Gestamp Q1 2025 slides: stable margins amid Western Europe weakness, NAFTA turnaround on track

Introduction & Market Context

Gestamp Automocion SA (BME:GEST) released its Q1 2025 financial results on May 8, showing resilience in a challenging automotive market environment. The Spanish auto parts manufacturer maintained stable profitability despite production volume declines in key markets, with its shares rising 2.65% to €2.64 following the announcement.

The global automotive production landscape showed mixed performance in Q1, with an overall decline of 1% globally. Western Europe experienced a significant 7.0% drop in production volumes, while NAFTA markets declined by 5.3%. China provided a bright spot with an 11.5% increase, helping to partially offset weakness in other regions.

As shown in the following chart of regional auto production volumes:

Quarterly Performance Highlights

Gestamp reported Q1 2025 revenues of €2,983 million, representing a slight decrease of 0.7% year-over-year in its auto business at constant currency. Despite this revenue decline, the company maintained EBITDA at €307 million with a 10.3% margin, demonstrating stable profitability compared to the previous year.

The company’s performance outpaced the broader market by 1.7 percentage points on a weighted basis, with particularly strong results in Eastern Europe (+12.8%) and Mercosur (+15.2%), which helped offset weakness in Western Europe (-7.0%) and Asia (-5.0%).

The following slide illustrates Gestamp’s revenue performance compared to market production growth:

Revenue decline was primarily attributed to two factors: lack of organic growth (particularly in Western Europe) and negative currency effects from Turkish, Brazilian, and Mexican currencies, as shown in this bridge analysis:

Net income decreased significantly from €55 million in Q1 2024 to €27 million in Q1 2025, while free cash flow remained negative at -€91 million, though improved from -€137 million in the same period last year. This negative free cash flow is consistent with typical first-quarter seasonality patterns.

The comprehensive financial performance is summarized in the following slide:

NAFTA Turnaround Progress

A key highlight of Gestamp’s Q1 results was the significant progress in its Phoenix restructuring plan for North American operations. The NAFTA region showed substantial profitability improvement, with EBITDA margin increasing from 4.5% in Q1 2024 to 6.4% in Q1 2025, representing a 187 basis point improvement year-over-year.

This progress comes despite challenging production volumes in the region, with U.S. volumes down 8.3% and overall NAFTA production down 5.3%. The company confirmed it remains on track to achieve its 2025 target of approximately 8% EBITDA margin for the full year, with further improvements expected in 2026.

The Phoenix plan’s impact and progress are illustrated in this detailed breakdown:

Financial Position & Outlook

Gestamp continued to strengthen its financial position, with net debt decreasing slightly to €2,219 million, resulting in a leverage ratio (net debt to LTM EBITDA) of 1.7x—the lowest first-quarter level since the implementation of IFRS 16 accounting standards.

The company maintains a solid liquidity position with €2,067 million available, comprising €1,256 million in cash and cash equivalents plus €811 million in available credit facilities.

As shown in the following chart of leverage and net debt evolution:

Regarding shareholder returns, Gestamp confirmed its dividend policy with a payout ratio of 30% of reported net profit, translating to approximately €0.10 per share to be paid in two installments (January and July 2025).

Despite market uncertainties, particularly around potential tariff impacts and trade tensions, Gestamp reiterated its full-year 2025 guidance, projecting:

• Low single-digit revenue growth, outperforming the market
• Auto business profitability in line with 2024 or showing slight improvement
• Gescrap business performance in line with last year
• Leverage and free cash flow within 2024 ranges

Strategic Positioning

Gestamp emphasized its geographic diversification as a key strength in navigating current market uncertainties, particularly potential impacts from trade tensions and tariffs. The company highlighted its "local-for-local" manufacturing approach, with 115 plants across five regions and minimal cross-border exports.

The following slide illustrates Gestamp’s global manufacturing footprint:

The company’s Gescrap business, focused on metal recycling, delivered solid performance despite declining scrap prices. Revenue increased from €154 million in Q1 2024 to €161 million in Q1 2025, though EBIT margin decreased slightly from 6.9% to 6.2% due to lower scrap prices in Europe (-9%) and China (-15%).

Management outlined an active execution plan to preserve financial strength in the current uncertain environment, focusing on profitability preservation through customer dialogue, cost control measures, and maintaining financial discipline through strict capital expenditure policies and working capital management.

During the Q4 2024 earnings call, Executive Chairman Francisco Riveras had noted, "We are convinced that we have had good performance in 2024 in a quite difficult scenario," a sentiment that appears to be continuing into early 2025 as the company navigates regional production challenges while maintaining stable overall profitability.

Full presentation:

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