INTERIM REPORT JANUARY – MARCH 2026

The key read-through is that management is showing pricing/mix discipline strong enough to offset a meaningful FX headwind, which matters more than the headline top-line softness. In a flat-to-slow-growth demand environment, a 12%+ operating margin implies the business is operating with unusually high incremental margin leverage, so even modest organic growth can translate into outsized earnings resilience over the next 1-2 quarters.

Second-order, the currency hit likely masks underlying share stability rather than real volume weakness. If the FX drag persists, reported revenue growth will stay noisy, but the market should increasingly anchor on local-currency execution and margin conversion; that favors suppliers with exposed operating leverage and disciplined cost bases, while pressuring weaker peers that need mid-single-digit reported growth to defend valuation. Competitors with lower gross margins may be forced into promotional activity, which can quietly widen the spread in profitability over the next 2-3 reporting cycles.

The main risk is that this is a margin peak rather than a durable step-up: if input costs re-accelerate or pricing normalizes, earnings momentum can flatten quickly despite stable organic sales. Another reversal catalyst is a stronger currency trajectory over the next 3-6 months, which would cap reported EPS upside even if underlying demand stays intact. Consensus may be underestimating how much of the improvement is operational vs. transitory FX noise, creating a setup where the stock can re-rate only if management proves this margin floor is sustainable into the next quarter.

The contrarian angle is that the market may be too focused on the sales miss and not enough on the quality of earnings. When organic growth is low but margins are expanding, the right question is whether free cash flow is inflecting; if so, the equity can still work even without faster revenue. That makes this more of a cash-generation story than a growth story, which often supports the shares longer than the headline print suggests.