Drägerwerk AG & Co. KGaA (ETR:DRW3) reported record net sales and sharply higher earnings for fiscal 2025, with management pointing to broad-based demand across both divisions and all regions despite significant headwinds from tariffs and currency movements.
Record sales and higher profitability in 2025
CEO Stefan Dräger said the company generated the highest net sales in its history at around EUR 3.5 billion, slightly above its latest forecast and about EUR 25 million higher than the pandemic-driven high in 2020. He emphasized that the new record was achieved “entirely without a special economic situation.”
Orders increased 7.7% to around EUR 3.6 billion on a currency-adjusted basis, with both divisions contributing. Lescow added that the Americas and EMEA regions were the largest growth drivers for both orders and sales.
Tariffs and FX created more than EUR 90 million of opposing effects
Management highlighted that 2025 results came against a tougher backdrop compared with 2024, when EBIT benefited from one-off gains including the sale of a non-strategic smoke and fire alarm systems business in the Netherlands and real estate in the U.S.
In 2025, the company faced headwinds from U.S. import tariffs and currency impacts. Stefan Dräger said tariffs imposed by the U.S. government reduced EBIT by roughly EUR 26 million (about EUR 21 million in Medical and EUR 5 million in Safety). Currency effects were described as totaling around EUR 45 million in EBIT impact, with the bulk attributed to the Medical division. Management summarized the combined headwinds, including the absence of prior-year one-offs, as “opposing effects of more than EUR 90 million,” which the company said it “overcompensated” through operating performance.
On profitability strategy, management reiterated its focus on raising the EBIT margin by an average of about one percentage point per year from 2024. The company said it improved margins by roughly one percentage point in both 2024 and 2025, with 2025’s gains driven mainly by the operating business rather than one-off items.
Division performance: Medical rebounds, Safety remains strong
Medical Division: Lescow said medical order intake increased roughly 9% in 2025, supported by demand for anesthesia machines, ventilators, services, and consumables. He also cited a “major multi-year order” for hospital infrastructure systems from Mexico that supported above-average growth in the Americas region. Medical net sales rose 7.4% for the year, led by growth across regions, while APAC sales were slightly below the prior year level.
The Medical gross margin improved 0.6 percentage points to 43.6%, with negative currency and tariff effects offset by favorable product and country mix. Medical EBIT doubled to EUR 57 million and the EBIT margin rose from 1.5% to 2.9%. In the fourth quarter, medical EBIT rose by around 40% to roughly EUR 80 million, which management attributed to strong year-end business.
Safety Division: Safety order intake rose more than 6% in 2025, driven primarily by Engineered Solutions and gas detection devices, with respiratory and personal protection products as well as alcohol and drug testing also contributing. Safety net sales increased 2.6% for the year. The division’s gross margin was stable at 47.3%, with currency and tariff pressures offset by product mix and price adjustments.
Safety EBIT increased 6.4% to around EUR 176 million, and the EBIT margin improved from 11.3% to 11.9%. Fourth-quarter Safety EBIT climbed by around 32% to roughly EUR 77 million, again linked to strong year-end business.
Cash flow improves; net debt declines, but expected to rise in 2026
Dräger reported a significant improvement in cash generation. Cash flow from operating activities rose by about EUR 71 million to around EUR 238 million. Free cash flow came in at around EUR 120 million, up roughly EUR 60 million year over year, and management said the cash conversion rate was 100%, a level it also expects for 2026.
Cash and cash equivalents increased to EUR 282 million, while net financial debt fell about 25% to EUR 123 million. Net debt to EBITDA improved from 0.5 to 0.3, which the CFO described as a “very healthy” leverage level.
However, Lescow said net financial debt is expected to increase in 2026 due to a large distribution center project in Lübeck that will be rented on a long-term basis, increasing lease liabilities under IFRS, as well as higher investment levels.
Dividend raised again; 2026 guidance and key Q&A themes
Management proposed increasing the dividend for the third consecutive year since 2023, in line with its policy of distributing around 30% of net profit. The company plans to propose a dividend of EUR 2.21 per common share and EUR 2.27 per preferred share at its annual shareholders’ meeting in May. CEO Stefan Dräger said that with an equity ratio “clearly over 50%,” the company intends to continue distributing at least 30% of net profit if the equity situation remains similarly strong.
For 2026, Dräger guided for currency-adjusted net sales growth of 2% to 6% and an EBIT margin of 5% to 7.5%. Management said both divisions are expected to contribute positive EBIT. The company said it will continue to counter U.S. import tariffs with price increases and measures developed in 2025, expecting these actions to be “more effective” across 2026. Guidance assumes tariffs remain at the level in place at the time of the annual financial statement, while management acknowledged uncertainty around potential changes.
In the Q&A, executives addressed several investor topics:
- Middle East exposure: Stefan Dräger said the company does not currently see a material impact on operations, including supply chains. He noted energy prices may remain elevated but said Dräger’s sensitivity to energy costs is limited.
- Ventilation market and competition: Management noted two major players had exited the ventilation market and said it did not see Mindray as a significant threat in developed markets, while describing Mindray as more active in parts of Africa.
- Recurring revenue/services: Management said the company crossed the EUR 1 billion threshold in services in 2025, and in some European countries—including Germany—service sales are already higher than device sales.
- Tariff reimbursements: Management said it had filed for reimbursement following court decisions questioning the legality of certain U.S. tariffs, but emphasized it is not included in the plan and remains uncertain. The company reiterated it had communicated a EUR 26 million net tariff effect, with a gross figure “around EUR 30 million” as potential upside if reimbursed.
- Defense business: Management said defense-related sales exceeded EUR 100 million and reiterated its goal to more than triple defense sales to about EUR 300 million by 2028, primarily within Safety portfolio categories such as personal protection and gas detection equipment.
- Early 2026 trading and FX: Management said the company entered 2026 with a strong backlog and that orders and sales were tracking expectations. It also said FX headwinds on net sales were about one percentage point, with a 30 to 60 basis point impact on EBIT margin under current assumptions.
Management said China remained stable but at a “much lower level than it used to,” and did not provide additional detail.
About Drägerwerk AG & Co. KGaA (ETR:DRW3)
Drägerwerk AG & Co KGaA operates as a medical and safety technology company worldwide. It develops, produces, and markets system solutions, equipment, and services for acute point of care, including emergency medicine, perioperative care, intensive care, and perinatal medicine. The company also develops, produces, and markets products, system solutions, and services for personal protection, gas detection technology, and integrated hazard management to customers in industry and mining sectors, as well as public sectors, such as fire departments, police, and disaster protection.
