Q2 2026 Grammer AG Earnings Call
Speaker #1: Mission: we will open the floor for your questions in a Q&A session. For this reason, we will then unmute your microphone. And with that, I will hand over to you, Jens.
Speaker #1: For your part.
Speaker #2: Thank you very much, Katerina, and good morning, everyone. My name is Jens Öhlenschläger, thank you for your interest in our company, and on behalf of the insider team, I welcome each of you to today's presentation of the GRAMMER Group Financial Results for the first half of 2026.
Speaker #2: Together with Kelvin Wang, our Grammar Group CFO, we will walk you through our financial performance and the outlook for the remainder of the year.
Speaker #2: But first, let me start with the headlines for the first half of 2026. Group revenue came in slightly above prior year. This was accompanied by a clear improvement in earnings.
Speaker #2: Operating EBIT rose to 41.7 million euro, the operating EBIT margin improved to 4.3%. The picture by product area was mixed: commercial vehicles grew, while automotive remained under pressure in a still difficult market environment.
Speaker #2: Regionally, APEC was the main growth driver, EMEA remained stable, while in America's the situation continues to be challenging. The improvement in earnings was mainly driven by a strong second quarter, together with a continued execution of our efficiency measures under the top 10 program, further organizational streamlining, and income from a public funding for research and development in the region of EMEA.
Speaker #2: Free cash flow was at 1.5 million positive, a clear step-up from the prior year period when free cash flow had to be reported close to minus 50 million euro.
Speaker #2: We also have been successful in securing the group's long-term refinancing shortly after reporting period. I will come back to that later on. An important-to-know also: we will and can confirm our full-year outlook despite a challenging market environment.
Speaker #2: Our CFO, Kelvin Wang, will now walk us through the details.
Speaker #1: Yeah. Thank you, Jens. And good morning from my side as well. My name is Kelvin Wang, the Group CFO of the GRAMMER. Currently, let me take you through the group figures for the first half of 2026.
Speaker #1: The group revenue reached 961.4 million euros, an increase of 0.8% versus 953.7 million euros last year. Adjusted for currency effects, the increase was 2.7%.
Speaker #1: Regarding the quarterly dynamic, the second quarter was stronger than the first quarter. Q2 revenue came in at 499.4 million euros, which was both higher than the first quarter of 2026 and also the second quarter of last year.
Speaker #1: This is an increase of 7.1% year on year, or 7.6% adjusted for currency. Looking at the two product areas, over the half year, commercial vehicles grew by 5.2% to 358.9 million euros, while automotive declined by 1.6% to 602.5 million euros, reflecting the weak demand across all regions.
Speaker #1: Turning to profitability, reported EBIT increased to 48.6 million euros, with the margin improve from 2.5% to 5.1%. This was supported by the positive currency effects for operating EBIT, which excludes currency effects increase by 17.1% to 41.7 million euros.
Speaker #1: Limiting the operating margin from 3.7% to 4.3%. Operating EBIT was adjusted for positive currency effects by 7.1 million euros. And expenses for restructuring provisions by 0.2 million euros.
Speaker #1: And now, let's move to the regions starting with EMEA region first. The region remained stable in a still challenging market revenue was essentially flat at 564 million euros, compared with 563.9 million euros in the prior year period.
Speaker #1: By product area, commercial vehicles increase by 1.6% to 238 million euros, mainly driven by the overall and road product market segment. Automotive declined by 1.1% to 326 million euros, largely due to lower R&D revenue.
Speaker #1: With the European automotive market remaining weak, reported EBIT increased significantly from the 20 to 41.4 million euros. With the margin increase from 3.5 to 7.3% for this region.
Speaker #1: The operating EBIT improved from the 24.4 to 40.7 million euros, and the operating EBIT margin from 4.3 to 7.2%. This profit increase mainly comes from the plant capacity adjustments.
Speaker #1: Operation efficiency improvement generally to say our top 10 measure is working and contributing. Additionally, it also reflects the subsidies for R&D project is around 4 million euros.
