you turn around things in North America, please?

And the third one is on your assumption of a second half recovery. I completely understand that you talked about new launches and benefits from underlying cost actions that you have taken over the last year. And also keep in mind, Q1 always has a seasonality for your business in terms of higher revenues and margins in China. So could you just give us some sense on how much of a pickup do you expect in the business second half versus first half this year, both from a revenue and margin perspective?

Thank you very much, Akshat, for your questions. I give it a start and then for sure, I hand over also to Andreas. Talking about the first quarter in China, which is an exceptional good EBIT margin of 18%. Your question was in terms of sales, how were sales developing and what were the pricing impact. You know out of the last year, over the year, we had 8% pricing kicking in. That's just a given. If you compare now last year's first quarter with this year's first quarter, you for sure see this 8%. We've been always talking about it that this 8% are exceptionally high. Typically, in the automotive industry, we can deal with 4%, 4.5% maximum in China because in China, also technical changes are easier to introduce. However, the big topic we saw last year is that the competitor for front engine did basically set new target prices. And this was something, and you mentioned it, was visible throughout the year in terms of the margin development in China in a very firm way.

And this is something which we've been constantly working on. So the impact was 8% pricing out of the revenue decline because we kind of -- you have this carryover effect. And if you compare quarter-to-quarter, first quarter to first quarter, basically, the first quarter last year was October, November, December '24. This is when the pricing discussions start at bigger scale. And now this delta, as I said, is around, about 8%. As stated, we are able to deal with 4% typically. And now we have to take extra actions to improve our profitability. This is why you also see the profitability of China still being on a decent level this year around with wonderful 18% because apparently, we can deal with this, but it has a time delay until we can deal with such margin deteriorations or pricing pressure in the industry. So these were the first 8%.

Then we had an FX impact, a couple of percentage points. And I'm sure Andreas will talk about that. I think it was in the range of 3% to 4%. And at the end of the day, then something in China -- in China, our business staggering is we have half of our business Western world OEMs, half of the business Chinese OEMs. So we are balanced very well. There is this consumer sentiment of China going down, which makes up around, about 4%, right? So the consumer sentiment after all went down 4. This is following the studies of market developments in China, where we have access to, and this is something which will lead us into the second half of the year. That's the strong belief of economists in China in a nutshell.

And then there was, for sure, the impact that we, as Stabilus Group are operating on the top segment cars in both China's OEMs and Western world OEMs. And when there is high inflation and people feel financial pressure, they decide on a shorter term because we saw that in the past as well, on a shorter term to concentrate on buying lower segment cars where typically the fitment rate of electromechanical devices is less.

So in a nutshell, coming back to your first question, the answer to that, 8% was pricing around, about. There was an FX impact of 3% to 4%. Then you see a consumer sentiment for the business of 4% and then the remainder is then something which goes in line with the different segment of the cars have been produced like the upper segment cars, which, by the way, we saw in all regions. But in Europe and North America, we've been better flexing that with industrial business as our industrial business position is bigger on a bigger scale than in China. This was more difficult this time around in China. And that's why particularly the Asia Pacific region was impacted by that. So that's your first question.

Then North America. In North America, the performance-related points, they are basically affecting our 2 automotive plants. It's the one in Mexico, and it's the one in Gastonia. And these 2 plants basically did lose around, about EUR 2 million last quarter, I would say, plus or minus on the efficiency side. And this is something which we're currently working on. There will be an impact also in the second quarter. We expect that in the third and the fourth quarter, we have things back under control. And this is something that was, as Andreas said, people fluctuation related. So we lost some people predominantly in the workforce, concentrating on direct labor, but also maintenance people.

And as you know and can imagine, maintenance people are basically the lubricant in the transmission and gearbox of such a plant, right? Because the maintenance people, they guarantee that the uptime of the lines is sufficient to serve the demand of the customer. Then you see a complete chain reaction, right? You lose some of the maintenance people, then you have less output, then you get into the mode of some premium freight, quality is impacted as well. And this is something which we've been working on. We took sufficient measures. We will get out of this position, but it actually takes a couple of months to get there.

So this basically is what we're working on for the second half of the year. You will see out of the improvements of the restructuring program, 1 percentage point improvement in the second half of the year on our EBIT margin. And then fixing the operational issues in North America will add another percentage point. And this is something which then lift us in terms of EBIT margin so that we're getting closer to the margins we had last year and also getting us within our guidance ballpark.

So Andreas, from your side, I mean I've been explaining intensively now the root causes and percentages, how they move up and down with our operational points. Because actually, it's very important to us that we have a clear picture of where we are suffering and how we're impacted by the current market circumstances. That's why it's important to talk about all these details. I understand that very well.

But Andreas, are there any points you'd like to add?

If I look at the 3 questions, I would say they are all covered, but we can double check that with Akshat. Did you receive what you were looking for?

Yes, that's very clear.

The next question is from Klaus Ringel of ODDO BHF.

I actually have 2 and would take them one by one. One would be a bit more detailed coming to Akshat's question about the business momentum. If you can already share a bit of light on your expectation for Q2. I mean margins shall improve over the course of the year, but regarding top line, can we also already expect some pickup in Q2 versus Q1? Or shall we rather expect something going sideways? This would be the first one.

So in terms of revenues, our expectation that in the second quarter, it moves rather sidewards. Why is that? In the second quarter, there is the Chinese New Year, which for sure is something which we have in our budget and are planning already, and it's considered in the guidance. And in terms of North America and Europe, we see a rather flat business out there. We see in the automotive industry, not too much movement. And on the industrial side, typically, the time when you get directionally a better view on how business develops is the spring time because this is when the orders kick in for new launches and other stuff, that's too early to say.

So I would say January, February, March is moving rather side from our business. But however, this is how we build our business plan this year. We said the first 2 quarters will be rather on the soft side. And then in the second half, it will be picking up. And then similarly, in the margin, and this is why at the end of the day, also, we confirm for sure our guidance because that's what we've been planning for to begin with.

Okay. Second one is on the additional point you're talking about humanoid. And I really appreciate that you also start talking about this. Some other players, yes, a bit more, much more vocal for a couple of months now. So I would be very interested how immediate this potential really is. I mean you have this big U.S. customer in automotive, which also has obviously big ambitions in the humanoid robots.

Is this really a couple of, I don't know, hundreds, thousands or millions of revenues over the course of the next 12, 18 months? Or is it less? Is it more? So this would be great. And also in terms of margin, is it fair to assume that you can achieve a kind of industrial margin in this area?

Yes. Thank you very much for this question. First of all, you mentioned at the beginning of your sentence that some already -- some people already have been talking about humanoid robots and automation in a broader scale in a different way than we do. The point is, for sure, in this humanoid robots, this is a customer which we also have on the automotive side. And there, sometimes it's not kind of allowed to talk about such movements.

On the other hand side, if I talk about the stake of volumes, sometimes there is restriction by governments to openly talk forefront about it because we need to meet all the regulations to deal with this in the first place, but also it's then, in many cases, restricted in terms of communication because it's military service. That's to begin with. But we will disclose as much as we can for sure, not jeopardizing our business model with basically infringing any agreement we have with our OEMs. That's something which we very strictly kind of meet.

So -- and then the impact, there is 2 areas. There's electromechanical devices, which we're currently working on for hinges and stuff for humanoid. That's something which is in the development phase. You will not see sales -- too much sales this year. There's difference in terms of the gripping systems, which we do for humanoid and also for end-of-arm tools for cobot systems. This is a new development with Destaco with basically a smart gripping system. And these gripping systems, they are in place already, and this is a couple of hundred thousand already in the first half of the year, which we deliver to the customers, and we expect that this goes up because there are new solutions with electrified version plus also feedback from the parts.

So it's basically intelligent gripping system, which we did offer to the market here lately, and that's perceiving very good feedback. These are the 2 elements which are leading to that business opportunity for us. I hope that answers your question.

So the next question in the queue is from Yasmin Steilen of Berenberg.

So first, coming back on the price erosion in China. So we have seen the headwinds in Q1. However, you stated during the last call that you expect price erosion in China to ease a bit. So what is your current view on the overall price headwinds in China for Powerise in FY '26? That's my first question.

Then with regards to the door actuation -- door actuators, you just stated that the ramp-up should happen in H2. So can you provide more color on the expected sales volumes to impact the second half? And how should we think about the profitability here in the ramp-up phase?

And the last one on Destaco. I might have overseen this in the interim report, but could you share any comments on the profitability, please?

So thank you very much for your questions. In terms of pricing in China, the pricing in China is in the range of 4% to 5%. That's what we assume this year. This is the pricing levels which we are used to. As I said before, last year, we saw this exceptional pricing of twice as much in the range of rather 8%. This year, we see that continuing with 4% to 5%. And that's something which we are in a better way, able to deal with because that's the typical price reductions you get out of efficiency and you get out of your bill of material with your normal doings in the business, and that's something which we definitely can deal with in a given business year.

