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Stabilus reported Q2 revenue of €304.9 million, down about 10% year‑over‑year, but impressively kept its EBIT margin at 11.2%; management credited cost savings and DESTACO synergies (≈€2.4m) for offsetting weaker volumes while adjusted free cash flow was weak at €4.1m due to higher receivables.
Regional performance was mixed: Asia‑Pacific plunged ~26.6% QoQ (POWERISE/auto weakness), the Americas fell ~11.5% QoQ though industrial sales rose and EBIT improved, while EMEA was broadly stable with slightly better margins.
Stabilus kept fiscal 2026 guidance (revenue €1.1–1.3bn, EBIT margin 10–12%, free cash flow €80–110m), reiterated a push to deleverage to net leverage below 3 (Q2 at 3.2) and expects cost/program savings—including ~450 job reductions—to deliver ~€19m (12‑month effect) and €32m by 2028.
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Stabilus (ETR:STM) reported second-quarter fiscal 2026 revenue of €304.9 million, down 10% year-over-year but higher than the first quarter’s roughly €291 million, as management highlighted steady execution on cost savings and transformation initiatives. Chief Executive Officer Dr. Michael Büchsner said the company is “progressing very well on our transformation and despite of rough waters, we deliver stable results.”
Büchsner emphasized that the “remarkable thing” in the quarter was that Stabilus maintained its EBIT margin at 11.2%, the same level as the prior year, despite lower sales. CFO Andreas Jäger attributed the year-over-year revenue decline in Q2 (January to March) primarily to lower volumes, with foreign exchange also weighing on results. He said roughly “two-third is really coming from the volume, where one-third is impacted by foreign currency translation.”
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Jäger said Stabilus realized €2.4 million of synergies from the DESTACO combination in the quarter. He also pointed to overhead cost reductions as a key offset to the earnings impact from lower sales, noting that overhead costs were reduced by €7.6 million versus the prior year despite inflationary pressures.
Adjusted free cash flow in the quarter came in at €4.1 million, which Jäger said was clearly below the prior-year quarter. He attributed the quarterly weakness mainly to higher accounts receivable after a “very strong” March that exceeded the normal sales run rate. Stabilus reported €15.7 million in operating cash flow for Q2 and €15.4 million of investments into facilities and production equipment, which Jäger said were “significant less than last year” as the company sought to preserve cash.
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For the first half of fiscal 2026, Jäger said revenue was down 0.2% year-over-year, with the decline driven primarily by Asia-Pacific and “in Asia-Pacific, a big portion from POWERISE.” Stabilus recorded more than €4 million of sales synergies with DESTACO in the first half, Jäger said.
Jäger highlighted an intensified focus on reducing overhead costs, stating that Stabilus reduced overhead expenses by €14.3 million in the first half. He also said that while Q2 cash flow was weaker year-over-year, the company generated slightly more cash flow than the prior year when comparing the full six months.
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Regionally, the company’s performance was mixed:
Americas: Jäger said revenue fell quarter-over-quarter by 11.5%, driven by automotive weakness. He noted, however, that DESTACO helped lift industrial components revenue in the Americas by 6%. EBIT improved from €5 million in Q1 to €9.9 million in Q2, with an 8.8% margin. Jäger cited challenges in gas spring production in Mexico and unfavorable currency effects when U.S. dollar invoicing translated into fewer Mexican pesos.
EMEA: Revenue was broadly stable quarter-over-quarter and “even slightly increased,” helped by automotive gas springs. Industrial components revenue in Europe rose 4.3%, Jäger said. EMEA EBIT margin improved from 10.8% to 11.2% sequentially.
Asia-Pacific: Revenue declined sharply—down 26.6% quarter-over-quarter—driven mainly by automotive, “especially from the POWERISE business.” Despite the drop, Jäger said the region delivered 16.7% EBIT margin, which he characterized as a “strong result.”
Management devoted significant time on the call to strategic updates. Büchsner said Stabilus has become roughly a 50/50 business split between automotive and industrial, with the industrial business growing 2% organically even as automotive revenue fell 16% year-over-year amid what he called a weak global automotive market.
He also cited ongoing competitive pressure—particularly in Asia-Pacific—alongside unfavorable currency translation effects (notably the U.S. dollar and renminbi), cautious consumer sentiment, and heightened attention to supply chain resilience amid geopolitical risks.
In Asia, Büchsner said Stabilus further streamlined its industrial footprint by integrating a new facility in Suzhou, which he said brings the company’s industrial brands “under one roof” to improve efficiency and customer proximity. He described the opening event as attended by 65 customers and government representatives, adding that Stabilus has seen “very nice order intake since that.”
Beyond footprint measures, Büchsner emphasized a push under the banner “Stabilus for Automation”, with increased focus on automation and robotics. He discussed development work tied to humanoid robots, noting that a humanoid robot can require “more than 20 hinges” and needs “a reliable motor with a gear system and the right software.” He referenced the company’s relationship with Synapticon, in which Stabilus has acquired a stake, as part of its capability set.
In defense, Büchsner said the business is “steadily growing,” citing €3.2 million already sold and stating “this will be triple soon.” He described sales including damping systems, opening systems, and gas springs/struts for applications ranging from standard weapons to drones.
Management said cost and organizational actions remain central to maintaining profitability in a softer demand environment. Büchsner said Stabilus executed personnel-related measures introduced about six months earlier, including reducing 450 employees, primarily overhead roles, equal to about 6% of the global workforce. He said these reductions were concentrated in Europe and the Americas, while Asia-Pacific requires investment to support “local for local” growth.
Büchsner put numbers around the savings program, saying cost savings in the first half were €14.3 million, with expected savings of €19 million on a 12-month effect basis and €32 million by 2028 from the broader reorganization and transformation efforts.
On sustainability, Büchsner said the company increased the share of renewable energy despite lower volumes and reduced CO2 emissions in facilities by “another 20%.” He also said solar power installations increased self-generated energy by “one-third more than before,” adding that external sustainability ratings have been at “a very good level” and improving.
Stabilus kept its fiscal 2026 guidance unchanged, with Büchsner citing stable first-half performance and margin resilience. The company reiterated:
Free cash flow: €80 million to €110 million
During Q&A, analyst Yasmin Steilen of Berenberg asked about cash flow seasonality and restructuring impacts. Büchsner said the free cash flow guidance reflects an €18 million cash outflow tied to the restructuring program and said inventory planning already includes higher levels to address potential supply chain risks. Jäger added that first-half free cash flow was about €30 million and pointed to working capital normalization, an inventory reduction program, and financing initiatives including an accounts receivable ABS program and reverse factoring to support full-year cash flow delivery.
On leverage, Büchsner said Stabilus is targeting a net leverage ratio of below 3 by year-end, after being at 3.2 in Q2, supported by inventory reductions, factoring initiatives, and margin improvement efforts in the second half.
Steilen also asked about the impact of China’s announced ban on fully hidden pop-up electric door handles. Büchsner said the change does not affect door actuation systems, which open and close doors via electromechanical components in conjunction with sensors and software. He said adoption remains broad, citing additional wins with Great Wall in China and an upcoming launch with BMW in the “next couple of weeks” that he described as the first “bigger and biggest volume” rollout in the Western market.
Looking ahead, Büchsner said the company sees “moderate growth” and “some light at the end of the tunnel,” with commercial vehicles serving as an indicator of potential improvement, and he reiterated the key priorities as deleveraging, cost execution, and continued investment in newer technology areas including automation, humanoids, and defense.
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.
The article "Stabilus Q2 Earnings Call Highlights" was originally published by MarketBeat.