Speaker #1: Operating EBIT was adjusted for positive currency effects by 0.9 million euros, and expenses for restructuring provisions by 0.2 million euros. And let's continue with the next region, APEC.
Speaker #1: Here, the revenue increased by 7.6% to 264.3 million euros, adjusted for currency effects the increase was even stronger at 10.2%. The two product areas moved in different directions.
Speaker #1: Commercial vehicles increase substantially by 30.7% to 85.6 million euros. Supported across all commercial vehicles segments, with particular strengths in off-road and truck from the domestic market in China, automotive was broadly stable, down just 0.8% to 178.7 million euros, reflecting the soft automotive market in China.
Speaker #1: On earnings, EBIT was essentially unchanged at 17.4 million euros versus 17.5 million euros, last year and operating and EBIT margin was 6.6%. Operating EBIT actually improved slightly from 17.7 18.2 million euros.
Speaker #1: With the margin at 6.9%, operating EBIT was adjusted for negative currency effects of 0.7 million euros, with that APEC remains a reliable earning contributor.
Speaker #1: And now, let's move to the next region, Americas. Revenue declined by 7.7% to 153 million euros, a large part of that was currency driven.
Speaker #1: Adjusted for currency effects that declines was 2.7% instead of 7.7%. Automotive was down 6.7% to 102.3 million euros but adjusted for currency effects it was 1% decrease.
Speaker #1: Commercial vehicles declined by 9.8% to 50.7 million euros, mainly due to lower overall demand from key customer in the agricultural and construction equipment sectors.
Speaker #1: On earnings, reported EBIT improved to minus 1.8 million euros from minus 5.8 million euros in the last year lifting the margin from minus 3.5% to minus 1.2%.
Speaker #1: Operating EBIT, however, came in at minus 6.2 million euros, against minus 0.2 million euros last year. Here, you say the effect of additional tariff-related cost and expense associated with new project ramp-ups operating EBIT was adjusted for positive currency effects by 4.3 million euros.
Speaker #1: So Americas still is our most challenging region, but with new project now ramping up, we are expecting a gradual improving contribution during the warming up.
Speaker #1: And now, let me turn to our workforce as a remind. We report headcount including temporary workers as our average over the period. On the basis group headcount came down by 1.9% to have an average of 13,927 employees.
Speaker #1: The regional picture varies quite a bit. In EMEA region, headcount was down 8.7%. This reflects our optimization and restructuring measures. And also, the internal transfer of selected functions to central service effective January 1st, 2026.
Speaker #1: Role functions are now reported and central than EMEA region. In Americas, headcount declined by 14.9%. Mainly reflecting the lower sales warning in the region.
Speaker #1: APEC moved in the opposite direction, with headcount up 15.6%. This was driven by capacity expansion and new product launches at our key locations. Now, to the capital expenditures.
Speaker #1: In the first half of 2026, we invested 41.1 million euros, an increase of 17.4% versus 35 million euros in the past year. A large part of that increase came from IFRS 16 lease additions, which increased from 2.6 to 10.3 million euros.
Speaker #1: By region, EMEA invested 15.9 million euros, an increase of 3 million. Mainly from an IFRS 16 leasing contract for a building in Poland area.
Speaker #1: APEC increased to 14.1 million euros driven by the investment in new customer projects and by leasing capitalization and IFRS 16 by 2.5 million euros.
Speaker #1: Americas come down to 6.8 million euros as the industrialization of the new project there has largely been completed. And the central service was at 4.3 million euros in line with the prior year.
Speaker #1: Now, let's turn into the balance sheet. And cash flow, the focus is on three key metrics. Working capital, free cash flow, and net debt.
Speaker #1: Working capital increased to 191.6 million euros up from 139.8 million euros at year end of 2025. This mainly reflects the higher trade receivable and inventories this is in line with 2026 Q2 sales warning much stronger than Q4 2025 from all the regions.
