Release Date: December 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stabilus SE (WBO:STA2, Financial) reported a solid performance in fiscal 2024 despite a challenging market environment, with revenues increasing by 7.5% to EUR 1.305 billion.
- The company plans to pay a dividend of EUR 1.15 per share, representing 40% of net income, which is at the upper end of their dividend policy range.
- Stabilus SE successfully integrated the acquisition of STACO, contributing to stable sales and high profitability, with a 20.44% EBIT margin.
- The company achieved a significant increase in free cash flow from EUR 107 million to EUR 132 million, aided by strong cash flow generation and optimization of working capital.
- Stabilus SE is optimistic about its fiscal 2025 guidance, forecasting sales between EUR 1.3 billion and EUR 1.45 billion, with an EBIT margin of 11% to 13% and free cash flow of EUR 90 to 140 million.
Negative Points
- The company experienced a 30.3% downturn in profit, primarily due to the impact of purchase price allocation related to the STACO acquisition.
- There is a challenging market environment with uncertainties, leading to a wider range in fiscal 2025 guidance to account for potential volatility.
- Stabilus SE faces pricing pressure in China, with expected price deterioration of around 5-6%, which could impact margins.
- The automotive sector remains challenging, with a flat or slightly decreased sales outlook, particularly in Europe, due to macroeconomic factors.
- Labor cost inflation, particularly in Mexico and Romania, continues to be a challenge, with expected increases of around 5% for fiscal 2025.
Q & A Highlights
Q: Could you provide some color on Q1 trading given the uncertainties and market volatility? How has the quarter started in terms of margins?
A: (CEO) We are halfway through the quarter, and October and early November continued similarly to the second half of last year. Sales development is slightly lower than the first quarter last year, in the range of 7 to 10%. This is already reflected in our guidance of 1.3 to 1.45 billion in sales and an 11 to 13% EBIT margin.
Q: Can you discuss the margin guidance, particularly in Europe and North America, and the actions being taken to offset cost inflation?
A: (CEO) We are addressing cost inflation through automation and labor cost management. Material prices are decreasing, and we are negotiating with suppliers to reduce costs. We expect to gain a couple of percentage points on our bill of material, which will offset pricing pressures.
Q: How do you view sustainable margins in APAC and China given the pricing pressure?
A: (CEO) We typically perform between 16 and 18% in China, but pricing pressure is leading to a 5-6% price deterioration. We are addressing this through technical changes and negotiations with suppliers, expecting improvements over the next 12 months.
Q: Regarding growth, which sectors or target industries are performing better, and how is the order intake compared to market share?
A: (CEO) Automotive is expected to be flat, with slight improvements in industrial sectors like aerospace and automation. We are winning business slightly ahead of our market share, particularly in powerise systems and gas springs.
Q: What are the major ingredients to improve margins from 12% to the long-term target of 15%?
A: (CEO) Key drivers include direct actuation, expansion of the industrial business, and cross-sales activities from acquisitions like STACO. Our automotive products' high quality and cost position also contribute to margin improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
