Drägerwerk AG & Co. KGaA ETR: DRW3 reported higher order intake, revenue growth, and a sharp improvement in earnings in the first quarter of 2026, supported by strong demand in its medical business and improving profitability in its safety division. CEO Stefan Dräger described the period as “a strong quarter,” and said the company is proposing a higher dividend at next week’s annual shareholders meeting, marking “the third consecutive increase for three years.”
Group results show higher sales, margin expansion, and improved cash generation
Presenting the financials, CFO Gert-Hartwig Lescow said group order intake increased by more than 3% on a currency-adjusted basis, led by the medical division and particularly Germany. Net sales rose about 7%, driven by both divisions, with “the slight decline in APAC” more than offset by growth in other regions, “particularly the Americas.”
Profitability improved at the gross margin level, with Lescow reporting an increase of 0.5 percentage points to 46.3%. The gain was “supported by the improvement in the medical division, which more than offset the slight decline in the safety division.”
On costs, Lescow said functional expenses fell 0.8% nominally due to the stronger euro, but at constant currency would have risen 1.7%. He noted the comparison was influenced by a one-time employee payment in Germany tied to a collective agreement in the prior year; excluding that base effect, expenses would have increased nominally by about 2.4%, still below the rate of sales growth.
With higher revenue and comparatively restrained expenses, group EBIT rose to EUR 17.9 million from EUR 4 million a year earlier, lifting the EBIT margin to 2.4% from 0.1%. Lescow also pointed to an improvement in rolling 12-month economic value added (EVA) of roughly EUR 68 million to around EUR 106 million.
Medical division: orders and sales rise, but EBIT remains negative
In the medical division, order intake increased by more than 5% to around EUR 480 million. Lescow said the rise reflected “higher demand for nearly all product areas and services,” with Germany a key driver due to “stronger demand for therapy devices and hospital infrastructure systems.”
He cautioned that order intake comparisons will face a major base effect in the second quarter: in April 2025, the company received a “major order in the mid double-digit million EUR range from Mexico,” which Lescow said “will not repeat.”
Medical division net sales grew by more than 5% to around EUR 480 million, with strong momentum in the Americas “mainly attributable to higher revenues from anesthesia workstations and services.” EMEA and Germany contributed to growth, while APAC posted a slight decline.
Medical gross margin expanded by about two percentage points to roughly 44%, helped by product mix and higher capacity utilization in production, “despite the negative currency effect,” according to Lescow. Functional expenses increased by around 3%, primarily due to higher personnel costs linked to increased headcount in the sales region.
The division’s EBIT improved significantly year over year, narrowing to minus EUR 18.5 million from minus EUR 27.7 million. The EBIT margin improved to minus 4.4% from minus 6.7%. Rolling 12-month EVA also improved by roughly EUR 53 million to around minus EUR 14 million.
Safety division: higher sales and EBIT despite lower gross margin
In the safety division, order intake rose 1.2%, which Lescow attributed to high demand for occupational health and safety equipment, gas detection, and services. Germany recorded a significant increase in orders, aided by “strong demand for engineered solutions,” including orders from defense customers. The Americas also grew, while EMEA and APAC order volumes declined.
Safety division net sales rose roughly 9%, driven by “considerable growth” in Germany, EMEA, and the Americas, while APAC came in below the prior-year level.
Gross margin in the safety division declined by 1.4 percentage points to around 49%, primarily due to “lower profitability due to the product mix and negative currency effects.” Functional expenses were 0.2% below the prior year, with Lescow citing “lower R&D expenses” as a key factor.
Despite margin pressure at the gross profit line, the safety division delivered higher operating profit. EBIT increased to around EUR 36 million from around EUR 28 million, lifting the EBIT margin to approximately 11% from roughly 9%. Rolling 12-month EVA improved by about EUR 50 million to around EUR 120 million.
Cash flow, debt, and capital efficiency improve
Drägerwerk also reported better cash generation in the quarter. Lescow said operating cash flow improved by around EUR 6 million to roughly EUR 62 million, driven by higher earnings and “effective working capital management, especially better development of trade receivables.” Free cash flow rose by around EUR 12 million, helped by higher operating cash flow and lower investment outflows. Lescow added that the company expects free cash flow “to continue to develop positively.”
Net financial debt declined by around EUR 56 million to about EUR 85 million, reflecting higher cash and cash equivalents from the stronger free cash flow. The net financial debt-to-EBITDA ratio improved to 0.2. Lescow said the company repaid a maturing EUR 50 million note loan at the start of the quarter using its own liquidity.
Other balance sheet and return metrics also strengthened. Rolling 12-month return on capital employed increased to 15.2% from 11.5%, which Lescow said was due to higher EBIT over the past three quarters. Net working capital stood at around EUR 745 million, about 7% higher than the prior year, and the equity ratio was around 52%, slightly above the 2025 year-end level.
Outlook reiterated; management comments on tariffs and geopolitical developments
In closing remarks, Stefan Dräger said the company’s order development “makes us optimistic about the further course of business this year.” He confirmed prior guidance, stating the company continues to expect net sales growth of 1% to 5% (or 2% to 6% net of currency effects) and an EBIT margin of 5% to 7.5%.
On external factors, Dräger addressed U.S. tariffs and the “war against Iran.” He said the company continues to expect tariff impacts similar to 2025 and that it does not see “any material impact on our business from the war so far.”
No analysts asked questions during the call’s Q&A session.
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.
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