What ElringKlinger (ZIL2) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue and adjusted EBIT rose to €451 million and €29.2 million, respectively, with the adjusted EBIT margin widening to 6.5%. ElringKlinger reaffirmed its full-year sales outlook of around €1.8 billion despite an expected 1.7% decline in global light-vehicle production.
• E-mobility continued to scale: quarterly sales nearly tripled to €65 million, and its adjusted EBIT loss narrowed to €9.6 million. The company said it remains on track to target e-mobility break-even and positive results in 2028.
• Orders, cash flow and debt metrics improved: order intake rose 15.2% to €538 million, operating free cash flow increased to €28.5 million, and net financial debt fell to €350 million. The company also agreed to sell two businesses and expects full-year one-off costs in the mid-double-digit millions of euros.

ElringKlinger ETR: ZIL2 reported higher third-quarter revenue and adjusted earnings as electric mobility programs ramped up, and confirmed its full-year sales outlook of around €1.8 billion despite expectations for a decline in global vehicle production.

Revenue rose to €451 million from €395 million a year earlier, while adjusted earnings before interest and taxes, or EBIT, increased 38% to €29.2 million. The adjusted EBIT margin widened to 6.5% from 5.4%, CEO Thomas Jessulat said on the company’s earnings call.

Jessulat said the company’s performance benefited from higher volumes, cost discipline and progress in its SHAPE30 efficiency strategy. He also pointed to continued expenses from the global ramp-up of large-scale orders, which totaled €12 million in the quarter.

E-mobility growth narrows losses

E-mobility sales reached €65 million in the third quarter, nearly triple the year-earlier level, as production contracts for cell contacting systems continued to ramp up. The business reduced its quarterly adjusted EBIT loss to €9.6 million, an improvement of €7.3 million.

For the first nine months of 2026, e-mobility revenue more than doubled to €189 million. Its adjusted EBIT loss narrowed to €33.7 million from €40.7 million a year earlier.

Jessulat said stronger demand for battery-electric vehicles could benefit ElringKlinger because its battery products carry higher value than its traditional products. He said that would help the company reach its target of breaking even and moving into positive territory in e-mobility in 2028.

The broader Original Equipment segment increased quarterly sales 18% to €310 million. Its adjusted EBIT improved to €3.9 million from a loss of €2.1 million, primarily because of progress in e-mobility, although ramp-up costs in two other business areas weighed on results.

Aftermarket revenue rose to €102 million from €96 million, while Engineered Plastics revenue increased to €39 million from €37 million. Jessulat said temporary customs-related issues and costs affected the Aftermarket margin, while cost discipline helped Engineered Plastics earnings.

Asked about the outlook for Engineered Plastics margins, Jessulat said a range of roughly 10% to 15% was a reasonable expectation.

Orders and cash flow improve

Third-quarter order intake rose 15.2% year over year to €538 million. The order backlog increased 19.4% to €1.327 billion at the end of the quarter, its highest level in the past five quarters, Jessulat said.

Operating free cash flow increased to €28.5 million from €18 million a year earlier, supported by lower investment spending and working capital management. Third-quarter capital expenditure fell 46% to €15.1 million, or 3.3% of sales, as the company reduced spending after an investment cycle tied to large-scale orders.

Net financial debt declined from the preceding quarter to €350 million, and the leverage ratio improved to 1.7 times adjusted EBITDA from 2.2 times a year earlier. The net working capital ratio fell to 19.5% of group sales from 23.2%.

Adjusted net income attributable to shareholders rose to €14.3 million from €6.2 million, and adjusted earnings per share increased to €0.23 from €0.10.

Outlook and restructuring

ElringKlinger confirmed the sales guidance it raised on Oct. 13, along with its other 2026 and medium-term outlook measures. Jessulat said global light-vehicle production is now expected to reach 91.6 million units in 2026, down 1.7% from the prior year.

The company entered an agreement during the quarter to sell its U.S. subsidiary in Fort Wayne, Indiana, and its shielding technology business in Kecskemét, Hungary, to Lydech. Jessulat said the businesses had a low- to mid-double-digit million euro amount of sales in 2025 and a low-triple-digit number of employees at year-end 2025.

He said the company expects full-year one-off costs in the mid-double-digit millions of euros, below the prior-year level. Third-quarter adjustments totaled €9.7 million, mainly for impairments related to the divestment and restructuring.

Asked about China, Jessulat described it as a difficult market but said new projects being ramped up should contribute additional business there. He said it was too early to determine how much that growth would offset declining trends.

About ElringKlinger (ETR:ZIL2)

ElringKlinger AG develops, manufactures, and sells systems and components for the automotive industry in Germany, the Asia-Pacific, North America, rest of Europe, and internationally. It operates through four segments: Original Equipment, Aftermarket, Engineered Plastics, and Other. The Original Equipment segment is involved in the development, manufacture, and sale of products and assemblies, such as metal sealing systems and drive train components; thermoplastics for drivetrains, body, and underbody applications; hybrid technologies; thermal, acoustic, and aerodynamic shielding systems; cylinder-head and specialty gaskets; battery and fuel cell components and systems; electric drive units; and exhaust gas purification.

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