How do we do that? We take our suppliers and do supplier negotiations because in absolute terms and volumes, for sure, the volumes go still up. It's a pricing-related reduction. So the volumes go up. And then at the end of the day, we negotiate with the suppliers in a better way, and we get their contribution to our success in the first place. Then the second thing is that our operational efficiencies in the plant are main point of our concentration in terms of our improvements. So that's something we saw over the course of the first quarter and second quarter already happening that the price reductions for this year will be in the range of 4% to 5%.

The second question you had, the door actuation system, the profitability and the launches. Actually, the launches in the second half of the year, they are filling the pipeline for main customers like BMW. There is also Tesla involved, there is Xiaomi involved and some others smaller scale. This is business which we, at the end of the day, won a couple of years back and the launches are planned this year. And the profitability is on good levels. It's comparable or even slightly higher than our margins on the Powerise side. This is driven predominantly by the good launch performance we already drove in Asia Pacific.

In Asia Pacific, specifically with our customers in China and Korea, we could establish a good position to also be leading in the price negotiations with the suppliers. Because at the end of the day, we've been winning over the course of the past years in the range of 40, so 4-0 percent of all businesses out there in door actuation. And due to the fact that we invested a lot in not only capacity because we have in all the different regions now aligned.

We also invested heavily in the area of building up our supply base and technology. So we are basically frontrunner in terms of developing the right software, integrating the sensorics, having the radar systems on hand and so forth. So that's very beneficial for us.

And at the end of the day, I would also come back to Klaus' question because Klaus asked the profitability of humanoids and profitability on industrial elements. I did forget to mention that this is for sure, average and slightly above industrial margins to basically close also the question we had from Klaus before.

And then last not least, you were talking about Destaco profitability. Destaco holds the profitability very good. There is 2 things to keep in mind. One thing, and this is something which also with Andreas, we can go in detail, there is a reshuffling of overhead costs in the organization due to the fact that now we distribute the complete overhead costs to the complete business we have. This is first time that we also burden Destaco with the company overhead rate across the board. So that means the like-for-like comparison at the end of the day is something which can be explained in detail, but it accounts for basically 2%, 2.5%, which we burden on the Destaco profitability. Other than that, the businesses we are taking in, considering the current industry weakness, we are absolutely fine with. I hope that answers your question.

Yes. That was very clear. And the last one on the -- sorry, on Destaco.

Excuse me?

So in terms of Destaco profitability, how should we think about it going forward?

This is what I meant. They're very stable in terms of the profitability. We did distribute first time this year to the Destaco business also the overhead costs. That means in the financial numbers, you will see now 2 effects. You will see a burden of the overhead -- related overheads to the Destaco business, which accounts for 2.5% around, about. And then you will also see that it's now coming together with other businesses like the synergy business we have on hand.

And this is basically also impacting the position of Destaco. But overall, it remains on a very good level for us. So it basically holds the course, except this burden of the overhead rates, which we first time basically also distributed now to the Destaco business.

Okay. So just to clarify, so the former indications you gave about 19% to 20% was ex-overhead costs?

This was without allocation of the overhead costs, indeed, yes.

At the moment, there are no questions in the queue. [Operator Instructions]

As of now, there seem no more questions to be on the line.

Yes. If there are no further questions, then thank you very much. One point is very important. We know exactly what to work on in the second quarter. It will be continuing the restructuring program, watch costs and for sure, use the drive levers we have to boost sales, which at the end of the day will kick in second half of the year, like our wonderful door actuation system where we have the launches coming in the second half of the year on the industrial side, the Industrial Powerise and then the automation system predominantly in the space of automation, but also humanoid robots, which we are in a long run working on.

With that, thank you very much. I wish you a nice and successful week. Bye, everybody.

Thank you. Have a good week. Bye.

Thank you very much, and welcome to our Full Year 2025 Call. My name is Michael Buchsner. I'm the CEO of the Stabilus Group.

And today, you have, as always, with me, Andreas Schroder, Investor Relations, but this time around, first time also in the discussion, Andreas Jaeger, our new CFO. I'll introduce him at a later stage, and then he for sure, will also take part actively of the discussion. He will lead us through the financial portion, so the details by region, business unit and other factors he'll talk about a bit. And then, he will also talk about a little bit CapEx, expenditures we did, net working capital. So, all the finance-related points he'll touch upon. And I'm really happy to have him as part of the Stabilus Group now.

But before we go that route, let me confirm the 2025 preliminary results. We all know it's a very challenging environment we are in. And we did release our preliminary results already on November 10. And here as we confirm all these numbers, we've been in a very stable process to close the year and also in a very, very stable financial position as a group, because in a very challenging environment, we achieved EUR 1.3 billion in terms of sales and an adjusted EBIT margin of 11%, which is outstanding given the market circumstances and it leaves us with free cash flow of EUR 119 million for the year, and that leads to a net leverage ratio of around about 3 to 2.96, which we've been talking before about and which is actually spot on with our prognosis we gave in August.

Yes. Also the overarching topic for us, and we saw it in the last call and talked about it also in numerous meetings is our transformation program. Throughout the session, I will also give an update on the transformation program, which greatly reduces personnel and operating costs to make us long-term sustainable as a group.

So, on the next page, we actually -- I would like to again welcome our new CFO, Andreas Jaeger. Born in 1972 in Switzerland. So, he's a Swiss citizen. And in terms of a professional background, it's very important to us, not only that he has a broad background in terms of financial, but he also has a very profound background in terms of industry business around the globe, global businesses like Forbo, he used to be a CFO there and then also the CEO interim wise. Geberit, also a very well-known company dedicated on different areas on the planet and also very focused on industrial business and sales channel, sales channel management, selling businesses to very challenging markets as well. And this actually helps us as a group because, as you know, our big aim and target is to expand our industrial business.

And, Andreas Jaeger, therefore, is actually the perfect fit to our organization to basically strive with us for this target, enriching our industrial business, taking the most out of our industrial footprint, our sales teams aside of the well-positioned automotive business, we are anyways as an organization, taking well care of.

So, in terms of the professional part and education, Bachelor degree in Business Administration. And this is basically along with his broad experience as Executive Master in European and International Law, a profound education to basically backfill also the needs of the Stabilus Group in terms of the technical knowledge of this position.

So, I'd like again to welcome Andreas. Welcome aboard. We're really happy to have you with us. And as I said, he will lead us through the financial portion then later on. And for sure, he will jump in right away in our Q&A session. So welcome.

Good. So we go ahead, and I would like to talk about the main points of our business as we stand and the things we currently work on to continuously improve our business to where it is and where we want to be at 2030.

Then, the organizational transformation is going on. We actually are basically about halfway through, I would say. We took all the necessary decisions in terms of how to streamline down the organization, where to streamline it down. We've been talking to our people and are in the rollout phase. Half of the people basically at the end of the day have been talked with. Half of them agreed already to all the actions we are taking. We're taking personnel-related measures, because we know -- we all of us know that this is a good time basically to streamline down the organization.

As you all know, we started 2 years already ahead again ago with streamlining down our operations, predominantly focusing on the area of co-brands with next step in terms of Automation, a next step in terms of getting more efficient on the operational side. And with these measures we are taking now, and we've been announcing them a couple of months ago, we are taking out 6% of the global workforce also on the overhead side, because we need to streamline down the organization to become more effective, basically to focus on the right things in business to rightsize our overhead structure with a given circumstances.

And for sure, with that, we confirm our STAR 2030 strategy and are striving for EBIT margin targets and this initiative greatly helps us with that. So, we also talk about the different locations. You know that the discussions in terms of streamlining down our footprint are things which we always have on the radar. Just to mention, we do consolidate some German footprint here in the U.S. We moved the Singapore operations and sales offices into Thailand. Just as a few example on how we work on a daily basis to optimize our organization.

So, on the next page, some more details on that. And I just want to repeat things, because it's very important to know-how on the financial side, we are performing in terms of our streamlining program, our efficiency program, our restructuring and reorganization program.

As you know, we started it in September. We announced late September that we will accrue some money. We did accrue EUR 18 million. So that means the effect on the net profit is already in the numbers in the financial year 2025. In '26, we will for sure see a cash outflow along the line as we basically pay severance payments. However, the big chunk of net profits or the net profit number was already basically stated by end of September with this impact of the EUR 18 million.

So, the payback is less than a year. We start this ramp-up phase as we speak. So the first 5-6 months of the year, as I said, we are halfway through with our reorganization, reshaping, restructuring activities. The activities go over the past of the first 5, 6 months of the year. Then we see the effect for the second half of the year. So, we should see that back-end loaded in the year and then a full effect of EUR 19 million cost savings in 2027.

Starting 2028, there will be EUR 32 million recurring annual cost savings, because that's when we backfill also all the savings out of the operational activities we've been doing alongside. So, to make the long story short, again, the net profitability numbers was already stated as of September. So the profits are backed in the old year's numbers. The cash outflow will be this year, because we accrued that severance money for the 450 employees and the payback is less than a year, which will materialize in the second half of the year 2026 for us.

