Release Date: November 11, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Stabilus SE (WBO:STA2) achieved record sales and a strong free cash flow in fiscal 2024, despite challenging macroeconomic conditions.

• The integration of the recent acquisition, Dako, is on track, contributing significantly to revenue and margin improvements.

• The company reported a 14% sales growth in the Asia Pacific region, highlighting strong performance in that market.

• Stabilus SE successfully refinanced a 250 million bridge loan, which was oversubscribed, securing favorable rates.

• Innovations in product offerings, particularly in automation and electrification, are well-received by the market, driving future growth.

Negative Points

• The economic situation in EMEA and the Americas was soft, impacting overall performance in these regions.

• Organic revenue experienced a downtrend of 2.4% globally, excluding recent acquisitions.

• Adjusted EBIT margin decreased from 14% to 12.5% in Q4, partly due to negative FX impacts.

• The company faced significant inflation-related increases in labor costs, particularly in regions like Mexico and Romania.

• There was a notable reduction in profit due to purchase price allocation and increased interest expenses from higher debt levels.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Signs with WBO:STA2.

Q: Can you provide more details on the cost actions planned for the upcoming year across Europe and North America? A: Dr. Michel Buchsner, CEO, explained that the focus will be on materials management and controlling labor costs. They expect a material price reduction of 1.5% to 2% and labor inflation of about 3.5% to 4%. These measures are being intensified through supplier conventions and automation activities.

Q: What impact could a second Trump presidency have on your North American business? A: Dr. Michel Buchsner, CEO, noted that while a second Trump presidency might increase volatility, Stabilus is well-prepared. The company has adjusted its operations and has a strong presence in the US with the acquisition of the US-based company, this take. The strategy of "in the region for the region" is expected to mitigate potential impacts.

Q: Can you discuss the trends in China and the outlook for the Powerise business in FY 2025? A: Dr. Michel Buchsner, CEO, highlighted that Powerise saw significant growth in Q4, driven by successful wins in China against local competition. The company expects continued double-digit growth in FY 2025, supported by strong order books and increasing demand for actuation systems.