Stabilus (ETR:STM) executives told analysts they are “holding course” in a difficult automotive and industrial market environment during the first quarter of fiscal 2026, pointing to strong cash generation and resilient profitability despite softer revenue. CEO Dr. Michael Büchsner and CFO Andreas Jaeger also reaffirmed full-year guidance and outlined a second-half-weighted improvement profile tied to restructuring benefits and product launches.
Q1 results: softer sales, strong margins and cash flow
Stabilus reported first-quarter revenue of EUR 291 million, which management described as a 7% decline versus the prior year, alongside foreign-exchange headwinds that were discussed as roughly 3% to 4% in the quarter. Büchsner highlighted that the revenue pressure was most visible in China, where consumer sentiment and mix effects weighed on demand, particularly in higher vehicle segments where Stabilus is more exposed.
A key highlight was the company’s free cash flow of EUR 23.9 million in the quarter, compared with EUR 8.9 million a year earlier. Büchsner attributed the improvement to operational management—cost control, forecasting discipline, and working-capital execution—rather than financing programs.
Regional performance: China margin strength offsets volume pressure
Jaeger provided a regional breakdown showing mixed revenue trends but notable profitability differences:
- Americas: Revenue was down 5.7% in euros, but organic growth was -0.5% after FX. EBIT margin was 4.7%, which management said was not satisfactory.
- EMEA: Revenue declined 1.4% in euros and -0.3% organically. EBIT margin was 10.8%, and Jaeger said the company increased margin by 1.9 percentage points despite lower volumes, citing fixed-cost reductions and a more flexible cost base.
- Asia Pacific: Revenue fell 13.6% year-over-year in reporting currency, driven predominantly by China. However, EBIT margin was the highest at 18.1%, with only a 1.3 percentage point decline versus the prior year despite lower volume.
Management emphasized that China’s profitability was intentionally protected by prioritizing higher-margin business rather than “hunting for each and every business.” Büchsner called the 18% EBIT margin in China a record for the first quarter, underscoring a strategy focused on product mix and margin discipline.
Drivers behind China and North America dynamics
During Q&A, management detailed the components behind China’s year-over-year sales pressure. Büchsner said that, comparing first quarter to first quarter, roughly 8% of the decline was tied to pricing carryover from last year’s elevated price pressure—higher than the company’s typical expectation of 4% to 4.5% in China. He also cited an FX impact of 3% to 4% and said consumer sentiment effects accounted for roughly 4%, with additional headwinds from a mix shift away from upper-segment vehicles where electromechanical fitment rates are higher.
Looking ahead, Büchsner told analysts the company expects China price reductions to normalize to around 4% to 5% in fiscal 2026, which management described as more manageable through supplier negotiations and operational efficiencies.
In North America, executives pointed to operational issues in two automotive plants—one in Mexico and one in Gastonia—as key contributors to weaker margins. Büchsner said these issues were linked to workforce fluctuation affecting direct labor and maintenance staffing, which then impacted line uptime, output, and created knock-on effects such as premium freight and quality challenges. He estimated the efficiency-related impact at around EUR 2 million in the quarter and said the company expects the headwind to continue in the second quarter, with performance returning “back under control” in the third and fourth quarters.
Strategic focus: Industrial POWERISE, door actuation, and automation
Management reiterated three growth drivers it expects to support results over the coming quarters and years:
- Industrial POWERISE: Büchsner said the product, built on automotive production lines and positioned as robust and cost-competitive, generated more than EUR 5 million of revenue in the first 12 months after its introduction last year and is growing at a double-digit rate, with management describing margins as “exceptionally high.”
- Door actuation: Büchsner described door actuation as a “next generation of vehicle comfort” and said interest is broad-based. He cited customer activity including Geely, Hyundai, and a planned start with MIH Auto, and said launches in the second half are expected to “greatly help” sales. In response to analyst questions, he said profitability for door actuation is comparable to, or slightly higher than, POWERISE margins.
- Automation and robotics (via DESTACO): Management highlighted synergy initiatives and said the company is working on intelligent gripping systems for humanoids and industrial robots, and also entered a development project for electromechanical hinge solutions for humanoid robots with a U.S.-based OEM that is also an existing automotive customer. Büchsner said hinge-related humanoid work is in development and not expected to drive significant sales this year, while gripping systems had already generated EUR 200,000 in deliveries in the first half.
On DESTACO, Büchsner said profitability remains stable but noted that the company has begun allocating broader group overhead costs to DESTACO, which he said reduces reported profitability by roughly 2% to 2.5% compared with prior indications that excluded those allocations.
Cost actions, leverage priorities, and guidance reaffirmed
Executives repeatedly returned to the company’s restructuring and overhead-reduction efforts. Büchsner said the transformation program began in the first quarter and is expected to gradually kick in over upcoming quarters, with a goal of removing EUR 19 million of fixed costs by 2027. He also told analysts the restructuring program should contribute about one percentage point of EBIT margin improvement in the second half, with another percentage point expected from resolving North America operational issues.
On balance sheet priorities, Jaeger said reducing net financial debt and leverage remains a clear focus, noting the company reduced net financial debt by EUR 13.3 million in the first quarter and reiterated an objective to bring leverage to 2.0 within the next two years. He also highlighted improvements in working capital, with net working capital at EUR 218.6 million, or 17.3% relative to revenue.
Management confirmed its fiscal 2026 outlook, reiterating expectations for EUR 1.1 billion to EUR 1.3 billion in revenue, an EBIT margin of 10% to 12%, and EUR 80 million to EUR 110 million in adjusted free cash flow. Büchsner also said the company expects second-quarter revenue to move “rather sidewards” versus the first quarter, citing seasonality around the Chinese New Year and relatively flat automotive conditions in North America and Europe.
About Stabilus (ETR:STM)
Stabilus SE, together with its subsidiaries, engages in the manufacture and sale of gas springs, dampers, vibration isolation products, and electric tailgate opening and closing equipment in Europe, the Middle East, Africa, North and South America, the Asia-Pacific, and internationally. Its products are used in automotive, navy and railways, commercial vehicles, aerospace, marine and rail, energy and construction, mechanical engineering, industrial machinery and automation, health, recreation, leisure, and furniture industries.