So, on the next page, I would also like to highlight in technical terms some initial and additional activities we are doing. You know we are a technical company. We are very proud as the Stabilus Group that we invest even in challenging times in the future. So, we invest in new products, we invest in new processes and we invest in capacity, because many of these businesses, predominantly on the Automotive side are already booked. And this is what we take care of with our CapEx number. Andreas will talk about that at a later stage in this presentation.

And I would like to highlight, first of all, a technical product, and then I will also go a little bit into the sales channel management in this presentation to tell you also what's new on that area. So, first of all, we introduced a new e-Gripper family. Why is this important? You know in the industry trend, we see that the companies are moving away from pneumatics towards electrification. Electrification is all over the place, because it's more reliable, it's less energy consuming. And also it gives a feedback and is needed for smart production, because it tells you the position of the grippers, it tells you the force you're gripping with, it tells you the distances and measures how to process, which is important for quality measures. That's why our customers, they're also very keen on getting a new product like that, the electric gripper.

We developed that over the course of the last 12 months, and it's now pushed into the market with three different sizes even. So it's a perfect tool for robotics. And robotics is all over the place. It's not only in industry areas, it's also in consumer goods production and wherever in the terms of logistics. There are logistics providers who are big customers of ours with this new gripper series. And I wanted to highlight that because it's groundbreaking in terms of new products for our growth in the future.

How do we sell this whole thing? We'll talk about it. Next page, please. Because at the end of the day, we started also a Stabilus for Automation initiative. You know that years back, we did harmonize our sales teams around the globe. We also did the same thing over the course of the last 12 months with Destaco. And now, we are in a very good stage of harmonizing our sales teams and bringing both companies even closer together also in terms of selling the different brands.

So, we have the right products on hand. We did develop the right products to begin with. And we started the initiative Stabilus for Automation, which basically leverage our combined strengths. The expertise in motion control, the good brand portfolio and the multi-industry portfolio in -- at the end of the day, bringing together the best of both. So, the positioning and handling, which now both companies sell and do, world-class automation and clamping, which we combine the forces of Stabilus and Destaco to begin with and with a stronger market position now in the U.S.

So combining and harmonizing these two initiatives, Stabilus into Stabilus 4 Automation brings us a step forward in terms of how we appeal the customer, how we sell products, for example, the e-Gripper. But also many other products in the automation space.

So if we now jump ahead on page, I would like to go into the financial numbers. So in a nutshell, just to summarize what we've been talking about on the first pages is strong result of the last year in a very challenging business environment, as we all know. We're actually hitting the right steps in terms of technology and sales management to boost sales. And then also, we have a strong financial performance to begin with, with our initiatives for sales and pushing our products into the different market segments.

Yes, in terms of our financial position, and here, you see the quarter 4 numbers. I'd like to highlight a couple of points. You see us performing with EUR 316 million sales in the last quarter of the year. EBIT margin was basically in the range of the company's margin for the whole year in the range of 11%. And the profitability was at this point impacted in the fourth quarter by this accrual we did of EUR 18 million for our reorganization restructuring measures.

This is why you see here this negative impact. So, as I said before, we did accrue this money last year. So, it was profit relevant in terms of cash. We'll see the impact this year as we basically pay severance payments.

Last year's cash performance was very good with a free cash flow in the quarter of almost EUR 60 million. We basically got to a full year number of EUR 119 million, which we see on the next page. So, the full year numbers basically, as stated at the beginning, show EUR 1.3 billion in terms of sales, adjusted EBIT margin of 11%. As I said, profitability was impacted predominantly by the transformation money we did accrue. And then the cash position is in terms of free cash flow, EUR 119 million. And for sure, Andreas will go into deeper detail in a second on these numbers. But in the given circumstances, in the given market, this is a very stable result. And also, it did allow us to pay back some debt on top of the very successful refinancing we did to further stabilize and build the right foundation for our company to start with.

So, this is in terms of quarterly number and full year number. On the next page, you also see that visualize. There are two more pages coming from my side before I hand over to Andreas. So, you see the business development in the fourth quarter. You see us being impacted in Americas by lower sales, but predominantly in Asia Pacific.

So, what happened there? I mean, in numerous meetings, we talked about that. The bigger point in Asia Pacific was that exactly in the fourth quarter of the Stabilus business year, the Trump administration announced a 100% tariff at the meanwhile they found an agreement, but this was a shock to the Asia Pacific, predominantly China organization for sure, which did cause that products like automation equipment, but also general industry equipment, which was kind of prior to that announcement, sourced in China and shipped to the U.S. basically came to an end instantly, because of these high tariffs, because all the manufacturing equipment transfers have been burdened with 100% impact on tariffs to the U.S. So that's why U.S. companies stopped basically or deferred ordering.

I want to highlight it's deferred ordering. There was no cancellation. So, now things are coming up a bit again, but there is some cautiousness in predominantly China, because of this unstable geopolitical situation and also the unrest in terms of tariff situation. So, in the full year, that means we saw this impact in Asia Pacific, which is all driven by China, with 12% year-over-year decline, as I said, predominantly driven by that all the exports out of China of equipment to the U.S. came to a stall. But also, there was a secondary impact because, a lot of the consumers in China were basically, yes, left with uncertainty. And so, the consumer indices also went down, as you all know. And this had an impact on our business to begin with.

One more point, which you also see in the numbers when it comes to the EBIT margin, but also Andreas will talk a bit about this, is we had a transfer pricing adjustment, which was driven by a Destaco-related move of some of the profits from the Americas to EMEA. And this is something which impacted us in the fourth quarter. But at the end of the day, for the complete year, I'd say Americas and EMEA, solid, stable with a slight upwards trend. Asia Pacific impacted by the tariff situation to begin with.

And with that, Andreas, I will hand over to you. First meeting for you. Welcome again, and I leave it with you to talk about the regions a little more in depth.

Thank you, Michael, and to all participants, also a very warm welcome from my side. Following the introduction on group level, I will now go deeper into the region, the market segments. And then I round up my part of the presentation with some more information on the investments before I then hand back to Michael for the outlook.

So, starting with the Americas. In Americas, we saw a growth of 2.5% in the top line in the revenue. We had two major impacts in there. On one hand, we had the first full year consolidation of Destaco. And you remember in 2024, Destaco was included as of April 1. So, we had 6 months of the results of Destaco in our accounts, whereas in 2025, Destaco is included for the whole financial year.

On the other hand, we had a significant negative impact from foreign exchange. The U.S. dollar weakened and we present our accounts in euro. So there, we saw an impact of minus 7%, which is more than EUR 30 million only in 2025.

In Americas, Destaco grew, so they contributed positively to the minus 1.2%. The major negative impact we saw came from Automotive and in Automotive from Powerise. In a competitive environment in Americas, we had to adjust our prices. So, the bigger impact came from prices more than from the volumes.

If we then look at the EBIT, we also have two major impacts on the EBIT of the period. On one hand, we included Destaco, as I mentioned before, adding 21.2%. But on the other hand, we have this harmonization of the transfer pricing policy following the consolidation of Destaco. There, we added almost EUR 8 million of cost into the region. Important to note, this has a significant impact on Americas, but on group level, this is neutral.

And also looking then on the margin, we had in last year a margin of 10.2% in the EBIT. This year, 7.9%. About half of it came from the change in the transfer pricing.

Moving then on to Europe. In Europe, we saw a growth of 3.2%. And also here, we had the first consolidation of Destaco that added about 5% to the whole revenue. In Europe, the FX impact was minor and most of the operations are in euro. So, this was a lesser extent.

When we look at the segment where this minus 1.4% came from, it's mainly of the negative impact from Automotive Gas Spring. Positive signs we saw from Automotive Powerise and Industrial components, the whole pricing was a less issue in Europe.

Looking then on the EBIT, we saw a plus of 20.6%. Here, you see now the positive impact. So, the back swing from the harmonization of the transfer pricing policy. Here, it added EUR 9.6 million. And on the other hand, the big impact -- positive impact came from the first consolidation of Destaco with plus 9.1%.

In Asia Pacific, the top line was reduced by 12.4%. Here, we had a minor impact from the first consolidation of Destaco that was positive. On the other hand, we had a minor negative impact from the FX rates in Asia Pacific. Almost all of the minus 12.4% are driven by China. In China, we really see a reduction on one hand on the volume, but also pricing-wise in the competitive pricing environment, we have to adjust our prices.

We still grew in the industrial components that we saw an organic growth. The major negative impact was China. And in China, it was Automotive and within Automotive, more from Powerise than from our Gas Springs.

Moving on to the EBIT. The EBIT went down with 29.3%. This was obviously heavily impacted by the lower volume and the lower prices. But if you then look at the margin, and we had a margin of 17.5% last year and this year, 14.1%. So you see even with the decline organically of 13.6% in the top line, we could maintain a solid EBIT margin of 14.1%, and that demonstrates our ability to adjust or to flexibilize our fixed cost in order to maintain a profitable business.

