Stabilus SE (SIUAF) Q3 2025 Earnings Call Highlights: Navigating Challenges with Strategic Stability
EBIT Margin: 11.1% year-to-date, consistent with last year.
Free Cash Flow: EUR105 million expected for the full year.
Net Leverage Ratio: Covenant increased to 4.0 until September 2026.
Investment: 6.8% of revenue, focusing on automation.
Regional Performance: Americas down 12%, Asia Pacific down 21%, Europe stable.
FX Impact: Negative impact of 5% on revenue due to strong euro.
Term Loan: New EUR150 million loan maturing in June 2029.
Warning! GuruFocus has detected 4 Warning Signs with SIUAF.
Release Date: August 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Stabilus SE (SIUAF) maintained an EBIT margin of 11.1% year-to-date, consistent with the previous year, despite a challenging market environment.
The company successfully refinanced its term loan ahead of schedule, securing a new long-term loan facility of EUR 150 million maturing in June 2029.
Stabilus SE (SIUAF) increased its covenant headroom to 4.0 until September 2026, indicating strong financial stability and trust from banks.
The company expects a free cash flow of EUR 105 million for the year, with a cash flow ratio exceeding 50%, demonstrating strong cash generation capabilities.
Stabilus SE (SIUAF) is implementing cost-cutting measures across various areas, including purchasing savings and operational efficiencies, to maintain profitability in a soft market.
Negative Points
Revenues in the third quarter were down by 10%, primarily due to a strong euro and the global tariff conflict, impacting sales in North America and Asia Pacific.
The company experienced a significant FX impact, with the euro's strength affecting revenues in North America and China.
Sales in the Americas and Asia Pacific regions declined by 12% and 21%, respectively, due to softer demand in the automotive and industrial sectors.
The Asia Pacific Powerise segment saw a 15% decline in organic revenues, with pricing pressures and competition in China contributing to the decrease.
Stabilus SE (SIUAF) anticipates continued pricing pressure in China, with prices expected to decrease by another 3% to 4% next year.
Q & A Highlights
Q: Could you provide more details on OEM call-offs within the automotive sector and order intake trends across your industrial businesses? Are there signs of stabilization? A: Michael Buechsner, CEO: We believe we have reached the bottom in terms of demand. The consumer sentiment is stabilizing, and we see positive signs in the industrial sector for next year. The automotive sector remains challenging, but investments in equipment indicate potential growth. Overall, we expect a more stable environment next year.
Q: Regarding APAC Powerise and China pricing, when can we expect stabilization and a return to growth in this segment? A: Michael Buechsner, CEO: We experienced a 15% decline in organic revenues in APAC Powerise, driven by a 7-8% price reduction and lower volumes. We anticipate prices to decrease by another 3-4% next year, but expect more stability as competitors reach pricing limits. Growth should stabilize as market conditions improve.
Q: Can you quantify the cost actions you're taking for next year? A: Michael Buechsner, CEO: We aim to reduce bill of material costs by 2-3% annually through VAVE actions and supplier negotiations. This year, we've achieved a 3-4% reduction, offsetting some market impacts. Our cost-cutting initiatives in indirect areas should improve margins by about a percentage point next year.
Q: Are you still committed to your strategic growth targets despite current market weaknesses? A: Michael Buechsner, CEO: Yes, we remain committed to our strategic growth targets. We expect some recovery of postponed orders in the fourth quarter or next year. Our business model is intact, and we continue to win contracts, indicating a positive outlook.
Q: Is there any change to the refinancing conditions or covenants? A: Michael Buechsner, CEO: No changes to the terms and conditions. Our covenant has increased from 3.5 to 4.0, providing more headroom and stability. This reflects the trust and support from our syndicated banks, and we remain committed to deleveraging.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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