Speaker #1: Free cash flow improved significantly to plus 1.5 million euros, from minus 49.9 million euros in the same period last year. The improvement was driven by a better operating cash flow and by the fact that prior year period was burdened by the payment for the J acquisition with value 35 million euros.
Speaker #1: Net debt stood at 504.9 million euros, compared with 476.8 million at year end 2025. On an adjusted basis, trading the 130 million euros subordinated shareholder loan from NIMBO G fund as equity the net debt was adjusted to 375.3 million euros.
Speaker #1: And then, let's move to the next slide. Let me close my part with a look at the equity leverage and gearing. Equity increased by 30.8 13.8% to 317 million euros.
Speaker #1: Driven mainly by the positive net result and positive currency transaction effects. The equity ratio improved to 18.4% from 17.3% at year end. On an adjusted basis, again, trading the 130 million euros subordinated shareholder loan as equity the equity ratio stands at 25.9%, which gives a more accurate picture of our financial structure.
Speaker #1: Leverage improved from 2.9 times from 3.2 times at year end, without subordinated shareholder loan adjustment. On an adjusted basis, it was 2.3 times and gearing came down to 159% from 171% after adjustment of subordinated shareholder loan gearing was 84%.
Speaker #1: The improvement in rose ratios reflects the sustained operational progress we have made. With that, I hand back to Jens for the outlook.
Speaker #2: Yeah, thank you very much, Kelvin. I will now continue with the outlook. For 2026. Before I will get to the numbers, a brief word on the market environment.
Speaker #2: Which remains mixed and demanding. The global light vehicle production is expected to decline slightly, with weaknesses in EMEA and China as a region, while the commercial vehicle market is stabilizing.
Speaker #2: The geopolitical situation keeps the economic development fragile, and demands volatile. In this sensitive market environment, GRAMMER navigated well in the first half of the year, delivering a solid performance in line with our outlook.
Speaker #2: For the full year, we confirmed the guidance published in March in our annual report 2025. We continue to expect group revenue of around 1.9 billion euro.
Speaker #2: China will remain as gross contributor driven by local OEMs, with which GRAMMER has built a robust position meanwhile. And in Americas, several new project ramp-ups in automotive will start to contribute substantially.
Speaker #2: On profitability, we are guiding for an operating EBIT of around 80 million euros. The continued execution of our top 10 program will be the primary driver here, as usual this outlook remains subject to geopolitical developments and the impact on the global economy.
Speaker #2: Let me also highlight an important milestone we have reached shortly after the end of the reporting period. The group's long-term financing was secured through several banks loan, totaling 762 million euro.
Speaker #2: This maturity of three years. This gives us a solid and reliable financing structure and underlines the confidence of our financing partners in GRAMMER. Last but not least, 2026 also marks a special milestone for GRAMMER, 30 years on the capital market.
Speaker #2: Since the IPO in 1996, GRAMMER has continuously developed expanded its international footprint and adapted to changing and challenging market environments. Over the past three decades, GRAMMER has been shaped by trust, strong partnerships, resilience, and continuous transformation.
Speaker #2: We would like to sincerely thank you our shareholders, banks, investors, customers, business partners, and employees for their trust, commitment, and support throughout this journey.
Speaker #2: And having this said, I'd like to hand over back to Kati.
Speaker #3: Thank you. Jens, and thank you, Kelvin. For the presentation and the update on GRAMMER's first half year performance. Before we continue, we would like to inform you that beginning next year, we will focus our conference call activities on our annual analyst and financial press conference, following of course the publication of the annual report, which will remain our key event for the financial community.
Speaker #3: We appreciate your continued interest in GRAMMER and look forward to our ongoing dialogue throughout the year. We will now move to the Q&A session.
Speaker #3: If you have any question, please raise your virtual hand. We will then invite you to ask your question and activate your microphone to do that.
Speaker #3: Okay. All right. So thank you very much. To each and everyone for your attention and participation. And see you in our next Q3 call end of October.
Speaker #3: Have a great day. Bye-bye.