On the next two slides, I would like to go into the details on the development by market segment. Here, just to highlight the two most important drivers in here, that's only Q4, basically Automotive, minus 10%. Please also note here, we also had a negative currency impact and then where you see a solid growth of 9% is our third biggest segment is the distributor and the independent aftermarket.

The full year by market segment, I just would highlight the first two lines, Automotive, similar picture as in the quarter with minus 10%. Also here, this line clearly impacted by the negative currency exchange impact.

Industry Machinery & Automation, where Destaco plays the major part of it, it was positive with 61%. This is the first consolidation, but in the footnote, you also see that Destaco as a business had an organic growth of 5.8% year-over-year.

Our net leverage situation, you can see on the following slide. We did reduce our net financial debt by EUR 36 million. So here, you see a positive development. The net leverage went slightly up. And the reason being is the result, the EBITDA, but our goal remains and we are committed to bring down our net leverage ratio in the next 3 years down to below the 2%. Our long-term target also remains unchanged. We target a net leverage ratio of 1%.

Looking at the net working capital position, and also the net working capital position, we could reduce by EUR 23 million, and we introduced the new ABS factoring. And also going forward, the net working capital and the development of the net working capital will be a priority on my desk. We want to further roll out the ABS program, and we also want to optimize our net working capital in general and particularly the inventory level.

Our investment pattern you can see on the next page. This year, we invested EUR 88.5 million in our company. And I think this is a clear demonstration that we are committed to our long-term growth path. Also in a challenging environment, we maintain our strategic investments and we invest in our company.

On the next slide, you see then the split. I think that's the even more interesting part, a significant part, EUR 30.8 million or 35% of our investment goes into R&D. We need to develop innovative products in order to secure our long-term profitable growth. That's then also the second biggest portion of our CapEx that goes into growth CapEx is 34%. And then it's maintenance. We need to maintain and keep our plants and machinery in order to have an efficient production process and then this part, CHF 13.5 million goes into optimization.

Yes, with this, I hand back to Michael for the outlook.

Thank you very much, Andreas. And yes, over the course of the next four pages, we'll talk a little bit more about financial numbers for next year before I summarize them and we'll have a Q&A session.

So, in terms of where we stand, we all know it's EUR 1.3 billion, 11% EBIT margin and a fantastic cash flow of EUR 119 million. For next year, our forecast range is between EUR 1.1 billion and EUR 1.3 billion sales, an EBIT margin of 10% to 12% EBIT margin on the adjusted side and EUR 80 million to EUR 110 million in terms of free cash flow.

So, that are basically our numbers which we see for next year in terms of the forecast. And on the next couple of pages, I'd like to talk a little bit about the details which are behind that plan, because I think this really matters and should allow you also to feed your charts and simulate and make your assumptions as well.

So, you all know that our numbers are to begin with based on GDP growth and light vehicle production. GDP growth should be positive 3% next year in '26 over '25. And this is something which we take as a baseline for sure, with some cautiousness because nobody knows how the geopolitical unrest and also the tariff situation at the end of the day for the next year impacts our numbers in the same way than the economy. And you saw there were some quite significant impacts in the year 2025 to begin with.

Yes. On the light vehicle production growth, we assume 91 million produced vehicles, which is slightly less than this year, up 2% to 3%. And this is something which we also see for next year, pretty stable Europe and North America, but also on the lower side with negative 2% and in America -- in Asia, probably down 3%. So, that's the numbers in terms of GDP and light vehicle production. These two numbers impact our business the most, because GDP is on the Industrial side are major and light vehicle production for sure, with whatever is automated -- automotive-related on the component side.

Yes, cost inflation at the end of the day, material expenses, we see kind of stable, right? We are wrestling every day with our suppliers also to get some savings out of our supply base. However, in uncertain times with quite stable sales, their abilities are also reaching a floor. So it means we see no inflation big scale, but also no deflation. So, we see a slight decrease of our material rates for next year, but in a ballpark number of 0.5 percentage point.

Labor cost inflation, it's in the -- end of the day, it's in the range of 6%, right? Western world, a little less, but we still see, for example, in Romania, but also in Mexico and China, predominantly in the lower cost areas, an inflation, which is above average, we would assume in the Western world. So, we've been calculating with about 6% year-over-year next year.

Important is also the FX rates for sure, USD 1.2 to the euro and CNY 8.5 to euro. So that's what we plan for.

On the next page, we see that coming down to the regions. And I've been touching on that a little beforehand. The yellow circle, you see the complete year, complete company, the Stabilus Group. So then followed by Americas, EMEA and Asia Pacific.

Americas, we see EUR 400 million to EUR 460 million. We see basically 9% to 11% EBIT margin in that range. Similar scale in EMEA, EUR 500 million to EUR 570 million and 10% to 11.5% EBIT margins. So these two regions fairly stable at the end of the day. And as I said, this is why Destaco also was a great move for us, not only that we are stronger in the Industrial side, we also put more focus on the Americas side, which you know these days is a good thing to do. It delivers stability and it makes sure that we have good stakes in both Americas and EMEA region to begin with.

Asia Pacific for us, for sure, that's predominantly China, EUR 200 million to EUR 270 million in terms of sales, 12% to 14.5% EBIT margin. That's the target for next year. And as I said, and you see that on the bottom line, GDP growth is in America, 2%; EMEA, 1.5%; China, 4% growth. So, there should be some growth coming on the GDP side.

Light vehicle production, however, there are clouds on the sky still, right? Uncertain electro-mobility, tariff situation, consumer sentiment low. And this is why actually GDP. So S&P numbers show Americas and EMEA down 2% and Asia Pacific down 3%. So these are the fundament of our basis planning also for the region in EMEA and Asia Pacific to begin with.

We still see some pricing pressures. We always see in the Automotive side. This year, we can deal with majority of it. You know that we saw last year some price deteriorations in China and in Americas, because of high competitive pressure. This basically this year, we still see some of it, but we can overcompensate that or compensate that with the activities we do on the technical side and on the purchasing side and efficiency side.

High inflation, Romania and Mexico, I mentioned here, but that's what we also see for China. But in China, it depends on pretty much how also the general business development is because we all know when the general business development is rather soft, then you also -- it's easier to negotiate with labor representatives, the tariff increases in the different regions. And this is something where we think China is -- could be okay. Romania and Mexico is more difficult to discuss with where we see still a labor cost inflation.

So on the next page, also some more numbers, right? The PPA, EUR 30 million for '26, EUR 16 million out of that is Destaco PPA. This is reduced EUR 29 million to EUR 26 million. Thereof, EUR 16 million Destaco.

CapEx, important to know, Andreas talked about it. We invest majorly in the development of new products and processes and equipment to produce. This is mainly concentrating also on the Automotive side, on the areas of door actuation where we see good growth in the years coming. We've got really fantastic awards. We are market leader in that segment. And the market leader with currently 40% market share on the door actuation, there we have very firm contracts for the years to come. They'll kick in starting end of next year.

And then, we also invest, for sure, on the Industrial side in electrification, smartification of products. Andreas mentioned that, and this is, for sure, the biggest bucket of our investments. It's probably 2/3 of the investments. For sure, we do some base maintenance, but it should write things off the table like -- there were some questions we always got underinvestment of Destaco. That's not the case. Destaco, it's where we invested -- it's we invest and this is why we also wanted to highlight that a lot in new technologies and also a lot in operational capacities for years to come. And less in maintenance, we invest in maintenance, what we need in maintenance to do, but it's not overly excessive in that area. So that's why I think the pie chart is very good.

Transformation program, to keep it short, we talked about it, EUR 18 million. We did accrue EUR 19 million is a full year cash benefit to us or full year cost benefit in 2027, going up to EUR 30 million during '28 even. Net working capital, I think it's really a good number to be between 17% and 20%. That's something which we saw on the graph. I think that's a good rate.

The group tax rate will be anywhere between 25% and 30%. Currently, we're in the range of 27% rather in the mid part of it. And yes, dividend -- and you saw that in the note we distributed, we also stick to our commitments we gave to our investors. We know some of the investors are less interested, others are way more, I tell you, in terms of dividend, because some of our membership, they finance their activities, their offices with dividends. We did cut it down to a lower dividend than in the years before, still being in the range of 40%.

So this time around, it's EUR 0.35, which we suggest for the AGM. And I think that's a good number. And on one hand side, it should show our membership who take care of dividend policy that even in difficult times, we let people participate on the net profits the company makes. And on the other hand side, there is good cash still remaining to do other activities for capital allocation like we discussed them beforehand.

Yes. And with that, I would like to summarize for you 2025, for sure, we've been impacted like everybody else in the industry out there, but we did do a very fantastic job in terms of EBIT margin and cash generation to begin with.

And the AGM '26, we proposed EUR 0.35 per share, total dividend of close to EUR 9 million, which is coming, yes, 37%, closer to 40% of our net profit as we always promised. And then for sure, given the current circumstances and difficulties in the market, we see this as a transitional year being in the range of EUR 1.1 billion to EUR 1.3 billion sales with an EBIT margin of 11% to 12% -- 10% to 12%, sorry, and a free cash flow of EUR 80 million to EUR 110 million.

