Stabilus Q3 Earnings Call Highlights

Key Points

• Third-quarter performance: Revenue fell approximately 4%–4.5% year over year to nearly €300 million, but adjusted EBIT margin improved to 10.8% from 10.5%, supported by efficiency measures and stronger industrial operations.
• Deleveraging and outlook: The €92 million sale of Tech Products and Fabreeka reduced total debt to €554 million and net leverage to 2.77 times. Stabilus maintained fiscal-year guidance for roughly €1.15 billion in revenue, an adjusted EBIT margin around 10% or slightly above, and approximately €90 million in free cash flow.
• Industrial growth offsets weakness: Industrial revenue grew organically by more than 8%, including 35% growth in aerospace, marine, rail and defense, while automotive declined about 15% and Asia-Pacific revenue fell 18% amid China-related weakness and pricing pressure. The company also expects initial low-single-digit million-euro revenue from humanoid-robot actuators next year through its Synapticon partnership.

Stabilus ETR: STM said third-quarter revenue was close to €300 million and adjusted EBIT margin improved to 10.8%, despite lower sales tied largely to weakness in China and continued pressure in automotive markets.

The company said revenue was approximately 4% to 4.5% below the prior-year quarter, while adjusted EBIT margin rose from 10.5% a year earlier. Management attributed the margin improvement to efficiency programs and a larger contribution from its industrial operations.

Portfolio sale supports deleveraging

Stabilus completed the sale of its Tech Products and Fabreeka businesses to VMC Group, with signing on May 7 and closing on June 23, 2026. The transaction had an enterprise value of €92 million.

Management said the businesses had been successful assets, with margins in the range of 30%, but were not a close fit with Stabilus’ strategy of focusing on electromechanical systems, intelligent motion control and automation. The divested operations primarily supplied vibration-management and mechanical-motion components, including rubber and plastic mounts.

The company used proceeds from the sale to reduce debt. Total debt declined to €554 million from €631 million, while net leverage fell to 2.77 times. Stabilus also renegotiated its debt covenants, increasing its maximum leverage ratio to 4.0 for fiscal 2026 and 3.9 throughout 2027, compared with a previous maximum of 3.5.

Management said the expanded covenant headroom was intended to provide additional flexibility amid uncertain market conditions and followed feedback from investors, analysts and shareholders.

Industrial business offsets automotive weakness

Stabilus reported organic revenue growth of more than 8% in its industrial business during the third quarter, compared with an organic decline of about 15% in automotive. Management said the industrial segment now produces the majority of company profits because of its stronger margin profile.

Growth areas cited by the company included independent aftermarket distribution, commercial vehicles, energy and construction, and aerospace, marine, rail and defense. Stabilus said aerospace, marine, rail and defense revenue grew by about 35%.

Management said the company’s earlier acquisition of DESTACO has supported both margins and sales opportunities in industrial markets. It also highlighted door-actuation launches with Xiaomi in China and BMW’s X5 series in Europe. Production for the Xiaomi program is expected to begin in August, while BMW activity was also building through the summer, according to management.

In defense, Stabilus said work on remote-handling equipment for rocket and nuclear propulsion systems was progressing in line with forecasts.

Robotics partnership advances

Stabilus said it is working with Synapticon on smart rotary actuators for humanoid robots. Stabilus holds more than 10% of Synapticon’s shares and invested a low-single-digit million euro amount in the collaboration, management said.

Synapticon is contributing motion-control software and safety functions, while Stabilus is focused on mass production of the robot-joint hardware. Management said the partners have begun sending initial hardware and software samples to customers and are jointly marketing the applications to robotics suppliers and manufacturers.

The company said a humanoid robot may require about 30 rotary actuators, with units used across its joints. Stabilus expects first humanoid-related sales next year, initially in the low-single-digit million euro range. Management described current activity as sample production rather than meaningful revenue in the present fiscal year.

Management estimated that, at a more mature stage, a robot joint could carry a value of roughly €100 to €250, though it cautioned that the estimate depends heavily on production volumes. Stabilus said the hardware portion could account for around 60% to 70% of the value created in the partnership, with software accounting for the remainder.

China and automotive conditions remain challenging

Stabilus said Asia-Pacific was affected by soft economic conditions in China, particularly in vehicle segments with higher technical content where its POWERISE products are used. The company reported an 18% year-over-year decline in Asia-Pacific revenue and said price erosion in China remained in the range of 5% to 6%.

Management said overall light-vehicle production was relatively flat, but growth was concentrated in smaller vehicle segments with lower product fitment for Stabilus. The company also cited weaker volumes from Western automakers and higher-end vehicle producers, including the impact of weaker demand for Volkswagen in China.

Stabilus expects pricing pressure in China to continue but said it is pursuing technical changes and cost-reduction measures to defend margins. The company said it also plans to further develop industrial business in China.

For the third quarter, Stabilus reported adjusted EBIT of about €32.2 million. Nine-month adjusted EBIT margin was 10.7%, while year-to-date organic sales were down nearly 6%, according to management. Foreign exchange had a 2.2% negative impact over the first nine months, though the company said the third-quarter effect was more limited at 0.6%.

Cost savings and fiscal-year outlook

Management said its personnel-related transformation measures have been completed, while organizational and location-related initiatives remain in execution. The company reported €15.4 million in cost savings over the first nine months, compared with €7.3 million in cash outflows related to restructuring.

• Expected savings for fiscal 2027: €19 million
• Expected recurring savings for fiscal 2028: €32 million
• Year-to-date capital expenditure as a share of revenue: 5.8%

Stabilus said it is also working to lower inventories and manage working capital through biweekly calls with operating entities. Management noted that the shift toward industrial markets can require higher inventories and involve longer payment terms than automotive operations.

The company narrowed, but maintained within its prior range, its fiscal-year guidance. Stabilus expects revenue of about €1.15 billion, adjusted EBIT margin of around 10% or slightly above, and free cash flow of approximately €90 million. Its fiscal year ends in September, leaving August and September as the final two months of the reporting period.

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.

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