For sure, with whatever we do, and you saw that with the investments we do in the long run, right, 2/3 of the capital expenditures we do is in new technologies and capacities for contracts we won for the next 2 to 5 years. We invest in the right things and very committed to our STAR 2030 strategy, and we will give full push to reach our numbers.

And with that, I would like to open the Q&A session.

[Operator Instructions] And the first question is from Akshat Kacker, JPMorgan.

Welcome, Andreas. Akshat from JPMorgan. I have three questions, please. The first one around the full year 2026 outlook. Obviously, a cautious guide at this point of the year, and the range is definitely wider than what we have seen in your previous outlooks. So, could you just give us more details and I think starting with business divisions and then going into different geographies. So, if you could just talk about overall business development expectations across Powerise, Industrial Components and Industrial Automation, those three segments going into next year? What are the key growth drivers? Or where do you see risks across those business divisions?

And the second part, as I said, on the regional outlook, you are clearly expecting sharp declines of 10% to 15% at the midpoint of the guide, specifically in APAC and Americas. So could you just give us more details on what exactly is going on in those geographies?

The second question is on the transformation program. And I see that you're talking about $32 million of gross savings by 2028, but you're also talking about higher-than-expected cost inflation in Mexico and Romania, along with other moving parts that you mentioned, materials and energy. So could you just help us put all of that in context and talk about the expectations around net savings, if possible, by 2027 and '28? How do you expect overall inflation elements to balance out on the P&L, please?

And the last one is probably some kind of guidance on the first quarter to help us put this guide for the full year into perspective. If you could just share some more details on how the first quarter of FY '26 has been progressing on a sales or an adjusted EBIT level?

Absolutely. Thank you very much, Akshat. So, I will begin with answering these in essence, four questions you're having. And then for sure, I will also turn it over to Andreas if there is any further comment from his side.

But to begin with, you said '26 is a cautious guidance, wider range than in the years before. What are the growth drivers by region? That is in essence your first question. And for the year 2026, it's our aim to have a robust guidance. So, this is what we wanted to start with, right? So that means, if you remember back in last year, the range was basically similar in terms of EBIT margin, for example, at that time, we've been between 11% and 13%, so a bandwidth of 2%. And this time around, it's also a bandwidth of 2%. So that means, our target is always, we build up a plan on the financial basis of S&P and GDP.

So how we -- how it works is, we take the GDP numbers, which next year show a positive of 3% and we take the S&P number, which show anywhere between 2% and 3% a decline for next year. And then we put that into the relation of, we have 55% Automotive business, 45% Industry business. And then this is how the fundamentals come together for our business plan.

So what does this mean in terms of growth drivers? We took this 3% of GDP growth for the Industrial sector and basically did plan that straight through to our numbers. There's some upsides and downside. There's always also on the Industrial side, some pricing pressure, which we think we can overcompensate with some initiatives we do to increase our cost position. So, on the Industrial side, that's straightforward. On the Industrial side, there's also another impacting factor, which is the tariff situation, a couple of percentage points focusing on the North American business in terms of headwinds, which we also think that to 90% around about we can push towards our customers. So that's basically when it comes for growth drivers, the business of Industry business.

How does the growth drivers of the Industry business materialize over the regions? Europe and North America, basically stable growth there of this 3% and probably a little better growth in China, but there is the big question mark for sure of how the region in Asia Pacific in a primary and secondary impact deal with the geopolitical unrest predominantly also the pressure of uncertainty of tariffs. This is what we saw this year. There was basically a roller coaster, and that's why we saw a downward trend also on the Industrial side in China.

So when it comes then to the Automotive business, we also took the numbers of S&P. We've been taking the numbers which show a decline of 2% in the area of Europe and North America and a decline of 3% in China. We took that across the board for all Gas Springs and Powerise systems. Then we added back some relief, because of door actuation, which should kick in starting next June. Because next June, July, there is the ramp-up of MI -- Xiaomi Auto, which is adding back for a full year effect, EUR 15 million sales on door actuation, but this starts in June.

And then we saw -- we see towards August, September, so after the summer shutdown that for the model all X series of BMW, the sales of door actuation kick in for BMW. So that means we took on GDP side what we have on hand from GDP. And on the light vehicle production, we took the light vehicle production baked it into all Powerise and Gas Springs and then added back volumes on the door actuation starting June, July, August with MI Auto and also with the business of Model X of BMW. So -- and this is with our firm contracts, and that's why we invested in the past year in the CapEx side, predominantly in developing these products alongside with capacities to build these vehicles.

So this is how, in a nutshell, the growth drivers are performing. In the same way, you asked about the regional split, Americas and Asia Pacific, how do sales develop here. In Americas, we see some cautiousness in terms of vehicle for build, minus 2%. But on the other hand, 3% GDP growth on the Industrial side. Yes, there is some pricing pressure, but we think we can offset this pricing pressure in America with technical changes. There is some pressure left in Asia Pacific. There is a very strong local competition there with predominantly engine. This is something where there might be a gap of 1% or 2%. But also here, we try to close this gap of price deterioration.

So, in terms of price deterioration in general terms, we did bake into the numbers, 0.5% price inflation for Gas Springs in the range of 2 to 3% of standard Powerise systems in China, we think that the price inflation will be in the range of 5%. We will offset majority of this, but there is still more pressure in Asia than in other regions. But we think the vast majority next year, we will offset this pricing pressure.

Then you said transformation, EUR 32 million, and sorry for the long answer, because you basically asked for basically a complete P&L with your questions. But in the transformation part, right? There is EUR 32 million 2028, that's absolutely right. There is still some inflation on the Mexican and Romanian side, which is more than average inflation you'd see. But this is something which we learn to deal with. Mexico and Romania, there will be in the range of 6% to 7% inflation, but they also bring to the table in measures and we counterbalance them with automation. So, we drive and continue to drive automation in Mexico and Romania to offset this 6% to 7% labor inflation in that region to begin with.

So -- and then in terms of guidance, quarter 1, basically, it's too early to state, because we now are in the closing phase of November. So, I would say out of the fourth quarter, we see some year-end effects, typically, the fourth quarter is very strong for us. So July, August and September with EUR 316 million. There, you're missing probably half a month in December to begin with in terms of sales. So this is something to acknowledge so that there is only half a month in December, which actually basically brings us to a slightly softer quarter than in the fourth quarter per definition, because you are suffering this half of month in December.

And then something also to consider is, for sure, the ongoing uncertainty in the market and the unrest in terms of tariff situation. In terms of regional development, we see in average the regions developing like we saw them over the course of the last 3 to 6 months. So, Europe and North America rather stable. Asia Pacific, still a roller coaster driven by the tariff situation and some unstable basically outlook for the economy there, which is coming back to that point. You saw that in Automotive industry will be down according to S&P numbers in China next year, 3%. There might be or is the positive level on GDP. But in general terms, the Chinese people, they see this uncertainty, and this is also something which we see in the numbers. So, I hope that I answered your questions. There were plenty of them touching our complete P&L and forecasting principle, but I hope that answers the question.

I'm sorry for the long questions. Just a very quick follow-up. So, when I think about the first question and your outlook, when I'm understanding what you're saying in terms of overall market development on GDP and LVP, your expectations around outperformance, your expectations around offsetting pricing pressure, it sounds to me like you are comfortable between the mid- to high end of the revenue guide as of now when you're thinking about the overall business. Because the lower end of the guide basically talks about 10% to 15% decline.

Yes. In a nutshell, I know we always have this discussion guidance and midpoint and where we see it. Over the course of the last 2 years, we saw a lot of things driving in, right, through and alongside the year. So, we always start in the first quarter with October, November, December. And then typically, like this year, the election of Trump and his first couple of months being the President, it was really a shaky situation through the complete economy, right? So that means, there is a lot of things which we're dealing with starting this February, right, with the new administration.

Then remember back when 3 years ago, the Ukraine war kicked in along with massive inflation. This also was always early in the year. So, we have, basically we are bringing out a guidance towards the end of the calendar year, not knowing what happens in January and February. This is a slight disadvantage for us. So yes, you could reformulate that and say they rather would like to, yes, be on the -- between the midpoint and the upper point of the guidance. However, the uncertainty is really what we need to consider also in our business, because we also get feedback. Hey, guys, we want you to have a realistic but matchable and achievable guidance for the year.

And we, for sure, don't know what we don't know starting next January, which things pop up, right, on the global scale. And I think there are many things like war, tariff situation, inflation, also things about geopolitics in the flow and nobody really knows how that turns out. And this is also something which you shaped in your first question saying the guidance is rather wide.

We have an EBIT margin range of this year, 10% to 12%. It's in the similar range, sizable range like we gave before. But yes, the issue is we don't know what happens in the start of the new year. And this is something which we try to formulate in the guidance. And this is why, yes, we have a certain range of the guidance.

And yes, if you look on to the activities we are doing in terms of shaping our profits throughout the year, this will be a back-end loaded year, because we start with all the efforts on the restructuring and this kicks in, in the second half of the year. That's also something to basically reflect. And then, it remains that we all are strong in terms of believing that some of these positive signs we see in the economy really materialize, and then we should see that in the second half of the year. I hope that helps.

At the moment, there seem to be no further questions. [Operator Instructions]

So many people were scared because it took us now quite some time to answer the first question. If there are any further questions, really happy to answer that. As a side note, you also, for sure, see the full pack of the numbers, including the details of last year in our -- on our homepage. And we value you as our investors for sure. So that means we also can have one-on-ones afterwards and happy to answer your questions then.

We have now another question from Yasmin Steilen, Berenberg.

I have two follow-ups, if I may. The one is on the guidance. So have you already received some indications by your customer in China that price erosion is slowing down to the level of 5%, which you have indicated? Or is it kind of this part of the guidance, which is still kind of uncertain? Any indications on this would be very helpful.

And the next question, you also mentioned that you're currently still leading on door actuation systems based on the RFQs. Can you share your view on the competitive landscape? Is there any risk engine that might also take an aggressive approach on pricing here again to gain market share?

So thank you very much, Yasmin, for your questions. The first one in terms of guidance when it comes to price erosions in China. From our perspective, the price erosion is way softer this year than it used to be last year. Just as a reminder, last year, we had in the range of 8% to 9% price deterioration on some of the Powerise products. And however, we saw, and this is the main competitor engine also now as they materialize the first products and projects that they see that kind of things are apparently more difficult than they thought. So this basically leads to the point that the price war basically on that end comes or become softer. This is why we think it's in the range of 5%, 6% maybe. And this is something we can deal with to an extent of 4%. So there might be 1% or 2% left, which we basically, at the end of the day, can deal with and we reflected that in the guidance.

So the China market is a very dynamic one in both directions. So that means, in many cases, it's more dynamic than in North America and Europe. So that means, also pricing requests typically come up then with basically a heads up of only 3 to 6 months. And this is basically what we fight with. And again, this is something we see that the competitor landscape is, however, stable. And we also have first victories. Right?

The engine business is very strong in a spoiler business. So at the end of the car on the tail side, there are some spoilers for sports cars. It's apparently a good market in China. We are pushing in now with our first product to counterbalance. And this is where we are a challenger of engine now. And this is something where we won first businesses, and this is something where we also are counterbalancing and fight this local competition successfully.

And by the way, just to point that out again, there's also in China, the main competitors are still Brose, Edscha and Magna. At the end of the day, they are winning or having more difficulties as we speak. So, we are the one which is the real competitor to engine, and we can match their prices. We don't want to do that at all [ Lanxess. ] We don't want to do that with all businesses, because we don't want to kill our pricing for sure and jeopardize our profits. So, we always go only to the extent that we keep some business, then yes, we might give some business to the competitors, gaining back some.

Now we're challenging them on the spoiler business. So this is a constant battle we are driving to keep our profitability on a maximum, and that's apparently the outcome. So, bring it to a nutshell, 5% to 6% this year, I think with majority of that we can deal with in China.

And then the second question was in terms of door actuator. Door actuator, it's the known competitor landscape. It's Brose, Edscha, [indiscernible] Magna as a Western world competitors. And then, yes, there will be Chinese competition. At this point in time, engine developed a new product. They were not successful in the market. So, we have some positive momentum there in gaining further business, but it would be an illusion to think that the Chinese would be on the long run, not capable to deal with this technology.

Now it's about using this head lengths. We are ahead of the competition to secure business, to stable and foster our position and to make it a success. And that's what we are in the midst with because not only that we won business with Xiaomi, with Mi Auto, but also we won good business with Geely, Great Wall, they will come further. I was talking about those who launch next year. There will be in the outer years more business coming. As I said, we have a market share of 40% currently. And this is why we invested so much in the past years to develop this new technology to begin with on the R&D side and also to push the equipment into our plants.

We have now in all three main regions, our door actuation lines sitting. They are not generating sales yet, because in the Automotive industry, you need to be ready 6 to 9 months before SOP for the first dry runs with the new products. That's just a given in the market, as you all know, this, for sure, is a little challenge, this ramp-up curve in the Automotive industry, but it's basically a given, and it should secure and it will secure a good business position on the door actuation side. So I hope this answers your question, Yasmin.

And the last question is from Klaus Ringel, ODDO BHF.

I actually have two, and I would like to take them one by one. Well the first one being, yes, your view on the pathway of your net debt-to-EBITDA leverage in the next quarters. There's some areas a big attention on this multiple. And the question would be, if we will go south from this 2.96 at year-end or due to this cash out for restructuring and maybe also payment of the dividend, we could see it going up a bit still before it will go down. So very -- would be very interested to hear your thoughts here. That's the first question.

So in terms of the first question, yes, we are below 3, below 3 was our target. It's also something which is extremely relevant for us to pay back our debt. We were very successful last year to refinance, which gives stability and also in the same way with refinancing, we've been opening up our covenant to 4, as you know, and now we are at 3. So we have enough headroom to be successful. We think that the net leverage will go up slightly above 3 in the next 2 quarters and then coming down and towards the end of the year, that will be below 3. This is basically our current planning.

Okay. And the second one would be a clarification on the impact of this transfer pricing on the margins. That's a one-off? Or will we see a continuous impact in the next couple of quarters?

This is a shift of 1% between the region of Europe and North America out of the transfer pricing, which is baked in our forecast numbers by region. And basically, it's something which was basically corrected in terms of transfer prices driven by allocations. And this is something which materializes 1% less in North America, 1% higher in Europe, and this will basically continue to be the new baseline.

And as this was the last question, I would like to hand the floor back over to Dr. Buchsner for closing remarks.

Yes. Thank you very much again for your trust, and thank you very much for being part of the presentation today. Again, I think we are very strong set up with our current stable financial results from last year. I think we're doing absolutely the right steps in terms of growing our business with new technologies and invest where it really matters to solidify the numbers for the next year and also continue our path to success with new technologies.

And with that, I would like to thank you. And as we probably for most of you don't have the time to talk about -- talk this year, I wish you a happy year ending and all the best for the year 2026. Thank you very much, and have a great day and week.

Thank you very much, and good morning also from my side. The reason for the call today is we'll talk about our transformation program in more detail. You all know that we've been starting the discussions already not only in the regular meetings we had during our conferences, but also in our Capital Markets Day. That for sure, in terms of Stabilus, we want and need to maintain our efficiency, profitability in the market. And that's why we started, basically, second boost of our transformation program. This is what we'll talk about today.

So in the light of the presentation, I would like to talk a bit about the economic environment we are in. I'd also like to talk about what the main content of the transformation program's second step is. You already know that we've been working on individual measures on the operations side over the course of the last 12 to 24 months, and we'll now give it another boost and get it into the overhead related portion of our business, as a second step. And this is something we need to talk about today. I would like to give you more information about that.

Also, last but not least, we'll talk about our guidance for the rest of the year because you remember that our guidance is EUR 1.3 billion and around about 11% EBIT margin in conjunction with EUR 105 million free cash flow. And just to tell you upfront, this guidance is for sure on. We are on track with our measures in that term. We will stick to the guidance we published lately about EUR 1.3 billion, 11% EBIT margin and also the free cash flow of EUR 105 million because this program is something where we want to secure the competitiveness of the company in the future. So let's dig into these things.

So we see an ongoing softness in the market, right? This is something which we all see. That is something we've seen predominantly in the automotive side, but also on the industrial side. And that is something which we need to consider, work on and basically also drive in terms of our actions on the business to maintain the profitability, to expand the profitability and to reach our long-term goals. And that's why we are here. I want to give you some details on that.

So this is predominantly in the automotive side, as I said, but also on the industrial side. And you all know that it's a global topic. It's not affecting the region. It's not affecting the Stabilus at all alone. You see the sentiment in the market. You see the consumer sentiment, which is softer. You see all the impacts of the tariff situation around the globe. And this is something which for sure also impacts our business. We have 11% EBIT margin. This is, I tell you, by far, better than our peers. However, we, as a company, we, as a leadership team, are utmost, highest target to maintain that, to stay competitive, to expand our business and to prepare for growth, which will definitely come.

Also here, I'd like to point out that in terms of our business wins, we are on track. So we will also talk about that in our year-end results presentation. We are winning business beyond our current market share. We are winning business in all regions. We are winning business in Europe, North America, predominantly also in China, where we for sure see the most competitive environment. So we are winning business. The pipelines are filled with business, and we have a solid and good forecast for the years to come.

However, today, only 8% of 10 parts [ are worth], so it's not a loss of any contract. It's not a loss of any business we have. It's just the consumer sentiment, which is low, and we will take the opportunity for sure to roll out our transformation program to ensure our profitability and also to ensure that we reach our global STAR targets, which we published with an EBIT margin of 15%.

And just getting a little bit in detail in terms of what that means for our company. This is organizational transformation, right? There are structures in place, which are -- structures, which are made for more business, for higher sales these times. And this is what we want to tailor down. So it's a reduction in terms of hierarchical level at the end of the day. We also have -- and still have a very strong customer focus. We want to have to maintain this customer-focused, fast decision making. That's where we take out certain positions in that terms. It's a true reorganization. So that means, also bringing both companies together, Stabilus and DESTACO. This opens opportunities for us to kind of use capabilities from both sides to streamline the organization, which is our highest target. We always mention that, right?

We also have impacts in terms of locations and locations measures. And here, interesting point, [indiscernible] for sure. We acquired DESTACO. It's a wonderful business. It's strategically absolutely the right decision at the end of the day, absolutely the vital case, and we'll pursue also the integration. In terms of the locations, this opens opportunities for us, right? Just to mention one opportunity, the DESTACO organization has a plant in Thailand. We had actually a plant in Singapore. There is good benefits to integrate the sharpest location of Singapore into Thailand. So we are using our footprint. We got along with DESTACO. And this is also something, which we have numerous times talked about, use the footprint of DESTACO to have [ its ] strength and [ its ] global reach, however, also to strive and execute economies of scale and gain synergies.

And that's what we do, for example, with this Singapore and Thailand organization, using the facilities of DESTACO in order to strengthen our business, but also there are opportunities in Germany and in the U.S., which we don't want to leave aside, right? And that's something we constantly are developing. We are constantly monitoring. And there's the volume on the global scale shifting.

As the tariffs kick in, in all regions, there's also shift in terms of volumes, and this is another opportunity where we, on a constant basis, revisit our production capacities, our overhead capacity and try to optimize those points into our layout, those points into our hierarchical layers and also overhead structure to constantly streamline.

And, as I said, one example is the Thailand facility of DESTACO, it captures good space for us. That means the Stabilus Group could close the Singapore office we put it into there. Then there are other synergies which you see on the IT side, for example, you see them on the HR side. You see them in all different functions. You see them in all different businesses. We are just -- and this is what we also said at the beginning of this whole journey, that we will combine the two organizations, and this is delivering us cost savings.

If you remember, our cost savings we are striving for. This year, we're in the range of EUR 1 million. These were the low-hanging fruits of integrating DESTACO further of bringing both organizations together. And predominantly in this EUR 1 million, not only that we've been saving on side of insurances, but also other costs, we also have been able to combine some headcount functions to combine some overhead functions. And this is truly also something which is extremely relevant in our business case of the DESTACO-related business case to make it a viable case, the whole M&A and the whole acquisition we have on hand.

And as we said, since the beginning, there are targets out there for sure, which harvest the fruits of the synergies amounting up to EUR 10 million over the course of the next year, purely on the cost side of the joint activities with DESTACO. So that's nothing new, right? We always talked about that we streamline the organization. We always talked about that we integrate or bring both companies closer together and that there are synergies in terms of all overhead functions, all business-related functions, all sales-related functions to bring the two companies closer together.

And that's why we said in the first place, there will be not only sales synergies, there will be also cost synergies. And this is another driving factor aside of currently lower volumes out there, which, at the end of the day, give the requirement to reorganize us another boost.

So as I said, and I'll just repeat myself, the guidance for the year is still on with the EUR 1.3 billion. The EBIT margin is also in terms of the guidance at 11%, yes? And also the free cash flow is in the range of EUR 105 million. So no change there. The current business environment is basically giving us a boost. And on the other side, this opportunity to streamline down our organization. And this is what we definitely take as an opportunity to further improve our cost structure to stick with our STAR 2030 targets of an EBIT margin of 15%.

So yes, the organization is impacted. The locations are impacted, and there will be personnel-related measures out there. Because whenever you bring two organizations closer and on the [ side ], the consumer sentiment and thereby the orders are getting softer, then, for sure, we can combine workforces. And this will, at the end of the day, affect 450 people out of our 8,200 people around the globe, which is, in a nutshell, 6% of our global workforce.

This will affect predominantly EMEA and Americas. Why is that? Yes, EMEA and America are both the hubs of Stabilus and DESTACO. In Asia, the growth trajectory is still different, right? We know there are the Asian countries. There is also the opportunities we still see in China. Over the course of the last years, we've been growing as a company from a single-digit percentage sales in that region, Asia, up to 25% of our business in Asia. For us, there's good growth opportunities out there. And this is why at the end of the day, despite of currently also Asia being impacted by the global tariff battle, we concentrated our activities on EMEA and Americas because this is where the predominant portion of our headcount, of our overhead structure lies. This is where originally the Stabilus and DESTACO organization have the main headcount. And this is where we see the biggest opportunity to work on, the efficiency of our organization.

So on the next page, we also go a little more in detail in terms of the costs. There will be a one-off expense of EUR 18 million. This is predominantly severance costs, as you can imagine, because we are bringing a different turn and spin into this whole discussion with, at the end of the day, our efficiency program, the restructuring costs on the other hand. And this will basically hit us in 2025. So we'll accrue for this money, which, yes, has an impact on our net profit for this year, and the cash flow will be out in -- flowing in terms of cash out in 2026.

This amount of money of EUR 18 million is basically tailored to the needs we have in terms of streamlining our organization. All measures are actually done very duly over the course of the last weeks. You can imagine there is a lot of brain power, which we put into that because we are, as I said, reaching out to all regions, all functions, predominantly Europe and North America to make sure that we tailor our organization to a point where we are most effective on the way forward.

Cost savings on the other hand, and this is the nice thing about it here, you see only '27 and '28 in terms of the years when it's mentioned, which cost savings will be attached to it. But if you look on to the headline, this is probably the predominant and most striking information. The payback is less than a year. So that means we are targeting a reorganization of our business, which is really highly effective. Many organizations do reorganizations and then at the end of the day, it takes longer than a year to get the money back. Here, we are targeting low-hanging fruit predominantly, but also the difficult cases to organize -- reorganize ourselves in the departments, business units and regions, predominantly Europe and North America, as I said, investing EUR 18 million, and the payback is less than a year.

So very well, you also can imagine that these two numbers already lay out, which margin improving, that means. And we always talked about it also very openly in our Capital Markets Day because if you take this 1-year payback on the EUR 17 million, you will increase the margin about 1% by this factor. So let's see how the economy next year goes, but the effect of this is easy to calculate, right, with EUR 18 million as an one-off, which we invest. If the investment is in a year around about, then we improve our margin also in line with what we said in our Capital Markets Day, which is around about 1 percentage point. It's an important information to know.

Then the EUR 19 million cost savings will be indeed in the year 2027 and then the full-blown impacts we see by EUR 32 million recurring annual cost savings from year '28 onwards, right? Why is that steep increase? Also because then the economy will basically support us in the outer years as businesses are developing in a different way, in a better way, then we see this EUR 32 million of annual recurring cost savings in the year 2028.

So that's about the cost side, yes? I don't want to miss out on talking a little bit on the next page about our guidance. And as I said at the beginning of this whole kind of presentation, our forecast for the year is still on in terms of the EBIT margin, 11%, the sales of EUR 1.3 billion around about and also the free cash flow of EUR 105 million because this program is -- and this is just in the nature of such a reorganization program, something we prepared for a number of weeks and months now, and it's something which is rolled out over the course of the year. So it's not something which you just like put it on, turn the lever, and it's up and running.

So it's not affecting us in this year in terms of these KPIs where we give a guidance. It's basically impacting us next year in terms of margin improvement on our guidance, however. And you see that on the bottom of the chart, one thing which I very clearly like to point out, for sure, the profits are impacted, the net profit is impacted by that, and it will be in the range of EUR 25 million plus or minus.

You all know that EUR 25 million plus or minus -- it's a plus or minus number because there is a lot of tax-related points which we typically kick in. Because if you just calculate it very sharp, you could also come up with EUR 27 million even, right, as a basic number then finally. However, we started in a consensus of EUR 47 million. If you take out the EUR 18 million, basically, you will be ending up slightly below the EUR 30 million. So it's in the range of EUR 25 million to EUR 27 million. There are some tax impacts which are always difficult to calculate. So here, you see the EUR 25 million could be also in the range of EUR 26 million, EUR 27 million whatsoever. But it will be definitely impacted because we are accruing then this EUR 18 million, and this goes directly on to the net profit line.

With that, again, I would like to put it in a nutshell. The reason for this reorganization and the organizational tailoring is that we want to maintain the strength of the Stabilus Group in the future. We want to have a company on hand, which is not gradually jammed in by side effects, and we don't want to massage from here and there. We want to tailor our organization to the needs of the outside world. We are at 11% EBIT margin. If you consider that this is one of the most difficult economic years ever, it's an outstanding result because it's probably twice as much than our peers do.

However, we want to secure that we are on a profitable level in that range and beyond, also hitting our 2030 number. And this is extremely important for us to invest this in a long run because from the actual environment, we see us very well impacted than everybody else in the same way by the softness in the automotive industry in all regions and the increasing pressure from the tariff situation. And this is something which we -- in the same way than the whole industry just -- like, we cannot ignore that, we take it as an opportunity to, at the end of the day, tailor our organization, tailor our cost structure to be successful in the future.

[ Everyone ] can imagine that this is a big step for the company. It's vital. It's extremely important, and we'll execute that in the weeks to come to have this full benefit with 1-year payback in next year.

Yes, with that, I would open for questions, please.

[Operator Instructions] And there's a first question coming from Yasmin Steilen, Berenberg. Please go ahead.

I have three questions, if I may, and I'll take them one by one. So the first one, just to clarify, not quite sure that I got it right. For the full cost saving effects of EUR 32 million quite tailwind from economic recovery. So if my understanding is correct, what level of economic recovery is reflected in your cost savings outlined?

Yes. So we'll answer them, as you said, step by step, right? We kick in with the first question. Thank you very much. And Yasmin, the first question is, our guidance, also the long-term guidance is basically in alignment with S&P in terms of light vehicle production and GDP. And those two criteria are basically what we see as an underlying assumption for the years, '27 and beyond.

So if you take these numbers, which is in the automotive industry, nowadays, less than 2% growth and on the side of GDP, in the range of 3%. Now this is basically what we, for sure, calculate with to achieve this number. So I think I mentioned that. For sure, nobody wants to hear that and nobody hopes for it. But in case, for sure, numbers go down, and there will be negative GDP or volumes of car production will be going very south, then it will be a different number. So the underlying assumption for us is that if you take the S&P numbers for GDP and light vehicle growth, then this comes. That's the underlying assumption.

Perfect. It's all clear. And then you already indicated, as you said during the Markets Day in June that you target leaner SG&A structures as well to improve profitability. Could you please clarify what proportion of the headcount reduction is SG&A related? And what is related to production footprint optimization?

If I talk about it in terms of the impact on the organization, the footprint related portion is probably 1/4, yes, so 25%. And the vast majority, which is 3/4 is then the overhead related points. And when we look back on the Capital Markets Day, I said we started the activities, and we talk about it whenever we meet, also in our individual discussions, we started the activities predominantly in our bigger areas like the Koblenz plant, but also in North America, with automation projects over the course of the last few years already. And this actually is in progress, yes? So we -- this is something which we continue to strive for. It touches, in terms of the desired savings, about 1/4, but 3/4 of this whole thing is then SG&A or overhead related cost assumptions, so SG&A, marketing, sales and whatever is on the overhead side, 3/4. 1/4 operations.

And has your incoming CFO being involved in the cost measure exercise?

Absolutely. And this is something which we are extremely proud of. Our CFO, who will come on board, is already in contact with us. Why is that? We know that basically our business world is turning very fast, right? We didn't want to wait also with the activities until Andreas Jaeger is on board. And that's why we involved him upfront. So we had several sessions on a good level of granularity. You know that we are in the midst of the budget planning, which will reach out beyond November. But also in an early stage, we always involved him, and he's spot on.

So when we meet him first, after the 1st of November, and we have our first discussions, he will confirm to you, he was 100% on board, it is an agreement, and supports all these activities and also has been ensure that the individual portions which are impacted and the patterns which are impacted are evaluated thoroughly.

Okay. Perfect. Maybe a final question. Could you provide us an update on the pricing in Automotive Powerise? And then what are your expectations for the next year?

Yes, for sure. As you have seen already, when we talk about next year, for sure, we're touching, at the end of the day, an area when -- towards the end of the year, we will, at the 8th of December, publish our guidance for next year. But this is a very specific question maybe to answer. In this year, we saw a price deterioration in the range of, globally, 5% to 6% driven predominantly by the impact of price deterioration in China, which was in some customers [indiscernible], particularly with the Chinese local ones. And then there was a price reduction in North America of about 3% to 4% and a little lower than 3% in Europe.

So all this together mixes to 5%, 6% price deterioration in the Powerise sector. And we only can deal with half of it, right? So that means some of this is leftover, which is a burden on our P&L, as you know. And this is something which we already -- also talked about, and it was predominantly in China.

So what does this mean for next year? We see that this is basically fading out. Why is that? Because purely we are a company in the same way our competition is selling innovation. We are selling technical products. And whenever you talk about such products, price deteriorations typically come to an end over the course of the years because something kind of beating each other on the pricing is never the right way to go forward. So we see next year's budget for the time being, a price deterioration in the range of 3.5%, 4% for Powerise and a little bit less than 1%, only 0.5% on the Gas Spring side. And this is something which hits us.

It's besides -- this, I would like to mention, I appreciate the question [indiscernible]. This one is actually important, yes? This was just an information where we are currently when it comes to pricing for our products. I would consider this question is not related to the topic today, but I'm happy to, for sure, answer you that question.

The next question comes from Marc-René Tonn, Warburg Research.

I presumably say it's probably not the call for the 2025 to sort of '26 guidance, but I think there's a bit of concern that the additional restructuring needs may indicate that overall profitability, let's say, may deteriorate further before it gets better again. [indiscernible]. And I appreciate that you mentioned already depriving and their first positive sets from the restructuring program hardly already in next year after this year's decision. But if you could give us some more flavor on how we should think about the next business year in terms of, let's say, generally talking about challenges and opportunities just to get better visibility, more confident in how the company should proceed in terms of [indiscernible]?

Absolutely. If you see our business, right, as I said at the beginning, it's basically also impacted by the outside world for sure, like other business. And if you see over the course of the years, how the business was developing, and this is the same for everybody who's in the industry, automotive and industrial applications, the first half year of our business, so that means October till March, went okay, and it went according to our assumptions basically.

In the second half of the year, with the change in the U.S. government and administration, in conjunction with tariffs situations, there were direct impacts on our business. But direct impacts were in terms of tariffs, we could basically get almost a waiver for it because we are local for local, we ensure that we [ crawl ] money back from our customers and the impact for this year's deal.

The secondary impact was big, and it started, as I said, with March, April when -- first, tariffs kicked in, and the consumer sentiment went down. So now we're in a quarterly saved area, also subsequently for the year to come, but we say this year, absolutely, this whole thing bottoming out. And that means we see -- and this basically in line also with GDP and S&P, light vehicle production, then we see that kind of flat progressing into next year.

And for sure, you mentioned also basically the impacting factors to the EBIT margin, right? So first thing is on the sales side, we see it basically bottoming out, and we see it flat year-over-year. [indiscernible] in alignment with what all other companies see out there. It's too early to talk about the guidance for sure for next year because we are still in the midst of the budgeting planning process, and we don't have a firm number, but this is basically in an overall sentiment.

So we'll talk about EBIT a bit. We are in 11% EBIT margin. That is our guidance for the year. As I said, we stick to it and EUR 1.3 billion. If you assume that sales basically will go plus/minus in the similar range, our assumption is that at the end of the day -- and this is something which we laid out on the [indiscernible] page before. If you talk about the 11% EBIT margin, and we see a payback of the investment of EUR 18 million in a year, that there is big deterioration on the profitability for the year to come on the base business.

Why is that? Also, if you remember what just Yasmin said, Yasmin Steilen also said, "How is the price deterioration developing year-over-year for next year," right? Typically, automotive industry, that's what I said, you have 3% to 4% price reductions, and you always can deal with it because on top of this organizational and structural change we do, we have our base here, and we also set the price reduction by taking into changes.

Last year, it was difficult because we had this impact by China because there were disproportionately higher price reductions driven by the developed competition. Next year, we see that coming back to normal, 3% to 4%, global scale. This is something we can deal with, in a nutshell, with our business on hand [ taking into ] changes.

So at the end of the day [indiscernible], in terms of the base business and base profitability, there is no impact from our side seen that this would go -- would lose. It's, as I said, on the long run with the guidance of 11% EBIT margin, it is not my personal. It is not the company's vision. Despite of having a margin, with 11% EBIT margin, this is twice as high than our competition. We are not happy with it; we want to achieve more. And this is why we take the opportunity to improve it further. This is why we take the opportunity over the course of the next months to streamline down organization. And this is the case why we are confident that there is a payback of 1 year, which then, if you put it in your calculation, results in a healthy EBIT margin, which we are striving for. And that's the reason why we do this activities.

Are there further questions?

So at the moment, there are no further. [Operator Instructions].

If there are no further questions, then just again, the Stabilus Group with 11% EBIT margin is in an extremely healthy path. And this is what we want to maintain whatever it takes. So this time around, we wanted to talk to you about this impact on, yes, the net profit because we need to accrue this EUR 18 million, but with a period of less than a year and with a very vital impact in the year, not only '26, but also '27, moreover, '28.

So we want to prepare as a company for the next step. We want to streamline down organization, and it is the right time to do so. And that's why we will execute over the course of the next weeks and months, this plan, to basically secure our stability in the market.

And with that, if there are no further questions, I would wish you a good rest of the week. Thank you very much.